[Federal Register Volume 81, Number 136 (Friday, July 15, 2016)]
[Proposed Rules]
[Pages 46162-46476]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16097]



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Vol. 81

Friday,

No. 136

July 15, 2016

Part II





Department of Health and Human Services





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Centers for Medicare & Medicaid Services





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





 Medicare Program; Revisions to Payment Policies Under the Physician 
Fee Schedule and Other Revisions to Part B for CY 2017; Medicare 
Advantage Pricing Data Release; Medicare Advantage and Part D Medical 
Low Ratio Data Release; Medicare Advantage Provider Network 
Requirements; Expansion of Medicare Diabetes Prevention Program Model; 
Proposed Rules

  Federal Register / Vol. 81 , No. 136 / Friday, July 15, 2016 / 
Proposed Rules  

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 410, 411, 414, 417, 422, 423, 424, 425, and 460

[CMS-1654-P]
RIN 0938-AS81


Medicare Program; Revisions to Payment Policies Under the 
Physician Fee Schedule and Other Revisions to Part B for CY 2017; 
Medicare Advantage Pricing Data Release; Medicare Advantage and Part D 
Medical Low Ratio Data Release; Medicare Advantage Provider Network 
Requirements; Expansion of Medicare Diabetes Prevention Program Model

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

ACTION: Proposed rule.

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SUMMARY: This major proposed rule addresses changes to the physician 
fee schedule and other Medicare Part B payment policies, such as 
changes to the Value Modifier, 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. This proposed rule also 
includes proposals related to the Medicare Shared Saving Program, and 
the release of certain pricing data from Medicare Advantage bids and 
medical loss ratio reports from Medicare health and drug plans. In 
addition, this rule proposes to expand the Medicare Diabetes Prevention 
Program model.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on September 6, 
2016.

ADDRESSES: In commenting, please refer to file code CMS-1654-P. 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-1654-P, 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-1654-P, 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: 
    Jessica Bruton, (410) 786-5991 for issues related to any physician 
payment issues not identified below.
    Gail Addis, (410) 786-4522, for issues related to diabetes self-
management training.
    Jaime Hermansen, (410) 786-2064, for issues related to moderate 
sedation coding and anesthesia services.
    Jessica Bruton, (410) 786-5991, for issues related to 
identification of potentially misvalued services.
    Roberta Epps, (410) 786-4503, for issues related to PAMA section 
218(a) policy and the transition from traditional x-ray imaging to 
digital radiography.
    Ken Marsalek, (410) 786-4502, for issues related to telehealth 
services.
    Ann Marshall, (410) 786-3059, for primary care issues related to 
chronic care management (CCM), burden reduction and evaluation and 
management services.
    Emily Yoder, (410) 786-1804, for primary care issues related to 
resource intensive services and other primary care issues.
    Lindsey Baldwin, (410) 786-1694, for primary care issues related to 
behavioral health integration services.
    Geri Mondowney, (410) 786-4584, and Donta Henson, (410) 786-1947, 
for issues related to geographic practice cost indices.
    Michael Soracoe, (410) 786-6312, for issues related to the target 
and phase-in provisions, the practice expense methodology, impacts, 
conversion factor, and the valuation of surgical procedures.
    Pamela West, (410) 786-2302, for issues related to therapy.
    Patrick Sartini, (410) 786-9252, for issues related to malpractice 
RVUs, radiation treatment, mammography and other imaging services.
    Kathy Bryant, (410) 786-3448, for issues related to collecting data 
on resources used in furnishing global services.
    Donta Henson, (410) 786-1947, for issues related to pathology and 
ophthalmology services.
    Corinne Axelrod, (410) 786-5620, for issues related to rural health 
clinics or federally qualified health centers for comprehensive care 
management services furnished incident to.
    Simone Dennis (410) 786-8409, for issues related to FQHC-specific 
market basket.
    JoAnna Baldwin (410) 786-7205, or Sarah Fulton (410) 786-2749, for 
issues related to appropriate use criteria for advanced diagnostic 
imaging services.
    Erin Skinner (410) 786-0157, for issues related to open payments.
    Sean O'Grady (410) 786-2259, or Julie Uebersax (410) 786-9284, for 
issues related to release of pricing data from Medicare Advantage bids 
and release of medical loss ratio data submitted by Medicare Advantage 
organizations and Part D sponsors.
    Sara Vitolo (410) 786-5714, for issues related to prohibition on 
billing qualified Medicare beneficiary individuals for Medicare cost-
sharing.
    Michelle Peterman (410) 786-2591, for issues on the technical 
correction for PQRS.
    Katie Mucklow (410) 786-0537 or John Spiegel (410) 786-1909, for 
issues related to Provider Enrollment Medicare Advantage Program.
    Jen Zhu (410) 786-3725, Carlye Burd (410) 786-1972, or Nina Brown 
(410)

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786-6103, for issues related to Medicare Diabetes Prevention Program 
model expansion.
    Rabia Khan or Terri Postma, (410) 786-8084 or [email protected], for 
issues related to Medicare Shared Savings Program.
    Sabrina Ahmed (410) 786-7499, or Fiona Larbi (410) 786-7224, for 
issues related to Value-based Payment Modifier and Physician Feedback 
Program.
    Lisa Ohrin Wilson (410) 786-8852, or Gabriel Scott (410) 786-3928, 
for issues related to physician self-referral updates.

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.

Table of Contents

I. Executive Summary and Background
    A. Executive Summary
    B. Background
II. Provisions of the Proposed Rule for PFS
    A. Determination of Practice Expense Relative Value Units (PE 
RVUs)
    B. Determination of Malpractice Relative Value Units (MRVUs)
    C. Medicare Telehealth Services
    D. Potentially Misvalued Services Under the Physician Fee 
Schedule
    1. Background
    2. Progress in Identifying and Reviewing Potentially Misvalued 
Codes
    3. Validating RVUs of Potentially Misvalued Codes
    4. CY 2017 Identification and Review of Potentially Misvalued 
Services
    5. Valuing Services That Include Moderate Sedation as an 
Inherent Part of Furnishing the Procedure
    6. Collecting Data on Resources Used in Furnishing Global 
Services
    E. Improving Payment Accuracy for Primary Care, Care Management 
Services, and Patient-Centered Services
    F. Improving Payment Accuracy for Preventive Services: Diabetes 
Self-Management Training (DSMT)
    G. Target for Relative Value Adjustments for Misvalued Services
    H. Phase-In of Significant RVU Reductions
    I. Geographic Practice Cost Indices (GPCIs)
    J. Payment Incentive for the Transition From Traditional X-Ray 
Imaging to Digital Radiography and Other Imaging Services
    K. Procedures Subject to the Multiple Procedure Payment 
Reduction (MPPR) and the OPPS Cap
    L. Valuation of Specific Codes
III. Other Provisions of the Proposed Rule for PFS
    A. Chronic Care Management (CCM) and Transitional Care 
Management (TCM) Supervision Requirements in Rural Health Clinics 
(RHCs) and Federally Qualified Health Centers (FQHCs)
    B. FQHC-Specific Market Basket
    C. Appropriate Use Criteria for Advanced Diagnostic Imaging 
Services
    D. Reports of Payments or Other Transfers of Value to Covered 
Recipients: Solicitation of Public Comments
    E. Release of Part C Medicare Advantage Bid Pricing Data and 
Part C and Part D Medical Loss Ratio (MLR) Data
    F. Prohibition on Billing Qualified Medicare Beneficiary 
Individuals for Medicare Cost-Sharing
    G. Recoupment or Offset of Payments to Providers Sharing the 
Same Taxpayer Identification Number
    H. Accountable Care Organization (ACO) Participants Who Report 
Physician Quality Reporting System (PQRS) Quality Measures 
Separately
    I. Medicare Advantage Provider Enrollment
    J. Proposed Expansion of the Diabetes Prevention Program (DPP) 
Model
    K. Medicare Shared Savings Program
    L. Value-Based Payment Modifier and Physician Feedback Program
    M. Physician Self-referral Updates
IV. Collection of Information Requirements
V. Response to Comments
VI. Regulatory Impact Analysis

Regulations Text

Acronyms

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

A1c--Hemoglobin A1c
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
CoA--Certificate of Accreditation
CoC--Certificate of Compliance
CoR--Certificate of Registration
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 2015 American Medical 
Association. All rights reserved.)
CQM--Clinical quality measure
CSW--Clinical social worker
CT--Computed tomography
CW--Certificate of Waiver
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
ED--Emergency Department
EHR--Electronic health record
E/M--Evaluation and management
EMT--Emergency Medical Technician
EP--Eligible professional
eRx--Electronic prescribing
ESRD--End-stage renal disease
FAR--Federal Acquisition Regulations
FDA--Food and Drug Administration
FFS--Fee-for-service
FQHC--Federally qualified health center
FR--Federal Register
GAF--Geographic adjustment factor
GAO--Government Accountability Office
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
MACRA--Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. 
114-10)
MAP--Measure Applications Partnership
MAPCP--Multi-payer Advanced Primary Care Practice
MAV--Measure application validity [process]
MCP--Monthly capitation payment

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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
PPM--Provider-Performed Microscopy
PQRS--Physician Quality Reporting System
PPIS--Physician Practice Expense Information Survey
PT--Physical therapy
PT--Proficiency Testing
PT/INR--Prothrombin Time/International Normalized Ratio
PY--Performance year
QA--Quality Assessment
QC--Quality Control
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 proposed rule 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 2017 PFS Proposed Rule, refer 
to item CMS-1654-P. 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 Jessica Bruton at 
(410) 786-5991.

CPT (Current Procedural Terminology) Copyright Notice

    Throughout this proposed rule, 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 proposed rule proposes to revise payment polices under 
the Medicare Physician Fee Schedule (PFS) and make other policy changes 
related to Medicare Part B payment. These changes would be applicable 
to services furnished in CY 2017. In addition, this proposed rule 
includes proposals related to: the Medicare Shared Savings Program and 
release of pricing data submitted to CMS by Medicare Advantage (MA) 
organizations; and medical loss ratio reports submitted by MA plans and 
Part D plans. These additional proposals are addressed in section III. 
of this proposed rule.
2. Summary of the Major Provisions
    The statute 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 statute 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 proposed rule, we are proposing to 
establish RVUs for CY 2017 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 proposed rule 
includes discussions and proposals regarding:

     Potentially Misvalued PFS Codes.
     Telehealth Services.
     Establishing Values for New, Revised, and Misvalued 
Codes.
     Target for Relative Value Adjustments for Misvalued 
Services.
     Phase-in of Significant RVU Reductions.
     Chronic Care Management (CCM) and Transitional Care 
Management (TCM) Supervision Requirements in Rural Health Clinics 
(RHCs) and Federally Qualified Health Centers (FQHCs).
     FQHC-Specific Market Basket.
     Appropriate Use Criteria for Advanced Diagnostic 
Imaging Services.
     Reports of Payments or Other Transfers of Value to 
Covered Recipients: Solicitation of Public Comments.
     Release of Part C Medicare Advantage Bid Pricing Data 
and Part C and Part D Medical Loss Ratio (MLR) Data.
     Prohibition on Billing Qualified Medicare Beneficiary 
Individuals for Medicare Cost-Sharing.
     Recoupment or Offset of Payments to Providers Sharing 
the Same Taxpayer Identification Number.
     Accountable Care Organization (ACO) Participants Who 
Report Physician Quality Reporting System (PQRS) Quality Measures 
Separately.
     Medicare Advantage Provider Enrollment.
     Proposed Expansion of the Diabetes Prevention Program 
(DPP) Model.
     Medicare Shared Savings Program.
     Value-Based Payment Modifier and the Physician Feedback 
Program.
     Physician Self-referral Updates.
3. Summary of Costs and Benefits
    The statute requires that annual adjustments to PFS RVUs may not 
cause annual estimated expenditures to differ by more than $20 million 
from what

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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 proposed in this proposed 
rule would affect the specialty distribution of Medicare expenditures. 
When considering the combined impact of proposed work, PE, and MP RVU 
changes, the projected payment impacts would be small for most 
specialties; however, the impact would be larger for a few specialties.
    We have determined that this major proposed rule is economically 
significant. For a detailed discussion of the economic impacts, see 
section VI. of this proposed rule.

B. Background

    Since January 1, 1992, Medicare has paid for physicians' services 
under section 1848 of the Social Security Act (the Act), ``Payment for 
Physicians' Services.'' The 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 proposed rule, 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. 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.
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

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in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended 
the period during which we would accept these supplemental data through 
March 1, 2005.
    In the CY 2007 PFS final rule with comment period (71 FR 69624), we 
revised the methodology for calculating 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 proposed rule.
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 proposed rule, 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.
    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 ensure 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 
(Pub. L. 113-93, enacted on April 1, 2014) (PAMA) 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.
    Subsequently, section 202 of the Achieving a Better Life Experience 
Act of 2014 (Division B of Pub. L. 113-295, enacted December 19, 2014) 
(ABLE) 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 was finalized in the 
CY 2016 PFS final rule with comment period, and proposed revisions are 
discussed in section II.G. of this proposed rule.
    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

[[Page 46167]]

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 was finalized in the CY 2016 PFS final rule 
with comment period and proposed revisions in this year's rulemaking 
are discussed in section II.H. of this proposed rule.

II. Provisions of the Proposed Rule 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).
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 Medicare Economic Index (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). We have incorporated the available utilization data for 
interventional cardiology, which became a recognized Medicare specialty 
during 2014. We finalized the use of a proxy PE/HR value for 
interventional cardiology in the CY 2016 final rule with comment period 
(80 FR 70892), as there are no PPIS data for this specialty, by 
crosswalking the PE/HR for from

[[Page 46168]]

Cardiology, since the specialties furnish similar services in the 
Medicare claims data.
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 proposed rule 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 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.
(3) 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. 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. For this reason, 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.
(4) Services With Technical Components (TCs) and Professional 
Components (PCs)
    Diagnostic services are generally composed 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.)
(5) 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). We also direct interested readers to the file called 
``Calculation of PE RVUs under Methodology for Selected Codes'' which 
is available on our Web site under downloads for the CY 2017 PFS 
proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. This 
file contains a table that illustrates the calculation of PE RVUs as 
described below for individual PFS codes.
(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.
    Step 2: Calculate the aggregate pool of direct PE costs for the 
current year. We 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.
    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 factor 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

[[Page 46169]]

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.
    We use an average of the 3 most recent years of available Medicare 
claims data to determine the specialty mix assigned to each code. As we 
stated in the CY 2016 final rule with comment period (80 FR 70894), we 
believe that the 3-year average will mitigate the need to use dominant 
or expected specialty instead of the claims data. Because we are 
incorporating CY 2015 claims data for use in the CY 2017 proposed 
rates, we believe that the proposed PE RVUs associated with the CY 2017 
PFS proposed rule provide a first opportunity to determine whether 
service-level overrides of claims data are necessary. Currently, in the 
development of PE RVUs we apply only the overrides that also apply to 
the MP RVU calculation. Since the proposed PE RVUs include a new year 
of claims into the 3 year average for the first time, we are seeking 
comment on the proposed CY 2017 PFS rates and whether or not the 
incorporation of a new year of utilization data into a three year 
average mitigates the need for alternative service-level overrides such 
as a claims-based approach (dominant specialty) or stakeholder-
recommended approach (expected specialty) in the development of PE (and 
MP) RVUs for low-volume codes. Prior year RVUs are available at several 
locations on the PFS Web site located at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/.
    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 the download file 
called ``Calculation of PE RVUs under Methodology for Selected Codes'', 
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 8 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 5 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 sum of steps 
5 and 17 of to the proposed aggregate work RVUs scaled by the ratio of 
current aggregate PE and work RVUs. This adjustment ensures that all PE 
RVUs in the PFS account for the fact that certain specialties are 
excluded from the calculation of PE RVUs but included in maintaining 
overall PFS budget neutrality. (See ``Specialties excluded from 
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.

[[Page 46170]]



       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-orthotist.
54................................  Medical supply company not included
                                     in 51, 52, or 53.
55................................  Individual certified orthotist.
56................................  Individual certified prosthetist.
57................................  Individual certified prosthetist-
                                     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%.
53...................................  Discontinued Procedure.  50%....................  50%.
54...................................  Intraoperative Care      Preoperative +           Preoperative +
                                        only.                    Intraoperative           Intraoperative
                                                                 Percentages on the       portion.
                                                                 payment files used by
                                                                 Medicare contractors
                                                                 to process Medicare
                                                                 claims.
55...................................  Postoperative Care only  Postoperative            Postoperative portion.
                                                                 Percentage on the
                                                                 payment files used by
                                                                 Medicare contractors
                                                                 to process Medicare
                                                                 claims.

[[Page 46171]]

 
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 
proposed rule.
(6) 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) [supcaret] 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.
    Stakeholders have often suggested that particular equipment items 
are used less frequently than 50 percent of the time in the typical 
setting and that CMS should reduce the equipment utilization rate based 
on these recommendations. We appreciate and share stakeholders' 
interest in using the most accurate assumption regarding the equipment 
utilization rate for particular equipment items. However, we believe 
that absent robust, objective, auditable data regarding the use of 
particular items, the 50 percent assumption is the most appropriate 
within the relative value system. We welcome the submission of data 
that illustrates an alternative rate.
    Maintenance: This factor for maintenance was proposed and finalized 
during rulemaking for CY 1998 PFS (62 FR 33164).
    We continue to investigate potential avenues for determining 
equipment maintenance costs across a broad range of equipment items.
    Interest Rate: In the CY 2013 PFS 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 are not proposing any changes to 
these interest rates for CY 2017.

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

d. Proposed Changes to Direct PE Inputs for Specific Services
    This section focuses on specific PE inputs. The direct PE inputs 
are included in the CY 2017 direct PE input database, which is 
available on our Web site under downloads for the CY 2017 PFS proposed 
rule 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 the CY 2015 PFS rulemaking cycle, 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 previously specified list 
of codes since these items were 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 had been become typically used in furnishing imaging 
services. However, since we did not receive any invoices for the PACS 
system prior to that year's proposed rule, we were unable to determine 
the appropriate pricing to use for the inputs. For CY 2015, we 
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 (79 FR 67561-67563). We used the 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. We received invoices from one 
stakeholder that facilitated a proposed price update for the PACS 
workstation in the CY 2016 PFS proposed rule, and we updated the price 
for the PACS workstation to $5,557 in the CY 2016 PFS final rule with 
comment period (80 FR 70899).
    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 PFS final rule with comment period (79 
FR 67563), we generally believe that workstations used by these 
practitioners

[[Page 46172]]

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, such as the view box equipment. Given that the 
majority of these services are reported globally in the nonfacility 
setting, we believe it is appropriate to include these costs as direct 
inputs for the associated HCPCS codes. Based on our established 
methodology in which single codes with professional and technical 
components are constructed by assigning work RVUs exclusively to the 
professional component and direct PE inputs exclusively to the 
technical components, these costs would be incorporated into the PE 
RVUs of the global and technical component of the HCPCS code.
    We stated in the CY 2016 PFS final rule with comment period that 
the costs of the professional workstation may be analogous to costs 
related to the use of film previously incorporated as direct PE inputs 
for these services. We also 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. Commenters responded by 
indicating their approval of the concept of a professional PACS 
workstation used for interpretation of digital images. We received 
invoices for the pricing of a professional PACS workstation, as well as 
additional invoices for the pricing of a mammography-specific version 
of the professional PACS workstation. The RUC also included these new 
equipment items in its recommendations for the CY 2017 PFS rulemaking 
cycle.
    Based on our analysis of submitted invoices, we are proposing to 
price the professional PACS workstation (ED053) at $14,616.93. We are 
not proposing a change in price for the current technical PACS 
workstation (ED050), which will remain at a price of $5,557.00.
    The price of the professional PACS workstation is based upon 
individual invoices submitted for the cost of a PC Tower ($1531.52), a 
pair of 3 MP monitors ($10,500.00 in total), a keyboard and mouse 
($84.95), a UPS power backup devices for TNP ($1098.00), and a switch 
for PACS monitors/workstations ($1402.46).
    We are proposing to add the professional PACS workstation to many 
CPT codes in the 70000 series that use the current technical PACS 
workstation (ED050) and include professional work for which such a 
workstation would be used. We are not proposing to add the equipment 
item to add-on codes since the base codes would include minutes for the 
item. We are also not proposing to add the item to codes that are 
therapeutic in nature, as the professional PACS workstation is intended 
for use in diagnostic services. We are therefore not proposing to add 
the item to codes in the Radiation Therapy section (77261 through 
77799) or the Nuclear Medicine Cardiology section (78414-78499). We 
also are not proposing to add the item to image guidance codes where 
the dominant provider is not a radiologist (77002, 77011, 77071, 77077, 
and 77081) according to the most recent year of claims data, since we 
believe a single workstation would be more typical in those cases. We 
have identified approximately 426 codes to which we are proposing to 
add a professional PACS workstation. Please see Table 4 for the full 
list of affected codes.
    For the professional PACS workstation, we are proposing to assign 
equipment time equal to the intraservice work time plus half of the 
preservice work time associated with the codes, since the work time 
generally reflects the time associated with the professional 
interpretation. We are proposing half of the preservice work time for 
the professional PACS workstation, as we do not believe that the 
practitioner would typically spend all of the preservice work period 
using the equipment. For older codes that do not have a breakdown of 
physician work time by service period, and only have an overall 
physician work time, we are proposing to use half the total work time 
as an approximation of the intraservice work time plus one half of the 
preservice work time. In our review of services that contained an 
existing PACS workstation and had a breakdown of physician work time, 
we found that half of the total time was a reasonable approximation for 
the value of intraservice work time plus one half of preservice work 
time where no such breakdown existed. We also considered using an 
equipment time formula of the physician intraservice time plus 1 minute 
(as a stand-in for the physician preservice work time). We are seeking 
public comment on the most accurate equipment time formula for the 
professional PACS workstation.
    We are seeking public comment on the proposed list of codes that 
would incorporate either the professional PACS workstation. We are 
interested in public comment on the codes for which a professional PACS 
workstation should be included, and whether one of these professional 
workstations should be included for codes outside the 70000 series. In 
cases within the 70000 series where radiologists are not the typical 
specialty reporting the code, such as CPT codes 77002 and 77011, we are 
asking whether it would be appropriate to add one of the professional 
PACS workstations to these services.

Table 4--Codes With Professional PACS Workstation in the Proposed Direct
                            PE Input Database
------------------------------------------------------------------------
                          HCPCS                            ED053 minutes
------------------------------------------------------------------------
70015...................................................              12
70030...................................................               3
70100...................................................               3
70110...................................................               4
70120...................................................               3
70130...................................................               4
70134...................................................               4
70140...................................................               3
70150...................................................               4
70160...................................................               3
70190...................................................               3
70200...................................................               4
70210...................................................               3
70220...................................................               4
70240...................................................               3
70250...................................................               4
70260...................................................               7
70300...................................................               2
70310...................................................               3
70320...................................................               3
70328...................................................               3
70330...................................................              22
70332...................................................               6
70336...................................................              20
70350...................................................               3
70355...................................................               5
70360...................................................               3
70370...................................................               4
70371...................................................               9
70380...................................................               3
70390...................................................               5
70450...................................................              12
70460...................................................              15
70470...................................................              18
70480...................................................              13
70481...................................................              13
70482...................................................              14
70490...................................................              13
70491...................................................              13
70492...................................................              14
70540...................................................              14
70542...................................................              19
70543...................................................              19
70544...................................................              13
70545...................................................              18
70546...................................................              18
70547...................................................              13
70548...................................................              20
70549...................................................              25
70551...................................................              21
70552...................................................              23
70553...................................................              28
70554...................................................              43
71010...................................................               4
71015...................................................               3

[[Page 46173]]

 
71020...................................................               4
71021...................................................               4
71022...................................................               4
71023...................................................               5
71030...................................................               4
71034...................................................               5
71035...................................................               3
71100...................................................               5
71101...................................................               4
71110...................................................               4
71111...................................................               5
71120...................................................               3
71130...................................................               3
71250...................................................              18
71260...................................................              17
71270...................................................              13
71275...................................................              28
71550...................................................              15
71551...................................................              30
71552...................................................              28
71555...................................................              33
72020...................................................               3
72040...................................................               4
72050...................................................               6
72052...................................................               6
72070...................................................               4
72072...................................................               3
72074...................................................               3
72080...................................................               3
72081...................................................               6
72082...................................................               7
72083...................................................               8
72084...................................................               9
72100...................................................               4
72110...................................................               6
72114...................................................               6
72120...................................................               4
72125...................................................              18
72126...................................................              12
72127...................................................              12
72128...................................................              18
72129...................................................              12
72130...................................................              12
72131...................................................              18
72132...................................................              12
72133...................................................              12
72141...................................................              23
72142...................................................              26
72146...................................................              23
72147...................................................              26
72148...................................................              23
72149...................................................              26
72156...................................................              28
72157...................................................              28
72158...................................................              28
72159...................................................              31
72170...................................................               5
72190...................................................               3
72191...................................................              28
72192...................................................              12
72193...................................................              12
72194...................................................              12
72195...................................................              30
72196...................................................              26
72197...................................................              30
72198...................................................              28
72200...................................................               3
72202...................................................               3
72220...................................................               3
72240...................................................              19
72255...................................................              18
72265...................................................              18
72270...................................................              23
72275...................................................              36
72285...................................................               9
72295...................................................               9
73000...................................................               3
73010...................................................               3
73020...................................................               3
73030...................................................               5
73040...................................................               6
73050...................................................               3
73060...................................................               4
73070...................................................               3
73080...................................................               4
73085...................................................               6
73090...................................................               3
73092...................................................               3
73100...................................................               4
73110...................................................               4
73115...................................................               6
73120...................................................               4
73130...................................................               4
73140...................................................               3
73200...................................................              18
73201...................................................              11
73202...................................................              12
73206...................................................              35
73218...................................................              25
73219...................................................              25
73220...................................................              30
73221...................................................              23
73222...................................................              23
73223...................................................              35
73225...................................................              31
73501...................................................               4
73502...................................................               5
73503...................................................               6
73521...................................................               5
73522...................................................               6
73523...................................................               7
73525...................................................               6
73551...................................................               4
73552...................................................               5
73560...................................................               4
73564...................................................               6
73565...................................................               4
73580...................................................               6
73590...................................................               4
73592...................................................               3
73600...................................................               4
73610...................................................               4
73615...................................................               6
73620...................................................               4
73630...................................................               4
73650...................................................               3
73660...................................................               3
73700...................................................              18
73701...................................................              11
73702...................................................              12
73706...................................................              35
73718...................................................              20
73719...................................................              25
73720...................................................              30
73721...................................................              23
73722...................................................              24
73723...................................................              32
73725...................................................              33
74000...................................................               4
74010...................................................               3
74020...................................................               4
74022...................................................               4
74150...................................................              14
74160...................................................              17
74170...................................................              21
74174...................................................              33
74175...................................................              28
74176...................................................              25
74177...................................................              28
74178...................................................              33
74181...................................................              15
74182...................................................              28
74183...................................................              35
74185...................................................              33
74210...................................................               5
74220...................................................               5
74230...................................................              12
74240...................................................               7
74241...................................................               7
74245...................................................               9
74246...................................................               7
74247...................................................              18
74249...................................................               9
74250...................................................               5
74251...................................................              33
74260...................................................               6
74261...................................................              43
74262...................................................              48
74263...................................................              42
74270...................................................               7
74280...................................................              23
74283...................................................              19
74290...................................................               4
74400...................................................              18
74410...................................................               6
74415...................................................               6
74430...................................................               4
74440...................................................               5
74455...................................................               4
74485...................................................               6
74710...................................................               4
74712...................................................              68
74740...................................................               5
75557...................................................              45
75559...................................................              58
75561...................................................              50
75563...................................................              66
75571...................................................              13
75572...................................................              25
75573...................................................              38
75574...................................................              35
75600...................................................               6
75605...................................................              11
75625...................................................              11
75630...................................................              13
75635...................................................              50
75658...................................................              13
75705...................................................              20
75710...................................................              11
75716...................................................              13
75726...................................................              11

[[Page 46174]]

 
75731...................................................              11
75733...................................................              13
75736...................................................              11
75741...................................................              13
75743...................................................              16
75746...................................................              11
75756...................................................              11
75791...................................................              33
75809...................................................               5
75820...................................................               7
75822...................................................              11
75825...................................................              11
75827...................................................              11
75831...................................................              11
75833...................................................              14
75840...................................................              11
75842...................................................              14
75860...................................................              11
75870...................................................              11
75872...................................................              11
75880...................................................               7
75885...................................................              14
75887...................................................              14
75889...................................................              11
75891...................................................              11
75893...................................................               6
75901...................................................              11
75902...................................................              13
75962...................................................               6
75966...................................................              13
75978...................................................               6
75984...................................................               8
75989...................................................              12
76000...................................................               3
76010...................................................               3
76080...................................................               6
76098...................................................               3
76100...................................................               6
76101...................................................               6
76102...................................................               6
76120...................................................               5
76376...................................................               8
76380...................................................              10
76390...................................................              28
76506...................................................              10
76536...................................................              12
76604...................................................               9
76700...................................................              14
76705...................................................              11
76770...................................................              13
76775...................................................              11
76776...................................................              13
76800...................................................              14
76801...................................................              18
76805...................................................              18
76811...................................................              35
76813...................................................              23
76815...................................................               8
76816...................................................              18
76817...................................................              13
76818...................................................              35
76819...................................................              28
76820...................................................              13
76821...................................................              13
76825...................................................              45
76826...................................................              11
76830...................................................              13
76831...................................................              30
76856...................................................              13
76857...................................................              10
76870...................................................              10
76872...................................................              20
76873...................................................              40
76881...................................................              18
76885...................................................              20
76886...................................................              15
76936...................................................              71
76942...................................................              19
76970...................................................               8
77012...................................................              11
77014...................................................               9
77021...................................................              53
77053...................................................               5
77054...................................................               5
77058...................................................              50
77059...................................................              55
77072...................................................               3
77074...................................................               5
77075...................................................               6
77076...................................................              12
77084...................................................              15
78012...................................................               8
78013...................................................              13
78014...................................................              13
78015...................................................              31
78016...................................................              49
78018...................................................              29
78070...................................................              13
78071...................................................              18
78072...................................................              23
78075...................................................              38
78102...................................................              18
78103...................................................              22
78104...................................................              20
78135...................................................              48
78140...................................................              40
78185...................................................              16
78190...................................................              40
78195...................................................              30
78201...................................................              16
78202...................................................              20
78205...................................................              20
78206...................................................              25
78215...................................................              13
78216...................................................              22
78226...................................................              13
78227...................................................              18
78230...................................................              19
78231...................................................              23
78232...................................................              28
78258...................................................              27
78261...................................................              21
78262...................................................              25
78264...................................................              13
78265...................................................              18
78266...................................................              23
78278...................................................              18
78290...................................................              18
78291...................................................              31
78300...................................................              15
78305...................................................              22
78306...................................................              11
78315...................................................              11
78320...................................................              24
78579...................................................               8
78580...................................................              13
78582...................................................              15
78597...................................................              13
78598...................................................              13
78600...................................................              16
78601...................................................              18
78605...................................................              21
78606...................................................              22
78607...................................................              29
78610...................................................              10
78630...................................................              24
78635...................................................              36
78645...................................................              32
78647...................................................              15
78650...................................................              40
78660...................................................              16
78700...................................................              17
78701...................................................              18
78707...................................................              22
78708...................................................              32
78709...................................................              40
78710...................................................              21
78740...................................................              30
78761...................................................              20
78800...................................................              28
78801...................................................              32
78802...................................................              24
78803...................................................              43
78804...................................................              35
78805...................................................              25
78806...................................................              23
78807...................................................              37
79440...................................................              24
G0389...................................................               9
767X1...................................................              13
------------------------------------------------------------------------

(2) Standardization of Clinical Labor Tasks
    As we noted in the CY 2015 PFS rule (79 FR 67640-67641), 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 preservice, service, and postservice 
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 would facilitate 
the identification of the usual numbers of minutes for clinical labor 
tasks and the identification of exceptions to the usual values. It 
would also allow for greater transparency and consistency in the 
assignment of equipment minutes based on clinical labor times. Finally, 
we believe that the

[[Page 46175]]

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 preservice time packages. We believe such standards would 
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.
    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 the CY 2015 PFS rule, 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 for each code the minutes 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 that occur in multiple codes, 
consistent with the changes that were made to individual supply and 
equipment items. In the meantime, we believe it would be appropriate to 
establish standard times for clinical labor tasks associated with all 
digital imaging services for purposes of reviewing individual services 
at present, and for possible broad-based standardization once the 
changes to the direct PE input database facilitate our ability to 
adjust time across services. During the CY 2016 PFS rulemaking cycle, 
we proposed appropriate standard minutes for five different clinical 
labor tasks associated with services that use digital imaging 
technology. In the CY 2016 PFS final rule with comment period (80 FR 
70901), we finalized appropriate standard minutes for four of those 
five activities, which are listed in Table 5.

Table 5--Clinical Labor Tasks Associated With Digital Imaging Technology
------------------------------------------------------------------------
                                                               Typical
                    Clinical labor task                        minutes
------------------------------------------------------------------------
Availability of prior images confirmed.....................            2
Patient clinical information and questionnaire reviewed by             2
 technologist, order from physician confirmed and exam
 protocoled by radiologist.................................
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...............................
------------------------------------------------------------------------

    We did not finalize standard minutes for the activity 
``Technologist QC's images in PACS, checking for all images, reformats, 
and dose page.'' We agreed with commenters that this task may require a 
variable length of time depending on the number of images to be 
reviewed. We stated 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 solicited public comment and 
feedback on this subject, with the anticipation of including a proposal 
in the CY 2017 proposed rule.
    We received many comments suggesting that this clinical labor 
activity should not have a standard time value. Commenters stated that 
the number of minutes varies significantly for different imaging 
modalities; and the time is not simply based on the quantity of images 
to be reviewed, but also the complexity of the images. The commenters 
recommended that time for this clinical labor activity should be 
assigned on a code by code basis. We agree with the commenters that the 
amount of clinical labor needed to check images in a PACS workstation 
may vary depending on the service. However, we do not believe that this 
precludes the possibility of establishing standards for clinical labor 
tasks as we have done in the past by creating multiple standard times, 
for example, those assigned to cleaning different kinds of scopes. We 
continue to believe that the use of clinical labor standards provides 
greater consistency among codes that share the same clinical labor 
tasks and can improve relativity of values among codes. We are 
proposing to establish a range of appropriate standard minutes for the 
clinical labor activity Technologist QCs images in PACS, checking for 
all images, reformats, and dose page. These standard minutes will be 
applied to new and revised codes that make use of this clinical labor 
activity when they are reviewed by us for valuation. We are proposing 2 
minutes as the standard for the simple case, 3 minutes as the standard 
for the intermediate case, and 4 minutes as the standard for the 
complex case. We are proposing the simple case of 2 minutes as the 
standard for the typical procedure code involving routine use of 
imaging. These values are based upon a review of the existing minutes 
assigned for this clinical labor activity; we have determined that 2 
minutes is the duration for most services and a small number of codes 
with more complex forms of digital imaging have higher values. We are 
proposing to use 2 minutes for services involving routine x-rays 
(simple), 3 minutes for services involving CTs and MRIs (intermediate), 
and 4 minutes for the most highly complex services which would exceed 
these more typical cases. We are soliciting comments regarding the most 
accurate category--simple, intermediate, or complex for existing codes, 
and in particular what criteria

[[Page 46176]]

might be used to identify complex cases systematically.
(b) Pathology Clinical Labor Tasks
    As with the clinical labor tasks associated with digital imaging, 
many of the currently assigned times for the specialized clinical labor 
tasks associated with pathology services are not consistent across 
codes. In reviewing past RUC 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 
high degree of specificity with which the tasks are described. We 
continue to believe that, in general, a clinical labor task will tend 
to take the same amount of time to perform as the same clinical labor 
task when it is performed in a clinically similar service.
    Therefore, we developed standard times for clinical labor tasks 
that we have used in finalizing direct PE inputs in recent years, 
starting in the CY 2012 PFS final rule with comment period (76 FR 
73213). These times were based on our review and assessment of the 
current times included for these clinical labor tasks in the direct PE 
input database. We proposed in the CY 2016 PFS proposed rule to 
establish standard times for a list of 17 clinical labor tasks related 
to pathology services, and solicited public feedback regarding our 
proposed standards. Many commenters stated in response to our proposal 
that they did not support the standardization of clinical labor 
activities across pathology services. Commenters stated that 
establishing 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 might be possible to standardize across codes with the same 
batch sizes, and urged us to consider pathology-specific details, such 
as batch size and block number, in the creation of any future standard 
times for clinical labor tasks related to 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, generally speaking, clinical labor 
tasks with the same description are comparable across different 
pathology procedures. We believe this to be true based on the 
comparability of clinical labor tasks in non-pathology services, as 
well as the high degree of specificity with which most pathology tasks 
are described relative to clinical labor tasks associated with other 
PFS services. We concurred 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 also 
believe that it is appropriate and feasible to establish ``per block'' 
standards or standards varied by batch size assumptions for many 
clinical labor activities that would 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 requested regular 
submission of these details on the PE worksheets supplied by the RUC as 
part of the review process for pathology services, as a means to assist 
in the determination of the most accurate direct PE inputs.
    We also stated our belief that many of the clinical labor 
activities for which we proposed to establish standard times were 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 that additional time may be required above 
the standard value for a clinical labor task that is part of an 
unusually complex or difficult service. As a result, we ultimately 
finalized standard times for 6 of the 17 proposed clinical labor 
activities in the CY 2016 final rule with comment period (80 FR 70902). 
We have listed the finalized standard times in Table 6. We are 
currently proposing no further action on the remaining 11 clinical 
labor activities pending further action by the RUC (see below).

    Table 6--Standard Times for Clinical Labor Tasks Associated With
                           Pathology Services
------------------------------------------------------------------------
                                                       Standard clinical
                 Clinical labor task                       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......................................
Clean room/equipment following procedure (including                  1
 any equipment maintenance that must be done after
 the procedure)......................................
Dispose of remaining specimens, spent chemicals/other                1
 consumables, and hazardous waste....................
Prepare, pack and transport specimens and records for                1
 in-house storage and external storage (where
 applicable).........................................
------------------------------------------------------------------------

    We remain committed to the process of establishing standard 
clinical labor times for tasks associated with pathology services. This 
may include establishing standards on a per-block or per-batch basis, 
as we indicated during the previous rulemaking cycle. However, we are 
aware that the PE Subcommittee of the RUC is currently working to 
standardize the pathology clinical labor activities they use in making 
their recommendations. We believe the RUC's efforts to narrow the 
current list of several hundred pathology clinical labor tasks to a 
more manageable number through the consolidation of duplicative or 
highly similar activities into a single description may serve PFS 
relativity and facilitate greater transparency in PFS ratesetting. We 
also believe that the RUC's standardization of pathology clinical labor 
tasks would facilitate our capacity to establish standard times for 
pathology clinical labor tasks in future rulemaking. Therefore, we are 
not proposing any additional change to clinical labor tasks associated 
with pathology services at this time.
(3) Equipment Recommendations for Scope Systems
    During our routine reviews of direct PE input recommendations, we 
have regularly found unexplained inconsistencies involving the use of 
scopes and the video systems associated with them. Some of the scopes 
include video systems bundled into the

[[Page 46177]]

equipment item, some of them include scope accessories as part of their 
price, and some of them are standalone scopes with no other equipment 
included. It is not always clear which equipment items related to 
scopes fall into which of these categories. We have also frequently 
found anomalies in the equipment recommendations, with equipment items 
that consist of a scope and video system bundle recommended along with 
a separate scope video system. Based on our review, the variations do 
not appear to be consistent with the different code descriptions.
    To promote appropriate relativity among the services and facilitate 
the transparency of our review process, during review of recommended 
direct PE inputs for the CY 2017 PFS proposed rule, we developed a 
structure that separates the scope and the associated video system as 
distinct equipment items for each code. Under this approach, we are 
proposing standalone prices for each scope, and separate prices for the 
video systems that are used with scopes. We would define the scope 
video system as including: (1) A monitor; (2) a processor; (3) a form 
of digital capture; (4) a cart; and (5) a printer. We believe that 
these equipment components represent the typical case for a scope video 
system. Our model for this system is the ``video system, endoscopy 
(processor, digital capture, monitor, printer, cart)'' equipment item 
(ES031), which we are proposing to re-price as part of this separate 
pricing approach. We obtained current pricing invoices for the 
endoscopy video system as part of our investigation of these issues 
involving scopes, which we are proposing to use for this re-pricing. We 
understand that there may be other accessories associated with the use 
of scopes; we are proposing to separately price any scope accessories, 
and individually evaluate their inclusion or exclusion as direct PE 
inputs for particular codes as usual under our current policy based on 
whether they are typically used in furnishing the services described by 
the particular codes.
    We are also proposing standardizing refinements to the way scopes 
have been defined in the direct PE input database. We believe that 
there are four general types of scopes: Non-video scopes; flexible 
scopes; semi-rigid scopes, and rigid scopes. Flexible scopes, semi-
rigid scopes, and rigid scopes would typically be paired with one of 
the video scope systems, while the non-video scopes would not. The 
flexible scopes can be further divided into diagnostic (or non-
channeled) and therapeutic (or channeled) scopes. We are proposing to 
identify for each anatomical application: (1) A rigid scope; (2) a 
semi-rigid scope; (3) a non-video flexible scope; (4) a non-channeled 
flexible video scope; and (5) a channeled flexible video scope. We are 
proposing to classify the existing scopes in our direct PE database 
under this classification system, to improve the transparency of our 
review process and improve appropriate relativity among the services. 
We plan to propose input prices for these equipment items through 
future rulemaking.
    We have proposed these changes only for the reviewed codes that 
make use of scopes; this applies to the codes in the Flexible 
Laryngoscopy family (CPT codes 31575, 31576, 31577, 31578, 315X1, 
315X2, 315X3, 31579) (see section II.L) and the Laryngoplasty family 
(CPT codes 31580, 31584, 31587, 315Y1, 315Y2, 315Y3, 315Y4, 315Y5, 
315Y6) (see section II.L) along with updated prices for the equipment 
items related to scopes utilized by these services. We are also 
soliciting comment on this separate pricing structure for scopes, scope 
video systems, and scope accessories, which we could consider proposing 
to apply to other PFS codes in future rulemaking.
(4) Technical Corrections to Direct PE Input Database
    Subsequent to the publication of the CY 2016 PFS final rule with 
comment period, stakeholders alerted us to several clerical 
inconsistencies in the direct PE database. We propose to correct these 
inconsistencies as described below and reflected in the CY 2017 direct 
PE input database displayed on our Web site under downloads for the CY 
2017 PFS proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
    For CY 2017, we are proposing the following technical corrections:
     For CPT codes 72081-72084, a stakeholder informed us that 
the equipment time for the PACS workstation (ED050) should be equal to 
the clinical labor during the service period; the equipment time 
formula we used for these codes for CY 2016 erroneously included 4 
minutes of preservice clinical labor. We agree with the stakeholder 
that the PACS workstation should use the standard equipment time 
formula for a PACS workstation for these codes. As a result, we are 
proposing to refine the ED050 equipment time to 21 minutes for CPT code 
72081, 36 minutes for CPT code 72082, 44 minutes for CPT code 72083, 
and 53 minutes for CPT code 72084 to reflect the clinical labor time 
associated with these codes. This same commenter also indicated that a 
number of clinical labor activities had been entered in the database in 
the incorrect service period for CPT codes 37215, 50432, 50694, and 
72081. These clinical labor activities were incorrectly listed in the 
``postservice'' period instead of the ``service post'' period. We are 
proposing to make these technical corrections as well so that the 
minutes are assigned to the appropriate service period within the 
direct PE input database.
     Another stakeholder alerted us that Ileoscopy codes 44380, 
44381 and 44382 did not include the direct PE input equipment item 
called the Gomco suction machine (EQ235) and indicated that this 
omission appeared to be inadvertent. We agree that it was. We have 
included the item EQ235 in the proposed direct PE input database for 
CPT code 44380 at a time of 29 minutes, for CPT code 44381 at a time of 
39 minutes, and to CPT code 44382 at a time of 34 minutes.
    The PE RVUs displayed in Addendum B on our Web site were calculated 
with the inputs displayed in the CY 2017 direct PE input database.
(5) Restoration of Inputs
    Several of the PE worksheets included in the RUC recommendations 
for CY 2016 contained time for the equipment item ``xenon light 
source'' (EQ167). Because there appeared 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 believed that the use of only one of these light sources 
would be typical and removed the xenon light equipment time. In the CY 
2016 PFS final rule with comment period, we restored the xenon light 
(EQ167) and removed the fiberoptic headlight (EQ170) with the same 
number of equipment minutes for CPT codes 30300, 31295, 31296, 31297, 
and 92511.
    We received comments expressing approval for the restoration of the 
xenon light. However, the commenters also stated that the two light 
sources were not duplicative, but rather, both a headlight and a xenon 
light source are required concurrently for otolaryngology procedures 
when scopes are utilized. The commenters requested that the fiberoptic 
headlight be restored to these codes.
    We agree with the commenters that the use of both light sources 
would be typical for these procedures. We are therefore proposing to 
add the fiberoptic headlight (EQ170) to CPT codes 30300,

[[Page 46178]]

31295, 31296, 31297, and 92511 at the same number of equipment minutes 
as the xenon light (EQ167).
(6) Updates to Prices for Existing Direct PE 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. For CY 2017, we are 
proposing the following price updates for existing direct PE inputs:
    Several commenters wrote to discuss the price of the Antibody 
Estrogen Receptor monoclonal (SL493). We received information including 
three invoices with new pricing information regarding the SL493 supply. 
We are proposing to use this information to propose for the supply item 
SL493 a price of $14.00 per test, which is the average price based on 
the invoices that we received in total for the item.
    We are also proposing to update the price for two supplies in 
response to the submission of new invoices. The proposed price for 
``antigen, venom'' supply (SH009) reflects an increase from $16.67 to 
$20.14 per milliliter, and the proposed price for ``antigen, venom, 
tri-vespid'' supply (SH010) reflects an increase from $30.22 to $44.05 
per milliliter.
    We routinely accept public submission of invoices as part of our 
process for developing payment rates for new, revised, and potentially 
misvalued codes. Often these invoices are submitted in conjunction with 
the RUC recommended values for the codes. For CY 2017, we note that 
some stakeholders have submitted invoices for new, revised, or 
potentially misvalued codes since the February deadline established for 
code valuation recommendations. To be included a given year's proposed 
rule, we generally need to receive invoices by the same February 
deadline. Of course, we will consider invoices submitted as public 
comments during the comment period following the publication of the 
proposed rule, and will consider any invoices received after February 
and/or outside of the public comment process as part of our established 
annual process for requests to update supply and equipment prices.

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 
expense (MP). 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 comprehensive 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).
    To determine MP RVUs for individual PFS services, our MP 
methodology uses three primary kinds of data: Specialty-level risk 
factors based on the collection of specialty-specific MP premium data 
that represent the actual expense incurred by practitioners to obtain 
MP insurance; Medicare claims data to determine service level risk 
factors based on a weighted average risk factors of the specialties 
that furnish each service, and the higher of the work RVU or clinical 
labor RVU to adjust the service level risk factor for the intensity and 
complexity of the service. Prior to CY 2016, MP RVUs were only updated 
once every 5 years, except in the case of new and revised codes.
    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 
5-year review of MP RVUs were determined either by a direct crosswalk 
from a similar source code or by a modified 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 difference in 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 were 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.
    In the CY 2016 PFS final rule with comment period (80 FR 70906 
through 70910), we finalized a policy to begin conducting annual MP RVU 
updates to reflect changes in the mix of practitioners providing 
services (using Medicare claims data), and to adjust MP RVUs for risk 
for intensity and complexity (using the work RVU or clinical labor 
RVU). We also finalized a policy to modify the specialty mix assignment 
methodology (for both MP and PE RVU calculations) to use an average of 
the 3 most recent years of data instead of a single year of data. We 
stated that under this approach, the specialty-specific risk factors 
would continue to be updated through notice and comment rulemaking 
every 5 years using updated premium data, but would remain unchanged 
between the 5-year reviews.
    For CY 2016, we did not propose to discontinue 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. We address 
comments regarding valuation of new and revised codes in section II.L 
of this proposed rule, which makes clear the codes with interim final 
values for CY 2016 have newly proposed values for CY 2017, all of which 
are again open for comment. The MP crosswalks for new and revised codes 
with interim final values were established in the CY 2016 PFS final 
rule with comment period; we will respond to comments regarding these 
interim final values in the CY 2017 PFS final rule.
2. Updating Specialty Specific Risk Factors
    The proposed CY 2017 GPCI update (eighth update), discussed in 
section II.E of this proposed rule, reflects updated MP premium data, 
collected for the purpose of proposing updates to the MP GPCIs. While 
we could use the updated MP premium data obtained for the purposes of 
the proposed eighth GPCI update to propose updates to the specialty 
risk factors used in the calculation of MP RVUs, this would not be 
consistent with the policy we previously finalized in the CY 2016 PFS 
final rule with comment period. In that rule, we indicated that the 
specialty-specific risk factors would continue to be updated through 
notice and comment rulemaking every 5 years using updated premium data, 
but would remain unchanged between the 5-year reviews. Additionally, 
consistent with the statutory requirement at section 1848(e)(1)(C) of 
the Act, only \1/2\ of the adjustment to MP GPCIs would be applied for 
CY 2017 based on the new

[[Page 46179]]

MP premium data. As such, we do not think it would be appropriate to 
propose to update the specialty risk factors for CY 2017 based on the 
updated MP premium data that is reflected in the proposed CY 2017 GPCI 
update. Therefore, we are not currently proposing to update the 
specialty-risk factors based on the new premium data collected for the 
purposes of the 3-year GPCI update for CY 2017 at this time. However, 
we seek comment on whether we should consider doing so, perhaps as 
early as for 2018, prior to the fourth review and update of MP RVUs 
that must occur no later than CY 2020.

C. 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 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).
    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 Federal Rural Health 
Policy (FORHP) 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

[[Page 46180]]

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 2016 will 
be considered for the CY 2018 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, requesters 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 Add Services to the List of Telehealth 
Services for CY 2017
    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, but also 
expedite our ability to identify codes for the telehealth list that 
resemble those services already on this list.
    We received several requests in CY 2015 to add various services as 
Medicare telehealth services effective for CY 2017. The following 
presents a discussion of these requests, and our proposals for 
additions to the CY 2017 telehealth list. Of the requests received, we 
found that four services were sufficiently similar to ESRD-related 
services currently on the telehealth list to qualify on a category 1 
basis. Therefore, we propose to add the following services to the 
telehealth list on a category 1 basis for CY 2017:
     CPT codes 90967 (End-stage renal disease (ESRD) related 
services for dialysis less than a full month of service, per day; for 
patients younger than 2 years of age; 90968 (End-stage renal disease 
(ESRD) related services for dialysis less than a full month of service, 
per day; for patients 2-11 years of age; 90969 (End-stage renal disease 
(ESRD) related services for dialysis less than a full month of service, 
per day; for patients 12-19 years of age); and 90970 (End-stage renal 
disease (ESRD) related services for dialysis less than a full month of 
service, per day; for patients 20 years of age and older).
    As we indicated in the CY 2015 final rule (80 FR 41783) for the 
ESRD-related services (CPT codes 90963-90966) added to the telehealth 
list for CY 2016, 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. This requirement also applies to CPT codes 90967-90970.
    While we did not receive a specific request, we also propose to add 
two advance care planning services to the telehealth list. We have 
determined that these services are similar to the annual wellness 
visits (HCPCS codes G0438 & G0439) currently on the telehealth list:
     CPT codes 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 care professional; first 30 minutes, face-to-
face with the patient, family member(s), or surrogate); and 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 care 
professional; each additional 30 minutes (list separately in addition 
to code for primary procedure)).
    We also received requests to add services to the telehealth list 
that do not meet our criteria for Medicare telehealth services. We are 
not proposing to add the following procedures for the reasons noted:
a. Observation Care: CPT codes--
     99217 (observation care discharge day management (this 
code is to be utilized to report all services provided to a patient on 
discharge from ``observation status'' if the discharge is on other than 
the initial date of ``observation status.'' To report services to a 
patient designated as ``observation status'' or ``inpatient status'' 
and discharged on the same date, use the codes for observation or 
inpatient care services [including admission and discharge services, 
99234-99236 as appropriate.]));
     99218 (initial observation care, per day, for the 
evaluation and management

[[Page 46181]]

of a patient which requires these three key components: A detailed or 
comprehensive history; a detailed or comprehensive examination; and 
medical decision making that is straightforward or of low complexity. 
Counseling and coordination of care with other physicians, other 
qualified health care professionals, or agencies are provided 
consistent with the nature of the problem(s) and the patient's and 
family's needs. Usually, the problem(s) requiring admission to 
``observation status'' are of low severity. Typically, 30 minutes are 
spent at the bedside and on the patient's hospital floor or unit);
     99219 (initial observation care, per day, for the 
evaluation and management of a patient, which requires these three key 
components: A comprehensive history; a comprehensive examination; and 
medical decision making of moderate complexity. Counseling and 
coordination of care with other physicians, other qualified health care 
professionals, or agencies are provided consistent with the nature of 
the problem(s) and the patient's and family's needs. Usually, the 
problem(s) requiring admission to ``observation status'' are of 
moderate severity. Typically, 50 minutes are spent at the bedside and 
on the patient's hospital floor or unit);
     99220 (initial observation care, per day, for the 
evaluation and management of a patient, which requires these three key 
components: A comprehensive history; a comprehensive examination; and 
medical decision making of high complexity. Counseling and coordination 
of care with other physicians, other qualified health care 
professionals, or agencies are provided consistent with the nature of 
the problem(s) and the patient's and family's needs. Usually, the 
problem(s) requiring admission to ``observation status'' are of high 
severity. Typically, 70 minutes are spent at the bedside and on the 
patient's hospital floor or unit);
     99224 (subsequent observation care, per day, for the 
evaluation and management of a patient, which requires at least two of 
these three key components: Problem focused interval history; problem 
focused examination; medical decision making that is straightforward or 
of low complexity. Counseling and coordination of care with other 
physicians, other qualified health care professionals, or agencies are 
provided consistent with the nature of the problem(s) and the patient's 
and family's needs. Usually, the patient is stable, recovering, or 
improving. Typically, 15 minutes are spent at the bedside and on the 
patient's hospital floor or unit);
     99225 (subsequent observation care, per day, for the 
evaluation and management of a patient, which requires at least two of 
these three key components: An expanded problem focused interval 
history; an expanded problem focused examination; medical decision 
making of moderate complexity. Counseling and coordination of care with 
other physicians, other qualified health care professionals, or 
agencies are provided consistent with the nature of the problem(s) and 
the patient's and family's needs. Usually, the patient is responding 
inadequately to therapy or has developed a minor complication. 
Typically, 25 minutes are spent at the bedside and on the patient's 
hospital floor or unit);
     99226 (subsequent observation care, per day, for the 
evaluation and management of a patient, which requires at least two of 
these three key components: A detailed interval history; a detailed 
examination; medical decision making of high complexity. Counseling and 
coordination of care with other physicians, other qualified health care 
professionals, or agencies are provided consistent with the nature of 
the problem(s) and the patient's and family's needs. Usually, the 
patient is unstable or has developed a significant complication or a 
significant new problem. Typically, 35 minutes are spent at the bedside 
and on the patient's hospital floor or unit);
     99234 (observation or inpatient hospital care, for the 
evaluation and management of a patient including admission and 
discharge on the same date, which requires these three key components: 
A detailed or comprehensive history; a detailed or comprehensive 
examination; and medical decision making that is straightforward or of 
low complexity. Counseling and coordination of care with other 
physicians, other qualified health care professionals, or agencies are 
provided consistent with the nature of the problem(s) and the patient's 
and family's needs. Usually the presenting problem(s) requiring 
admission are of low severity. Typically, 40 minutes are spent at the 
bedside and on the patient's hospital floor or unit);
     99235 (observation or inpatient hospital care, for the 
evaluation and management of a patient including admission and 
discharge on the same date, which requires these three key components: 
A comprehensive history; a comprehensive examination; and medical 
decision making of moderate complexity. Counseling and coordination of 
care with other physicians, other qualified health care professionals, 
or agencies are provided consistent with the nature of the problem(s) 
and the patient's and family's needs. Usually the presenting problem(s) 
requiring admission are of moderate severity. Typically, 50 minutes are 
spent at the bedside and on the patient's hospital floor or unit);
     99236 (observation or inpatient hospital care, for the 
evaluation and management of a patient including admission and 
discharge on the same date, which requires these three key components: 
A comprehensive history; a comprehensive examination; and medical 
decision making of high complexity. Counseling and coordination of care 
with other physicians, other qualified health care professionals, or 
agencies are provided consistent with the nature of the problem(s) and 
the patient's and family's needs. Usually the presenting problem(s) 
requiring admission are of high severity. Typically, 55 minutes are 
spent at the bedside and on the patient's hospital floor or unit);
    The request to add these observation services referenced various 
studies supporting the use of observation units. The studies indicated 
that observation units provide safe, cost effective care to patients 
that need ongoing evaluation and treatment beyond the emergency 
department visit by having reduced hospital admissions, shorter lengths 
of stay, increased safety and reduced cost. Additional studies cited 
indicated that observation units reduce the work load on emergency 
department physicians, and reduce emergency department overcrowding.
    In the CY 2005 PFS proposed rule (69 FR 47510), we considered a 
request but did not propose to add the observation CPT codes 99217-
99220 to the list of Medicare telehealth services on a category two 
basis for the reasons described in that rule. The most recent request 
did not include any information that would cause us to question the 
previous evaluation under the category one criterion, which has not 
changed, regarding the significant differences in patient acuity 
between these services and services on the telehealth list. (69 FR 
66277) While the request included evidence of the general benefits of 
observation units, it did not include specific information 
demonstrating that the services described by these codes provided 
clinical benefit when furnished via telehealth, which is necessary for 
us to consider these codes on a category two basis. Therefore, we are 
not proposing to add these services to the list of approved telehealth 
services.

[[Page 46182]]

b. Emergency Department Visits: CPT Codes--
     99281 (emergency department visit for the evaluation and 
management of a patient, which requires these three key components: A 
problem focused history; a problem focused examination; and 
straightforward medical decision making. Counseling and coordination of 
care with other physicians, other qualified health care professionals, 
or agencies are provided consistent with the nature of the problem(s) 
and the patient's and family's needs. Usually, the presenting 
problem(s) are self-limited or minor);
     99282 (emergency department visit for the evaluation and 
management of a patient, which requires these three key components: An 
expanded problem focused history; an expanded problem focused 
examination; and medical decision making of low complexity. Counseling 
and coordination of care with other physicians, other qualified health 
care professionals, or agencies are provided consistent with the nature 
of the problem(s) and the patient's and family's needs. Usually, the 
presenting problem(s) are of low to moderate severity);
     99283 (emergency department visit for the evaluation and 
management of a patient, which requires these three key components: An 
expanded problem focused history; an expanded problem focused 
examination; and medical decision making of moderate complexity. 
Counseling and coordination of care with other physicians, other 
qualified health care professionals, or agencies are provided 
consistent with the nature of the problem(s) and the patient's and 
family's needs. Usually, the presenting problem(s) are of moderate 
severity);
     99284 (emergency department visit for the evaluation and 
management of a patient, which requires these three key components: A 
detailed history; a detailed examination; and medical decision making 
of moderate complexity. Counseling and coordination of care with other 
physicians, other qualified health care professionals, or agencies are 
provided consistent with the nature of the problem(s) and the patient's 
and family's needs. Usually, the presenting problem(s) are of high 
severity, and require urgent evaluation by the physician, or other 
qualified health care professionals but do not pose an immediate 
significant threat to life or physiologic function); and
     99285 (emergency department visit for the evaluation and 
management of a patient, which requires these three key components 
within the constraints imposed by the urgency of the patient's clinical 
condition and mental status: A comprehensive history; a comprehensive 
examination; and medical decision making of high complexity. Counseling 
and coordination of care with other physicians, other qualified health 
care professionals, or agencies are provided consistent with the nature 
of the problem(s) and the patient's and family's needs. Usually, the 
presenting problem(s) are of high severity and pose an immediate 
significant threat to life or physiologic function).
    In the CY 2005 PFS proposed rule (69 FR 47510), we considered a 
request but did not propose to add the emergency department visit CPT 
codes 99281-99285 to the list of Medicare telehealth services for the 
reasons described in that rule.
    The current request to add the emergency department E/M services 
stated that the codes are similar to outpatient visit codes (CPT codes 
99201-99215) that have been on the telehealth list since CY 2002. As we 
noted in the CY 2005 PFS final rule, while the acuity of some patients 
in the emergency department might be the same as in a physician's 
office; we believe that, in general, more acutely ill patients are more 
likely to be seen in the emergency department, and that difference is 
part of the reason there are separate codes describing evaluation and 
management visits in the Emergency Department setting. The practice of 
emergency medicine often requires frequent and fast-paced patient 
reassessments, rapid physician interventions, and sometimes the 
continuous physician interaction with ancillary staff and consultants. 
This work is distinctly different from the pace, intensity, and acuity 
associated with visits that occur in the office or outpatient setting. 
Therefore, we are not proposing to add these services to the list of 
approved telehealth services on a category one basis.
    The requester did not provide any studies supporting the clinical 
benefit of managing emergency department patients with telehealth which 
is necessary for us to consider these codes on a category two basis. 
Therefore, we are not proposing to add these services to the list of 
approved telehealth services on a category two basis.
    Many requesters of additions to the telehealth list urged us to 
consider the potential value of telehealth for providing beneficiaries 
access to needed expertise. We note that if clinical guidance or advice 
is needed in the emergency department setting, a consultation may be 
requested from an appropriate source, including consultations that are 
currently included on the list of telehealth services.
c. Critical Care Evaluation and Management: 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 believe critical care services are 
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 considered 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 that 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 furnished via telehealth is still described 
accurately by the requested code and produces a clinical benefit for 
the patient via telehealth. However, in reviewing the information 
provided by the ATA and a study titled, ``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, which 
could be indicators of clinical benefit. Therefore, we stated that 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 (80 FR 71061).
    This year, requesters cited additional studies to support adding 
critical care

[[Page 46183]]

services on a category 2 basis. Eight of the studies dealt with 
telestroke and one with teleneurology. Telestroke is an approach that 
allows a neurologist to provide remote treatment to vascular stroke 
victims. Teleneurology offers consultations for neurological problems 
from a remote location. It may be initiated by a physician or a 
patient, for conditions such as headaches, dementia, strokes, multiple 
sclerosis and epilepsy.
    However, according to the literature, the management of stroke via 
telehealth requires more than a single practitioner and is distinct 
from the work described by the E/M codes. One additional study cited 
involved pediatric patients, while another noted that the Department of 
Defense has used telehealth to provide critical care services to 
hospitals in Guam for many years. Another reference study indicated 
that consulting intensivists thought that telemedicine consultations 
were superior to telephone consultations. In all of these cases, we 
believe the evidence demonstrates that interaction between these 
patients and distant site practitioners can have clinical benefit. 
However, we do not agree that the kinds of services described in the 
study are those that are included in the critical care E/M codes. We 
note that CPT guidance makes clear that a variety of other services are 
bundled into the payment rates for critical care, including gastric 
intubations and vascular access procedures among others We do not 
believe these kinds of services are furnished via telehealth. Public 
comments, included cited studies, can be viewed at https://www.regulations.gov/#!documentDetail;D=CMS-2015-0081-0002. Therefore, 
we are not proposing to add these services to the list of Medicare 
telehealth services for CY 2017.
    However, we are persuaded by the requests that we recognize the 
potential benefit of critical care consultation services that are 
furnished remotely. We note that there are currently codes on the 
telehealth list that could be reported when consultation services are 
furnished to critically ill patients. But in consideration of these 
public requests, we recognize that there may be greater resource costs 
involved in furnishing these services relative to the existing 
telehealth consultation codes. We also agree with the requesters that 
there may be potential benefits of remote care by specialists for these 
patients. For these reasons, we think it would be advisable to create a 
coding distinction between telehealth consultations for critically ill 
patients relative to telehealth consultations for other hospital 
patients. Such a coding distinction would allow us to recognize the 
additional resource costs in terms of time and intensity involved in 
furnishing such services under the conditions where remote, intensive 
consultation is required to provide access to appropriate care for the 
critically ill patient. We recognize that the current set of codes may 
not adequately describe such services because current E/M coding 
presumes that the services are occurring in-person, in which case the 
expert care would be furnished in a manner described by the current 
codes for critical care.
    Therefore, we are proposing to make payment through new codes, 
initial and subsequent, used to describe critical care consultations 
furnished via telehealth. This coding would provide a mechanism to 
report an intensive telehealth consultation service, initial or 
subsequent, for the critically ill patient under the circumstance when 
a qualified health care professional has in-person responsibility for 
the patient but the patient benefits from additional services from a 
distant-site consultant specially trained in providing critical care 
services. We propose limiting these services to once per day per 
patient. Like the other telehealth consultations, these services would 
be valued relative to existing E/M services (see Section II.L.2.b for 
proposed code valuations).
    More details on the new coding (GTTT1 and GTTT2) and proposed 
valuation for these services are discussed in section II.L. of this 
proposed rule and the proposed RVUs for this service are included in 
Addendum B of this proposed rule. Like the other telehealth 
consultation codes, we are proposing that these services would be added 
to the telehealth list and would be subject to the geographic and other 
statutory restrictions that apply to telehealth services.
    We request comment on this proposal, specifically as to whether the 
use of new coding would create a helpful distinction between telehealth 
consultations for critically ill patients relative to telehealth 
consultations for other hospital patients. We are also specifically 
interested in comments on how these services would be distinguished 
from existing critical care services and examples of different 
scenarios when each code would be appropriate. Such comments will help 
us to refine provider communication materials.
d. Psychological Testing: CPT Codes--
     96101 (psychological testing (includes psychodiagnostic 
assessment of emotionality, intellectual abilities, personality and 
psychopathology, e.g., MMPI, Rorschach, WAIS), per hour of the 
psychologist's or physician's time, both face-to-face time 
administering tests to the patient and time interpreting these test 
results and preparing the report);
     96102 psychological testing (includes psychodiagnostic 
assessment of emotionality, intellectual abilities, personality and 
psychopathology, e.g., MMPI and WAIS), with qualified health care 
professional interpretation and report, administered by technician, per 
hour of technician time, face-to-face);
     96118 Neuropsychological testing (e.g., Halstead-Reitan 
neuropsychological battery, Wechsler memory scales and Wisconsin card 
sorting test), per hour of the psychologist's or physician's time, both 
face-to-face time administering tests to the patient and time 
interpreting these test results and preparing the report); and,
     96119 Neuropsychological testing (e.g., Halstead-Reitan 
neuropsychological battery, Wechsler memory scales and Wisconsin card 
sorting test), with qualified health care professional interpretation 
and report, administered by technician, per hour of technician time, 
face-to-face).
    Requesters indicated that there is nothing in the Minnesota 
Multiphasic Personality Inventory (MMPI), the Rorschach inkblot test, 
the Wechsler Adult Intelligence Scale (WAIS), the Halstead-Reitan 
Neuropsychological Battery and Allied Procedures, or the Wisconsin Card 
Sorting Test (WCST), that cannot be done via telehealth nor is 
different than neurological tests done for Parkinson's disease, seizure 
medication side effects, gait assessment, nor any of the many 
neurological examinations done via telehealth with the approved 
outpatient office visit and inpatient visit CPT codes currently on the 
telehealth list. As an example, requesters indicated that the MPPI is 
administered by a computer, which generates a report that is 
interpreted by the clinical psychologist, and that the test requires no 
interaction between the clinician and the patient.
    We previously considered the request to add these codes to the 
Medicare telehealth list in the CY 2015 final rule (79 FR 67600). We 
decided not to add these codes, indicating that these services are not 
similar to other services on the telehealth list because they require 
close observation of how a patient responds. We noted that the 
requesters did not submit evidence supporting the clinical benefit of 
furnishing these services via telehealth so that we could evaluate them 
on a

[[Page 46184]]

category 2 basis. While we acknowledge that requesters believe that 
some of these tests require minimal, if any, interaction between the 
clinician and patient, we disagree. We continue to believe that 
successful completion of the tests listed as examples in these codes 
require the clinical psychologist to closely observe the patient's 
response, which cannot be performed via telehealth. Some patient 
responses, for example, sweating and fine tremors, may be missed when 
the patient and examiner are not in the same room. Therefore, we are 
not proposing to add these services to the list of Medicare telehealth 
services for CY 2017.
e. Physical and Occupational Therapy and Speech-Language Pathology 
Services: CPT Codes--
     92507 (treatment of speech, language, voice, 
communication, and auditory processing disorder; individual); and, 
92508 (treatment of speech, language, voice, communication, and 
auditory processing disorder; group, 2 or more individuals); 92521 
(evaluation of speech fluency (e.g., stuttering, cluttering)); 92522 
(evaluation of speech sound production (e.g., articulation, 
phonological process, apraxia, dysarthria)); 92523 (evaluation of 
speech sound production (e.g., articulation, phonological process, 
apraxia, dysarthria); with evaluation of language comprehension and 
expression (e.g., receptive and expressive language)); 92524 
(behavioral and qualitative analysis of voice and resonance); 
(evaluation of oral and pharyngeal swallowing function); 92526 
(treatment of swallowing dysfunction or oral function for feeding); 
92610 (evaluation of oral and pharyngeal swallowing function); CPT 
codes 97001 (physical therapy evaluation); 97002 (physical therapy re-
evaluation); 97003 (occupational therapy evaluation); 97004 
(occupational therapy re-evaluation); 97110 (therapeutic procedure, 1 
or more areas, each 15 minutes; therapeutic exercises to develop 
strength and endurance, range of motion and flexibility); 97112 
(therapeutic procedure, 1 or more areas, each 15 minutes; neuromuscular 
reeducation of movement, balance, coordination, kinesthetic sense, 
posture, or proprioception for sitting or standing activities); 97116 
(therapeutic procedure, 1 or more areas, each 15 minutes; gait training 
(includes stair climbing)); 97532 (development of cognitive skills to 
improve attention, memory, problem solving (includes compensatory 
training), direct (one-on-one) patient contact, each 15 minutes); 97533 
(sensory integrative techniques to enhance sensory processing and 
promote adaptive responses to environmental demands, direct (one-on-
one) patient contact, each 15 minutes); 97535 (self-care/home 
management training (e.g., activities of daily living (adl) and 
compensatory training, meal preparation, safety procedures, and 
instructions in use of assistive technology devices/adaptive equipment) 
direct one-on-one contact, each 15 minutes); 97537 (community/work 
reintegration training (e.g., shopping, transportation, money 
management, avocational activities or work environment/modification 
analysis, work task analysis, use of assistive technology device/
adaptive equipment), direct one-on-one contact, each 15 minutes); 97542 
(wheelchair management (e.g., assessment, fitting, training), each 15 
minutes); 97750 (physical performance test or measurement (e.g., 
musculoskeletal, functional capacity), with written report, each 15 
minutes); 97755 (assistive technology assessment (e.g., to restore, 
augment or compensate for existing function, optimize functional tasks 
and maximize environmental accessibility), direct one-on-one contact, 
with written report, each 15 minutes); 97760 Orthotic(s) management and 
training (including assessment and fitting when not otherwise 
reported), upper extremity(s), lower extremity(s) and/or trunk, each 15 
minutes); 97761 (prosthetic training, upper and lower extremity(s), 
each 15 minutes); and 97762 (checkout for orthotic/prosthetic use, 
established patient, each 15 minutes).
    The statute defines who is an authorized practitioner of telehealth 
services. Physical therapists, occupational therapists and speech-
language pathologists are not authorized practitioners of telehealth 
under section 1834(m)(4)(E) of the Act, as defined in section 
1842(b)(18)(C) of the Act. Because the above services are predominantly 
furnished by physical therapists, occupational therapists and speech-
language pathologists, we do not believe it would be appropriate to add 
them to the list of telehealth services at this time. One requester 
suggested that we can add telehealth practitioners without legislation, 
as evidenced by the addition of nutritional professionals. However, we 
do not believe we have such authority and note that nutritional 
professionals are included as practitioners in the definition at 
section 1834(b)(18)(C)(vi) of the Act, and thus, are within the 
statutory definition of telehealth practitioners. Therefore, we are not 
proposing to add these services to the list of Medicare telehealth 
services for CY 2017.
    In summary, we propose to add the following codes to the list of 
Medicare telehealth services beginning in CY 2017 on a category 1 
basis:
     ESRD-related services 90967 through 90970. 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.
     Advance care planning (CPT codes 99497 and 99498).
     Telehealth Consultations for a Patient Requiring Critical 
Care Services (GTTT1 and GTTT2)
    We remind 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 
2018, these requests must be submitted and received by December 31, 
2016. 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.
4. Place of Service (POS) Code for Telehealth Services
    CMS has received multiple requests from various stakeholders to 
establish a POS code to identify services furnished via telehealth. 
These requests have come from other payers, but may also be related to 
confusion concerning whether to use the POS where the distant site 
physician is located or the POS where the patient is located. The 
process for establishing POS codes, is managed by the POS Workgroup 
within CMS, is available for use by all payers, and is not contingent 
upon Medicare PFS rulemaking. However, if such a POS code were to be 
created, in order to make it valid for use in Medicare, we would have 
to determine the appropriate payment rules associated with the code. 
Therefore, we are proposing how a POS code for telehealth would be used 
under the PFS with the expectation that, if such a code is available, 
it would be used as early as January 1, 2017. We propose that the 
physicians or practitioners furnishing telehealth services would be 
required to report the telehealth POS code to

[[Page 46185]]

indicate that the billed service is furnished as a telehealth service 
from a distant site.
    Our proposed requirement for physicians and practitioners to use 
the telehealth POS code to report that telehealth services were 
furnished from a distant site would improve payment accuracy and 
consistency in telehealth claims submission. Currently, for services 
furnished via telehealth, we have instructed practitioners to report 
the POS code that would have been reported had the service been 
furnished in person. However, some practitioners use the POS where they 
are located when the service is furnished, while others use the POS 
corresponding to the patient's location.
    Under the PFS, the POS code determines whether a service is paid 
using the facility or non-facility practice expense relative value 
units (PE RVUs). The facility rate is paid when a service is furnished 
in a location where Medicare is making a separate facility payment to 
an entity other than the physician or practitioner that is intended to 
reflect the facility costs associated with the service (clinical staff, 
supplies and equipment). We note that in accordance with section 
1834(m)(2)(B) of the Act, the payment amount for the telehealth 
facility fee paid to the originating site is a national fee, paid 
without geographic or site of service adjustments that generally are 
made for payments to different kinds of Medicare providers and 
suppliers. In the case of telehealth services, we believe that facility 
costs (clinical staff, supplies, and equipment) associated with the 
provision of the service would generally be incurred by the originating 
site, where the patient is located, and not by the practitioner at the 
distant site. And, by statute, the Medicare pays a fee to the site that 
hosts the patient. This is analogous to the circumstances under which 
the facility PE RVUs are used to pay for services under the PFS. 
Therefore, we are proposing to use the facility PE RVUs to pay for 
telehealth services reported by physicians or practitioners with the 
telehealth POS code. We note that there are only three codes on the 
telehealth list with a difference greater than 1.0 PE RVUs between the 
facility PE RVUs and the non-facility PE RVUs. The remainder of the 
physician payments for telehealth services would be unchanged by this 
proposal. We do not anticipate that this proposal would result in a 
significant change in the total payment for the majority of services on 
the telehealth list. Moreover, many practitioners already use a 
facility POS when billing for telehealth services (those that report 
the POS of the originating site where the beneficiary is located). The 
proposed policy to use the telehealth POS code for telehealth services 
would not affect payment for telehealth services for these 
practitioners.
    The POS code for telehealth would not apply to originating sites 
billing the facility fee. Originating sites are not furnishing a 
service via telehealth since the patient is physically present in the 
facility. Accordingly, the originating site would continue to use the 
POS code that applies to the type of facility where the patient is 
located.
    We are also proposing a change to our regulation at Sec.  
414.22(b)(5)(i)(A) that addresses the PE RVUs used in different 
settings. These proposed revisions would improve clarity regarding our 
current and proposed policies. Specifically, we are proposing to amend 
this section to specify that the facility PE RVUs are paid for 
practitioner services furnished via telehealth under Sec.  410.78. In 
addition, we are proposing a change to resolve any potential ambiguity 
and clarify that payment under the PFS is made at the facility rate 
(facility PE RVUs) when services are furnished in a hospital but for 
which the hospital is not being paid. Finally, to streamline the 
existing regulation, we are also proposing to delete Sec.  414.32 of 
our regulation that refers to the calculating of payments for certain 
services prior to 2002.
    This proposed change is aligned with regulatory changes being 
proposed in the ``Medicare Program: Hospital Outpatient Prospective 
Payment and Ambulatory Surgical Center Payment Systems and Quality 
Reporting Programs; Organ Procurement Organization Reporting and 
Communication; Transplant Outcome Measures and Documentation 
Requirements; Electronic Health Record (EHR) Incentive Programs; 
Payment to Certain Off-Campus Provider-Based Departments'' proposed 
rule to implement section 603 of the Bipartisan Budget Act of 2015. In 
that proposed rule, we discuss payment rates for services furnished to 
patients in off-campus provider-based departments.

D. Potentially Misvalued Services Under the Physician Fee Schedule

1. Background
    Section 1848(c)(2)(B) of the Act directs the Secretary to conduct a 
periodic review, not less often than every 5 years, of the RVUs 
established under the PFS. Section 1848(c)(2)(K) of the Act requires 
the Secretary to periodically identify potentially misvalued services 
using certain criteria and to review and make appropriate adjustments 
to the relative values for those services. Section 1848(c)(2)(L) to the 
Act also requires the Secretary to develop a process to validate the 
RVUs of certain potentially misvalued codes under the PFS, using the 
same criteria used to identify potentially misvalued codes, and to make 
appropriate adjustments.
    As discussed in section II.B. of this proposed rule, each year we 
develop appropriate adjustments to the RVUs taking into account 
recommendations provided by the American Medical Association/Specialty 
Society Relative Value Scale Update Committee (RUC), the Medicare 
Payment Advisory Commission (MedPAC), and others. For many years, the 
RUC has provided us with recommendations on the appropriate relative 
values for new, revised, and potentially misvalued PFS services. We 
review these recommendations on a code-by-code basis and consider these 
recommendations in conjunction with analyses of other data, such as 
claims data, to inform the decision-making process as authorized by the 
law. We may also consider analyses of work time, work RVUs, or direct 
PE inputs using other data sources, such as Department of Veteran 
Affairs (VA), National Surgical Quality Improvement Program (NSQIP), 
the Society for Thoracic Surgeons (STS), and the Physician Quality 
Reporting System (PQRS) databases. In addition to considering the most 
recently available data, we also assess the results of physician 
surveys and specialty recommendations submitted to us by the RUC for 
our review. We also consider information provided by other 
stakeholders. We conduct a review to assess the appropriate RVUs in the 
context of contemporary medical practice. We note that section 
1848(c)(2)(A)(ii) of the Act authorizes the use of extrapolation and 
other techniques to determine the RVUs for physicians' services for 
which specific data are not available and requires us to take into 
account the results of consultations with organizations representing 
physicians who provide the services. In accordance with section 1848(c) 
of the Act, we determine and make appropriate adjustments to the RVUs.
    In its March 2006 Report to the Congress (http://www.medpac.gov/documents/reports/Mar06_EntireReport.pdf?sfvrsn=0), MedPAC discussed 
the importance of appropriately valuing physicians' services, noting 
that misvalued services can distort the market for physicians'

[[Page 46186]]

services, as well as for other health care services that physicians 
order, such as hospital services. In that same report MedPAC postulated 
that physicians' services under the PFS can become misvalued over time. 
MedPAC stated, ``When a new service is added to the physician fee 
schedule, it may be assigned a relatively high value because of the 
time, technical skill, and psychological stress that are often required 
to furnish that service. Over time, the work required for certain 
services would be expected to decline as physicians become more 
familiar with the service and more efficient in furnishing it.'' We 
believe services can also become overvalued when PE declines. This can 
happen when the costs of equipment and supplies fall, or when equipment 
is used more frequently than is estimated in the PE methodology, 
reducing its cost per use. Likewise, services can become undervalued 
when physician work increases or PE rises.
    As MedPAC noted in its March 2009 Report to Congress (http://www.medpac.gov/documents/reports/march-2009-report-to-congress-medicare-payment-policy.pdf?sfvrsn=0), in the intervening years since 
MedPAC made the initial recommendations, CMS and the RUC have taken 
several steps to improve the review process. Also, section 
1848(c)(2)(K)(ii) of the Act augments our efforts by directing the 
Secretary to specifically examine, as determined appropriate, 
potentially misvalued services in the following categories:
     Codes that have experienced the fastest growth.
     Codes that have experienced substantial changes in 
practice expenses.
     Codes that describe new technologies or services within an 
appropriate time period (such as 3 years) after the relative values are 
initially established for such codes.
     Codes which are multiple codes that are frequently billed 
in conjunction with furnishing a single service.
     Codes with low relative values, particularly those that 
are often billed multiple times for a single treatment.
     Codes that have not been subject to review since 
implementation of the fee schedule.
     Codes that account for the majority of spending under the 
physician fee schedule.
     Codes for services that have experienced a substantial 
change in the hospital length of stay or procedure time.
     Codes for which there may be a change in the typical site 
of service since the code was last valued.
     Codes for which there is a significant difference in 
payment for the same service between different sites of service.
     Codes for which there may be anomalies in relative values 
within a family of codes.
     Codes for services where there may be efficiencies when a 
service is furnished at the same time as other services.
     Codes with high intra-service work per unit of time.
     Codes with high practice expense relative value units.
     Codes with high cost supplies.
     Codes as determined appropriate by the Secretary.
    Section 1848(c)(2)(K)(iii) of the Act also specifies that the 
Secretary may use existing processes to receive recommendations on the 
review and appropriate adjustment of potentially misvalued services. In 
addition, the Secretary may conduct surveys, other data collection 
activities, studies, or other analyses, as the Secretary determines to 
be appropriate, to facilitate the review and appropriate adjustment of 
potentially misvalued services. This section also authorizes the use of 
analytic contractors to identify and analyze potentially misvalued 
codes, conduct surveys or collect data, and make recommendations on the 
review and appropriate adjustment of potentially misvalued services. 
Additionally, this section provides that the Secretary may coordinate 
the review and adjustment of any RVU with the periodic review described 
in section 1848(c)(2)(B) of the Act. Section 1848(c)(2)(K)(iii)(V) of 
the Act specifies that the Secretary may make appropriate coding 
revisions (including using existing processes for consideration of 
coding changes) that may include consolidation of individual services 
into bundled codes for payment under the physician fee schedule.
2. Progress in Identifying and Reviewing Potentially Misvalued Codes
    To fulfill our statutory mandate, we have identified and reviewed 
numerous potentially misvalued codes as specified in section 
1848(c)(2)(K)(ii) of the Act, and we plan to continue our work 
examining potentially misvalued codes in these areas over the upcoming 
years. As part of our current process, we identify potentially 
misvalued codes for review, and request recommendations from the RUC 
and other public commenters on revised work RVUs and direct PE inputs 
for those codes. The RUC, through its own processes, also identifies 
potentially misvalued codes for review. Through our public nomination 
process for potentially misvalued codes established in the CY 2012 PFS 
final rule with comment period, other individuals and stakeholder 
groups submit nominations for review of potentially misvalued codes as 
well.
    Since CY 2009, as a part of the annual potentially misvalued code 
review and Five-Year Review process, we have reviewed over 1,671 
potentially misvalued codes to refine work RVUs and direct PE inputs. 
We have assigned appropriate work RVUs and direct PE inputs for these 
services as a result of these reviews. A more detailed discussion of 
the extensive prior reviews of potentially misvalued codes is included 
in the CY 2012 PFS final rule with comment period (76 FR 73052 through 
73055). In the CY 2012 PFS final rule with comment period, we finalized 
our policy to consolidate the review of physician work and PE at the 
same time (76 FR 73055 through 73958), and established a process for 
the annual public nomination of potentially misvalued services.
    In the CY 2013 PFS final rule with comment period, we built upon 
the work we began in CY 2009 to review potentially misvalued codes that 
have not been reviewed since the implementation of the PFS (so-called 
``Harvard-valued codes''). In CY 2009, we requested recommendations 
from the RUC to aid in our review of Harvard-valued codes that had not 
yet been reviewed, focusing first on high-volume, low intensity codes 
(73 FR 38589). In the fourth Five-Year Review (76 FR 32410), we 
requested recommendations from the RUC to aid in our review of Harvard-
valued codes with annual utilization of greater than 30,000. In the CY 
2013 PFS final rule with comment period, we identified specific 
Harvard-valued services with annual allowed charges that total at least 
$10,000,000 as potentially misvalued. In addition to the Harvard-valued 
codes, in the CY 2013 PFS final rule with comment period we finalized 
for review a list of potentially misvalued codes that have stand-alone 
PE (codes with physician work and no listed work time and codes with no 
physician work that have listed work time).
    In the CY 2016 PFS final rule with comment period, we finalized for 
review a list of potentially misvalued services, which included eight 
codes in the neurostimulators analysis-programming family (CPT 95970-
95982). We also finalized as potentially misvalued 103 codes identified 
through

[[Page 46187]]

our screen of high expenditure services across specialties.
3. Validating RVUs of Potentially Misvalued Codes
    Section 1848(c)(2)(L) of the Act requires the Secretary to 
establish a formal process to validate RVUs under the PFS. The Act 
specifies that the validation process may include validation of work 
elements (such as time, mental effort and professional judgment, 
technical skill and physical effort, and stress due to risk) involved 
with furnishing a service and may include validation of the pre-, post-
, and intra-service components of work. The Secretary is directed, as 
part of the validation, to validate a sampling of the work RVUs of 
codes identified through any of the 16 categories of potentially 
misvalued codes specified in section 1848(c)(2)(K)(ii) of the Act. 
Furthermore, the Secretary may conduct the validation using methods 
similar to those used to review potentially misvalued codes, including 
conducting surveys, other data collection activities, studies, or other 
analyses as the Secretary determines to be appropriate to facilitate 
the validation of RVUs of services.
    In the CY 2011 PFS proposed rule (75 FR 40068) and CY 2012 PFS 
proposed rule (76 FR 42790), we solicited public comments on possible 
approaches, methodologies, and data sources that we should consider for 
a validation process. A summary of the comments along with our 
responses are included in the CY 2011 PFS final rule with comment 
period (75 FR 73217) and the CY 2012 PFS final rule with comment period 
(73054 through 73055).
    We contracted with two outside entities to develop validation 
models for RVUs.
    Given the central role of time in establishing work RVUs and the 
concerns that have been raised about the current time values used in 
rate setting, we contracted with the Urban Institute to develop 
empirical time estimates based on data collected from several health 
systems with multispecialty group practices. The Urban Institute 
collected data by directly observing the delivery of services and 
through the use of electronic health records for services selected by 
the contractor in consultation with CMS and is using this data to 
produce objective time estimates. We expect the final Urban Institute 
report will be made available on the CMS Web site later this summer.
    The second contract is with the RAND Corporation, which used 
available data to build a validation model to predict work RVUs and the 
individual components of work RVUs, time and intensity. The model 
design was informed by the statistical methodologies and approach used 
to develop the initial work RVUs and to identify potentially misvalued 
procedures under current CMS and RUC processes. RAND consulted with a 
technical expert panel on model design issues and the test results. The 
RAND report is available under downloads on the Web site 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-Items/CMS-1612-FC.html.
    After posting RAND's report on the models and results on our Web 
site, we received comments indicating that the models did not 
adequately address global surgery services due to the lack of available 
data on included visits. Therefore, we modified the RAND contract to 
include the development of G-codes that could be used to collect data 
about post-surgical follow-up visits on Medicare claims to meet the 
requirements in section 1848(c)(8)(B) of the Act regarding collection 
of data on global services. Our proposals related to this data 
collection requirement are discussed in section II.D.6. Also, the data 
from this project would provide information that would allow the time 
for these services to be included in the model for validating RVUs.
4. CY 2017 Identification and Review of Potentially Misvalued Services
a. 0-day Global Services That Are Typically Billed With an Evaluation 
and Management (E/M) Service With Modifier 25
    Because routine E/M is included in the valuation of codes with 0-, 
10-, and 90-day global periods, Medicare only makes separate payment 
for E/M services that are provided in excess of those considered 
included in the global procedure. In such cases, the physician would 
report the additional E/M service with Modifier 25, which is defined as 
a significant, separately identifiable E/M service performed by the 
same physician on the day of a procedure above and beyond other 
services provided or beyond the usual preservice and postservice care 
associated with the procedure that was performed. Modifier 25 allows 
physicians to be paid for E/M services that would otherwise be denied 
as bundled.
    In reviewing misvalued codes, both CMS and the RUC have often 
considered how frequently particular codes are reported with E/M codes 
to account for potential overlap in resources. Some stakeholders have 
expressed concern with this policy especially with regard to the 
valuation of 0-day global services that are typically billed with a 
separate E/M service with the use of Modifier 25. For example, when we 
established our valuation of the osteopathic manipulation services, 
described by CPT codes 98925-98929, we did so with the understanding 
that these codes are usually reported with E/M codes.
    Medicare claims data for CY 2015 show that 19 percent of the codes 
that describe 0-day global services were billed over 50 percent of the 
time with an E/M with Modifier 25. Since routine E/M is included in the 
valuation of 0-day global services, we believe that the routine billing 
of separate E/M services may indicate a possible problem with the 
valuation of the bundle, which is intended to include all the routine 
care associated with the service.
    We believe that reviewing the procedure codes typically billed with 
an E/M with Modifier 25 as potentially misvalued may be one avenue to 
improve valuation of these services. To develop the CY 2017 proposed 
list of potentially misvalued services in this category, we identified 
0-day global codes billed with an E/M 50 percent of the time or more, 
on the same day of service, with the same physician and same 
beneficiary. To prioritize review of these potentially misvalued 
services, we are identifying the codes that have not been reviewed in 
the last 5 years, and with greater than 20,000 allowed services. Table 
7 lists the 83 codes that meet these review criteria and we are 
proposing these as potentially misvalued for CY 2017. We request public 
input on additional ways to address appropriate valuations for all 
services that are typically billed with an E/M with Modifier 25.

[[Page 46188]]



    Table 7--0-Day Global Services That Are Typically Billed With an
        Evaluation and Management (E/M) Service With Modifier 25
------------------------------------------------------------------------
              HCPCS                           Long descriptor
------------------------------------------------------------------------
11000............................  Removal of inflamed or infected skin,
                                    up to 10% of body surface.
11100............................  Biopsy of single growth of skin or
                                    tissue.
11300............................  Shaving of 0.5 centimeters or less
                                    skin growth of the trunk, arms, or
                                    legs.
11301............................  Shaving of 0.6 centimeters to 1.0
                                    centimeters skin growth of the
                                    trunk, arms, or legs.
11302............................  Shaving of 1.1 to 2.0 centimeters
                                    skin growth of the trunk, arms, or
                                    legs.
11305............................  Shaving of 0.5 centimeters or less
                                    skin growth of scalp, neck, hands,
                                    feet, or genitals.
11306............................  Shaving of 0.6 centimeters to 1.0
                                    centimeters skin growth of scalp,
                                    neck, hands, feet, or genitals.
11307............................  Shaving of 1.1 to 2.0 centimeters
                                    skin growth of scalp, neck, hands,
                                    feet, or genitals.
11310............................  Shaving of 0.5 centimeters or less
                                    skin growth of face, ears, eyelids,
                                    nose, lips, or mouth.
11311............................  Shaving of 0.6 centimeters to 1.0
                                    centimeters skin growth of face,
                                    ears, eyelids, nose, lips, or mouth.
11312............................  Shaving of 1.1 to 2.0 centimeters
                                    skin growth of face, ears, eyelids,
                                    nose, lips, or mouth.
11740............................  Removal of blood accumulation between
                                    nail and nail bed.
11755............................  Biopsy of finger or toe nail.
11900............................  Injection of up to 7 skin growths.
11901............................  Injection of more than 7 skin
                                    growths.
12001............................  Repair of wound (2.5 centimeters or
                                    less) of the scalp, neck, underarms,
                                    trunk, arms or legs.
12002............................  Repair of wound (2.6 to 7.5
                                    centimeters) of the scalp, neck,
                                    underarms, genitals, trunk, arms or
                                    legs.
12004............................  Repair of wound (7.6 to 12.5
                                    centimeters) of the scalp, neck,
                                    underarms, genitals, trunk, arms or
                                    legs.
12011............................  Repair of wound (2.5 centimeters or
                                    less) of the face, ears, eyelids,
                                    nose, lips, or mucous membranes.
12013............................  Repair of wound (2.6 to 5.0
                                    centimeters) of the face, ears,
                                    eyelids, nose, lips, or mucous
                                    membranes.
17250............................  Application of chemical agent to
                                    excessive wound tissue.
20526............................  Injection of carpal tunnel.
20550............................  Injections of tendon sheath,
                                    ligament, or muscle membrane.
20551............................  Injections of tendon attachment to
                                    bone.
20552............................  Injections of trigger points in 1 or
                                    2 muscles.
20553............................  Injections of trigger points in 3 or
                                    more muscles.
20600............................  Aspiration or injection of small
                                    joint or joint capsule.
20604............................  Arthrocentesis, aspiration or
                                    injection, small joint or bursa
                                    (e.g., fingers, toes); with
                                    ultrasound guidance, with permanent
                                    recording and reporting.
20605............................  Aspiration or injection of medium
                                    joint or joint capsule.
20606............................  Arthrocentesis, aspiration or
                                    injection, intermediate joint or
                                    bursa (e.g., temporomandibular,
                                    acromioclavicular, wrist, elbow or
                                    ankle, olecranon bursa); with
                                    ultrasound guidance, with permanent
                                    recording and reporting.
20610............................  Aspiration or injection of large
                                    joint or joint capsule.
20611............................  Arthrocentesis, aspiration or
                                    injection, major joint or bursa
                                    (e.g., shoulder, hip, knee,
                                    subacromial bursa); with ultrasound
                                    guidance, with permanent recording
                                    and reporting.
20612............................  Aspiration or injection of cysts.
29105............................  Application of long arm splint
                                    (shoulder to hand).
29125............................  Application of non-moveable, short
                                    arm splint (forearm to hand).
29515............................  Application of short leg splint (calf
                                    to foot).
29540............................  Strapping of ankle or foot.
29550............................  Strapping of toes.
30901............................  Simple control of nose bleed.
30903............................  Complex control of nose bleed.
31231............................  Diagnostic examination of nasal
                                    passages using an endoscope.
31238............................  Control of nasal bleeding using an
                                    endoscope.
31500............................  Emergent insertion of breathing tube
                                    into windpipe cartilage using an
                                    endoscope.
31575............................  Diagnostic examination of voice box
                                    using flexible endoscope.
31579............................  Examination to assess movement of
                                    vocal cord flaps using an endoscope.
31645............................  Aspiration of lung secretions from
                                    lung airways using an endoscope.
32551............................  Removal of fluid from between lung
                                    and chest cavity, open procedure.
32554............................  Removal of fluid from chest cavity.
40490............................  Biopsy of lip.
43760............................  Change of stomach feeding, accessed
                                    through the skin.
45300............................  Diagnostic examination of rectum and
                                    large bowel using an endoscope.
46600............................  Diagnostic examination of the anus
                                    using an endoscope.
51701............................  Insertion of temporary bladder
                                    catheter.
51702............................  Insertion of indwelling bladder
                                    catheter.
51703............................  Insertion of indwelling bladder
                                    catheter.
56605............................  Biopsy of external female genitals.
57150............................  Irrigation of vagina or application
                                    of drug to treat infection.
57160............................  Fitting and insertion of vaginal
                                    support device.
58100............................  Biopsy of uterine lining.
64405............................  Injection of anesthetic agent,
                                    greater occipital nerve.
64418............................  Injection of anesthetic agent, collar
                                    bone nerve.
64455............................  Injections of anesthetic or steroid
                                    drug into nerve of foot.
65205............................  Removal of foreign body in external
                                    eye, conjunctiva.
65210............................  Removal of foreign body in external
                                    eye, conjunctiva or sclera.
65222............................  Removal of foreign body, external
                                    eye, cornea with slit lamp
                                    examination.
67515............................  Injection of medication or substance
                                    into membrane covering eyeball.
67810............................  Biopsy of eyelid.
67820............................  Removal of eyelashes by forceps.

[[Page 46189]]

 
68200............................  Injection into conjunctiva.
69100............................  Biopsy of ear.
69200............................  Removal of foreign body from ear
                                    canal.
69210............................  Removal of impact ear wax, one ear.
69220............................  Removal of skin debris and drainage
                                    of mastoid cavity.
92511............................  Examination of the nose and throat
                                    using an endoscope.
92941............................  Insertion of stent, removal of plaque
                                    or balloon dilation of coronary
                                    vessel during heart attack, accessed
                                    through the skin.
92950............................  Attempt to restart heart and lungs.
98925............................  Osteopathic manipulative treatment to
                                    1-2 body regions.
98926............................  Osteopathic manipulative treatment to
                                    3-4 body regions.
98927............................  Osteopathic manipulative treatment to
                                    5-6 body regions.
98928............................  Osteopathic manipulative treatment to
                                    7-8 body regions.
98929............................  Osteopathic manipulative treatment to
                                    9-10 body regions.
G0168............................  Wound closure utilizing tissue
                                    adhesive(s) only.
G0268............................  Removal of impacted cerumen (one or
                                    both ears) by physician on same date
                                    of service as audiologic function
                                    testing.
------------------------------------------------------------------------

b. End-Stage Renal Disease Home Dialysis Services (CPT Codes 90963 
Through 90970)
    In the CY 2004 PFS final rule with comment period (68 FR 63216), we 
established new Level II HCPCS G-codes for end-stage renal disease 
(ESRD) services and established payment for those codes through monthly 
capitation payment (MCP) rates. For ESRD center-based patients, payment 
for the G-codes varied based on the age of the beneficiary and the 
number of face-to-face visits furnished each month (for example, 1 
visit, 2-3 visits and 4 or more visits). We believed that many 
physicians would provide 4 or more visits to center-based ESRD patients 
and a small proportion will provide 2-3 visits or only one visit per 
month. Under the MCP methodology, to receive the highest payment, a 
physician would have to provide at least four ESRD-related visits per 
month. However, payment for home dialysis MCP services only varied by 
the age of beneficiary. Although we did not initially specify a 
frequency of required visits for home dialysis MCP services, we stated 
that we expect physicians to provide clinically appropriate care to 
manage the home dialysis patient.
    The CPT Editorial Panel created new CPT codes to replace the G-
codes for monthly ESRD-related services, and we accepted the new codes 
for use under the PFS in CY 2009. The CPT codes created were 90963-
90966 for monthly ESRD-related services for home dialysis patient and 
CPT codes 90967-90970 for dialysis with less than a full month of 
services.
    In a GAO report titled ``END-STAGE RENAL DISEASE Medicare Payment 
Refinements Could Promote Increased Use of Home Dialysis'' dated 
October 2015, http://www.gao.gov/products/GAO-16-125, the GAO stated 
that experts and stakeholders they interviewed indicated that home 
dialysis could be clinically appropriate for at least half of patients. 
Also, at a meeting in 2013, the chief medical officers of 14 dialysis 
facility chains jointly estimated that a realistic target for home 
dialysis would be 25 percent of dialysis patients. The GAO noted that 
CMS data showed that about 10 percent of adult Medicare dialysis 
patients use home dialysis as of March 2015.
    In the report, the GAO noted that CMS intended for the existing 
payment structure to create an incentive for physicians to prescribe 
home dialysis, because the monthly payment rate for managing the 
dialysis care of home patients, which requires a single in-person 
visit, was approximately equal to the rate for managing and providing 
two to three visits to ESRD center-based patients. However, GAO found 
that, in 2013, the rate of $237 for managing home patients was lower 
than the average payment of $266 and maximum payment of $282 for 
managing ESRD center-based patients. The GAO stated that this 
difference in payment rates may discourage physicians from prescribing 
home dialysis.
    Physician associations and other physicians GAO interviewed stated 
that the visits with home patients are often longer and more 
comprehensive than in-center visits; this is in part because physicians 
may conduct visits with individual home patients in a private setting, 
but they may be able to more easily visit multiple in-center patients 
on a single day as they receive dialysis. The physician associations 
GAO interviewed also said that they may spend a similar amount of time 
outside of visits to manage the care of home patients and that they are 
required to provide at least one visit per month to perform a complete 
assessment of the patient.
    It is important to note that, as stated in the CY 2011 PFS final 
rule with comment period (75 FR 73296), we believe that furnishing 
monthly face-to-face visits is an important component of high quality 
medical care for ESRD patients being dialyzed at home and generally 
would be consistent with the current standards of medical practice. 
However, we also acknowledged that extenuating circumstances may arise 
that make it difficult for the MCP physician (or NPP) to furnish a 
visit to a home dialysis patient every month. Therefore, we allow 
Medicare contractors the discretion to waive the requirement for a 
monthly face-to-face visit for the home dialysis MCP service on a case-
by-case basis, for example, when the MCP physician's (or NPP's) notes 
indicate that the MCP physician (or NPP) actively and adequately 
managed the care of the home dialysis patient throughout the month.
    The GAO recommended, and we agreed, that CMS examine Medicare 
policies for monthly payments to physicians to manage the care of 
dialysis patients and revise them if necessary to ensure that these 
policies are consistent with our goal of encouraging the use of home 
dialysis among patients for whom it is appropriate. Therefore, we are 
proposing to identify CPT codes 90963 through 90970 as potentially 
misvalued codes based on the volume of claims submitted for these 
services relative to those submitted for facility ESRD services.

[[Page 46190]]

c. Direct PE Input Discrepancies
i. Appropriate Direct PE Inputs Involved in Procedures Involving 
Endoscopes
    Stakeholders have raised concerns about potential inconsistencies 
with the inputs and the prices related to endoscopic procedures in the 
direct PE database. Upon review, we noted that there are 45 different 
pieces of endoscope related-equipment and 25 different pieces of 
endoscope related-supplies that are currently associated with these 
services. Relative to other kinds of equipment items in the direct PE 
input, these items are much more varied and used for many fewer 
services. Given the frequency with which individual codes can be 
reviewed and the importance of standardizing inputs for purposes of 
maintaining relativity across PFS services, we believe that this 
unusual degree of variation is likely to result in code misvaluation. 
To facilitate efficient review of this particular kind of misvaluation, 
and because we believe that stakeholders will prefer the opportunity to 
contribute to such standardization, we request that stakeholders like 
the RUC review and make recommendations on the appropriate endoscopic 
equipment and supplies typically provided in all endoscopic procedures 
for each anatomical body region, along with their appropriate prices.
ii. Appropriate Direct PE Inputs in the Facility Post-Service Period 
When Post-Operative Visits Are Excluded
    We identified a potential inconsistency in instances where there 
are direct PE inputs included in the facility postservice period even 
though post-operative visit is not included in a service. We identified 
13 codes that are affected by this issue and we are unclear if the 
discrepancy is caused by inaccurate direct PE inputs or inaccurate 
post-operative data in the work time file. We request that stakeholders 
including the RUC review these discrepancies and provide their 
recommendations on the appropriate direct PE inputs for the codes 
listed in Table 8.

  Table 8--Codes That Have Direct PE Inputs in the Facility Postservice
             Period When Post-Operative Visits Are Excluded
------------------------------------------------------------------------
             CPT Code                          Long descriptor
------------------------------------------------------------------------
21077.............................  Impression and preparation of eye
                                     socket prosthesis.
21079.............................  Impression and custom preparation of
                                     temporary oral prosthesis.
21080.............................  Impression and custom preparation of
                                     permanent oral prosthesis.
21081.............................  Impression and custom preparation of
                                     lower jaw bone prosthesis.
21082.............................  Impression and custom preparation of
                                     prosthesis for roof of mouth
                                     enlargement.
21083.............................  Impression and custom preparation of
                                     roof of mouth prosthesis.
21084.............................  Impression and custom preparation of
                                     speech aid prosthesis.
28636.............................  Insertion of hardware to foot bone
                                     dislocation with manipulation,
                                     accessed through the skin.
28666.............................  Insertion of hardware to toe joint
                                     dislocation with manipulation,
                                     accessed through the skin.
43652.............................  Incision of vagus nerves of stomach
                                     using an endoscope.
46900.............................  Chemical destruction of anal
                                     growths.
47570.............................  Connection of gall bladder to bowel
                                     using an endoscope.
66986.............................  Exchange of lens prosthesis.
------------------------------------------------------------------------

d. Insertion and Removal of Drug Delivery Implants--CPT Codes 11981 and 
11983
    Stakeholders have urged CMS to create new coding describing the 
insertion and removal of drug delivery implants for buprenorphine 
hydrochloride, formulated as a 4 rod, 80 mg, long acting subdermal drug 
implant for the treatment of opioid addiction. These stakeholders have 
suggested that current coding that describes insertion and removal of 
drug delivery implants is too broad and that new coding is needed to 
account for specific additional resource costs associated with 
particular treatment. We are identifying existing CPT codes 11981 
(Insertion, non-biodegradable drug delivery implant), 11982 (Removal, 
non-biodegradable drug delivery implant), and 11983 (Removal with 
reinsertion, non-biodegradable drug delivery implant) as potentially 
misvalued codes and are seeking comment and information regarding 
whether the current resource inputs in work and practice expense for 
these codes appropriately account for variations in the service 
relative to which devices and related drugs are inserted and removed.
5. Valuing Services That Include Moderate Sedation as an Inherent Part 
of Furnishing the Procedure
    The CPT manual identifies 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. In developing RVUs for these services, we include the 
resource costs associated with moderate sedation in the valuation since 
the CPT codes include moderate sedation as an inherent part of the 
procedure. Therefore, only the procedure code is currently reported 
when furnishing the service. Endoscopic procedures constitute a 
significant portion of the services identified in Appendix G. In the CY 
2015 PFS proposed rule (79 FR 40349), we noted that it appeared that 
practice patterns for endoscopic procedures were changing, with 
anesthesia increasingly being separately reported for these procedures, 
meaning that the resource costs associated with sedation were no longer 
incurred by the practitioner reporting the Appendix G procedure. We 
indicated that, in order to reflect apparent changes in medical 
practice, we were considering establishing a uniform approach to the 
appropriate valuation of all Appendix G services for which moderate 
sedation is no longer inherent, rather than addressing the issue at the 
procedure level as individual codes are revalued. We solicited public 
comment on approaches to the appropriate valuation of these services.
    In the CY 2016 PFS proposed rule (80 FR 41707), we again solicited 
public comment and recommendations on approaches to address the 
appropriate valuation of moderate sedation related to Appendix G 
services. In response to our comment solicitation, the CPT Editorial 
Panel created CPT codes for separately reporting moderate sedation 
services in association with the elimination of Appendix G from the CPT 
Manual for CY 2017. This coding change would provide for payment for

[[Page 46191]]

moderate sedation services only in cases where it is furnished. In 
addition to providing recommended values for the new codes used to 
separately report moderate sedation, the RUC has also provided a 
methodology for revaluing all services previously identified in 
Appendix G, without moderate sedation, in order to make appropriate 
corresponding adjustments for the procedural services. The RUC 
recommended this methodology to address moderate sedation valuation 
generally instead of recommending that it be addressed as individual 
codes are reviewed. The RUC's recommended methodology would remove work 
RVUs for moderate sedation from Appendix G codes based on a code-level 
assessment of whether the procedures are typically performed on 
straightforward patients or more difficult patients. Based on its 
recommended methodology, the RUC is recommending removal of fewer RVUs 
from each of the procedural services than it recommends for valuing the 
moderate sedation services. If we were to use the RUC-recommended 
values for both the moderate sedation codes and the Appendix G 
procedural codes without refinement, overall payments for these 
procedures, when moderate sedation is furnished, would increase 
relative to the current payment.
    We direct readers to section II.L. of this proposed rule, which 
includes more details regarding our proposed valuation of the new 
moderate sedation codes and our proposed uniform methodology for 
revaluation of the procedural codes previously identified in Appendix 
G. We believe that the RVUs assigned under the PFS should reflect the 
overall resource costs of PFS services, regardless of how many codes 
are used to report the services. Therefore, our proposed methodology 
for valuation of Appendix G procedural services would maintain current 
resource assumptions for the procedures when furnished with moderate 
sedation and redistribute the RVUs associated with moderate sedation 
(previously included in Appendix G procedural codes) to other PFS 
services. We believe that our proposed uniform methodology for 
revaluation of Appendix G services without moderate sedation is 
consistent with our general principle that the overall resource costs 
for the procedures do not change based solely on changes in coding.
    We also note that stakeholders presented information to CMS 
regarding specialty group survey data for physician work. The 
stakeholders shared survey results for physician work involved in 
furnishing moderate sedation that demonstrated a significant bimodal 
distribution between procedural services furnished by 
gastroenterologists (GI) and procedural services furnished by other 
specialties. Since we believe that gastroenterologists furnish the 
highest volume of services previously identified in Appendix G, and 
services primarily furnished by gastroenterologists prompted the 
concerns that led to our identification of changes in medical practice 
and potentially duplicative payment for these codes, we have addressed 
the variations between the GI and other specialties in our review of 
the new moderate sedation CPT codes and their recommended values. We 
again direct readers to section II.L. of this proposed rule where we 
discuss our proposal to augment the new CPT codes for moderate sedation 
with an endoscopy-specific moderate sedation code, as well as proposed 
valuations reflecting the differences in the physician survey data 
between GI and other specialties.
6. Collecting Data on Resources Used in Furnishing Global Services
a. Background
(1) Current Payment Policy for Global Packages
    Under the PFS, certain services, such as surgery, are valued and 
paid for as part of global packages that include the procedure and the 
services typically furnished in the periods immediately before and 
after the procedure. For each of these global packages, we establish a 
single PFS payment that includes payment for particular services that 
we assume to be typically furnished during the established global 
period. There are three primary categories of global packages that are 
labeled based on the number of post-operative days included in the 
global period: 0-day; 10-day; and 90-day. The 0-day global packages 
include the surgical procedure and the pre-operative and post-operative 
services furnished by the physician on the day of the service. The 10-
day global packages include these services and, in addition, visits 
related to the procedure during the 10 days following the day of the 
procedure. The 90-day global packages include the same services as the 
0-day global codes plus the pre-operative services furnished one day 
prior to the procedure and post-operative services during the 90 days 
immediately following the day of the procedure. Section 40.1 of Chapter 
12 of the Claims Processing Manual (Pub. 100-04) defines the global 
surgical package to include the following services related to the 
surgery when furnished during the global period by the same physician 
or another practitioner in the same group practice:
     Pre-operative Visits: Pre-operative visits after the 
decision is made to operate beginning with the day before the day of 
surgery for major procedures and the day of surgery for minor 
procedures;
     Intra-operative Services: Intra-operative services that 
are normally a usual and necessary part of a surgical procedure;
     Complications Following Surgery: All additional medical or 
surgical services required of the surgeon during the post-operative 
period of the surgery because of complications that do not require 
additional trips to the operating room;
     Post-operative Visits: Follow-up visits during the post-
operative period of the surgery that are related to recovery from the 
surgery;
     Post-surgical Pain Management: By the surgeon;
     Supplies: Except for those identified as exclusions; and
     Miscellaneous Services: Items such as dressing changes; 
local incisional care; removal of operative pack; removal of cutaneous 
sutures and staples, lines, wires, tubes, drains, casts, and splints; 
insertion, irrigation and removal of urinary catheters, routine 
peripheral intravenous lines, nasogastric and rectal tubes; and changes 
and removal of tracheostomy tubes.
    In the CY 2015 PFS proposed and final rules we extensively 
discussed the problems with accurate valuation of 10-and 90-day global 
packages. Our concerns included the fact that we do not use actual data 
on services furnished in order to update the rates, questions regarding 
the accuracy of our current assumptions about typical services, whether 
we will be able to adjust values on a regular basis to reflect changes 
in the practice of medicine and health care delivery, and how our 
global payment policies affect what services are actually furnished (79 
FR 67582 through 67585). In finalizing a policy to transform all 10-day 
and 90-day global codes to 0-day global codes in CY 2017 and CY 2018, 
respectively, to improve the accuracy of valuation and payment for the 
various components of global packages, including pre- and post-
operative visits and the procedure itself, we stated that we were 
adopting this policy because we believe it is critical that PFS payment 
rates be based upon RVUs that reflect the resource costs of furnishing 
the services. We also stated our belief that transforming all 10- and 
90-day global codes to 0-day global packages would:

[[Page 46192]]

     Increase the accuracy of PFS payment by setting payment 
rates for individual services that more closely reflect the typical 
resources used in furnishing the procedures;
     Avoid potentially duplicative or unwarranted payments when 
a beneficiary receives post-operative 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 post-operative 
physicians' services in the 0-day global packages; and
     Facilitate the availability of more accurate data for new 
payment models and quality research.
(2) Data Collection and Revaluation of Global Packages Required by 
MACRA
    Section 523(a) of the Medicare Access and CHIP Reauthorization Act 
of 2015 (MACRA) (Pub. L. 114-10, enacted April 16, 2015) prohibits the 
Secretary from implementing the policy, described above, that would 
have transformed all 10-day and 90-day global surgery packages to 0-day 
global packages.
    Section 1848(c)(8)(B) of the Act, which was also added by section 
523(a) of the MACRA, requires us to collect data to value surgical 
services. Section 1848(c)(8)(B)(i) of the Act requires us 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 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 and furnished during the global period, 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 
reassess the value of this collected information; and allows us to 
discontinue the collection of this information if the Secretary 
determines that we have adequate information from other sources to 
accurately value global surgical services. Section 1848(c)(8)(B)(iii) 
of the Act specifies that the Inspector General shall audit a sample of 
the collected information to verify its accuracy. Section 1848(c)(9) of 
the Act (added by section 523(b) of the MACRA) 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.
    Section 1848(c)(8)(C) of the Act, which was also added by section 
523(a) of the MACRA, 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.
(3) Public Input
    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 the CY 2015 PFS final rule 
(79 FR 67582 through 67591) the limitations and difficulties involved 
in the appropriate valuation of the global packages, especially when 
the resources and the related values assigned to the component services 
are not defined. To gain input from stakeholders on implementation of 
this data collection, we sought comment on various aspects of this task 
in the CY 2016 proposed rule (80 FR 41707 through 41708). We solicited 
comments from the public regarding the kinds of auditable, objective 
data (including the number and type of visits and other services 
furnished during the post-operative period by the practitioner 
furnishing the procedure) 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 post-operative 
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 potential methods of valuing 
the individual components of the global surgical package. A large 
number of comments expressed strong support for our proposal to hold an 
open door forum or town hall meetings with the public. Toward this end, 
we held a national listening session on January 20, 2016. Prior to the 
listening session, the topics for which guidance was being sought were 
sent electronically to those who registered for the session and made 
available on our Web site. The topics were:
     Mechanisms for capturing the types of services typically 
furnished during the global period.
     Determining the representative sample for the claims-based 
data collection.
     Determining whether we should collect data on all surgical 
services or, if not, which services should be sampled.
     Potential for designing data collection elements to 
interface with existing infrastructure used to track follow-up visits 
within the global period.
     Consideration of use of 5 percent withhold until required 
information is furnished.
    The 658 participants in the national listening session provided 
valuable information on this task. A written transcript and an audio 
recording of this session are available at https://www.cms.gov/Outreach-and-Education/Outreach/NPC/National-Provider-Calls-and-Events-Items/2016-01-20-MACRA.html.
    We considered both the comments submitted on the CY 2016 PFS 
proposed rule and the input provided at the listening session as we 
developed this proposal for data collection. When relevant, we discuss 
this stakeholder input below without distinguishing between comments on 
the proposed rule and input provided at the national listening session.
b. Data Collection Required To Accurately Value Global Packages
    Resource-based valuation of individual physicians' services is a 
critical foundation for Medicare payment to physicians. It is essential 
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 to make appropriate payment and 
preserve relativity among services. For global surgical packages, this 
requires using objective data on all of the resources used to furnish 
the services that are included in the package. Not having such data for 
some components may significantly skew relativity and create 
unwarranted payment disparities within the PFS.
    The current valuations for many services valued as global packages 
are based upon the total package as a unit rather than by determining 
the resources used in furnishing the procedure and each additional 
service/visit and summing the results. As a result, we do not have the 
same level of information about the components of global packages as we 
do for other services. To value global packages accurately and

[[Page 46193]]

relative to other procedures, we need accurate information about the 
resources--work, PEs and malpractice--used in furnishing the procedure, 
similar to what is used to determine RVUs for all services. In addition 
we need the same information on the post-operative services furnished 
in the global period (and pre-operative services the day before for 90-
day global packages). Public comments about our proposal to value all 
global services as 0-day global services and pay separately for 
additional post-operative services when furnished indicated that there 
were no reliable data available on the value of the underlying 
procedure that did not also incorporate the value of the post-operative 
services, reinforcing our view that more data are needed across the 
board.
    While we believe that most of the services furnished in the global 
period are visits for follow-up care, we do not have accurate 
information on the number and level of visits typically furnished 
because those billing for global services are not required to submit 
claims for post-operative visits. A May 2012 Office of Inspector 
General (OIG) report, entitled Cardiovascular Global Surgery Fees Often 
Did Not Reflect the Number of Evaluation and Management Services 
Provided (http://oig.hhs.gov/oas/reports/region5/50900054.pdf) found 
that for 202 of the 300 sampled cardiovascular global surgeries, the 
Medicare payment rates were based on a number of visits that did not 
reflect the actual number of services provided. Specifically, 
physicians provided fewer services than the visits included in the 
payment calculation for 132 global surgery services and provided more 
services than were included in the payment calculations for 70 
services. Similar results were found in OIG reports entitled 
``Musculoskeletal Global Surgery Fees Often Did Not Reflect The Number 
Of Evaluation And Management Services Provided'' (http://oig.hhs.gov/oas/reports/region5/50900053.asp) and ``Review of Cataract Global 
Surgeries and Related Evaluation and Management Services, Wisconsin 
Physicians Service Insurance Corporation Calendar Year 2003, March 
2007'' (http://oig.hhs.gov/oas/reports/region5/50600040.pdf).
    Claims data plays a major role in PFS rate-setting. Specifically, 
Medicare claims data is a primary driver in the allocation of indirect 
PE RVUs and MP RVUs across the codes used by particular specialties, 
and in making overall budget neutrality and relativity adjustments. In 
most cases, a claim must be filed for all visits. Such claims provide 
information such as the place of service, the type and, if relevant, 
the level of the service, the date of the service, and the specialty of 
the practitioner furnishing the services. Because we have not required 
claims reporting of visits included in global surgical packages, we do 
not have any of this information for the services bundled in the 
package.
    In addition to the lack of information about the number and level 
of visits actually furnished, the current global valuations rely on 
crosswalks to E/M visits, based upon the assumption that the resources, 
including work, used in furnishing pre- and post-operative visits are 
similar to those used in furnishing E/M visits. We are unaware of any 
studies or surveys that verify this assertion. Although we generally 
value global packages using the same direct PE inputs as are used for 
the E/M services, for services for which the RUC recommendations 
include specific PE inputs in addition to those typically included for 
E/M services, we generally use the additional inputs in the global 
package valuation. Of note, when a visit included in a global package 
would use fewer resources than a comparable E/M service, the RUC 
generally does not include recommendations to decrease the PE inputs of 
the visit included in the global package, and we have not generally 
made comparable reductions. Another inconsistency with our current 
global package valuation approach is that even though we effectively 
assume that the E/M codes are appropriate for valuing pre- and post-
operative services, the indirect PE inputs used for calculating 
payments for global services are based upon the specialty mix 
furnishing the global service, not the specialty mix of the physicians 
furnishing the E/M services, resulting in a different valuation for the 
E/M services contained in global packages than for separately billable 
E/M services. There is a critical need to obtain complete information 
if we are to value global packages accurately and in a way that 
preserves relativity across the fee schedule.
    To meet the requirement under section 1848(c)(8)(B)(i) of the Act, 
we develop, through rulemaking, a process to gather information needed 
to value surgical services. Therefore, we are proposing a rigorous data 
collection effort that we believe would provide us the data needed to 
accurately value the 4,200 codes with a 10- or 90-day global period. 
Using our authority under sections 1848(c)(2)(M) and (c)(8)(B)(i) of 
the Act, we propose to gather the data needed to determine how to best 
structure global packages with post-operative care that is typically 
delivered days, weeks or months after the procedure and whether there 
are some procedures for which accurate valuation for packaged post-
operative care is not possible. Finally, we believe these data would 
provide useful information to assess the resources used in furnishing 
pre- and post-operative care. To accurately do so, we need to know the 
volume and costs of the resources typically used. Although it may not 
be possible to gather all the necessary data and to complete the 
analysis required to re-value all of the codes currently valued as 10- 
or 90-day global packages by January 1, 2019, we believe the proposed 
data collection would provide the foundation for such valuations and 
would allow us to re-value, as appropriate, the surgical services on a 
flow basis, starting in rulemaking for CY 2019.
    We are proposing a three-pronged approach to collect timely and 
accurate data on the frequency of, and inputs involved in furnishing, 
global services including the procedure and the pre-operative visits, 
post-operative visits, and other services for which payment is included 
in the global surgical payment. By analyzing these data, we would not 
only have the most comprehensive information available on the resources 
used in furnishing these services, but also would be able to determine 
the appropriate packages for such services. Specifically, the effort 
would include:
     Comprehensive claims-based reporting about the number and 
level of pre- and post-operative visits furnished for 10- and 90-day 
global services.
     A survey of a representative sample of practitioners about 
the activities involved in and the resources used in providing a number 
of pre- and post-operative visits during a specified, recent period of 
time, such as two weeks.
     A more in-depth study, including direct observation of the 
pre- and post-operative care delivered in a small number of sites, 
including some ACOs.
    This work is critical to understanding and characterizing the work 
and other resources involved in furnishing services throughout the 
current global periods assigned to specific surgical procedures. The 
information collected and analyzed through the activities would be the 
first comprehensive look at the volume and level of services in a 
global period, and the activities and inputs involved in furnishing 
global services. The data from these activities would ultimately inform 
our revaluation of global surgical packages.

[[Page 46194]]

(1) Statutory Authority for Data Collection
    As described above, section 1848(c)(8)(B)(i) of the Act requires us 
to develop, through rulemaking, a process to gather information needed 
to value surgical services from a representative sample of physicians. 
The statute requires that the collected information include the number 
and level of medical visits furnished during the global period and 
other items and services related to the surgery and furnished during 
the global period, as appropriate.
    In addition, section 1848(c)(2)(M) of the Act, which was added to 
the Act by section 220 of the PAMA, authorizes the Secretary to collect 
or obtain information on resources directly or indirectly related to 
furnishing services for which payment is made under the PFS. Such 
information may be collected or obtained from any eligible professional 
or any other source. Information may be collected or obtained from 
surveys of physicians, other suppliers, providers of services, 
manufacturers, and vendors. That section also authorizes the Secretary 
to collect information through any other mechanism determined 
appropriate. When using information gathered under this authority, the 
statute requires the Secretary to disclose the information source and 
discuss the use of such information in the determination of relative 
values through notice and comment rulemaking.
    As described above, to gain all the information that is needed to 
determine the appropriate packages for global services and to revalue 
those services, we need to conduct a comprehensive study on the 
resources used in furnishing such services. Through such a study, we 
would have much more robust data to use in valuation than has been 
typically available. We anticipate that such efforts would inform how 
to more regularly collect data on the resources used in furnishing 
physicians' services. To the extent that such mechanisms prove 
valuable, they may be used to collect data for valuing other services. 
To achieve this significant data collection, we are proposing to 
collect data under the authority of both section 1848(c)(8)(B) and 
(c)(2)(M) of the Act.
(2) Claims-Based Data Collection
    This section describes our proposal for claims-based data 
collection that would be applicable to 10- and 90-day global services 
furnished on or after January 1, 2017, including who would be required 
to report, what they would be required to report, and how reports would 
be submitted.
(a) Information To Be Reported
    A key element of claims-based reporting is using codes that 
appropriately reflect the services furnished. In response to the 
comment solicitation in the CY 2016 PFS proposed rule and in the 
January 2016 listening session, we received numerous recommendations 
for the information to be reported on claims. The most frequently 
recommended approach was for practitioners to report the existing CPT 
code for follow-up visits included in the surgical package (CPT 99024--
Postoperative follow-up visit, normally included in the surgical 
package, to indicate that an E/M service was performed during a 
postoperative period for a reason(s) related to the original 
procedure). Others suggested using this code for outpatient visits and 
using length of stay data for estimating the number of inpatient visits 
during the global period. In response to our concerns that CPT code 
99024 would provide only the number of visits and not the level of 
visits as required by the statute, one commenter suggested using 
modifiers in conjunction with CPT code 99024 to indicate the level of 
the visit furnished. Others recommended using existing CPT codes for E/
M visits to report post-operative care. One commenter suggested that 
CMS analyze data from a sample of large systems and practices that are 
using electronic health records that require entry of some CPT code for 
every visit to capture the number of post-operative visits. After 
noting that the documentation requirements and PEs required for post-
operative visits differ from those of E/M visits outside the global 
period, one commenter encouraged us to develop a separate series of 
codes to capture the work of the post-operative services and to 
measure, not just estimate, the number and complexity of visits during 
the global period.
    Other commenters opposed the use of a new set of codes or the use 
of modifiers to report post-operative visits. Commenters also noted 
several issues for us to consider in developing data collection 
mechanisms, including that many post-operative services do not have CPT 
codes to bill separately, that surgeons perform a wide range of 
collaborative care services, and that patient factors, including 
disease severity and comorbidities, influence what post-operative care 
is furnished.
    To assist us in determining appropriate coding for claims-based 
reporting, we added a task to the RAND contract for developing a model 
to validate the RVUs in the PFS, which was awarded in response to a 
requirement in the Affordable Care Act. Comments that we received on 
RAND's report suggested the models did not adequately address global 
surgery services due to the lack of available data on included visits. 
Therefore, we modified the RAND contract to include the development of 
G-codes that could be used to collect data about post-surgical follow-
up visits on Medicare claims for valuing global services under MACRA 
and so that this time could be included in the model for validating 
RVUs.
    To inform its work, RAND conducted interviews with surgeons and 
other physicians/non-physician practitioners (NPP) who provide post-
operative care. A technical expert panel (TEP), convened by RAND, 
reviewed the findings of the interviews and provided input on how to 
best capture care provided in the post-operative period on claims.
    In summarizing the input from the interviews and the TEP, RAND 
indicated that several considerations were important in developing a 
claims-based method for capturing post-operative services. First, a 
simple system to facilitate reporting was needed. Since it was reported 
that a majority of post-operative visits are straightforward, RAND 
found that a key for any proposed system is identifying the smaller 
number of complex post-operative visits. Another consideration for RAND 
was not using the existing CPT E/M structure to capture postoperative 
care because of concerns that E/M codes are inadequately designed to 
capture the full scope of post-operative care and that using such codes 
might create confusion. Another consideration was that the TEP was most 
enthusiastic about a set of codes that used site of care, time, and 
complexity to report visits. RAND also believed it was important to 
distinguish--particularly in the inpatient setting--between 
circumstances where a surgeon is providing primary versus secondary 
management of a patient. Finally, a mechanism for reporting the 
postoperative care occurs outside of in-person visits and by clinical 
staff was needed. RAND noted that in the inpatient setting in 
particular, surgeons spend considerable time reviewing test results and 
coordinating care with other practitioners.
    After reviewing various approaches, RAND recommended a set of time-
based, post-operative visit codes that could be used for reporting care 
provided during the post-operative period.

[[Page 46195]]

    The recommended codes are distinguished by the setting of care and 
whether they are furnished by a physician/NPP or by clinical staff. All 
codes are intended to be reported in 10-minute increments. A copy of 
the report is available available on the CMS Web site under downloads 
for the CY 2017 PFS proposed rule with comment period at http://www.cms.gov/physicianfeesched/downloads/.
    Based upon the work done by RAND, we are proposing the following 
codes be used for reporting on claims the services actually furnished 
but not paid separately because they are part of global packages. No 
separate payment would be made for these codes.

                 TABLE 9--Proposed Global Service Codes
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Inpatient......................  GXXX1            Inpatient visit,
                                                   typical, per 10
                                                   minutes, included in
                                                   surgical package.
                                 GXXX2            Inpatient visit,
                                                   complex, per 10
                                                   minutes, included in
                                                   surgical package.
                                 GXXX3            Inpatient visit,
                                                   critical illness, per
                                                   10 minutes, included
                                                   in surgical package.
Office or Other Outpatient.....  GXXX4            Office or other
                                                   outpatient visit,
                                                   clinical staff, per
                                                   10 minutes, included
                                                   in surgical package.
                                 GXXX5            Office or other
                                                   outpatient visit,
                                                   typical, per 10
                                                   minutes, included in
                                                   surgical package.
                                 GXXX6            Office or other
                                                   outpatient visit,
                                                   complex, per 10
                                                   minutes, included in
                                                   surgical package.
Via Phone or Internet..........  GXXX7            Patient interactions
                                                   via electronic means
                                                   by physician/NPP, per
                                                   10 minutes, included
                                                   in surgical package.
                                 GXXX8            Patient interactions
                                                   via electronic means
                                                   by clinical staff,
                                                   per 10 minutes,
                                                   included in surgical
                                                   package.
------------------------------------------------------------------------

(i) Coding for Inpatient Global Service Visits
    Our coding proposal includes three codes for reporting inpatient 
pre- and post-operative visits that distinguish the intensity involved 
in furnishing the services. The typical inpatient visit would be 
reported using HCPCS code GXXX1, Inpatient visit, typical, per 10 
minutes, included in surgical package. The activities listed in Table 
10 are those that RAND recommended to be reported as a typical visit. 
Under our proposal, visits that involve any combination or number of 
the services listed in Table 10 would be reported using GXXX1. Based on 
the findings from the interviews and the TEP, RAND reports that the 
vast majority of inpatient post-operative visits would be expected to 
be reported using GXXX1.

     Table 10--Activities Included in Typical Visit (GXXX1 & GXXX5)
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Review vitals, laboratory or pathology results, imaging, progress notes
Take interim patient history and evaluate post-operative progress
Assess bowel function
Conduct patient examination with a specific focus on incisions and
 wounds, post-surgical pain, complications, fluid and diet intake
Manage medications (for example, wean pain medications)
Remove stitches, sutures, and staples
Change dressings
Counsel patient and family in person or via phone
Write progress notes, post-operative orders, prescriptions, and
 discharge summary
Contact/coordinate care with referring physician or other clinical staff
Complete forms or other paperwork
------------------------------------------------------------------------

    Inpatient pre- and post-operative visits that are more complex than 
typical visits but do not qualify as critical illness visits would be 
coded using GXXX2 (Inpatient visit, complex, per 10 minutes, included 
in surgical package). To report this code, the practitioner would be 
required to furnish services beyond those included in a typical visit 
and have documentation that indicates what services were provided that 
exceeded those included in a typical visit. Some circumstances that 
might merit the use of the complex visit code are secondary management 
of a critically ill patient where another provider such as an 
intensivist is providing the primary management, primary management of 
a particularly complex patient such as a patient with numerous 
comorbidities or high likelihood of significant decline or death, 
management of a significant complication, or complex procedures outside 
of the operating room (For example, significant debridement at the 
bedside).
    The highest level of inpatient pre- and post-operative visits, 
critical illness visits (GXXX3--Inpatient visit, critical illness, per 
10 minutes, included in surgical package) would be reported when the 
physician is providing primary management of the patient at a level of 
care that would be reported using critical care codes if it occurred 
outside of the global period. This involves acute impairment of one or 
more vital organ systems such that there is a high probability of 
imminent or life threatening deterioration in the patient's condition.
    Similar to how time is now counted for the existing CPT critical 
care codes, all time spent engaged in work directly related to the 
individual patient's care would count toward the time reported with the 
inpatient visit codes; this includes time spent at the immediate 
bedside or elsewhere on the floor or unit, such as time spent with the 
patient and family members, reviewing test results or imaging studies, 
discussing care with other staff, and documenting care.
(ii) Coding for Office and Other Outpatient Global Services Visits
    Our proposal includes three codes that would be used for reporting 
post-operative visits in the office or other outpatient settings. For 
these three codes, time would be defined as the face-to-face time with 
patient, which reflects the current rules for time-based outpatient 
codes.
    Under our proposal, GXXX4 (Office or other outpatient visit, 
clinical staff, per 10 minutes, included in surgical package) would be 
used for visits in which the clinical care is provided by clinical 
staff.
    GXXX5 (Office or other outpatient visit, typical, per 10 minutes, 
included in surgical package) would be used for reporting any 
combination of activities in Table 10. Based on the findings from the 
interviews and the TEP, RAND reports that the vast majority of office 
or other outpatient visits would be expected to be reported using the 
GXXX5 code.
    Accordingly, we would expect the office or other outpatient visit 
code, complex, GXXX6 (Office or other outpatient visit, complex, per 10 
minutes, included in surgical package), to be used infrequently. 
Examples of when it might be used include management of a particularly 
complex patient such as a patient with numerous comorbidities or high 
likelihood of dying, management of a significant complication, or 
management or discussion of a complex diagnosis (For

[[Page 46196]]

example, new cancer diagnosis, high risk of mortality). Practitioners 
would include documentation in the medical record as to what services 
were provided that exceeded those included in a typical visit.
    Only face-to-face time spent by the practitioner with the patient 
and their family members would count toward the time reported with the 
office visit codes. Therefore, even though the codes for both inpatient 
and outpatient settings use the same time increment, the services that 
are included differ by setting, consistent with the variation in 
existing coding conventions.
(iii) Coding for Services Furnished Via Electronic Means
    Services that are provided via phone, the internet, or other 
electronic means outside the context of a face-to-face visit would be 
reported using GXXX7 when furnished by a practitioner and GXXX8 when 
furnished by clinical staff. We are proposing that practitioners would 
not report these services if they are furnished the day before, the day 
of, or the day after a visit as we believe these would be included in 
the pre- and post-service activities in the typical visit. However, we 
are proposing that these codes be used to report non-face-to-face 
services provided by clinical staff prior to the primary procedure 
since global surgery codes are typically valued with assumptions 
regarding pre-service clinical labor time. Given that some 
practitioners have indicated that services they furnish commonly 
include activities outside the face-to-face service, we believe it is 
important to capture information about those activities in both the 
pre- and post-service periods. We believe these requirements to report 
on clinical labor time are consistent with and no more burdensome than 
those used to report clinical labor time associated with chronic care 
management services, which similarly describe care that takes place 
over more than one patient encounter.
    In addition, for services furnished via interactive 
telecommunications that meet the requirements of a Medicare telehealth 
service visit, the appropriate global service G-code for the services 
should be reported with the GT modifier to indicate that the service 
was furnished ``via interactive audio and video telecommunications 
systems.''
(iv) Benefits of G-Codes
    One commenter indicated that the documentation requirements and PEs 
for post-operative visits differ from those of other E/M visits, and 
encouraged us to develop a separate series of codes to capture the work 
of the post-operative services and to measure, not just estimate, the 
number and complexity of visits during the global period. Others 
opposed the use of a new set of codes or the use of modifiers to 
collect information on post-operative visits. After considering the 
RAND report, the comments and other stakeholder input that we have 
received, and our needs for data to fulfill our statutory mandate and 
to value surgical services appropriately, we are proposing this new set 
of codes because we believe it provides us the most robust data upon 
which to determine the most appropriate way and amounts to pay for PFS 
surgical services. We believe that the codes being proposed would 
provide data of the kind that can reasonably collected through claims 
data and that reflect what we believe are key issues in the post-
operative care where the service is provided, who furnishes the 
service, its relative complexity, and the time involved in the service.
    We seek public comments about all aspects of these codes, including 
the nature of the services described, the time increment, and any other 
areas of interest to stakeholders. We are particularly interested in 
any pre- or post-operative services furnished that could not be 
appropriately captured by these codes. Although RAND developed this set 
of codes to collect data on post-operative services, we are proposing 
to also use such codes to collect data on pre-operative services. We 
are seeking comments on whether the codes discussed above are 
appropriate for collecting data on pre-operative services or whether 
additional codes should be added to distinguish in the data collected 
the resources used for pre-operative services from those used for post-
operative services. We also seek comment on any activities that should 
be added to the list of activities in Table 10 to reflect typical pre-
operative visit activities.
(v) Alternative Approach to Coding
    As noted above, many stakeholders expressed strong support for the 
use of CPT code 99024 (Postoperative follow-up visit, normally included 
in the surgical package, to indicate that an evaluation and management 
service was performed during a postoperative period for a reason(s) 
related to the original procedure) to collect data on post-operative 
care. Stakeholders suggest that practitioners are familiar with this 
existing CPT code and the burden on practitioners would be minimized by 
only having to report that a visit occurred, not the level of the 
visit. We do not believe that this code alone would provide the 
information that we need for valuing surgical services nor do we 
believe it alone can meet the statutory requirement that we collect 
data on the number and level of visits because it does not provide any 
information beyond the number of visits. Although we are proposing to 
use the G-codes detailed above to measure pre- and post-operative 
visits, given the strong support that many stakeholders have for the 
use of CPT code 99024, we are soliciting comments specifically on how 
we could use this code to capture the statutorily required data on the 
number and level of visits and the data that we would need to value 
global services in the future.
    Some have suggested using CPT code 99024 with modifiers to indicate 
to which of the existing levels of E/M codes the visit corresponds. As 
outlined in the RAND report, E/M visits may not accurately capture what 
drives greater complexity in post-operative visits. E/M billing 
requirements are built upon complexity in elements such as medical 
history, review of systems, family history, social history, and how 
many organ systems are examined. In the context of a post-operative 
visit, many of these elements may be irrelevant. RAND also noted that 
there was significant concern from interviewees and the expert panel 
about documentation that is required for reporting E/M codes. 
Specifically, they argued that documentation requirements for surgeons 
to support the relevant E/M visit code would place undue administrative 
burden on surgeons. RAND reported that many surgeons currently use 
minimal documentation when they provide a postoperative visit. 
Moreover, to value surgical packages accurately we need to understand 
the activities involved in furnishing post-operative care and as 
discussed above, we lack information that would demonstrate that 
activities involved in post-operative care are similar to those in E/M 
services. In addition, the use of modifiers to report levels of 
services is more difficult to operationalize than using unique HCPCS 
codes. However, we would be interested in whether, and if so, why, 
practitioners would find it easier to report CPT code 99024 with 
modifiers corresponding to the proposed G-code levels rather than the 
new G-codes, as proposed. We are also seeking comment on whether 
practitioners would find it difficult to use this for pre-operative 
visits since the CPT code descriptor specifically defines it as a 
``post-operative follow-up'' service.

[[Page 46197]]

    We are also seeking comment on whether time of visits could alone 
be a proxy for the level of visit. If pre- and post-operative care 
varies only by the time the practitioner spends care so that time could 
be a proxy for complexity of the service, then we could use the 
reporting of CPT code 99024 in 10-minute increments to meet the 
statutory requirement of collecting claims-based data on the number and 
level of visits. In addition to comments on whether time is an accurate 
proxy for level of visit, we are seeking comment on the feasibility and 
desirability of reporting CPT 99024 in 10-minute increments.
c. Reporting of Claims
    We propose that the G-codes detailed above would be reported for 
services related to and within 10- and 90-day global periods for 
procedures furnished on or after January 1, 2017. Services related to 
the procedure furnished following recovery and otherwise within the 
relevant global period would be required to be reported. These codes 
would be included on claims filed through the usual process. Through 
this mechanism, we would collect all of the information reported on a 
claim for services, including information about the practitioner, 
service furnished, date of service, and the units of service. By not 
imposing special reporting requirements on the reporting of these 
codes, we intend to allow practitioners the flexibility to report the 
services on a rolling basis as they are furnished or to report all of 
the services on one claim once all have been furnished, as long as the 
filed claims meet the requirements for filing claims. As with all other 
claims, we would expect the patient's medical record to include 
documentation of the services furnished. Documentation that would be 
expected is an indication that a visit occurred or a service was 
furnished and sufficient information to determine that the appropriate 
G-code was reported.
    We are not proposing any special requirements for inclusion of 
additional data on claims that could be used for linking the post-
operative care furnished to a particular service. To use the data 
reported on post-operative visits for analysis and valuation, we will 
link the data reported on post-operative care to the related procedure 
using date of service, practitioner, beneficiary, and diagnosis. We 
believe this approach to matching will allow us to accurately link the 
preponderance of G-codes to the related procedure. However, we solicit 
comment on the extent to which post-operative care may not be 
appropriately linked to related procedures whether we should consider 
using additional variables to link these aspects of the care, and 
whether additional data should be required to be reported to enable a 
higher percentage of matching.
d. Special Provisions for Teaching Physicians
    We are seeking comment on whether special provisions are needed to 
capture the pre- and post-operative services provided by residents in 
teaching settings. If the surgeon is present for the key portion of the 
visit, should the surgeon report the joint time spent by the resident 
and surgeon with the patient? If the surgeon is not present for the key 
portion of the visit, should the resident report the service? If we 
value services without accounting for services provided by residents 
that would otherwise be furnished by the surgeon in non-teaching 
settings, subsequent valuations based upon the data we collect may 
underestimate the resources used, particularly for the types of 
surgeries typically furnished in teaching facilities. However, there is 
also a risk of overvaluing services if the reporting includes services 
that are provided by residents when those services would otherwise be 
furnished by a physician other than the surgeon, such as a hospitalist 
or intensivist, and as such, should not be valued in the global 
package.
e. Who Reports
    In both the comments on the CY 2016 proposed rule and in the 
national listening session, there was a great deal of discussion 
regarding the challenges that we are likely to encounter in obtaining 
adequate data to support appropriate valuation. Some indicated that a 
broad sample and significant cooperation from physicians would be 
necessary to understand what is happening as part of the global 
surgical package. One commenter suggested that determining a 
representative sample would be difficult and, due to the variability 
related to the patient characteristics, it would be easier to have all 
practitioners report. Many suggested that we conduct an extensive 
analysis across surgical specialties with a sample that is 
representative of the entire physician community and covers the broad 
spectrum of the various types of physician practice to avoid problems 
that biased or inadequate data collection would cause. Suggestions of 
factors to account for in selecting a sample include specialty, 
practice size (including solo practices), practice setting, volume of 
claims, urban, rural, type of surgery, and type of health care delivery 
systems. Another commenter pointed out that small sample sizes may lead 
to unreliable data. On the other hand, some commenters stated that 
requiring all practitioners to report this information is unreasonable 
and would be an insurmountable burden. A participant acknowledged that 
it would be difficult for practitioners to report on only certain 
procedures, while another stated that this would not be an 
administrative burden.
    After considering the input of stakeholders, we are proposing that 
any practitioner who furnishes a procedure that is a 10- or 90-day 
global report the pre- and post-operative services furnished on a claim 
using the codes proposed above. We agree with stakeholders that it is 
necessary to obtain data from a broad, representative sample across 
specialties, geographic location, and practice size, practice model, 
patient acuity, and differing practice patterns. However, as we 
struggled to develop a sampling approach that would result in 
statistically reliable and valid data, it became apparent that we do 
not have adequate information about how post-operative care is 
delivered, how it varies and, more specifically, what drives variation 
in post-operative care. In its work to develop the coding used for its 
study, RAND found a range of opinions on what drives variation in post-
operative care. (The report is available on the CMS Web site under 
downloads for the CY 2017 PFS proposed rule with comment period at 
http://www.cms.gov/physicianfeesched/downloads/.) Without information 
on what drives variation in pre- and post-operative care, we would have 
to speculate about the factors upon which to base a sample or assume 
that the variation in such care results from the same variables as are 
frequently identified for explaining variation in health care and 
clinical practice. In addition, we have concerns about whether a sample 
could provide sufficient volume to value accurately the global package, 
except in the case of a few high-volume procedures.
    In addition to concerns about achieving an appropriate, sufficient, 
and unbiased representative sample of practitioners, we have 
significant operational concerns with collecting data from a limited 
sample of practitioners or on a limited sample of services. These 
include how to gain sufficient information on practitioners to 
sufficiently stratify the sample, how to identify the practitioners who 
must report, determining which services, and for those who practice in 
multiple settings and/or with multiple groups in which settings the 
practitioner would report. Establishing the rules to govern

[[Page 46198]]

which post-operative care should be reported for which procedures would 
be challenging for us to develop for a random sample and difficult for 
physicians to apply.
    With the limited time between the issuance of the CY 2017 PFS final 
rule with comment period and the beginning of reporting on January 1st, 
it would be challenging to make sure that affected practitioners are 
aware of the requirement to report and have an ability to determine 
which post-operative care to report. If, instead, we require all 
practitioners to report, we can take a uniform approach to notifying 
practitioners. The national medical and coding organizations are 
routinely relied upon by practitioners for information on new coding 
and billing requirements and play a major role in the expeditious 
adoption of new coding or billing requirements. Similarly, adjustments 
to software used for medical records and coding are made by national 
organizations. We have concerns that if this requirement is only 
applied to a small segment of practitioners that these organizations 
will not be able to ensure that the affected practitioners are aware 
and easily able to comply with the requirements.
    The more robust the reported data, the more accurate our ultimate 
valuations can be. Given the importance of data on visits in accurate 
valuations for global packages, we believe that collecting data on all 
pre- and post-operative visits in the global period is the best way to 
accurately value surgical procedures with global packages.
    We recognize that reporting of all pre- and post-operative visits 
would require submission of additional claims by those practitioners 
furnishing global services, but we believe the benefits of accurate 
data for valuation of services merits the imposition of this 
requirement. By using the claims system to report the data, we believe 
the additional burden is minimized. Stakeholders have reported that 
many practitioners are already required by their practice or health 
care system to report a code for each visit for internal control 
purposes and some of these systems already submit claims for these 
services, which are denied. For these practices, the additional burden 
would be minimal. We believe that requiring only some physicians to 
report this information, or requiring reporting for only some services, 
could actually be more burdensome to physicians than requiring this 
information from all physicians on all services because of the 
additional steps necessary to determine whether a report is required 
for a particular service and adopting a mechanism to assure that data 
is collected and reported when required. Moreover, we believe the 
challenges with implementing a limited approach at the practice level 
as compared to a requirement for all global services would result in 
less reliable data being reported.
    As we analyze the data collected and make decisions about 
valuations, we would reassess the data needed and what should be 
required from whom. Under section 1848(c)(8)(B)(ii) of the Act, we are 
required to reassess every 4 years whether continued collection of 
these data is needed. However, we can modify through rulemaking what 
data is collected at any time, as appropriate. By collecting data on 
all procedures with a 10- or 90-day global package, we would have the 
information to assess whether the post-operative care furnished varies 
by factors such as specialty, geography, practice setting, and practice 
size, and thus, the information needed for a selection of a 
representative sample. By initially collecting information from all 
practitioners that furnish surgical services, we believe we would be 
able to reduce required reporting in the future if we find that 
adequate information can be obtained by selective reporting. Without 
the broader set of data we would not be able to evaluate the 
variability of pre- and post-operative care in order to identify a 
useful targeted data collection.
    While section 1848(c)(8)(B) of the Act requires us to collect data 
from a representative sample of physicians on the number and level of 
visits provided during the global period, it does not prohibit us from 
collecting data from a broad set of physicians. In addition, section 
1848(c)(2)(M) of the Act authorizes the collection of data from a wide 
range of physicians. Given the benefits of more robust data, including 
avoiding sample bias, obtaining more accurate data, and facilitating 
operational simplicity, we believe collecting data on all post-
operative care initially is the best way to undertake an accurate 
valuation of surgical services in the future.
(1) Survey of Practitioners
    We agree with commenters that we need more information than is 
currently provided on claims and that we should utilize a number of 
different data sources and collection approaches to collect the data 
needed to assess and revalue global surgery services. In addition to 
the claims-based reporting, we are proposing to survey a large, 
representative sample of practitioners and their clinical staff in 
which respondents would report information about approximately 20 
discrete pre-operative and post-operative visits and other global 
services like care coordination and patient training. The proposed 
survey would produce data on a large sample of pre-operative and post-
operative visits and is being designed so that we could analyze the 
data collected in conjunction with the claims-based data that we would 
be collecting. We expect to obtain data from approximately 5,000 
practitioners.
    We have contracted with RAND to develop and, if our proposal is 
finalized, conduct this survey. RAND would also assist us in analyzing 
data collected under this survey and the claims-based data. While the 
primary data collection would be via a survey instrument, RAND would 
conduct semi-structured interviews and direct observations of data in a 
small number of pilot sites to inform survey design, validate survey 
results, and collect information that is not conducive to survey-based 
reporting.
    Our proposed sampling approach would sample practitioners rather 
than for procedures or visits to streamline survey data collection and 
minimize respondent burden. Specifically, we propose to representative 
and random sample from a frame of providers who billed Medicare for 
more than a minimum threshold of surgical procedures with a 10- or 90-
day global period (for example, 200 procedures) in the most recent 
available prior year of claims data. We expect to survey approximately 
5,000 practitioners, stratified by specialty, geography, and practice 
type. Based upon preliminary analysis we believe this number of 
participants will allow us to collect information on post-operative 
care following the full range of CPT level-2 surgical procedure code 
groups. A smaller sample size would reduce the precision of estimates 
from the survey and more importantly risk missing important differences 
in post-operative care for specific specialties or following different 
types of surgical procedures. We expect a response rate in excess of 50 
percent.
    We are not proposing that respondents report on the entire period 
of post-operative care for individual patients, as a 90-day follow-up 
window (for surgeries currently with a 90-day global period) is too 
long to implement practically in this study setting and would be more 
burdensome to practitioners. Instead, we propose to collect information 
on a range of different post-operative services resulting from 
surgeries furnished by

[[Page 46199]]

the in-sample practitioner prior to or during a fixed reporting period.
    Each sampled practitioner will be assigned to a specified and brief 
(for example, 2-week) reporting period. Given the proposed overall data 
collection period, the selected sample of providers will be randomly 
divided into 6 subsets within each specialty, each of which will be 
assigned to a specified reporting period. Practitioners will be asked 
to describe 20 post-operative visits furnished to Medicare 
beneficiaries or other patients during the reporting period. The 
information collected through the survey instrument, which will be 
developed based upon direct observation and discussions in a small 
number of pilot sites, will include contextual information to describe 
the background for the post-operative care, including, for example:
     Procedure codes(s) and date of service for procedure upon 
which the global period is based.
     Procedure place of service (type).
     Whether or not there were complications during or after 
the procedure.
     The number in sequence of the follow-up visit (for 
example, the first visit after the procedure).
    The survey instrument will also collect information on the visit in 
question including, for example:
     Which level of visit using the finalized no-pay codes.
     Specific pre-service, face-to-face, and post-service 
activities furnished during the visit.
     Times for each activity.
     Identify who performed each activity (physician or other 
practitioner).
     PE components used during the visit, for example supplies 
like surgical dressings and clinical staff time.
    Finally, the instrument will ask respondents to report other prior 
or anticipated care furnished to the patient by the practice outside of 
the context of a post-operative visit, for example non-face-to-face 
services.
    The survey approach will complement the claims data collection by 
collecting detailed information on the activities, time, intensity, and 
resources involved in delivering global services. The resulting visit-
level survey data would allow us to explore in detail the variation in 
activities, time, intensity, and resources associated with global 
services within and between physicians and procedures, and would help 
to validate the information gathered through claims. A summary of the 
work that RAND would be doing is available on the CMS Web site under 
downloads for the CY 2017 PFS proposed rule with comment period at 
http://www.cms.gov/physicianfeesched/downloads/.
(2) Required Participation in Data Collection
    Using the authority we are provided under sections 1848(c)(8) and 
1848(c)(2)(M) of the Act, we are proposing to require all practitioners 
who furnish a 10- or 90-day global service to submit a claim(s) 
providing information on all services furnished within the relevant 
global service period in the form and manner described below, beginning 
with surgical or procedural services furnished on or after January 1, 
2017. We are also proposing to require participation by practitioners 
selected for the broad-based survey through which we are proposing to 
gather additional data needed to value surgical services, such as the 
clinical labor and equipment involved that cannot be efficiently 
collected on claim (see below).
    Given the importance of the proposed survey effort, making sure 
that we get valid data is critical. By eliminating the bias that would 
be associated with using only data reported voluntarily, we believe we 
will get more accurate and representative data. In addition to the 
potential bias inherent in voluntary surveys, we are concerned that 
relying on voluntary data reporting would limit the adequacy of the 
volume of data we obtain, will require more effort to recruit 
participation, and may make it impossible to obtain data for valuation 
for CY 2019 as required by the statute.
    Based on our previous experience with requesting voluntary 
cooperation in data collection activity, voluntary participation poses 
a significant challenge in data collection. Specifically, the Urban 
Institute's work (under contract with us) to validate work RVUs by 
conducting direct observation of the time it took to furnish certain 
elements of services paid under the physician fee schedule provides 
evidence of this challenge. (See https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Downloads/RVUs-Validation-Urban-Interim-Report.pdf for an interim report that describes 
challenges in securing participation in voluntary data collection.) 
Similarly, we routinely request invoices on equipment and supplies that 
are used in furnishing services and often receive no more than one 
invoice. These experiences support the idea that mandatory 
participation in data collection activities is essential if we are to 
collect valid and unbiased data.
    Section 1848(a)(9) of the Act authorizes us, through rulemaking, to 
withhold payment of up to 5 percent of the payment for services on 
which the practitioner is required to report under section 
1848(c)(8)(B)(i) of the Act until the practitioner has completed the 
required reporting. Some commenters opposed the imposition of this 
payment withhold, and others said it was too large of a penalty. While 
we believe this is a way to encourage practitioners to report on claims 
the information we propose to require on care that is furnished in the 
global period, we are not proposing to implement this option at this 
time. We believe that requiring physicians to report the information on 
claims, combined with the incentive to report complete information so 
that we can make appropriate revisions when we revalue payments for 
global surgical services, would result in compliance with the reporting 
requirements. However, we note that if we find that compliance with 
required claims-based reporting is not acceptable, we would consider in 
future rulemaking imposing up to a 5 percent payment withhold as 
authorized by the statute.
    Consistent with the requirements of section 1848(c)(2)(M) of the 
Act, should the data collected under this requirement be used to 
determine RVUs, we will disclose the information source and discuss the 
use of such information in such determination of relative values 
through future notice and comment rulemaking.
(3) Data Collection From Accountable Care Organizations (ACOs)
    We are particularly interested in knowing whether physicians and 
practices affiliated with ACOs expend greater time and effort in 
providing post-operative global services in keeping with their goal of 
improving care coordination for their assigned beneficiaries. ACOs are 
organizations in which practitioners and hospitals voluntarily come 
together to provide high-quality and coordinated care for their 
patients. Because such organizations share in the savings realized by 
Medicare, their incentive is to minimize post-operative visits while 
maintaining high quality post-operative care for patients. In addition, 
we believe that such organizations offer us the opportunity to gain 
more in-depth information about delivery of surgical services.
    We propose to collect primary data on the activities and resources 
involved in delivering services in and around surgical events in the 
ACO context by surveying a small number of ACOs (Pioneer and Next 
Generation ACOs).

[[Page 46200]]

Similar to the approach of the more general practitioner survey, this 
effort would begin with an initial phase of primary data collection 
using a range of methodologies in a small number of ACOs; development, 
piloting, and validation of an additional survey module specific to 
ACOs. A survey of practitioners participating in approximately 4 to 6 
ACOs using the survey instrument along with the additional ACO-specific 
module will be used to collect data from on pre- and post-operative 
visits.
(4) Conclusion
    We recognize that the some of the data collection activity proposed 
here varies greatly from how the data is currently gathered to support 
PFS valuations for global surgery services. However, we believe the 
proposed claims-based data collection is generally consistent with how 
claims data is reported for other kinds of services paid under the PFS. 
We believe that the authority and requirements included in the statute 
through the MACRA and PAMA were intended to expand and enhance data 
that might be available to enhance the accuracy of PFS payments. 
Because these are new approaches to collecting data and in an area--
global surgery--where very little data has previously been collected, 
we cannot describe exactly how this information would be used in 
valuing services. What is clear is that the claims-based data would 
provide information parallel to the kinds of claims-data used in 
developing RVUs for other PFS services and that by collecting these 
data, we would know far more than we do now about how post-operative 
care is delivered and gain insight to support appropriate packaging and 
valuation. We would include any revaluation proposals based on these 
data in subsequent notice and comment rulemaking.

E. Improving Payment Accuracy for Primary Care, Care Management, and 
Patient-Centered Services

1. Overview
    In recent years, we have undertaken ongoing efforts to support 
primary care and patient-centered care management within the PFS as 
part of HHS' broader efforts to achieve better care, smarter spending 
and healthier people through delivery system reform. We have recognized 
the need to improve payment accuracy for primary care and patient-
centered care management over several years, especially beginning in 
the CY 2012 PFS proposed rule (76 FR 42793) and continuing in each 
subsequent year of rulemaking. In the CY 2012 proposed rule, we 
acknowledged the limitations of the current code set that describes 
evaluation & management (E/M) services within the PFS. For example, E/M 
services represent a high proportion of PFS expenditures but have not 
been recently revalued to account for significant changes in the 
disease burden of the Medicare patient population and changes in health 
care practice that are underway, to meet the current population's 
health care needs. These trends in the Medicare population and health 
care practice have been widely recognized in the provider community and 
by health services researchers and policymakers alike.\1\ We believe 
the focus of the health care system has shifted to delivery system 
reforms, such as patient-centered medical homes, clinical practice 
improvement, and increased investment in primary and comprehensive care 
management/coordination services for chronic and other conditions. This 
shift requires centralized management of patient needs and extensive 
care coordination among practitioners and providers (often on a non-
face-to-face basis across an extended period of time). In contrast, the 
current CPT code set is designed with an overall orientation to pay for 
discrete services and procedural care as opposed to ongoing primary 
care, care management and coordination, and cognitive services. It 
includes thousands of separately paid, individual codes, most of which 
describe highly specialized procedures and diagnostic tests, while 
there are relatively few codes that describe care management and 
cognitive services. Further, in the past, we have not recognized as 
separately payable many existing CPT codes that describe care 
management and cognitive services, viewing them as bundled and paid as 
part of other services including the broadly drawn E/M codes that 
describe face-to-face visits billed by physicians and practitioners in 
all specialties.
---------------------------------------------------------------------------

    \1\ See, for example, http://content.healthaffairs.org/content/25/5/w378.full; http://www.commonwealthfund.org/publications/issue-
briefs/2008/feb/how-disease-burden-influences-medication-patterns-
for-medicare-beneficiaries--implications-for-polic; http://www.hhs.gov/ash/about-ash/multiple-chronic-conditions/index.html; 
http://www.nejm.org/doi/full/10.1056/NEJMp1600999#t=article; https://www.pcpcc.org/about; https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html.
---------------------------------------------------------------------------

    This has resulted in minimal service variation for ongoing primary 
care, care management and coordination, and cognitive services relative 
to other PFS services, and in potential misvaluation of E/M services 
under the PFS (76 FR 42793). Some stakeholders believe that there is 
substantial misvaluation of physician work within the PFS, and that the 
current service codes fail to capture the range and intensity of 
nonprocedural physician activities (E/M services) and the ``cognitive'' 
work of certain specialties (http://www.nejm.org/doi/full/10.1056/NEJMp1600999#t=article).
    Recognizing the inverse for specialties that furnish other kinds of 
services, MedPAC has noted that the PFS allows some specialties to more 
easily increase the volume of services they provide (and therefore 
their revenue from Medicare) relative to other specialties, 
particularly those that spend most of their time providing E/M 
services. (MedPAC March 2015 Report to the Congress, available at 
http://www.medpac.gov/-documents-/reports). We agree with this 
analysis, and we recognize that the current set of E/M codes limits 
Medicare's ability under the PFS to appropriately recognize the 
relative resource costs of primary care, care management/coordination 
and cognitive services relative to specialized procedures and 
diagnostic tests.
    In recent years, we have been engaged in an ongoing incremental 
effort to update and improve the relative value of primary care, care 
management/coordination, and cognitive services within the PFS by 
identifying gaps in appropriate payment and coding. These efforts 
include changes in payment and coding for a broad range of PFS 
services. This effort is particularly vital in the context of the 
forthcoming transition to the Merit-Based Incentive Payment System 
(MIPS) and Alternative Payment Models (APMs) incentives under The 
Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) (Pub. L. 
114-10, enacted April 16, 2015), since MIPS and many APMs will adopt 
and build on PFS coding, RVUs and PFS payment as their foundation.
    In CY 2013, we began by focusing on post-discharge care management 
and transition of beneficiaries back into the community, establishing 
new codes to pay separately for transitional care management (TCM) 
services. Next we finalized new coding and separate payment beginning 
in CY 2015 for chronic care management (CCM) services provided by 
clinical staff. Most recently, in the CY 2016 PFS proposed rule (80 FR 
41708 through 41711), we solicited public comments on three additional 
policy areas of consideration: (1) Improving payment for the 
professional work of care management

[[Page 46201]]

services through coding that would more accurately describe and value 
the work of primary care and other cognitive specialties for complex 
patients (for example, monthly timed services including care 
coordination, patient/caregiver education, medication management, 
assessment and integration of data, care planning); (2) establishing 
separate payment for collaborative care, particularly, how we might 
better value and pay for robust inter-professional consultation, 
between primary care physicians and psychiatrists (developing codes to 
describe and provide payment for the evidence-based psychiatric 
collaborative care model (CoCM), and between primary care physicians 
and other (non-mental health) specialists; and (3) assessing whether 
current PFS payment for CCM services is adequate and whether we should 
reduce the administrative burden associated with furnishing and billing 
these services.
    In the CY 2016 PFS final rule with comment period (80 FR 70919 
through 70921), we summarized the many public comments we received in 
response to last year's comment solicitation. Instead of the specific 
policies we sought comment on, several commenters recommended an 
overhaul and complete revaluation of the E/M codes through a major 
research initiative akin to that undertaken when the PFS was first 
established. Many other commenters recommended that, until a major 
research initiative could be conducted to fully address the 
deficiencies in the current E/M code set, CMS should make separate 
payment under Medicare for a number of existing CPT codes to improve 
payment in the areas in which we solicited comments, including the 
codes used to describe complex CCM services (CPT codes 99487 and 
99489). Other commenters also suggested that care management services 
may be beneficial to a number of other patient populations in addition 
to those transitioning into the community from an inpatient setting and 
those with multiple chronic conditions.
    Also in response to our CY 2016 comment solicitation, the AMA 
restructured its existing CPT/RUC workgroup on these issues and 
convened the relevant individual specialty societies to develop new CPT 
coding that would address these issues. We understand that these 
efforts are ongoing, and that at this time, two sets of new codes are 
scheduled to be included in the CY 2018 CPT code set in response to our 
2016 comment solicitation. One is a set of new codes describing 
services furnished under the psychiatric CoCM and the other is a code 
for assessment and care planning services for patients with cognitive 
impairment. Several stakeholders have urged us to facilitate Medicare 
payment for these and other new primary care, care management, and 
cognitive services sooner than CY 2018 by proposing payment using G-
codes for CY 2017.
    In response to our comment solicitation in the CY 2016 proposed 
rule, MedPAC commented that the PFS is an ill-suited payment mechanism 
for primary care and cognitive care generally. MedPAC recommended that 
Congress replace the expired Primary Care Incentive Payment (PCIP) with 
a capitated payment mechanism and expressed preference for codes like 
CCM that are beneficiary-centered and do not pay for each distinct care 
coordination activity.
    Finally, many public commenters recommended a number of 
modifications to the current CCM payment rules. According to many 
commenters, current payment does not cover the cost of furnishing these 
services, and therefore, the codes are underutilized. As referenced in 
section II.E.3 on improving access and payment for CCM services, our 
assessment of claims data for CY 2015 for CPT code 99490 suggests that 
CCM services may be underutilized relative to the intended eligible 
patient population.
    After considering the commenters' perspective and recommendations, 
as well as monitoring the ongoing efforts at the AMA/RUC and CPT to 
respond with new/revised coding, for CY 2017 we are proposing a number 
of changes to coding and payment policies under the PFS. These 
proposals are intended to accomplish the following:
     Improve payment for care management services provided in 
the care of beneficiaries with behavioral health conditions (including 
services for substance use disorder treatment) through new coding, 
including three codes used to describe services furnished as part of 
the psychiatric CoCM and one to address behavioral health integration 
more broadly.
     Improve payment for cognition and functional assessment, 
and care planning for beneficiaries with cognitive impairment.
     Adjust payment for routine visits furnished to 
beneficiaries whose care requires additional resources due to their 
mobility-related disabilities.
     Recognize for Medicare payment the additional CPT codes 
within the Chronic Care Management family (for Complex CCM services) 
and adjust payment for the visit during which CCM services are 
initiated (the initiating CCM visit) to reflect resources associated 
with the assessment for, and development of, a new care plan.
     Recognize for Medicare payment CPT codes for non-face-to-
face Prolonged E/M services by the physician (or other billing 
practitioner) that are currently bundled, and increase payment rates 
for face-to-face prolonged E/M services by the physician (or other 
billing practitioner) based on existing RUC recommended values.
    We are aware that CPT has approved a code to describe assessment 
and care planning for patients with cognitive impairment; however, it 
will not be ready in time for valuation in CY 2017. Therefore, we are 
proposing to make payment using a G-code (GPPP6--see below) for this 
service in 2017. We are also aware that CPT has approved three codes 
that describe services furnished consistent with the psychiatric CoCM, 
but that they will also not be ready in time for valuation in CY 2017. 
We discuss these services in more detail in the next section of this 
proposed rule. To facilitate separate payment for these services 
furnished to Medicare beneficiaries during CY 2017, we are proposing to 
make payment through the use of three G-codes (GPPP1, GPPP2, and 
GPPP3--see below) that parallel the new CPT codes, as well as a fourth 
G-code (GPPPX--see below) to describe services furnished using a 
broader application of behavioral health integration in the primary 
care setting. We intend for these to be temporary codes (for perhaps 
only one year) and will consider whether to adopt and establish values 
for the new CPT codes under our standard process, presumably for CY 
2018. While we recognize that there may be overlap in the patient 
populations for the proposed new G-codes, we note that time spent by a 
practitioner or clinical staff cannot be counted more than once for any 
code (or assigned to more than one patient), consistent with PFS coding 
conventions.
    Proposed payment for services described by new coding are as 
follows (please note that the descriptions included for GPPP1, GPPP2, 
and GPPP3 are from Current Procedural Terminology (CPT[supreg]) 
Copyright 2016 American Medical Association (and will be effective as 
part of CPT codes January 1, 2018). All rights reserved):
     GPPP1: Initial psychiatric collaborative care management, 
first 70 minutes in the first calendar month of behavioral health care 
manager activities, in consultation with a psychiatric consultant, and 
directed by the treating physician or other qualified

[[Page 46202]]

health care professional, with the following required elements:
    ++ Outreach to and engagement in treatment of a patient directed by 
the treating physician or other qualified health care professional;
    ++ Initial assessment of the patient, including administration of 
validated rating scales, with the development of an individualized 
treatment plan;
    ++ Review by the psychiatric consultant with modifications of the 
plan if recommended;
    ++ Entering patient in a registry and tracking patient follow-up 
and progress using the registry, with appropriate documentation, and 
participation in weekly caseload consultation with the psychiatric 
consultant; and
    ++ Provision of brief interventions using evidence-based techniques 
such as behavioral activation, motivational interviewing, and other 
focused treatment strategies.
     GPPP2: Subsequent psychiatric collaborative care 
management, first 60 minutes in a subsequent month of behavioral health 
care manager activities, in consultation with a psychiatric consultant, 
and directed by the treating physician or other qualified health care 
professional, with the following required elements:
    ++ Tracking patient follow-up and progress using the registry, with 
appropriate documentation;
    ++ Participation in weekly caseload consultation with the 
psychiatric consultant;
    ++ Ongoing collaboration with and coordination of the patient's 
mental health care with the treating physician or other qualified 
health care professional and any other treating mental health 
providers;
    ++ Additional review of progress and recommendations for changes in 
treatment, as indicated, including medications, based on 
recommendations provided by the psychiatric consultant;
    ++ Provision of brief interventions using evidence-based techniques 
such as behavioral activation, motivational interviewing, and other 
focused treatment strategies;
    ++ Monitoring of patient outcomes using validated rating scales; 
and relapse prevention planning with patients as they achieve remission 
of symptoms and/or other treatment goals and are prepared for discharge 
from active treatment.
     GPPP3: Initial or subsequent psychiatric collaborative 
care management, each additional 30 minutes in a calendar month of 
behavioral health care manager activities, in consultation with a 
psychiatric consultant, and directed by the treating physician or other 
qualified health care professional (List separately in addition to code 
for primary procedure) (Use GPPP3 in conjunction with GPPP1, GPPP2).
     GPPPX: Care management services for behavioral health 
conditions, at least 20 minutes of clinical staff time, directed by a 
physician or other qualified health care professional time, per 
calendar month.
     GPPP6: Cognition and functional assessment using 
standardized instruments with development of recorded care plan for the 
patient with cognitive impairment, history obtained from patient and/or 
caregiver, by the physician or other qualified health care professional 
in office or other outpatient setting or home or domiciliary or rest 
home.
     GPPP7: Comprehensive assessment of and care planning by 
the physician or other qualified health care professional for patients 
requiring chronic care management services, including assessment during 
the provision of a face-to-face service (billed separately from monthly 
care management services) (Add-on code, list separately in addition to 
primary service).
     GDDD1: Resource-intensive services for patients for whom 
the use of specialized mobility-assistive technology (such as 
adjustable height chairs or tables, patient lifts, and adjustable 
padded leg supports) is medically necessary and used during the 
provision of an office/outpatient evaluation and management visit (Add-
on code, list separately in addition to primary procedure).
    Additionally, we are aware that other codes are being developed 
through the CPT process. We have noted with interest that the CPT 
Editorial Panel and AMA/RUC restructured the former Chronic Care 
Coordination Workgroup to establish a new Emerging CPT and RUC Issues 
Workgroup that we hope will continue to consider the issues raised in 
this section of our CY 2017 proposed rule. We are continuing to 
consider possible additional codes for CCM services that would describe 
the time of the physician or other billing practitioner. We also remain 
interested in whether there should be changes under the PFS to reflect 
additional models of inter-professional collaboration for health 
conditions, in addition to those we are proposing for behavioral health 
integration.
    For additional details on the coding and proposed valuation related 
to these proposals, see section II.L of this proposed rule for 
Valuation of Specific Codes. We note that the development of coding for 
these and other kinds of services across the PFS is typically an 
iterative process that responds to changes in medical practice and may 
be best refined over several years, with PFS rulemaking and the 
development of CPT codes as important parts of that process. Thus, we 
anticipate continuing the multi-year process of implementing 
initiatives designed to improve payment for, and recognize long-term 
investment in, primary care, care management and cognitive services, 
and patient-centered services.
2. Non-Face-To-Face Prolonged Evaluation & Management (E/M) Services
    In public comments to the CY 2016 PFS proposed rule, many 
commenters recommended that CMS should establish separate payment for 
non-face-to-face prolonged E/M service codes that we currently consider 
to be ``bundled'' under the PFS (CPT codes 99358, 99359). The CPT 
descriptors are:
     CPT code 99358 (Prolonged evaluation and management 
service before and/or after direct patient care, first hour); and
     CPT code 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).
    Commenters believed that separate payment for these existing CPT 
codes would provide a means for physicians and other billing 
practitioners to receive payment that more appropriately accounts for 
time that they spend providing non-face-to-face care. We agree that 
these codes would provide a means to recognize the additional resource 
costs of physicians and other practitioners when they spend an 
extraordinary amount of time outside the in-person office visit caring 
for the individual needs of their patients. And we believe that doing 
so in the context of the ongoing changes in health care practice to 
meet the current population's health care needs would be beneficial for 
Medicare beneficiaries and consistent with our overarching goals 
related to patient-centered care.
    These non-face-to-face prolonged service codes are broadly 
described (although they include only time spent personally by the 
physician or other billing practitioner) and have a relatively high 
time threshold (the time counted must be beyond the usual service time 
for the primary or companion E/M code that is also billed). We believe 
this makes them sufficiently distinct from the other codes we propose 
to pay in CY 2017 as part of our

[[Page 46203]]

primary care/care management/cognitive care initiative described in 
this section of our proposed rule. Accordingly, beginning in CY 2017 we 
propose to recognize CPT codes 99358 and 99359 for separate payment 
under the PFS. We note that time could not be counted more than once 
towards the provision of CPT codes 99358 or 99359 and any other PFS 
service. See section II.L for a discussion of our proposed valuation of 
CPT codes 99358 and 99359.
    We propose to require the services to be furnished on the same day 
by the same physician or other billing practitioner as the companion E/
M code. However, in reviewing the CPT guidance for CPT codes 99358 and 
99359, we noted that CPT codes 99358 and 99359 should not be reported 
during the same service period as complex CCM services (CPT codes 
99487, 99489) or TCM services (CPT codes 99495, 99496). One reason for 
excluding TCM and complex CCM services from concurrent billing would be 
that, like prolonged services, TCM and complex CCM services include 
substantial non-face-to-face work by the billing physician or other 
practitioner (an E/M visit and/or medical decision-making of moderate 
or high complexity). However, the CPT prolonged service with patient 
contact codes are billable on the same day an E/M service is furnished, 
and the CPT prolonged service codes without direct patient contact are 
services furnished during a single day that are directly related to a 
discrete face-to-face service. In contrast, TCM and CCM codes are 
billed monthly and focused on a broader episode of patient care. We are 
seeking public input on the intersection of the prolonged service codes 
with CCM and TCM services. We are also seeking public comment on the 
potential intersection of the prolonged service CPT codes 99358 and 
99359 with proposed code GPPP7 (Comprehensive assessment of and care 
planning for patients requiring CCM services). Specifically, we are 
seeking comment regarding how distinctions among these services can be 
clearly delineated, including how the prolonged time can be clearly 
distinguished from typical pre- and post-service time, which is 
continued to be bundled with other codes. For all of these services, we 
have concerns that there may potentially be program integrity risks as 
the same non-face-to-face activities could be undertaken to meet the 
billing requirements for any of the above. We are seeking public 
comment to help us identify the full extent of program integrity 
considerations, as well as options for mitigating program integrity 
risks associated with these and other potentially overlapping codes.
3. Establishing Separate Payment for Behavioral Health Integration 
(BHI)
a. Psychiatric Collaborative Care Model (CoCM)
    In the CY 2016 PFS final rule with comment period (80 FR 70920), we 
stated that we believed the care and management for Medicare 
beneficiaries with behavioral health conditions may include extensive 
discussion, information sharing and planning between a primary care 
physician and a specialist. We refer to this practice broadly as 
``Behavioral Health Integration'' (BHI). In CY 2016 rulemaking, we 
described that in recent years, many randomized controlled trials have 
established an evidence base for an approach to caring for patients 
with behavioral health conditions called the psychiatric Collaborative 
Care Model (CoCM). A specific model for BHI, CoCM 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. As we previously noted, several 
resources have been published that describe the psychiatric CoCM in 
greater detail and assess the impact of the model, including pieces 
from the University of Washington (http://aims.uw.edu/), the Institute 
for Clinical and Economic Review (http://icer-review.org/announcements/icer-report-presents-evidence-based-guidance-to-support-integration-of-behavioral-health-into-primary-care/), and the Cochrane Collaboration 
(http://www.cochrane.org/CD006525/DEPRESSN_collaborative-care-forpeople-with-depression-and-anxiety). Because this particular kind of 
collaborative care model has been tested and documented in medical 
literature, we expressed that we were particularly interested in 
comments on how coding under the PFS might facilitate appropriate 
valuation of the services furnished under the model. We also solicited 
comments to assist us in considering refinements to coding and payment 
to address this model in particular relative to current coding and 
payment policies, as well as information related to various 
requirements and aspects of these services.
    After consideration of the comments, we are proposing to begin 
making separate payment for services furnished using the psychiatric 
CoCM beginning January 1, 2017. We are aware that CPT, recognizing the 
need for new coding for services under this model of care, has approved 
three codes to describe psychiatric collaborative care that is 
consistent with this model, but the codes will not be ready in time for 
valuation in CY 2017. Current CPT coding does not accurately describe 
or facilitate appropriate payment for the treatment of Medicare 
beneficiaries under this model of care. For example, under current 
Medicare payment policy, there is no payment made specifically for 
regular monitoring of patients using validated clinical rating scales 
or for regular psychiatric caseload review and consultation that does 
not involve face-to-face contact with the patient. We believe that 
these resources are directly involved in furnishing ongoing care 
management services to specific patients with specific needs, but they 
are not appropriately recognized under current coding and payment 
mechanisms. Because PFS valuation is based on the relative resource 
costs of the PFS services furnished to Medicare beneficiaries, we 
believe that appropriate coding for these services for CY 2017 will 
facilitate accurate payment for these and other PFS services. 
Therefore, we are proposing separate payment for services under the 
psychiatric CoCM using three new G-codes, as detailed above: GPPP1, 
GPPP2, and GPPP3, which would parallel the CPT codes that are being 
created to report these services. We intend for these to be temporary 
codes (for perhaps only one year) and will consider whether to adopt 
and establish values for the new CPT codes under our standard process, 
presumably for CY 2018.
    Services in the psychiatric CoCM are provided under the direction 
of a treating physician or other qualified health care professional 
during a calendar month. These services are provided when a patient has 
a diagnosed psychiatric disorder that requires a behavioral health care 
assessment; establishing, implementing, revising, or monitoring a care 
plan; and provision of brief interventions. The diagnosis may be either 
pre-existing or made by the billing practitioner. These services are 
reported by the treating physician or other qualified health care

[[Page 46204]]

professional and include the services of the treating physician or 
other qualified health care professional, the behavioral health care 
manager (see description below) who furnishes services incident to 
services of the treating physician or other qualified health care 
professional, and the psychiatric consultant (see description below) 
whose consultative services are furnished incident to services of the 
treating physician or other qualified health care professional. 
Patients who are appropriate candidates to participate in the 
psychiatric CoCM may have newly diagnosed conditions, need help in 
engaging in treatment, have not responded to standard care delivered in 
a non-psychiatric setting, or require further assessment and engagement 
prior to consideration of referral to a psychiatric care setting. 
Patients are treated under this model for an episode of care, defined 
as beginning when the behavioral health care manager engages in care of 
the patient under the appropriate supervision of the treating physician 
and ending with:
     The attainment of targeted treatment goals, which 
typically results in the discontinuation of care management services 
and continuation of usual follow-up with the treating physician or 
other qualified healthcare professional; or
     Failure to attain targeted treatment goals culminating in 
referral to a psychiatric care provider for ongoing treatment; or
     Lack of continued engagement with no psychiatric 
collaborative care management services provided over a consecutive six 
month calendar period (break in episode).
    A new episode of care starts after a break in episode of six 
calendar months or more.
    The treating physician or other qualified health care professional 
directs the behavioral health care manager and continues to oversee the 
patient's care, including prescribing medications, providing treatments 
for medical conditions, and making referrals to specialty care when 
needed. Medically necessary E/M and other services may be reported 
separately by the treating physician or other qualified health care 
professional, or other physicians or practitioners, during the same 
calendar month. Time spent by the treating physician or other qualified 
health care professional on activities for services reported separately 
may not be included in the services reported using GPPP1, GPPP2, and 
GPPP3. The behavioral health care manager under this model of care is a 
member of the treating physician or other qualified health care 
professional's clinical staff with formal education or specialized 
training in behavioral health (which could include a range of 
disciplines, for example, social work, nursing, and psychology) who 
provides care management services, as well as an assessment of needs, 
including the administration of validated rating scales,\2\ the 
development of a care plan, provision of brief interventions, ongoing 
collaboration with the treating physician or other qualified health 
care professional, maintenance of a registry,\3\ all in consultation 
with a psychiatric consultant. The behavioral health care manager 
furnishes these services both face-to-face and non-face-to-face, and 
consults with the psychiatric consultant minimally on a weekly basis. 
We would expect that the behavioral health care manager would be on-
site at the location where the treating physician or other qualified 
health care professional furnishes services to the beneficiary.
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    \2\ For example, see https://aims.uw.edu/resource-library/measurement-based-treatment-target.
    \3\ For example, see https://aims.uw.edu/collaborative-care/implementation-guide/plan-clinical-practice-change/identify-population-based.
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    The behavioral health care manager may or may not be a professional 
who meets all the requirements to independently furnish and report 
services to Medicare. If otherwise eligible, then that individual may 
report separate services furnished a beneficiary receiving the services 
described by GPPP1, GPPP2, GPPP3, and GPPPX in the same calendar month. 
These could include: psychiatric evaluation (90791, 90792), 
psychotherapy (90832, 90833, 90834, 90836, 90837, 90838), psychotherapy 
for crisis (90839, 90840), family psychotherapy (90846, 90847), 
multiple family group psychotherapy (90849), group psychotherapy 
(90853), smoking and tobacco use cessation counseling (99406, 90407), 
and alcohol or substance abuse structured screening and brief 
intervention services (99408, 99409). Time spent by the behavioral 
health care manager on activities for services reported separately may 
not be included in the services reported using time applied to GPPP1, 
GPPP2, and GPPP3.
    The psychiatric consultant involved in the ``incident to'' care 
furnished under this model is a medical professional trained in 
psychiatry and qualified to prescribe the full range of medications. 
The psychiatric consultant advises and makes recommendations, as 
needed, for psychiatric and other medical care, including psychiatric 
and other medical diagnoses, treatment strategies including appropriate 
therapies, medication management, medical management of complications 
associated with treatment of psychiatric disorders, and referral for 
specialty services, that are communicated to the treating physician or 
other qualified health care professional, typically through the 
behavioral health care manager. The psychiatric consultant does not 
typically see the patient or prescribe medications, except in rare 
circumstances, but can and should facilitate a referral to a 
psychiatric care provider when clinically indicated.
    In the event that the psychiatric consultant furnishes services to 
the beneficiary directly in the calendar month described by other 
codes, such as E/M services or psychiatric evaluation (90791, 90792), 
the services may be reported separately by the psychiatric consultant. 
Time spent by the psychiatric consultant on activities for services 
reported separately may not be included in the services reported using 
GPPP1, GPPP2, and GPPP3.
    We also note that, although the psychiatric CoCM has been studied 
extensively in the setting of specific behavioral health conditions 
(for example, depression), we received persuasive comments last year 
recommending that we not specify particular diagnoses required for use 
of the codes for several reasons, including that: there may be overlap 
in behavioral health conditions; there are concerns that there could be 
modification of diagnoses to fit within payment rules which could skew 
the accuracy of submitted diagnosis code data; and for many patients 
for whom specialty care is not available, or who choose for other 
reasons to remain in primary care, primary care treatment will be more 
effective if it is provided within a model of integrated care that 
includes care management and psychiatric consultation.
(1) General Behavioral Health Integration (BHI)
    We recognize that the psychiatric CoCM is prescriptive and that 
much of its demonstrated success may be attributable to adherence to a 
set of elements and guidelines of care as described in the preceding 
paragraphs. Therefore, we are proposing the use of these codes to pay 
accurately for this specific model of care for the benefit of Medicare 
beneficiaries, given its wide-spread adoption and recognized 
effectiveness. However, we note that PFS coding, in general, does not 
dictate how physicians practice medicine and believe that it should, 
instead, reflect the practice of medicine. We also recognize that there 
are primary care practices that are incurring, or may

[[Page 46205]]

incur, resource costs inherent to treatment of patients with similar 
conditions based on other models of BHI that may benefit beneficiaries 
with behavioral health conditions (see, for example, the approach 
described at http://www.integration.samhsa.gov/integrated-care-models.) 
These models of care include resource costs associated with care 
managers and consultants that are not accurately characterized by the 
descriptions in the preceding paragraphs. However, these costs are also 
not included as direct PE inputs in other PFS services, such as E/M 
codes. In its comment regarding the psychiatric CoCM, MedPAC noted its 
preference for beneficiary-centered treatment that would allow for 
flexibility in addressing patient needs, rather than approaches that 
are tied to a particular model of care. MedPAC also urged CMS not to 
make separate payment for each care management activity.
    Therefore, to recognize the resource costs associated with 
furnishing behavioral health care management services to Medicare 
beneficiaries under related but different models of care without paying 
for each activity separately, we are also proposing to make payment 
using a new G-code that describes care management for beneficiaries 
with diagnosed behavioral health conditions under a broader application 
of integration in the primary care setting. We believe that for this 
subset of Medicare beneficiaries, the resources associated with 
medically necessary care management services are not otherwise 
adequately reflected under the PFS. The proposed code is GPPPX (Care 
management services for behavioral health conditions, at least 20 
minutes of clinical staff time, directed by a physician or other 
qualified health care professional time, per calendar month). We note 
that we expect this coding to be refined over time as we receive more 
information about other behavioral health care models being used and 
how they are implemented.
    We are seeking stakeholder input on whether we should consider 
requiring a longer duration of time for this code or an add-on to the 
code that would allow, for example, additional 20 minute increments. In 
addition, while we recognize that services inherent to models of BHI 
provided under this code may range in resource costs, we hope that 
appropriate payment for these services will lead to appropriate use of 
BHI models of care, which, in turn, will inform further refinement of 
the valuation in the future. For additional information on proposed 
valuation of these codes, see section II.L of this proposed rule.
(2) Initiating Visit for Proposed BHI Codes (GPPP1, GPPP2, GPPP3, and 
GPPPX)
    Similar to CCM services (see section II.E.4), we propose to require 
an initiating visit for the BHI codes (both the psychiatric CoCM model 
and the general BHI code), that would be billable separately from the 
services themselves. We propose that the same services that can serve 
as the initiating visit for CCM services (see section II.E.3 of this 
proposed rule) can serve as the initiating visit for the proposed BHI 
codes. The initiating visit would establish the beneficiary's 
relationship with the billing practitioner (most aspects of the BHI 
services would be furnished incident to the billing practitioner's 
professional services), ensure the billing treating physician or other 
qualified health care professional assesses the patient prior to 
initiating other care management processes, and provides an opportunity 
to obtain beneficiary consent (discussed below). We welcome public 
comment on the types of services that are appropriate for an initiating 
visit for the BHI codes, and within what timeframe the initiating visit 
should be conducted prior to furnishing BHI services.
(3) Beneficiary Consent
    Commenters to the CY 2016 PFS proposed rule indicated that they did 
not believe a specific patient consent for BHI services is necessary 
and, in fact, that requiring special informed consent for these 
services may reduce access due to stigma associated with behavioral 
health conditions. Instead, the commenters recommended requiring a more 
general consent prior to initiating these services whereby the 
beneficiary gives the initiating physician or practitioner permission 
to consult with relevant specialists, which would include conferring 
with a psychiatric consultant. Accordingly, we propose to require a 
general beneficiary consent to consult with relevant specialists prior 
to initiating these services, recognizing that applicable rules 
continue to apply regarding privacy. The proposed general consent would 
encompass conferring with a psychiatric consultant when furnishing the 
psychiatric CoCM codes (GPPP1, GPPP2, and GPPP3) or the broader BHI 
code (GPPPX). Similar to the proposed beneficiary consent process for 
CCM services (see section II.E.4 of this proposed rule), we propose 
that the billing practitioner must document in the beneficiary's 
medical record that the beneficiary's consent was obtained to consult 
with relevant specialists including a psychiatric consultant, and that, 
as part of the consent, the beneficiary is informed that there is 
beneficiary cost-sharing, including potential deductible and 
coinsurance amounts, for both in-person and non-face-to-face services 
that are provided. We welcome stakeholder comments on this proposal.
    We recognize that special informed consent can also be helpful in 
cases when a particular service is limited to being billed by a single 
practitioner for a particular beneficiary. We do not believe that there 
are circumstances where it would reasonable for multiple practitioners 
to be reporting these codes during the same month. However, we are not 
proposing a formal limit at this time. We are seeking comment on 
whether such a limitation would be beneficial or whether there are 
circumstances under which a beneficiary might reasonably receive BHI 
services from more than one practitioner during a given month.
    In recent months, many stakeholders have advised that we should 
waive the applicable Part B coinsurance for services such as those 
included in our proposed BHI codes. However, we currently lack 
statutory authority to waive the coinsurance for services such as 
these.
4. Reducing Administrative Burden and Improving Payment Accuracy for 
Chronic Care Management (CCM) Services
    Beginning in CY 2015, we implemented separate payment for chronic 
care management (CCM) services under CPT code 99490 (Chronic care 
management services, at least 20 minutes of clinical staff time 
directed by a physician or other qualified health 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.
    We finalized a proposal to make separate payment for CCM services 
as one initiative in a series of initiatives designed to improve 
payment for, and encourage long-term investment in, care management 
services (79 FR 67715). In particular, we sought to address an issue 
raised to us by the physician community, which asserted that the care 
management included in many of the existing E/M services, such as 
office visits, does not adequately describe the

[[Page 46206]]

typical non-face-to-face care management work required by certain 
categories of beneficiaries (78 FR 43337). We began to re-examine how 
Medicare should pay under the PFS for non-face-to-face care management 
services that were bundled into the PFS payment for face-to-face E/M 
visits, being included in the pre- and post-encounter work (78 FR 
43337). In proposing separate payment for CCM, we acknowledged that, 
even though we had previously considered non-face-to-face care 
management services as bundled into the payment for face-to-face E/M 
visits, the E/M office/outpatient visit CPT codes may not reflect all 
the services and resources required to furnish comprehensive, 
coordinated care management for certain categories of beneficiaries. We 
stated that we believed that the resources required to furnish complex 
chronic care management services to beneficiaries with multiple (that 
is, two or more) chronic conditions were not adequately reflected in 
the existing E/M codes. Medical practice and patient complexity 
required physicians, other practitioners and their clinical staff to 
spend increasing amounts of time and effort managing the care of 
comorbid beneficiaries outside of face-to-face E/M visits, for example 
complex and multidisciplinary care modalities that involve regular 
physician development and/or revision of care plans; subsequent report 
of patient status; review of laboratory and other studies; 
communication with other health care professionals not employed in the 
same practice who are involved in the patient's care; integration of 
new information into the care plan; and/or adjustments of medical 
therapy.
    Therefore, in the CY 2014 PFS final rule with comment period, we 
established a separate payment under the PFS for CPT code 99490 (78 FR 
43341 through 43342). We sought to include a relatively broad eligible 
patient population within the code descriptor, established a moderate 
payment amount, and established bundled payment for concurrently new 
CPT codes that were reserved for beneficiaries requiring ``complex'' 
CCM services (base CPT code 99487 and its add-on code 99489) (79 FR 
67716 through 67719). We stated that we would evaluate the services 
reported under CPT code 99490 to assess whether the service is targeted 
to the right population and whether the payment amount is appropriate 
(79 FR 67719). We remind stakeholders that CMS did not limit the 
eligible population to any particular list of chronic conditions other 
than the language in the CPT code descriptor. Accordingly, one or more 
of the chronic conditions being managed through CCM services could be 
chronic mental health or behavioral health conditions or chronic 
cognitive disorders, as long as the chronic conditions meet the 
eligibility language in the CPT code descriptor for CCM services and 
the billing practitioner meets all of Medicare's requirements to bill 
the code including comprehensive, patient-centered care planning for 
all health conditions (see Table 11).
    In finalizing separate payment for CPT code 99490, we considered 
whether we should develop standards to ensure that physicians and other 
practitioners billing the service would have the capability to fully 
furnish the service (79 FR 67721). We sought to make certain that the 
new PFS code(s) would provide beneficiary access to appropriate care 
management services that are characteristic of advanced primary care, 
such as patient support for chronic diseases to achieve health goals; 
24/7 patient access to care and health information; receipt of 
preventive care; patient, family and caregiver engagement; and timely 
coordination of care through electronic health information exchange. 
Accordingly, we established a set of scope of service elements and 
payment rules in addition to or in lieu of those established in CPT 
guidance (in the CPT code descriptor and CPT prefatory language), that 
the physician or nonphysician practitioner must satisfy to fully 
furnish CCM services and report CPT code 99490 (78 FR 74414 through 
74427, 79 FR 67715 through 67730, and 80 FR 14854). We established 
requirements to furnish a preceding qualifying visit, obtain advance 
written beneficiary consent, use certified electronic health record 
(EHR) technology to furnish certain elements of the service, share the 
care plan and clinical summaries electronically, document specified 
activities, and other items summarized in Table 11. For the CCM service 
elements for which we required use of a certified EHR, the billing 
practitioner must use, at a minimum, technology meeting the edition(s) 
of certification criteria that is acceptable for purposes of the EHR 
Incentive Programs as of December 31st of the calendar year preceding 
each PFS payment year. (For the CY 2017 PFS payment year, this would 
mean technology meeting the 2014 edition of certification criteria). 
These elements and requirements for separately payable CCM services are 
extensive and generally exceed those required for payment of codes 
describing procedures, diagnostic tests, or other E/M services under 
the PFS. In addition, both CPT guidance and our rules specify that only 
a single practitioner who assumes the care management role for a given 
beneficiary can bill CPT code 99490 per service period (calendar 
month). Because the new CCM service closely overlapped with several 
Medicare demonstration models of advanced primary care (the Multi-Payer 
Advanced Primary Care Practice (MAPCP) demonstration and the 
Comprehensive Primary Care Initiative (CPCI)), we provided that 
practitioners participating in one of these two initiatives could not 
be paid for CCM services furnished to a beneficiary attributed by the 
initiative to their practice (79 FR 67729).
    Given the non-face-to-face nature of CCM services, we also sought 
to ensure that beneficiaries would receive advance notice that Part B 
cost sharing applies since we currently have no legislative authority 
to ``waive'' cost sharing for this service. Also since only one 
practitioner can bill for CCM each service period, we believed the 
beneficiary notice requirement would help prevent duplicate payment to 
multiple practitioners.
    Since the establishment of CPT code 99490 for separate payment of 
CCM services, in a number of forums and in public comments to the CY 
2016 PFS final rule (80 FR 70921), many practitioners have stated that 
the service elements and billing requirements are burdensome, redundant 
and prevent them from being able to provide the services to 
beneficiaries who could benefit from them. Stakeholders have stated 
that CPT 99490 is underutilized because it is underpaid relative to the 
resources involved in furnishing the services, especially given the 
extensive Medicare rules for payment, and they have suggested a number 
of potential changes to our current payment rules. Stakeholders 
continue to believe that many of the CCM payment rules are duplicative 
of other statutory and regulatory provisions, and to recommend that we 
reduce the rules and expand CCM coding and payment to distinguish among 
different levels of patient complexity. We also note that section 103 
of the MACRA requires CMS to assess and report to Congress (no later 
than December 31, 2017) on access to CCM services by underserved rural 
and racial and ethnic minority populations and to conduct an outreach/
education campaign that is underway.
    Our assessment of claims data for CY 2015 for CPT code 99490 
suggests that

[[Page 46207]]

CCM services may indeed be underutilized considering the number of 
eligible Medicare beneficiaries. Our analysis of Medicare claims data 
indicates that for CY 2015, approximately 275,000 unique Medicare 
beneficiaries received the service an average of 3 times each, totaling 
$37 million in allowed charges. Since CPT code 99490 describes a 
minimum of 20 minutes of clinical staff time spent furnishing CCM 
services during a month and does not have a time limit, and since we 
currently do not separately pay the other codes in the CCM family of 
CPT codes (which would provide us with utilization data on the number 
of patients requiring longer service times during a billing period), we 
do not know how often patients required more than 20 minutes of CCM 
services per month. We also do not know their relative complexity, 
other than meeting the acuity criteria in the CPT code descriptor. We 
also have no way to know the relative complexity of the CCM services 
furnished to beneficiaries.
    In light of this stakeholder feedback and our mandate under MACRA 
section 103 to encourage and report on access to CCM services, we are 
proposing several changes in the payment rules for CCM services. Our 
primary goal and statutory mandate is to pay as accurately as possible 
for services furnished to Medicare beneficiaries based on the relative 
resources required to furnish PFS services, including CCM services. In 
so doing, we also expect to facilitate beneficiaries' access to 
reasonable and necessary CCM services that improve health outcomes. 
First, for CY 2017 we are proposing to more appropriately recognize and 
pay for the other codes in the CPT family of CCM services (CPT codes 
99487 and 99489 describing complex CCM), consistent with our general 
practice to price services according to their relative ranking within a 
given family of services. We direct the reader to section II.L of this 
proposed rule for a discussion of proposed valuation for base CPT code 
99487 and its add-on CPT code 99489. The CPT code descriptors are:
     CPT code 99487--Complex chronic care 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.
     CPT code 99489--Each additional 30 minutes of clinical 
staff time directed by a physician or other qualified health care 
professional, per calendar month (List separately in addition to code 
for primary procedure).
    As CPT provides, less than 60 minutes of clinical staff time in the 
service period could not be reported separately, and similarly, less 
than 30 minutes in addition to the first 60 minutes of complex CCM in a 
service period could not be reported. We would require 60 minutes of 
services for reporting CPT code 99487 and 30 additional minutes for 
each unit of CPT code 99489.
    We propose to adopt the CPT provision that CPT codes 99487, 99489, 
99490 may only be reported once per service period (calendar month) and 
only by the single practitioner who assumes the care management role 
with a particular beneficiary for the service period. That is, a given 
beneficiary would be classified as eligible to receive either complex 
or non-complex CCM during a given service period (calendar month), not 
both, and only one professional claim could be submitted to the PFS for 
CCM for that service period by one practitioner.
    Except for differences in the CPT code descriptors, we propose to 
require the same CCM service elements for CPT codes 99487, 99489 and 
99490. In other words, all the requirements in Table 11 would apply 
whether the code being billed for the service period is CPT code 99487 
(plus 99489 if applicable) or CPT code 99490. These three codes would 
differ in the amount of clinical staff service time provided; the 
complexity of medical decision-making as defined in the E/M guidelines 
(determined by the problems addressed by the reporting practitioner 
during the month); and the nature of care planning that was performed 
(establishment or substantial revision of the care plan for complex CCM 
versus establishment, implementation, revision or monitoring of the 
care plan for non-complex CCM). Billing practitioners could consider 
identifying beneficiaries who require complex CCM services using 
criteria suggested in CPT guidance (such as number of illnesses, number 
of medications or repeat admissions or emergency department visits) or 
the profile of typical patients in the CPT prefatory language, but 
these would not comprise Medicare conditions of eligibility for complex 
CCM.
    We are proposing several changes to our current scope of service 
elements for CCM, and are proposing that the same scope of service 
elements, as amended, would apply to all codes used to report CCM 
services beginning in 2017 (i.e., CPT codes 99487, 99489 and 99490). In 
particular, we are proposing changes in the requirements for the 
initiating visit, 24/7 access to care and continuity of care, format 
and sharing of the care plan and clinical summaries, beneficiary 
receipt of the care plan, beneficiary consent, and documentation. In 
Table 11, we summarize the current scope of service elements and 
payment rules for CCM and indicate whether we are proposing to retain, 
remove or revise each element.
a. Initiating Visit
    As provided in the CY 2014 PFS final rule with comment period (78 
FR 74425) and subregulatory guidance (available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Downloads/Payment_for_CCM_Services_FAQ.pdf), CCM must be initiated by the billing 
practitioner during a ``comprehensive'' E/M visit, annual wellness 
visit (AWV) or initial preventive physical exam (IPPE). This face-to-
face, initiating visit is not part of the CCM service and can be 
separately billed to the PFS, but is required before CCM services can 
be provided directly or under other arrangements. The billing 
practitioner must discuss CCM with the patient at this visit. While 
informed patient consent does not have to be obtained during this 
visit, the visit is an opportunity to obtain the required consent. The 
face-to-face visit included in transitional care management (TCM) 
services (CPT 99495 and 99496) qualifies as a ``comprehensive'' visit 
for CCM initiation. Levels 2 through 5 E/M visits (CPT 99212 through 
99215) also qualify; CMS does not require the practice to initiate CCM 
during a level 4 or 5 E/M visit. However CPT codes that do not involve 
a face-to-face visit by the billing practitioner or are not separately 
payable by Medicare (such as CPT 99211, anticoagulant management, 
online services, telephone and other E/M services) do not qualify as 
initiating visits. If the practitioner furnishes a ``comprehensive'' E/
M, AWV, or IPPE and does not discuss CCM with the patient at that 
visit, that visit cannot count as the initiating visit for CCM.
    We continue to believe that we should require an initiating visit 
in advance of furnishing CCM services, separate from the services 
themselves, because a face-to-face visit establishes the beneficiary's 
relationship with the billing practitioner

[[Page 46208]]

(most aspects of the CCM services are furnished incident to the billing 
practitioner's professional services). The initiating visit also 
ensures collection of comprehensive health information to inform the 
care plan. We continue to believe that the types of face-to-face 
services that qualify as an initiating visit for CCM are appropriate. 
We are not proposing to change the kinds of visits that can qualify as 
initiating CCM visits. However we are proposing to require the 
initiating visit only for new patients or patients not seen within one 
year instead of for all beneficiaries receiving CCM services. We 
believe this will allow practitioners with existing relationships with 
patients who have been seen relatively recently to initiate CCM 
services without furnishing a potentially unnecessary E/M visit. We are 
seeking public comment on whether a period of time shorter than one 
year would be more appropriate.
    We are also proposing for CY 2017 to create a new add-on G-code 
that would improve payment for visits that qualify as initiating visits 
for CCM services. The code would be billable for beneficiaries who 
require extensive face-to-face assessment and care planning by the 
billing practitioner (as opposed to clinical staff), through an add-on 
code to the initiating visit, GPPP7 (Comprehensive assessment of and 
care planning by the physician or other qualified health care 
professional for patients requiring chronic care management services 
(billed separately from monthly care management services) (Add-on code, 
list separately in addition to primary service). We propose that when 
the billing practitioner initiating CCM personally performs extensive 
assessment and care planning outside of the usual effort described by 
the billed E/M code (or AWV or IPPE code), the practitioner could bill 
GPPP7 in addition to the E/M code for the initiating visit (or in 
addition to the AWV or IPPE), and in addition to the CCM CPT code 99490 
(or proposed 99487 and 99489) if all requirements to bill for CCM 
services are also met. See section II.L for proposed valuation of 
GPPP7.
    The code GPPP7 would account specifically for additional work of 
the billing practitioner in personally performing a face-to-face 
assessment of a beneficiary requiring CCM services, and personally 
performing CCM care planning (the care planning could be face-to-face 
and/or non-face-to-face) that is not already reflected in the 
initiating visit itself (nor in the monthly CCM service code). We 
believe GPPP7 might be particularly appropriate to bill when the 
initiating visit is a less complex visit (such as a level 2 or 3 E/M 
visit), although GPPP7 could be billed along with higher level visits 
if the billing practitioner's effort and time exceeded the usual effort 
described by the initiating visit code. It could also be appropriate to 
bill GPPP7 when the initiating visit addresses problems unrelated to 
CCM, and the billing practitioner does not consider the CCM-related 
work he or she performs in determining what level of initiating visit 
to bill. We believe that this proposal will more appropriately 
recognize the relative resource costs for the work of the billing 
practitioner in initiating CCM services, specifically for extensive 
work assessing the beneficiary and establishing the CCM care plan that 
is reasonable and necessary, and that is not accounted for in the 
billed initiating visit or in the unit of the CCM service itself that 
is billed for a given service period. In addition, we believe this 
proposal will help ensure that the billing practitioner personally 
performs and meaningfully contributes to the establishment of the CCM 
care plan when the patient's complexity warrants it.
    Consistent with general coding guidance, the work that is reported 
under GPPP7 (including time) could not also be reported under or 
counted towards the reporting of any other billed code, including any 
of the monthly CCM services codes. The care plan that the practitioner 
must create in order to bill GPPP7 would be subject to the same 
requirements as the care plan included in the monthly CCM services, 
namely it must be an electronic patient-centered care plan based on a 
physical, mental, cognitive, psychosocial, functional and environmental 
(re)assessment and an inventory of resources and supports; a 
comprehensive care plan for all health issues. This would distinguish 
it from the more limited care plan included in the BHI codes GPPP1, 
GPPP2, GPPP3 or GPPPX which focus on behavioral health issues, or the 
care plan included in GPPP6 which focuses on cognitive status. We are 
seeking public input on potential overlap among these codes and further 
clinical input as to how the assessments and care planning that is 
included in them would differ.
    Finally, although not part of our proposals for 2017, we have noted 
with interest a recent CPT coding proposal for a code that would 
potentially identify and separately pay for monthly CCM work that is 
personally performed by the billing physician or other practitioner. We 
will continue to follow any CPT developments in this area.
b. 24/7 Access to Care and Continuity of Care
    We propose several revisions to the scope of service elements of 
24/7 Access to care and Continuity of Care. We continue to believe 
these elements are important aspects of CCM services, but that it would 
be appropriate to improve alignment with CPT provisions and remove the 
requirement for the care plan to be available remotely to individuals 
providing CCM services after hours. Studies have shown that after-hours 
care is best implemented as part of a larger practice approach to 
access and continuity (see for example, the peer-review article 
available at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3475839/). 
There is substantial local variation in how 24/7 access and continuity 
of care are achieved, depending on the contractual relationships among 
practitioners and providers in a particular geographic area and other 
factors. Care models include various contractual relationships between 
physician practices and after-hours clinics, urgent care centers and 
emergency departments; extended primary care office hours; physician 
call-sharing; telephone triage systems; and health information 
technology such as shared EHRs and systematic notification procedures 
(http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3475839/). Some or all of 
these may be used to provide access to urgent care on a 24/7 basis 
while maintaining information continuity between providers.
    We recognize that some models of care require more significant 
investment in practice infrastructure than others, for example 
resources in staffing or health information technology. In addition, we 
believe there is room to reduce the administrative complexity of our 
current payment rules for CCM services to accommodate a range of 
potential care models. In re-examining what should be included in the 
CCM scope of service elements for 24/7 Access to Care and Continuity of 
Care, we believe the CPT language adequately and more appropriately 
describes the services that should, at a minimum, be included in these 
service elements. Therefore, we propose to adopt the CPT language for 
these two elements. For 24/7 Access to Care, the scope of service 
element would be to provide 24/7 access to physicians or other 
qualified health care professionals or clinical staff including 
providing patients/caregivers with a means to make contact with health 
care professionals in the practice to address urgent needs regardless 
of the time of day or day of week. We believe

[[Page 46209]]

the CPT language more accurately reflects the potential role of 
clinical staff or call-sharing services in addressing after-hours care 
needs than our current language does. In addition, the 24/7 access 
would be for ``urgent'' needs rather than ``urgent chronic care 
needs,'' because we believe after-hours services typically would and 
should address any urgent needs and not only those explicitly related 
to the beneficiary's chronic conditions.
    We recognize that health information systems that include remote 
access to the care plan or the full EHR after hours, or a feedback loop 
that communicates back to the primary care physician and others 
involved in the beneficiary's care regarding after-hours care or advice 
provided, are extremely helpful (http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3475839/#CR25). They help ensure that the beneficiary 
receives necessary follow up, particularly if he or she is referred to 
the emergency department, and follow up after an emergency department 
visit is required under the CCM element of Management of Care 
Transitions. Accordingly, we continue to support and encourage the use 
of interoperable EHRs or remote access to the care plan in providing 
the CCM service elements of 24/7 Access to Care, Continuity of Care, 
and Management of Care Transitions. However, adoption of such 
technology would be optimal not only for CCM services, but also for a 
number of other PFS services and procedures (including various other 
care management services), and we have not required adoption of any 
certified or non-certified health information technology as a condition 
of payment for any other PFS service. We note that there are incentives 
under other Medicare programs to adopt such information technology, and 
are concerned that imposing EHR-related requirements at the service 
level as a condition of PFS payment could create disparities between 
these services and others under the fee schedule. Lastly, we recognize 
that not all after-hours care warrants follow-up or a feedback loop 
with the practitioner managing the beneficiary's care overall, and that 
under particular circumstances feedback loops can be achieved through 
oral, telephone or other less sophisticated communication methods. 
Therefore at this time, we propose to remove the requirement that the 
individuals providing CCM after hours must have access to the 
electronic care plan. This proposal reflects our understanding that 
flexibility in how practices can provide the requisite 24/7 access to 
care, as well as continuity of care and management of care transitions, 
for their CCM patients can facilitate appropriate access to these 
services for Medicare beneficiaries. This proposal is not intended to 
undermine the significance of standardized communication methods as 
part of effective care. Instead, we recognize that other CMS 
initiatives may be better mechanisms to incentivize increased 
interoperability of health information systems than conditions of 
payment assigned to particular services under the PFS. We also 
anticipate that improved accuracy of payment for care management 
services and reduced administrative burden associated with billing for 
them will contribute to practitioners' capacity to invest in the best 
tools for managing the care of Medicare beneficiaries.
    For Continuity of Care, we currently require the ability to obtain 
successive routine appointments ``with the practitioner or a designated 
member of the care team,'' while CPT only references successive routine 
appointments ``with a designated member of the care team.'' We do not 
believe there is any practical difference between these two phrases and 
therefore are proposing to omit the words ``practitioner or'' from our 
requirement. The billing practitioner is a member of the CCM care team, 
so the CPT language already allows for successive routine appointments 
either with the billing practitioner or another appropriate member of 
the CCM care team.
c. Electronic Care Plan
    Based on review of extensive public comment and stakeholder 
feedback, we have come to believe that we should not require 
individuals providing the beneficiary with the required 24/7 access to 
care for urgent needs to have access to the care plan as a condition of 
CCM payment. As discussed above, we believe that in general, provision 
of effective after-hours care of the beneficiary would require access 
to the care plan, if not the full EHR. However, we have heard from 
rural and other practices that remote access to the care plan is not 
always necessary or possible because urgent care needs after-hours are 
often referred to a practitioner or care team member who established 
the care plan or is familiar with the beneficiary. In some instances, 
the care plan does not need to be available in order to address urgent 
patient needs after business hours. In addition, we have not required 
the use of any certified or non-certified health information technology 
in the provision of any other PFS services (including various other 
care management services). We are concerned that imposing EHR-related 
requirements at the service level as a condition of PFS payment could 
distort the relative valuation of services priced under the fee 
schedule. Therefore, we propose to change the CCM service element to 
require timely electronic sharing of care plan information within and 
outside the billing practice, but not necessarily on a 24/7 basis, and 
to allow transmission of the care plan by fax.
    We acknowledge that it is best for practitioners and providers to 
have access to care plan information any time they are providing 
services to beneficiaries who require CCM services. This proposal is 
not intended to undermine the significance of electronic communication 
methods other than fax transmission in providing effective, continuous 
care. On the contrary, we believe that fax transmission, while commonly 
used, is much less efficient and secure than other methods of 
communicating patient health information, and we encourage 
practitioners to adopt and use electronic technologies other than fax 
for transmission and exchange of the CCM care plan. We continue to 
believe the best means of exchange of all relevant patient health 
information is through standardized electronic means. However, we 
recognize that other CMS initiatives may be better mechanisms to 
incentivize increased interoperability of health information systems 
than conditions of payment assigned to particular services under the 
PFS. We believe our proposal would still allow timely availability of 
health information within and outside the practice for purposes of 
providing CCM, and would simplify the rules governing provision of the 
service and improve access to the service. These proposed revisions 
would better align the service with appropriate CPT prefatory language, 
which may reduce unnecessary administrative complexity for 
practitioners in navigating the differences between CPT guidance and 
Medicare rules.
d. Clinical Summaries
    The CCM scope of service element Management of Care Transitions 
includes a requirement for the creation and electronic transmission and 
exchange of continuity of care documents referred to as ``clinical 
summaries'' (see Table 11). We patterned our requirements regarding 
clinical summaries after the EHR Incentive Program requirement that an 
eligible professional who transitions their patient to another setting 
of care or provider of care, or refers their patient to another 
provider of care, should

[[Page 46210]]

provide a summary care record for each transition of care or referral. 
This clinical summary includes demographics, the medication list, 
medication allergy list, problem list, and a number of other data 
elements if the practitioner knows them. As a condition of CCM payment, 
we required standardized content for clinical summaries (that they must 
be created/formatted according to certified EHR technology). For the 
exchange/transport function, we did not require the use of a specific 
tool or service to exchange/transmit clinical summaries, as long as 
they are transmitted electronically (this can include fax only when the 
receiving practitioner or provider can only receive by fax).
    Based on review of extensive public comment and stakeholder 
feedback, we have come to believe that we should not require the use of 
any specific electronic technology in managing a beneficiary's care 
transitions as a condition of payment for CCM services. Instead we are 
proposing more simply to require the billing practitioner to create and 
exchange/transmit continuity of care document(s) timely with other 
practitioners and providers. To avoid confusion with the requirements 
of the EHR Incentive Programs, and since we would no longer require 
standardized content for the CCM continuity of care document(s), we 
would refer to them as continuity of care documents instead of clinical 
summaries. We would no longer specify how the billing practitioner must 
transport or exchange these document(s), as long as it is done timely 
and consistent with the Care Transitions Management scope of service 
element. We welcome public input on how we should refer to these 
document(s), noting that CPT does not provide model language specific 
to CCM services. The proposed term ``continuity of care document(s)'' 
draws on CPT prefatory language for TCM services, which CPT provides 
may include ``obtaining and reviewing the discharge information (for 
example, discharge summary, as available, or continuity of care 
document).''
    Again, this proposal is not intended to undermine the significance 
of a standardized, electronic format and means of exchange (other than 
fax) of all relevant patient health information, for achieving timely, 
seamless care across settings especially after discharge from a 
facility. On the contrary, we believe that fax transmission, while 
commonly used, is much less efficient and secure than other methods of 
communicating patient health information, and we encourage 
practitioners to adopt and use electronic technologies other than fax 
for transmission and exchange of continuity of care documents in 
providing CCM services. We continue to believe the best means of 
exchange of all relevant patient health information is through 
standardized electronic means. However, as we discussed above regarding 
the CCM care plan, we have not applied similar requirements to other 
PFS services specifically (including various other care management 
services) and have concerns about how doing so may create disparities 
between these services and others under the PFS. We also recognize that 
other CMS initiatives may be better mechanisms to incentivize increased 
interoperability of health information systems than conditions of 
payment assigned to particular services under the PFS. However, we also 
anticipate that our proposals will contribute to practitioners' 
capacity to invest in the best tools for managing the care of Medicare 
beneficiaries.
e. Beneficiary Receipt of Care Plan
    We propose to simplify the current requirement to provide the 
beneficiary with a written or electronic copy of the care plan, by 
instead adopting the CPT language specifying more simply that a copy of 
the care plan must be given to the patient or caregiver. While we 
believe beneficiaries should and must be provided a copy of the care 
plan, and that practitioners may choose to provide the care plan in 
hard copy or electronic form in accordance with patient preferences, we 
do not believe it is necessary to specify the format of the care plan 
that must be provided as a condition of CCM payment. Additionally, we 
recognize that there may be times that sharing the care plan with the 
caregiver (in a manner consistent with applicable privacy and security 
rules and regulations) may be appropriate.
f. Beneficiary Consent
    We continue to believe that obtaining advance beneficiary consent 
to receive CCM services is important to ensure the beneficiary is 
informed, educated about CCM services, and is aware of applicable cost 
sharing. We also believe that querying the beneficiary about whether 
another practitioner is already providing CCM services helps to reduce 
the potential for duplicate provision or billing of the services. 
However, we believe the consent process could be simplified, and that 
it should be left to the practitioner and the beneficiary to decide the 
best way to establish consent. Therefore, we propose to continue to 
require billing practitioners to inform the beneficiary of the 
currently required information (that is, inform the beneficiary of the 
availability of CCM services; inform the beneficiary that only one 
practitioner can furnish and be paid for these services during a 
calendar month; and inform the beneficiary of the right to stop the CCM 
services at any time (effective at the end of the calendar month)). 
However, we propose to specify that the practitioner could document in 
the beneficiary's medical record that this information was explained 
and note whether the beneficiary accepted or declined CCM services 
instead of obtaining a written agreement.
    We also propose to remove the language requiring beneficiary 
authorization for the electronic communication of his or her medical 
information with other treating providers as a condition of payment for 
CCM services, because under the Health Insurance Portability and 
Accountability Act (HIPAA) Privacy Rule (45 CFR 164.506), a covered 
entity is permitted to use or disclose protected health information for 
purposes of treatment without patient authorization. Moreover, if such 
disclosure is electronic, the HIPAA Security Rule requires secure 
transmission (45 CFR 164.312(e)). In previous regulations we have 
reminded practitioners that for all electronic sharing of beneficiary 
information in the provision of CCM services, HIPAA Privacy and 
Security Rule standards apply in the usual manner (79 FR 67728).
g. Documentation
    We have heard from practitioners that the requirements to document 
certain information in a certified EHR format are redundant because the 
CCM billing rules already require documentation of core clinical 
information in a certified EHR format. Specifically, we already require 
structured recording of demographics, problems, medications and 
medication allergies, and the creation of a clinical summary record, 
using a qualifying certified EHR; and that a full list of problems, 
medications and medication allergies in the EHR must inform the care 
plan, care coordination and ongoing clinical care. Therefore, we 
propose to no longer require the use of a qualifying certified EHR to 
document communication to and from home- and community-based providers 
regarding the patient's psychosocial needs and functional deficits and 
to document beneficiary consent. We would continue to require 
documentation in the medical record of beneficiary consent (discussed 
above) and of communication to and from home- and community-based 
providers

[[Page 46211]]

regarding the patient's psychosocial needs and functional deficits.
    In summary, we believe our proposed changes would retain elements 
of the CCM service that are most characteristic of the changes in 
medical practice toward advanced primary care, while eliminating 
redundancy, simplifying provision of the services, and improving access 
without compromising quality of care and beneficiary privacy or advance 
notice and consent. We also anticipate that improved accuracy of 
payment for care management services and reduced administrative burden 
associated with billing for these services will contribute to 
practitioners' capacity to invest in the best tools for managing the 
care of Medicare beneficiaries.
g. CCM Requirements for Rural Health Clinics (RHCs) and Federally 
Qualified Health Centers (FQHCs)
    RHCs and FQHCs have been authorized to bill for CCM services since 
January 1, 2016, and are paid based on the Medicare 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. The RHC and FQHC 
requirements for billing CCM services have generally followed the 
requirements for practitioners billing under the PFS, with some 
adaptations based on the RHC and FQHC payment methodologies.
    To assure that CCM requirements for RHCs and FQHCs are not more 
burdensome than those for practitioners billing under the PFS, we are 
proposing revisions for CCM services furnished by RHCs and FQHCs 
similar to the revisions proposed under the section above entitled, 
``Reducing Administrative Burden and Improving Payment Accuracy for 
Chronic Care Management (CCM) Services'' for RHCs and FQHCs. 
Specifically, we propose to:
     Require that CCM be initiated during an AWV, IPPE, or 
comprehensive E/M visit only for new patients or patients not seen 
within one year. This would replace the requirement that CCM could only 
be initiated during an AWV, IPPE, or comprehensive E/M visit where CCM 
services were discussed.
     Require 24/7 access to a RHC or FQHC practitioner or 
auxiliary staff with a means to make contact with a RHC or FQHC 
practitioner to address urgent health care needs regardless of the time 
of day or day of week. This would replace the requirement that CCM 
services be available 24/7 with health care practitioners in the RHC or 
FQHC who have access to the patient's electronic care plan to address 
his or her urgent chronic care needs, regardless of the time of day or 
day of the week.
     Require timely electronic sharing of care plan information 
within and outside the RHC or FQHC, but not necessarily on a 24/7 
basis, and allow transmission of the care plan by fax. This would 
replace the requirement that the electronic care plan be available on a 
24/7 basis to all practitioners within the RHC or FQHC whose time 
counts towards the time requirement for the practice to bill the CCM 
code, and removes the restriction on allowing the care plan to be 
faxed.
     Require that in managing care transitions, the RHC or FQHC 
creates, exchanges, and transmits continuity of care document(s) in a 
timely manner with other practitioners and providers. This would 
replace the requirements that clinical summaries must be created and 
formatted according to certified EHR technology, and the requirement 
for electronic exchange of clinical summaries by a means other than 
fax.
     Require that a copy of the care plan be given to the 
patient or caregiver. This would remove the description of the format 
(written or electronic) and allows the care plan to be provided to the 
caregiver when appropriate (and in a manner consistent with applicable 
privacy and security rules and regulations).
     Require that the RHC or FQHC practitioner documents in the 
beneficiary's medical record that all the elements of beneficiary 
consent (for example, that the beneficiary was informed of the 
availability of CCM services; only one practitioner can furnish and be 
paid for these services during a calendar month; the beneficiary may 
stop the CCM services at any time, effective at the end of the calendar 
month, etc.) were provided, and whether the beneficiary accepted or 
declined CCM services. This would replace the requirement that RHCs and 
FQHCs obtain a written agreement that these elements were discussed, 
and removes the requirement that the beneficiary provide authorization 
for the electronic communication of his or her medical information with 
other treating providers as a condition of payment for CCM services.
     Require that communication to and from home- and 
community-based providers regarding the patient's psychosocial needs 
and functional deficits be documented in the patient's medical record. 
This would replace the requirement to document this patient health 
information in a certified EHR format.
    We note that we are not proposing an additional payment adjustment 
for patients who require extensive assessment and care planning as part 
of the initiating visit, as payments for RHC and FQHC services are not 
adjusted for length or complexity of the visit.
    We believe these proposed changes would keep the CCM requirements 
for RHCs and FQHCs consistent with the CCM requirements for 
practitioners billing under the PFS, simplify the provision of CCM 
services by RHCs and FQHCs, and improve access to these services 
without compromising quality of care, beneficiary privacy, or advance 
notice and consent.

           Table 11--Chronic Care Management (CCM) Scope of Service Elements and Billing Requirements
----------------------------------------------------------------------------------------------------------------
     CCM Scope of service element/billing         Propose to       Propose to
                 requirement                        retain           remove             Proposed revision
----------------------------------------------------------------------------------------------------------------
Initiating Visit--Initiation during an AWV,    ...............  ...............  Initiation during an AWV, IPPE,
 IPPE, or face-to-face E/M visit for all                                          or face-to-face E/M visit
 patients (Level 4 or 5 visit not required).                                      (Level 4 or 5 visit not
                                                                                  required) for new patients or
                                                                                  patients not seen within 1
                                                                                  year.
Structured Recording of Patient Information    ...............  ...............  Structured Recording of Patient
 Using Certified EHR Technology--Structured                                       Information Using Certified
 recording of demographics, problems,                                             EHR Technology--Structured
 medications, medication allergies, and the                                       recording of demographics,
 creation of a structured clinical summary                                        problems, medications and
 record, using certified EHR technology. A                                        medication allergies using
 full list of problems, medications and                                           certified EHR technology. A
 medication allergies in the EHR must inform                                      full list of problems,
 the care plan, care coordination and ongoing                                     medications and medication
 clinical care.                                                                   allergies in the EHR must
                                                                                  inform the care plan, care
                                                                                  coordination and ongoing
                                                                                  clinical care.

[[Page 46212]]

 
24/7 Access to Care--Access to care            ...............  ...............  Provide 24/7 access to
 management services 24/7 (providing the                                          physicians or other qualified
 beneficiary with a means to make timely                                          health professionals or
 contact with health care practitioners in                                        clinical staff including
 the practice who have access to the                                              providing patients/caregivers
 patient's electronic care plan to address                                        with a means to make contact
 his or her urgent chronic care needs                                             with health care professionals
 regardless of the time of day or day of the                                      in the practice to address
 week).                                                                           urgent needs regardless of the
                                                                                  time of day or day of week.
Continuity of Care--Continuity of care with a  ...............  ...............  Continuity of care with a
 designated practitioner or member of the                                         designated member of the care
 care team with whom the beneficiary is able                                      team with whom the beneficiary
 to get successive routine appointments.                                          is able to schedule successive
                                                                                  routine appointments.
Comprehensive Care Management--Care                         X   ...............  ...............................
 management for chronic conditions 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.
Electronic Comprehensive Care Plan--Creation                X   ...............  ...............................
 of an electronic patient-centered care plan
 based on a physical, mental, cognitive,
 psychosocial, functional and environmental
 (re)assessment and an inventory of resources
 and supports; a comprehensive care plan for
 all health issues.
Electronic Sharing of Care Plan--Must at       ...............  ...............  Must at least electronically
 least electronically capture care plan                                           capture care plan information,
 information; make this information available                                     and make this information
 on a 24/7 basis to all practitioners within                                      available timely within and
 the practice whose time counts towards the                                       outside the billing practice
 time requirement for the practice to bill                                        as appropriate. Share care
 the CCM code; and share care plan                                                plan information
 information electronically (by fax in                                            electronically (can include
 extenuating circumstance) as appropriate                                         fax) and timely within and
 with other practitioners and providers.                                          outside the billing practice
                                                                                  to individuals involved in the
                                                                                  beneficiary's care.
Beneficiary Receipt of Care Plan--Provide the  ...............  ...............  A copy of the plan of care must
 beneficiary with a written or electronic                                         be given to the patient or
 copy of the care plan.                                                           caregiver.
Documentation of care plan provision to        ...............               X   ...............................
 beneficiary-- Document provision of the care
 plan as required to the beneficiary using
 certified EHR technology.
Management of Care Transitions...............  ...............  ...............  Management of Care Transitions
 Management of care transitions                                           Management of care
 between and among health care providers and                                      transitions between and among
 settings, including referrals to other                                           health care providers and
 clinicians; follow-up after an emergency                                         settings, including referrals
 department visit; and follow-up after                                            to other clinicians; follow-up
 discharges from hospitals, skilled nursing                                       after an emergency department
 facilities or other health care facilities.                                      visit; and follow-up after
 Format clinical summaries according                                      discharges from hospitals,
 to certified EHR technology (content                                             skilled nursing facilities or
 standard).                                                                       other health care facilities.
 Not required to use a specific tool                                      Create and exchange/
 or service to exchange/transmit clinical                                         transmit continuity of care
 summaries, as long as they are transmitted                                       document(s) timely with other
 electronically (by fax in extenuating                                            practitioners and providers.
 circumstance).
Home- and Community-Based Care Coordination--               X   ...............  ...............................
 Coordination with home and community based
 clinical service providers.
Documentation of Home- and Community-Based     ...............  ...............  Communication to and from home-
 Care Coordination--Communication to and from                                     and community-based providers
 home- and community-based providers                                              regarding the patient's
 regarding the patient's psychosocial needs                                       psychosocial needs and
 and functional deficits must be documented                                       functional deficits must be
 in the patient's medical record using                                            documented in the patient's
 certified EHR technology.                                                        medical record.

[[Page 46213]]

 
Enhanced Communication Opportunities--                      X   ...............  ...............................
 Enhanced opportunities for the beneficiary
 and any caregiver to communicate with the
 practitioner 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
 Inform the beneficiary of the                                            of the availability of CCM
 availability of CCM services and obtain his                                      services.
 or her written agreement to have the                                             Inform the beneficiary
 services provided, including authorization                                       that only one practitioner can
 for the electronic communication of his or                                       furnish and be paid for these
 her medical information with other treating                                      services during a calendar
 providers.                                                                       month.
 Inform the beneficiary of the right                                      Inform the beneficiary
 to stop the CCM services at any time                                             of the right to stop the CCM
 (effective at the end of the calendar month)                                     services at any time
 and the effect of a revocation of the                                            (effective at the end of the
 agreement on CCM services.                                                       calendar month).
 Inform the beneficiary that only one                                     Document in the
 practitioner can furnish and be paid for                                         beneficiary's medical record
 these services during a calendar month.                                          that the required information
 Document the beneficiary's written                                       was explained and whether the
 consent and authorization using certified                                        beneficiary accepted or
 EHR technology.                                                                  declined the services.
----------------------------------------------------------------------------------------------------------------

5. Assessment and Care Planning for Patients With Cognitive Impairment
    For CY 2017 we are proposing a G-code that would provide separate 
payment to recognize the work of a physician (or other appropriate 
billing practitioner) in assessing and creating a care plan for 
beneficiaries with cognitive impairment, GPPP6 (Cognition and 
functional assessment using standardized instruments with development 
of recorded care plan for the patient with cognitive impairment, 
history obtained from patient and/or caregiver, in office or other 
outpatient setting or home or domiciliary or rest home). We understand 
that a similar code was recently approved by the CPT Editorial Panel 
and is scheduled to be included in the CY 2018 CPT code set. We intend 
for GPPP6 to be a temporary code (perhaps for only one-year) and will 
consider whether to adopt and establish relative value units for the 
new CPT code under our standard process, presumably for CY 2018.
    We reviewed the list of service elements that were proposed at CPT, 
and are proposing the following as required service elements of GPPP6:
     Cognition-focused evaluation including a pertinent history 
and examination.
     Medical decision making of moderate or high complexity 
(defined by the E/M guidelines).
     Functional assessment (for example, Basic and Instrumental 
Activities of Daily Living), including decision-making capacity.
     Use of standardized instruments to stage dementia.
     Medication reconciliation and review for high-risk 
medications, if applicable.
     Evaluation for neuropsychiatric and behavioral symptoms, 
including depression, including use of standardized instrument(s).
     Evaluation of safety (for example, home), including motor 
vehicle operation, if applicable.
     Identification of caregiver(s), caregiver knowledge, 
caregiver needs, social supports, and the willingness of caregiver to 
take on caregiving tasks.
     Advance care planning and addressing palliative care 
needs, if applicable and consistent with beneficiary preference.
     Creation of a care plan, including initial plans to 
address any neuropsychiatric symptoms and referral to community 
resources as needed (for example, adult day programs, support groups); 
care plan shared with the patient and/or caregiver with initial 
education and support.
    The proposed valuation of GPPP6 (discussed in section II.E.1) 
assumes that this code would include services that are personally 
performed by the physician (or other appropriate billing practitioner) 
and would significantly overlap with services described by certain E/M 
visit codes, advance care planning services, and certain psychological 
or psychiatric service codes that are currently separately payable 
under the PFS. Accordingly, we propose that GPPP6 must be furnished by 
the physician (or other appropriate billing practitioner) and could not 
be billed on the same date of service as CPT codes 90785 (Psytx complex 
interactive), 90791 (Psych diagnostic evaluation), 90792 (Psych diag 
eval w/med srvcs), 96103 (Psycho testing admin by comp), 96120 
(Neuropsych tst admin w/comp), 96127 (Brief emotional/behav assmt), 
99201-99215 (Office/outpatient visits new), 99324-99337 (Domicil/r-home 
visits new pat), 99341-99350 (Home visits new patient), 99366-99368 
(Team conf w/pat by hc prof), 99497 (Advncd care plan 30 min), 99498 
(Advncd care plan addl 30 min)), since these codes all reflect face-to-
face services provided by the physician or other billing practitioner 
for related services that are separately payable. In addition, we are 
proposing to prohibit billing of GPPP6 with other care planning 
services, such as care plan oversight services (CPT code 99374), home 
health care and hospice supervision (G0181, G0182), or our proposed 
add-on code for comprehensive assessment and care planning by the 
billing practitioner for patients requiring CCM services (GPPP7). We 
are seeking comment on whether there are circumstances where multiple 
care planning codes could be furnished without significant overlap. We 
propose to specify that GPPP6 may serve as a companion or primary E/M 
code to the prolonged service codes (those that are currently 
separately paid, and those we propose to separately pay beginning in 
2017), but are interested in

[[Page 46214]]

public input on whether there is any overlap among these services. We 
are seeking comment on how to best delineate the post-service work for 
GPPP6 from the work necessary to provide the prolonged services code.
    We do not believe the services described by GPPP6 would 
significantly overlap with proposed or current medically necessary CCM 
services (CPT codes 99487, 99489, 99490); TCM services (99495, 99496); 
or the proposed behavioral health integration service codes (GPPP1, 
GPPP2, GPPP3, GPPPX). Therefore we propose that GPPP6 could be billed 
on the same date-of-service or within the same service period as these 
codes (CPT codes 99487, 99489, 99490, 99495, 99496, GPPP1, GPPP2, 
GPPP3, GPPPX). There may be overlap in the patient population eligible 
to receive these services and the population eligible to receive the 
services described by GPPP6, but we believe there would be sufficient 
differences in the nature and extent of the assessments, interventions 
and care planning, as well as the qualifications of individuals 
providing the services, to allow concurrent billing for services that 
are medically reasonable and necessary. We welcome public comment on 
potential overlap between GPPP6 and existing PFS billing codes, as well 
as the other primary care/cognitive services addressed in this section 
of the proposed rule.
6. Improving Payment Accuracy for Care of People With Disabilities
a. Background
    People with disabilities face significant challenges accessing the 
health care system. Medicare beneficiaries who are under age 65 with 
disabilities are three times more likely to report having difficulties 
finding a doctor who accepts Medicare than beneficiaries age 65 and 
older.\4\ When able to find a Medicare participating physician, people 
with disabilities report worse experiences than people without 
disabilities on many quality measures, including those related to 
patient-centered care and patient safety based on data from the 
National Healthcare Disparities Report, produced by the Agency for 
Healthcare Research and Quality (AHRQ).\5\ The reasons for these access 
and quality disparities are multifaceted and may include a range of 
payment challenges, accessibility issues with equipment and facilities, 
communication obstacles, and sometimes lack of practitioner 
understanding of how to assess and fully address the needs and 
preferences of people with disabilities. The Equity Plan for Improving 
Quality in Medicare, released last fall by CMS, highlights many 
challenges in achieving better outcomes for people with disabilities.
---------------------------------------------------------------------------

    \4\ The Henry J Kaiser Family Foundation. 2010. ``Medicare and 
Nonelderly People with Disabilities.''
    \5\ National Healthcare Disparities Report, 2013. May 2014. 
Agency for Healthcare Research and Quality, Rockville, MD. The 
National Healthcare Disparities Report summarizes health care 
quality and access among various racial, ethnic, and income groups 
and other priority populations, such as residents of rural areas and 
people with disabilities.
---------------------------------------------------------------------------

    One way to help improve access to high-quality physicians' services 
for people with disabilities is to ensure Medicare Physician Fee 
Schedule payments are based on the accurate relative resource costs of 
services furnished to people with disabilities.
    As described in section I.B. of this proposed rule, PFS payments 
are required to be based on the relative resources involved in 
furnishing a service. To determine the relative resources required to 
furnish a service described by a specific HCPCS code, CMS considers the 
``typical'' Medicare service described by that code, and identifies the 
resources involved in that scenario. This approach assumes that while 
practitioners might incur greater or fewer costs in furnishing any 
specific service to any particular beneficiary, RVUs are allocated 
appropriately based on a ``typical'' Medicare case-mix.
    For HCPCS codes that describe narrowly-defined procedures and 
tests, PFS payment rates based on the typical resources may be accurate 
for most kinds of practitioners and many beneficiaries, because the 
granularity of coding corresponds with practitioners' use of resources 
based on the specific medical needs of their patients. However, the 
HCPCS codes that describe the office/outpatient E/M services are 
broadly defined, so the typical service billed using one of those HCPCS 
codes matches a much smaller percentage of all the services billed 
using that HCPCS code. Medicare payment rates for these kinds of 
services under the PFS do not vary by the population being served, or 
by the particular practitioner furnishing the services. Payment for 
these kinds of service vary only based on the delineations among the 
level of visits, despite the reality that adequately serving certain 
patients requires much greater resources in ways that are generally not 
reflected in the described differentiation between visit levels.
    For example, the same codes and rates are used to pay for routine 
care of all patients, including furnishing care to patients with 
disabilities that often require greater resources relating to 
equipment, clinical staff, and physician time relative to the resource 
costs associated with providing the same kind of care to other Medicare 
beneficiaries. Thus, the payment rate for the code may not accurately 
reflect the resources involved in providing the service to certain 
categories of beneficiaries. For these reasons, the resources involved 
in furnishing care, including and especially routine care of both acute 
and chronic illness, to beneficiaries with disabilities may be 
routinely and systematically underestimated under PFS payment made on 
the basis of the broadly described visit codes. This effectively 
reduces overall payment relative to resource needs for practitioners 
who more frequently serve such patients, which could negatively impact 
access or quality of care for beneficiaries with disabilities.
b. Establishing a HCPCS G-Code To Improve Payment Accuracy for Care of 
People With Mobility-Related Disabilities
    We estimate that about 7 percent of all Medicare beneficiaries have 
a potentially disabling mobility-related diagnosis (the Medicare-only 
prevalence is 5.5 percent and the prevalence for Medicare-Medicaid dual 
eligible beneficiaries is 11 percent), using 2010 Medicare (and for 
dual eligible beneficiaries, Medicaid) claims data.
    When a beneficiary with a mobility-related disability goes to a 
physician or other practitioner's office for an E/M visit, the 
resources associated with providing the visit can exceed the resources 
required for the typical E/M visit. An E/M visit for a patient with a 
mobility-related disability can require more physician and clinical 
staff time to provide appropriate care because the patient may require 
skilled assistance throughout the visit to carefully move and adjust 
his/her body. Furthermore, an E/M visit for a patient with a mobility-
related disability commonly requires specialized equipment such as a 
wheel chair accessible scale, floor and overhead lifts, a movable exam 
table, padded leg supports, a stretcher and transfer board. The current 
E/M visit payment rates, based on an assumption of ``typical'' 
resources involved in furnishing an E/M visit to a ``typical'' patient, 
do not accurately reflect these additional resources associated with 
furnishing appropriate care to many beneficiaries with mobility-related 
disabilities.
    When furnishing E/M services to beneficiaries with mobility-related

[[Page 46215]]

disabilities, practitioners face difficult choices in deciding whether 
to take the extra time necessary and invest in the required specialized 
equipment for these visits even though the payment rate for the service 
does not account for either expense; potentially providing less than 
optimal care for a beneficiary whose needs exceed the standard 
appointment block of time in the standard equipped exam room reflected 
in the current E/M visit payment rate; or declining to accept 
appointments altogether for beneficiaries who require additional time 
and specialized equipment.
    Each of these scenarios is potentially problematic. The first two 
scenarios suggest that the quality of care for this beneficiary 
population might be compromised by assumptions under the PFS regarding 
relative resource costs in furnishing services to this population. The 
third scenario reflects an obvious access problem for these 
beneficiaries. To improve payment accuracy and help ameliorate 
potential disparity in access and quality for beneficiaries with 
mobility-related disabilities, we propose to create a new add-on G-
code, effective for CY 2017, to describe the additional services 
furnished in conjunction with E/M services to beneficiaries with 
disabilities that impair their mobility:
     GDDD1: Resource-intensive services for patients for whom 
the use of specialized mobility-assistive technology (such as 
adjustable height chairs or tables, patient lifts, and adjustable 
padded leg supports) is medically necessary and used during the 
provision of an office/outpatient evaluation and management service 
visit (Add-on code, list separately in addition to primary procedure).
    Effective January 1, 2017, we propose that this add-on code could 
be billed with new and established patient office/outpatient E/M codes 
(CPT codes 99201 through 99205, and 99212 through 99215), as well as 
transitional care management codes (CPT codes 99495 and 99496), when 
the additional resources described by the code are medically necessary 
and used in the provision of care. In addition to seeking comment on 
this proposal, we are also seeking comment on other HCPCS codes that 
may be appropriate base codes for this proposed add-on code, including 
those describing preventive visits and services. We remind potential 
commenters that the rationale for this proposal is based in large part 
on the broad use and lack of granularity in coding for E/M services 
relative to other PFS services in conjunction with the additional 
resources used.
    The proposed inputs and valuation for this code are detailed in 
section II.L of this proposed rule.
c. Soliciting Comment on Other Coding Changes To Improve Payment 
Accuracy for Care of People With Disabilities
    When furnishing care to a beneficiary with a mobility-related 
disability, the current E/M visit payment rates may not fully reflect 
the associated resource costs that are being incurred by practitioners. 
We recognize that there are other populations for which payment 
adjustment may be appropriate. Our proposal regarding beneficiaries 
with mobility-related disabilities reflects the discrete nature of the 
additional resource costs for this population, the clear lack of 
differentiation in resource costs regarding particular kinds of 
frequently-furnished services, and the broad recognition of access 
problems. We recognize that some physician practices may frequently 
furnish services to particular populations for which the relative 
resource costs are similarly systemically undervalued and we seek 
comment regarding other circumstances where these dynamics can be 
discretely observed.
7. Supervision for Requirements for Non-Face-to-Face Care Management 
Services
    Our current regulations in Sec.  410.26(b) provide for an exception 
to allow general supervision of CCM services (and similarly, for the 
non-face-to-face portion of TCM services), because these are non-face-
to-face care management/care coordination services that would commonly 
be provided by clinical staff when the billing practitioner, and hence, 
the supervising physician, is not physically present; and the CPT codes 
are comprised solely (or largely) of non-face-to-face services provided 
by clinical staff. A number of codes that we are proposing to establish 
for separate payment in CY 2017 under our initiative to improve payment 
accuracy for primary care and care management are similar to CCM 
services in that a critical element of the services is non-face-to-face 
care management/care coordination services provided by clinical staff 
when the billing practitioner may not be physically present. 
Accordingly, we are proposing to amend Sec.  410.26(a)(3) and Sec.  
410.26 (b) to better define general supervision and to allow general 
supervision not only for CCM services and the non-face-to-face portion 
of TCM services, but also for proposed codes GPPP1, GPPP2, GPPP3, 
GPPPX, CPT code 99487, and CPT code 99489. Instead of adding each of 
these proposed codes requiring general supervision to the regulation 
text on an individual basis, we propose to revise our regulation under 
paragraph (b)(1) of Sec.  410.26 to allow general supervision of the 
non-face-to-face portion of designated care management services, and we 
would designate the applicable services through notice and comment 
rulemaking.

F. Improving Payment Accuracy for Services: Diabetes Self-Management 
Training (DSMT)

    Section 1861(s)(2)(S) of the Act specifies that medical and other 
health services include DSMT services as defined in section 1861(qq) of 
the Act. DSMT services are intended to educate beneficiaries in the 
successful self-management of diabetes. DSMT includes, as applicable, 
instructions in self-monitoring of blood glucose; education about diet 
and exercise; an insulin treatment plan developed specifically for the 
patient who is insulin-dependent; and motivation for patients to use 
the new skills for self-management (see Sec.  410.144(a)(5)). DSMT 
services are reported under HCPCS codes G0108 (Diabetes outpatient 
self-management training services, individual, per 30 minutes) and 
G0109 (Diabetes outpatient self- management training services, group 
session (2 or more), per 30 minutes). The benefit, as specified at 
Sec.  410.141, consists of 1 hour of individual and 9 hours of group 
training unless special circumstances warrant more individual training 
or no group session is available within 2 months of the date the 
training is ordered.
    Section 1861(qq) of the Act specifies that DMST services are 
furnished by a certified provider, defined as a physician or other 
individual or entity that also provides, in addition to DSMT, other 
items or services for which payment may be made under Medicare. The 
physician, individual or entity that furnishes the training also must 
meet certain quality standards. The physician, individual or entity can 
meet standards established by us or standards originally established by 
the National Diabetes Advisory Board and subsequently revised by 
organizations who participated in their establishment, or can be 
recognized by an organization that represents individuals with diabetes 
as meeting standards for furnishing the services.
    We require that all those who furnish DSMT services be accredited 
as meeting quality standards by a CMS-approved national accreditation 
organization (NAO). In accordance with Sec.  410.144, a CMS-approved 
NAO may accredit an

[[Page 46216]]

individual, physician or entity to meet one of three sets of DSMT 
quality standards: CMS quality standards; the National Standards for 
Diabetes Self-Management Education Programs (National Standards); or 
the standards of an NAO that represents individuals with diabetes that 
meet or exceed our quality standards. Currently, we recognize the 
American Diabetes Association and the American Association of Diabetes 
Educators as approved NAOs, both of whom follow National Standards. 
Medicare payment for outpatient DSMT services is made in accordance 
with Sec.  414.63.
    An article titled ``Use of Medicare's Diabetes Self-Management 
Training Benefit'' was published in the Health Education Behavior on 
January 23, 2015. The article noted that only 5 percent of Medicare 
beneficiaries with newly diagnosed diabetes used DSMT services. The 
article recommended that future research identify barriers to DSMT 
access.
    We understand there are a number of issues that may contribute to 
the low utilization of these services. Some of the issues that have 
been brought to our attention by the DSMT community and NAOs are:
     Concerns that claims have been rejected or denied because 
of confusion about the credentials of the individuals who furnish DSMT 
services. In entities following the National Standards, the credentials 
of the educators actually providing the training are determined by the 
NAO and are not to be determined by the Medicare Administrative 
Contractor. Many individuals who actually furnish DSMT services, such 
as registered nurses and pharmacists, do not qualify to enroll in 
Medicare as certified providers, as that term is defined at section 
1861(qq)(2)(A) of the Act, and codified in our regulations at Sec.  
410.140 as approved entit(ies).
     Questions about when individual (rather than group) DSMT 
services are available. As noted above, the benefit consists of 1 hour 
of individual and 9 hours of group training unless special 
circumstances warrant more individual training or no group session is 
available within 2 months of the date the training is ordered. The 
special circumstances are when the beneficiary's physician or qualified 
NPP documents in the beneficiary's medical record that the beneficiary 
has special needs resulting from conditions such as severe vision, 
hearing, or language limitations that would hinder effective 
participation in a group training session. In all cases, however, the 
physician or NPP must order individual training.
     Concerns that the Medicare Benefit Policy Manual, Chapter 
15, section 300 does not clarify the settings and locations in which 
DSMT services may be provided. As a result, some providers (and perhaps 
some Medicare contractors) are confused. In regard to this issue, we 
note that a forthcoming manual update will reiterate the guidance we 
provided to the DSMT community, including the NAOs, in a response to 
their letter requesting clarification regarding the settings and 
locations in which DSMT services can be provided. The manual update 
will clarify that: (a) In the case of DSMT services furnished by an 
entity that submits professional claims to the A/B Medicare 
Administrative Contractor (MAC), such as a physician's office or an 
RD's practice, DSMT services may be furnished at alternate locations 
used by the entity as a practice location; and (b) when the DSMT 
services are furnished by an entity that is a hospital outpatient 
department (HOPD), these DSMT services must be furnished in the 
hospital (including a provider-based department) and cannot be 
furnished at alternate non-hospital locations. We plan to address and 
clarify the above issues through Medicare program instructions as 
appropriate. We also recognize the possibility that Medicare payment 
for these services may not fully reflect the resources required to 
provide them and this may be contributing to relatively low 
utilization. There may also be other barriers to access of which we are 
not aware. We are seeking public comment on such barriers to help us 
identify and address them. We also seek comment and information on 
whether Medicare payment for these services is accurate. In particular, 
we would appreciate information on the time and intensity of services 
provided, and on the services and supplies that should be included in 
the calculation of practice expenses. We will consider this information 
to determine whether to propose an update to resource inputs used to 
develop payment rates for these services in future rulemaking.

G. Target for Relative Value Adjustments for Misvalued Services

    Section 1848(c)(2)(O) of the Act establishes 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 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. Under section 1848(c)(2)(O)(v) of the 
Act, the target that applies to calendar years (CYs) 2017 and 2018 is 
calculated as 0.5 percent of the estimated amount of expenditures under 
the PFS for the year.
    In CY 2016 PFS rulemaking, we proposed and finalized a methodology 
to implement this statutory provision.
    Because the annual target is calculated by measuring changes from 
one year to the next, for CY 2016, we considered how to account for 
changes in values that are best measured over 3 years, instead of 2 
years. As we described in the CY 2016 final rule with comment period 
(80 FR 70932), our general valuation process for potentially misvalued, 
new, and revised codes was to establish values on an interim final 
basis for a year in the PFS final rule with comment period. Then, 
during the 60-day period following the publication of the final rule 
with comment period, we would accept public comment about those 
valuations. In the final rule with comment period for the subsequent 
year, we would consider and respond to public comments received on the 
interim final values, and make any appropriate adjustments to values 
based on those comments. Under that process for revaluing new, revised, 
and misvalued codes, we believe the overall change in valuation for 
many codes would best measured across values for 3 years: Between the 
original value in the first year; the interim final value in the second 
year; and the finalized value in the third year. However, the target 
calculation for a year would only be comparing changes in RVUs between 
2 years and not among 3 years, so the

[[Page 46217]]

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) 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. We noted that 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 generated 
challenges in calculating the target for CY 2016. 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 had then included 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 and finalized the decision 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.
    For the CY 2017 final rule with comment period, we will be 
finalizing values (year 3) for codes that were interim final in CY 2016 
(year 2). Unlike codes that were interim final for CY 2015, the codes 
that are interim final for CY 2016 were included as misvalued codes and 
will fall within the range of years for which the misvalued code target 
provision applies. Thus, overall changes in values for these codes 
would be measured in the target across 3 full years: The original value 
in the first year (CY 2015); the interim final value in the second year 
(CY 2016); and the finalized value in the third year (CY 2017). The 
changes in valuation for these CY 2016 interim final codes were 
previously measured and counted towards the target during their initial 
change in valuation between years 1 and 2.
    As such, we are proposing to include changes in values of the CY 
2016 interim final codes toward the CY 2017 misvalued code target. We 
believe that this is consistent with the approach that we finalized in 
last year's final rule with comment period. The changes in values of CY 
2015 interim final codes were not counted towards the misvalued code 
target in CY 2016 since the valuation change occurred over multiple 
years, including years not applicable to the misvalued code target 
provision. However, both of the changes in valuation for the CY 2016 
interim final codes, from year 1 to year 2 (CY 2015 to CY 2016) and 
from year 2 to year 3 (CY 2016 to CY 2017), have taken place during 
years that occur within the misvalued code target provision. We 
therefore believe that any adjustments made to these codes based on 
public comment should be considered towards the achievement of the 
target for CY 2017, just as any changes in valuation for these same CY 
2016 interim final codes previously counted towards the achievement of 
the target for CY 2016.
    We seek public comments regarding this proposal. We also remind 
commenters that we have revised our process for revaluing new, revised 
and misvalued codes so that we will be proposing and finalizing values 
for most of the misvalued codes during a single calendar year. After 
this year, there will be far fewer instances of interim final codes and 
changes that are best measured over 3 years far.
    We refer readers to the regulatory impact analysis section of this 
proposed rule for our estimate of the proposed net reduction in 
expenditures relative to the 0.5 percent target for CY 2017, 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 2017 PFS proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.

H. Phase-In of Significant RVU Reductions

    Section 1848(c)(7) of the Act 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.
    In the CY 2016 PFS rulemaking, we proposed and finalized a 
methodology to implement this statutory provision. To determine which 
services are described by new or revised codes for purposes of the 
phase-in provision, we apply the phase-in to all services that are 
described by the same, unrevised code in both the current and update 
year, and exclude codes that describe different services in the current 
and update year.
    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 estimate the total RVUs for a 
service prior to the budget-neutrality redistributions that result from 
implementing phase-in values. In implementing the phase-in, we consider 
a 19 percent reduction as the maximum 1-year reduction for any service 
not described by a new or revised code. This approach limits the year 
one reduction for the service to the maximum allowed amount (that is, 
19 percent), and then phases in the remainder of the reduction.
    The statute provides 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 for a year is estimated to be equal to or greater 
than 20 percent. Since CY 2016 was the first year in which we applied 
the phase-in transition, CY 2017 will be the first year in which a 
single code could be subject to RVU reductions greater than 20 percent 
for 2 consecutive years.
    Under our finalized policy, the only codes that are not subject to 
the phase-in are those that are new or revised, which we defined as 
those services that are not described by the same, unrevised code in 
both the current and update year, or by the same codes that describe 
different services in the current and update year. Since CY 2016 was 
the first year for which the phase-in provision applied, we did not 
address how we would handle codes with

[[Page 46218]]

values that had been partially phased in during the first year, but 
that have a remaining phase-in reduction of 20 percent or greater.
    The significant majority of codes with reductions in RVUs that are 
greater than 20 percent in year one would not be likely to meet the 20 
percent threshold in a consecutive year. However, in a few cases, 
significant changes (for example, in the input costs included in the 
valuation of a service) could produce reductions of 20 percent or 
greater in consecutive years.
    We believe that a consistent methodology regarding the phase-in 
transition should be applied to these cases. We propose to reconsider 
in each year, for all codes that are not new or revised codes and 
including codes that were assigned a phase-in value in the previous 
year, whether the total RVUs for the service would otherwise be 
decreased by an estimated 20 percent or more as compared to the total 
RVUs for the previous year. Under this proposed policy, the 19 percent 
reduction in total RVUs would continue to be the maximum one-year 
reduction for all codes (except those considered new and revised), 
including those codes with phase-in values in the previous year. In 
other words, for purposes of the 20 percent threshold, every service is 
evaluated anew each year, and any applicable phase-in is limited to a 
decrease of 19 percent. For example, if we were to adopt a 50 percent 
reduction in total RVUs for an individual service, the reduction in any 
particular year would be limited to a decrease of 19 percent in total 
RVUs. Because we do not set rates 2 years in advance, the phase-in 
transition continues to apply until the year-to-year reduction for a 
given code does not meet the 20 percent threshold.
    We are soliciting comments regarding this proposal.
    The list of codes proposed to be subject to the phase-in and the 
associated proposed RVUs that result from this methodology are 
available on the CMS Web site under downloads for the CY 2017 PFS 
proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.

I. Geographic Practice Cost Indices (GPCIs)

1. Background
    Section 1848(e)(1)(A) of the Act requires us to develop separate 
Geographic Practice Cost Indices (GPCIs) to measure relative cost 
differences among localities compared to the national average for each 
of the three fee schedule components (that is, work, PE, and 
malpractice (MP)). The PFS localities are discussed in section II.E.3. 
of this proposed rule. Although the statute requires that the PE and MP 
GPCIs reflect the full relative cost differences, section 
1848(e)(1)(A)(iii) of the Act requires that the work GPCIs reflect only 
one-quarter of the relative cost differences compared to the national 
average. In addition, section 1848(e)(1)(G) of the Act sets a permanent 
1.5 work GPCI floor for services furnished in Alaska beginning January 
1, 2009, and section 1848(e)(1)(I) of the Act sets a permanent 1.0 PE 
GPCI floor for services furnished in frontier states (as defined in 
section 1848(e)(1)(I) of the Act) beginning January 1, 2011. 
Additionally, section 1848(e)(1)(E) of the Act provided for a 1.0 floor 
for the work GPCIs, which was set to expire on March 31, 2015. Section 
201 of the MACRA amended the statute to extend the 1.0 floor for the 
work GPCIs through CY 2017 (that is, for services furnished no later 
than December 31, 2017).
    Section 1848(e)(1)(C) of the Act requires us to review and, if 
necessary, adjust the GPCIs at least every 3 years. Section 
1848(e)(1)(C) of the Act requires that, if more than 1 year has elapsed 
since the date of the last previous GPCI adjustment, the adjustment to 
be applied in the first year of the next adjustment shall be half of 
the adjustment that otherwise would be made. Therefore, since the 
previous GPCI update was implemented in CY 2014 and CY 2015, we are 
proposing to phase in 1/2 of the latest GPCI adjustment in CY 2017.
    We have completed a review of the GPCIs and are proposing new GPCIs 
in this proposed rule. We also calculate a geographic adjustment factor 
(GAF) for each PFS locality. The GAFs are a weighted composite of each 
area's work, PE and malpractice expense GPCIs using the national GPCI 
cost share weights. While we do not actually use GAFs in computing the 
fee schedule payment for a specific service, they are useful in 
comparing overall areas costs and payments. The actual effect on 
payment for any actual service would deviate from the GAF to the extent 
that the proportions of work, PE and MP RVUs for the service differ 
from those of the GAF.
    As noted above, section 201 of the MACRA extended the 1.0 work GPCI 
floor for services furnished through December 31, 2017. Therefore, the 
proposed CY 2017 work GPCIs and summarized GAFs reflect the 1.0 work 
floor. Additionally, as required by sections 1848(e)(1)(G) and 
1848(e)(1)(I) of the Act, the 1.5 work GPCI floor for Alaska and the 
1.0 PE GPCI floor for frontier states are permanent, and therefore, 
applicable in CY 2017. See Addenda D and E to this proposed rule for 
the proposed CY 2017 GPCIs and summarized GAFs available on the CMS Web 
site under the supporting documents section of the CY 2017 PFS proposed 
rule located at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
2. GPCI Update
    The proposed updated GPCI values were calculated by a contractor. 
There are three GPCIs (work, PE, and MP), and all GPCIs are calculated 
through comparison to a national average for each. Additionally, each 
of the three GPCIs relies on its own data source(s) and methodology for 
calculating its value as described below. Additional information on the 
CY 2017 GPCI update may be found in our contractor's draft report, 
``Draft Report on the CY 2017 Update of the Geographic Practice Cost 
Index for the Medicare Physician Fee Schedule,'' which is available on 
our Web site. It is located under the supporting documents section for 
the CY 2017 PFS proposed rule located at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
a. Work GPCIs
    The work GPCIs are designed to reflect the relative costs of 
physician labor by Medicare PFS locality. As required by statute, the 
work GPCI reflects one quarter of the relative wage differences for 
each locality compared to the national average.
    To calculate the work GPCIs, we use wage data for seven 
professional specialty occupation categories, adjusted to reflect one-
quarter of the relative cost differences for each locality compared to 
the national average, as a proxy for physicians' wages. Physicians' 
wages are not included in the occupation categories used in calculating 
the work GPCI because Medicare payments are a key determinant of 
physicians' earnings. Including physician wage data in calculating the 
work GPCIs would potentially introduce some circularity to the 
adjustment since Medicare payments typically contribute to or influence 
physician wages. That is, including physicians' wages in the physician 
work GPCIs would, in effect, make the indices, to some extent, 
dependent upon Medicare payments.

[[Page 46219]]

    The work GPCI updates in CYs 2001, 2003, 2005, and 2008 were based 
on professional earnings data from the 2000 Census. However, for the CY 
2011 GPCI update (75 FR 73252), the 2000 data were outdated and wage 
and earnings data were not available from the more recent Census 
because the ``long form'' was discontinued. Therefore, we used the 
median hourly earnings from the 2006 through 2008 Bureau of Labor 
Statistics (BLS) Occupational Employment Statistics (OES) wage data as 
a replacement for the 2000 Census data. The BLS OES data meet several 
criteria that we consider to be important for selecting a data source 
for purposes of calculating the GPCIs. For example, the BLS OES wage 
and employment data are derived from a large sample size of 
approximately 200,000 establishments of varying sizes nationwide from 
every metropolitan area and can be easily accessible to the public at 
no cost. Additionally, the BLS OES is updated regularly, and includes a 
comprehensive set of occupations and industries (for example, 800 
occupations in 450 industries). For the CY 2014 GPCI update, we used 
updated BLS OES data (2009 through 2011) as a replacement for the 2006 
through 2008 data to compute the work GPCIs.
    Because of its reliability, public availability, level of detail, 
and national scope, we believe the BLS OES continues to be the most 
appropriate source of wage and employment data for use in calculating 
the work GPCIs (and as discussed in section II.E.2.b the employee wage 
component and purchased services component of the PE GPCI). Therefore, 
for the proposed CY 2017 GPCI update, we used updated BLS OES data 
(2011 through 2014) as a replacement for the 2009 through 2011 data to 
compute the work GPCIs.
b. Practice Expense GPCIs
    The PE GPCIs are designed to measure the relative cost difference 
in the mix of goods and services comprising practice expenses (not 
including malpractice expenses) among the PFS localities as compared to 
the national average of these costs. Whereas the physician work GPCIs 
(and as discussed later in this section, the MP GPCIs) are comprised of 
a single index, the PE GPCIs are comprised of four component indices 
(employee wages; purchased services; office rent; and equipment, 
supplies and other miscellaneous expenses). The employee wage index 
component measures geographic variation in the cost of the kinds of 
skilled and unskilled labor that would be directly employed by a 
physician practice. Although the employee wage index adjusts for 
geographic variation in the cost of labor employed directly by 
physician practices, it does not account for geographic variation in 
the cost of services that typically would be purchased from other 
entities, such as law firms, accounting firms, information technology 
consultants, building service managers, or any other third-party 
vendor. The purchased services index component of the PE GPCI (which is 
a separate index from employee wages) measures geographic variation in 
the cost of contracted services that physician practices would 
typically buy. (For more information on the development of the 
purchased service index, we refer readers to the CY 2012 PFS final rule 
with comment period (76 FR 73084 through 73085)). The office rent index 
component of the PE GPCI measures relative geographic variation in the 
cost of typical physician office rents. For the medical equipment, 
supplies, and miscellaneous expenses component, we believe there is a 
national market for these items such that there is not significant 
geographic variation in costs. Therefore, the equipment, supplies and 
other miscellaneous expense cost index component of the PE GPCI is 
given a value of 1.000 for each PFS locality.
    For the previous update to the GPCIs (implemented in CY 2014) we 
used 2009 through 2011 BLS OES data to calculate the employee wage and 
purchased services indices for the PE GPCI. As discussed in section 
II.E.2.a., because of its reliability, public availability, level of 
detail, and national scope, we continue to believe the BLS OES is the 
most appropriate data source for collecting wage and employment data. 
Therefore, in calculating the proposed CY 2017 GPCI update, we used 
updated BLS OES data (2011 through 2014) as a replacement for the 2009 
through 2011 data for purposes of calculating the employee wage 
component and purchased service index of the PE GPCI.
c. Malpractice Expense (MP) GPCIs
    The MP GPCIs measure the relative cost differences among PFS 
localities for the purchase of professional liability insurance (PLI). 
The MP GPCIs are calculated based on insurer rate filings of premium 
data for $1 million to $3 million mature claims-made policies (policies 
for claims made rather than services furnished during the policy term). 
For the CY 2014 GPCI update (seventh update) we used 2011 and 2012 
malpractice premium data (78 FR 74382). The proposed CY 2017 MP GPCI 
update reflects 2014 and 2015 premium data. Additionally, the proposed 
CY 2017 MP GPCI update reflects several proposed technical refinements 
to the MP GPCI methodology as discussed later in section 5.
d. GPCI Cost Share Weights
    For the proposed CY 2017 GPCIs, we are continuing to use the 
current cost share weights for determining the PE GPCI values and 
locality GAFs. We refer readers to the CY 2014 PFS final rule with 
comment period (78 FR 74382 through 74383), for further discussion 
regarding the 2006-based MEI cost share weights revised in CY 2014 that 
were also finalized for use in the CY 2014 (seventh) GPCI update.
    The proposed GPCI cost share weights for CY 2017 are displayed in 
Table 12.

      Table 12--Proposed Cost Share Weights for CY 2017 GPCI Update
------------------------------------------------------------------------
                                                            Proposed CY
                                           Current cost      2017 cost
            Expense category               share weight    share weight
                                                (%)             (%)
------------------------------------------------------------------------
Work....................................          50.866          50.866
Practice Expense........................          44.839          44.839
    --Employee Compensation.............          16.553          16.553
    --Office Rent.......................          10.223          10.223
    --Purchased Services................           8.095           8.095
    --Equipment, Supplies, Other........           9.968           9.968
Malpractice Insurance...................           4.295           4.295
    Total...............................         100.000         100.000
------------------------------------------------------------------------


[[Page 46220]]

e. PE GPCI Floor for Frontier States
    Section 10324(c) of the Affordable Care Act added a new 
subparagraph (I) under section 1848(e)(1) of the Act to establish a 1.0 
PE GPCI floor for physicians' services furnished in frontier states 
effective January 1, 2011. In accordance with section 1848(e)(1)(I) of 
the Act, beginning in CY 2011, we applied a 1.0 PE GPCI floor for 
physicians' services furnished in states determined to be frontier 
states. In general, a frontier state is one in which at least 50 
percent of the counties are ``frontier counties,'' which are those that 
have a population per square mile of less than 6. For more information 
on the criteria used to define a frontier state, we refer readers to 
the FY 2011 Inpatient Prospective Payment System (IPPS) final rule (75 
FR 50160 through 50161). There are no changes in the states identified 
as Frontier States for the CY 2017 proposed rule. The qualifying states 
are: Montana, Wyoming, North Dakota, South Dakota, and Nevada. In 
accordance with statute, we would apply a 1.0 PE GPCI floor for these 
states in CY 2017.
f. Proposed GPCI Update
    As explained above in the background section, the periodic review 
and adjustment of GPCIs is mandated by section 1848(e)(1)(C) of the 
Act. At each update, the proposed GPCIs are published in the PFS 
proposed rule to provide an opportunity for public comment and further 
revisions in response to comments prior to implementation. The proposed 
CY 2017 updated GPCIs for the first and second year of the 2-year 
transition, along with the GAFs, are displayed in Addenda D and E to 
this proposed rule available on our Web site under the supporting 
documents section of the CY 2017 PFS proposed rule Web page at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
3. Payment Locality Discussion
a. Background
    The current PFS locality structure was developed and implemented in 
1997. There are currently 89 total PFS localities; 34 localities are 
statewide areas (that is, only one locality for the entire state). 
There are 52 localities in the other 16 states, with 10 states having 2 
localities, 2 states having 3 localities, 1 state having 4 localities, 
and 3 states having 5 or more localities. The combined District of 
Columbia, Maryland, and Virginia suburbs; Puerto Rico; and the Virgin 
Islands are the remaining three localities of the total of 89 
localities. The development of the current locality structure is 
described in detail in the CY 1997 PFS proposed rule (61 FR 34615) and 
the subsequent final rule with comment period (61 FR 59494). We note 
that the localities generally represent a grouping of one or more 
constituent counties.
    Prior to 1992, Medicare payments for physicians' services were made 
under the reasonable charge system. Payments were based on the charging 
patterns of physicians. This resulted in large differences in payment 
for physicians' services among types of services, geographic payment 
areas, and physician specialties. Recognizing this, the Congress 
replaced the reasonable charge system with the Medicare PFS in the 
Omnibus Budget Reconciliation Act (OBRA) of 1989, and the PFS went into 
effect January 1, 1992. Payments under the PFS are based on the 
relative resources involved with furnishing services, and are adjusted 
to account for geographic variations in resource costs as measured by 
the GPCIs.
    Payment localities originally were established under the reasonable 
charge system by local Medicare carriers based on their knowledge of 
local physician charging patterns and economic conditions. These 
localities changed little between the inception of Medicare in 1967 and 
the beginning of the PFS in 1992. Shortly after the PFS took effect, we 
undertook a study in 1994 that culminated in a comprehensive locality 
revision that was implemented in 1997 (61 FR 59494).
    The revised locality structure reduced the number of localities 
from 210 to the current 89, and the number of statewide localities 
increased from 22 to 34. The revised localities were based on locality 
resource cost differences as reflected by the GPCIs. For a full 
discussion of the methodology, see the CY 1997 PFS final rule with 
comment period (61 FR 59494). The current 89 fee schedule areas are 
defined alternatively by state boundaries (for example, Wisconsin), 
metropolitan areas (for example, Metropolitan St. Louis, MO), portions 
of a metropolitan area (for example, Manhattan), or rest-of-state areas 
that exclude metropolitan areas (for example, Rest of Missouri). This 
locality configuration is used to calculate the GPCIs that are in turn 
used to calculate payments for physicians' services under the PFS.
    As stated in the CY 2011 PFS final rule with comment period (75 FR 
73261), changes to the PFS locality structure would generally result in 
changes that are budget neutral within a state. For many years, before 
making any locality changes, we have sought consensus from among the 
professionals whose payments would be affected. In recent years, we 
have also considered more comprehensive changes to locality 
configuration. In 2008, we issued a draft comprehensive report 
detailing four different locality configuration options (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/downloads/ReviewOfAltGPCIs.pdf). We refer readers to 
the CY 2014 PFS final rule with comment period for further discussion 
regarding that report, as well as a discussion about the Institute of 
Medicine's empirical study of the Medicare GAFs established under 
sections 1848(e) (PFS GPCI) and 1886(d)(3)(E) (IPPS wage index) of the 
Act.
b. California Locality Update to the Fee Schedule Areas Used for 
Payment Under Section 220(h) of the Protecting Access to Medicare Act
(1) General Discussion and Legislative Change
    Section 220(h) of the PAMA added a new section 1848(e)(6) to the 
Act, that modifies the fee schedule areas used for payment purposes in 
California beginning in CY 2017.
    Currently, the fee schedule areas used for payment in California 
are based on the revised locality structure that was implemented in 
1997 as previously discussed. Beginning in CY 2017, section 
1848(e)(6)(A)(i) of the Act requires that the fee schedule areas used 
for payment in California must be Metropolitan Statistical Areas (MSAs) 
as defined by the Office of Management and Budget (OMB) as of December 
31 of the previous year; and section 1848(e)(6)(A)(ii) of the Act 
requires that all areas not located in an MSA must be treated as a 
single rest-of-state fee schedule area. The resulting modifications to 
California's locality structure would increase its number of localities 
from 9 under the current locality structure to 27 under the MSA-based 
locality structure.
    However, section 1848(e)(6)(D) of the Act defines transition areas 
as the fee schedule areas for 2013 that were the rest-of-state 
locality, and locality 3, which was comprised of Marin county, Napa 
county, and Solano county. Section 1848(e)(6)(B) specifies that the 
GPCI values used for payment in a transition area are to be phased in 
over 6 years, from 2017 through 2021, using a weighted sum of the GPCIs 
calculated under the new MSA-based locality structure and the GPCIs 
calculated under the current PFS locality structure. That is, the GPCI 
values applicable for

[[Page 46221]]

these areas during this transition period are a blend of what the GPCI 
values would have been under the current locality structure, and what 
the GPCI values would be under the MSA-based locality structure. For 
example, in the first year, CY 2017, the applicable GPCI values for 
counties that were previously in rest-of-state or locality 3 and are 
now in MSAs are a blend of 1/6 of the GPCI value calculated for the 
year under the MSA-based locality structure, and 5/6 of the GPCI value 
calculated for the year under the current locality structure. The 
proportions shift by 1/6 in each subsequent year so that, by CY 2021, 
the applicable GPCI values for counties within transition areas are a 
blend of 5/6 of the GPCI value for the year under the MSA-based 
locality structure, and 1/6 of the GPCI value for the year under the 
current locality structure. Beginning in CY 2022, the applicable GPCI 
values for counties in transition areas are the values calculated under 
the new MSA-based locality structure. For the sake of clarity, we 
reiterate that this incremental phase-in is only applicable to those 
counties that are in transition areas that are now in MSAs, which are 
only some of the counties in the 2013 California rest-of state locality 
and locality 3.
    Additionally, section 1848(e)(6)(C) of the Act establishes a hold 
harmless for transition areas beginning with CY 2017 whereby the 
applicable GPCI values for a year under the new MSA-based locality 
structure may not be less than what they would have been for the year 
under the current locality structure. There are a total of 58 counties 
in California, 50 of which are in transition areas as defined in 
section 1848(e)(6)(D) of the Act. Therefore, 50 counties in California 
are subject to the hold harmless provision. The other 8 counties, which 
are metropolitan counties that are not defined as transition areas, are 
not held harmless for the impact of the new MSA-based locality 
structure, and may therefore potentially experience slight decreases in 
their GPCI values as a result of the provisions in section 1848(e)(6) 
of the Act, insofar as the locality in which they are located now newly 
includes data from adjacent counties that decreases their GPCI values 
relative to those that would have applied had the new data not been 
incorporated. Therefore, the GPCIs for these eight counties under the 
MSA-based locality structure may be less than they would have been 
under the current GPCI structure. The eight counties that are not 
within transition areas are: Orange; Los Angeles; Alameda; Contra 
Costa; San Francisco; San Mateo; Santa Clara; and Ventura counties.
    We emphasize that while transition areas are held harmless from the 
impact of the GPCI changes using the new MSA-based locality structure, 
because we are proposing other updates for CY 2017 as part of the 
eighth GPCI update, including the use of updated data, transition areas 
would still be subject to impacts resulting from those other updates. 
Table 13 illustrates using GAFs, for CY 2017, the isolated impact of 
the MSA-based locality changes and hold-harmless for transition areas 
required by section 1848(e)(6) of the Act, the impact of the proposed 
use of updated data for GPCIs, and the combined impact of both of these 
proposed changes.

             Table 13--Impact on California GAFs as a Result of Section 1848(e)(6) of the Act and Proposed Updated Data by Fee Schedule Area
                                                        [Sorted alphabetically by locality name]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Combined
                                                     Transition    2016    2017 GAF w/o    % Change due     2017 GAF w/    % Change due   impact of PAMA
             Medicare fee schedule area                  area      GAF      1848(e)(6)      to new GPCI     1848(e)(6)     to 1848(e)(6)   and new GPCI
                                                                                               data                                          data (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bakersfield........................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Chico..............................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
El Centro..........................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Fresno.............................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Hanford-Corcoran...................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Los Angeles-Long Beach-Anaheim (Los Angeles County)           0     1.09            1.09           -0.20           1.091            0.10           -0.10
Los Angeles-Long Beach-Anaheim (Orange County).....           0     1.09           1.104            1.10           1.101           -0.30            0.80
Madera.............................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Merced.............................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Modesto............................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Napa...............................................           1     1.14           1.128           -0.80           1.128            0.00           -0.80
Oxnard-Thousand Oaks-Ventura.......................           0     1.09           1.083           -0.60           1.083            0.00           -0.60
Redding............................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Rest Of California.................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Riverside-San Bernardino-Ontario...................           1     1.04           1.031           -0.50           1.032            0.10           -0.40
Sacramento-Roseville-Arden-Arcade..................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Salinas............................................           1     1.04           1.031           -0.50           1.033            0.20           -0.30
San Diego-Carlsbad.................................           1     1.04           1.031           -0.50           1.035            0.40           -0.10
San Francisco-Oakland-Hayward (Alameda/Contra Costa           0     1.18           1.125           -4.80           1.142            1.50           -3.40
 County)...........................................
San Francisco-Oakland-Hayward (Marin County).......           1     1.14           1.128           -0.80           1.129            0.10           -0.70
San Francisco-Oakland-Hayward (San Francisco                  0     1.18           1.194            1.00           1.175           -1.60           -0.60
 County)...........................................
San Francisco-Oakland-Hayward (San Mateo County)...           0     1.18           1.187            0.40           1.171           -1.30           -0.90
San Jose-Sunnyvale-Santa Clara (San Benito County).           1     1.04           1.031           -0.50           1.053            2.10            1.60
San Jose-Sunnyvale-Santa Clara (Santa Clara County)           0     1.18           1.176            0.10           1.175           -0.10            0.00

[[Page 46222]]

 
San Luis Obispo-Paso Robles-Arroyo Grande..........           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Santa Cruz-Watsonville.............................           1     1.04           1.031           -0.50           1.042            1.10            0.60
Santa Maria-Santa Barbara..........................           1     1.04           1.031           -0.50           1.036            0.50            0.00
Santa Rosa.........................................           1     1.04           1.031           -0.50           1.037            0.60            0.10
Stockton-Lodi......................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Vallejo-Fairfield..................................           1     1.14           1.128           -0.80           1.128            0.00           -0.80
Visalia-Porterville................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
Yuba City..........................................           1     1.04           1.031           -0.50           1.031            0.00           -0.50
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Additionally, for the purposes of calculating budget neutrality and 
consistent with the PFS budget neutrality requirements as specified 
under section 1848(c)(2)(B)(ii)(II) of the Act, we are proposing to 
start by calculating the national GPCIs as if the current localities 
are still applicable nationwide; then for the purposes of payment in 
California, we will override the GPCI values with the values that are 
applicable for California consistent with the requirements of section 
1848(e)(6) of the Act. This approach is consistent with the 
implementation of the GPCI floor provisions that have previously been 
implemented--that is, as an after-the-fact adjustment that is 
implemented for purposes of payment after both the GPCIs and PFS budget 
neutrality have already been calculated.
(2) Proposed Operational Considerations
    As discussed above, under section 1848(e)(6) of the Act, counties 
that were previously in the rest-of-state locality or locality 3 and 
are now in MSAs would have their GPCI values under the new MSA-based 
locality structure phased in gradually, in increments of one-sixth over 
6 years. Section 1848(e)(1)(C) of the Act requires that, if more than 1 
year has elapsed since the date of the last previous GPCI adjustment, 
the adjustment to be applied in the first year of the next adjustment 
shall be 1/2 of the adjustment that otherwise would be made. While 
section 1848(e)(6)(B) of the Act establishes a blended phase-in for the 
MSA-based GPCI values, it does not explicitly state whether or how that 
provision is to be reconciled with the requirement at section 
1848(e)(1)(C) of the Act. We believe that since section 1848(e)(6)(A) 
of the Act requires that we must make the change to MSA-based fee 
schedule areas for California GPCIs notwithstanding the preceding 
provisions of section 1848(e) of the Act, and subject to the succeeding 
provisions of section 1848(e)(6) of the Act, that applying the two-year 
phase-in specified by the preceding provisions simultaneously with the 
six-year phase-in would undermine the incremental 6-year phase-in 
specified in section 1848(e)(6)(B) of the Act. Therefore, we are 
proposing that the requirement at section 1848(e)(1)(C) of the Act to 
phase in \1/2\ of the adjustment in year 1 of the GPCI update would not 
apply to counties that were previously in the rest-of-state or locality 
3 and are now in MSAs, and therefore, are subject to the blended phase-
in as described above. Since section 1848(e)(6)(B) of the Act provides 
for a gradual phase in of the GPCI values under the new MSA-based 
locality structure, specifically in one-sixth increments over 6 years, 
if we were to also apply the requirement to phase in 1/2 of the 
adjustment in year 1 of the GPCI update then the first year increment 
would effectively be one-twelfth. We note that this issue is only of 
concern if more than 1 year has elapsed since the previous GPCI update, 
and would only be applicable through CY 2021 since, beginning in CY 
2022, the GPCI values for such areas in an MSA would be fully based on 
the values calculated under the new MSA-based locality structure for 
California.
    As previously stated, the resulting modifications to California's 
locality structure increase its number of localities from 9 under the 
current locality structure to 27 under the MSA-based locality 
structure. However, both the current localities and the MSA-based 
localities are comprised of various component counties, and in some 
localities only some of the component counties are subject to the 
blended phase-in and hold harmless provisions required by section 
1848(e)(6)(B) and (C) of the Act. Therefore, the application of these 
provisions may produce differing GPCI values among counties within the 
same fee schedule area under the MSA-based locality structure. For 
example, the MSA-based San Jose-Sunnyvale-Santa Clara locality, is 
comprised of 2 constituent counties--San Benito county, and Santa Clara 
county. San Benito County is in a transition area (2013 rest-of-state), 
while Santa Clara county is not. Hence, although the counties are in 
the same MSA, the requirements of section 1848(e)(6)(B) and (C) of the 
Act may produce differing GPCI values for each county. To address this 
issue, we propose to assign a unique locality number to the counties 
that would be impacted in the aforementioned manner. As a result, 
although the modifications to California's locality structure increase 
the number of localities from 9 under the current locality structure to 
27 under the MSA-based locality structure, for purposes of payment, the 
actual number of localities under the MSA-based locality structure 
would be 32 to account for instances where unique locality numbers are 
needed as described above. Additionally, while the fee schedule area 
names are consistent with the MSAs designated by OMB, we are proposing 
to maintain 2-digit locality numbers to correspond to the existing fee 
schedule areas. Pursuant to the implementation of the new MSA-based 
locality structure for California, the total number of PFS localities 
would increase from 89 to 112. Table 14 displays the current fee 
schedule areas in California, and Table 15 displays the MSA-based fee 
schedule areas in California required by section 1848(e)(6) of the Act. 
Additional information on the California locality update may be found 
in our contractor's draft report, ``Draft Report on the CY 2017 Update 
of the Geographic Practice Cost Index for the Medicare Physician Fee 
Schedule,'' which is available on the CMS Web site.

[[Page 46223]]

It is located under the supporting documents section of the CY 2017 PFS 
proposed rule located at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.

           Table 14--Current Fee Schedule Areas in California
                [Sorted alphabetically by locality name]
------------------------------------------------------------------------
         Locality number           Fee schedule area       Counties
------------------------------------------------------------------------
26..............................  Anaheim/Santa Ana.  Orange
18..............................  Los Angeles.......  Los Angeles
03..............................  Marin/Napa/Solano.  Marin, Napa, And
                                                       Solano
07..............................  Oakland/Berkley...  Alameda And Contra
                                                       Costa
05..............................  San Francisco.....  San Francisco
06..............................  San Mateo.........  San Mateo
09..............................  Santa Clara.......  Santa Clara
17..............................  Ventura...........  Ventura
99..............................  Rest Of State.....  All Other Counties
------------------------------------------------------------------------


                              Table 15--MSA-Based Fee Schedule Areas in California
                                    [Sorted alphabetically by locality name]
----------------------------------------------------------------------------------------------------------------
                                    Proposed new
    Current  locality  number         locality       Fee schedule area         Counties         Transition area
                                       number           (MSA name)
----------------------------------------------------------------------------------------------------------------
99...............................              54  Bakersfield, CA.....  Kern................  YES.
99...............................              55  Chico, CA...........  Butte...............  YES.
99...............................              71  El Centro, CA.......  Imperial............  YES.
99...............................              56  Fresno, CA..........  Fresno..............  YES.
99...............................              57  Hanford-Corcoran, CA  Kings...............  YES.
18...............................              18  Los Angeles-Long      Los Angeles.........  NO.
                                                    Beach-Anaheim, CA
                                                    (Los Angeles
                                                    County).
26...............................              26  Los Angeles-Long      Orange..............  NO.
                                                    Beach-Anaheim, CA
                                                    (Orange County).
99...............................              58  Madera, CA..........  Madera..............  YES.
99...............................              59  Merced, CA..........  Merced..............  YES.
99...............................              60  Modesto, CA.........  Stanislaus..........  YES.
3................................              51  Napa, CA............  Napa................  YES.
17...............................              17  Oxnard-Thousand Oaks- Ventura.............  NO.
                                                    Ventura, CA.
99...............................              61  Redding, CA.........  Shasta..............  YES.
99...............................              75  REST OF STATE.......  All Other Counties..  YES.
99...............................              62  Riverside-San         Riverside, and San    YES.
                                                    Bernardino-Ontario,   Bernardino.
                                                    CA.
99...............................              63  Sacramento--Rosevill  El Dorado, Placer,    YES.
                                                    e--Arden-Arcade, CA.  Sacramento, and
                                                                          Yolo.
99...............................              64  Salinas, CA.........  Monterey............  YES.
99...............................              72  San Diego-Carlsbad,   San Diego...........  YES.
                                                    CA.
7................................               7  San Francisco-        Alameda, Contra       NO.
                                                    Oakland-Hayward, CA   Costa.
                                                    (Alameda County/
                                                    Contra Costa
                                                    County).
3................................              52  San Francisco-        Marin...............  YES.
                                                    Oakland-Hayward, CA
                                                    (Marin County).
5................................               5  San Francisco-        San Francisco.......  NO.
                                                    Oakland-Hayward, CA
                                                    (San Francisco
                                                    County).
6................................               6  San Francisco-        San Mateo...........  NO.
                                                    Oakland-Hayward, CA
                                                    (San Mateo County).
99...............................              65  San Jose-Sunnyvale-   San Benito..........  YES.
                                                    Santa Clara, CA
                                                    (San Benito County).
9................................               9  San Jose-Sunnyvale-   Santa Clara.........  NO.
                                                    Santa Clara, CA
                                                    (Santa Clara
                                                    County).
99...............................              73  San Luis Obispo-Paso  San Luis Obispo.....  YES.
                                                    Robles-Arroyo
                                                    Grande, CA.
99...............................              66  Santa Cruz-           Santa Cruz..........  YES.
                                                    Watsonville, CA.
99...............................              74  Santa Maria-Santa     Santa Barbara.......  YES.
                                                    Barbara, CA.
99...............................              67  Santa Rosa, CA......  Sonoma..............  YES.
99...............................              73  Stockton-Lodi, CA...  San Joaquin.........  YES.
3................................              53  Vallejo-Fairfield,    Solano..............  YES.
                                                    CA.
99...............................              69  Visalia-Porterville,  Tulare..............  YES.
                                                    CA.
99...............................              70  Yuba City, CA.......  Sutter, and Yuba....  YES.
----------------------------------------------------------------------------------------------------------------

4. Proposed Update to the Methodology for Calculating GPCIs in the U.S. 
Territories
    In calculating GPCIs within U.S. states, we use county-level wage 
data from the Bureau of Labor Statistics (BLS) Occupational Employment 
Statistics Survey (OES), county-level residential rent data from the 
American Community Survey (ACS), and malpractice insurance premium data 
from state departments of insurance. In calculating GPCIs for the U.S. 
territories, we currently use three distinct methodologies--one for 
Puerto Rico, another for the Virgin Islands, and a third for the 
Pacific Islands (Guam, American Samoa, and Northern Marianas Islands). 
These three methodologies were adopted at different times based 
primarily on the data that were available at the time they were 
adopted. At present, because Puerto Rico is the only territory where 
county-level BLS OES, county-level ACS, and malpractice premium data 
are available, it is the only territory for which we use territory-
specific data to calculate GPCIs. For the Virgin Islands, because 
county-level wage and rent data are not available, and insufficient 
malpractice premium data are available, CMS has set the work, PE, and 
MP GPCI values for the Virgin Islands payment locality at the national 
average of 1.0 even though,

[[Page 46224]]

like Puerto Rico, the Virgin Islands is its own locality and county-
level BLS OES data are available for the Virgin Islands. For the U.S. 
territories in the Pacific Ocean, we currently crosswalk GPCIs from the 
Hawaii locality for each of the three GPCIs, and incorporate no local 
data from these territories into the GPCI calculations even though 
county-level BLS OES data does exist for Guam, but not for American 
Samoa or the Northern Mariana Islands.
    As noted above, currently Puerto Rico is the only territory for 
which we calculate GPCIs using the territory-specific information 
relative to data from the U.S. States. For several years stakeholders 
in Puerto Rico have raised concerns regarding the applicability of the 
proxy data in Puerto Rico relative to their applicability in the U.S. 
states. We believe that these concerns may be consistent across island 
territories, but lack of available, appropriate data has made it 
difficult to quantify such variation in costs. For example, some 
stakeholders previously indicated that shipping and transportation 
expenses increase the cost of acquiring medical equipment and supplies 
in islands and territories relative to the mainland. While we have 
previously attempted to locate data sources specific to geographic 
variation in such shipping costs, we found no comprehensive national 
data source for this information (we refer readers to 78 FR 74387 
through 74388 for the detailed discussion of this issue). Therefore, we 
have not been able to quantify variation in costs specific to island 
territories in the calculation of the GPCIs.
    For all the island territories other than Puerto Rico, the lack of 
comprehensive data about unique costs for island territories has had 
minimal impact on GPCIs because we have used either the Hawaii GPCIs 
(for the Pacific territories) or used the unadjusted national averages 
(for the Virgin Islands). In an effort to provide greater consistency 
in the calculation of GPCIs given the lack of comprehensive data 
regarding the validity of applying the proxy data used in the States in 
accurately accounting for variability of costs for these island 
territories, we are proposing to treat the Caribbean Island territories 
(the Virgin Islands and Puerto Rico) in a consistent manner. We propose 
to do so by assigning the national average of 1.0 to each GPCI index 
for both Puerto Rico and the Virgin Islands. We are not proposing any 
changes to the GPCI methodology for the Pacific Island territories 
(Guam, American Samoa, and Northern Marianas Islands) where we already 
consistently assign the Hawaii GPCI values for each of the three GPCIs. 
Additional information on the Proposed Update to the Methodology for 
Calculating GPCIs in the U.S. Territories may be found in our 
contractor's draft report, ``Draft Report on the CY 2017 Update of the 
Geographic Practice Cost Index for the Medicare Physician Fee 
Schedule,'' which is available on our Web site. It is located under the 
supporting documents section of the CY 2017 PFS proposed rule located 
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
5. Proposed Refinement to the MP GPCI Methodology
    In the process of calculating MP GPCIs for the purposes of this 
proposed rule, we identified several technical refinements to the 
methodology that yield improvements over the current method. We are 
also proposing refinements that conform to our proposed methodology for 
calculating the GPCIs for the U.S. Territories described above. 
Specifically, we are proposing modifications to the methodology to 
account for missing data used in the calculation of the MP GPCI. Under 
the methodology used in the CY 2014 GPCI update (78 FR 74380 through 
74391), we first calculated the average premiums by insurer and 
specialty, then imputed premium values for specialties for which we did 
not have specific data, before adjusting the specialty-specific premium 
data by market share weights. We are proposing to revise our 
methodology to instead calculate the average premiums for each 
specialty using issuer market share for only available companies. This 
proposed methodological improvement would reduce potential bias 
resulting from large amounts of imputation, an issue that is prevalent 
for insurers that only write policies for ancillary specialties for 
which premiums tend to be low. The current method would impute the low 
premiums for ancillary specialties across the remaining specialties, 
and generally greater imputation leads to less accuracy. Additional 
information on the MP GPCI methodology, and the proposed refinement to 
the MP GPCI methodology may be found in our contractor's draft report, 
``Draft Report on the CY 2017 Update of the Geographic Practice Cost 
Index for the Medicare Physician Fee Schedule,'' which is available on 
our Web site. It is located under the supporting documents section of 
the CY 2017 PFS proposed rule located at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.

J. Payment Incentive for the Transition From Traditional X-Ray Imaging 
to Digital Radiography and Other Imaging Services

    Section 502(a)(1) of the Consolidated Appropriations Act of 2016 
(H.R. 2029) amended section 1848(b) of the Act by establishing new 
paragraph (b)(9). Effective for services furnished beginning January 1, 
2017, section 1848(b)(9)(A) of the Act reduces by 20 percent the 
payment amounts under the PFS for the technical component (TC) 
(including the TC portion of a global service) of imaging services that 
are X-rays taken using film. The reduction is made prior to any other 
adjustment under this section and without application of this new 
paragraph.
    Section 1848(b)(9)(B) of the Act provides for a 7 percent reduction 
in payments for imaging services made under the PFS that are X-rays 
(including the X-ray component of a packaged service) taken using 
computed radiology furnished during CY 2018, 2019, 2020, 2021, or 2022, 
and for a 10 percent reduction for such imaging services taken using 
computed radiology furnished during CY 2023 or a subsequent year. 
Computed radiology technology is defined for purposes of this paragraph 
as cassette-based imaging, which utilizes an imaging plate to create 
the image involved. Section 1848(b)(9) of the Act also requires 
implementation of the reductions in payment for X-rays through 
appropriate mechanisms, which can include the use of modifiers. In 
accordance with section 1848(c)(2)(B)(v)(X), the adjustments under 
section 1848(b)(9)(A) of the Act are exempt from budget neutrality.
    In this section of the rule, we discuss the proposed implementation 
of the reduction in payment for X-rays taken using film provided for in 
section 1848(b)(9)(A) of the Act. Because the required reductions in 
PFS payment for imaging services (including the imaging portion of a 
service) that are X-rays taken using computed radiography technology 
does not apply for CY 2017, we will address implementation of section 
1848(b)(9)(B) of the Act in future rulemaking.
    To implement the provisions of sections 1848(b)(9)(A) of the Act 
relating to the PFS payment reduction for X-rays taken using film that 
are furnished during CY 2017 or subsequent years, in this proposed 
rule, we are proposing to establish a new modifier (modifier ``XX'') to 
be used on claims, as allowed under the section 1848(b)(9)(D) of the 
Act. The list of CY 2017 applicable HCPCS codes describing imaging 
services that are X-ray services are on

[[Page 46225]]

the CMS Web site under downloads for the CY 2017 PFS proposed rule with 
comment period at http://www.cms.gov/physicianfeesched/downloads/. We 
are proposing that, beginning January 1, 2017, this modifier would be 
required on claims for X-rays that are taken using film. The modifier 
would be required on claims for the technical component of the X-ray 
service, including when the service is billed globally, since the PFS 
payment adjustment is made to the technical component regardless of 
whether it is billed globally or separately using the -TC modifier. The 
use of this proposed modifier to indicate an X-ray taken using film 
would result in a 20-percent reduction for the technical component of 
the X-ray service, as specified under section 1848(b)(9)(A) of the Act 
that would be exempt from budget neutrality as specified under section 
1848(c)(2)(B)(v)(X) of the Act.

K. Procedures Subject to the Multiple Procedure Payment Reduction 
(MPPR) and the OPPS Cap

    Effective January 1, 2012, we implemented an MPPR of 25 percent on 
the professional component (PC) of advanced imaging services. The 
reduction applies when multiple imaging procedures are furnished by the 
same physician (or physician in the same group practice) to the same 
patient, in the same session, on the same day. Full payment is made for 
the PC of the highest priced procedure. Payment for the PC of 
subsequent services is reduced by 25 percent.
    Section 502(a)(2)(A) of the Consolidated Appropriations Act, 2016 
(Pub. L. 114-113, enacted on December 18, 2015) added a new section 
1848(b)(10) of the Act which revises the payment reduction from 25 
percent to 5 percent, effective January 1, 2017. Section 502(a)(2)(B) 
added a new subclause at section 1848(c)(2)(B)(v)(XI) which exempts the 
reduced expenditures attributable to the revised 5 percent MMPR on the 
PC of imaging from the PFS budget neutrality provision. We propose to 
implement these provisions for services furnished on or after January 
1, 2017. We refer readers to section VI.C of this proposed rule 
regarding the necessary adjustment to the proposed PFS conversion 
factor to account for the mandated exemption from PFS budget 
neutrality.
    We note that the lists of services for the upcoming calendar year 
that are subject to the MPPR 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 therefore, are subject 
to the OPPS cap, are displayed in the public use files for the PFS 
proposed and final rules for each year. The public use files for CY 
2017 are available on our Web site under downloads for the CY 2017 PFS 
proposed rule with comment period at http://www.cms.gov/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFSFederal-Regulation-Notices.html.

L. Valuation of Specific Codes

1. Background: Process for Valuing New, Revised, and Potentially 
Misvalued Codes
    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 make sure 
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 5-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 5-year review process, revisions in RVUs were proposed 
and finalized via rulemaking. In addition to the 5-year reviews, 
beginning with CY 2009, CMS and the RUC have identified a number of 
potentially misvalued codes each year using various identification 
screens, as discussed in section II.B.5. of this proposed rule. 
Historically, when we received RUC recommendations, our process had 
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 accepted public comment about those valuations. For 
services furnished during the calendar year following the publication 
of interim final rates, we paid 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 considered 
and responded to public comments received on the interim final values, 
and typically made any appropriate adjustments and finalized those 
values.
    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. Beginning with 
this CY 2017 proposed rule, the new process will be applicable to all 
codes, except for new codes that describe truly new services. For CY 
2017, we are proposing new values in this proposed rule for the vast 
majority of new, revised, and potentially misvalued codes for which we 
received complete RUC recommendations by February 10, 2016. To complete 
the transition to this new process, for codes where we established 
interim final values in the CY 2016 PFS final rule with comment period, 
we reviewed the comments received during the 60-day public comment 
period following release of the CY 2016 PFS final rule with comment 
period, and are re-proposing values for those codes in this CY 2017 
proposed rule.
    We will consider public comments received during the 60-day public 
comment period for this proposed rule before establishing final values 
in the final rule with comment period, and adopt interim final values 
only 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. Recommendations regarding 
any new or revised codes received after February 10th will be 
considered in the next year's proposed rule (that is, CY 2018 PFS 
rulemaking).
2. Methodology for Proposing Work RVUs
    We conduct a review of each code identified in this section and 
review 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 
inputs generally includes, but is not limited to, a review of 
information provided by the RUC, HCPAC (Health Care Professionals 
Advisory Committee), and other public commenters, medical literature, 
and comparative databases, as well as a comparison with other codes 
within the 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. In the CY 2011 
PFS final rule with comment period (75

[[Page 46226]]

FR 73328 through 73329), we discussed a variety of methodologies and 
approaches used to develop work RVUs, including survey data, building 
blocks, crosswalks to key reference or similar codes, and magnitude 
estimation (see the CY 2011 PFS final rule with comment period for more 
information). 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, we have frequently utilized an incremental methodology 
in which we value a code based upon its incremental difference between 
another code or another family of codes. The statute specifically 
defines the work component as the resources in time and intensity 
required in furnishing the service. Also, the published literature on 
valuing work has recognized the key role of time in overall work. For 
particular codes, we refine the work RVUs 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 intraservice time.
    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. Our longstanding 
adjustments have reflected a broad assumption 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 furnished on the 
same day as an E/M service.
    We note that many commenters and stakeholders have expressed 
concerns with our ongoing adjustment of work RVUs based on changes in 
the best information we have regarding the time resources involved in 
furnishing individual services. We are particularly concerned with the 
RUC's and various specialty societies' objections to our approach given 
the significance of their recommendations to our process for valuing 
services and since much of the information we have used to make the 
adjustments is derived from their survey process. As explained in the 
CY 2016 PFS final rule with comment period (80 FR 70933), we recognize 
that adjusting work RVUs for changes is not always a straightforward 
process, so we apply various methodologies to identify several 
potential work values for individual codes. However, we want to 
reiterate that we are statutorily obligated to consider both time and 
intensity in establishing work RVUs for PFS services.
    We have observed that for many codes reviewed by the RUC, final 
recommended work RVUs appear to be incongruous with recommended 
assumptions regarding the resource costs in time. This is the case for 
a significant portion of codes for which we have recently established 
or proposed work RVUs that are based on refinements to the RUC-
recommended values. When we have adjusted work RVUs to account for 
significant changes in time, we begin by looking at the change in the 
time in the context of the RUC-recommended work RVU. When the 
recommended work RVUs do not appear to account for significant changes 
in time, we employ the different approaches to identify potential 
values that reconcile the recommended work RVUs with the recommended 
time values. Many of these methodologies, such as survey data, building 
blocks, crosswalks to key reference or similar codes, and magnitude 
estimation have long been used in developing work RVUs under the PFS. 
In addition to these we sometimes use the relationship between the old 
time values and the new time values for particular services to identify 
alternative work RVUs based on changes in time components.
    In so doing, rather than ignoring the RUC-recommended value, we are 
using the recommended values as a starting reference and then applying 
one of these several methodologies to account for the reductions in 
time that we believe have not otherwise been reflected in the RUC 
recommended value. When we believe that such changes in time have 
already been accounted for in the RUC recommendation, then we do not 
make such adjustments. Likewise, we do not arbitrarily apply time 
ratios to current work RVUs to calculate proposed work RVUs. We use the 
ratios to identify potential work RVUs and consider these work RVUs as 
potential options relative to the values developed through other 
options.
    We want to make it clear that we are not implying that the decrease 
in time as reflected in survey values must equate to a one-to-one or 
linear decrease in newly valued work RVUs. Instead, we believe that 
since the two components of work are time and intensity that absent an 
obvious or explicitly stated rationale for why the relative intensity 
of a given procedure has increased, that significant decreases in time 
should be reflected in decreases

[[Page 46227]]

to work RVUs. If the RUC recommendation has appeared to disregard or 
dismiss the changes in time, without a persuasive explanation of why 
such a change should not be accounted for in the overall work of the 
service, then we generally use one of the aforementioned referenced 
methodologies to identify potential work RVUs, including the 
methodologies intended to account for the changes in the resources 
involved in furnishing the procedure.
    Several commenters, including the RUC, in general have objected to 
our use of these methodologies and deemed our actions in adjusting the 
recommended work RVUs as inappropriate. We received several specific 
comments regarding this issue in response to the CY 2016 PFS final rule 
with comment period, those comments are summarized below.
    Comment: Several commenters, including the RUC, stated that our 
methodology for adjusting work RVUs appears to be contrary to the 
statute.
    Response: We disagree with these comments. Since section 
1848(c)(1)(A) of the Act explicitly identifies time as one of the two 
types of resources that encompass the work component of the PFS 
payment, we do not believe that our use of the aforementioned 
methodologies to adjust the work RVU to account for the changes in 
time, which is one of the resources involved, 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. 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 observed that the RUC also uses a variety 
of methodologies to develop work RVUs for individual codes, and 
subsequently validates the results of these approaches through 
magnitude estimation or crosswalk to established values for other 
codes.
    Comment: Several commenters, including the RUC, stated that we 
could not take one element of the services that has changed such as 
intra-service time, and apply an overall ratio for reduction to the 
work RVU based on changes to time, as that renders the value no longer 
resource-based in comparison to the RUC-recommended values.
    Response: We disagree with the commenters. 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 service has 
changed significantly. We reiterate that, consistent with the statute, 
we are required to value the work RVU based on the relative resources 
involved in furnishing the service, which include time and intensity. 
When our review of recommended values determines that changes in the 
resource of time have been unaccounted for in a recommended RVU, then 
we believe we have the obligation to account for that change in 
establishing work RVUs since the statute explicitly identifies time as 
one of the two elements of the work RVUs. We recognize that it would 
not be appropriate to develop work RVUs solely based on time given that 
intensity is also an element of work, but in applying the time ratios 
we are using derived intensity measures based on current work RVUs for 
individual procedures. Were we to disregard intensity altogether, the 
work RVUs for all services would be developed based solely on time 
values and that is definitively not the case. Furthermore, we reiterate 
that we use time ratios to identify potential work RVUs, and then use 
other methods (including estimates of work from CMS medical personnel 
and crosswalks to key reference or similar codes) to validate these 
RVUs. We also disagree with several commenters' implications that a 
work RVU developed through such estimation methods is only resource-
based through the RUC process.
    Comment: Several commenters, including the RUC, stated that our 
inconsistent use of the time ratio methodology has rendered it 
ineffective for valuation purposes and that by choosing the starting 
base work value and/or physician time at random, we are essentially 
reverse engineering the work value we want under the guise of a 
standard algorithm.
    Response: We do not choose a starting base work value and/or 
physician time at random as suggested by the commenters. We use the RUC 
recommended values or the existing values as the base values; 
essentially, we are taking one of those values and applying adjustments 
to account for the change in time that based on our analysis of the RUC 
recommendation, we determine has not been properly accounted for to 
determine an appropriate work RVU. In circumstances where adjustments 
to time and the corresponding work RVU are relatively congruent or 
persuasively explained, our tendency has been to use those values as 
recommended. Where the RUC recommendations do not account for changes 
in time, we have made changes to RUC-recommended values to account for 
the changes in time.
    Comment: Commenters, including the RUC, also stated that the use of 
time ratio methodologies distills the valuation of the service into a 
basic formula with the only variable being either the new total 
physician time or the new intra-service physician time, and that these 
methodologies are based on the incorrect assumption that the per minute 
physician work intensity established is permanent regardless of when 
the service was last valued. Other commenters have suggested that 
previous assumed times are inaccurate.
    Response: We agree with commenters that per minute intensity for a 
given service may change over time. If we believed that the per-minute 
intensity for a given service were immutable, then a reverse-building 
block approach to revaluation based on new time data could be 
appropriate. However, we have not applied such an approach specifically 
because we agree that the per-minute intensity of work is not 
necessarily static over time or even necessarily during the course of a 
procedure. Instead, we utilize time ratios to identify potential values 
that account for changes in time and compare these values to other PFS 
services for estimates of overall work. When the values we develop 
reflect a similar derived intensity, we agree that our values are the 
result of our assessment that the relative intensity of a given service 
has remained similar.
    Regarding the validity of comparing new times to the old times, we, 
too, hope that time estimates have improved over many years especially 
when many years have elapsed since the last time the service in 
question was valued. However, we also believe that our operating 
assumption regarding the validity of the pre-existing values as a point 
of comparison is critical to the integrity of the relative value system 
as currently constructed. Pre-existing times are a very important 
element in the allocation of indirect PE RVUs by specialty, and had the 
previously recommended times been overestimated, the specialties that 
furnish such services would be benefitting from these times in the 
allocation of indirect PE RVUs. As long time observers of the RUC 
process, we also recognize that the material the RUC uses to develop 
overall work recommendations includes the data

[[Page 46228]]

from the surveys about time. We have previously stated concerns 
regarding the validity of much of the RUC survey data. However, we 
believe additional kinds of concern would be warranted if the RUC 
itself were operating under the assumption that its pre-existing data 
were typically inaccurate.
    We understand stakeholders' concerns regarding how best to consider 
changes in time in improving the accuracy of work RVUs and have 
considered all of the issues raised by commenters. In conjunction with 
our review of recommended code values for CY 2017, we conducted a 
preliminary analysis to identify general tendencies in the relationship 
between changes in time and changes in work RVUs for CY 2014 and CY 
2015. We looked at services for which there were no coding changes to 
simplify the analysis. The intent of this preliminary analysis was to 
examine commenters' beliefs that CMS is only considering time when 
making refinements to RUC recommended work values. For CY 2014, we 
found that in the aggregate, the average difference between the RUC 
recommended intraservice time and existing intraservice time was -17 
percent, but the average difference between the RUC recommended work 
RVU and existing work RVU was only -4 percent. However, the average 
difference between the CMS refined work RVU and existing work RVU was -
7 percent. For CY 2015, the average difference between the RUC 
recommended intraservice time and existing intraservice time was -17 
percent, but the average difference between the RUC recommended work 
RVU and existing work RVU was 1 percent, and the average difference 
between the CMS refined work RVU and existing work RVU was -6 percent. 
This preliminary analysis demonstrates that we are not making 
refinements solely in consideration of time, if that were the case, the 
changes in the work RVU values that we adopted would be comparable to 
the changes in the time that we adopted, but that is not the case.
    We believe that we should account for efficiencies in time when the 
recommended work RVU does not account for those efficiencies, otherwise 
relativity across the PFS can be significantly skewed over periods of 
time. For example, if when a code is first valued, a physician was 
previously able to do only 5 procedures per day, but due to new 
technologies, the same physician can now do 10 procedures per day, 
resource costs in time have empirically been lessened, and we believe 
that relative reduction in resources involved in furnishing that 
service should be accounted for in the assignment of work RVUs for that 
service, since the statute explicitly identifies time as one of the two 
components of work. Of course, if more resource intensive technology 
has allowed for the increased efficiency in furnishing the procedure, 
then the nonfacility PE RVUs for the service should also be adjusted to 
account for this change. Additionally, we believe it may be that the 
intensity per minute of the procedure may have changed with the greater 
efficiency in time. Again, that is why we do not generally reduce work 
RVUs in strict proportion to changes in time. We understand that 
intensity is not entirely linear, and that data related to time as 
obtained in the RUC survey instrument may improve over time, and that 
the number of survey respondents may improve over time. However, we 
also understand time as a tangible resource cost in furnishing PFS 
services, and a cost that by statute, is one of the two kinds of 
resources to be considered as part of the work RVU.
    Therefore, we are interested in receiving comments on whether, 
within the statutory confines, there are alternative suggestions as to 
how changes in time should be accounted for when it is evident that the 
survey data and/or the RUC recommendation regarding the overall work 
RVU does not reflect significant changes in the resource costs of time 
for codes describing PFS services. We are also seeking comment on 
potential alternatives, including the application of the reverse 
building block methodology, to making the adjustments that would 
recognize overall estimates of work in the context of changes in the 
resource of time for particular services.
    Table 16 contains a list of codes for which we are proposing work 
RVUs; this includes all RUC recommendations received by February 10, 
2016, and codes for which we established interim final values in the CY 
2016 PFS final rule with comment period. When the proposed work RVUs 
vary from those recommended by the RUC or for which we do not have RUC 
recommendations, we address those codes in the portions of this section 
that are dedicated to particular codes. The proposed work RVUs and 
other payment information for all proposed CY 2017 payable codes are 
available in Addendum B. Addendum B is available on the CMS Web site 
under downloads for the CY 2017 PFS proposed rule with comment period 
at http://www.cms.gov/physicianfeesched/downloads/. The proposed time 
values for all CY 2017 codes are listed in a file called ``CY 2017 PFS 
Proposed Work Time,'' available on the CMS Web site under downloads for 
the CY 2017 PFS proposed rule with comment period at http://www.cms.gov/physicianfeesched/downloads/.
3. Methodology for Proposing the Direct PE Inputs To Develop PE RVUs
a. Background
    On an annual basis, the RUC provides us 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 PFS, consultation with 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 proposed refinements of the RUC's direct PE recommendations at the 
code-specific level. In this proposed rule, 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 
proposed 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 proposed PE RVUs. This calculation

[[Page 46229]]

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 proposed refinements listed in Table 
16 result in changes under the $0.32 threshold and are unlikely to 
result in a change to the proposed RVUs.
    We also note that the proposed direct PE inputs for CY 2017 are 
displayed in the proposed CY 2017 direct PE input database, available 
on the CMS Web site under the downloads for the CY 2017 proposed rule 
at www.cms.gov/PhysicianFeeSched/. The inputs displayed there have also 
been used in developing the proposed CY 2017 PE RVUs as displayed in 
Addendum B.
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. The direct PE input recommendations generally 
correspond to the work time values associated with services. We believe 
that inadvertent discrepancies between work time values and direct PE 
inputs should be refined or adjusted in the establishment of proposed 
direct PE inputs to resolve the discrepancies.
(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 over several years of rulemaking, 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 preservice 
or postservice 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 preservice or postservice 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 since any items in the room in question would be available if the 
room is not being occupied by a particular patient. For additional 
information, we refer readers to our discussion of these issues 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, 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, we review 
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 preservice 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. This is because codes more recently 
reviewed would be more likely to have a greater number of clinical 
labor tasks as a result of the general tendency to increase the number 
of clinical labor tasks. 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.
(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 or that cannot be allocated to 
individual services or patients. We have addressed these kinds of 
recommendations in previous rulemaking (78 FR 74242), and we do not use 
items included in these recommendations as direct PE inputs in the 
calculation of PE RVUs.
(5) 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, however, 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 2017, we received invoices for several new supply and 
equipment items. Tables 16 and 17 detail the invoices received for new 
and existing items in the direct PE database. As discussed in section 
II.A. of this proposed rule with comment

[[Page 46230]]

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 during 
the 60-day public comment period for this proposed rule. We expect that 
invoices received outside of the public comment period would be 
submitted by February 10th of the following year for consideration in 
future rulemaking, similar to our new process for consideration of RUC 
recommendations.
    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 16 and 17 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. A single invoice may not be reflective of 
typical costs and we 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.
(6) Service Period Clinical Labor Time in the Facility Setting
    Generally speaking, our proposed inputs do not include clinical 
labor minutes assigned to the service 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 address 
proposed code-specific refinements to clinical labor in the individual 
code sections.
(7) Procedures Subject to the Multiple Procedure Payment Reduction 
(MPPR) and the OPPS Cap
    We note that the public use files for the PFS proposed and final 
rules for each year display both the 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 
1848(b)(4)(B) of the Act, and therefore, are subject to the OPPS cap 
for the upcoming calendar year. The public use files for CY 2017 are 
available on the CMS Web site under downloads for the CY 2017 PFS 
proposed rule with comment period at http://www.cms.gov/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFSFederal-Regulation-Notices.html.
4. Specialty-Mix Assumptions for Proposed Malpractice RVUs
    The proposed CY 2017 malpractice crosswalk table is displayed in 
the public use files for the PFS proposed and final rules. The public 
use files for CY 2017 are available on the CMS Web site under downloads 
for the CY 2017 PFS proposed rule with comment period at http://www.cms.gov/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFSFederal-Regulation-Notices.html. The table lists the CY 2017 HCPCS 
codes and their respective source codes used to set the proposed CY 
2017 MP RVUs where the source code for this calculation deviates from 
the source code for the utilization otherwise used for purposes of PFS 
ratesetting. The proposed MP RVUs for all PFS services and the 
utilization crosswalk used to identify the source codes for all other 
PFS codes are reflected in Addendum B on the CMS Web site at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/.
5. Valuation of Specific Codes
a. CY 2017 Proposed Codes That Were Also CY 2016 Proposed Codes
(1) Soft Tissue Localization (CPT Codes 10035 and 10036)
    In the CY 2016 PFS final rule with comment period, we established 
the RUC-recommended work value as interim final for CPT codes 10035 and 
10036. We also made standard refinements to remove duplicative clinical 
labor and utilize standard equipment time formulas for the PACS 
workstation proxy (ED050).
    Comment: A commenter stated that the clinical labor task ``Review/
read X-ray, lab, and pathology reports'' occurs during the preservice 
period, and it is a separate activity than ``Review examination with 
interpreting MD'', which occurs during the service period.
    Response: We continue to believe that this clinical labor is 
duplicative with the clinical labor for Review examination with 
interpreting MD because we believe that these two descriptors detail 
the same clinical labor activity taking place, rather than two separate 
and distinct tasks. We are proposing to maintain our previous 
refinement to 0 minutes for this clinical labor task for CPT codes 
10035 and 10036.
    We are also proposing to maintain the interim final work RVUs for 
CPT codes 10035 and 10036.
(2) Repair Flexor Tendon (CPT Codes 26356, 26357, and 26358)
    In the CY 2016 PFS final rule with comment period, we established 
an interim final work RVU of 9.56 for CPT code 26356 after considering 
both its similarity in time to CPT code 25607 (Open treatment of distal 
radial extra-articular fracture) and the recommended reduction in time 
relative to the current times assumed for this procedure. We 
established an interim final work RVU of 10.53 for CPT code 26357 based 
on a direct crosswalk from CPT code 27654 (Repair, secondary, Achilles 
tendon, with or without graft), as we believed that this work RVU 
better reflected the changes in time for this procedure. For the last 
code in the family, we established an interim final work RVU of 12.13 
for CPT code 26358, based on the RUC recommended increment of 1.60 work 
RVUs relative to CPT code 26357.
    Comment: We received several comments regarding the interim final 
work values for this family of codes.

[[Page 46231]]

One commenter stated that it was inappropriate to use time ratios to 
evaluate CPT code 26356 as it was last valued in 1995, noting that 
there was an anomalous relationship between the current work RVU and 
the imputed time components in the RUC database. This commenter also 
pointed out that when the previous time was developed, fabrication of a 
splint was considered to be part of the intraservice work, while in the 
current survey instrument, the fabrication of the splint is considered 
to be part of the postservice work since it is a dressing. This 
commenter urged CMS to adopt the RUC recommendations. A different 
commenter agreed that the CMS crosswalk to CPT code 25607 was an 
appropriate crosswalk for CPT code 26356 and supported the CMS work RVU 
of 9.56.
    Response: We appreciate the support from the commenter. We continue 
to believe that our crosswalk for this code is an appropriate choice, 
due to our estimate of overall work between CPT code 26356 and CPT code 
25607. We appreciate the commenters' concerns regarding the time ratio 
methodologies and have responded to these concerns about our 
methodology in section II.L.2 of this proposed rule. Although we note 
the commenter's statement about how the service period in which 
fabrication of a splint takes place may have evolved over time, we do 
not agree that this task would be responsible for a decrease in 
intraservice survey time, as the postservice survey time for CPT code 
26356 remained unchanged at 30 minutes. If the decrease in intraservice 
time had been due to the shift of splinting from the intraservice 
period to the postservice period, then we would have expected to see an 
increase in the postservice period minutes. However, they remained 
exactly the same in the physician survey for CPT 26356. As we wrote 
earlier in this section, we believe in the validity of using pre-
existing time values as a point of comparison, and we believe that we 
should account for efficiencies in time when the recommended work RVU 
does not account for those efficiencies. After consideration of 
comments received, we are proposing to maintain CPT code 26356 at its 
current work RVU of 9.56 for CY 2017.
    Comment: Several commenters disagreed with the work RVU for CPT 
code 26357. One commenter stated that the CMS crosswalk to CPT code 
27654 had less total time and resulted in an inappropriately lower 
intensity. This commenter urged CMS to adopt the RUC-recommended work 
value. Another commenter stated that a better crosswalk for CPT code 
26357 would be CPT code 25608 (Open treatment of distal radial intra-
articular fracture or epiphyseal separation), the next code in the same 
upper extremity family that CMS used for the initial crosswalk. This 
commenter stated that the CMS crosswalk for CPT code 26357 created a 
rank order anomaly in terms of intensity within this family, and that 
the commenter's suggested crosswalk would create two pairs of matched 
codes, survey CPT codes 26356/26357 with crosswalk CPT codes 25607/
25608.
    Response: We appreciate the suggested crosswalk from the 
commenters, and we agree that the choice of the initial CMS crosswalk 
creates a rank order anomaly within the family in terms of intensity. 
As a result, after consideration of comments received, we are proposing 
to instead value CPT code 26357 at the 25th percentile survey work RVU 
of 11.00 for CY 2017. This valuation corrects the anomalous intensity 
within the Repair Flexor Tendon family of codes, and preserves the RUC-
recommended increment between CPT codes 26356 and 26357.
    Comment: The commenters agreed that the RUC-recommended increment 
of 1.60 was appropriate for the work RVU of CPT code 26358 when added 
to the work RVU of CPT code 26357. However, commenters stated that this 
increment of 1.60 should be added to the RUC-recommended work value for 
CPT code 26357, and not the CMS refined value from the CY 2016 PFS 
final rule with comment period.
    Response: We also continue to believe that the increment of 1.60 is 
appropriate for the work RVU of CPT code 26358. After consideration of 
comments received, we are therefore proposing to set the work RVU for 
this code at 12.60 for CY 2017, based on the increment of 1.60 from CPT 
code 26357's proposed work RVU of 11.00.
    We are proposing to maintain the current direct PE inputs for all 
three codes.
(3) Esophagogastric Fundoplasty Trans-Oral Approach (CPT Code 43210)
    For CY 2016, 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 noted our determination that a 
work RVU of 7.75, which corresponds to the 25th percentile survey 
result, more accurately reflects the resources used in furnishing the 
service associated with CPT code 43210. Therefore, for CY 2016 we 
established an interim final work RVU of 7.75 for CPT code 43210.
    Comment: A few commenters urged CMS to accept the RUC-recommended 
work RVU of 9.00 for CPT code 43210. The commenters believed that the 
RUC-recommended value compared well with the key reference service, CPT 
code 43276 (Endoscopic retrograde cholangiopancreatography (ERCP); with 
removal and exchange of stent(s), biliary or pancreatic duct, including 
pre- and post-dilation and guide wire passage, when performed, 
including sphincterotomy, when performed, each stent exchanged), which 
has a work RVU of 8.94 and an intraservice time of 60 minutes. 
Commenters believed that due to similar intra-service times and 
intensities, that CPT code 43210 should be valued nearly identically to 
CPT code 43276. Some commenters also stated that to maintain relativity 
within the upper GI code families, CPT code 43210 should not have a 
lower work RVU than CPT code 43276, especially since the majority of 
survey participants indicated that CPT code 43210 is ``somewhat more'' 
complex than CPT code 43276. Additionally, one commenter noted that an 
EGD (Esophagogastroduodenoscopy) is used twice during this service, 
before and after fundoplication. They stated that because this is a 
multi-stage procedure, other EGD codes are not comparable. The 
commenter also pointed out that this technology has a small number of 
users and urged us to accept the RUC-recommended work RVU of 9.00 until 
there is increased volume and then reassess in 2 years. Commenters also 
requested refinement panel consideration for this service.
    Response: Per the commenters' request, we referred this code to the 
CY 2016 multi-specialty refinement panel for further review. The result 
of the panel was a recommendation that we accept the RUC-recommended 
value of 9.00 work RVUs. However, since there are four ERCP codes with 
60 minutes of intraservice time, three of which have work RVUs of less 
than 7.00 and only one of the four codes has a work RVU higher than 
7.75 RVUs (8.94), based on our estimate of overall work for this 
service, we continue to believe that the 25th percentile of the survey 
most accurately reflects the relative resource costs associated with 
CPT code 43210. Therefore, for CY 2017 we are proposing a work RVU of 
7.75 for CPT code 43210.
(4) Percutaneous Biliary Procedures Bundling (CPT Codes 47531, 47532, 
47533, 47534, 47535, 47536, 47537, 47538, 47539, 47540, 47541, 47542, 
47543, and 47544)
    These codes were revalued with new recommendations at the October 
2015

[[Page 46232]]

RUC meeting; we will discuss the CY 2016 interim final comments 
alongside the new recommendations. Please see section II.L for a 
discussion of the CY 2017 proposed code values.
(5) Percutaneous Image Guided Sclerotherapy (CPT Code 49185)
    For CY 2016, we established an interim final work RVU of 2.35 for 
CPT code 49185 based on a crosswalk from CPT code 62305 (Myelography 
via lumbar injection, including radiological supervision and 
interpretation; 2 or more regions (e.g., lumbar/thoracic, cervical/
thoracic, lumbar/cervical, lumbar/thoracic/cervical)); which we 
believed accurately reflected the time and intensity involved in 
furnishing CPT code 49185. We also requested stakeholder input on the 
price of supply item SH062 (sclerosing solution) as the volume of the 
solution in this procedure (300 mL) is much higher than other CPT codes 
utilizing SH062 (between 1 and 10 mL).
    Comment: Commenters disagreed with our proposed crosswalk of CPT 
code 49185 from CPT code 62305. Commenters believed that the RUC-
recommended crosswalk from CPT code 31622 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; diagnostic, 
with cell washing, when performed (separate procedure)) was a more 
appropriate comparison due to similarity in service. Commenters 
requested that CPT code 49185 be referred to the refinement panel.
    Response: The requests did not meet the requirements related to new 
clinical information for referral to the refinement panel. After review 
of the comments, we continue to believe that a crosswalk of CPT code 
49185 from the value for CPT code 62305 is most appropriate due to 
similarities in overall work. Therefore, we are proposing a work RVU of 
2.35 for CPT code 49185 for CY 2017 and seek additional rationale for 
why a different work RVU or crosswalk would more accurately reflect the 
resources involved in furnishing this service.
    Comment: A commenter stated that the procedure described by CPT 
code 49185 involved a separate clinical labor staff type. Due to the 
inclusion of this additional individual, the L037D clinical labor and 
additional gloves were appropriate to include in the procedure.
    Response: The commenter did not provide any evidence for this 
claim. We continue to believe that this additional use of clinical 
staff would not be typical for CPT code 49185. This procedure does not 
involve moderate sedation, and therefore, we do not believe that there 
would be a typical need for a third staff member. As a result, we are 
proposing to maintain our direct PE refinements from the CY 2016 PFS 
final rule with comment period.
    Additionally, we did not receive any information regarding SH062 
that supports maintaining an input of 300 mL, and as noted above, this 
level far exceeds the volume associated with other CPT codes; 
therefore, we are proposing to refine the direct practice expense 
inputs for SH062 from 300 mL to 10 mL, which is the highest level 
associated with other CPT codes utilizing SH062.
(6) Genitourinary Procedures (CPT Codes 50606, 50705, and 50706)
    In the CY 2016 PFS final rule with comment period, we established 
as interim final the RUC-recommended work RVUs for all three codes. We 
did not receive any comments on the work values for these codes, and we 
are proposing to maintain all three at their current work RVUs.
    The RUC recommended the inclusion of ``room, angiography'' (EL011) 
for this family of codes. As we discussed in the CY 2016 PFS final rule 
with comment period, we did not believe that an angiography room would 
be used in the typical case for these procedures, and we therefore 
replaced the recommended equipment item ``room, angiography'' with 
equipment item ``room, radiographic-fluoroscopic'' (EL014) for all 
three codes on an interim final basis. We also stated our belief that 
since the predecessor procedure codes generally did not include an 
angiography room and we did not have a reason to believe that the 
procedure would have shifted to an angiography room in the course of 
this coding change, we did not believe that the use of an angiography 
room would be typical for these procedures.
    Comment: Several commenters disagreed with the CMS substitution of 
the fluoroscopic room in place of the angiography room. The commenters 
stated that all three of these procedures were previously reported 
using CPT code 53899 (Unlisted procedure, urinary system) which does 
not have any PE inputs, and the RUC recommendations included as a 
reference CPT code 50387 (Removal and replacement of externally 
accessible transnephric ureteral stent), which includes an angiography 
room. The commenters suggested that CPT code 50387 was an example of a 
predecessor code that included the use of an angiography room, along 
with other codes that are being bundled together to create the new 
Genitourinary codes.
    Response: We do not agree with the commenter's implication that 
because CPT code 50387 was an appropriate reference code for use in 
valuation, that it necessarily would have previously been used to 
describe services that are now reported under CPT codes 50606, 50705, 
or 50706. Our perspective is consistent with the RUC-recommended 
utilization crosswalk for the three new codes, which did not suggest 
that the services were previously reported using 50706. We do not 
believe that use of one particular code for reference in developing 
values for another necessarily means that the all of the same equipment 
would be used for both services.
    We do not believe that these codes describe the same clinical work 
either. CPT code 50387 is for the ``Removal and replacement of 
externally accessible transnephric ureteral stent'' while CPT code 
50606 describes an ``Endoluminal biopsy of ureter and/or renal 
pelvis'', CPT code 50705 refers to ``Ureteral embolization or 
occlusion'', and CPT code 50706 details ``Balloon dilation, ureteral 
stricture.'' Additionally, the codes do not have the same global 
periods, which makes comparisons between CPT code 50387 and CPT codes 
506060, 50705, and 50706 even more difficult. We note that despite the 
commenter's claim that CPT code 50387 was provided as a reference for 
these procedures, 50387 is not in fact listed as a reference for any of 
these three codes, or mentioned at all in the codes' respective summary 
of recommendations. However, we acknowledge that among the procedures 
that are provided as references, many of them include the use of an 
angiography room, such as CPT code 36227 (Selective catheter placement, 
external carotid artery) and CPT code 37233 (Revascularization, 
endovascular, open or percutaneous, tibial/peroneal artery, unilateral, 
each additional vessel). Therefore, we agree that the use of the 
angiography room in these procedures, or at least some of its component 
parts, may be warranted.
    Comment: A commenter stated that the substitution of the 
fluoroscopic room for the angiography room was clinically unjustified. 
The commenter stated that the angiography room was needed for these 
procedures to carry out 3-axis rotational imaging (so as to avoid 
rolling the patient), ensure sterility, and avoid unacceptable 
radiation exposure to physicians, their staff, and their patients. The 
commenter indicated that the only piece of equipment listed in the 
angiography room that would not be typically utilized for these 
procedures is the Provis Injector. All of the other

[[Page 46233]]

items are used for these Genitourinary procedures. The commenter urged 
CMS to restore the angiography room to these procedures.
    Response: We agree that it is important to provide equipment that 
is medically reasonable and necessary. Our concern with the use of the 
angiography room for these codes is that we do not believe all of the 
equipment would be typically necessary to furnish the procedure. For 
example, the commenter agreed that the Provis Injector would not be 
required for these Genitourinary codes. Therefore, we are proposing to 
remove the angiography room from these three procedures and add in its 
place the component parts that make up the room. Table 16 details these 
components:

              Table 16--Angiography Room (EL011) Components
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
100 KW at 100 kV (DIN6822) generator
C-arm single plane system, ceiling mounted, integrated multispace
T motorized rotation, multiple operating modes
real-time digital imaging
40 cm image intensifier at 40/28/20/14cm
30 x 38 image intensifier dynamic flat panel detector
floor-mounted patient table with floating tabletop designed for
 angiographic exams and interventions (with peistepping for image
 intensifiers 13in+)
18 in TFT monitor
network interface (DICOM)
Careposition: Radiation free positioning of collimators
Carewatch: Acquisition and monitoring of configurable dose area product
Carefilter: Cu-prefiltration
DICOM HIS/RIS
Control room interface
Injector, Provis
Shields, lower body and mavig
Leonardo software
Fujitsu-Siemens high performance computers
Color monitors
Singo modules for dynamic replay and full format images
Prepared for internal networking and Siemens remote servicing, both
 hardware and software
------------------------------------------------------------------------

    We will include all of the above components except the Provis 
Injector, as commenters have indicated that its use would not be 
typical for these procedures. We welcome additional comment regarding 
if these or other components are typically used in these Genitourinary 
procedures. We currently lack pricing information for these components; 
we are therefore proposing to include each of these components in the 
direct PE input database at a price of $0.00 and we are soliciting 
invoices from the public for their costs so that we may be able to 
price these items for use in developing final PE RVUs for CY 2017
    We also note that we believe that this issue illustrates a 
potentially broad problem with our use of equipment ``rooms'' in the 
direct PE input database. For most services, we only include equipment 
items that are used and unavailable for other uses due to their use 
during the services described by a particular code. However, for items 
included in equipment ``rooms,'' we allocate costs regardless of 
whether the individual items that comprise the room are actually used 
in the particular service.
    To maintain relativity among different kinds of procedures, we are 
interested in obtaining more information specifying the exact resources 
used in furnishing services described by different codes. We hope to 
address this subject in greater detail in future rulemaking.
(7) Laparoscopic Radical Prostatectomy (CPT code 55866)
    In the CY 2016 PFS final rule with comment period, we established 
an interim final work RVU of 21.36 for CPT code 55866 based on a direct 
crosswalk to CPT code 55840 (Prostatectomy, retropubic radical, with or 
without nerve sparing). We stated that we believed these codes were 
medically similar procedures with nearly identical time values, and we 
did not believe that the difference in intensity between CPT code 55840 
and CPT code 55866 was significant enough to warrant the RUC-
recommended difference of 5.50 work RVUs. We also compared CPT code 
55866 to the work RVU of 25.18 for CPT code 55845, and stated our 
belief that, in general, a laparoscopic procedure would not require 
greater resources than an open procedure.
    Comment: Several commenters disagreed with the statement that a 
laparoscopic procedure, such as CPT code 55866, would generally require 
fewer resources than an open procedure, such as CPT code 55840. 
Commenters stated that developing the skill necessary to perform a 
minimally invasive laparoscopic surgery requires a greater degree of 
experience and specialized training than that required to perform an 
open prostatectomy. Commenters indicated that this level of 
practitioner skill should be reflected in the work RVU for the 
procedure, as intensity is based in part upon skill, mental effort, and 
psychological stress.
    Response: We agree with the commenters that skill and technique as 
well as mental effort and psychological stress on the part of the 
practitioner contribute to the overall intensity of the furnishing a 
given service, and therefore, are one of the two components in 
determining code-level work RVUs. However, we do not believe that 
relative increases in requisite skill or technique can be considered 
alone. Although the development of new technology (such as robotic 
assistance) may create a greater burden of knowledge on the part of the 
practitioner, it can also make procedures faster, safer, and easier to 
perform. This means that there may be reductions in time for such a 
procedure (which is the other component of the work RVU), but also that 
the mental effort and psychological stress for a given procedure may be 
mitigated by the improvements in safety. Therefore, we do not agree 
that a newer procedure that includes additional technology and requires 
greater training would inherently be valued at a higher rate than an 
older and potentially more invasive procedure.
    Comment: A commenter stated that CPT code 55866 describes two very 
different procedures in one code. The descriptor for the code states 
``includes robotic assistance when performed'', and the procedure is 
performed differently depending on whether or not the robotic 
assistance is included. The commenter indicated that the vast majority 
of radical prostatectomies are performed with the robot, and although 
the outcomes are the same in both cases, the procedures are completely 
different.
    Response: We agree with the commenter that the descriptor includes 
the possibility for confusion, especially on the part of the survey 
respondents. Valuing this code based on the typical case is difficult 
when the procedure differs depending on the inclusion or exclusion of 
robotic assistance. We would recommend that valuation might be improved 
if the CPT Editorial Panel were to consider further revisions to this 
code to describe the two cases of laparoscopic radical prostatectomy: 
With and without robotic assistance.
    Comment: One commenter stated that the application of the phase-in 
transition for facility-only codes like CPT code 55866 would have a 
particularly egregious impact in the second year of the transition. The 
commenter urged CMS to ensure that its implementation of the phase-in 
transition does not undermine the protections created by the statute.
    Response: Please see Sections II.G and II.H or a discussion of the 
phase-in transition and its implementation in its second year.
    Comment: Several commenters requested that CMS refer CPT code 55866 
to the refinement panel for

[[Page 46234]]

review. At the refinement panel, the presenters brought up new evidence 
in the form of a study published in 2016 describing discharge data for 
radical laparoscopic prostatectomies. The presenters stated that there 
were many more people included in this study as opposed to the 30 
respondents in the survey data, and that on average the robotic 
procedure took 90 minutes longer than the open procedure. The 
additional time needed to perform the procedure, as indicated by this 
new study's results, was presented as a new rationale as to why CMS 
should accept the RUC-recommended work RVU.
    Response: CPT code 55866 was referred to the CY 2016 Multi-
Specialty Refinement Panel per the request of commenters. The outcome 
of the refinement panel was a median work RVU of 26.80, the same value 
as the RUC recommended in the previous rulemaking cycle. After 
consideration of the comments and the results of the refinement panel, 
we are proposing for CY 2017 to maintain the interim final work RVU of 
21.36 for CPT code 55866. We are interested in the results of the study 
mentioned at the refinement panel, and we will consider incorporating 
this data into the valuation of this code, including, if appropriate, 
adjustments to the work times used in PFS ratesetting. We are also 
seeking that the study be submitted through the public comment process 
so that we can allow it proper consideration along with other 
information submitted by the public, rather than using the results of a 
single study to propose valuations. We are also curious about the time 
values regarding the duration of CPT code 55866. One of the members of 
the refinement panel stated that on average the robotic procedure took 
90 minutes longer than the open procedure. This is not what was 
indicated by the survey data from the RUC recommendations, which had 
the two procedures valued at virtually identical times (same 
intraservice time, 6 minutes difference total time). We are therefore 
seeking comment on whether the times included in this study are more 
accurate than the time reflected in the RUC surveys.
(8) Intracranial Endovascular Intervention (CPT codes 61645, 61650, and 
61651)
    For CY 2016, we established interim final work RVUs of 15.00 for 
CPT code 61645, 10.00 for CPT code 61650 and 4.25 for CPT code 61651. 
The RUC-recommended values for CPT codes 61645, 61650 and 61651 were 
17.00, 12.00 and 5.50, respectively. We valued CPT code 61645 by 
applying the ratio between the RUC-recommended reference code's, CPT 
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), work and time to CPT code 61645. We valued CPT 
code 61650 based on a crosswalk to 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), due to similar intensity and 
intraservice time. We valued CPT code 61651 based on a crosswalk to 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 the code for 
primary procedure, due to similar intraservice time and intensity.
    Both CPT codes 61645 and 61650 included postservice work time 
associated with CPT code 99233 (Subsequent hospital care, per day, for 
the evaluation and management of a patient, which requires at least 2 
of these 3 key components: A detailed interval history; A detailed 
examination; Medical decision making of high complexity. Counseling 
and/or coordination of care with other physicians, other qualified 
health care professionals, or agencies are provided consistent with the 
nature of the problem(s) and the patient's and/or family's needs. 
Usually, the patient is unstable or has developed a significant 
complication or a significant new problem. Typically, 35 minutes are 
spent at the bedside and on the patient's hospital floor or unit). In 
the CY 2016 PFS final rule with comment period, we stated that we 
believe that for the typical patient, these services would be 
considered hospital outpatient services, not inpatient services. As a 
result the intraservice time of the hospital observation care service 
was valued in the immediate postservice time. We refined the work time 
for CPT code 61645 by removing 55 minutes of work time associated with 
CPT code 99233, and added 30 minutes of time from CPT code 99233 to the 
immediate postservice. Therefore the total time for CPT code 61645 was 
reduced to 241 minutes and the immediate postservice time increased to 
83 minutes. We also removed the inpatient visit from CPT code 61650, 
which reduced the total time to 206 minutes and increased the 
postservice time to 75 minutes.
    Comment: Commenters disagreed with our categorization of these 
codes as outpatient only, and therefore, subject to the 23-hour 
outpatient policy. Commenters stated that according to Medicare claims 
data, the predecessor codes were performed primarily on an inpatient 
basis. Additionally, commenters pointed out that the new codes would 
typically be performed on acute stroke patients. Commenters also said 
as the new codes are inpatient-only, the CMS reductions in work and 
time based on the assumption of outpatient status are flawed; as a 
result, commenters suggested we accept the RUC-recommended values. 
Commenters also requested that these codes be referred to the 
refinement panel.
    Response: We valued CPT codes 61645, 61650, and 61651 based on 
comparisons to reference CPT codes 37231, 37221, and 37223, 
respectively. We continue to believe that these codes are appropriate 
comparisons based on intensity and intra-service time because no 
persuasive information was presented at the refinement panel that 
indicated that these comparisons are not appropriate. Therefore we are 
proposing an RVU of 15.00 for CPT code 61645, 10.00 for CPT code 61650, 
and 4.25 for CPT code 61651. We are also proposing time inputs based on 
our refinements of the RUC recommendations, including removing the time 
associated with hospital inpatient visit CPT code 99233 from the 
intraservice work time, and adding 30 minutes to the immediate 
postservice time for both CPT codes 61645 and 61650.
    We are also seeking comment on the inclusion of post-operative 
visits in a 0-day global. Both CPT codes 61645 are 0-day global codes, 
and the refinements described above reflect changes to more appropriate 
value these codes as 0-day codes. We do not believe that 0-day globals 
codes should include post-operative visits; rather, if global codes 
require post-operative visits, they are more appropriately assigned 10- 
or 90-day global periods based on our current criteria. Our policy has 
been to remove the visit from the post-operative period and the 
associated minutes from the total time while adding 30 minutes to the 
immediate postservice period without necessarily making an adjustment 
to the work RVU (see the CY 2010 PFS proposed rule, 74 FR 33557; also 
see the CY 2011 PFS proposed rule, 75 FR 40072).

[[Page 46235]]

(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. For the CY 2016 PFS final rule with comment period, we 
established the RUC-recommended work RVUs, 1.75 and 1.10, as interim 
final for CPT codes 64461 and 64462, respectively.
    For CPT code 64463, we utilized a direct crosswalk from three other 
injection codes (CPT codes 64416 (Injection, anesthetic agent; brachial 
plexus, continuous infusion by catheter (including catheter placement), 
64446 (Injection, anesthetic agent; sciatic nerve, continuous infusion 
by catheter (including catheter placement), and 64449 (Injection, 
anesthetic agent; lumbar plexus, posterior approach, continuous 
infusion by catheter (including catheter placement)) which all had a 
work RVU of 1.81 as we believed this crosswalk more accurately 
reflected the work involved in furnishing this service.
    Comment: The RUC stated that CPT code 64463 is more comparable to 
CPT code 64483 (Injection(s), anesthetic agent and/or steroid, 
transforaminal epidural, with imaging guidance (fluoroscopy or CT); 
lumbar or sacral, single), which has a work RVU of 1.90 and requires 
the same physician work and time to perform. The RUC recommended we 
accept the 25th percentile survey work RVU of 1.90. Another commenter 
stated that our value for CPT code 64463 was inappropriate since 
imaging guidance is not part of our comparison codes. The commenter 
advocated for us to accept the survey respondent's selection of CPT 
code 64483 as the most appropriate comparison code and assign a work 
RVU of 1.90.
    Response: After reviewing and considering the comments, we continue 
to believe that CPT codes 64416, 64446, and 64449, all of which have 20 
minutes of intraservice time, are better crosswalks to CPT code 64463, 
which also has 20 minutes of intraservice time and a similar total 
time. In contrast, the crosswalk code recommended by commenters, CPT 
64483, only has 15 minutes of intraservice time. Therefore, we are 
proposing a work RVU of 1.81 for CPT code 64463 for CY 2017.
(10) Implantation of Neuroelectrodes (CPT codes 64553 and 64555)
    The RUC identified CPT codes 64553 and 64555 as a site of service 
anomaly during the CY 2016 PFS rulemaking cycle. In the Medicare claims 
data, these services were typically reported in the nonfacility 
setting, yet the survey data was predicated on a facility-based 
procedure. We agreed with the RUC that these two codes should be 
referred to the CPT Editorial Panel to better define the services, in 
particular to investigate the possibility of establishing one code to 
describe temporary or testing implantation and another code to describe 
permanent implantation. We maintained the CY 2015 work RVUs and direct 
PE inputs for these two codes on an interim basis until receiving 
updated recommendations from CPT and the RUC.
    Comment: A commenter requested that CMS allow practitioners to bill 
the MACs separately for a percutaneous electrode kit (SA022) for CPT 
code 64555. The commenter stated that without allowing for a separate 
payment for the percutaneous electrode kit, the payment for the 
procedure would be insufficient to cover the physician's costs.
    Response: We agree that CPT codes 64553 and 64555 as currently 
constructed are potentially misvalued codes, which is why we are 
maintaining the CY 2015 work RVUs and direct PE inputs on an interim 
basis. We believe that the disposable supplies furnished incident to 
the procedure are paid through the nonfacility PE RVUs. The 
percutaneous electrode kit (SA022) was not previously included in the 
direct PE inputs for either of these two services, and since we are 
proposing to maintain current direct PE inputs pending additional 
recommendations, we do not agree that disposable supplies should be 
separately payable. We are proposing to maintain the interim final work 
RVUs and direct PE inputs for these two codes, and we look forward to 
reviewing recommendations regarding these procedures again for future 
rulemaking.
    Additionally, we were alerted to a discrepancy regarding the times 
for these codes in the CY 2016 work time file. Our proposed CY 2017 
work time file addresses this discrepancy by reflecting the RUC 
recommended times of 155 minutes for CPT code 64553 and 140 minutes for 
CPT code 64555.
(11) Ocular Reconstruction Transplant (CPT code 65780)
    In CY 2015, the RUC identified CPT code 65780 as potentially 
misvalued through a misvalued code screen for 90-day global services 
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 
determined the RUC-recommended work RVU of 8.80 for CPT code 65780 
would likely overstate the work involved in the procedure given the 
change in intraservice and total times compared to the previous values. 
We believed that the ratio of the total times (230/316) applied to the 
work RVU (10.73) more accurately reflected the work involved in this 
procedure. Therefore, we established an interim final work RVU of 7.81 
for CPT code 65780.
    Comment: The RUC and other commenters disagreed with our interim 
final values based on objections to our use of time ratios in 
developing work RVUs for PFS services.
    Response: We appreciate the commenters' concerns and have responded 
to these concerns about our methodology in section II.L of this 
proposed rule. After review of the comments, we continue to consider 
the work RVU of 7.81 to accurately represent the work involved in CPT 
code 65780. We believe this service is similar in overall intensity to 
CPT code 27766 (Open treatment of medial malleolus fracture, includes 
internal fixation, when performed) that has a work RVU of 7.89 and a 
total time that more closely approximates that of CPT code 65780. 
Therefore, we are proposing a work RVU of 7.81 for CPT code 65780 for 
CY 2017.
(12) Trabeculoplasty by Laser Surgery (CPT code 65855)
    In CY 2015, the RUC identified CPT code 65855 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 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.

[[Page 46236]]

    The RUC recommended a work RVU of 3.00 for CPT code 65855. While 
the RUC-recommended value represents a reduction from the CY 2015 work 
RVU of 3.99, we stated 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 building block method. However, the 
RUC-recommended work RVU only represents a 25 percent reduction 
relative to the previous value. To identify potential work RVUs 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, 
which we established as interim final for CY 2016.
    Comment: A few commenters, including the RUC, provided explanations 
as to how the RUC recommendation had already accounted for the 
reduction in physician intra-service time and post-operative visits. 
Some commenters disagreed with CMS' interim final values based on 
objections to CMS' use of time ratios in developing work RVUs for PFS 
services.
    Response: We appreciate the commenters' concerns regarding the time 
ratio methodologies and have responded to these concerns about our 
methodology in section II.H.2 of this proposed rule. After considering 
the explanations provided by commenters through public comments 
describing the RUC's methodologies in more detail, we agree that the 
proposed value did not accurately reflect the physician work involved 
in furnishing the service. Therefore, for CY 2017 we are proposing the 
RUC-recommended work RVU value of 3.00 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 screen for 90-day global codes that included more 
than 6 office visits). We believed the RUC-recommended work RVU of 
13.94 for CPT code 66170 did 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 suggested that the RUC-recommended work RVU for CPT code 
66170 overstated the work involved in furnishing the service, since the 
recommended value only represented a reduction of approximately seven 
percent. We believed that applying the intraservice time ratio, the 
ratio between the CY 2015 intraservice time, 60 minutes, and the RUC-
recommended intraservice time, 45 minutes, applied to the current work 
RVU, 15.02, resulted in a more appropriate work RVU. Therefore, for CY 
2016, we established an interim final work RVU of 11.27 for CPT code 
66170.
    For CPT code 66172, the RUC recommended a work RVU of 14.81. After 
comparing the RUC-recommended work RVU for this code to the work RVU 
for similar codes (for example, CPT code 44900 (Incision and drainage 
of appendiceal abscess, open) and CPT code 52647 (Laser coagulation of 
prostate, including control of postoperative bleeding, complete 
(vasectomy, meatotomy, cystourethroscopy, urethral calibration and/or 
dilation, and internal urethrotomy are included if performed))), we 
believed the RUC-recommended work RVU of 14.81 overstated 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 resulted in a work 
RVU of 12.57 for CPT code 66172. Therefore, for CY 2016, we established 
an interim final work RVU of 12.57 for CPT code 66172.
    Comment: Several commenters, including the RUC, disagreed with our 
interim final values based on objections to our use of time ratios in 
developing work RVUs for PFS services. Commenters also requested CMS 
refer CPT codes 66170 and 66172 to the refinement panel.
    Response: We appreciate the commenters' concerns regarding the time 
ratio methodologies and have responded to these concerns in section 
II.H.2 of this proposed rule. CPT codes 66170 and 66172 were referred 
to the CY 2016 multi-specialty refinement panel per commenters' 
request. The outcome of the refinement panel was a median of 13.94 RVUs 
for CPT code 66170 and 14.84 RVUs for CPT code 66172. Due to the new 
information presented to the refinement panel regarding the level of 
intensity required to perform millimeter incisions in the eye, we agree 
with the assessment of the refinement panel and therefore, for CY 2017 
we are proposing a work RVU of 13.94 for CPT code 66170 and 14.84 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 a screen for 90-day global post-operative 
visits. The RUC recommended a work RVU of 16.00 for CPT code 67107, 
which corresponded to the 25th percentile of the survey. While the RUC 
recommendation represented a five percent reduction from the current 
work RVU of 16.71, we believed the RUC recommendation still overvalued 
the service given the 15 percent reduction in intraservice time and 25 
percent reduction in total time. We used the intraservice time ratio 
between the existing and new time values to identify an interim final 
work RVU of 14.06. We believed this value accurately reflected the work 
involved in this service and was comparable to other codes that have 
the same global period and similar intraservice time and total time. 
For CY 2016, we established 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 of the survey, which reflected a 25 percent 
reduction from the current work RVU. The survey results reflected a 53 
percent reduction in intraservice time and a 42 percent reduction in 
total time. We believe the RUC-recommended work RVU overestimated 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 work RVU 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 established 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 used 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. For CPT code 67113, the RUC recommended and we 
established an interim final work RVU of 19.00 based on the 25th 
percentile of the survey.

[[Page 46237]]

    Comment: Several commenters, including the RUC, disagreed with our 
interim final values based on objections to our use of time ratios in 
developing work RVUs for PFS services. Some commenters also stated that 
by using some RUC-recommended increments and rejecting others, we have 
not only established inconsistencies within the family of codes, but 
potentially opened up anomalies across a wide range of services. The 
RUC also expressed disagreement with using the recommended work RVU 
increments without using the recommended work RVU. Some commenters also 
stated the new IWPUT values for these three services are 
inappropriately low and pointed to the derived per minute intensity of 
0.064 for CPT code 67110 as particularly problematic.
    Response: We appreciate the commenters' concerns regarding the time 
ratio methodologies and have responded to these concerns in section 
II.H.2 of this proposed rule. We disagree with the statement about 
inconsistencies as the codes in this family are valued relative to one 
another based on the times and level of physician work required for 
each code. Also, we generally do not agree that a low IWPUT itself 
indicates overall misvaluation as the validity of the IWPUT as a 
measure of intensity depends on the accuracy of the assumptions 
regarding the number, level, and work RVUs attributable to visits for 
services in the post-operative global period for individual services. 
For example, a service with an unrealistic number or level of post-
operative visits may have a very low derived intensity for the intra-
service time.
    CPT codes 67107, 67108, and 67110 were referred to the CY 2016 
multi-specialty refinement panel per commenters' request. The outcome 
of the refinement panel was a median of 16.00, 17.13, and 10.25 work 
RVUs; respectively. After consideration of the comments and the results 
of the refinement panel, we are proposing a work RVU of 16.00, 17.13, 
and 10.25 for CPT codes 67107, 67108, and 66110, respectively, for CY 
2017.
(15) Fetal MRI (CPT Codes 74712 and 74713)
    For CY 2016, we established the RUC-recommended work RVU of 3.00 as 
interim final for CPT code 74712. We established an interim final work 
RVU of 1.78 for CPT code 74713 based on a refinement of the RUC-
recommended work RVU of 1.85 using the ratio of work to time for both 
codes. This proposed value also corresponds to the 25th percentile 
survey result.
    Comment: Commenters stated that the work RVU of 1.78 for CPT code 
74713 did not reflect the higher intensity inherent in the procedure's 
typical patient. The commenter explained that the typical patient is 
pregnant with twins and has a higher likelihood of complications 
related to congenital anomalies, as well as of ischemic brain injury 
with twin gestations. The commenter further stated that twin gestations 
are more difficult to image. Commenters requested that CPT code 74713 
be referred to the multispecialty refinement panel.
    Response: CPT code 74713 was referred to the CY 2016 multispecialty 
refinement panel. After considering the comments and the results of the 
refinement panel, we agree with commenters that an RVU of 1.78 
underestimates the work for CPT code 74713. Therefore, we propose a 
work RVU of 1.85 for the service for CY 2017.
(16) Interstitial Radiation Source Codes (CPT Codes 77778 and 77790)
    In CY 2016 PFS final rule with comment period, we established an 
interim final value for CPT code 77790 without a work RVU, consistent 
with the RUC's recommendation. We did not use the RUC-recommended work 
RVU to establish the interim final values for CPT code 77778. We stated 
that the specialty society survey included a work time that was 
significantly higher than the RUC-recommended work time without a 
commensurate change in RVU. For CY 2016, we established the 25th 
percentile work RVU survey result of 8.00 as interim final for CPT code 
77778.
    Comment: Commenters agreed that the preservice survey times and the 
RUC-recommended survey times were inconsistent and explained that this 
inconsistency resulted from the RUC's use of preservice packages in 
developing recommendations. In addition, commenters stated that because 
the work associated with CPT code 77790 (including pre-time 
supervision, handling, and loading of radiation seeds into needles) was 
bundled into CPT code 77778, that the additional work should be 
reflected in the RVU for CPT code 77778. Commenters encouraged us to 
accept the RUC-recommended work RVU of 8.78 and requested that CPT code 
77778 be referred to the refinement panel.
    Response: We did not refer CPT code 77778 to the CY 2016 
multispecialty refinement panel because commenters did not provide new 
clinical information. We continue to believe that, based on the 
reduction in total work time, an RVU of 8.00 accurately reflects the 
work involved in furnishing CPT code 77778. Therefore for CY 2017, we 
are proposing a work RVU of 8.00 for CPT code 77778 and 0 work RVUs for 
CPT code 77790. We are also seeking comment on whether we should use 
time values based on preservice packages if the recommended work value 
is based on time values that are significantly different than those 
ultimately recommended.
(17) Colon Transit Imaging (CPT Codes 78264, 78265, and 78266)
    In establishing CY 2016 interim final values, we accepted the RUC-
recommended work RVUs for CPT codes 78265 and 78266. We believed that 
the RUC-recommended RVU of 0.80 overestimated the work involved in 
furnishing CPT code 78264 and as a result, we established an interim 
final work RVU of 0.74 based on a crosswalk to CPT code 78226 
(hepatobiliary system imaging, including gallbladder when present), due 
to similar intraservice times and intensities.
    Comment: Commenters did not support our interim final work RVU for 
CPT code 78264. Commenters disagreed with our assessment of CPT code 
78264 as having a higher work RVU and shorter intraservice time 
relative to the other codes in the family. One commenter stated that a 
difference of two minutes in intraservice time was insignificant and 
should not be used as a rationale for revaluing. Another commenter 
stated that we should have maintained the RUC-recommended crosswalk of 
CPT code 78264 to CPT code 78227 (Hepatobiliary system imaging, 
including gallbladder when present; with pharmacologic intervention, 
including quantitative measurement(s) when performed) due to 
similarities in service, work and intensity. Based on these concerns, 
commenters requested that CPT code 78264 be referred to the refinement 
panel.
    Response: CPT code 78264 was referred to the CY 2016 multi-
specialty refinement panel for further review. We calculate the 
refinement panel results as the median of each vote. That result for 
CPT code 78264 was 0.79 RVUs. After consideration of the comments and 
the refinement panel results, we agree that 0.79 accurately captures 
the overall work involved in furnishing this service and are proposing 
a value of 0.79 for CPT code 78264.

[[Page 46238]]

(18) Cytopathology Fluids, Washings or Brushings and Cytopathology 
Smears, Screening, and Interpretation (CPT Codes 88104, 88106, 88108, 
88112, 88160, 88161, and 88162)
    In the CY 2016 PFS final rule with comment period, we made a series 
of refinements to the recommended direct PE inputs for this family of 
codes. We removed the equipment time for the solvent recycling system 
(EP038) and the associated clinical labor described by the tasks 
``Recycle xylene from stainer'' and ``Order, restock, and distribute 
specimen containers and or slides with requisition forms'' due to our 
belief that these were forms of indirect PE. This refinement applied to 
all seven codes in the family. We also noticed what appeared to be an 
error in the quantity 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 believed was intended to be a quantity of 2. We therefore 
refined the value of these supplies to 2 for CPT codes 88108 and 88112.
    Comment: Several commenters disagreed with our characterization of 
the solvent recycling system and its associated clinical labor tasks as 
indirect PE. Commenters stated that the solvent recycling system costs 
are direct expenses since they are based on the amount of recycled 
solvent allocated to each specimen, with solvents allocated to specific 
specimens based on batch size. They indicated that the related clinical 
labor tasks are also forms of direct PE as they are also based on the 
amount of recycled solvent allocated to each specimen. The time for 
these tasks varies based on the batch size, which varies by procedure.
    Response: We maintain our previously stated belief that these are 
forms of indirect PE, as they are 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. We continue to believe 
that a solvent recycling system would be in general use for a lab 
practice, and that the associated clinical labor tasks for ordering and 
restocking specimen containers can be more accurately described as 
administrative activities. We are proposing to maintain these 
refinements from the previous rulemaking cycle for CPT codes 88104-
88162.
    Comment: A commenter indicated that we did not account for the 
batch size when considering the supply quantities for CPT codes 88108 
and 88112. The commenter indicated that the practice expense inputs 
should be assumed to have a batch size of five for these two codes, and 
therefore, no edits should be made. The commenter requested that we 
restore the quantity of 0.2 for the gloves, gowns, and eye shields 
associated with these procedures. This did not apply to the other codes 
on the submitted spreadsheet, which had a batch size of one.
    Response: We appreciate the assistance of the commenter in 
clarifying the batch size for these procedures. As a result, we are 
proposing to refine the supply quantity of the non-sterile gloves 
(SB022), impermeable staff gowns (SB027), and eye shields (SM016) back 
to the RUC-recommended value of 0.2 for CPT codes 88108 and 88112.
(19) Immunohistochemistry (CPT Codes 88341, 88342, 88344, and 88350)
    In the CY 2014 PFS final rule with comment period (78 FR 74341), we 
assigned a status indicator of I (Not valid for Medicare purposes) to 
CPT codes 88342 and 88343 and instead created two G-codes, G0461 and 
G0462, to report immunohistochemistry services. We did this in part to 
avoid creating incentives for overutilization. For CY 2015, the CPT 
coding was revised with the creation of two new CPT codes, 88341 and 
88344, the revision of CPT code 88342 and the deletion of CPT code 
88343. In the past for similar procedures in this family, the RUC 
recommended a work RVU for the add-on code (CPT code 88364) that was 60 
percent of the base code (CPT code 88365). In the CY 2015 PFS final 
rule with comment period, we stated that the relative resources 
involved in furnishing an add-on service in this family would be 
reflected appropriately using the same 60 percent metric and 
subsequently established an interim final work RVU of 0.42 for CPT code 
88341, which was 60 percent of the work RVU of the base CPT code 88342 
(0.70). In the CY 2016 PFS proposed rule, we revised the add-on codes 
from 60 percent to 76 percent of the base code and subsequently 
revalued CPT code 88341 at 0.53 work RVUs. However, we inadvertently 
published work RVUs for CPT code 88341 in Addendum B without explicitly 
discussing it in the preamble text. In the CY 2016 PFS final rule with 
comment period, we maintained CPT code 88341's CY 2015 work RVU of 0.53 
as interim final for CY 2016 and requested public comment. Also, in the 
CY 2016 PFS final rule with comment period, we established an interim 
final value of 0.70 work RVUs for CPT codes 88342 and 88344.
    Comment: Several commenters expressed their opposition to a 
standard discount for the physician work involved in pathology add-on 
services and urged us to accept the RUC-recommend value of 0.65 RVUs 
for CPT code 88341.
    Response: We appreciate commenters' concerns regarding a standard 
discount; however, we believe that it is reasonable to estimate work 
RVUs for a base and an add-on code, and to recognize efficiencies 
between them, by looking at how similar efficiencies are reflected in 
work RVUs for other PFS services. Also we note that the intravascular 
codes for which we initially established our base/add-on code 
relationship for CPT codes 88346 and 88350 were deleted in CY 2016 and 
replaced with two new codes; CPT codes 37252 and 37253. The 
relationship between 37252 and 37253 represents a 20 percent discount 
for the add-on code as the base CPT code 37252 has a work RVU of 1.80 
and 37523 and work RVU of 1.44. As CPT codes 37252 and 37253 replaced 
the codes on which our discounts for base and add-on codes were based 
(please see the CY 2016 PFS final rule with comment period (80 FR 
70972) for a detailed discussion) we believed it would be appropriate 
to maintain the same 20 percent relationship for 88346 and 88350. 
Therefore, for CY 2017, we are proposing a work RVU of 0.56 for CPT 
code 88341, which represents 80 percent of 0.70, the work RVU of the 
base code.
    For CY 2016, we finalized a work RVU of 0.56 for CPT code 88350 
which represented 76 percent of 0.74, the RVU for the base code. To 
maintain consistency within this code family, we are proposing to 
revalue CPT code 88350 using the 20 percent discount discussed above. 
To value CPT code 88350, we multiplied the work RVU of CPT code 88346, 
0.74, by 80 percent, and then subtracted the product from 0.74, 
resulting in a work RVU of 0.59 for CPT code 88350. Therefore, for CY 
2017, we are proposing a work RVU of 0.59 for CPT code 88350.
    A stakeholder has suggested to us that an error was made in the 
implementation of direct PE inputs for code 88341 and several other 
related codes. This stakeholder stated that when CMS reclassified 
equipment code EP112 (Benchmark ULTRA automated slide preparation 
system) and EP113 (E-Bar II Barcode Slide Label System) into a single 
equipment item, with a price of $150,000 using equipment code EP112,

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the equipment minutes assigned to the E-Bar II Barcode Slide Label 
System should have been added into the new EP112 equipment time. The 
stakeholder requested that these minutes should be added into the EP112 
equipment time; for example, 1 additional minute should be added to CPT 
code 88341 for a total of 16 minutes.
    We appreciate the additional information, and are soliciting 
additional information on this topic through public comment on this 
proposed rule to assess whether it would be appropriate to add the 
former EP113 minutes into EP112. We are specifically seeking comment 
from other stakeholders, including the RUC, since the assigned number 
of minutes was originally based on a RUC recommendation. This 
information would be potentially relevant for CPT codes 88341 
(Immunohistochemistry or immunocytochemistry, per specimen; each 
additional single antibody stain procedure), 88342 
(Immunohistochemistry or immunocytochemistry, per specimen; initial 
single antibody stain procedure), 88344 (Immunohistochemistry or 
immunocytochemistry, per specimen; each multiplex antibody stain 
procedure), 88360 (Morphometric analysis, tumor immunohistochemistry, 
quantitative or semiquantitative, per specimen, each single antibody 
stain procedure; manual), and 88361 (Morphometric analysis, tumor 
immunohistochemistry, quantitative or semiquantitative, per specimen, 
each single antibody stain procedure; using computer-assisted 
technology).
(20) Morphometric Analysis (CPT Codes 88364, 88365, 88367, 88368, 88369 
and 88373)
    For CY 2015, the CPT editorial panel revised the code descriptors 
for the in situ hybridization procedures, CPT codes 88365, 88367 and 
88368, to specify ``each separately identifiable probe per block.'' 
Additionally, three new add-on codes (CPT codes 88364, 88369, 88373,) 
were created to specify ``each additional separately identifiable probe 
per slide.'' Some of the add-on codes in this family had RUC-
recommended work RVUs that were 60 percent of the work RVU of the base 
procedure. We believed this accurately reflected the resources used in 
furnishing these add-on codes and subsequently established interim-
final work RVUs of 0.53 for code 88364 (60 percent of the work RVU of 
CPT code 88365); 0.53 for CPT code 88369 (60 percent of the work RVU of 
CPT code 88368); and 0.43 for CPT code 88373 (60 percent of the work 
RVU of CPT code 88367).
    For CY 2016, the RUC re-reviewed these services 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 code 88365 we finalized a work RVU 
of 0.88.
    For CPT codes 88364 and 88369, we increased the work RVUs of these 
add-on codes from 0.53 to 0.67, which reflected 76 percent of the work 
RVUs of the base procedures for these services. However, we 
inadvertently omitted the rationale for this revision to the work RVUs 
in the proposed rule. Consequently, we maintained the CY 2015 interim 
final values of the work RVU of 0.67 for CPT codes 88464 and 88369 and 
sought comment on these values for CY 2016. For CPT code 88373 we 
finalized a work RVU of 0.43.
    Comment: A few commenters stated their objection to our use of a 
standard discount for pathology add-on services and for suggesting that 
each service is separate and unique. Commenters also stated there 
should be no comparison of intravascular ultrasound services to 
morphometric analysis, immunohistochemistry, immunofluorescence, or any 
pathology service.
    Response: In reviewing the RUC-recommended base/add-on 
relationships between several pathology codes, we continue to believe 
the base/add-on code time relationships for pathology services are 
appropriate and have not been presented with any compelling evidence 
that conflicts with the RUC-recommended relationships. However, as we 
stated above, the intravascular codes we initially examined in 
revaluing CPT codes 88364 and 88369 were deleted in CY 2016 and 
replaced with CPT codes 37252 and 37253. For the reasons stated above 
we continue to believe this 20 percent discount relationship between 
the base and add-on code accurately reflects the work involved in 
furnishing these services.
    Therefore, for CY 2017, we are proposing a work RVU of 0.70 for CPT 
codes 88364 and 88369 which represents a 20 percent discount from the 
base code. As the relationship between the base code and add-on code 
now represents a 20 percent difference we are proposing to revalue CPT 
code 88373 at 0.58 work RVUs. Therefore, for CY 2017 we are proposing a 
work RVU of 0.58 for CPT code 88373.
(21) Liver Elastography (CPT Code 91200)
    For CY 2016, we received a RUC recommendation of 0.27 RVU for CPT 
code 91200. After careful review of the recommendation, we established 
the RUC-recommended work RVU and direct PE inputs as interim final for 
CY 2016.
    Comment: A few commenters requested that we reconsider the level of 
payment assigned to this service when furnished in a non-facility 
setting, stating that the code met the definition for the potentially 
misvalued code list as there is a significant difference in payment 
between sites of service. The commenters also asked us to reconsider 
the assigned 50 percent utilization rate for the FibroScan equipment in 
this procedure as the current utilization rate would translate to over 
50 procedures per week. Instead, the commenters suggested the typical 
number of procedures done per week ranges between 15 and 25 and 
requested we adopt a 25 percent utilization rate which corresponds to 
that number of procedures.
    Response: We refer commenters to the CY 2016 final rule with 
comment period (80 FR 71057-71058) where we discussed and addressed the 
comparison of the PFS payment amount to the OPPS payment amount for CPT 
91200. For the commenter's statement about the utilization rate, 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 
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 support 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. The commenters did not 
provide any verifiable data suggesting a lower utilization rate. 
Therefore, for CY 2017 we are proposing a work RVU of 0.27 for CPT code 
91200, consistent with the CY 2016 interim final value, and we continue 
to explore and seek comments regarding publicly available data sources 
to identify the most accurate equipment utilization rate assumptions 
possible. We also note that following the

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publication of the CY 2016 PFS final rule with comment period (80 FR 
70886) there was an inconsistency in the Work Time file published on 
the CMS Web site. For CPT code 91200 the RUC recommended 16 minutes 
total service time whereas our file reflected 18 minutes total time for 
the service. For CY 2017, we are proposing to update the Work Time file 
to reflect the RUC's recommendation, which is 16 minutes for CPT code 
91200.
b. CY 2017 Proposed Codes
(1) Anesthesia Services Furnished in Conjunction with Lower 
Gastrointestinal (GI) Procedures (CPT Codes 00740 and 00810)
    The anesthesia procedure CPT codes 00740 and 00810 are used for 
anesthesia furnished in conjunction with lower gastrointestinal (GI) 
procedures. In the CY 2016 PFS proposed rule (80 FR 41686), we 
discussed that in reviewing Medicare claims data, a separate anesthesia 
service is now reported more than 50 percent of the time that several 
types of colonoscopy procedures are reported. We discussed that 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 reexamined. We proposed to 
identify CPT codes 00740 and 00810 as potentially misvalued and sought 
public comment regarding valuation for these services.
    The RUC recommended maintaining the base unit value of 5 as an 
interim base value for both CPT code 00740 and 00810 on an interim 
basis, due to their concerns about the specialty society surveys. The 
RUC suggested that the typical patient vignettes used in the surveys 
for both CPT codes 00740 and 00810 were not representative of current 
typical practice and recommended that the codes be resurveyed with 
updated vignettes. We agree that it is premature to propose any changes 
to the valuation of CPT codes 00740 and 00810, but continue to believe 
that these services are potentially misvalued and look forward to 
receiving input from interested parties and specialty societies for 
consideration during future notice and comment rulemaking.
(2) Removal of Nail Plate (CPT Code 11730)
    We identified CPT code 11730 (Avulsion of nail plate, partial or 
complete, simple; single) through a screen of high expenditures by 
specialty. The HCPAC recommended a work RVU of 1.10. We believe the 
recommendation for this service overestimates the work involved in 
performing this procedure, specifically given the decrease in physician 
intraservice and total time concurrently recommended by the HCPAC. We 
believe that a work RVU of 1.05, which corresponds to the 25th 
percentile of the survey results, more accurately represents the time 
and intensity of furnishing the service. To further support the 
validity of the use of the 25th percentile of the survey, a work RVU of 
1.05, we identified two crosswalk CPT codes, 20606 (Arthrocentesis, 
aspiration and/or injection, intermediate joint or bursa), with a work 
RVU of 1.00, and 50389 (Removal of nephrostomy tube, requiring 
fluoroscopic guidance) with a work RVU of 1.10, both of which have 
identical intraservice times, similar total times and similar 
intensity. We note that our proposed work RVU of 1.05 for CPT code 
11730 falls halfway between the work RVUs for these two crosswalk-
codes. CPT Code 11730 may be reported with add-on CPT code 11732 to 
report performance of the same procedure for each additional nail plate 
procedure.
    Since CPT code 11732 was not reviewed by the HCPAC for CY 2017, we 
are proposing a new work value to maintain the consistency of this add-
on code with the base code, CPT code 11730. We are proposing to remove 
2 minutes from the physician intraservice time to maintain consistency 
with the HCPAC-recommended reduction of 2 minutes from the physician 
intraservice time period for the base code. We are using a crosswalk 
from the value for CPT code 77001 (Fluoroscopic guidance for central 
venous access device placement, replacement (catheter only or 
complete), or removal (includes fluoroscopic guidance for vascular 
access and catheter manipulation, any necessary contrast injections 
through access site or catheter with related venography radiologic 
supervision and interpretation, and radiographic documentation of final 
catheter position) (List separately in addition to code for primary 
procedure)), which has similar physician intraservice and total time 
values; therefore, we are proposing a work RVU of 0.38 for CPT code 
11732. As further support for this proposal, we note that this proposed 
RVU reduction is similar to the value obtained by subtracting the 
incremental difference in the current and recommended work RVUs for the 
base code from the current value of CPT code 11732.
    We are proposing to use the HCPAC-recommended direct PE inputs for 
CPT code 11730. We are proposing to apply some of HCPAC-recommended 
refinements for CPT code 11730 to11732, including the removal of the 
penrose drain (0.25in x 4in), lidocaine 1%-2% inj (Xylocaine), 
applicator (cotton-tipped, sterile) and silver sulfadiazene cream 
(Silvadene), as well as the reduction of the swab-pad, alcohol from 2 
to 1. In addition, we are proposing not to include the recommended the 
supply items ``needle, 30g, and syringe, 10-12ml'' since other similar 
items are present, and we think inclusion of these additional supply 
items would be duplicative. For clinical labor, we are proposing to 
assign 8 minutes to ``Assist physician in performing procedure'' for to 
maintain a reduction that is proportionate to that recommended for 
11730. For the supply item ``ethyl chloride spray,'' we believe that 
the listed input price of $4.40 per ounce overestimates the cost of 
this supply item, and we are seeking comment on the accuracy of this 
supply item price. Finally, we are adding two equipment items as was 
done in the base code, basic instrument pack and mayo stand, and are 
proposing to adjust the times for all pieces of equipment to 8 minutes 
to reflect the clinical service period time.
(3) Bone Biopsy Excisional (CPT Code 20245)
    In CY 2014, CPT code 20245 was identified by the RUC's 10-Day 
Global Post-Operative Visits Screen.
    For CY 2017, the RUC recommended a value of 6.50 work RVUs for CPT 
code 20245, including a change in global period from 10- to 0- days. We 
disagree with this value given the significant reductions in the 
intraservice time, total time, and the change in the office visits 
assuming the change in global period. The intraservice and total times 
were decreased by approximately 33 and 53 percent respectively; while 
the elimination of three post-operative visits (one CPT code 99214 and 
two CPT code 99213 visits) alone would reduce the overall work RVU by 
at least 38 percent under the reverse building block methodology. We 
also note that the RUC-recommended work RVU of 6.50 only represents a 
27 percent reduction relative to the previous work RVU of 8.95. To 
develop a work RVU for this service, we used a crosswalk from CPT code 
19298 (Placement of radiotherapy after loading brachytherapy catheters 
(multiple tube and button type) into the breast for interstitial 
radioelement application following (at the time of or subsequent to) 
partial mastectomy, includes imaging guidance), since we believe the 
codes share similar intensity and total time and the same intraservice 
time of 60 minutes. Therefore, for CY

[[Page 46241]]

2017, we are proposing a work RVU of 6.00 for CPT code 20245.
(4) Insertion of Spinal Stability Distractive Device (CPT Codes 228X1, 
228X2, 228X4, and 228X5)
    For CY 2016, the CPT Editorial Panel converted two Category III 
codes to Category I codes describing the insertion of an interlaminar/
interspinous process stability device (CPT codes 228X1 and 228X4) and 
developed two corresponding add-on codes (CPT codes 228X2 and 228X5). 
The RUC recommended a work RVU of 15.00 for CPT code 228X1, 4.00 for 
CPT code 228X2, 7.39 for CPT code 228X4, and 2.34 for CPT code 228X5.
    We believe that the RUC recommendations for CPT codes 228X1 and 
228X4 overestimate the work involved in furnishing these services. We 
believe that a crosswalk to CPT code 36832 (Revision, open, 
arteriovenous fistula; without thrombectomy, autogenous or 
nonautogenous dialysis graft (separate procedure)) which has a work RVU 
of 13.50 is an accurate comparison. CPT code 36832 is similar in total 
time, work intensity, and number of visits to 228X1. This is supported 
by the ratio between total time and work in the key reference service, 
CPT code 63047 (Laminectomy, facetectomy and foraminotomy (unilateral 
or bilateral with decompression of spinal cord, cauda equina and/or 
nerve root[s], [e.g., spinal or lateral recess stenosis]), single 
vertebral segment; lumbar). Therefore, we are proposing a work RVU of 
13.50 for CPT code 228X1. For CPT code 228X4, we believe that CPT code 
29881 (Arthroscopy, knee, surgical; with meniscectomy (medial OR 
lateral, including any meniscal shaving) including debridement/shaving 
of articular cartilage (chondroplasty), same or separate 
compartment(s), when performed) is an appropriate crosswalk based on 
clinical similarity as well as intensity and total time. CPT code 29881 
has an RVU of 7.03; therefore, we are proposing a work RVU of 7.03 for 
CPT code 228X4. We are proposing to accept the RUC-recommended work RVU 
for CPT codes 228X2 and 228X5 without refinement.
(5) Biomechanical Device Insertion (CPT Codes 22X81, 22X82, and 22X83)
    For CY 2016, the CPT Editorial Panel established three new category 
I add-on codes and deleted one code to provide a more detailed 
description of the placement and attachment of biomechanical spinal 
devices. For CPT code 22X81, the RUC recommended a work RVU of 4.88. 
For CPT code 22X82, and CPT code 22X83, the recommended work RVUs are 
5.50 and 6.00, respectively.
    In reviewing the code descriptors, descriptions of work and 
vignettes associated with CPT codes 22X82 and 22X83, we determined that 
the two procedures, in addition to having identical work time, contain 
many clinical similarities and do not have quantifiable differences in 
overall intensity. Therefore, we are proposing the RUC-recommended work 
RVU of 5.50 for both CPT code 22X82 and CPT code 228X3. We believe that 
the RUC-recommended work RVU for CPT code 22X81 overestimates the work 
in the procedure relative to the other codes in the family. We are 
proposing a work RVU of 4.25 for CPT code 228X1 based a crosswalk from 
CPT code 37237 (Transcatheter placement of an intravascular stent(s) 
(except lower extremity artery(s) for occlusive disease, cervical 
carotid, extracranial vertebral or intrathoracic carotid, intracranial, 
or coronary), open or percutaneous, including radiological supervision 
and interpretation and including all angioplasty within the same 
vessel, when performed; each additional artery (List separately in 
addition to code for primary procedure)), which is similar in time and 
intensity to the work described by CPT code 22X81.
(6) Closed Treatment of Pelvic Ring Fracture (CPT Codes 271X1 and 
271X2)
    For CY 2017, the CPT Editorial Panel deleted CPT codes 27193 and 
27194 and replaced them with two new codes, 271X1 and 271X2, and the 
RUC recommended a work RVU of 5.50 for CPT code 27193, and a work RVU 
of 9.00 for CPT code 271X2 to describe closed treatment of pelvic ring 
fracture. We are proposing to change the global period for these 
services from 90 days to 0 days because these codes typically represent 
emergent procedures with which injuries beyond pelvic ring fractures 
are likely to occur; we believe it is typical that multiple 
practitioners would be involved in providing post-operative care and it 
is likely that a practitioner furnishing a different procedure is more 
likely to be providing the primary post-operative care. If other 
practitioners are typically furnishing care in the post-surgery period, 
we believe that the six postservice visits included in CPT code 271X1, 
and the seven included in 271X2, would likely not occur. This is 
similar to our CY 2016 review and valuation of CPT codes 21811 (Open 
treatment of rib fracture(s) with internal fixation, includes 
thoracoscopic visualization when performed, unilateral; 1-3 ribs), 
21812 (Open treatment of rib fracture(s) with internal fixation, 
includes thoracoscopic visualization when performed, unilateral; 4-6 
ribs), and 21813 (Open treatment of rib fracture(s) with internal 
fixation, includes thoracoscopic visualization when performed, 
unilateral; 7 or more ribs). In our valuation of those codes, we 
determined that a 0-day, rather than a 90-day global period was 
preferable, in part because those codes describe rib fractures that 
would typically occur along with other injuries, and the patient would 
likely already be receiving post-operative care because of the other 
injuries. We believe that the same rationale applies here. To establish 
a work RVU for 271X1, we are crosswalking this code to CPT code 65800 
(Paracentesis of anterior chamber of eye (separate procedure); with 
removal of aqueous), due to its identical intraservice time and similar 
total time, after removing the work associated with postoperative 
visits, and its similar level of intensity. Therefore, we are proposing 
a work RVU of 1.53 for CPT code 271X1. For 271X2, we are crosswalking 
to CPT code 93452 (Left heart catheterization including intraprocedural 
injection(s) for left ventriculography, imaging supervision and 
interpretation, when performed) which has an identical intraservice 
time and similar total time after removing the work associated with 
postoperative visits from 271X2. We are proposing a work RVU of 4.75 
for code 271X2.
(7) Bunionectomy (CPT Codes 28289, 282X1, 28292, 28296, 282X2, 28297, 
28298, and 28299)
    The RUC identified CPT Code 28293 as a 90-day global service with 
more than 6 office visits and CPT codes 28290-28299 as part of the 
family of services. In October 2015, the CPT Editorial Panel created 
two new CPT codes (282X1, 282X2), deleted CPT codes 28290, 28293, 28294 
and revised CPT codes 28289, 28292, 28296, 28297, 28298 and 28299 based 
on the rationale that more accurate descriptions of the services needed 
to be developed.
    For CPT codes 28289, 28292, 28296, 28297, 28298, and 28299 the RUC 
recommended and we are proposing work RVUs of 6.90, 7.44, 8.25, 9.29, 
7.75, and 9.29 respectively. For CPT code 282X1, the RUC recommended a 
work RVU of 8.01 based on the 25th percentile of the survey. We believe 
the recommendation for this service overestimates the overall work 
involved in performing this procedure given the decrease in 
intraservice time, total time, and post-operative visits when compared 
to deleted predecessor CPT code 28293. Due to similarity in

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intraservice and total times, we believe a direct crosswalk of the work 
RVUs for CPT code 65780 (Ocular surface reconstruction; amniotic 
membrane transplantation, multiple layers), to CPT code 282X1 more 
accurately reflects the time and intensity of furnishing the service. 
Therefore, for CY 2017, we are proposing a work RVU of 7.81 for CPT 
code 282X1.
    For CPT code 282X2, the RUC recommended a work RVU of 8.57 based on 
the 25th percentile of the survey. We believe the recommendation for 
this service overestimates the work involved in performing this 
procedure given the similarity in the intensity of the services and 
identical intraservice and total times as CPT code 28296. Therefore, we 
propose a direct RVU crosswalk from CPT code 28296 to CPT code 282X2. 
For CY 2017, we are proposing a work RVU of 8.25 for CPT code 282X2.
(8) Endotracheal Intubation (CPT Code 31500)
    In the CY 2016 PFS final rule with comment period (80 FR 70914), we 
identified CPT code 31500 as potentially misvalued. The specialty 
societies surveyed this code, and after reviewing the survey responses, 
including increases in time, the RUC recommended an increase in work 
RVUs to 3.00 for CPT code 31500. After reviewing the RUC's 
recommendation, we are proposing a work RVU of 2.66, based on a direct 
crosswalk to CPT code 65855, which has similar intensity and service 
times as reflected in the survey data reported by the specialty groups.
(9) Closure of Left Atrial Appendage With Endocardial Implant (CPT Code 
333X3)
    The CPT Editorial Panel deleted category III code 0281T 
(Percutaneous transcatheter closure of the left atrial appendage with 
implant, including fluoroscopy, transseptal puncture, catheter 
placement(s), left atrial angiography, left atrial appendage 
angiography, radiological supervision and interpretation) and created 
new CPT code 333X3 to describe percutaneous transcatheter closure of 
the left atrial appendage with implant. The RUC recommended a work RVU 
of 14.00, which is the 25th percentile survey result. After reviewing 
that recommendation, we are proposing a work RVU of 13.00 for CPT code 
333X3, which is the minimum survey result. Based on our clinical 
judgment and that the key reference codes discussed in the RUC 
recommendations have higher intraservice and total service times than 
the median survey results for CPT code 333X3, we believe a work RVU of 
13.00 more accurately represents the work value for this service.
(10) Valvuloplasty (CPT Codes 334X1 and 334X2)
    The CPT Editorial Committee created new codes to describe 
valvuloplasty procedures and deleted existing CPT code 33400 
(Valvuloplasty, aortic valve; open, with cardiopulmonary bypass). New 
CPT code 334X1 represents a simple valvuloplasty procedure and new CPT 
code 334X2 describes a more complex valvuloplasty procedure. We are 
proposing to use the RUC-recommended values for CPT code 334X1. For CPT 
code 334X2, the RUC recommended a work RVU of 44.00, the 25th 
percentile survey result. The RUC estimated that approximately 70 
percent of the services previously reported using CPT code 33400 would 
have been reported using CPT code 334X2 with 30 percent reported using 
new CPT code 334X1. Therefore, the typical service previously reported 
with 33400 ought to now be reported with 334X2. Compared to deleted CPT 
code 33400, the survey results for CPT 334X2 showed the median 
intraservice time to be similar but total service time to be decreased. 
Therefore, we do not believe the increase recommended by the RUC is 
warranted, and we are proposing a work RVU of 41.50 for CPT code 334X2. 
This is the current value of CPT code 33400, and given that the typical 
service should remain consistent between the two codes, we believe the 
work RVU should remain consistent as well.
(11) Dialysis Circuit (CPT Codes 369X1, 369X2, 369X3, 369X4, 369X5, 
369X6, 369X7, 369X8, 369X9)
    In January 2015, a CPT/RUC workgroup identified the following CPT 
codes as being frequently reported together in various combinations: 
35475 (Transluminal balloon angioplasty, percutaneous; brachiocephalic 
trunk or branches, each vessel), 35476 (Transluminal balloon 
angioplasty, percutaneous; venous), 36147 (Introduction of needle and/
or catheter, arteriovenous shunt created for dialysis (graft/fistula); 
initial access with complete radiological evaluation of dialysis 
access, including fluoroscopy, image documentation and report), 36148 
(Introduction of needle and/or catheter, arteriovenous shunt created 
for dialysis (graft/fistula); additional access for therapeutic 
intervention), 37236 (Transcatheter placement of an intravascular 
stent(s) (except lower extremity artery(s) for occlusive disease, 
cervical carotid, extracranial vertebral or intrathoracic carotid, 
intracranial, or coronary), open or percutaneous, including 
radiological supervision and interpretation and including all 
angioplasty within the same vessel, when performed; initial artery), 
37238 (Transcatheter placement of an intravascular stent(s), open or 
percutaneous, including radiological supervision and interpretation and 
including angioplasty within the same vessel, when performed; initial 
vein), 75791 (Angiography, arteriovenous shunt (e.g., dialysis patient 
fistula/graft), complete evaluation of dialysis access, including 
fluoroscopy, image documentation and report (includes injections of 
contrast and all necessary imaging from the arterial anastomosis and 
adjacent artery through entire venous outflow including the inferior or 
superior vena cava), radiological supervision and interpretation), 
75962 (Transluminal balloon angioplasty, peripheral artery other than 
renal, or other visceral artery, iliac or lower extremity, radiological 
supervision and interpretation), and 75968 (Transluminal balloon 
angioplasty, each additional visceral artery, radiological supervision 
and interpretation). These codes are frequently reported together for 
both dialysis circuit services and transluminal angioplasty services. 
At the October 2015 CPT Editorial Panel meeting, the panel approved the 
creation of nine new codes and deletion of four existing codes used to 
describe bundled dialysis circuit intervention services, and the 
creation of four new codes and deletion of 13 existing codes used to 
describe bundled percutaneous transluminal angioplasty services (see 
discussion of the latter code family in the next section). The Dialysis 
Circuit family of codes overlaps with the Open and Percutaneous 
Transluminal Angioplasty family of codes (CPT codes 372X1-372X4), as 
they are both being constructed from the same set of frequently 
reported together codes. We reviewed these two families of codes 
concurrently to maintain relativity between these clinically similar 
procedures based upon the same collection of deleted codes.
    For CPT code 369X1, we are proposing a work RVU of 2.82 instead of 
the RUC-recommended work RVU of 3.36. When we compared CPT code 369X1 
against other codes in the RUC database, we found that the RUC-
recommended work RVU of 3.36 would be the highest value in the database 
among the 32 0-day global codes with 25 minutes of intraservice time. 
Generally speaking, we are particularly skeptical of RUC-recommended 
values for newly ``bundled'' codes that appear not to recognize the 
full resource

[[Page 46243]]

overlap between predecessor codes. Since the recommended values would 
establish a new highest value when compared to other services with 
similar time, we believe it likely that the recommended value for the 
new code does not reflect the efficiencies in time. Of course, were the 
compelling evidence for this valuation accompanying the recommendation, 
we would consider such information. We also note that the reference 
code selected by the survey participants, CPT code 36200 (Introduction 
of catheter, aorta), has a higher intraservice time and total time, but 
a lower work RVU of 3.02. We believe that there are more accurate CPT 
codes that can serve as a reference for CPT code 369X1. As a result, we 
are proposing to crosswalk CPT code 369X1 to CPT code 44388 
(Colonoscopy through stoma; diagnostic). CPT code 44388 has a work RVU 
of 2.82, and we believe it is a more accurate crosswalk for valuation 
due to its similar overall intensity and shared intraservice time of 25 
minutes with 369X1 and similar total time of 65 minutes.
    We are proposing a work RVU of 4.24 for CPT code 369X2 instead of 
the RUC-recommended work RVU of 4.83. The RUC-recommended work RVU is 
based upon a direct crosswalk to CPT code 43253 
(Esophagogastroduodenoscopy, flexible, transoral) which shares the same 
40 minutes of intraservice time with CPT code 369X2. However, CPT code 
43253 has significantly longer total time than CPT code 369X2, 104 
minutes against 86 minutes, which we believe reduces its utility for 
comparison. We are instead proposing to crosswalk the work RVU for CPT 
code 369X2 from CPT code 44408 (Colonoscopy through stoma), which has a 
work RVU of 4.24. In addition to our assessment that the two codes 
share similar intensities, CPT code 44408 also shares 40 minutes of 
intraservice time with CPT code 369X2 but has only 95 minutes of total 
time and matches the duration of the procedure under review more 
closely than the RUC-recommended crosswalk to CPT code 43253. We also 
note that the RUC-recommended work increment between CPT codes 369X1 
and 369X2 was 1.47, and by proposing a work RVU of 4.24 for CPT code 
369X2, we maintain a very similar increment of 1.42. As a result, we 
are proposing a work RVU of 4.24 for CPT code 369X2, based on this 
direct crosswalk to CPT code 44408.
    For CPT code 369X3, we are proposing a work RVU of 5.85 instead of 
the RUC-recommended work RVU of 6.39. The RUC-recommended value is 
based on a direct crosswalk to CPT code 52282 (Cystourethroscopy, with 
insertion of permanent urethral stent). Like the previous pair of RUC-
recommended crosswalk codes, CPT code 52282 shares the same 
intraservice time of 50 minutes with CPT code 369X3, but has 
substantially longer total time (120 minutes against 96 minutes) which 
we believe limits its utility as a crosswalk. We are proposing a work 
RVU of 5.85 based on maintaining the RUC-recommended work RVU increment 
of 3.03 as compared to CPT code 369X1 (proposed at a work RVU of 2.82), 
the base code for this family of related procedures. We also point to 
CPT code 44403 (Colonoscopy through stoma; with endoscopic mucosal 
resection) as a reference point for this value. CPT code 44403 has a 
work RVU of 5.60, but also lower intraservice time (45 minutes as 
compared to 50 minutes) and total time (92 minutes as compared to 96 
minutes) in relation to CPT code 369X3, suggesting that a work RVU a 
bit higher than 5.60 would be an accurate valuation. Therefore, we are 
proposing a work RVU of 5.85 for CPT code 369X3, based on an increment 
of 3.03 from the work RVU of CPT code 369X1.
    We are proposing a work RVU of 6.73 instead of the RUC-recommended 
work RVU of 7.50 for CPT code 369X4. Our proposed value comes from a 
direct crosswalk from CPT code 43264 (Endoscopic retrograde 
cholangiopancreatography), which shares the same intraservice time of 
60 minutes with CPT code 369X4 and has a higher total time. We also 
looked to the intraservice time ratio between CPT codes 369X1 and 
369X4; this works out to 60 minutes divided by 25 minutes, for a ratio 
of 2.4, and a suggested work RVU of 6.77 (derived from 2.4 times CPT 
code 369X1's work RVU of 2.82). This indicates that our proposed work 
RVU of 6.73 maintains relativity within the Dialysis Circuit family. As 
a result, we are proposing a work RVU of 6.73 for CPT code 369X4, based 
on a direct crosswalk to CPT code 43264.
    We are proposing a work RVU of 8.46 instead of the RUC-recommended 
work RVU of 9.00 for CPT code 369X5. We looked at the intraservice time 
ratio between CPT codes 369X1 and 369X5 as one potential method for 
valuation, which is a 1:3 ratio (25 minutes against 75 minutes) for 
this case. This means that one potential value for CPT code 369X5 would 
be triple the work RVU of CPT code 369X1, or 2.82 times 3, which 
results in a work RVU of 8.46. We also investigated preserving the RUC-
recommended work RVU increment between CPT code 369X1 and 369X5, which 
was an increase of 5.64. When this increment is added to the work RVU 
of 2.82 for CPT code 369X1, it also resulted in a work RVU of 8.46 for 
CPT code 369X5. Therefore, we are proposing a work RVU of 8.46 for CPT 
code 369X5, based on both the intraservice time ratio with CPT code 
369X1 and the RUC-recommended work increment with the same code.
    For CPT code 369X6, we are proposing a work RVU of 9.88 instead of 
the RUC-recommended work RVU of 10.42. We based the proposed value upon 
the RUC-recommended work RVU increment between CPT codes 369X1 and 
369X6, which is 7.06. When added to the work RVU of 2.82 for CPT code 
369X1, the work RVU for CPT code 369X6 would be 9.88. We are supporting 
this value through the use of two crosswalks that both share the same 
90 minutes of intraservice time with 369X6. These are CPT code 31546 
(Laryngoscopy, direct, with submucosal removal of non-neoplastic 
lesion(s) of vocal cord) at a work RVU of 9.73 and CPT code 61623 
(Endovascular temporary balloon arterial occlusion, head or neck) at a 
work RVU of 9.95.
    The final three codes in the Dialysis Circuit family are all add-on 
codes, which make comparisons difficult to the global 0-day codes that 
make up the rest of the family. We are proposing a work RVU of 2.48 
instead of the RUC-recommended work RVU of 3.00 for CPT code 369X7. Due 
to the difficulty of comparing CPT code 369X7 with the non-add-on codes 
in the rest of the Dialysis Circuit family, we looked instead to 
compare the value to the add-on codes in the Open and Percutaneous 
Transluminal Angioplasty family of codes (CPT codes 372X1-372X4). As we 
stated previously, both of these groups of new codes are being 
constructed from the same set of frequently reported together codes. We 
reviewed these two families of codes together to maintain relativity 
across the two families, and so that we could compare codes that shared 
the same global period.
    We are proposing the RUC-recommended work RVUs for all four codes 
in the Open and Percutaneous Transluminal Angioplasty family of codes. 
As a result, we compared CPT code 369X7 with the RUC-recommended work 
RVU of 2.97 for CPT code 372X4, which is also an add-on code. These 
procedures should be clinically very similar, since both of them are 
performing percutaneous transluminal angioplasty on a central vein, and 
both of them are add-on procedures. We looked at the intraservice time 
ratio between these two codes, which was a comparison between 25 
minutes for CPT code 369X7 against 30 minutes for CPT code 372X4.

[[Page 46244]]

This produces a ratio of 0.83, and a proposed work RVU of 2.48 for CPT 
code 369X7 when multiplied with the RUC-recommended work RVU of 2.97 
for CPT code 372X4. We note as well that the intensity was markedly 
higher for CPT code 369X7 as compared to CPT code 372X4 when using the 
RUC-recommended work values, which did not make sense since CPT code 
369X7 would typically be a clinically less intense procedure. Using the 
intraservice time ratio results in the two codes having exactly the 
same intensity. As a result, we are therefore proposing a work RVU of 
2.48 for CPT code 369X7, based on this intraservice time ratio with the 
RUC-recommended work RVU of CPT code 372X4.
    For CPT code 369X8, we disagree with the RUC-recommended work RVU 
of 4.25, and we are instead proposing a work RVU of 3.73. We do not 
consider the RUC work value of 4.25 to be accurate for CPT code 369X8, 
as this was higher than our proposed work value for CPT code 369X2 
(4.24), and we do not believe that an add-on code should typically have 
a higher work value than a similar non-add-on code with the same 
intraservice time. We identified two appropriate crosswalks for valuing 
CPT code 369X8: CPT code 93462 (Left heart catheterization by 
transseptal puncture through intact septum or by transapical puncture) 
and CPT code 37222 (Revascularization, endovascular, open or 
percutaneous, iliac artery). Both of these codes share the same 
intraservice time as CPT code 369X8, and both of them also have the 
same work RVU of 3.73, which results in these codes also sharing the 
same intensity since they are all add-on codes. We are therefore 
proposing a work value of 3.73 for CPT code 369X8, based on a direct 
crosswalk to CPT codes 93462 and 37222.
    Finally, we are proposing a work RVU of 3.48 for CPT code 369X9 
instead of the RUC-recommended work RVU of 4.12. The RUC recommended 
value comes from a direct crosswalk from CPT code 38746 (Thoracic 
lymphadenectomy by thoracotomy). We compared the RUC-recommended work 
RVU for this procedure to other add-on codes with 30 minutes of 
intraservice time and found that the recommended work RVU of 4.12 would 
overestimate the overall intensity of this service relative to those 
with similar times. In reviewing the range of these codes, we believe 
that a more appropriate crosswalk is to CPT code 61797 (Stereotactic 
radiosurgery (particle beam, gamma ray, or linear accelerator)) at a 
work RVU of 3.48. We believe that this value is more accurate when 
compared to other add-on procedures with 30 minutes of intraservice 
time across the PFS. As a result, we are proposing a work RVU of 3.48 
for CPT code 369X9 based on a direct crosswalk from CPT code 61797.
    We are proposing to use the RUC-recommended direct PE inputs for 
these nine codes with several refinements. We are not proposing to 
include the recommended additional preservice clinical labor for CPT 
codes 369X4, 369X5, and 369X6. The preservice work description is 
identical for all six of the global 0-day codes in this family; there 
is no justification given in the RUC recommendations as to why the 
second three codes need additional clinical labor time beyond the 
minimal preservice clinical labor assigned to the first three codes. We 
do not believe that the additional staff time would be typical. Patient 
care already would have been coordinated ahead of time in the typical 
case, and the need for unscheduled dialysis or other unusual 
circumstances would be discussed prior to the day of the procedure. We 
are therefore proposing to refine the preservice clinical labor for CPT 
codes 369X4, 369X5, and 369X6 to match the preservice clinical labor of 
CPT codes 369X1, 369X2, and 369X3.
    We are proposing to refine the L037D clinical labor for ``Prepare 
and position patient/monitor patient/set up IV'' from 5 minutes to 3 
minutes for CPT codes 369X1-369X6. The RUC recommendation included a 
written justification for additional clinical labor time beyond the 
standard 2 minutes for this activity, stating that the extra time is 
needed to prepare the patient's arm for the procedure. We agree that 
extra time may be needed for this activity as compared to the default 
standard of 2 minutes; however, we are assigning 1 extra minute for 
preparing the patient's arm, resulting in a total of 3 minutes for this 
task. We do not believe that 3 extra minutes would be typically needed 
for arm positioning.
    We are proposing to remove the ``kit, for percutaneous thrombolytic 
device (Trerotola)'' supply (SA015) from CPT codes 369X4, 369X5, and 
369X6. We believe that this thrombolytic device kit and the ``catheter, 
thrombectomy-Fogarty'' (SD032) provide essentially the same supply, and 
the use of only one of them would be typical in these procedures. We 
believe that each of these supplies can be used individually for 
thrombectomy procedures. We are proposing to remove the SA015 supply 
and retain the SD032 supply, and we seek additional comment and 
information regarding the use of these two supplies.
    We are also proposing to remove the recommended supply item 
``covered stent (VIABAHN, Gore)'' (SD254) and replace it with the 
``stent, vascular, deployment system, Cordis SMART'' (SA103) for CPT 
codes 369X3 and 369X6. The Cordis SMART vascular stent was previously 
used in the past for CPT code 37238, which is the deleted code for 
transcatheter placement of an intravascular stent that CPT codes 369X3 
and 369X6 are replacing. We do not have a stated rationale as to the 
need for this supply substitution, and therefore, we do not believe it 
would be appropriate to replace the current items with a significantly 
higher-priced item without additional information.
    We are also proposing to refine the quantity of the ``Hemostatic 
patch'' (SG095) from 2 to 1 for CPT codes 369X4, 369X5, and 369X6. This 
supply was not included in any of the deleted base codes out of which 
the new codes are being constructed, and while we agree that the use of 
a single hemostatic patch has become common clinical practice, we do 
not agree that CPT codes 369X4-369X6 would typically require a second 
patch. As a result, we are proposing to refine the SG095 supply 
quantity from 2 to 1 for CPT codes 369X4-369X6, which also matches the 
supply quantity for CPT codes 369X1-369X3.
    Included in the RUC recommendation for the Dialysis Circuit family 
of codes were a series of invoices for a ``ChloraPrep applicator (26 
ml)'' supply. We are soliciting comments regarding whether the Betadine 
solution has been replaced by a Chloraprep solution in the typical case 
for these procedures. We are also soliciting comments regarding whether 
the ``ChloraPrep applicator (26 ml)'' detailed on the submitted 
invoices is the same supply as the SH098 ``chlorhexidine 4.0% 
(Hibiclens)'' applicator currently in the direct PE database.
    Finally, we are also interested in soliciting comments about the 
use of guidewires for these procedures. We are requesting feedback 
about which guidewires would be typically used for these procedures, 
and which guidewires are no longer clinically necessary.
(12) Open and Percutaneous Transluminal Angioplasty (CPT Codes 372X1, 
372X2, 372X3, and 372X4)
    In January 2015, a CPT/RUC workgroup identified the following CPT 
codes as being frequently reported together in various combinations: 
35475 (Transluminal balloon angioplasty, percutaneous; brachiocephalic 
trunk or branches, each vessel), 35476 (Transluminal balloon 
angioplasty,

[[Page 46245]]

percutaneous; venous), 36147 (Introduction of needle and/or catheter, 
arteriovenous shunt created for dialysis (graft/fistula); initial 
access with complete radiological evaluation of dialysis access, 
including fluoroscopy, image documentation and report), 36148 
(Introduction of needle and/or catheter, arteriovenous shunt created 
for dialysis (graft/fistula); additional access for therapeutic 
intervention), 37236 (Transcatheter placement of an intravascular 
stent(s) (except lower extremity artery(s) for occlusive disease, 
cervical carotid, extracranial vertebral or intrathoracic carotid, 
intracranial, or coronary), open or percutaneous, including 
radiological supervision and interpretation and including all 
angioplasty within the same vessel, when performed; initial artery), 
37238 (Transcatheter placement of an intravascular stent(s), open or 
percutaneous, including radiological supervision and interpretation and 
including angioplasty within the same vessel, when performed; initial 
vein), 75791 (Angiography, arteriovenous shunt (e.g., dialysis patient 
fistula/graft), complete evaluation of dialysis access, including 
fluoroscopy, image documentation and report (includes injections of 
contrast and all necessary imaging from the arterial anastomosis and 
adjacent artery through entire venous outflow including the inferior or 
superior vena cava), radiological supervision and interpretation), 
75962 (Transluminal balloon angioplasty, peripheral artery other than 
renal, or other visceral artery, iliac or lower extremity, radiological 
supervision and interpretation), and 75968 (Transluminal balloon 
angioplasty, each additional visceral artery, radiological supervision 
and interpretation). At the October 2015 CPT Editorial Panel meeting, 
the panel approved the creation of four new codes and deletion of 13 
existing codes used to describe bundled percutaneous transluminal 
angioplasty services. The Open and Percutaneous Transluminal 
Angioplasty family of codes overlaps with the Dialysis Circuit family 
of codes (CPT codes 369X1-369X9), as they are both being constructed 
from the same set of frequently reported together codes. We reviewed 
these two families of codes concurrently to maintain relativity between 
these clinically similar procedures based upon the same collection of 
deleted codes. After consideration of these materials, we are proposing 
to accept the RUC-recommended work RVU for CPT codes 372X1, 372X2, 
372X3, and 372X4.
    For the clinical labor direct PE inputs, we are proposing to use 
the RUC-recommend inputs with several refinements. Our proposed inputs 
refine the recommended clinical labor time for ``Prepare and position 
patient/monitor patient/set up IV'' from 5 minutes to 3 minutes for CPT 
codes 372X1 and 372X3. The RUC recommendation included a written 
justification for additional clinical labor time beyond the standard 2 
minutes for this activity, stating that the extra time was needed to 
move leads out of X-ray field, check that X-ray is not obstructed and 
that there is no risk of collision of X-ray equipment with patient. As 
we wrote for the same clinical labor activity in the Dialysis Circuit 
family, we agree that extra time may be needed for this activity as 
compared to the default standard of 2 minutes; however, we are 
assigning 1 extra minute for the additional positioning tasks, 
resulting in a total of 3 minutes for this task. We do not believe that 
3 extra minutes would be typically needed for preparation of the X-ray. 
The equipment times for the angiography room (EL011) and the PACS 
workstation (ED050) have been refined to reflect this change in 
clinical labor.
    We are proposing to remove the ``drape, sterile, femoral'' supply 
(SB009) and replace it with a ``drape, sterile, fenestrated 16in x 
29in'' supply (SB011) for CPT codes 372X1 and 372X3. The two base codes 
out of which these new codes are being constructed, CPT codes 35471 and 
35476, both made use of the SB011 fenestrated sterile drape supply, and 
there was no rationale provided for the switch to the SB009 femoral 
sterile drape in the two new codes. We are seeking comment on the use 
of sterile drapes for these procedures, and what rationale there is to 
support the use of the SB009 femoral sterile drape as typical for these 
new procedures.
(13) Percutaneous Biliary Procedures Bundling (CPT Codes 47531, 47532, 
47533, 47534, 47535, 47536, 47537, 47538, 47539, 47540, 47541, 47542, 
47543, and 47544)
    This group of fourteen codes was reviewed by the RUC at the April 
2015 meeting. We established interim final values for this group of 
codes during the CY 2016 PFS rulemaking cycle, and subsequently 
received updated RUC recommendations from the October 2015 meeting for 
the CY 2017 PFS rulemaking cycle. Our proposals for these codes 
incorporate both the updated RUC recommendations, as well as public 
comments received as part of the interim final status of these 
procedures.
    We received several comments regarding the CMS refinements to the 
work values for this family of codes in the CY 2016 final rule with 
comment period. The relevance of many of these comments has been 
diminished by the new series of RUC recommendations for work values 
that we received as a result of the October 2015 meeting. Given that we 
are proposing the updated RUC-recommended work RVUs for CPT codes 
47531, 47532, 47533, 47534, 47535, 47536, 47537, 47538, 47539, 47540, 
47542, 47543, and 47544, we seek additional comments relative to these 
proposed values. We agree that the second round of physician surveys 
conducted for the October 2015 RUC meeting more accurately captured the 
work and time required to perform these procedures. The one exception 
is CPT code 47541; the survey times for this procedure were identical 
as conducted for the April and October 2015 RUC meetings, yet the RUC 
recommendation increased from a work RVU of 5.61 in April to a work RVU 
of 7.00 in October. Given that the time values for the procedure 
remained unchanged between the two surveys, we do not understand why 
the work RVU would have increased by nearly 1.50 in the intervening 
months. Since this code also has an identical intraservice time (60 
minutes) and total time (121 minutes) as CPT code 47533, we do not 
agree that it should be valued at a substantially higher rate compared 
to a medically similar procedure within the same code family. We are 
therefore proposing to crosswalk the work value of CPT code 47541 to 
the work value of CPT code 47533, and we are proposing a work RVU of 
5.63 for both procedures.
    We also note that many of the codes in the Percutaneous Biliary 
Procedures family were previously included in Appendix G, and were 
valued under the assumption that moderate sedation was typically 
performed on the patient. As part of the initiative to pay separately 
for moderate sedation when it is performed, we are removing a portion 
of the work RVU and preservice work time from CPT codes 47532, 47533, 
47534, 47535, 47536, 47538, 47539, 47540, and 47541. For example, we 
are proposing that CPT code 47541 undergoes a 0.25 reduction in its 
work RVU from 5.63 to 5.38, and a 10 minute reduction in its preservice 
work time from 33 minutes to 23 minutes, to reflect the work that will 
now be reported separately using the new moderate sedation codes. CPT 
codes 47542, 47533, and 47544 are also included in the moderate 
sedation initiative; however, as add-on codes, they are not subject to 
alterations in

[[Page 46246]]

their work RVUs or work times since the moderate sedation code with 
work RVUs and work time (991X2) will only be billed once for each base-
code and not additionally with the add-on codes. These changes are 
reflected in Appendix B and the work time file posted to the Web; see 
section II.D for more details.
    For the direct PE inputs, we are proposing to remove the L051A 
clinical labor for ``Sedate/apply anesthesia'' and the L037D for 
``Assist Physician in Performing Procedure'' for CPT codes 47531 and 
47537. As we wrote in last year's final rule with comment period (80 FR 
71053), we believe that this clinical labor describes activities 
associated with moderate sedation, and moderate sedation is not typical 
for these procedures. We are also proposing to refine the L037D 
clinical labor for ``Clean room/equipment by physician staff'' from 6 
minutes to 3 minutes for all of the codes in this family. Three minutes 
is the standard for this clinical labor activity, and we continue to 
maintain that the need for additional clinical labor time for this 
cleaning activity would not be typical for these procedures.
    Comment: One commenter disagreed with our refinement to replace 
supply item ``catheter, balloon, PTA'' (SD152) with supply item 
``catheter, balloon ureteral (Dowd)'' (SD150). The commenter stated 
that a Dowd catheter is designed and FDA approved for use in the 
prostatic urethra by retrograde placement through the penile urethra, 
and it is not designed for use in an antegrade ureteral dilation 
procedure. The commenter stated that this replacement is inappropriate. 
The updated RUC recommendations for this family of codes also restored 
the balloon PTA catheter.
    Response: We are proposing again to replace the recommended supply 
item ``catheter, balloon, PTA'' (SD152) with supply item ``catheter, 
balloon ureteral (Dowd)'' (SD150). We believe that the use of this 
ureteral balloon catheter, which is specifically designed for catheter 
and image guidance procedures, would be more typical than the use of a 
PTA balloon catheter. While we recognize that the Dowd catheter is not 
FDA approved, it is our understanding that the PTA balloon catheter has 
also not been FDA approved for use in these procedures. We are 
uncertain if the commenter was requesting that we should no longer 
include catheters that lack FDA approval in the direct PE database; 
this would preclude the use of most of the catheters in our direct PE 
database. We welcome additional comment on the use of FDA approved 
catheters; in the meantime, we will continue our long-standing practice 
of using the catheters in the direct PE database without explicit 
regard to FDA approval in particular procedures.
    We are also proposing to remove the recommended supply item ``stone 
basket'' (SD315) from CPT code 47543 and add it to CPT code 47544. 
Based on the code descriptors, we believe that the stone basket was 
intended to be included in CPT code 47544 and was erroneously listed 
under CPT code 47543. We are soliciting comments from the public to 
help clarify this issue.
    We note again that many of the codes in the Percutaneous Biliary 
Procedures family were previously included in Appendix G, and as part 
of the initiative to pay separately for moderate sedation when 
performed, we are removing some of the recommended direct PE inputs 
related to moderate sedation from CPT codes 47532, 47533, 47534, 47535, 
47536, 47538, 47539, 47540, and 47541. We are removing the L051A 
clinical labor time for ``Sedate/apply anesthesia'', ``Assist Physician 
in Performing Procedure (CS)'', and ``Monitor pt. following moderate 
sedation''. We are also removing the conscious sedation pack (SA044) 
supply, and some or all of the equipment time for the stretcher 
(EF018), the mobile instrument table (EF027), the 3-channel ECG 
(EQ011), and the IV infusion pump (EQ032). These changes are reflected 
in the public use files posted to the web; see section II.D for more 
details.
(14) Flexible Laryngoscopy (CPT Codes 31575, 31576, 31577, 31578, 
317X1, 317X2, 317X3, and 31579)
    After we identified CPT codes 31575 and 31579 as potentially 
misvalued in (80 FR 70912-70914) the RUC referred the entire flexible 
laryngoscopy family of codes back to CPT for revision and the addition 
of several codes representing new technology within this family of 
services. At the May 2015 CPT meeting, the Editorial Panel added three 
new codes to describe laryngoscopy with ablation or destruction of 
lesion and therapeutic injection. Based on the survey results, the time 
resources involved in furnishing the procedures described by this code 
family experienced a significant reduction in the intraservice period, 
yet the recommended work RVUs were not similarly reduced. Therefore, in 
reviewing the recommended values for this family of codes we looked for 
a rationale for increased intensity and absent such rationale, propose 
to adjust the recommend work RVUs to account for significant changes in 
time.
    For CPT code 31575, we disagree with the RUC-recommended work RVU 
of 1.00, and we are instead proposing a work RVU of 0.94. We looked at 
the total time ratio for CPT code 31575, which is decreasing from 28 
minutes to 24 minutes, and applied this ratio of 0.86 times the current 
work RVU of 1.10 to derive our proposed work RVU of 0.94. We are 
supporting this value for CPT code 31575 through a crosswalk to CPT 
code 64405 (Injection, anesthetic agent; greater occipital nerve), 
which shares 5 minutes of intraservice time and also has a work RVU of 
0.94.
    We agree with the RUC that CPT code 31575 serves as the base code 
for the rest of the Flexible Laryngoscopy family. As a result, we are 
proposing to maintain the same RUC-recommended increments for the rest 
of the codes in this family, measuring the increments from CPT code 
31575's refined work RVU of 0.94 instead of the RUC-recommended work 
RVU of 1.00. This means that each of the work RVUs for the codes in the 
rest of the family has decreased by 0.06 when compared to the RUC-
recommended value. We are therefore proposing a work RVU of 1.89 for 
CPT code 31576, a work RVU of 2.19 for CPT code 31577, a work RVU of 
2.43 for CPT code 31578, a work RVU of 3.01 for CPT code 317X1, a work 
RVU of 2.43 for CPT code 317X2, a work RVU of 2.43 for CPT code 317X3, 
and a work RVU of 1.88 for CPT code 31579.
    Amongst the direct PE inputs, we are proposing to refine the 
clinical labor time for ``Obtain vital signs'' for CPT codes 31577 and 
31579 from 3 minutes to 2 minutes. We believe that this extra clinical 
labor time is duplicative, as these codes are typically performed with 
a same day E/M service. Each procedure is only allotted a maximum of 5 
minutes for obtaining vital signs, and since 3 minutes are already 
included in the E/M code, we are proposing to reduce the time to 2 
minutes for these services. Similarly, we are proposing to remove the 3 
minutes of clinical labor time for ``Clean room/equipment by physician 
staff'' from CPT codes 31575, 31577, and 31579. These procedures are 
typically reported with a same day E/M service, making the clinical 
labor minutes for cleaning the room in these procedure codes 
duplicative of the time already included in the E/M codes.
    For CPT code 317X1, we are proposing to remove the ``laser tip, 
diffuser fiber'' supply (SF030) and replace it with the ``laser tip, 
bare (single use)'' supply (SF029) already present in our direct PE 
database. We

[[Page 46247]]

believe that the invoice for SF030 submitted with the RUC 
recommendation is not current enough to establish a new price for this 
supply; as a result, we are substituting the SF029 supply for this 
input. We welcome the submission of new invoices to accurately price 
the diffuser fiber with laser tip.
    We are also proposing to make significant changes to the prices of 
several of the supplies and equipment related to Flexible Laryngoscopy, 
as well as to the prices of scopes more broadly. We are proposing to 
set the price of the disposable biopsy forceps supply (SD318) at 
$26.84, based on the submission of an invoice with a price of $536.81 
for a unit size of 20. In our search for additional information 
regarding scope inputs, we obtained a quote from a vendor listing the 
current price for several equipment items related to the use of scopes. 
Since we believe that the prices in vendor quotes would typically be 
equal to or higher than prices actually paid by practitioners, we are 
updating the prices in our direct PE database to reflect this new 
information. As part of this process, we are proposing to increase the 
price of the ``light source, xenon'' (EQ167) from $6,723.33 to $7,000 
to reflect current pricing information. We are also proposing to adjust 
the price of the ``fiberscope, flexible, rhinolaryngoscopy'' (ES020) 
from $6,301.93 to $4,250.00.
    In accordance with the wider proposal that we are making involving 
the use of scope equipment, we are proposing to separate the scopes 
used in these procedures from the scope video systems. In the course of 
researching different kinds of scopes, we obtained vendor pricing for 
two different types of scopes used in these procedures. We are 
proposing to price the ``rhinolaryngoscope, flexible, video, non-
channeled'' (ES063) at $8,000 and the ``rhinolaryngoscope, flexible, 
video, channeled'' (ES064) at $9,000 in accordance with our vendor 
quotes. We are proposing to use the non-channeled scope for CPT codes 
31575, 31579, and 317X3 and the channeled scope for CPT codes 31576, 
31577, 31578, 317X1, and 317X2 in accordance with the RUC-recommended 
video systems that stipulated channeled versus non-channeled scope 
procedures.
    We believe that the ``Video-flexible laryngoscope system'' listed 
in the recommendations is not a new form of equipment, but rather 
constitutes a version of the existing ``video system, endoscopy'' 
equipment (ES031). We are not adding a new equipment item to our direct 
PE database; instead, we are proposing to use the submitted invoices to 
update the price of the ES031 endoscopy video system. As the equipment 
code for ES031 indicates, we are proposing to define the endoscopy 
video system as containing a processor, digital capture, monitor, 
printer, and cart. We are proposing to price ES031 at $15,045.00; this 
reflects a price of $2,000.00 for the monitor, $9,000.00 for the 
processor, $1,750.00 for the cart, and $2,295.00 for the printer. These 
prices were obtained from our vendor invoice, with the exception of the 
printer, which is a crosswalk to the ``video printer, color (Sony 
medical grade)'' equipment (ED036).
    We do not agree that there is a need for multiple different video 
systems for this collection of Flexible Laryngoscopy codes based on our 
understanding of the clinical differences among the codes. In keeping 
with this understanding, we are proposing to use the same existing 
``video system, endoscopy'' equipment (ES031) for the remaining codes 
in the family that included RUC recommendations for new equipment items 
named ``Video-flexible channeled laryngoscope system'' and ``Video-
flexible laryngoscope stroboscopy system.'' For CPT codes 31576, 31577, 
31578, 317X1, and 317X2, we are proposing to replace the Video-flexible 
channeled laryngoscope system with the existing endoscopy video system 
(ES031) along with a channeled flexible video rhinolaryngoscope 
(ES064). For CPT code 31579, we are proposing to rename the RUC-
recommended ``Video-flexible laryngoscope stroboscopy system'' to the 
shortened ``stroboscopy system'' (ES065) and assign it a price of 
$19,100.00. This reflects the price of the StrobeLED Stroboscopy system 
included on the submitted invoice. We are proposing to treat the 
stroboscopy system as a scope accessory, which will be included along 
with the ``video system, endoscopy'' equipment (ES031) and the 
``rhinolaryngoscope, flexible, video, non-channeled'' (ES063) for CPT 
code 31579. When the price of the scope, the scope video system, and 
the stroboscopy system are summed together, the total proposed 
equipment price is $42,145.00.
    We are proposing to refine the recommended equipment times for 
several equipment items to conform to changes in clinical labor time. 
These are: The fiberoptic headlight (EQ170), the suction and pressure 
cabinet (EQ234), the reclining exam chair with headrest (EF008), and 
the basic instrument pack (EQ137). We are proposing to use the standard 
equipment time formula for scope accessories for the endoscopy video 
system (ES031) and the stroboscopy scope accessory system (ES065). We 
are also proposing to refine the equipment time for the channeled and 
non-channeled flexible video rhinolaryngoscopes to use the standard 
equipment time formula for scopes. For this latter pair of two new 
equipment items, this proposal results in small increases to their 
respective equipment times.
(15) Laryngoplasty (CPT Codes 31580, 31584, 31587, and 315X1-315X6)
    CPT code 31588 (Laryngoplasty, not otherwise specified (e.g., for 
burns, reconstruction after partial laryngectomy) was identified as 
potentially misvalued based on the RUC's 90-Day Global Post-Operative 
Visits screen. When this code family was reviewed by the RUC, it was 
determined that some codes in the family required revision to reflect 
the typical patient before a survey could be conducted and the code 
family was referred to the CPT Editorial Panel for revision. At the 
October 2015 CPT Editorial Panel meeting, the CPT Editorial Panel 
approved the creation of six new codes, revision of three codes, and 
deletion of three codes. For CPT codes 31580, 31587, 315X1, 315X2, 
315X3, 315X4, and 315X6, CMS is proposing the RUC-recommended work 
RVUs.
    For CPT code 31584, the RUC recommended a work RVU of 20.00. We 
believe that the 25th percentile of the survey, which is a work RVU of 
17.58, better represents the time and intensity involved with 
furnishing this service based on a comparison with and assessment of 
the overall intensity of other codes with similar instraservice and 
total time. This value is also supported by a crosswalk code of CPT 
code 42844 (Radical resection of tonsil, tonsillar pillars, and/or 
retromolar trigone; closure with local flap (e.g., tongue, buccal)), 
which has identical intraservice time and identical total time. 
Therefore, we are proposing a work value of 17.58 RVUs for CPT code 
31584.
    For CPT code 315X5, the RUC recommended a work value of 15.60 RVUs. 
We believe that the 25th percentile of the survey, which is a work RVU 
of 13.56, better represents the time and intensity involved with 
furnishing this service based on a comparison of the overall intensity 
of other codes with similar instraservice and total time. The 25th 
percentile of the survey is additionally bracketed by two crosswalk 
codes that we estimate have slightly lower and slighter higher overall 
intensities, CPT code 36819

[[Page 46248]]

(Arteriovenous anastomosis, open; by upper arm basilic vein 
transposition), which has a work RVU of 13.29, and CPT code 49654 
(Laparoscopy, surgical, repair, incisional hernia (includes mesh 
insertion, when performed); reducible), which has a work RVU of 13.76; 
both of these codes have identical intraservice time and similar total 
time. Therefore, we are proposing a work RVU of 13.56 for CPT code 
315X5.
    Additionally, the RUC forwarded invoices provided by a medical 
specialty society for the video-flexible laryngoscope system used in 
these services. As discussed in section II.A of this proposed rule, we 
have proposed changes to the items included in equipment item ES031 
(video system, endoscopy). Consistent with those proposed changes, we 
are proposing to add a Nasolaryngoscope, non-channeled, to the list of 
equipment items used for CPT codes 31580, 31584, 31587, and 315X1-
315X6, along with the modified equipment item ES031.
(16) Mechanochemical Vein Ablation (MOCA) (CPT Codes 364X1 and 364X2)
    At the October 2015 CPT meeting, the CPT Editorial Panel 
established two Category I codes for reporting venous mechanochemical 
ablation, CPT codes 364X1 and 364X2. We are proposing the RUC-
recommended work RVU of 3.50 for CPT code 364X1. For CPT code 364X2 we 
believe that the RUC-recommended work RVU of 2.25 does not accurately 
reflect the typical work involved in furnishing this procedure. The 
specialty society survey recommended that this add-on code has half the 
work of the base code, CPT code 364X1. This value is supported by the 
ratio between work and time in the key reference service, CPT code 
36476 (Endovenous ablation 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)). Therefore, we are proposing a 
work RVU of 1.75 for CPT code 364X2.
    The RUC-recommended direct practice expense inputs for CPT codes 
364X1 and 364X2 included inputs for an ultrasound room (EL015). Based 
on the clinical nature of these procedures, we do not believe that an 
ultrasound room would typically be used to furnish these procedures. We 
are proposing to remove inputs for the ultrasound room and put in a 
portable ultrasound (EQ250), power table (EF031), and light (EF014). 
The RUC also recommended that the ultrasound machine be allocated 
clinical staff time based on the PACS workstation formula. We do not 
believe that an ultrasound machine would be used like a PACS 
workstation, as images are generated and reviewed in real time. 
Therefore, we are proposing to remove all inputs associated with the 
PACS workstation.
(17) Esophageal Sphincter Augmentation (CPT Codes 432X1 and 432X2)
    In October 2015, the CPT Editorial Panel created two new codes to 
describe laparoscopic implantation and removal of a magnetic bead 
sphincter augmentation device used for treatment of gastroesophageal 
reflux disease (GERD). The RUC noted that the specialty societies 
conducted a targeted survey of the 145 physicians who have been trained 
to furnish these services and who are the only physicians who have 
performed these procedures. They noted that only 18 non-conflicted 
survey responses were received despite efforts to follow up and that 
nine physicians had no experience in the past 12 months with the 
procedure. The RUC agreed with the specialty society that the expertise 
of those responding was sufficient to consider the survey, however, 
neither entity used the survey results as the as the primary basis for 
their recommended value.
    For CPT code 432X1, the RUC recommended a work RVU of 10.13. We 
compared this code to CPT code 43180 (Esophagoscopy, rigid, 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), which 
has a work RVU of 9.03 and has identical intraservice time and similar 
total time. We believe the overall intensity of these procedures is 
similar, therefore, we are proposing a work RVU of 9.03 for CPT code 
432X1.
    For CPT code 432X2, the RUC recommended a work RVU of 10.47. To 
value this code, we used the increment between the RUC-recommended work 
RVU for this code and CPT code 432X1 (0.34 RVUs) to develop our 
proposed work RVU of 9.37 for CPT code 432X2.
(18) Electromyography Studies (CPT Code 51784)
    We identified CPT code 51784 as potentially misvalued through a 
screen of high expenditure by specialty. This family also includes CPT 
code 51785 (Needle electromyography studies (EMG) of anal or urethral 
sphincter, any technique) but was not included in this survey. Both 
services have 0-day global periods. The RUC recommended a work RVU of 
0.75 for CPT code 51784. We believe that this service is more 
accurately valued without a global period, since that is more 
consistent with other diagnostic services, and specifically, with all 
the other diagnostic electromyography services. We are proposing a 
change to the global period from 0-day to no global period, and we are 
proposing the RUC-recommended work RVU of 0.75 for CY 2017. We are also 
proposing to change the global period for CPT code 51785 from 0-day to 
no global period, to be consistent with 51784. Additionally, we are 
proposing to add CPT code 51785 to the list of potentially misvalued 
codes to update the value of the service considering the change in 
global period, and to maintain consistency with 51784.
(19) Cystourethroscopy (CPT Code 52000)
    In the CY 2016 PFS final rule with comment period, CMS identified 
CPT code 52000 through the screen for high expenditure services by 
specialty screen. The RUC-recommended work RVUs of 1.75 for CPT code 
52000 is larger than the work RVUs for all 0-day global codes with 10 
minutes of intraservice time and we do not believe that the overall 
intensity of this service is greater than all of the other codes. 
Instead, we believe the overall work compares for this code compares 
favorably to CPT code 58100 (Endometrial sampling (biopsy) with or 
without endocervical sampling (biopsy), without cervical dilation, any 
method (separate procedure)), which has a work RVU of 1.53, and has 
identical intraservice time and similar total time. Therefore, we are 
using a direct crosswalk to CPT code 58100 and are proposing a work RVU 
of 1.53 for CPT code 52000.
(20) Biopsy of Prostate (CPT Code 55700)
    In the CY 2016 PFS final rule with comment period, CMS identified 
CPT code 55700 as potentially misvalued based on the high expenditure 
by specialty screen.
    The RUC subsequently reviewed this code for physician work and 
practice expense and recommended a work RVU of 2.50 based on the 25th 
percentile of the survey. We believe the RUC-recommended work RVU 
overestimates the work involved in furnishing this service given the 
reduction in total service time; specifically, the reduction in 
preservice and postservice times. The RUC recommendation also appears 
overvalued when compared to similar 0-day global services with 15 
minutes of intraservice time and comparable total

[[Page 46249]]

times. To develop a proposed work RVU, we crosswalked the work RVUs for 
this code from CPT code 69801 (Labyrinthotomy, with perfusion of 
vestibuloactive drug(s), transcanal), noting similar levels of 
intensity, similar total times, and identical intraservice times. 
Therefore, we are proposing a work RVU of 2.06 for CPT code 55700.
    As part of the recommended direct PE inputs for CPT code 55700, the 
RUC recommended inclusion of a new equipment item, Biopsy Guide, but we 
have not received any invoices to price this item. Given our 
longstanding difficulties in acquiring accurate pricing information for 
equipment items, we are seeking invoices and public comment for pricing 
this equipment prior to adding this new equipment item code.
(21) Hysteroscopy (CPT Codes 58555-58563)
    In the CY 2016 PFS proposed rule, we proposed CPT code 58558 as a 
potentially misvalued code based on the screen for high expenditure by 
specialty screen. This code was reviewed at the January 2016 RUC 
meeting and CPT codes 58559-58563 were included in the review as part 
of the family.
    For CPT code 58555, the RUC recommended a work RVU of 3.07. We 
believe that the 25th percentile of the survey, a work RVU of 2.65, 
more accurately reflects the resources involved in furnishing this 
service. This value is bracketed by two crosswalk codes, CPT code 43191 
(Esophagoscopy, rigid, transoral; diagnostic, including collection of 
specimen(s) by brushing or washing when performed (separate 
procedure)), which has a work RVU of 2.49, and CPT code 31295 (Nasal/
sinus endoscopy, surgical; with dilation of maxillary sinus ostium 
(e.g., balloon dilation), transnasal or via canine fossa), which has a 
work RVU of 2.70. Compared with CPT code 58555, CPT codes 43191 and 
31295 have identical intraservice times and similar total times. 
Therefore, we are proposing a work RVU of 2.65 for CPT code 58555.
    For CPT code 58558, the RUC recommended a work RVU of 4.37. 
However, we believe that a direct crosswalk from CPT code 36221 (Non-
selective catheter placement, thoracic aorta, with angiography of the 
extracranial carotid, vertebral, and/or intracranial vessels, 
unilateral or bilateral, and all associated radiological supervision 
and interpretation, includes angiography of the cervicocerebral arch, 
when performed), which has a work RVU of 4.17, and which has identical 
intraservice time and very similar total time, more accurately reflects 
the time and intensity of furnishing this service. This value is 
additionally supported by using an increment between this code and the 
base code for this family, CPT code 58555. The increment between the 
RUC-recommended values for these two codes is 1.3. That increment added 
to the proposed work RVU of 2.65 for the base code, CPT code 58555, 
results in a work RVU of 3.95. Therefore, we are proposing a work value 
of 4.17 RVUs for CPT code 58558.
    For CPT code 58559, the RUC recommended a work RVU of 5.54. 
However, we believe that a direct crosswalk of the work RVUs for CPT 
code 52315 (Cystourethroscopy, with removal of foreign body, calculus, 
or ureteral stent from urethra or bladder (separate procedure); 
complicated), which has a work RVU of 5.20 and which has a similar 
(slightly higher) intraservice time and similar total time as compared 
with CPT code 58589 more accurately reflects the time and intensity of 
furnishing this service. This value is additionally supported by using 
an increment between CPT code 58559 and the base code for this family, 
CPT code 58555. The increment between the RUC recommended values for 
the two codes is 2.47. That increment added to the proposed value for 
the base code, CPT code 58555 (2.65), results in a work RVU of 5.12. 
Therefore, we are proposing a work RVU of 5.20 for CPT code 58559.
    For CPT code 58560, the RUC recommended a work RVU of 6.15. 
However, we believe that a direct crosswalk of the work RVUs for CPT 
code 52351 (Cystourethroscopy, with ureteroscopy and/or pyeloscopy; 
diagnostic), which has a work RVU of 5.75 and which has more 
intraservice time and very similar total time, more accurately reflects 
the time and intensity of furnishing this service. This value is 
additionally supported by using an increment between CPT code 58560 and 
the base code for this family, CPT code 58555. The increment between 
the RUC recommended values for the two codes is 3.08. That increment 
added to the proposed value for the base code, CPT code 58555 (2.65), 
results in a work RVU of 5.73. Therefore, we are proposing a work RVU 
of 5.75 for CPT code 58560.
    For CPT code 58561, the RUC recommended a work RVU of 7.00. 
However, we believe that a direct crosswalk of the work RVUs for CPT 
code 35475 (Transluminal balloon angioplasty, percutaneous; 
brachiocephalic trunk or branches, each vessel), which has a work RVU 
of 6.60 and which has similar intraservice and total times, more 
accurately reflects the time and intensity of furnishing this service. 
This value is additionally supported by using an increment between CPT 
code 58561 and the base code for this family, CPT code 58555. The 
increment between the RUC recommended values for the two codes is 3.93. 
That increment added to the proposed value for the base code, CPT code 
58555 (2.65), results in a work RVU of 6.58. Therefore, we are 
proposing a work RVU of 6.60 for CPT code 58561.
    For CPT code 58562, the RUC recommended a work RVU of 4.17. 
However, we believe that a direct crosswalk of the work RVUs for CPT 
code 15277 (Application of skin substitute graft to face, scalp, 
eyelids, mouth, neck, ears, orbits, genitalia, hands, feet, and/or 
multiple digits, total wound surface area greater than or equal to 100 
sq cm; first 100 sq cm wound surface area, or 1% of body area of 
infants and children), which has a work RVU of 4.00 and which has 
identical intraservice time and similar total time, more accurately 
reflects the time and intensity of furnishing this service. The RUC 
also used this code as one of its supporting codes for its 
recommendation. This value is additionally supported by using an 
increment between CPT code 58562 and the base code for this family, CPT 
code 58555. The increment between the RUC recommended values for the 
two codes is 1.10. That increment added to the proposed value for the 
base code, CPT code 58555 (2.65), results in a work RVU of 3.75. 
Therefore, we are proposing a work RVU of 4.00 for CPT code 58562.
    For CPT code 58563, the RUC recommended a work RVU of 4.62. 
However, we believe that a direct crosswalk of the work RVUs for CPT 
code 33962 (Extracorporeal membrane 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)), which has a work RVU of 4.47 
and which has identical intraservice time and similar total time, more 
accurately reflects the resources involved in furnishing this service. 
This value is additionally supported by using an increment between CPT 
code 58563 and the base code for this family, CPT code 58555. The 
increment between the RUC recommended values for the two codes is 1.55. 
That increment added to the proposed value for the base code, CPT code 
58555 (2.65), results in a work RVU of 4.20. We note that CPT code 
58563 has the same instraservice time and the same total time as CPT 
code 58558; however, we agree that the

[[Page 46250]]

intensity would be slightly higher for this service. Therefore, we are 
proposing a work RVU of 4.47 for CPT code 58562.
    The RUC submitted invoices for two new equipment items used in 
furnishing CPT code 58558, the Hysteroscopic Fluid Management System 
and the Hysteroscopic Resection System. We are proposing to use these 
invoice prices for the Hysteroscopic Fluid Management System, which 
totaled $14,698.38. The Hysteroscopic Resection System included the 
price of the hysteroscope as well as other items necessary for tissue 
removal. However, we generally price endoscopes separately and not as a 
part of a system. In order to maintain consistency, we are proposing 
not to include the hysteroscope from the Resection System. Instead, we 
are proposing to update the equipment item ``endoscope, rigid, 
hysteroscopy'' (ES009) with the invoice price, $6,207.50. We are not 
proposing to include the sterilization tray from the Hysteroscopic 
Resection System because we believe this tray has generally been 
characterized as an indirect expense. For the Hysteroscopic Resection 
System, we are proposing to include the Hysteroscopic tissue remover 
($18,375), the sheath ($1,097.25), and the calibration device ($300), 
and creating a new equipment item code, priced at $19,857.50 in the 
proposed direct PE input database. We did not propose to include the 
calibration device since the submitted price was not documented with a 
paid invoice.
(22) Epidural Injections (CPT Codes 623X5, 623X6, 623X7, 623X8, 623X9, 
62X10, 62X11, and 62X12)
    We are proposing the RUC-recommended work RVU for all eight of the 
codes in this family.
    We are proposing to remove the 10-12ml syringes (SC051) and the RK 
epidural needle (SC038) from all eight of the codes in this family. 
These supplies are duplicative, as they are included in the epidural 
tray (SA064). As an alternative, we could remove the epidural tray and 
replace it with the individual supply components used in each 
procedure; we are seeking public comment on either the inclusion of the 
epidural tray or its individual components for this family of codes.
(23) Endoscopic Decompression of Spinal Cord (CPT code 630X1)
    For CY 2016, the CPT Editorial Panel created CPT code 630X1 to 
describe the endoscopic decompression of neural elements. The RUC 
recommended a work RVU of 10.47 based on a crosswalk to CPT code 47562 
(Laparoscopy, surgical; cholecystectomy) with a higher intraservice 
time than reflected in the survey data. Since we believe CPT codes 
630X1 and 47562 are similar in intensity, we believe using the same 
work RVU as the crosswalk code overestimates the work involved in 
furnishing CPT code 630X1. Reference CPT code 49507 (Repair initial 
inguinal hernia, age 5 years or older; incarcerated or strangulated) 
has a work RVU of 9.09 and has similar intensity and an identical 
intraservice time compared to CPT code 630X1. Therefore, we are 
proposing a work RVU of 9.09 for CPT code 630X1.
(24) Retinal Detachment Repair (CPT Codes 67101 and 67105)
    For CY 2015, the CPT Editorial Panel made several changes to CPT 
codes 67101 and 67105. These changes include revising the code 
descriptors to exclude ``diathermy'' and ``with or without drainage of 
subretinal fluid'' and removing the reference to ``1 or more 
sessions''. The recommended global period has also changed from 90 days 
to 10 days.
    For CPT code 67101 we propose the RUC recommendation of 3.50 work 
RVUs, which was based on the 25th percentile of the survey. For CPT 
code 67105, the RUC recommended a work RVU of 3.84 based on the 25th 
percentile of the survey. The RUC also stated that CPT code 67105 was a 
more intense procedure, and therefore, should have a higher work RVU 
than CPT code 67101. Currently, CPT code 67101 has a higher work RVU 
than CPT code 67105 and according to the surveys the intraservice and 
total times remain higher for CPT code 67101. It was not clearly 
explained and we do not understand why the RUC believes that CPT code 
67105 is more work than CPT code 67101. Therefore we are not proposing 
the RUC-recommended work value of 3.50 for CPT code 67105. We do not 
find evidence that CPT code 67105 is more intense than CPT code 67101 
and accordingly propose a new value for CPT code 67105. To value CPT 
code 67105 we used the RVU ratio between 67101 and 67105. We divided 
the current work RVU of CPT code 67105 (8.53), by the current work RVU 
of CPT code 67101 (8.80) and multiplied the quotient by the RUC-
recommended work RVU for CPT code 67101 (3.50) to arrive at a product 
of 3.39 work RVUs.
    Therefore, for CY 2017 we are proposing a work RVU of 3.39 for CPT 
code 67105.
(25) Abdominal Aortic Ultrasound Screening (CPT Code 767X1)
    For CY 2017, the CPT Editorial Panel created a new code, CPT 767X1, 
to describe abdominal aortic ultrasound screening, currently described 
by HCPCS G-code G0389. The specialties that surveyed CPT code 767X1 for 
the RUC were vascular surgery and radiology, and the direct practice 
expense inputs recommended by the RUC included an ultrasound room. 
Based on an analysis of Medicare claims data, the dominant specialties 
furnishing the service are family practice and internal medicine. We 
believe that these specialties may more typically use a portable 
ultrasound device rather than an ultrasound room. Therefore, we are 
proposing to accept the RUC-recommended work value of 0.55, and the 
RUC-recommended PE inputs for this service, but we are seeking comment 
regarding whether or not it would be more accurate to substitute a 
portable ultrasound device or possibly a hand-held device for an 
ultrasound room for CPT code 767X1. We note that while the phase-in of 
significant reductions in RVUs ordinarily would not apply to new codes, 
we believe that it would be appropriate to consider this change from a 
G-code to a CPT code to be fundamentally similar to an editorial coding 
change since the service is not described differently, and therefore, 
we propose to apply the phase-in to this service by comparing the 
previous value of the G-code to the value for the new CPT code.
(26) Fluoroscopic Guidance (CPT Codes 77001, 77002, and 77003)
    In the CY 2015 PFS final rule with comment period, CMS indicated 
that while CPT codes 77002 and 77003 had been previously classified as 
stand-alone codes without global periods, we believe their vignettes 
and CPT Manual parentheticals are consistent with an add-on code as has 
been established for CPT code 77001. Therefore, the global periods for 
CPT codes 77002 and 77003 now reflect an add-on code global period with 
modifications to the vignettes and parentheticals.
    For CPT code 77001, we are proposing the RUC-recommended work RVU 
of 0.38. The RUC-recommended work RVUs for CPT codes 77002 and 77003 do 
not appear to account for the significant decrease in total times for 
these codes relative to the current total times. We note that these 
three codes describe remarkably similar services and have identical 
intraservice and total times. Based on the identical times and

[[Page 46251]]

notable similarity for all three of these codes, we are proposing a 
work RVU of 0.38 for all three codes.
(27) Radiation Treatment Devices (CPT Codes 77332, 77333, and 77334)
    We identified CPT codes 77332, 77333, and 77334 through the high 
expenditures by specialty screen. These services represent an 
incremental increase of complexity from the simple to the intermediate 
to the complex in design of radiation treatment devices. The RUC 
recommended no change from the current work RVUs for these codes, which 
are currently 0.54 for CPT code 77332, 0.84 for CPT code 77333 and 1.24 
for CPT code 77334. We believe the recommended work RVUs overstate the 
work involved in furnishing these services, as they do not sufficiently 
reflect the degree to which the RUC concurrently recommended a decrease 
in intraservice or total time. For CPT code 77332, we believe the RUC 
recommendation to maintain its current value despite a 34 percent 
decrease in total time appears to ignore the change in time. Therefore, 
we are proposing a value for this code based on a crosswalk from the 
value from CPT code 93287 (Peri-procedural device 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)), due to its identical 
intraservice time, similar total time, and similar level of intensity. 
We are therefore proposing a work RVU of 0.45 for CPT code 77332. We 
are further supporting this valuation with HCPAC code 97760 
(Orthotic(s) management and training (including assessment and fitting 
when not otherwise reported) upper extremity(s), lower extremity(s) 
and/or trunk, each 15 minutes), which has similar physician time and 
intensity measurements and a work RVU of 0.45. As these codes are 
designed to reflect an incremental increase in work value from simple, 
to intermediate, and complex device designs, we used an incremental 
difference methodology to value CPT codes 77333 and 77334. We are 
proposing a work RVU of 0.75 for CPT code 77333, maintaining its 
recommended increment from CPT code 77332, For CPT code 77334, we are 
proposing a work RVU of 1.15 which maintains its increment from CPT 
code 77332.
(28) Special Radiation Treatment (CPT Code 77470)
    We identified CPT code 77470 through the high expenditure charges 
by specialty. We are proposing the RUC-recommended work RVU of 2.03. 
However, we believe the description of service and vignette describe 
different and unrelated treatments being performed by the physician and 
clinical staff for a typical patient, and this presents a disparity 
between the work RVUs and PE RVUs. We seek public comment on 
information that would clarify this apparent disparity to help 
determine appropriate PE inputs. In addition, we seek comment to 
determine if creating two G-codes, one which describes the work portion 
of this service, and one which describes the PE portion, may be a 
potentially more accurate method of valuing and paying for the service 
or services described by this code.
(29) Flow Cytometry Interpretation (CPT Codes 88184, 88185, 88187, 
88188, and 88189)
    The Flow Cytometry Interpretation family of codes is split into a 
pair of codes used to describe the technical component of flow 
cytometry (CPT codes 88184 and 88185), which do not have a work 
component, and a trio of codes (CPT codes 88187, 88188, and 88189) 
which do not have direct practice expense inputs, as they are 
professional component only services. CPT codes 88184 and 88185 were 
reviewed by the RUC in April 2014, and their CMS refined values were 
included in the CY 2016 PFS final rule with comment period. The full 
family of codes was reviewed again at the January 2016 RUC meeting, and 
new recommendations were submitted to CMS as part of the CY 2017 PFS 
rulemaking cycle.
    We are proposing the RUC-recommended work RVU of 0.74 for CPT code 
88187, and the RUC-recommended work RVU of 1.70 for CPT code 88189. For 
CPT code 88188, we are proposing a work RVU of 1.20 instead of the RUC-
recommended work RVU of 1.40. We arrived at this value by noticing that 
there were no comparable codes with no global period in the RUC 
database with intraservice time and total time of 30 minutes that had a 
work RVU higher than 1.20. The RUC-recommended work RVU of 1.40 would 
go beyond the current maximum value and establish a new high, which is 
not consistent with our estimation of the overall intensity of this 
service relative to the others. As a result, we believe it is more 
accurate to crosswalk CPT code 88188 to the work value of the code with 
the current highest value, which is CPT code 88120 (Cytopathology, in 
situ hybridization (for example, FISH), urinary tract specimen with 
morphometric analysis, 3-5 molecular probes) at a work RVU of 1.20. We 
believe that CPT code 88120 is crosswalk comparable code since it 
shares the identical intraservice time and total time of 30 minutes 
with CPT code 88188.
    We also noted that the survey increment between CPT codes 88187 and 
88188 at the RUC-recommended 25th percentile was 0.40 (between work 
RVUs of 1.00 and 1.40), and this increment of 0.40 when added to CPT 
code 88187's work RVU of 0.74 would arrive at a value of 1.14. In 
addition, the total time for CPT code 88188 decreases from 43 minutes 
to 30 minutes, which is a ratio of 0.70, and when this time ratio is 
multiplied by CPT code 88188's previous work value of 1.69, the result 
would be a new work RVU of 1.18. With this information in mind, we are 
proposing a work RVU of 1.20 for CPT code 88188 as a result of a direct 
crosswalk to CPT code 88120.
    For CPT codes 88184 and 88185, which describe the technical 
component of flow cytometry, we are proposing to use the RUC-
recommended inputs with a series of refinements. However, we believe 
that the coding for these two procedures may inhibit accurate 
valuation. CPT code 88184 describes the first marker for flow 
cytometry, while CPT code 88185 is an add-on code that describes each 
additional marker. We believe that it may be more accurate to have a 
single CPT code that describes the technical component of flow 
cytometry on a per patient case basis, as these two procedures are 
always performed together and it is difficult to determine the clinical 
labor, supplies, and equipment used in the typical case under the 
current coding structure. We are soliciting comments regarding the 
public interest in consolidating these two procedures into a single 
code used to describe the technical component of flow cytometry.
    Absent such a change in coding, we are proposing to refine the 
clinical labor time for ``Instrument start-up, quality control 
functions, calibration, centrifugation, maintaining specimen tracking, 
logs and labeling'' from 15 minutes to 13 minutes for CPT code 88184. 
We maintain that 13 minutes for this activity, which is the current 
time value, would be typical for the procedure, as CPT code 88182 also 
uses 13 minutes for the identical clinical labor task. We are also 
proposing to refine the L054A clinical labor for

[[Page 46252]]

``Load specimen into flow cytometer, run specimen, monitor data 
acquisition, and data modeling, and unload flow cytometer'' from 10 
minutes to 7 minutes using the same rationale, a comparison to CPT code 
88182.
    We are proposing to maintain the clinical labor for ``Print out 
histograms, assemble materials with paperwork to pathologists Review 
histograms and gating with pathologist'' for CPT code 88184 at 2 
minutes, as opposed to the RUC-recommended 5 minutes. A clinical labor 
time of 2 minutes is standard for this activity; we disagree with the 
RUC rationale that reviewing histograms and gating with the pathologist 
in this procedure is not similar to other codes. We also note that the 
review of histograms with a pathologist is not even described by CPT 
code 88184, which again refers to the technical component of flow 
cytometry, not the professional component. We are also proposing to 
refine the L033A clinical labor time for ``Clean room/equipment 
following procedure'' from 2 minutes to 1 minute for CPT code 88184. We 
have established 1 minute in previous rulemaking (80 FR 70902) as the 
standard time for this clinical labor activity in the laboratory 
setting.
    We are proposing to maintain our removal of the clinical labor time 
for ``Enter data into laboratory information system, multiparameter 
analyses and field data entry, complete quality assurance 
documentation'' for both CPT code 88182 and CPT code 88184. As we 
stated in last year's final rule with comment period (80 FR 70979), 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, and 
we not consider this task as typically performed by clinical labor on a 
per-service basis.
    We are proposing to maintain the quantity of the ``lysing reagent'' 
supply (SL089) at 2 ml for CPT code 88185, as opposed to the RUC-
recommended quantity of 3 ml. In our discussions with pathology 
specialists who perform flow cytometry, we were informed that the use 
of 50-55 ml of the lysing reagent would be typical for an entire 
patient case. The RUC recommendation similarly suggested a quantity of 
46 ml or 48 ml per patient case. We were also told that the most 
typical number of markers used for flow cytometry is 24, consisting of 
1 service of CPT code 88184 and 23 services of CPT code 88185. An 
investigation of our claims data confirmed this information, indicating 
that 24 markers is the most frequent per patient case for flow 
cytometry, and the use of more than 20 markers is typical. We believe 
that this data supports our refinement of the lysing reagent from a 
quantity of 3 ml to a quantity of 2 ml for CPT code 88185, which is 
also the current value for the procedure and the RUC-recommended value 
from the previous set of recommendations. For the typical case of 24 
markers, our value would produce a total lysing reagent quantity of 51 
ml (5 ml from the single service of CPT code 88184 and 46 ml from the 
23 services of CPT code 88185), which matches with the amount required 
for a total per patient case. If we were to adopt the RUC 
recommendation, the total lysing reagent quantity would be 74 ml, which 
is well in excess of what we believe to be typical for these 
procedures.
    We are also proposing to refine the quantity of the ``antibody, 
flow cytometry'' supply (SL186) from quantity 1.6 to quantity 1, which 
is also the current value for the supply and the RUC-recommended value 
from the previous set of recommendations. We do not agree that more 
than one antibody would be typically used for each marker. We are 
reaffirming the previous RUC recommendation, and maintaining the 
current quantity of 1 antibody for each marker.
    We are not proposing the recommended additional time for the 
``printer, dye sublimation (photo, color)'' equipment (ED031). We are 
proposing to maintain the equipment time at 2 minutes for CPT code 
88184, and at 1 minute for CPT code 88185. As we stated in the CY 2016 
PFS final rule with comment period (80 FR 70979), we are proposing to 
assign equipment time for the dye sublimation printer to match the 
clinical labor time for ``Print out histograms, assemble materials with 
paperwork to pathologists.'' We do not believe that it would be typical 
for the printer to be in use longer than it takes to accomplish this 
clinical labor task.
(30) Mammography--Computer Aided Detection Bundling (CPT Codes 770X1, 
770X2 and 770X3)
    Section 104 of the Medicare, Medicaid, and SCHIP Benefits 
Improvement and Protection Act of 2000 (BIPA) (Pub. L. 106-554) 
required us to create separate codes with higher payment amounts for 
digital mammography compared to film mammography, which was the 
technology considered to be typical at the time. In addition, the 
statute required additional payment to be made when computer-aided 
detection (CAD) was used.
    In CY 2002, we began valuing digital mammography services using 
three G-codes, G0202, G0204, and G0206 to describe screening 
mammography, unilateral diagnostic mammography, and bilateral 
diagnostic mammography, respectively. CMS implemented the requirements 
of BIPA section 104(d)(1), which applied to tests furnished in 2001, by 
using the work RVUs of the parallel CPT codes, but establishing a fixed 
PE RVU rather than using PE RVUs developed under the standard PE 
methodology. The fixed amount of PE RVUs for these codes has generally 
remained unchanged since implementation of the G-codes that 
specifically described digital imaging.
    Most mammography services under Medicare have since been billed 
with these G-codes when digital mammography was used, and with CPT 
codes 77055, 77056, and 77057 when film mammography was used. The use 
of CAD has been reported with CPT codes 77051 and 77052. For CY 2017, 
the CPT Editorial Panel deleted CPT codes 77051, 77052, 77055, 77056, 
77057 and created three new CPT codes, 770X1, 770X2, and 770X3, to 
describe mammography services bundled with CAD. For CY 2017, the RUC 
recommended a work RVU of 0.81 for CPT code 770X1, a work RVU of 1.00 
for CPT code 770X2, and a work RVU of 0.76 for CPT code 770X3, as well 
as new PE inputs for use in developing resource-based PE RVUs based on 
our standard methodologies. The RUC has recommended these inputs and 
only one medical specialty society has provided us with a set of single 
invoices to price the equipment used in furnishing these services.
    We have reviewed these coding changes and recommended changes to 
valuation for CY 2017. The revised CPT coding mitigates the need for 
both separate G-codes and the CAD add-on codes. Based upon these coding 
changes and the recommended input values, overall Medicare payment for 
mammography services would be drastically reduced. This is especially 
the case for the technical component of these services, which could 
possibly be reduced up to 50 percent relative to the PE RVUs currently 
used for payment for these services.
    Based on our initial review of the recommended inputs for the new 
codes, we believe that these changes would likely result in values more 
closely related to the relative resources involved in furnishing these 
services. However, we recognize that these services, particularly the 
preventive

[[Page 46253]]

screenings, are of particular importance to the Medicare program and 
the health of the Medicare beneficiaries. We are concerned that making 
drastic changes in coding and payment for these services could be 
disruptive in ways that could affect beneficiary access to necessary 
services. We also recognize that unlike almost any other high-volume 
PFS service, the RVUs used for payment for many years have not been 
developed through the generally applicable PFS methodologies, and 
instead reflect the statutory directive under section 104 of the BIPA. 
Similarly, we recognize that the changes in both coding and valuation 
are significant changes for those who provide these services. 
Therefore, instead of proposing to simultaneously adopt the revised CPT 
coding and drastic reductions in overall payment rates, we believe it 
is advisable to adopt the new coding, including the elimination of 
separate billing for CAD, for CY 2017 without proposing immediate 
implementation of the recommended resource inputs. We anticipate that 
we will consider the recommended inputs, including the pricing of the 
required equipment, as carefully as possible prior to proposing revised 
PE values through subsequent rulemaking.
    Therefore, for CPT codes 770X1, 770X2, and 770X3, we are proposing 
to accept the RUC-recommended work RVUs, but to crosswalk the PE RVUs 
for the technical component of the current corresponding G-codes, as we 
seek further pricing information for these equipment items.
    In addition to seeking comment on this proposal, we are also 
seeking comment on rates for these services in the commercial market to 
help us understand the potential impacts of any future proposed 
revisions to PFS payment rates.
    Finally, we note that by adopting the new coding for CY 2017, any 
subsequent significant reduction in RVUs (greater than 20 percent) for 
the codes would be subject to the statutory phase-in under section 
1848(c)(7).
    To help us examine the resource inputs for these services, we are 
seeking public comment on the list of items recommended as equipment 
inputs for mammography services. We also invite commenters to provide 
any invoices that would help with future pricing of these items.

     Table 17--Recommended Equipment Items for Mammography Services
------------------------------------------------------------------------
       #         Item description     Quantity            Purpose
------------------------------------------------------------------------
1..............  2D Selenia                     1  Mammography unit and
                  Dimensions                        in-room console
                  Mammography                       itself.
                  System.
2..............  Mammo                          1  Required for MQSA.
                  Accreditation                     The phantom is
                  Phantom.                          currently valued
                                                    into the existing
                                                    mammography room.
3..............  Phantom Case....               1  Protects expensive
                                                    required phantom
                                                    from damage.
4..............  Paddle Storage                 3  It requires 3 racks
                  Rack.                             to hold and prevent
                                                    damage to all of the
                                                    paddles that are
                                                    part of the typical
                                                    standard mammography
                                                    system.
5..............  Needle                         1  Needed for a full
                  Localization                      functioning
                  Kit.                              mammography room.
                                                    Allows for the
                                                    performance of
                                                    needle
                                                    localizations. Input
                                                    is not separately in
                                                    the PE for the
                                                    mammography guided
                                                    procedure codes,
                                                    19281-19282, as a
                                                    fully functioning
                                                    mammography room is
                                                    needed for those
                                                    procedures.
6..............  Advanced                       1  Workflow system
                  Workflow                          connecting
                  Manager System.                   mammography room and
                                                    workstations.
7..............  Cenova 2D Tower                1  CAD server, and also
                  System.                           used for post-
                                                    processing.
8..............  Image Checker                  1  License required for
                  CAD (9.4)                         using CAD. This is a
                  License for One                   one-time fee.
                  FFDM.
9..............  Film Digitizing                1  Digitizes analog
                  System.                           films to digital for
                                                    comparison purposes.
10.............  Mammography                    1  A special chair
                  Chair.                            needed for patients
                                                    who cannot stand to
                                                    safely have their
                                                    mammogram performed.
11.............  Laser Imager                   1  Prints high
                  Printer.                          resolution copies of
                                                    the mammograms to
                                                    send to surgeons and
                                                    oncologists, and to
                                                    use in the OR.
12.............  Barcode Scanner.               1  Allows selection of
                                                    individual patient
                                                    file for
                                                    interpretation.
13.............  MRS V7 SQL                     1  MQSA requires that
                  Reporting                         the facility develop
                  System.                           and maintain a
                                                    database that tracks
                                                    recall rates from
                                                    screening, true and
                                                    false positive and
                                                    true and false
                                                    negative rates,
                                                    sensitivity,
                                                    specificity, and
                                                    cancer detection
                                                    rate. A reporting
                                                    system is required
                                                    to build the
                                                    required database
                                                    and produce the
                                                    federally required
                                                    quality audit.
                                                    Components below
                                                    needed for the
                                                    reporting system.
                                                    The reporting system
                                                    is currently valued
                                                    into the existing
                                                    mammography room.
14.............  Worksheet                      1  Database reports are
                  Printing Module.                  required for federal
                                                    tracking purposes.
                                                    This is used to
                                                    generate reports for
                                                    MQSA.
15.............  Site License....               1  License for site to
                                                    use the reporting
                                                    system. This is a
                                                    one-time fee.
16.............  Additional                     3  Licenses for
                  Concurrent User                   radiologists to use
                  License.                          the reporting
                                                    system. A minimum of
                                                    three additional
                                                    licenses is typical.
17.............  Densitometer....               1  Required for MQSA.
------------------------------------------------------------------------

    We also received specialty society recommendations for a new 
Equipment Item, a physician PACS mammography workstation. We note that 
we discuss physician PACS workstation in section II.A of this rule. The 
items that comprise the physician PACS mammography workstation are 
listed in Table 18. We are requesting public comment as to the 
appropriateness of this list and if some items are indirect expenses or 
belong in other codes. We also invite commenters to provide any 
invoices that would help with future pricing of these items.

            Table 18--Physician PACS Mammography Workstation
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
PC Tower.
Monitors 5 MP (mammo) (x2).
3rd & 4th monitor (for speech recognition, etc.).
Admin Monitor (the extra working monitor).
Keyboard & Mouse.

[[Page 46254]]

 
Powerscribe Microphone.
Software--SV APP SYNC 1.3.0.
Software--R2 Cenova.
------------------------------------------------------------------------

    We also note that for CY 2015, the CPT Editorial Panel created CPT 
codes 77061, 77062, and 77063 to describe unilateral, bilateral, and 
screening digital breast tomosynthesis, respectively. CPT code 77063 is 
an add-on code to 77057, the CPT code for screening mammography. To be 
consistent with our use of G codes for digital mammography, we did not 
implement two of these three CPT codes for Medicare purposes. We only 
adopted CPT code 77063 an add-on code to G0202. Instead of adopting 
stand-alone codes 77061 and 77062, we created a new code, G0279 
Diagnostic digital breast tomosynthesis, as an add-on code to the 
diagnostic digital mammography codes G0204 and G0206 and assigned it 
values based on CPT code 77063. Pending revaluation of the mammography 
codes using direct PE inputs, we propose to maintain the current coding 
structure for digital breast tomosynthesis with the technical change 
that G0279 be reported with 770X1 or 770X2 as the replacement codes for 
G0204 and G0206.
(31) Microslide Consultation (CPT Codes 88321, 88323, and 88325)
    CPT codes 88321, 88323, and 88325 were reviewed by the RUC in April 
2014 for their direct PE inputs only, and the CMS refined values were 
included in the CY 2016 PFS final rule with comment period. The family 
of codes was reviewed again at the January 2016 RUC meeting for both 
work values and direct PE inputs, and new recommendations were 
submitted to CMS as part of the CY 2017 PFS rulemaking cycle.
    In the CY 2016 PFS final rule with comment period, we finalized our 
proposal to remove many of the inputs for clinical labor, supplies, and 
equipment for CPT code 88325. The descriptor for this code did not 
state that slide preparation was taking place, and therefore, we 
refined 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. After further discussion with pathologists and 
consideration of comments received, we have been persuaded that slide 
preparation does take place in conjunction with the service described 
by CPT code 88325. In the RUC-recommended direct PE inputs from the 
January 2016 meeting, the labor, supplies, and equipment inputs related 
to slide preparation were added once again to CPT code 88325. We are 
proposing to accept these restorations related to slide preparation 
without refinement.
    Regarding the clinical labor direct PE inputs, we are proposing to 
assign 1 minute of L037B clinical labor for ``Complete workload 
recording logs. Collate slides and paperwork. Deliver to pathologist'' 
for CPT codes 88323 and 88325. We are maintaining this at the current 
value for CPT code 88323, and adding this 1 minute to CPT code 88325 
based on our new understanding that slide preparation is undertaken as 
part of the service described by this code. We are proposing to remove 
the clinical labor for ``Assemble and deliver slides with paperwork to 
pathologists'' from all three codes, as we believe this clinical labor 
is redundant with the labor assigned for ``Complete workload recording 
logs.'' We are similarly proposing to remove the clinical labor for 
``Clean equipment while performing service'' from CPT codes 88323 and 
88325, as we believe it to be redundant with the clinical labor 
assigned for ``Clean room/equipment following procedure.''
    We are proposing to maintain the quantity of the ``stain, 
hematoxylin'' supply (SL135) at 16 ml for CPT codes 88323 and 88325, as 
opposed to the RUC-recommended quantity of 32 ml. The RUC 
recommendation stated that the hematoxylin supply does not include 
eosin and should not be redundant; the stains are not mixed together, 
but are instead sequential. The recommendation also made a comparison 
to the use of the hematoxylin supply quantity in CPT code 88305. 
However, we note that CPT code 88305 does not include 8 ml of eosin 
stain (SL201), but instead 8 gm of eosin solution (SL063), and these 
are not the same supply. Therefore we do not agree that a direct 
comparison of the supply quantities is the most accurate way to value 
these procedures. For CPT codes 88323 and 88325, we continue to note 
that the prior supply inputs for these procedures had quantity 2.4 of 
the eosin solution (SL063) and quantity 4.8 of the hematoxylin stain 
(SL135); in other words, a 1:2 ratio between the eosin and hematoxylin. 
We are proposing to maintain that 1:2 ratio with 8 ml of the eosin 
stain (SL201) and 16 ml of the hematoxylin stain (SL135).
    We are also proposing to update the use of the eosin solution 
(sometimes listed as ``eosin y'') in our supply database. We believe 
that the eosin solution supply (SL063), which is measured in grams, 
reflects an older process of creating eosin stains by hand. This is in 
contrast to the eosin stain supply (SL201), which is measured in 
milliliters, and can be ordered in a state that is ready for staining 
immediately. We do not believe that the use of eosin solution would 
reflect typical lab practice today, with the readily availability for 
purchase of inexpensive eosin staining materials. We also note that in 
the CY 2016 PFS final rule with comment period, we removed 8 gm of the 
eosin solution and replaced it with 8 ml of the eosin stain, and this 
substitution was accepted without further change in the most recent set 
of RUC recommendations. As a result, we are proposing to update the 
price of the eosin stain supply from $0.044 per ml to $0.068 per ml to 
reflect the current cost of the supply. We are also proposing to use 
CPT codes 88323 and 88325 as a model, and replace the use of eosin 
solution with an equal quantity of eosin stain for the rest of the 
codes that make use of this supply. This applies to 15 other CPT codes: 
88302 (Level II--Surgical pathology, gross and microscopic 
examination), 88304 (Level III--Surgical pathology, gross and 
microscopic examination), 88305 (Level IV--Surgical pathology, gross 
and microscopic examination), 88307 (Level V--Surgical pathology, gross 
and microscopic examination), 88309 (Level VI--Surgical pathology, 
gross and microscopic examination), 88364 (In situ hybridization (e.g., 
FISH), per specimen; each additional single probe stain procedure), 
88365 (In situ hybridization (e.g., FISH), per specimen; initial single 
probe stain procedure), 88366 (In situ hybridization (e.g., FISH), per 
specimen; each multiplex probe stain procedure), 88367 (Morphometric 
analysis, in situ hybridization (quantitative or semi-quantitative), 
using computer-assisted technology, per specimen; initial single probe 
stain procedure), 88368 (Morphometric analysis, in situ hybridization 
(quantitative or semi-quantitative), manual, per specimen; initial 
single probe stain procedure), 88369 (Morphometric analysis, in situ 
hybridization (quantitative or semi-quantitative), manual, per 
specimen; each additional single probe stain procedure), 88373 
(Morphometric analysis, in situ hybridization (quantitative or semi-
quantitative), using computer-assisted technology, per specimen; each 
additional single probe stain procedure), 88374 (Morphometric analysis, 
in situ hybridization (quantitative or semi-quantitative),

[[Page 46255]]

using computer-assisted technology, per specimen; each multiplex probe 
stain procedure), 88377 (Morphometric analysis, in situ hybridization 
(quantitative or semi-quantitative), manual, per specimen; each 
multiplex probe stain procedure), and G0416 (Surgical pathology, gross 
and microscopic examinations, for prostate needle biopsy, any method).
(32) Closure of Paravalvular Leak (CPT Codes 935X1, 935X2, and 935X3)
    The CPT Editorial Committee developed three new codes (two base 
codes and one add-on code) to describe paravalvular leak closure 
procedures that were previously reported using an unlisted code. The 
RUC recommended a work RVU of 17.97 for CPT code 935X2. We are 
proposing a work RVU of 14.50 for CPT code 935X2, a direct crosswalk 
from CPT code 37227. We believe that a direct crosswalk to CPT code 
37227 accurately reflects the time and intensity described in CPT code 
935X2 since CPT code 37227 also describes a transcatheter procedure 
with similar service times.
    To maintain relativity among the codes in this family, we are 
proposing refinements to the recommended work RVUs for CPT code 935X1. 
The RUC noted the additional work associated with CPT code 935X1 
compared to CPT code 935X2 was due to the addition of a transseptal 
puncture to access the mitral valve. The RUC identified a work RVU of 
3.73 for a transseptal puncture. Therefore, for CPT code 935X1, we are 
proposing a work RVU of 18.23 arrived at by using our proposed work RVU 
for CPT code 935X2 (14.50) and adding the value of a transseptal 
puncture (3.73).
    CPT code 935X3 is an add-on code used to report placement of 
additional occlusion devices for percutaneous transcatheter 
paravalvular leak closure, performed in conjunction with either an 
initial mitral or aortic paravalvular leak closure. The RUC recommended 
a work RVU of 8.00 for this code. We considered applying the relative 
increment between CPT codes 935X1 and 935X2, however, we believe that a 
direct crosswalk to CPT code 35572, with a work RVU of 6.81, more 
accurately reflects the time and intensity of furnishing the service. 
Therefore, for CPT code 935X3, we are proposing a work RVU of 6.81.
(33) Electroencephalogram (EEG) (CPT Codes 95812, 95813, and 95957)
    In February 2016, the RUC submitted recommendations for work and 
direct PE inputs for CPT codes 95812, 95813, and 95957. We are 
proposing to use the RUC-recommended physician work and direct PE 
inputs for CPT code 95957 and to use the RUC-recommended work RVUs for 
CPT codes 95812 and 95813.
    In the CY 2016 PFS final rule with comment period (80 FR 70886), we 
finalized direct PE input refinements for several clinical labor times 
for CPT codes 95812 and 95813. The RUC's February 2016 PE summary of 
recommendations indicated that the specialty society expert panel 
disagreed with CMS' refinements to clinical labor time for these two 
codes. The RUC recommended 62 minutes for clinical labor task ``perform 
procedure'' for CPT code 95812 and 96 minutes for the same clinical 
labor task for CPT code 95813, similar to the values recommended by the 
RUC in April 2014.
    We are proposing to maintain the CMS-refined CY 2016 PE inputs for 
clinical labor task ``perform procedure'' for CPT codes 95812 (50 
minutes) and 95813 (80 minutes). The PE summary of recommendations 
state that CPT code 95812 requires 50 minutes of clinical labor time 
for EEG recording, and CPT code 95813 requires 80 minutes of clinical 
labor time for the same clinical labor task.
(34) Parent, Caregiver-Focused Health Risk Assessment (CPT Code 961X0)
    In October 2015, the CPT Editorial Panel created two new PE-only 
codes, 961X0 (Administration of patient-focused health risk assessment 
instrument (e.g., health hazard appraisal) with scoring and 
documentation, per standardized instrument) and 961X1 (Administration 
of caregiver-focused health risk assessment instrument (e.g., 
depression inventory) for the benefit of the patient, with scoring and 
documentation, per standardized instrument). For CPT code 961X0, we are 
proposing the RUC-recommended direct PE inputs. For CPT code 961X1, the 
service is furnished to a patient who may not be a Medicare beneficiary 
and thus we do not believe would be eligible for Medicare payment. We 
are proposing to assign a procedure status of I (Not valid for Medicare 
purposes) for CPT code 961X1.
    We note that we believe that this code describes a service that is 
frequently reasonable and necessary in the treatment of illness or 
injury, such as when there has been a change in health status. However, 
when the service described by CPT code 961X0 is explicitly included in 
another service being furnished, such as the Annual Wellness Visit 
(AWV), this code should not be billed separately, much like other codes 
that describe services included in codes with broader descriptions. We 
also note that this service should not be billed separately if 
furnished as a preventive service as it would describe a non-covered 
service. However, we are also seeking comment on whether this service 
may be better categorized as an add-on code and welcome stakeholder 
input regarding whether or not there are circumstances when this 
service might be furnished as a stand-alone service.
(35) Reflectance Confocal Microscopy (CPT Codes 96931, 96932, 96933, 
96934, 96935, and 96936)
    For CY 2015, the CPT Editorial panel established six new Category I 
codes to describe reflectance confocal microscopy (RCM) for imaging of 
skin. For CPT codes 96931 and 96933, the specialty society and the RUC 
agreed that the physician work required for both codes were identical, 
and therefore, should be valued the same. The RUC recommended a work 
RVU of 0.80 for CPT codes 96931 and 96933 based on the 25th percentile 
of the survey. Based on the similarity of the services being performed 
in CPT codes 96931 and 96933 and the identical intra-service times of 
96931, 96933 and 88305, the key reference code from the survey, we 
believe a direct crosswalk from CPT code 88305 to 96931 and 96933 would 
more accurately reflect the work involved in furnishing the procedure. 
Therefore, for CY 2017 we are proposing a value of 0.75 RVUs for CPT 
codes 96931 and 96933. In addition, we are removing 3 minutes of 
preservice time in CPT codes 96931 and 96933 since it is not included 
in CPT code 88305 and as a result, we do not believe it is appropriate 
in CPT codes 96931 and 96933 either.
    For CPT codes 96934 and 96936 the specialty society and the RUC 
agreed that the physician work required for both codes were identical, 
and therefore, should be valued the same. In its recommendation, the 
RUC stated that it believed the survey respondents somewhat 
overestimated the work for CPT code 96934 with the 25th percentile 
yielding a work RVU of 0.79. Consequently, the RUC reviewed the survey 
results from CPT code 96936 and agreed that the 25th percentile work 
RVU of 0.76 accurately accounted for the work involved for the service. 
Therefore, the RUC recommended a work RVU of 0.76 for CPT codes 96934 
and 96936.
    We believe that the incremental difference between the RUC-
recommended values for the base and add-on codes accurately captures 
the difference in work between the code pairs. However, because we 
valued the base codes differently than the RUC, we are proposing values 
for the add-on

[[Page 46256]]

codes that maintain the RUC's 0.04 increment instead of the RUC-
recommended values. Therefore we are proposing a work RVU of 0.71 for 
CPT codes 96934 and 96936.
    We are also proposing to reduce the preservice clinical labor for 
Patient clinical information and questionnaire reviewed by 
technologist, order from physician confirmed and exam protocoled by 
physician CPT codes 96934 and 93936 as this work is performed in the 
two CPT base codes 93931 and 93933. The service period clinical labor 
for ``Prepare and position patient/monitor patient/set up IV'' was 
reduced from 2 to 1 minute for CPT codes 93934 and 93936 since we 
believe that less positioning time is needed with subsequent lesions. 
The service period clinical labor for ``Other Clinical Activity--Review 
imaging with interpreting physician'' was refined to zero minutes for 
CPT codes 96933 and 96936 as these are interpretation and report only 
codes and not image acquisition.
(36) Evaluative Procedures for Physical Therapy and Occupational 
Therapy (CPT Codes 97X61, 97X62, 97X63, 97X64, 97X65, 97X66, 97X67, 
97X68)
    For CY 2017, the CPT Editorial Panel deleted four CPT codes (97001, 
97002, 97003, and 97004) and created eight new CPT codes (97X61-97X68) 
to describe the evaluative procedures furnished by physical therapists 
and occupational therapists. There are three new codes, stratified by 
complexity, to replace a single code, 97001, for physical therapy (PT) 
evaluation, three new codes, also stratified by complexity, to replace 
a single code, 97003, for occupational therapy (OT) evaluation, and one 
new code each to replace the reevaluation codes for physical and 
occupational therapy--97002 and 97004. Table 19 includes the long 
descriptors and the required components of each of the eight new CPT 
codes for the PT and OT services.
    The CPT Editorial Panel's creation of the new codes for PT and OT 
evaluative procedures grew out of a CPT workgroup that was originally 
convened in January 2012 when contemplating major revision of the 
Physical Medicine and Rehabilitation CPT section of codes in response 
to our nomination of therapy codes as potentially misvalued codes, 
including CPT code 97001 (and, as a result, all four codes in the 
family) in the CY 2012 PFS proposed rule.
    In reviewing the eight new CPT codes for evaluative procedures, the 
HCPAC forwarded recommendations for work RVUs and direct PE inputs for 
each code. Currently, CPT codes 97001 and 97003 both have a work RVU of 
1.20, and CPT codes 97002 and 97004 both have a work RVU of 0.60. These 
CPT codes have reflected the same work RVUs since CY 1998 when we 
accepted the HCPAC values during CY 1998 rulemaking.
i. Valuation of Evaluation Codes
    The HCPAC submitted work RVU recommendations for each of the six 
new PT and OT evaluation codes. These recommendations are intended to 
be work neutral relative to the valuation for the previous single 
evaluation code for PT and OT, respectively. However, that assessment 
for each family of codes is dependent on the accuracy of the 
utilization forecast for the different complexity levels within the PT 
or OT family. As used in this section, work neutrality is distinct from 
the budget neutrality that is applied broadly in the PFS. Specifically, 
work neutrality is intended to reflect that despite changes in coding, 
the overall amount of work RVUs for a set of services is held constant 
from one year to the next. For example, if a service is reported using 
a single code with a work RVU of 2.0 for one year but that same service 
would be reported using two codes, one for ``simple'' and another for 
``complex'' in the subsequent year valued at 1.0 and 3.0 respectively, 
work neutrality could only be attained if exactly half the services 
were reported using each of the two new codes. If more than half of the 
services were reported using the ``simple'' code, then there would be 
fewer overall work RVUs. If more than half of the services were 
reported using the ``complex'' code, then there would be more overall 
work RVUs. Therefore, work neutrality can only be assessed with an 
understanding of the relative frequency of how often particular codes 
will be reported.
    The HCPAC recommended a work RVU of 0.75 for CPT code 97X61, a work 
RVU of 1.18 for CPT code 97X62, and a work RVU of 1.5 for CPT code 
97X63. The PT specialty society projected that the moderate complexity 
evaluation code would be reported 50 percent of the time because it is 
the typical evaluation, and the CPT codes for the low and high 
complexity evaluations are each expected to be billed 25 percent of the 
time. The HCPAC-recommended work RVU of 1.18 for CPT code 97X62 
represents the survey median with 30 minutes of intraservice time, 10 
minutes of preservice time, and 15 minutes postservice time. The HCPAC 
notes this work value is appropriately ranked between levels 2 and 3 of 
the E/M office visit codes for new patients.
    The HCPAC recommended a work RVU of 0.88 for CPT code 97X65, a work 
RVU of 1.20 for CPT code 97X66, and a work RVU of 1.70 for CPT code 
97X67. For the OT codes, work neutrality would be achieved only with a 
projected utilization in which the low-complexity evaluation is billed 
50 percent of the time; the moderate-complexity evaluation is billed 40 
percent of the time, and the high-complexity evaluation only billed 10 
percent of the time. For purposes of calculating work neutrality, the 
HCPAC recommended assuming that the low-complexity code will be most 
frequently reported even though the HCPAC-recommended work RVU of 1.20 
and 45 minutes of intraservice time for moderate complexity code is 
identical to that of the current OT evaluation code. The HCPAC believes 
that the work RVU of 1.20 is appropriately ranked between 99202 and 
99203, levels 2 and 3 for E/M office visits for new outpatients.
ii. Valuation of Evaluation Codes and Discussion of PAMA
    In our review of the HCPAC recommendations, we noted the work 
neutrality and the inherent reliance on the utilization assumptions. We 
considered the three complexity levels for the PT evaluations and the 
three complexity levels for the OT evaluations; and we also considered 
the evaluation services described by the codes as a whole. The varying 
work RVUs and the dependence on utilization for each complexity level 
to ensure work neutrality in the PT and OT code families make it 
difficult for us evaluate the HCPAC's recommended values or to predict 
with a high degree of certainty whether physical and occupational 
therapists will actually bill for these services at the same rate 
forecast by their respective specialty societies.
    We are concerned that the coding stratification in the PT and OT 
evaluation codes may result in upcoding incentives, especially while 
physical and occupational therapists gain familiarity and expertise in 
the differential coding of the new PT and OT evaluation codes that now 
include the typical face-to-face times and new required components that 
are not enumerated in the current codes. We are also concerned that 
stratified payment rates may provide, in some cases, a payment 
incentive to therapists to upcode to a higher complexity level than was 
actually furnished to receive a higher payment.
    We understand that there may be multiple reasons for the CPT 
Editorial Panel to stratify coding for OT and PT

[[Page 46257]]

evaluation codes based on complexity. We also note that the codes will 
be used by payers in addition to Medicare, and other payers may have 
direct interest in making such differential payment based on complexity 
of OT and PT evaluation. Given our concerns regarding appropriate 
valuation, work neutrality, and potential upcoding, however, we do not 
believe that making different payment based on the reported complexity 
for these services is, at current, advantageous for Medicare or 
Medicare beneficiaries.
    Given the advantages inherent and public interest in using CPT 
codes once they become part of the code set, we are proposing to adopt 
the new CPT codes for use in Medicare for CY 2017. However, given our 
concerns about appropriate pricing and payment for the stratified 
services, we are proposing to price the services described by these 
stratified codes as a group instead of individually. To do that, we are 
proposing to utilize the authority in section 220(f) of the Protecting 
Access to Medicare Act (PAMA), which revised section 1848(c)(2)(C) of 
the Act to authorize the Secretary to determine RVUs for groups of 
services, rather than determining RVUs at the individual service level. 
We believe that using this authority instead of proposing to make 
payment based on Medicare G-codes will preserve consistency in the code 
set across payers, thus lessening burden on providers, while retaining 
flexibilities that are beneficial to Medicare.
    We propose a work RVU of 1.20 for both the PT and the OT evaluation 
groups of services. We are proposing this work RVU because we believe 
it best represents the typical PT and OT evaluation. This is the value 
recommended by the HCPAC for the OT moderate-complexity evaluation and 
nearly the same work RVU for corresponding PT evaluation (1.18). 
Additionally, 1.20 work RVUs is the long-standing value for the current 
evaluation codes, 97001 and 97003, and, thus, assures work neutrality 
without reliance on particular assumptions about utilization, which we 
believe was the intent of the HCPAC recommendation.
    Because we are proposing to use the same work RVU for the six 
evaluation codes, we are not addressing any additional concerns about 
the utilization assumptions recommended to us. By proposing the same 
work values for each code in the family, there will be no ratesetting 
impact to work neutrality. As such, we are not revising the utilization 
crosswalks as projected by the respective therapy specialties to 
achieve work neutrality. However, were we to value each code in the PT 
or OT evaluation families individually, we would seek objective data 
from stakeholders to support the utilization crosswalks, particularly 
those for the OT family in which the low-level complexity evaluation is 
depicted as typical and the high-complexity is projected to be billed 
infrequently at 10 percent of the overall number of OT evaluations.
    We are proposing to use the direct PE inputs forwarded by the HCPAC 
(with the refinements described below) for the typical PT evaluation 
and also for the typical OT evaluation in the development of PE RVUs 
for the PT and OT codes as a group of services. For the PT codes, we 
are proposing to use the recommended inputs for the moderate-complexity 
code for the direct PE inputs of all three codes based on its 
assumption as the typical service. Our proposed direct PE inputs 
reflect the recommended values minus 2 minutes of physical therapist 
assistant (PTA) time in the service period because we believe that PTA 
tasks to administer certain assessment tools are appropriately included 
as part of the physical therapist's work and the time of the PTA to 
explain and/or score self-reported outcome measures is not separately 
included in the clinical labor of other codes. We are proposing to 
include the recommended four sheets of laser paper without an 
association to a specific equipment item, but we are seeking comment 
regarding the paper's use.
    For the OT evaluation codes, we considered proposing to use the 
direct PE inputs for the low-complexity evaluation because the OT 
specialty organization believes it represents the typical OT evaluation 
service with a projected 50 percent utilization rate. However, we 
propose to use the moderate-level direct inputs instead, because the 
direct PE for this level is based on a vignette that is valued with the 
same intraservice time, 45 minutes, as the current code, CPT code 
97003. Consequently, we propose to use the recommended direct PE inputs 
for the moderate-complexity code for use in developing PE RVUs for this 
group of services.
    Our proposed direct PE inputs reflect the recommended values minus 
2 minutes of occupational therapist assistant (OTA) time in the service 
period because we believe that OTA tasks to administer certain 
assessment tools are appropriately included as part of the occupational 
therapist's work and the time of the OTA to explain and/or score self-
reported outcome measures is not separately included in the clinical 
labor of other codes. We also rounded up the recommended 6.8 minutes to 
7 minutes to represent the time the OTA assists the occupational 
therapist during the intraservice time period. For the Vision Kit 
equipment item, our proposed price reflects the submitted invoice that 
clearly defined a kit.
iii. Valuation of Reevaluation Codes
    The recommendations the HCPAC sent to us for the PT and OT 
reevaluation codes are not work neutral. For the new PT reevaluation 
code, CPT code 97X64, the HCPAC recommended a work RVU of 0.75 compared 
to the work RVU of 0.60 for CPT code 97002. This recommended work RVU 
falls between the 25th percentile of the survey and the survey's median 
value and was based on a direct crosswalk to CPT code 95992 for 
canalith repositioning with 20 minutes intraservice time and 10 minutes 
immediate postservice time. The HCPAC supported this 0.15 work RVU 
increase based on an anomalous relationship between PT services and E/M 
office visit codes for established patients, noting that physician E/M 
codes have historically been used as a relative comparison. The HCPAC 
stated its 0.75 work RVU recommendation for code 97X64 appropriately 
ranks it between the key reference codes for this service 99212 and 
99213, levels 2 and 3 E/M office-visit codes for established patients.
    The HCPAC provided a work RVU of 0.80 for the OT reevaluation code, 
CPT code 97X68, based on the 25th percentile of the survey, which 
represents an increase over the current work RVU of 0.60 for CPT code 
97004. This work value includes 30 minutes of intraservice time, 5 
minutes preservice time, and 10 minutes immediate postservice time. The 
HCPAC noted that the increase in work compared to the PT reevaluation 
code (0.75) is because the occupational therapist spends more time 
observing and assessing the patient and, in general, the OT patient 
typically has more functional and cognitive disabilities. The HCPAC 
recommendation notes that the 0.80 work RVU recommendation 
appropriately ranks it between the level 1 and 2 E/M office-visit codes 
for new patients.
    The HCPAC's recommended increases to work RVUs for the PT and OT 
reevaluation codes are not work neutral. We are unclear why the HCPAC 
did not maintain work neutrality for the OT and PT reevaluation codes 
since maintaining work neutrality was important to the establishment of 
the six new evaluation codes. We are proposing to maintain the

[[Page 46258]]

overall work RVUs for these services by proposing 0.60 work RVUs for 
CPT codes 97X64 and 97X68, consistent with the work RVUs for the 
deleted reevaluation codes. We are seeking comments from stakeholders 
on whether there are reasons that the reevaluation codes should be 
revalued without regard to work neutrality particularly given the 
HCPAC's interest in preserving work neutrality for the new evaluation 
codes.
    We are proposing the HCPAC-recommended direct PE inputs for CPT 
code 97X64 with a reduction in time for the PTA by 1 minute (from 5 to 
4) in the service period- the line for ``Other Clinical Activity''--
because the time to explain and score the self-reported outcome measure 
(for example, Oswestry) is not separately included in the clinical 
labor of other codes.
    We are proposing the HCPAC-recommended direct PE inputs for CPT 
code 97X68 with a reduction in time for the OTA by 1 minute (from 3 to 
2) in the service period--the line for ``Other Clinical Activity''--for 
the same reason we reduced the corresponding line for PTAs--because the 
time to explain and score any patient-self-administered functional and/
or other standardized outcome measure is not separately included in the 
clinical labor of other codes.
    Because the new CPT code descriptors contain new coding 
requirements for each complexity level, we seek comment from the PT and 
OT specialty organizations as well as other stakeholders to clarify how 
therapists will be educated to distinguish the required complexity 
level components and the selection of the number of elements that 
impact the plan of care. For example, for the OT codes, we invite 
comment on how to define performance deficits, what process the 
occupational therapist uses to identify the number of these performance 
deficits that result in activity limitations, and performance factors 
needed for each complexity level. For the PT codes, we would like more 
information about how the physical therapist differentiates the number 
of personal factors that actually affect the plan of care. We would 
also be interested in understanding more about how the physical 
therapist selects the number of elements from any of the body 
structures and functions, activity limitations, and/or participation 
restrictions to make sure there is no duplication during the physical 
therapist's examination of body systems.
iv. Always Therapy Codes
    It is also important to note that CMS defines the codes for these 
evaluative services as ``always therapy.'' This means that they always 
represent therapy services regardless of who performs them and always 
require a therapy modifier, GP or GO, to signify that the services are 
furnished under a PT or OT plan of care, respectively. These codes will 
also be subject to the therapy MPPR and to statutory therapy caps.

 Table 19--CPT Long Descriptors for Physical Medicine and Rehabilitation
------------------------------------------------------------------------
                                      CPT long descriptors for physical
            New CPT code                 medicine and rehabilitation
------------------------------------------------------------------------
97X61..............................  Physical therapy evaluation: Low
                                      complexity, requiring these
                                      components:
                                      A history with no personal
                                      factors and/or comorbidities that
                                      impact the plan of care;
                                      An examination of body
                                      system(s) using standardized tests
                                      and measures addressing 1-2
                                      elements from any of the
                                      following: Body structures and
                                      functions, activity limitations,
                                      and/or participation restrictions;
                                      A clinical presentation
                                      with stable and/or uncomplicated
                                      characteristics; and
                                      Clinical decision making
                                      of low complexity using
                                      standardized patient assessment
                                      instrument and/or measurable
                                      assessment of functional outcome.
                                     Typically, 20 minutes are spent
                                      face-to-face with the patient and/
                                      or family.
97X62..............................  Physical therapy evaluation:
                                      Moderate complexity, requiring
                                      these components:
                                      A history of present
                                      problem with 1-2 personal factors
                                      and/or comorbidities that impact
                                      the plan of care;
                                      An examination of body
                                      systems using standardized tests
                                      and measures in addressing a total
                                      of 3 or more elements from any of
                                      the following: Body structures and
                                      functions, activity limitations,
                                      and/or participation restrictions;
                                      An evolving clinical
                                      presentation with changing
                                      characteristics; and
                                      Clinical decision making
                                      of moderate complexity using
                                      standardized patient assessment
                                      instrument and/or measurable
                                      assessment of functional outcome.
                                     Typically, 30 minutes are spent
                                      face-to-face with the patient and/
                                      or family.
97X63..............................  Physical therapy evaluation: High
                                      complexity, requiring these
                                      components:
                                      A history of present
                                      problem with 3 or more personal
                                      factors and/or comorbidities that
                                      impact the plan of care;
                                      An examination of body
                                      systems using standardized tests
                                      and measures addressing a total of
                                      4 or more elements from any of the
                                      following: Body structures and
                                      functions, activity limitations,
                                      and/or participation restrictions;
                                      A clinical presentation
                                      with unstable and unpredictable
                                      characteristics; and
                                      Clinical decision making
                                      of high complexity using
                                      standardized patient assessment
                                      instrument and/or measurable
                                      assessment of functional outcome.
                                     Typically, 45 minutes are spent
                                      face-to-face with the patient and/
                                      or family.
97X64..............................  Reevaluation of physical therapy
                                      established plan of care,
                                      requiring these components:
                                      An examination including a
                                      review of history and use of
                                      standardized tests and measures is
                                      required; and
                                      Revised plan of care using
                                      a standardized patient assessment
                                      instrument and/or measurable
                                      assessment of functional outcome
                                     Typically, 20 minutes are spent
                                      face-to-face with the patient and/
                                      or family.
97X65..............................  Occupational therapy evaluation,
                                      low complexity, requiring these
                                      components:
                                      An occupational profile
                                      and medical and therapy history,
                                      which includes a brief history
                                      including review of medical and/or
                                      therapy records relating to the
                                      presenting problem;
                                      An assessment(s) that
                                      identifies 1-3 performance
                                      deficits (i.e., relating to
                                      physical, cognitive, or
                                      psychosocial skills) that result
                                      in activity limitations and/or
                                      participation restrictions; and
                                      Clinical decision making
                                      of low complexity, which includes
                                      an analysis of the occupational
                                      profile, analysis of data from
                                      problem-focused assessment(s), and
                                      consideration of a limited number
                                      of treatment options. Patient
                                      presents with no comorbidities
                                      that affect occupational
                                      performance. Modification of tasks
                                      or assistance (e.g., physical or
                                      verbal) with assessment(s) is not
                                      necessary to enable completion of
                                      evaluation component.
                                     Typically, 30 minutes are spent
                                      face-to-face with the patient and/
                                      or family.

[[Page 46259]]

 
97X66..............................  Occupational therapy evaluation,
                                      moderate complexity, requiring
                                      these components:
                                      An occupational profile
                                      and medical and therapy history,
                                      which includes an expanded review
                                      of medical and/or therapy records
                                      and additional review of physical,
                                      cognitive, or psychosocial history
                                      related to current functional
                                      performance;
                                      An assessment(s) that
                                      identifies 3-5 performance
                                      deficits (i.e., relating to
                                      physical, cognitive, or
                                      psychosocial skills) that result
                                      in activity limitations and/or
                                      participation restrictions; and
                                      Clinical decision making
                                      of moderate analytic complexity,
                                      which includes an analysis of the
                                      occupational profile, analysis of
                                      data from detailed assessment(s),
                                      and consideration of several
                                      treatment options. Patient may
                                      present with comorbidities that
                                      affect occupational performance.
                                      Minimal to moderate modification
                                      of tasks or assistance (e.g.,
                                      physical or verbal) with
                                      assessment(s) is necessary to
                                      enable patient to complete
                                      evaluation component.
                                     Typically, 45 minutes are spent
                                      face-to-face with the patient and/
                                      or family.
97X67..............................  Occupational therapy evaluation,
                                      high complexity, requiring these
                                      components:
                                      An occupational profile
                                      and medical and therapy history,
                                      which includes review of medical
                                      and/or therapy records and
                                      extensive additional review of
                                      physical, cognitive, or
                                      psychosocial history related to
                                      current functional performance;
                                      An assessment(s) that
                                      identify 5 or more performance
                                      deficits (i.e., relating to
                                      physical, cognitive, or
                                      psychosocial skills) that result
                                      in activity limitations and/or
                                      participation restrictions; and
                                      A clinical decision-making
                                      is of high analytic complexity,
                                      which includes an analysis of the
                                      patient profile, analysis of data
                                      from comprehensive assessment(s),
                                      and consideration of multiple
                                      treatment options. Patient
                                      presents with comorbidities that
                                      affect occupational performance.
                                      Significant modification of tasks
                                      or assistance (e.g., physical or
                                      verbal) with assessment(s) is
                                      necessary to enable patient to
                                      complete evaluation component.
                                     Typically, 60 minutes are spent
                                      face-to-face with the patient and/
                                      or family.
97X68..............................  Reevaluation of occupational
                                      therapy established plan of care,
                                      requiring these components:
                                      An assessment of changes
                                      in patient functional or medical
                                      status with revised plan of care;
                                      An update to the initial
                                      occupational profile to reflect
                                      changes in condition or
                                      environment that affect future
                                      interventions and/or goals; and
                                      A revised plan of care. A
                                      formal reevaluation is performed
                                      when there is a documented change
                                      in functional status or a
                                      significant change to the plan of
                                      care is required.
                                     Typically, 30 minutes are spent
                                      face-to-face with the patient and/
                                      or family.
------------------------------------------------------------------------

v. Potentially Misvalued Therapy Codes
    Since 2010, in addition to the codes for evaluative services, CMS 
has periodically added codes that represent therapy services to the 
list of potentially misvalued codes. The current list of 10 therapy 
codes was based on the statutory category ``codes that account for the 
majority of spending under the physician fee schedule,'' as specified 
in section 1848(c)(2)(K)(ii)(VII) of the Act. We understand that the 
therapy specialty organizations have pursued the development of coding 
changes through the CPT process for these modality and procedures 
services. While we understand that, in some cases, it may take several 
years to develop appropriate coding revisions, we are, in the meantime, 
seeking information regarding appropriate valuation for the existing 
codes. See Table 20.

      Table 20--Potentially Misvalued Codes Identified Through High
                     Expenditure by Specialty Screen
------------------------------------------------------------------------
          HCPCS code                        Short descriptor
------------------------------------------------------------------------
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.
------------------------------------------------------------------------

(37) Proposed Valuation of Services Where Moderate Sedation Is an 
Inherent Part of the Procedure and Proposed Valuation of Moderate 
Sedation Services (CPT Codes 991X1, 991X2, 991X3, 991X4, 991X5, and 
991X6; and HCPCS Code GMMM1)
    In the CY 2015 PFS proposed rule (79 FR 40349), we noted that it 
appeared that practice patterns for endoscopic procedures were 
changing. Anesthesia services are increasingly being separately 
reported for endoscopic procedures, meaning that resource costs 
associated with sedation were no longer incurred by the practitioner 
reporting the procedure. Subsequently, in the CY 2016 PFS proposed rule 
(80 FR 41707), we sought public comment and recommendations on 
approaches to address the appropriate valuation of moderate sedation 
related to the approximately 400 diagnostic and therapeutic procedures 
for which the CPT Editorial Committee has determined that moderate 
sedation is an inherent part of furnishing the service. The CPT 
Editorial Committee created separate codes for reporting of moderate 
sedation services.

            Table 21--Moderate Sedation Codes and Descriptors
------------------------------------------------------------------------
           CPT/HCPCS code                         Descriptor
------------------------------------------------------------------------
991X1..............................  Moderate sedation services provided
                                      by the same physician or other
                                      qualified health care professional
                                      performing the diagnostic or
                                      therapeutic service that the
                                      sedation supports, requiring the
                                      presence of an independent trained
                                      observer to assist in the
                                      monitoring of the patient's level
                                      of consciousness and physiological
                                      status; initial 15 minutes of
                                      intra-service time, patient
                                      younger than 5 years of age.

[[Page 46260]]

 
991X2..............................  Moderate sedation services provided
                                      by the same physician or other
                                      qualified health care professional
                                      performing the diagnostic or
                                      therapeutic service that the
                                      sedation supports, requiring the
                                      presence of an independent trained
                                      observer to assist in the
                                      monitoring of the patient's level
                                      of consciousness and physiological
                                      status; initial 15 minutes of
                                      intra-service time, patient age 5
                                      years or older.
991X3..............................  Moderate sedation services provided
                                      by a physician or other qualified
                                      health care professional other
                                      than the physician or other
                                      qualified health care professional
                                      performing the diagnostic or
                                      therapeutic service that the
                                      sedation supports; initial 15
                                      minutes of intra-service time,
                                      patient younger than 5 years of
                                      age.
991X4..............................  Moderate sedation services provided
                                      by a physician or other qualified
                                      health care professional other
                                      than the physician or other
                                      qualified health care professional
                                      performing the diagnostic or
                                      therapeutic service that the
                                      sedation supports; initial 15
                                      minutes of intra-service time,
                                      patient age 5 years or older.
991X5..............................  Moderate sedation services provided
                                      by the same physician or other
                                      qualified health care professional
                                      performing the diagnostic or
                                      therapeutic service that the
                                      sedation supports, requiring the
                                      presence of an independent trained
                                      observer to assist in the
                                      monitoring of the patient's level
                                      of consciousness and physiological
                                      status; each additional 15 minutes
                                      of intra-service time (List
                                      separately in addition to code for
                                      primary service).
991X6..............................  Moderate sedation services provided
                                      by a physician or other qualified
                                      health care professional other
                                      than the physician or other
                                      qualified health care professional
                                      performing the diagnostic or
                                      therapeutic service that the
                                      sedation supports; each additional
                                      15 minutes intra-service time
                                      (List separately in addition to
                                      code for primary service).
------------------------------------------------------------------------

    For the newly created moderate sedation CPT codes, we are proposing 
to use the RUC-recommended work RVUs for CPT codes 991X1, 991X2, 991X3, 
and 991X6. CPT codes 991X1 and 991X2 make a distinction between 
moderate sedation services furnished to patients younger than 5 years 
of age and patients 5 years or older, with CPT codes 991X3 and 991X4 
making a similar distinction. The RUC recommendations include a work 
RVU increment of 0.25 between CPT code 991X1 and 991X2. For CPT code 
991X4, we are proposing a work RVU of 1.65 to maintain the 0.25 
increment relative to CPT code 991X3 (a RUC-recommended work RVU of 
1.90) and maintain relativity among the CPT codes in this family. We 
are proposing to use the RUC-recommended direct PE inputs for all six 
codes.
    When moderate sedation is reported for Medicare beneficiaries, we 
expect that it would most frequently reported using the code that 
describes moderate sedation furnished by the same person who also 
performs the primary procedure for patients 5 years of age or older. 
Under the new coding structure, these services would be reported using 
CPT code 991X2. Stakeholders have presented information that 
illustrates that the specialty group survey data regarding the work 
involved in furnishing the moderate sedation described by CPT code 
991X2 showed a significant bimodal distribution between procedural 
services furnished by gastroenterologists (GI) and those services 
furnished by other specialties. The GI societies' survey data reported 
a median valuation of 0.10 work RVUs for moderate sedation furnished by 
the same person furnishing the base procedure; all other specialty 
groups (combined) reported a median valuation of 0.25 work RVUs. Given 
the significant volume of moderate sedation furnished by GI 
practitioners and the significant difference in RVUs reported in the 
survey data, we are proposing to make payment using a gastrointestinal 
(GI) endoscopy-specific moderate sedation code GMMM1 that would be used 
in lieu of the new CPT moderate sedation coding used more broadly: 
GMMM1: Moderate sedation services provided by the same physician or 
other qualified health care professional performing a gastrointestinal 
endoscopic service (excluding biliary procedures) that sedation 
supports, requiring the presence of an independent trained observer to 
assist in the monitoring of the patient's level of consciousness and 
physiological status; initial 15 minutes of intra-service time; patient 
age 5 years or older.
    We are proposing to value GMMM1 at 0.10 work RVUs based on the 
median survey result for GI respondents in the survey data. We are 
proposing that when moderate sedation services are furnished by the 
same practitioner reporting the GI endoscopy procedure, practitioners 
would report the sedation services using GMMM1 instead of 991X2. In all 
other cases, we propose that practitioners would report moderate 
sedation using one of the new moderate sedation CPT codes consistent 
with CPT guidance. This would include the full range of codes for those 
furnishing moderate sedation with the remaining (non-GI endoscopy) base 
procedures as well as for the other circumstances during which moderate 
sedation is furnished along with a GI endoscopy (for example, to a 
patient under 5 years of age or for a biliary procedure, the 
endoscopist furnishing moderate sedation should not use GMMM1, but 
instead use the appropriate CPT code; see Table 22 for more information 
about when GMMM1 should be used in lieu of the newly created moderate 
sedation CPT codes).
    In addition to providing recommended values for the new codes used 
to separately report moderate sedation, the RUC has provided 
recommendations that value the procedural services without moderate 
sedation. However, the RUC recommends removing fewer RVUs from the 
procedures than it recommends for valuing the sedation services. In 
other words, the RUC is recommending that overall payments for these 
procedures should be increased now that practitioners will be required 
to report the sedation services that were previously included as 
inherent parts of the procedures. We believe that if we were to use the 
RUC recommendations for re-valuation of the procedural services without 
refinement, the RVUs currently attributable to the redundant payment 
for sedation services when anesthesia is separately reported would be 
used exclusively to increase overall payment for these services. We 
refer readers to Section II.D.5. of this proposed rule, which includes 
a more extensive discussion of our general principle that overall 
resource costs for the procedures including moderate sedation do not 
inherently change based solely on changes in coding.
    To account for the separate billing of moderate sedation services, 
we are proposing to maintain current values for the procedure codes 
less the work RVUs associated with the most frequently reported 
corresponding moderate sedation code so that practitioners furnishing 
the moderate sedation

[[Page 46261]]

services previously considered to be inherent in the procedure will 
have no change in overall work RVUs. Since we are proposing 0.10 work 
RVUs for moderate sedation for the GI endoscopy procedures, this means 
we are proposing a corresponding .10 reduction in work RVUs for these 
procedures. For all other Appendix G procedures that currently include 
moderate sedation as an inherent part of the procedure, we are 
proposing to remove 0.25 work RVUs from the current values.
    Table 22 lists the existing work RVUs for each applicable service 
and our proposed refined work RVU using the proposed revaluation 
methodology described above. Additionally, the table identifies the GI 
endoscopic services for which we are proposing that GMMM1 would be used 
to report moderate sedation services. This information will be made 
available and maintained in the ``downloads'' section of the PFS Web 
site at http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.

   Table 22--Proposed Valuations for Endoscopy Services Minus Moderate
                                Sedation
------------------------------------------------------------------------
                                                               Use GMMM1
                                                    CY 2017    to report
                 HCPCS                    CY 2016   proposed   moderate
                                         work RVU   work RVU   sedation
                                                                 (Y/N)
------------------------------------------------------------------------
10030..................................      3.00       2.75          N
19298..................................      6.00       5.75          N
20982..................................      7.27       7.02          N
20983..................................      7.13       6.88          N
22510..................................      8.15       7.90          N
22511..................................      7.58       7.33          N
22512..................................      4.00       4.00          N
22513..................................      8.90       8.65          N
22514..................................      8.24       7.99          N
22515..................................      4.00       4.00          N
22526..................................      6.10       5.85          N
22527..................................      3.03       3.03          N
31615..................................      2.09       1.84          N
31622..................................      2.78       2.53          N
31623..................................      2.88       2.63          N
31624..................................      2.88       2.63          N
31625..................................      3.36       3.11          N
31626..................................      4.16       3.91          N
31627..................................      2.00       2.00          N
31628..................................      3.80       3.55          N
31629..................................      4.00       3.75          N
31632..................................      1.03       1.03          N
31633..................................      1.32       1.32          N
31634..................................      4.00       3.75          N
31635..................................      3.67       3.42          N
31645..................................      3.16       2.91          N
31646..................................      2.72       2.47          N
31647..................................      4.40       4.15          N
31648..................................      4.20       3.95          N
31649..................................      1.44       1.44          N
31651..................................      1.58       1.58          N
31652..................................      4.71       4.46          N
31653..................................      5.21       4.96          N
31654..................................      1.40       1.40          N
31660..................................      4.25       4.00          N
31661..................................      4.50       4.25          N
31725..................................      1.96       1.71          N
32405..................................      1.93       1.68          N
32550..................................      4.17       3.92          N
32551..................................      3.29       3.04          N
32553..................................      3.80       3.55          N
33010..................................      2.24       1.99          N
33011..................................      2.24       1.99          N
33206..................................      7.39       7.14          N
33207..................................      8.05       7.80          N
33208..................................      8.77       8.52          N
33210..................................      3.30       3.05          N
33211..................................      3.39       3.14          N
33212..................................      5.26       5.01          N
33213..................................      5.53       5.28          N
33214..................................      7.84       7.59          N
33216..................................      5.87       5.62          N
33217..................................      5.84       5.59          N
33218..................................      6.07       5.82          N
33220..................................      6.15       5.90          N
33221..................................      5.80       5.55          N
33222..................................      5.10       4.85          N
33223..................................      6.55       6.30          N
33227..................................      5.50       5.25          N
33228..................................      5.77       5.52          N
33229..................................      6.04       5.79          N
33230..................................      6.32       6.07          N
33231..................................      6.59       6.34          N
33233..................................      3.39       3.14          N
33234..................................      7.91       7.66          N
33235..................................     10.15       9.90          N
33240..................................      6.05       5.80          N
33241..................................      3.29       3.04          N
33244..................................     13.99      13.74          N
33249..................................     15.17      14.92          N
33262..................................      6.06       5.81          N
33263..................................      6.33       6.08          N
33264..................................      6.60       6.35          N
33282..................................      3.50       3.25          N
33284..................................      3.00       2.75          N
33990..................................      8.15       7.90          N
33991..................................     11.88      11.63          N
33992..................................      4.00       3.75          N
33993..................................      3.51       3.26          N
35471..................................     10.05       9.80          N
35472..................................      6.90       6.65          N
35475..................................      6.60       6.35          N
35476..................................      5.10       4.85          N
36010..................................      2.43       2.18          N
36140..................................      2.01       1.76          N
36147..................................      3.72       3.47          N
36148..................................      1.00       1.00          N
36200..................................      3.02       2.77          N
36221..................................      4.17       3.92          N
36222..................................      5.53       5.28          N
36223..................................      6.00       5.75          N
36224..................................      6.50       6.25          N
36225..................................      6.00       5.75          N
36226..................................      6.50       6.25          N
36227..................................      2.09       2.09          N
36228..................................      4.25       4.25          N
36245..................................      4.90       4.65          N
36246..................................      5.27       5.02          N
36247..................................      6.29       6.04          N
36248..................................      1.01       1.01          N
36251..................................      5.35       5.10          N
36252..................................      6.99       6.74          N
36253..................................      7.55       7.30          N
36254..................................      8.15       7.90          N
36481..................................      6.98       6.73          N
36555..................................      2.68       2.43          N
36557..................................      5.14       4.89          N
36558..................................      4.84       4.59          N
36560..................................      6.29       6.04          N
36561..................................      6.04       5.79          N
36563..................................      6.24       5.99          N
36565..................................      6.04       5.79          N
36566..................................      6.54       6.29          N
36568..................................      1.92       1.67          N
36570..................................      5.36       5.11          N
36571..................................      5.34       5.09          N
36576..................................      3.24       2.99          N
36578..................................      3.54       3.29          N
36581..................................      3.48       3.23          N
36582..................................      5.24       4.99          N
36583..................................      5.29       5.04          N
36585..................................      4.84       4.59          N
36590..................................      3.35       3.10          N
36870..................................      5.20       4.95          N
37183..................................      7.99       7.74          N
37184..................................      8.66       8.41          N
37185..................................      3.28       3.28          N
37186..................................      4.92       4.92          N
37187..................................      8.03       7.78          N
37188..................................      5.71       5.46          N
37191..................................      4.71       4.46          N
37192..................................      7.35       7.10          N
37193..................................      7.35       7.10          N
37197..................................      6.29       6.04          N
37211..................................      8.00       7.75          N
37212..................................      7.06       6.81          N
37213..................................      5.00       4.75          N
37214..................................      2.74       2.49          N
37215..................................     18.00      17.75          N
37216..................................      0.00       0.00          N
37218..................................     15.00      14.75          N
37220..................................      8.15       7.90          N
37221..................................     10.00       9.75          N
37222..................................      3.73       3.73          N
37223..................................      4.25       4.25          N
37224..................................      9.00       8.75          N
37225..................................     12.00      11.75          N
37226..................................     10.49      10.24          N
37227..................................     14.50      14.25          N
37228..................................     11.00      10.75          N
37229..................................     14.05      13.80          N
37230..................................     13.80      13.55          N
37231..................................     15.00      14.75          N
37232..................................      4.00       4.00          N
37233..................................      6.50       6.50          N
37234..................................      5.50       5.50          N
37235..................................      7.80       7.80          N
37236..................................      9.00       8.75          N
37237..................................      4.25       4.25          N
37238..................................      6.29       6.04          N
37239..................................      2.97       2.97          N
37241..................................      9.00       8.75          N
37242..................................     10.05       9.80          N

[[Page 46262]]

 
37243..................................     11.99      11.74          N
37244..................................     14.00      13.75          N
37252..................................      1.80       1.80          N
37253..................................      1.44       1.44          N
43200..................................      1.52       1.42          Y
43201..................................      1.82       1.72          Y
43202..................................      1.82       1.72          Y
43204..................................      2.43       2.33          Y
43205..................................      2.54       2.44          Y
43206..................................      2.39       2.29          Y
43211..................................      4.30       4.20          Y
43212..................................      3.50       3.40          Y
43213..................................      4.73       4.63          Y
43214..................................      3.50       3.40          Y
43215..................................      2.54       2.44          Y
43216..................................      2.40       2.30          Y
43217..................................      2.90       2.80          Y
43220..................................      2.10       2.00          Y
43226..................................      2.34       2.24          Y
43227..................................      2.99       2.89          Y
43229..................................      3.59       3.49          Y
43231..................................      2.90       2.80          Y
43232..................................      3.69       3.59          Y
43233..................................      4.17       4.07          Y
43235..................................      2.19       2.09          Y
43236..................................      2.49       2.39          Y
43237..................................      3.57       3.47          Y
43238..................................      4.26       4.16          Y
43239..................................      2.49       2.39          Y
43240..................................      7.25       7.15          Y
43241..................................      2.59       2.49          Y
43242..................................      4.83       4.73          Y
43243..................................      4.37       4.27          Y
43244..................................      4.50       4.40          Y
43245..................................      3.18       3.08          Y
43246..................................      3.66       3.56          Y
43247..................................      3.21       3.11          Y
43248..................................      3.01       2.91          Y
43249..................................      2.77       2.67          Y
43250..................................      3.07       2.97          Y
43251..................................      3.57       3.47          Y
43252..................................      3.06       2.96          Y
43253..................................      4.83       4.73          Y
43254..................................      4.97       4.87          Y
43255..................................      3.66       3.56          Y
43257..................................      4.25       4.15          Y
43259..................................      4.14       4.04          Y
43260..................................      5.95       5.70          N
43261..................................      6.25       6.00          N
43262..................................      6.60       6.35          N
43263..................................      6.60       6.35          N
43264..................................      6.73       6.48          N
43265..................................      8.03       7.78          N
43266..................................      4.17       3.92          N
43270..................................      4.26       4.01          N
43273..................................      2.24       2.24          N
43274..................................      8.58       8.33          N
43275..................................      6.96       6.71          N
43276..................................      8.94       8.69          N
43277..................................      7.00       6.75          N
43278..................................      8.02       7.77          N
43450..................................      1.38       1.13          N
43453..................................      1.51       1.26          N
44360..................................      2.59       2.49          Y
44361..................................      2.87       2.77          Y
44363..................................      3.49       3.39          Y
44364..................................      3.73       3.63          Y
44365..................................      3.31       3.21          Y
44366..................................      4.40       4.30          Y
44369..................................      4.51       4.41          Y
44370..................................      4.79       4.69          Y
44372..................................      4.40       4.30          Y
44373..................................      3.49       3.39          Y
44376..................................      5.25       5.15          Y
44377..................................      5.52       5.42          Y
44378..................................      7.12       7.02          Y
44379..................................      7.46       7.36          Y
44380..................................      0.97       0.87          Y
44381..................................      1.48       1.38          Y
44382..................................      1.27       1.17          Y
44384..................................      2.95       2.85          Y
44385..................................      1.30       1.20          Y
44386..................................      1.60       1.50          Y
44388..................................      2.82       2.72          Y
44388-53...............................      1.41       1.36          Y
44389..................................      3.12       3.02          Y
44390..................................      3.84       3.74          Y
44391..................................      4.22       4.12          Y
44392..................................      3.63       3.53          Y
44394..................................      4.13       4.03          Y
44401..................................      4.44       4.34          Y
44402..................................      4.80       4.70          Y
44403..................................      5.60       5.50          Y
44404..................................      3.12       3.02          Y
44405..................................      3.33       3.23          Y
44406..................................      4.20       4.10          Y
44407..................................      5.06       4.96          Y
44408..................................      4.24       4.14          Y
44500..................................      0.49       0.39          Y
45303..................................      1.50       1.40          Y
45305..................................      1.25       1.15          Y
45307..................................      1.70       1.60          Y
45308..................................      1.40       1.30          Y
45309..................................      1.50       1.40          Y
45315..................................      1.80       1.70          Y
45317..................................      2.00       1.90          Y
45320..................................      1.78       1.68          Y
45321..................................      1.75       1.65          Y
45327..................................      2.00       1.90          Y
45332..................................      1.86       1.76          Y
45333..................................      1.65       1.55          Y
45334..................................      2.10       2.00          Y
45335..................................      1.14       1.04          Y
45337..................................      2.20       2.10          Y
45338..................................      2.15       2.05          Y
45340..................................      1.35       1.25          Y
45341..................................      2.22       2.12          Y
45342..................................      3.08       2.98          Y
45346..................................      2.91       2.81          Y
45347..................................      2.82       2.72          Y
45349..................................      3.62       3.52          Y
45350..................................      1.78       1.68          Y
45378..................................      3.36       3.26          Y
45378-53...............................      1.68       1.63          Y
45379..................................      4.38       4.28          Y
45380..................................      3.66       3.56          Y
45381..................................      3.66       3.56          Y
45382..................................      4.76       4.66          Y
45384..................................      4.17       4.07          Y
45385..................................      4.67       4.57          Y
45386..................................      3.87       3.77          Y
45388..................................      4.98       4.88          Y
45389..................................      5.34       5.24          Y
45390..................................      6.14       6.04          Y
45391..................................      4.74       4.64          Y
45392..................................      5.60       5.50          Y
45393..................................      4.78       4.68          Y
45398..................................      4.30       4.20          Y
47000..................................      1.90       1.65          N
47382..................................     15.22      14.97          N
47383..................................      9.13       8.88          N
47532..................................      4.25       4.25          N
47533..................................      6.00       5.38          N
47534..................................      8.03       7.60          N
47535..................................      4.50       3.95          N
47536..................................      2.88       2.61          N
47538..................................      6.60       4.75          N
47539..................................      9.00       8.75          N
47540..................................     10.75       9.03          N
47541..................................      5.61       5.38          N
47542..................................      2.50       2.85          N
47543..................................      3.07       3.00          N
47544..................................      4.29       3.28          N
49405..................................      4.25       4.00          N
49406..................................      4.25       4.00          N
49407..................................      4.50       4.25          N
49411..................................      3.82       3.57          N
49418..................................      4.21       3.96          N
49440..................................      4.18       3.93          N
49441..................................      4.77       4.52          N
49442..................................      4.00       3.75          N
49446..................................      3.31       3.06          N
50200..................................      2.63       2.38          N
50382..................................      5.50       5.25          N
50384..................................      5.00       4.75          N
50385..................................      4.44       4.19          N
50386..................................      3.30       3.05          N
50387..................................      2.00       1.75          N
50430..................................      3.15       2.90          N
50432..................................      4.25       4.00          N
50433..................................      5.30       5.05          N
50434..................................      4.00       3.75          N
50592..................................      6.80       6.55          N
50593..................................      9.13       8.88          N
50606..................................      3.16       3.16          N
50693..................................      4.21       3.96          N
50694..................................      5.50       5.25          N
50695..................................      7.05       6.80          N
50705..................................      4.03       4.03          N
50706..................................      3.80       3.80          N
57155..................................      5.40       5.15          N
66720..................................      5.00       4.75          N
69300..................................      6.69       6.44          N
77371..................................      0.00       0.00          N
77600..................................      1.56       1.31          N
77605..................................      2.09       1.84          N
77610..................................      1.56       1.31          N
77615..................................      2.09       1.84          N
92920..................................     10.10       9.85          N
92921..................................      0.00       0.00          N
92924..................................     11.99      11.74          N
92925..................................      0.00       0.00          N
92928..................................     11.21      10.96          N
92929..................................      0.00       0.00          N
92933..................................     12.54      12.29          N

[[Page 46263]]

 
92934..................................      0.00       0.00          N
92937..................................     11.20      10.95          N
92938..................................      0.00       0.00          N
92941..................................     12.56      12.31          N
92943..................................     12.56      12.31          N
92944..................................      0.00       0.00          N
92953..................................      0.23       0.01          N
92960..................................      2.25       2.00          N
92961..................................      4.59       4.34          N
92973..................................      3.28       3.28          N
92974..................................      3.00       3.00          N
92975..................................      7.24       6.99          N
92978..................................      0.00       0.00          N
92979..................................      0.00       0.00          N
92986..................................     22.85      22.60          N
92987..................................     23.63      23.38          N
93312..................................      2.55       2.30          N
93313..................................      0.51       0.26          N
93314..................................      2.10       1.85          N
93315..................................      2.94       2.69          N
93316..................................      0.85       0.60          N
93317..................................      2.09       1.84          N
93318..................................      2.40       2.15          N
93451..................................      2.72       2.47          N
93452..................................      4.75       4.50          N
93453..................................      6.24       5.99          N
93454..................................      4.79       4.54          N
93455..................................      5.54       5.29          N
93456..................................      6.15       5.90          N
93457..................................      6.89       6.64          N
93458..................................      5.85       5.60          N
93459..................................      6.60       6.35          N
93460..................................      7.35       7.10          N
93461..................................      8.10       7.85          N
93462..................................      3.73       3.73          N
93463..................................      2.00       2.00          N
93464..................................      1.80       1.80          N
93505..................................      4.37       4.12          N
93530..................................      4.22       3.97          N
93561..................................      0.50       0.25          N
93562..................................      0.16       0.01          N
93563..................................      1.11       1.11          N
93564..................................      1.13       1.13          N
93565..................................      0.86       0.86          N
93566..................................      0.86       0.86          N
93567..................................      0.97       0.97          N
93568..................................      0.88       0.88          N
93571..................................      0.00       0.00          N
93572..................................      0.00       0.00          N
93582..................................     12.56      12.31          N
93583..................................     14.00      13.75          N
93609..................................      0.00       0.00          N
93613..................................      6.99       6.99          N
93615..................................      0.99       0.74          N
93616..................................      1.49       1.24          N
93618..................................      4.25       4.00          N
93619..................................      7.31       7.06          N
93620..................................     11.57      11.32          N
93621..................................      0.00       0.00          N
93622..................................      0.00       0.00          N
93624..................................      4.80       4.55          N
93640..................................      3.51       3.26          N
93641..................................      5.92       5.67          N
93642..................................      4.88       4.63          N
93644..................................      3.29       3.04          N
93650..................................     10.49      10.24          N
93653..................................     15.00      14.75          N
93654..................................     20.00      19.75          N
93655..................................      7.50       7.50          N
93656..................................     20.02      19.77          N
93657..................................      7.50       7.50          N
94011..................................      2.00       1.75          N
94012..................................      3.10       2.85          N
94013..................................      0.66       0.41          N
96440..................................      2.37       2.12          N
G0105..................................      3.36       3.26          Y
G0105-53...............................      1.68       1.63          Y
G0121..................................      3.36       3.26          Y
G0121-53...............................      1.68       1.63          Y
G0341..................................      6.98       6.98          N
------------------------------------------------------------------------

(38) Prolonged Evaluation and Management Services (CPT Codes 99354, 
99358, and 99359)
    We previously received RUC recommendations for face-to-face and 
non-face-to-face prolonged E/M services. In response to the CY 2016 PFS 
proposed rule, in which we sought comment about improving payment 
accuracy for cognitive services, commenters suggested that we consider 
making separate payment for CPT codes 99358 and 99359. As reflected in 
section II.E, we are proposing to make separate payment for these 
services.
    We are also proposing values for services in this family of codes 
based on the RUC-recommended values, including for CPT code 99354, 
which would increase the current work RVU to 2.33. Likewise, we are 
proposing to adopt the RUC-recommended work values of 2.10 for CPT code 
99358 and of 1.00 for CPT code 99359.
(39) Complex Chronic Care Management Services (CPT Codes 99487 and 
99489)
    We received RUC recommendations for CPT codes 99487 and 99489 
following the October 2012 RUC meeting. For CY 2017, we are proposing 
to change the procedure status for CPT codes 99487 and 99489 from B 
(bundled) to A (active), see II.E, and are proposing to adopt the RUC-
recommended values for work, 1.00 work RVUs for CPT code 99487 and 0.50 
work RVUs for CPT code 99489, as well as direct PE inputs consistent 
with the RUC recommendations.
(40) Prostate Biopsy, Any Method (HCPCS Code G0416)
    The College of American Pathologists and the American Society of 
Cytopathology formed an expert panel to make recommendations at the 
October 2015 RUC meeting to determine an appropriate work RVU for HCPCS 
code G0416, as they felt that the survey results were invalid. The 
panel made several arguments to the RUC in recommending for a higher 
work RVU under the RUC's ``compelling evidence'' standard. These 
arguments were: (1) That incorrect assumptions were made in previous 
valuations; (2) the value of HCPCS code G0416 remained constant while 
the code descriptors changed over the years; and (3) the ``anomalous 
relationship'' between HCPCS code G0416 and CPT code 88305 (Level IV--
Surgical pathology, gross and microscopic examination). The expert 
panel recommended a work RVU of 4.00 based on a crosswalk from CPT code 
38240 (Hematopoietic progenitor cell (HPC); allogeneic transplantation 
per donor). The RUC agreed.
    We believe HCPCS code G0416 should not be valued as a direct 
crosswalk from CPT code 38240. Instead we believe CPT code 88305 is the 
basis for HCPCS code G0416, and therefore, HCPCS code G0416 should be 
valued as such. To value HCPCS code G0416, we used the intra-service 
time ratio between HCPCS code G0416 and CPT code 88305 to arrive at a 
work RVU of 3.60. To further support this method, we note that the 
IWPUT for HCPCS code G0416 with a work RVU of 3.60 is the same as CPT 
code 88305. Using the RUC recommended RVU of 4.00 results in a higher 
IWPUT, and we do not believe there is a difference in work intensity 
between these codes. Therefore for CY 2017, we are proposing a work RVU 
of 3.60 for HCPCS code G0416.
(41) Behavioral Health Integration: Psychiatric Collaborative Care 
Model (HCPCS Codes GPPP1, GPPP2, and GPPP3) and General Behavioral 
Health Integration (HCPCS Code GPPPX)
    For CY 2017, we are proposing to establish and make separate 
Medicare payment using four new HCPCS G-codes, GPPP1 (Initial 
psychiatric collaborative care management, first 70 minutes in the 
first calendar month of behavioral health care manager activities, in 
consultation with a psychiatric consultant, and directed by the 
treating physician or other qualified health care professional), GPPP2 
(Subsequent psychiatric collaborative care management, first 60 minutes 
in a subsequent month of behavioral health

[[Page 46264]]

care manager activities, in consultation with a psychiatric consultant, 
and directed by the treating physician or other qualified health care 
professional), GPPP3 (Initial or subsequent psychiatric collaborative 
care management, each additional 30 minutes in a calendar month of 
behavioral health care manager activities, in consultation with a 
psychiatric consultant, and directed by the treating physician or other 
qualified health care professional), and GPPPX (Care management 
services for behavioral health conditions, at least 20 minutes of 
clinical staff time, directed by a physician or other qualified health 
care professional time, per calendar month) for collaborative care and 
care management for beneficiaries with behavioral health conditions, as 
detailed in section II.E of this proposed rule. To value HCPCS codes 
GPPP1, GPPP2, and GPPP3, we are proposing to base the portion of the 
work RVU that accounts for the work of the treating physician or other 
qualified health care professional on a direct crosswalk to the 
proposed work values for the complex CCM codes, CPT codes 99487 and 
99489. To value the portion of the work RVU that accounts for the 
psychiatric consultant, we are estimating ten minutes of psychiatric 
consultant time per patient per month and a value of 0.42 work RVUs, 
based on the per minute work RVUs for the highest volume codes 
typically billed by psychiatrists. Since the behavioral health care 
manager in the services described by HCPCS codes GPPP1, GPPP2, and 
GPPP3 should have academic with specialized training in behavioral 
health, we are proposing a new clinical labor type for the behavioral 
health care manager, L057B, at $0.57 per minute, based on the rates for 
genetic counselors in the direct PE input database. We are seeking 
comment on all aspects of these proposed valuations.
    To value HCPCS code GPPPX, we are proposing a work value based on a 
direct crosswalk from CPT code 99490 (Chronic care management 
services), a work value of 0.61 RVUs. We recognize that the services 
described by CPT code 99490 are distinct from those furnished under the 
CoCM and we believe that these alsovary based on different kinds of BHI 
care. We note that there are relatively few existing codes that 
describe these kinds of services over a calendar month. We also believe 
that the resources associated with 99490 may vary based on the ways 
different practitioners implement the service. Until we have more 
information about how these services are typically furnished, we 
believe valuation based on the minimum resources would be most 
appropriate. To account for the care manager minutes in the direct PE 
inputs for HCPCS code GPPPX, we are proposing to use clinical labor 
type L045C, which is the labor type for social workers/psychologists 
and has a rate of $0.45 per minute.
(42) Resource-Intensive Services (HCPCS Code GDDD1)
    As discussed in section II.E, we are proposing to establish payment 
for services furnished to patients with mobility-related disabilities, 
through a new add-on G-code, to be billable with office/outpatient E/M 
and TCM codes. Based on our analysis of the resources typically 
involved in furnishing office visits to patients with these needs 
(especially including the typical additional practitioner and staff 
time), we believe that the physician work and time for HCPCS code GDDD1 
is most accurately valued through a direct crosswalk from CPT code 
99212 (Level 2 office or other outpatient visit for the evaluation and 
management of an established patient). Therefore, we are proposing a 
work RVU of 0.48 and a physician time of 16 minutes for HCPCS code 
GDDD1. We are seeking comment on whether these work and time values 
accurately capture the additional physician work typically involved in 
furnishing services to patients with mobility impairments.
    We believe that a direct crosswalk to the clinical staff-time 
associated with CPT code 99212, which is 27 minutes of LN/LPN/MTA 
(L037D) accurately represents the additional clinical staff time 
required to furnish an outpatient office visit or TCM to a patient with 
a mobility-related disability. We are also proposing to include as 
direct practice expense inputs 27 minutes for a stretcher (EF018) and a 
high/low table (EF028), and 27 minutes for new equipment inputs 
associated with the following: A patient lift system, wheelchair 
accessible scale, and padded leg support positioning system. These 
items are included in the CY 2017 proposed direct PE input database. We 
are seeking comments on whether these inputs are appropriate, and 
whether any additional inputs are typically used in treating patients 
with mobility-impairments.
(43) Comprehensive Assessment and Care Planning for Patients With 
Cognitive Impairment (HCPCS Code GPPP6)
    For CY 2017, we are proposing to create and pay separately for new 
HCPCS code GPPP6 (Cognition and functional assessment using 
standardized instruments with development of recorded care plan for the 
patient with cognitive impairment, history face-to-face obtained from 
patient and/or caregiver, in office or other outpatient setting or home 
or domiciliary or rest home), see II.E for further discussion. Based on 
similarities between work intensity and time, we believe that the 
physician work and time for this code would be accurately valued by 
combining the work RVUs from CPT code 99204 (Level 4 office or other 
outpatient visit for the evaluation and management of a new patient) 
and half the work RVUs for HCPCS code G0181 (Physician supervision of a 
patient receiving Medicare-covered services furnished by a 
participating home health agency (patient not present) requiring 
complex and multidisciplinary care modalities involving regular 
physician development and/or revision of care plans, review of 
subsequent reports of patient status, review of laboratory and other 
studies, communication (including telephone calls) with other health 
care professionals involved in the patient's care, integration of new 
information into the medical treatment plan and/or adjustment of 
medical therapy, within a calendar month, 30 minutes or more). 
Therefore, we are proposing a work RVU of 3.30. For direct practice 
expense inputs we are proposing 70 total minutes of time for RN/LPN/MTA 
(L037D). We believe this is typical based on information from several 
specialty societies representing practitioners who typically furnish 
this service and report, it, when appropriate, using E/M codes. We are 
seeking comment on these valuation assumptions and would welcome 
additional information on the work and direct practice expense 
associated with furnishing this service.
(44) Comprehensive Assessment and Care Planning for Patients Requiring 
Chronic Care Management (HCPCS Code GPPP7)
    For CY 2017 we are proposing to make payment for the resource costs 
of comprehensive assessment and care planning for patients requiring 
CCM services through HCPCS code GPPP7 as an add-on code to be billed 
with the initiating visit for CCM for patients that require extensive 
assessment and care planning (see section II.E). In valuing this code, 
we believe that a crosswalk to half the work and time values of HCPCS 
code G0181 (Physician supervision of a patient receiving Medicare-
covered services provided by a participating home health agency 
(patient not present) requiring complex and

[[Page 46265]]

multidisciplinary care modalities involving regular physician 
development and/or revision of care plans, review of subsequent reports 
of patient status, review of laboratory and other studies, 
communication (including telephone calls) with other health care 
professionals involved in the patient's care, integration of new 
information into the medical treatment plan and/or adjustment of 
medical therapy, within a calendar month, 30 minutes or more) 
accurately accounts for the time and intensity of the work associated 
with furnishing this service over and above the work accounted for as 
part of the separately billed initiating visit. Therefore, we are 
proposing a work RVU of 0.87 and 29 minutes of physician time. We are 
also proposing 36 minutes for a RN/LPN/MTA (L037D) as the only direct 
PE input for this service.
(45) Telehealth Consultation for a Patient Requiring Critical Care 
Services (HCPCS Codes GTTT1 and GTTT2)
    As discussed in section II.C, we are proposing use of HCPCS G-
codes, GTTT1 (Telehealth consultation, critical care, physicians 
typically spend 60 minutes communicating with the patient via 
telehealth (initial) and GTTT2 (Telehealth consultation, critical care, 
physicians typically spend 50 minutes communicating with the patient 
via telehealth (subsequent)), to report telehealth consultations for a 
patient requiring critical care services. We note that due to limited 
coding granularity for high-intensity cognitive services, in the PFS, 
we do not believe there is an intuitive crosswalk code for ideal 
estimation of the work and time values for GTTT1. In general, we 
believe that the overall work for GTTT1 is not as much as 99291 
(Critical care, evaluation and management of the critically ill or 
critically injured patient; first 30-74 minutes) but that the service 
involves more work than G0427 (Telehealth consultation, emergency 
department or initial inpatient, typically 70 minutes or more 
communicating with the patient via telehealth). We believe that GTTT1 
is most accurately valued by a crosswalk to the work RVU and physician 
intra-service time of 38240 (Hematopoietic progenitor cell (HPC); 
allogeneic transplantation per donor) can therefore serve as an 
appropriate crosswalk. Therefore we are proposing a work RVU of 4.0 and 
are seeking comment on the accuracy of these assumptions. We do not 
believe that direct PE inputs would typically be involved with 
furnishing this service from the distant site. For GTTT2 we are 
proposing a work RVU of 3.86 based on a crosswalk from G0427. We 
believe that G0427 has similar overall work intensity to GTTT2 and has 
a similar intraservice time. We also believe that no direct PE inputs 
would typically be associated with furnishing this service from the 
distant site.

              Table 23--Proposed CY 2017 Work RVUs for New, Revised and Potentially Misvalued Codes
----------------------------------------------------------------------------------------------------------------
                                                                                                   CMS time
      HCPCS              Descriptor        Current work RVU    RUC work RVU    CMS work RVU       refinement
----------------------------------------------------------------------------------------------------------------
00740............  Anesthesia for upper   0.00..............            0.00            0.00  No.
                    gastrointestinal
                    endoscopic
                    procedures,
                    endoscope introduced
                    proximal to duodenum.
00810............  Anesthesia for lower   0.00..............            0.00            0.00  No.
                    intestinal
                    endoscopic
                    procedures,
                    endoscope introduced
                    distal to duodenum.
10035............  Placement of soft      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      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.
11730............  Avulsion of nail       1.10..............            1.10            1.05  No.
                    plate, partial or
                    complete, simple;
                    single.
11732............  Avulsion of nail       0.44..............            0.44            0.38  Yes.
                    plate, partial or
                    complete, simple;
                    each additional nail
                    plate.
20245............  Biopsy, bone, open;    8.95..............            6.50            6.00  No.
                    deep (e.g., humerus,
                    ischium, femur).
20550............  Injection(s); single   0.75..............            0.75            0.75  No.
                    tendon sheath, or
                    ligament,
                    aponeurosis (e.g.,
                    plantar ``fascia'').
20552............  Injection(s); single   0.66..............            0.66            0.66  No.
                    or multiple trigger
                    point(s), 1 or 2
                    muscle(s).
20553............  Injection(s); single   0.75..............            0.75            0.75  No.
                    or multiple trigger
                    point(s), 3 or more
                    muscles.
228X1............  Insertion of           NEW...............           15.00           13.50  No.
                    interlaminar/
                    interspinous process
                    stabilization/
                    distraction device,
                    without fusion,
                    including image
                    guidance when
                    performed, with open
                    decompression,
                    lumbar; single level.
228X2............  Insertion of           NEW...............            4.00            4.00  No.
                    interlaminar/
                    interspinous process
                    stabilization/
                    distraction device,
                    without fusion,
                    including image
                    guidance when
                    performed, with open
                    decompression,
                    lumbar; second level.
228X4............  Insertion of           NEW...............            7.39            7.03  No.
                    interlaminar/
                    interspinous process
                    stabilization/
                    distraction device,
                    without open
                    decompression or
                    fusion, including
                    image guidance when
                    performed, lumbar;
                    single level.
228X5............  Insertion of           NEW...............            2.34            2.34  No.
                    interlaminar/
                    interspinous process
                    stabilization/
                    distraction device,
                    without open
                    decompression or
                    fusion, including
                    image guidance when
                    performed, lumbar;
                    second level.

[[Page 46266]]

 
22X81............  Insertion of           NEW...............            4.88            4.25  No.
                    interbody
                    biomechanical
                    device(s) (e.g.,
                    synthetic cage,
                    mesh) with integral
                    anterior
                    instrumentation for
                    device anchoring
                    (e.g., screws,
                    flanges) when
                    performed to
                    intervertebral disc
                    space in conjunction
                    with interbody
                    arthrodesis, each
                    interspace.
22X82............  Insertion of           NEW...............            5.50            5.50  No.
                    intervertebral
                    biomechanical
                    device(s) (e.g.,
                    synthetic cage,
                    mesh) with integral
                    anterior
                    instrumentation for
                    device anchoring
                    (e.g., screws,
                    flanges) when
                    performed to
                    vertebral
                    corpectomy(ies)
                    (vertebral body
                    resection, partial
                    or complete) defect,
                    in conjunction with
                    interbody
                    arthrodesis, each
                    contiguous defect.
22X83............  Insertion of           NEW...............            6.00            5.50  No.
                    intervertebral
                    biomechanical
                    device(s) (e.g.,
                    synthetic cage,
                    mesh,
                    methylmethacrylate)
                    to intervertebral
                    disc space or
                    vertebral body
                    defect without
                    interbody
                    arthrodesis, each
                    contiguous defect.
26356............  Repair or              9.56..............  ..............            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              10.53.............  ..............           11.00  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              12.13.............  ..............           12.60  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.
271X1............  Closed treatment of    NEW...............            5.50            1.53  Yes.
                    posterior pelvic
                    ring fracture(s),
                    dislocation(s),
                    diastasis or
                    subluxation of the
                    ilium, sacroiliac
                    joint, and/or
                    sacrum, with or
                    without anterior
                    pelvic ring
                    fracture(s) and/or
                    dislocation(s) of
                    the pubic symphysis
                    and/or superior/
                    inferior rami,
                    unilateral or
                    bilateral; without
                    manipulation.
271X2............  Closed treatment of    NEW...............            9.00            4.75  Yes.
                    posterior pelvic
                    ring fracture(s),
                    dislocation(s),
                    diastasis or
                    subluxation of the
                    ilium, sacroiliac
                    joint, and/or
                    sacrum, with or
                    without anterior
                    pelvic ring
                    fracture(s) and/or
                    dislocation(s) of
                    the pubic symphysis
                    and/or superior/
                    inferior rami,
                    unilateral or
                    bilateral; with
                    manipulation,
                    requiring more than
                    local anesthesia
                    (i.e., general
                    anesthesia, moderate
                    sedation, spinal/
                    epidural).
28289............  Hallux rigidus         8.31..............            6.90            6.90  No.
                    correction with
                    cheilectomy,
                    debridement and
                    capsular release of
                    the first
                    metatarsophalangeal
                    joint.
28292............  Correction, hallux     9.05..............            7.44            7.44  No.
                    valgus (bunion),
                    with or without
                    sesamoidectomy;
                    Keller, McBride, or
                    Mayo type procedure.
28296............  Correction, hallux     8.35..............            8.25            8.25  No.
                    valgus (bunion),
                    with or without
                    sesamoidectomy; with
                    metatarsal osteotomy
                    (e.g., Mitchell,
                    Chevron, or
                    concentric type
                    procedures).
28297............  Correction, hallux     9.43..............            9.29            9.29  No.
                    valgus (bunion),
                    with or without
                    sesamoidectomy;
                    Lapidus-type
                    procedure.
28298............  Correction, hallux     8.13..............            7.75            7.75  No.
                    valgus (bunion),
                    with or without
                    sesamoidectomy; by
                    phalanx osteotomy.
28299............  Correction, hallux     11.57.............            9.29            9.29  No.
                    valgus (bunion),
                    with or without
                    sesamoidectomy; by
                    double osteotomy.
282X1............  Hallux rigidus         NEW...............            8.01            7.81  No.
                    correction with
                    cheilectomy,
                    debridement and
                    capsular release of
                    the first
                    metatarsophalangeal
                    joint; with implant.
282X2............  Correction, hallux     NEW...............            8.57            8.25  No.
                    valgus
                    (bunionectomy), with
                    sesamoidectomy, when
                    performed; with
                    proximal metatarsal
                    osteotomy, any
                    method.
31500............  Intubation,            2.33..............            3.00            2.66  No.
                    endotracheal,
                    emergency procedure.
31575............  Laryngoscopy,          1.10..............            1.00            0.94  No.
                    flexible fiberoptic;
                    diagnostic.
31576............  Laryngoscopy,          1.97..............            1.95            1.89  No.
                    flexible fiberoptic;
                    with biopsy.
31577............  Laryngoscopy,          2.47..............            2.25            2.19  No.
                    flexible fiberoptic;
                    with removal of
                    foreign body.
31578............  Laryngoscopy,          2.84..............            2.49            2.43  No.
                    flexible fiberoptic;
                    with removal of
                    lesion.
31579............  Laryngoscopy,          2.26..............            1.94            1.88  No.
                    flexible or rigid
                    fiberoptic, with
                    stroboscopy.
317X1............  Laryngoscopy,          NEW...............            3.07            3.01  No.
                    flexible; with
                    ablation or
                    destruction of
                    lesion(s) with
                    laser, unilateral.

[[Page 46267]]

 
317X2............  Laryngoscopy,          NEW...............            2.49            2.43  No.
                    flexible; with
                    therapeutic
                    injection(s) (e.g.,
                    chemodenervation
                    agent or
                    corticosteroid,
                    injected
                    percutaneous,
                    transoral, or via
                    endoscope channel),
                    unilateral.
317X3............  Laryngoscopy,          NEW...............            2.49            2.43  No.
                    flexible; with
                    injection(s) for
                    augmentation (e.g.,
                    percutaneous,
                    transoral),
                    unilateral.
31580............  Laryngoplasty; for     14.66.............           14.60           14.60  No.
                    laryngeal web, 2-
                    stage, with keel
                    insertion and
                    removal.
31584............  Laryngoplasty; with    20.47.............           20.00           17.58  No.
                    open reduction of
                    fracture.
31587............  Laryngoplasty,         15.27.............           15.27           15.27  No.
                    cricoid split.
315X1............  Laryngoplasty; for     NEW...............           21.50           21.50  No.
                    laryngeal stenosis,
                    with graft, without
                    indwelling stent
                    placement, younger
                    than 12 years of age.
315X2............  Laryngoplasty; for     NEW...............           20.50           20.50  No.
                    laryngeal stenosis,
                    with graft, without
                    indwelling stent
                    placement, age 12
                    years or older.
315X3............  Laryngoplasty; for     NEW...............           22.00           22.00  No.
                    laryngeal stenosis,
                    with graft, with
                    indwelling stent
                    placement, younger
                    than 12 years of age.
315X4............  Laryngoplasty; for     NEW...............           22.00           22.00  No.
                    laryngeal stenosis,
                    with graft, with
                    indwelling stent
                    placement, age 12
                    years or older.
315X5............  Laryngoplasty,         NEW...............           15.60           13.56  No.
                    medialization;
                    unilateral.
315X6............  Cricotracheal          NEW...............           25.00           25.00  No.
                    resection.
333X3............  Percutaneous           NEW...............           14.00           13.00  No.
                    transcatheter
                    closure of the left
                    atrial appendage
                    with endocardial
                    implant, including
                    fluoroscopy,
                    transseptal
                    puncture, catheter
                    placement(s), left
                    atrial angiography,
                    left atrial
                    appendage
                    angiography, when
                    performed, and
                    radiological
                    supervision and
                    interpretation.
334X1............  Valvuloplasty, aortic  NEW...............           35.00           35.00  No.
                    valve, open, with
                    cardiopulmonary
                    bypass; simple
                    (i.e., valvotomy,
                    debridement,
                    debulking and/or
                    simple commissural
                    resuspension).
334X2............  Valvuloplasty, aortic  NEW...............           44.00           41.50  No.
                    valve, open, with
                    cardiopulmonary
                    bypass; complex
                    (e.g., leaflet
                    extension, leaflet
                    resection, leaflet
                    reconstruction or
                    annuloplasty).
364X1............  Partial exchange       NEW...............            2.00            2.00  No.
                    transfusion, blood,
                    plasma or
                    crystalloid
                    necessitating the
                    skill of a physician
                    or other qualified
                    health care
                    professional,
                    newborn.
36440............  Push transfusion,      1.03..............            1.03            1.03  No.
                    blood, 2 years or
                    younger.
36450............  Exchange transfusion,  2.23..............            3.50            3.50  No.
                    blood; newborn.
36455............  Exchange transfusion,  2.43..............            2.43            2.43  No.
                    blood; other than
                    newborn.
36X41............  Endovenous ablation    NEW...............            3.50            3.50  No.
                    therapy of
                    incompetent vein,
                    extremity, inclusive
                    of all imaging
                    guidance and
                    monitoring,
                    percutaneous,
                    mechanochemical;
                    first vein treated.
364X2............  Endovenous ablation    NEW...............            2.25            1.75  No.
                    therapy of
                    incompetent vein,
                    extremity, inclusive
                    of all imaging
                    guidance and
                    monitoring,
                    percutaneous,
                    mechanochemical;
                    subsequent vein(s)
                    treated in a single
                    extremity, each
                    through separate
                    access sites.
369X1............  Introduction of        NEW...............            3.36            2.82  No.
                    needle(s) and/or
                    catheter(s),
                    dialysis circuit,
                    with diagnostic
                    angiography of the
                    dialysis circuit,
                    including all direct
                    puncture(s) and
                    catheter
                    placement(s),
                    injection(s) of
                    contrast, all
                    necessary imaging
                    from the arterial
                    anastomosis and
                    adjacent artery
                    through entire
                    venous outflow
                    including the
                    inferior or superior
                    vena cava,
                    fluoroscopic
                    guidance, radiologic
                    supervision and
                    interpretation and
                    image documentation
                    and report.
369X2............  Introduction of        NEW...............            4.83            4.24  No.
                    needle(s) and/or
                    catheter(s),
                    dialysis circuit,
                    with diagnostic
                    angiography of the
                    dialysis circuit,
                    including all direct
                    puncture(s) and
                    catheter
                    placement(s),
                    injection(s) of
                    contrast, all
                    necessary imaging
                    from the arterial
                    anastomosis and
                    adjacent artery
                    through entire
                    venous outflow
                    including the
                    inferior or superior
                    vena cava,
                    fluoroscopic
                    guidance, radiologic
                    supervision and
                    interpretation and
                    image documentation
                    and report; with
                    transluminal balloon
                    angioplasty,
                    peripheral dialysis
                    segment, including
                    all imaging and
                    radiological
                    supervision and
                    interpretation
                    necessary to perform
                    the angioplasty.

[[Page 46268]]

 
369X3............  Introduction of        NEW...............            6.39            5.85  No.
                    needle(s) and/or
                    catheter(s),
                    dialysis circuit,
                    with diagnostic
                    angiography of the
                    dialysis circuit,
                    including all direct
                    puncture(s) and
                    catheter
                    placement(s),
                    injection(s) of
                    contrast, all
                    necessary imaging
                    from the arterial
                    anastomosis and
                    adjacent artery
                    through entire
                    venous outflow
                    including the
                    inferior or superior
                    vena cava,
                    fluoroscopic
                    guidance, radiologic
                    supervision and
                    interpretation and
                    image documentation
                    and report; with
                    transcatheter
                    placement of
                    intravascular
                    stent(s) peripheral
                    dialysis segment,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation
                    necessary to perform
                    the stenting, and
                    all angioplasty
                    within the
                    peripheral dialysis
                    segment.
369X4............  Percutaneous           NEW...............            7.50            6.73  No.
                    transluminal
                    mechanical
                    thrombectomy and/or
                    infusion for
                    thrombolysis,
                    dialysis circuit,
                    any method,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation,
                    diagnostic
                    angiography,
                    fluoroscopic
                    guidance, catheter
                    placement(s), and
                    intraprocedural
                    pharmacological
                    thrombolytic
                    injection(s).
369X5............  Percutaneous           NEW...............            9.00            8.46  No.
                    transluminal
                    mechanical
                    thrombectomy and/or
                    infusion for
                    thrombolysis,
                    dialysis circuit,
                    any method,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation,
                    diagnostic
                    angiography,
                    fluoroscopic
                    guidance, catheter
                    placement(s), and
                    intraprocedural
                    pharmacological
                    thrombolytic
                    injection(s); with
                    transluminal balloon
                    angioplasty,
                    peripheral dialysis
                    segment, including
                    all imaging and
                    radiological
                    supervision and
                    interpretation
                    necessary to perform
                    the angioplasty.
369X6............  Percutaneous           NEW...............           10.42            9.88  No.
                    transluminal
                    mechanical
                    thrombectomy and/or
                    infusion for
                    thrombolysis,
                    dialysis circuit,
                    any method,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation,
                    diagnostic
                    angiography,
                    fluoroscopic
                    guidance, catheter
                    placement(s), and
                    intraprocedural
                    pharmacological
                    thrombolytic
                    injection(s); with
                    transcatheter
                    placement of an
                    intravascular
                    stent(s), peripheral
                    dialysis segment,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation to
                    perform the stenting
                    and all angioplasty
                    within the
                    peripheral dialysis
                    circuit.
369X7............  Transluminal balloon   NEW...............            3.00            2.48  No.
                    angioplasty, central
                    dialysis segment,
                    performed through
                    dialysis circuit,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation
                    required to perform
                    the angioplasty.
369X8............  Transcatheter          NEW...............            4.25            3.73  No.
                    placement of an
                    intravascular
                    stent(s), central
                    dialysis segment,
                    performed through
                    dialysis circuit,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation
                    required to perform
                    the stenting, and
                    all angioplasty in
                    the central dialysis
                    segment.
369X9............  Dialysis circuit       NEW...............            4.12            3.48  No.
                    permanent vascular
                    embolization or
                    occlusion (including
                    main circuit or any
                    accessory veins),
                    endovascular,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation
                    necessary to
                    complete the
                    intervention.
372X1............  Transluminal balloon   NEW...............            7.00            7.00  No.
                    angioplasty (except
                    lower extremity
                    artery(s) for
                    occlusive disease,
                    intracranial,
                    coronary, pulmonary,
                    or dialysis
                    circuit), open or
                    percutaneous,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation
                    necessary to perform
                    the angioplasty
                    within the same
                    artery; initial
                    artery.
372X2............  Transluminal balloon   NEW...............            3.50            3.50  No.
                    angioplasty (except
                    lower extremity
                    artery(s) for
                    occlusive disease,
                    intracranial,
                    coronary, pulmonary,
                    or dialysis
                    circuit), open or
                    percutaneous,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation
                    necessary to perform
                    the angioplasty
                    within the same
                    artery; each
                    additional artery.
372X3............  Transluminal balloon   NEW...............            6.00            6.00  No.
                    angioplasty (except
                    dialysis circuit),
                    open or
                    percutaneous,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation
                    necessary to perform
                    the angioplasty
                    within the same
                    vein; initial vein.

[[Page 46269]]

 
372X4............  Transluminal balloon   NEW...............            2.97            2.97  No.
                    angioplasty (except
                    dialysis circuit),
                    open or
                    percutaneous,
                    including all
                    imaging and
                    radiological
                    supervision and
                    interpretation
                    necessary to perform
                    the angioplasty
                    within the same
                    vein; each
                    additional vein.
41530............  Submucosal ablation    3.50..............  ..............            3.50  No.
                    of the tongue base,
                    radiofrequency, 1 or
                    more sites, per
                    session.
43210............  Esophagogastroduodeno  7.75..............  ..............            7.75  No.
                    scopy, flexible,
                    transoral; with
                    esophagogastric
                    fundoplasty, partial
                    or complete,
                    includes
                    duodenoscopy when
                    performed.
432X1............  Laparoscopy,           NEW...............           10.13            9.03  No.
                    surgical, esophageal
                    sphincter
                    augmentation
                    procedure, placement
                    of sphincter
                    augmentation device
                    (i.e., magnetic
                    band), including
                    cruroplasty when
                    performed.
432X2............  Removal of esophageal  NEW...............           10.47            9.37  No.
                    sphincter
                    augmentation device.
47531............  Injection procedure    1.80..............            1.30            1.30  No.
                    for cholangiography,
                    percutaneous,
                    complete diagnostic
                    procedure including
                    imaging guidance
                    (e.g., ultrasound
                    and/or fluoroscopy)
                    and all associated
                    radiological
                    supervision and
                    interpretation;
                    existing access.
47532............  Injection procedure    4.25..............            4.32            4.25  No.
                    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 biliary   6.00..............            5.45            5.38  No.
                    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 biliary   8.03..............            7.67            7.60  No.
                    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............  Conversion of          4.50..............            4.02            3.95  No.
                    external biliary
                    drainage catheter to
                    internal-external
                    biliary drainage
                    catheter,
                    percutaneous,
                    including diagnostic
                    cholangiography when
                    performed, imaging
                    guidance (e.g.,
                    fluoroscopy), and
                    all associated
                    radiological
                    supervision and
                    interpretation.
47536............  Exchange of biliary    2.88..............            2.68            2.61  No.
                    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     1.83..............            1.84            1.84  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 stent(s)  6.60..............            4.82            4.75  No.
                    into a bile duct,
                    percutaneous,
                    including diagnostic
                    cholangiography,
                    imaging guidance
                    (e.g., fluoroscopy
                    and/or ultrasound),
                    balloon dilation,
                    catheter exchange(s)
                    and catheter
                    removal(s) when
                    performed, and all
                    associated
                    radiological
                    supervision and
                    interpretation, each
                    stent; existing
                    access.
47539............  Placement of stent(s)  9.00..............            8.82            8.75  No.
                    into a bile duct,
                    percutaneous,
                    including diagnostic
                    cholangiography,
                    imaging guidance
                    (e.g., fluoroscopy
                    and/or ultrasound),
                    balloon dilation,
                    catheter exchange(s)
                    and catheter
                    removal(s) when
                    performed, and all
                    associated
                    radiological
                    supervision and
                    interpretation, each
                    stent; new access,
                    without placement of
                    separate biliary
                    drainage catheter.

[[Page 46270]]

 
47540............  Placement of stent(s)  10.75.............            9.10            9.03  No.
                    into a bile duct,
                    percutaneous,
                    including diagnostic
                    cholangiography,
                    imaging guidance
                    (e.g., fluoroscopy
                    and/or ultrasound),
                    balloon dilation,
                    catheter exchange(s)
                    and catheter
                    removal(s) 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 access    5.61..............            6.82            5.38  No.
                    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 of    2.50..............            2.85            2.85  No.
                    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            3.07..............            3.00            3.00  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/    4.29..............            3.28            3.28  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.
49185............  Sclerotherapy of a     2.35..............  ..............            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.
50606............  Endoluminal biopsy of  3.16..............  ..............            3.16  No.
                    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 embolization  4.03..............  ..............            4.03  No.
                    or occlusion,
                    including imaging
                    guidance (e.g.,
                    ultrasound and/or
                    fluoroscopy) and all
                    associated
                    radiological
                    supervision and
                    interpretation.
50706............  Balloon dilation,      3.80..............  ..............            3.80  No.
                    ureteral stricture,
                    including imaging
                    guidance (e.g.,
                    ultrasound and/or
                    fluoroscopy) and all
                    associated
                    radiological
                    supervision and
                    interpretation.
51700............  Bladder irrigation,    0.88..............            0.60            0.60  No.
                    simple, lavage and/
                    or instillation.
51701............  Insertion of non-      0.50..............            0.50            0.50  No.
                    indwelling bladder
                    catheter (e.g.,
                    straight
                    catheterization for
                    residual urine).
51702............  Insertion of           0.50..............            0.50            0.50  No.
                    temporary indwelling
                    bladder catheter;
                    simple (e.g., Foley).
51703............  Insertion of           1.47..............            1.47            1.47  No.
                    temporary indwelling
                    bladder catheter;
                    complicated (e.g.,
                    altered anatomy,
                    fractured catheter/
                    balloon).
51720............  Bladder instillation   1.50..............            0.87            0.87  No.
                    of anticarcinogenic
                    agent (including
                    retention time).
51784............  Electromyography       1.53..............            0.75            0.75  No.
                    studies (EMG) of
                    anal or urethral
                    sphincter, other
                    than needle, any
                    technique.
52000............  Cystourethroscopy      2.23..............            1.75            1.53  No.
                    (separate procedure).
55700............  Biopsy, prostate;      2.58..............            2.50            2.06  No.
                    needle or punch,
                    single or multiple,
                    any approach.
55866............  Laparoscopy, surgical  21.36.............  ..............           21.36  No.
                    prostatectomy,
                    retropubic radical,
                    including nerve
                    sparing, includes
                    robotic assistance,
                    when performed.
58555............  Hysteroscopy,          3.33..............            3.07            2.65  No.
                    diagnostic (separate
                    procedure).
58558............  Hysteroscopy,          4.74..............            4.37            4.17  No.
                    surgical; with
                    sampling (biopsy) of
                    endometrium and/or
                    polypectomy, with or
                    without D & C.
58559............  Hysteroscopy,          6.16..............            5.54            5.20  No.
                    surgical; with lysis
                    of intrauterine
                    adhesions (any
                    method).
58560............  Hysteroscopy,          6.99..............            6.15            5.75  No.
                    surgical; with
                    division or
                    resection of
                    intrauterine septum
                    (any method).
58561............  Hysteroscopy,          9.99..............            7.00            6.60  No.
                    surgical; with
                    removal of
                    leiomyomata.

[[Page 46271]]

 
58562............  Hysteroscopy,          5.20..............            4.17            4.00  No.
                    surgical; with
                    removal of impacted
                    foreign body.
58563............  Hysteroscopy,          6.16..............            4.62            4.47  No.
                    surgical; with
                    endometrial ablation
                    (e.g., endometrial
                    resection,
                    electrosurgical
                    ablation,
                    thermoablation).
585X1............  Laparoscopy,           NEW...............           14.08           14.08  No.
                    surgical, ablation
                    of uterine
                    fibroid(s) including
                    intraoperative
                    ultrasound guidance
                    and monitoring,
                    radiofrequency.
61640............  Balloon dilatation of  N.................               N               N  No.
                    intracranial
                    vasospasm,
                    percutaneous;
                    initial vessel.
61641............  Balloon dilatation of  N.................               N               N  No.
                    intracranial
                    vasospasm,
                    percutaneous; each
                    additional vessel in
                    same vascular family.
61642............  Balloon dilatation of  N.................               N               N  No.
                    intracranial
                    vasospasm,
                    percutaneous; each
                    additional vessel in
                    different vascular
                    family.
61645............  Percutaneous arterial  15.00.............  ..............           15.00  No.
                    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           10.00.............  ..............           10.00  No.
                    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           4.25..............  ..............            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.
623X5............  Injection(s), of       NEW...............            1.80            1.80  No.
                    diagnostic or
                    therapeutic
                    substance(s) (e.g.,
                    anesthetic,
                    antispasmodic,
                    opioid, steroid,
                    other solution), not
                    including neurolytic
                    substances,
                    including needle or
                    catheter placement,
                    interlaminar
                    epidural or
                    subarachnoid,
                    cervical or
                    thoracic; without
                    imaging guidance.
623X6............  Injection(s), of       NEW...............            1.95            1.95  No.
                    diagnostic or
                    therapeutic
                    substance(s) (e.g.,
                    anesthetic,
                    antispasmodic,
                    opioid, steroid,
                    other solution), not
                    including neurolytic
                    substances,
                    including needle or
                    catheter placement,
                    interlaminar
                    epidural or
                    subarachnoid,
                    cervical or
                    thoracic; with
                    imaging guidance
                    (i.e., fluoroscopy
                    or CT).
623X7............  Injection(s), of       NEW...............            1.55            1.55  No.
                    diagnostic or
                    therapeutic
                    substance(s) (e.g.,
                    anesthetic,
                    antispasmodic,
                    opioid, steroid,
                    other solution), not
                    including neurolytic
                    substances,
                    including needle or
                    catheter placement,
                    interlaminar
                    epidural or
                    subarachnoid, lumbar
                    or sacral (caudal);
                    without imaging
                    guidance.
623X8............  Injection(s), of       NEW...............            1.80            1.80  No.
                    diagnostic or
                    therapeutic
                    substance(s) (e.g.,
                    anesthetic,
                    antispasmodic,
                    opioid, steroid,
                    other solution), not
                    including neurolytic
                    substances,
                    including needle or
                    catheter placement,
                    interlaminar
                    epidural or
                    subarachnoid, lumbar
                    or sacral (caudal);
                    with imaging
                    guidance (ie,
                    fluoroscopy or CT).
623X9............  Injection(s),          NEW...............            1.89            1.89  No.
                    including indwelling
                    catheter placement,
                    continuous infusion
                    or intermittent
                    bolus, of diagnostic
                    or therapeutic
                    substance(s) (e.g.,
                    anesthetic,
                    antispasmodic,
                    opioid, steroid,
                    other solution), not
                    including neurolytic
                    substances,
                    interlaminar
                    epidural or
                    subarachnoid,
                    cervical or
                    thoracic; without
                    imaging guidance.
62X10............  Injection(s),          NEW...............            2.20            2.20  No.
                    including indwelling
                    catheter placement,
                    continuous infusion
                    or intermittent
                    bolus, of diagnostic
                    or therapeutic
                    substance(s) (e.g.,
                    anesthetic,
                    antispasmodic,
                    opioid, steroid,
                    other solution), not
                    including neurolytic
                    substances,
                    interlaminar
                    epidural or
                    subarachnoid,
                    cervical or
                    thoracic; with
                    imaging guidance
                    (ie, fluoroscopy or
                    CT).

[[Page 46272]]

 
62X11............  Injection(s),          NEW...............            1.78            1.78  No.
                    including indwelling
                    catheter placement,
                    continuous infusion
                    or intermittent
                    bolus, of diagnostic
                    or therapeutic
                    substance(s) (e.g.,
                    anesthetic,
                    antispasmodic,
                    opioid, steroid,
                    other solution), not
                    including neurolytic
                    substances,
                    interlaminar
                    epidural or
                    subarachnoid, lumbar
                    or sacral (caudal);
                    without imaging
                    guidance.
62X12............  Injection(s),          NEW...............            1.90            1.90  No.
                    including indwelling
                    catheter placement,
                    continuous infusion
                    or intermittent
                    bolus, of diagnostic
                    or therapeutic
                    substance(s) (e.g.,
                    anesthetic,
                    antispasmodic,
                    opioid, steroid,
                    other solution), not
                    including neurolytic
                    substances,
                    interlaminar
                    epidural or
                    subarachnoid, lumbar
                    or sacral (caudal);
                    with imaging
                    guidance (ie,
                    fluoroscopy or CT).
630X1............  Endoscopic             NEW...............           10.47            9.09  No.
                    decompression of
                    spinal cord, nerve
                    root(s), including
                    laminotomy, partial
                    facetectomy,
                    foraminotomy,
                    discectomy and/or
                    excision of
                    herniated
                    intervertebral disc;
                    1 interspace, lumbar.
64461............  Paravertebral block    1.75..............  ..............            1.75  No.
                    (PVB) (paraspinous
                    block), thoracic;
                    single injection
                    site (includes
                    imaging guidance,
                    when performed).
64462............  Paravertebral block    1.10..............  ..............            1.10  No.
                    (PVB) (paraspinous
                    block), thoracic;
                    second and any
                    additional injection
                    site(s) (includes
                    imaging guidance,
                    when performed).
64463............  Paravertebral block    1.81..............  ..............            1.81  No.
                    (PVB) (paraspinous
                    block), thoracic;
                    continuous infusion
                    by catheter
                    (includes imaging
                    guidance, when
                    performed).
64553............  Percutaneous           2.36..............  ..............            2.36  Yes.
                    implantation of
                    neurostimulator
                    electrode array;
                    cranial nerve.
64555............  Percutaneous           2.32..............  ..............            2.32  Yes.
                    implantation of
                    neurostimulator
                    electrode array;
                    peripheral nerve
                    (excludes sacral
                    nerve).
64566............  Posterior tibial       0.60..............  ..............            0.60  No.
                    neurostimulation,
                    percutaneous needle
                    electrode, single
                    treatment, includes
                    programming.
65778............  Placement of amniotic  1.00..............  ..............            1.00  No.
                    membrane on the
                    ocular surface;
                    without sutures.
65779............  Placement of amniotic  2.50..............  ..............            2.50  No.
                    membrane on the
                    ocular surface;
                    single layer,
                    sutured.
65780............  Ocular surface         7.81..............  ..............            7.81  No.
                    reconstruction;
                    amniotic membrane
                    transplantation,
                    multiple layers.
65855............  Trabeculoplasty by     2.66..............  ..............            2.77  No.
                    laser surgery.
66170............  Fistulization of       11.27.............  ..............           11.27  No.
                    sclera for glaucoma;
                    trabeculectomy ab
                    externo in absence
                    of previous surgery.
66172............  Fistulization of       12.57.............  ..............           12.57  No.
                    sclera for glaucoma;
                    trabeculectomy ab
                    externo with
                    scarring from
                    previous ocular
                    surgery or trauma
                    (includes injection
                    of antifibrotic
                    agents).
67101............  Repair of retinal      8.80..............            3.50            3.50  No.
                    detachment, 1 or
                    more sessions;
                    cryotherapy or
                    diathermy, including
                    drainage of
                    subretinal fluid,
                    when performed.
67105............  Repair of retinal      8.53..............            3.84            3.39  No.
                    detachment, 1 or
                    more sessions;
                    photocoagulation,
                    including drainage
                    of subretinal fluid,
                    when performed.
67107............  Repair of retinal      14.06.............  ..............           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      15.19.............  ..............           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      8.31..............  ..............            8.31  No.
                    detachment; by
                    injection of air or
                    other gas (e.g.,
                    pneumatic
                    retinopexy).
67113............  Repair of complex      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 46273]]

 
67227............  Destruction of         3.50..............  ..............            3.50  No.
                    extensive or
                    progressive
                    retinopathy (e.g.,
                    diabetic
                    retinopathy),
                    cryotherapy,
                    diathermy.
67228............  Treatment of           4.39..............  ..............            4.39  No.
                    extensive or
                    progressive
                    retinopathy (e.g.,
                    diabetic
                    retinopathy),
                    photocoagulation.
70540............  Magnetic resonance     1.35..............            1.35            1.35  No.
                    (e.g., proton)
                    imaging, orbit,
                    face, and/or neck;
                    without contrast
                    material(s).
70542............  Magnetic resonance     1.62..............            1.62            1.62  No.
                    (e.g., proton)
                    imaging, orbit,
                    face, and/or neck;
                    with contrast
                    material(s).
70543............  Magnetic resonance     2.15..............            2.15            2.15  No.
                    (e.g., proton)
                    imaging, orbit,
                    face, and/or neck;
                    without contrast
                    material(s),
                    followed by contrast
                    material(s) and
                    further sequences.
72170............  Radiologic             0.17..............  ..............            0.17  No.
                    examination, pelvis;
                    1 or 2 views.
73501............  Radiologic             0.18..............  ..............            0.18  No.
                    examination, hip,
                    unilateral, with
                    pelvis when
                    performed; 1 view.
73502............  Radiologic             0.22..............  ..............            0.22  No.
                    examination, hip,
                    unilateral, with
                    pelvis when
                    performed; 2-3 views.
73503............  Radiologic             0.27..............  ..............            0.27  No.
                    examination, hip,
                    unilateral, with
                    pelvis when
                    performed; minimum
                    of 4 views.
73521............  Radiologic             0.22..............  ..............            0.22  No.
                    examination, hips,
                    bilateral, with
                    pelvis when
                    performed; 2 views.
73522............  Radiologic             0.29..............  ..............            0.29  No.
                    examination, hips,
                    bilateral, with
                    pelvis when
                    performed; 3-4 views.
73523............  Radiologic             0.31..............  ..............            0.31  No.
                    examination, hips,
                    bilateral, with
                    pelvis when
                    performed; minimum
                    of 5 views.
73551............  Radiologic             0.16..............  ..............            0.16  No.
                    examination, femur;
                    1 view.
73552............  Radiologic             0.18..............  ..............            0.18  No.
                    examination, femur;
                    minimum 2 views.
74712............  Magnetic resonance     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     1.78..............  ..............            1.85  No.
                    (e.g., proton)
                    imaging, fetal,
                    including placental
                    and maternal pelvic
                    imaging when
                    performed; each
                    additional gestation.
767X1............  Ultrasound, abdominal  NEW...............            0.55            0.55  No.
                    aorta, real time
                    with image
                    documentation,
                    screening study for
                    abdominal aortic
                    aneurysm.
77001............  Fluoroscopic guidance  0.38..............            0.38            0.38  No.
                    for central venous
                    access device
                    placement,
                    replacement
                    (catheter only or
                    complete), or
                    removal (includes
                    fluoroscopic
                    guidance for
                    vascular access and
                    catheter
                    manipulation, any
                    necessary contrast
                    injections through
                    access site or
                    catheter with
                    related venography
                    radiologic
                    supervision and
                    interpretation, and
                    radiographic
                    documentation of
                    final catheter
                    position).
77002............  Fluoroscopic guidance  0.54..............            0.54            0.38  No.
                    for needle placement
                    (e.g., biopsy,
                    aspiration,
                    injection,
                    localization device).
77003............  Fluoroscopic guidance  0.60..............            0.60            0.38  No.
                    and localization of
                    needle or catheter
                    tip for spine or
                    paraspinous
                    diagnostic or
                    therapeutic
                    injection procedures
                    (epidural or
                    subarachnoid).
770X1............  Fluoroscopic guidance  NEW...............            0.81            0.81  No.
                    for central venous
                    access device
                    placement,
                    replacement
                    (catheter only or
                    complete), or
                    removal (includes
                    fluoroscopic
                    guidance for
                    vascular access and
                    catheter
                    manipulation, any
                    necessary contrast
                    injections through
                    access site or
                    catheter with
                    related venography
                    radiologic
                    supervision and
                    interpretation, and
                    radiographic
                    documentation of
                    final catheter
                    position).
770X2............  Fluoroscopic guidance  NEW...............            1.00            1.00  No.
                    for needle placement
                    (e.g., biopsy,
                    aspiration,
                    injection,
                    localization device).
770X3............  Fluoroscopic guidance  NEW...............            0.76            0.76  No.
                    and localization of
                    needle or catheter
                    tip for spine or
                    paraspinous
                    diagnostic or
                    therapeutic
                    injection procedures
                    (epidural or
                    subarachnoid).
77332............  Treatment devices,     0.54..............            0.54            0.45  No.
                    design and
                    construction; simple
                    (simple block,
                    simple bolus).
77333............  Treatment devices,     0.84..............            0.84            0.75  No.
                    design and
                    construction;
                    intermediate
                    (multiple blocks,
                    stents, bite blocks,
                    special bolus).
77334............  Treatment devices,     1.24..............            1.24            1.15  No.
                    design and
                    construction;
                    complex (irregular
                    blocks, special
                    shields,
                    compensators,
                    wedges, molds or
                    casts).
77470............  Special treatment      2.09..............            2.03            2.03  No.
                    procedure (e.g.,
                    total body
                    irradiation,
                    hemibody radiation,
                    per oral or
                    endocavitary
                    irradiation).

[[Page 46274]]

 
77778............  Interstitial           8.00..............  ..............            8.00  No.
                    radiation source
                    application,
                    complex, includes
                    supervision,
                    handling, loading of
                    radiation source,
                    when performed.
77790............  Supervision,           0.00..............  ..............            0.00  No.
                    handling, loading of
                    radiation source.
78264............  Gastric emptying       0.74..............  ..............            0.74  No.
                    imaging study (e.g.,
                    solid, liquid, or
                    both).
78265............  Gastric emptying       0.98..............  ..............            0.98  No.
                    imaging study (e.g.,
                    solid, liquid, or
                    both); with small
                    bowel transit.
78266............  Gastric emptying       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  No.
                    fluids, washings or
                    brushings, except
                    cervical or vaginal;
                    smears with
                    interpretation.
88106............  Cytopathology,         0.37..............  ..............            0.37  No.
                    fluids, washings or
                    brushings, except
                    cervical or vaginal;
                    simple filter method
                    with interpretation.
88108............  Cytopathology,         0.44..............  ..............            0.44  No.
                    concentration
                    technique, smears
                    and interpretation
                    (e.g., Saccomanno
                    technique).
88112............  Cytopathology,         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  No.
                    smears, any other
                    source; screening
                    and interpretation.
88161............  Cytopathology,         0.50..............  ..............            0.50  No.
                    smears, any other
                    source; preparation,
                    screening and
                    interpretation.
88162............  Cytopathology,         0.76..............  ..............            0.76  No.
                    smears, any other
                    source; extended
                    study involving over
                    5 slides and/or
                    multiple stains.
88184............  Flow cytometry, cell   0.00..............            0.00            0.00  No.
                    surface,
                    cytoplasmic, or
                    nuclear marker,
                    technical component
                    only; first marker.
88185............  Flow cytometry, cell   0.00..............            0.00            0.00  No.
                    surface,
                    cytoplasmic, or
                    nuclear marker,
                    technical component
                    only; each
                    additional marker.
88187............  Flow cytometry,        1.36..............            0.74            0.74  No.
                    interpretation; 2 to
                    8 markers.
88188............  Flow cytometry,        1.69..............            1.40            1.20  No.
                    interpretation; 9 to
                    15 markers.
88189............  Flow cytometry,        2.23..............            1.70            1.70  No.
                    interpretation; 16
                    or more markers.
88321............  Consultation and       1.63..............            1.63            1.63  No.
                    report on referred
                    slides prepared
                    elsewhere.
88323............  Consultation and       1.83..............            1.83            1.83  No.
                    report on referred
                    material requiring
                    preparation of
                    slides.
88325............  Consultation,          2.50..............            2.85            2.85  No.
                    comprehensive, with
                    review of records
                    and specimens, with
                    report on referred
                    material.
88341............  Immunohistochemistry   0.53..............  ..............            0.56  No.
                    or
                    immunocytochemistry,
                    per specimen; each
                    additional single
                    antibody stain
                    procedure (List
                    separately in
                    addition to code for
                    primary procedure).
88364............  In situ hybridization  0.67..............  ..............            0.70  No.
                    (e.g., FISH), per
                    specimen; each
                    additional single
                    probe stain
                    procedure.
88369............  Morphometric           0.67..............  ..............            0.67  No.
                    analysis, in situ
                    hybridization
                    (quantitative or
                    semi-quantitative),
                    manual, per
                    specimen; each
                    additional single
                    probe stain
                    procedure.
91110............  Gastrointestinal       3.64..............            2.49            2.49  No.
                    tract imaging,
                    intraluminal (e.g.,
                    capsule endoscopy),
                    esophagus through
                    ileum, with
                    interpretation and
                    report.
91111............  Gastrointestinal       1.00..............            1.00            1.00  No.
                    tract imaging,
                    intraluminal (e.g.,
                    capsule endoscopy),
                    esophagus with
                    interpretation and
                    report.
91200............  Liver elastography,    0.27..............  ..............            0.27  No.
                    mechanically induced
                    shear wave (e.g.,
                    vibration), without
                    imaging, with
                    interpretation and
                    report.
92132............  Scanning computerized  0.35..............            0.30            0.30  No.
                    ophthalmic
                    diagnostic imaging,
                    anterior segment,
                    with interpretation
                    and report,
                    unilateral or
                    bilateral.
92133............  Scanning computerized  0.50..............            0.40            0.40  No.
                    ophthalmic
                    diagnostic imaging,
                    posterior segment,
                    with interpretation
                    and report,
                    unilateral or
                    bilateral; optic
                    nerve.
92134............  Scanning computerized  0.50..............            0.45            0.45  No.
                    ophthalmic
                    diagnostic imaging,
                    posterior segment,
                    with interpretation
                    and report,
                    unilateral or
                    bilateral; retina.
92235............  Fluorescein            0.81..............            0.75            0.75  No.
                    angiography
                    (includes multiframe
                    imaging) with
                    interpretation and
                    report.
92240............  Indocyanine-green      1.10..............            0.80            0.80  No.
                    angiography
                    (includes multiframe
                    imaging) with
                    interpretation and
                    report.
92250............  Fundus photography     0.44..............            0.40            0.40  No.
                    with interpretation
                    and report.
922X4............  Fluorescein            NEW...............            0.95            0.95  No.
                    angiography and
                    indocyanine-green
                    angiography
                    (includes multiframe
                    imaging) performed
                    at the same patient
                    encounter with
                    interpretation and
                    report, unilateral
                    or bilateral.

[[Page 46275]]

 
93050............  Arterial pressure      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.
935X1............  Percutaneous           NEW...............           21.70           18.23  No.
                    transcatheter
                    closure of
                    paravalvular leak;
                    initial occlusion
                    device, mitral valve.
935X2............  Percutaneous           NEW...............           17.97           14.50  No.
                    transcatheter
                    closure of
                    paravalvular leak;
                    initial occlusion
                    device, aortic valve.
935X3............  Percutaneous           NEW...............            8.00            6.81  No.
                    transcatheter
                    closure of
                    paravalvular leak;
                    each additional
                    occlusion device
                    (list separately in
                    addition to code for
                    primary service).
95144............  Professional services  0.06..............            0.06            0.06  No.
                    for the supervision
                    of preparation and
                    provision of
                    antigens for
                    allergen
                    immunotherapy,
                    single dose vial(s)
                    (specify number of
                    vials).
95165............  Professional services  0.06..............            0.06            0.06  No.
                    for the supervision
                    of preparation and
                    provision of
                    antigens for
                    allergen
                    immunotherapy;
                    single or multiple
                    antigens (specify
                    number of doses).
95812............  Electroencephalogram   1.08..............            1.08            1.08  No.
                    (EEG) extended
                    monitoring; 41-60
                    minutes.
95813............  Electroencephalogram   1.73..............            1.63            1.63  No.
                    (EEG) extended
                    monitoring; greater
                    than 1 hour.
95957............  Digital analysis of    1.98..............            1.98            1.98  No.
                    electroencephalogram
                    (EEG) (e.g., for
                    epileptic spike
                    analysis).
95971............  Electronic analysis    0.78..............  ..............            0.78  No.
                    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    0.80..............  ..............            0.80  No.
                    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.
961X0............  Administration of      NEW...............            0.00            0.00  No.
                    patient-focused
                    health risk
                    assessment
                    instrument (e.g.,
                    health hazard
                    appraisal) with
                    scoring and
                    documentation, per
                    standardized
                    instrument.
961X1............  Administration of      NEW...............            0.00            0.00  No.
                    caregiver-focused
                    health risk
                    assessment
                    instrument (e.g.,
                    depression
                    inventory) for the
                    benefit of the
                    patient, with
                    scoring and
                    documentation, per
                    standardized
                    instrument.
96931............  Reflectance confocal   0.00..............            0.80            0.75  No.
                    microscopy (RCM) for
                    cellular and sub-
                    cellular imaging of
                    skin; image
                    acquisition and
                    interpretation and
                    report, first lesion.
96932............  Reflectance confocal   0.00..............            0.00            0.00  No.
                    microscopy (RCM) for
                    cellular and sub-
                    cellular imaging of
                    skin; image
                    acquisition only,
                    first lesion.
96933............  Reflectance confocal   0.00..............            0.80            0.75  No.
                    microscopy (RCM) for
                    cellular and sub-
                    cellular imaging of
                    skin; interpretation
                    and report only,
                    first lesion.
96934............  Reflectance confocal   0.00..............            0.76            0.71  No.
                    microscopy (RCM) for
                    cellular and sub-
                    cellular imaging of
                    skin; image
                    acquisition and
                    interpretation and
                    report, each
                    additional lesion.
96935............  Reflectance confocal   0.00..............            0.00            0.00  No.
                    microscopy (RCM) for
                    cellular and sub-
                    cellular imaging of
                    skin; image
                    acquisition only,
                    each additional
                    lesion.
96936............  Reflectance confocal   0.00..............            0.76            0.71  No.
                    microscopy (RCM) for
                    cellular and sub-
                    cellular imaging of
                    skin; interpretation
                    and report only,
                    each additional
                    lesion.
97X61............  Physical therapy       NEW...............            0.75            1.20  Yes.
                    evaluation; low
                    complexity.
97X62............  Physical therapy       NEW...............            1.18            1.20  No.
                    evaluation; moderate
                    complexity.
97X63............  Physical therapy       NEW...............            1.50            1.20  Yes.
                    evaluation; high
                    complexity.
97X64............  Reevaluation of        NEW...............            0.75            0.60  No.
                    physical therapy
                    established plan of
                    care.

[[Page 46276]]

 
97X65............  Occupational therapy   NEW...............            0.88            1.20  Yes.
                    evaluation; low
                    complexity.
97X66............  Occupational therapy   NEW...............            1.20            1.20  No.
                    evaluation; moderate
                    complexity.
97X67............  Occupational therapy   NEW...............            1.70            1.20  Yes.
                    evaluation; high
                    complexity.
97X68............  Reevaluation of        NEW...............            0.80            0.60  No.
                    occupational therapy
                    care/established
                    plan of care.
991X1............  Moderate sedation      NEW...............            0.50            0.50  No.
                    services provided by
                    the same physician
                    or other qualified
                    health care
                    professional
                    performing the
                    diagnostic or
                    therapeutic service
                    that the sedation
                    supports, requiring
                    the presence of an
                    independent trained
                    observer to assist
                    in the monitoring of
                    the patient's level
                    of consciousness and
                    physiological
                    status; initial 15
                    minutes of intra-
                    service time,
                    patient younger than
                    5 years of age.
991X2............  Moderate sedation      NEW...............            0.25            0.25  No.
                    services provided by
                    the same physician
                    or other qualified
                    health care
                    professional
                    performing the
                    diagnostic or
                    therapeutic service
                    that the sedation
                    supports, requiring
                    the presence of an
                    independent trained
                    observer to assist
                    in the monitoring of
                    the patient's level
                    of consciousness and
                    physiological
                    status; initial 15
                    minutes of intra-
                    service time,
                    patient age 5 years
                    or older.
991X3............  Moderate sedation      NEW...............            1.90            1.90  No.
                    services provided by
                    a physician or other
                    qualified health
                    care professional
                    other than the
                    physician or other
                    qualified health
                    care professional
                    performing the
                    diagnostic or
                    therapeutic service
                    that the sedation
                    supports; initial 15
                    minutes of intra-
                    service time,
                    patient younger than
                    5 years of age.
991X4............  Moderate sedation      NEW...............            1.84            1.65  No.
                    services provided by
                    a physician or other
                    qualified health
                    care professional
                    other than the
                    physician or other
                    qualified health
                    care professional
                    performing the
                    diagnostic or
                    therapeutic service
                    that the sedation
                    supports; initial 15
                    minutes of intra-
                    service time,
                    patient age 5 years
                    or older.
991X5............  Moderate sedation      NEW...............            0.00            0.00  No.
                    services provided by
                    the same physician
                    or other qualified
                    health care
                    professional
                    performing the
                    diagnostic or
                    therapeutic service
                    that the sedation
                    supports, requiring
                    the presence of an
                    independent trained
                    observer to assist
                    in the monitoring of
                    the patient's level
                    of consciousness and
                    physiological
                    status; each
                    additional 15
                    minutes of intra-
                    service time.
991X6............  Moderate sedation      NEW...............            1.25            1.25  No.
                    services provided by
                    a physician or other
                    qualified health
                    care professional
                    other than the
                    physician or other
                    qualified health
                    care professional
                    performing the
                    diagnostic or
                    therapeutic service
                    that the sedation
                    supports; each
                    additional 15
                    minutes intra-
                    service time.
99354............  Prolonged evaluation   1.77..............  ..............            2.33  No.
                    and management or
                    psychotherapy
                    service(s) (beyond
                    the typical service
                    time of the primary
                    procedure) in the
                    office or other
                    outpatient setting
                    requiring direct
                    patient contact
                    beyond the usual
                    service; first hour.
99358............  Prolonged evaluation   2.10..............  ..............            2.10  No.
                    and management
                    service before and/
                    or after direct
                    patient care; first
                    hour.
99359............  Prolonged evaluation   1.00..............  ..............            1.00  No.
                    and management
                    service before and/
                    or after direct
                    patient care; each
                    additional 30
                    minutes.
99487............  Complex chronic care   0.00..............  ..............            1.00  No.
                    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.

[[Page 46277]]

 
99489............  Complex chronic care   0.00..............  ..............            0.50  No.
                    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;
                    each additional 30
                    minutes of clinical
                    staff time directed
                    by a physician or
                    other qualified
                    health care
                    professional, per
                    calendar month.
G0416............  Surgical pathology,    3.09..............            4.00            3.60  No.
                    gross and
                    microscopic
                    examinations, for
                    prostate needle
                    biopsy, any method.
GDDD1............  Resource-intensive     NEW...............  ..............            0.48  No.
                    services for
                    patients for whom
                    the use of
                    specialized mobility-
                    assistive technology
                    (such as adjustable
                    height chairs or
                    tables, patient
                    lift, and adjustable
                    padded leg supports)
                    is medically
                    necessary and used
                    during the provision
                    of an office/
                    outpatient E/M visit
                    (Add-on code, list
                    separately in
                    addition to primary
                    procedure).
GMMM1............  Moderate sedation      NEW...............  ..............            0.10  No.
                    services provided by
                    the same physician
                    or other qualified
                    health care
                    professional
                    performing a
                    gastrointestinal
                    endoscopic service
                    (excluding biliary
                    procedures) that the
                    sedation supports,
                    requiring the
                    presence of an
                    independent trained
                    observer to assist
                    in the monitoring of
                    the patient's level
                    of consciousness and
                    physiological
                    status; initial 15
                    minutes of intra-
                    service time.
GPPP1............  Initial psychiatric    NEW...............  ..............            1.59  No.
                    collaborative care
                    management, first 70
                    minutes in the first
                    calendar month of
                    behavioral health
                    care manager
                    activities, in
                    consultation with a
                    psychiatric
                    consultant, and
                    directed by the
                    treating physician
                    or other qualified
                    health care
                    professional.
GPPP2............  Subsequent             NEW...............  ..............            1.42  No.
                    psychiatric
                    collaborative care
                    management, first 60
                    minutes in a
                    subsequent month of
                    behavioral health
                    care manager
                    activities, in
                    consultation with a
                    psychiatric
                    consultant, and
                    directed by the
                    treating physician
                    or other qualified
                    health care
                    professional.
GPPP3............  Initial or subsequent  NEW...............  ..............            0.71  No.
                    psychiatric
                    collaborative care
                    management, each
                    additional 30
                    minutes in a
                    calendar month of
                    behavioral health
                    care manager
                    activities, in
                    consultation with a
                    psychiatric
                    consultant, and
                    directed by the
                    treating physician
                    or other qualified
                    health care
                    professional.
GPPP6............  Cognition and          NEW...............  ..............            3.30  No.
                    functional
                    assessment using
                    standardized
                    instruments with
                    development of
                    recorded care plan
                    for the patient with
                    cognitive
                    impairment, history
                    obtained from
                    patient and/or
                    caregiver, in office
                    or other outpatient
                    setting or home or
                    domiciliary or rest
                    home.
GPPP7............  Comprehensive          NEW...............  ..............            0.87  No.
                    assessment of and
                    care planning for
                    patients requiring
                    chronic care
                    management services
                    (billed separately
                    from monthly care
                    management services).
GPPPX............  Care management        NEW...............  ..............            0.61  No.
                    services for
                    behavioral health
                    conditions, at least
                    20 minutes of
                    clinical staff time,
                    directed by a
                    physician or other
                    qualified health
                    care professional
                    time, per calendar
                    month.
GTTT1............  Telehealth             NEW...............  ..............            4.00  No.
                    consultation,
                    critical care,
                    physicians typically
                    spend 60 minutes
                    communicating with
                    the patient via
                    telehealth (initial).
GTTT2............  Telehealth             NEW...............  ..............            3.86  No.
                    consultation,
                    critical care,
                    physicians typically
                    spend 50 minutes
                    communicating with
                    the patient via
                    telehealth
                    (subsequent).
----------------------------------------------------------------------------------------------------------------


[[Page 46278]]


  Table 24--CY 2016 Proposed Codes With Direct PE Input Recommendations
                       Accepted Without Refinement
------------------------------------------------------------------------
             HCPCS code                           Description
------------------------------------------------------------------------
00740...............................  Anesth upper gi visualize.
00810...............................  Anesth low intestine scope.
10030...............................  Guide cathet fluid drainage.
11730...............................  Removal of nail plate.
19298...............................  Place breast rad tube/caths.
20245...............................  Bone biopsy excisional.
20550...............................  Inj tendon sheath/ligament.
20552...............................  Inj trigger point 1/2 muscl.
20553...............................  Inject trigger points 3/>.
20982...............................  Ablate bone tumor(s) perq.
20983...............................  Ablate bone tumor(s) perq.
22510...............................  Perq cervicothoracic inject.
22511...............................  Perq lumbosacral injection.
22512...............................  Vertebroplasty addl inject.
22513...............................  Perq vertebral augmentation.
22514...............................  Perq vertebral augmentation.
22515...............................  Perq vertebral augmentation.
22526...............................  Idet single level.
22527...............................  Idet 1 or more levels.
228X1...............................  Insj stablj dev w/dcmprn.
228X4...............................  Insj stablj dev w/o dcmprn.
28289...............................  Repair hallux rigidus.
28292...............................  Correction of bunion.
28296...............................  Correction of bunion.
28297...............................  Correction of bunion.
28298...............................  Correction of bunion.
28299...............................  Correction of bunion.
282X1...............................  Corrj halux rigdus w/implt.
31615...............................  Visualization of windpipe.
31622...............................  Dx bronchoscope/wash.
31623...............................  Dx bronchoscope/brush.
31624...............................  Dx bronchoscope/lavage.
31625...............................  Bronchoscopy w/biopsy(s).
31626...............................  Bronchoscopy w/markers.
31627...............................  Navigational bronchoscopy.
31628...............................  Bronchoscopy/lung bx each.
31629...............................  Bronchoscopy/needle bx each.
31632...............................  Bronchoscopy/lung bx addl.
31633...............................  Bronchoscopy/needle bx addl.
31634...............................  Bronch w/balloon occlusion.
31635...............................  Bronchoscopy w/fb removal.
31645...............................  Bronchoscopy clear airways.
31646...............................  Bronchoscopy reclear airway.
31652...............................  Bronch ebus samplng 1/2 node.
31653...............................  Bronch ebus samplng 3/> node.
31654...............................  Bronch ebus ivntj perph les.
32405...............................  Percut bx lung/mediastinum.
32550...............................  Insert pleural cath.
32553...............................  Ins mark thor for rt perq.
333X3...............................  Perq clsr tcat l atr apndge.
334X1...............................  Valvuloplasty aortic valve.
334X2...............................  Valvuloplasty aortic valve.
35471...............................  Repair arterial blockage.
35472...............................  Repair arterial blockage.
35475...............................  Repair arterial blockage.
35476...............................  Repair venous blockage.
36010...............................  Place catheter in vein.
36140...............................  Establish access to artery.
36147...............................  Access av dial grft for eval.
36148...............................  Access av dial grft for proc.
36200...............................  Place catheter in aorta.
36221...............................  Place cath thoracic aorta.
36222...............................  Place cath carotid/inom art.
36223...............................  Place cath carotid/inom art.
36224...............................  Place cath carotid art.
36225...............................  Place cath subclavian art.
36226...............................  Place cath vertebral art.
36227...............................  Place cath xtrnl carotid.
36228...............................  Place cath intracranial art.
36245...............................  Ins cath abd/l-ext art 1st.
36246...............................  Ins cath abd/l-ext art 2nd.
36247...............................  Ins cath abd/l-ext art 3rd.
36248...............................  Ins cath abd/l-ext art addl.
36251...............................  Ins cath ren art 1st unilat.
36252...............................  Ins cath ren art 1st bilat.
36253...............................  Ins cath ren art 2nd+ unilat.
36254...............................  Ins cath ren art 2nd+ bilat.
36481...............................  Insertion of catheter vein.
36555...............................  Insert non-tunnel cv cath.
36557...............................  Insert tunneled cv cath.
36558...............................  Insert tunneled cv cath.
36560...............................  Insert tunneled cv cath.
36561...............................  Insert tunneled cv cath.
36563...............................  Insert tunneled cv cath.
36565...............................  Insert tunneled cv cath.
36566...............................  Insert tunneled cv cath.
36568...............................  Insert picc cath.
36570...............................  Insert picvad cath.
36571...............................  Insert picvad cath.
36576...............................  Repair tunneled cv cath.
36578...............................  Replace tunneled cv cath.
36581...............................  Replace tunneled cv cath.
36582...............................  Replace tunneled cv cath.
36583...............................  Replace tunneled cv cath.
36585...............................  Replace picvad cath.
36590...............................  Removal tunneled cv cath.
36870...............................  Percut thrombect av fistula.
369X7...............................  Balo angiop ctr dialysis seg.
369X8...............................  Stent plmt ctr dialysis seg.
369X9...............................  Dialysis circuit embolj.
37183...............................  Remove hepatic shunt (tips).
37184...............................  Prim art m-thrmbc 1st vsl.
37185...............................  Prim art m-thrmbc sbsq vsl.
37186...............................  Sec art thrombectomy add-on.
37187...............................  Venous mech thrombectomy.
37188...............................  Venous m-thrombectomy add-on.
37191...............................  Ins endovas vena cava filtr.
37192...............................  Redo endovas vena cava filtr.
37193...............................  Rem endovas vena cava filter.
37197...............................  Remove intrvas foreign body.
37220...............................  Iliac revasc.
37221...............................  Iliac revasc w/stent.
37222...............................  Iliac revasc add-on.
37223...............................  Iliac revasc w/stent add-on.
37224...............................  Fem/popl revas w/tla.
37225...............................  Fem/popl revas w/ather.
37226...............................  Fem/popl revasc w/stent.
37227...............................  Fem/popl revasc stnt & ather.
37228...............................  Tib/per revasc w/tla.
37229...............................  Tib/per revasc w/ather.
37230...............................  Tib/per revasc w/stent.
37231...............................  Tib/per revasc stent & ather.
37232...............................  Tib/per revasc add-on.
37233...............................  Tibper revasc w/ather add-on.
37234...............................  Revsc opn/prq tib/pero stent.
37235...............................  Tib/per revasc stnt & ather.
37236...............................  Open/perq place stent 1st.
37237...............................  Open/perq place stent ea add.
37238...............................  Open/perq place stent same.
37239...............................  Open/perq place stent ea add.
37241...............................  Vasc embolize/occlude venous.
37242...............................  Vasc embolize/occlude artery.
37243...............................  Vasc embolize/occlude organ.
37244...............................  Vasc embolize/occlude bleed.
37252...............................  Intrvasc us noncoronary 1st.
37253...............................  Intrvasc us noncoronary addl.
372X2...............................  Trluml balo angiop addl art.
372X4...............................  Trluml balo angiop addl vein.
43200...............................  Esophagoscopy flexible brush.
43201...............................  Esoph scope w/submucous inj.
43202...............................  Esophagoscopy flex biopsy.
43206...............................  Esoph optical endomicroscopy.
43213...............................  Esophagoscopy retro balloon.
43215...............................  Esophagoscopy flex remove fb.
43216...............................  Esophagoscopy lesion removal.
43217...............................  Esophagoscopy snare les remv.
43220...............................  Esophagoscopy balloon <30 mm.
43226...............................  Esoph endoscopy dilation.
43227...............................  Esophagoscopy control bleed.
43229...............................  Esophagoscopy lesion ablate.
43231...............................  Esophagoscop ultrasound exam.
43232...............................  Esophagoscopy w/us needle bx.
43235...............................  Egd diagnostic brush wash.
43236...............................  Uppr gi scope w/submuc inj.
43239...............................  Egd biopsy single/multiple.
43245...............................  Egd dilate stricture.
43247...............................  Egd remove foreign body.
43248...............................  Egd guide wire insertion.
43249...............................  Esoph egd dilation <30 mm.
43250...............................  Egd cautery tumor polyp.
43251...............................  Egd remove lesion snare.
43252...............................  Egd optical endomicroscopy.
43255...............................  Egd control bleeding any.
43270...............................  Egd lesion ablation.
432X1...............................  Laps esophgl sphnctr agmnt.
432X2...............................  Rmvl esophgl sphnctr dev.
43450...............................  Dilate esophagus 1/mult pass.
43453...............................  Dilate esophagus.
44380...............................  Small bowel endoscopy br/wa.
44381...............................  Small bowel endoscopy br/wa.
44382...............................  Small bowel endoscopy.
44385...............................  Endoscopy of bowel pouch.
44386...............................  Endoscopy bowel pouch/biop.
44388...............................  Colonoscopy thru stoma spx.
44389...............................  Colonoscopy with biopsy.
44390...............................  Colonoscopy for foreign body.
44391...............................  Colonoscopy for bleeding.
44392...............................  Colonoscopy & polypectomy.
44394...............................  Colonoscopy w/snare.
44401...............................  Colonoscopy with ablation.
44404...............................  Colonoscopy w/injection.
44405...............................  Colonoscopy w/dilation.
45303...............................  Proctosigmoidoscopy dilate.
45305...............................  Proctosigmoidoscopy w/bx.

[[Page 46279]]

 
45307...............................  Proctosigmoidoscopy fb.
45308...............................  Proctosigmoidoscopy removal.
45309...............................  Proctosigmoidoscopy removal.
45315...............................  Proctosigmoidoscopy removal.
45317...............................  Proctosigmoidoscopy bleed.
45320...............................  Proctosigmoidoscopy ablate.
45332...............................  Sigmoidoscopy w/fb removal.
45333...............................  Sigmoidoscopy & polypectomy.
45334...............................  Sigmoidoscopy for bleeding.
45335...............................  Sigmoidoscopy w/submuc inj.
45338...............................  Sigmoidoscopy w/tumr remove.
45340...............................  Sig w/tndsc balloon dilation.
45346...............................  Sigmoidoscopy w/ablation.
45350...............................  Sgmdsc w/band ligation.
45378...............................  Diagnostic colonoscopy.
45379...............................  Colonoscopy w/fb removal.
45380...............................  Colonoscopy and biopsy.
45381...............................  Colonoscopy submucous njx.
45382...............................  Colonoscopy w/control bleed.
45384...............................  Colonoscopy w/lesion removal.
45385...............................  Colonoscopy w/lesion removal.
45386...............................  Colonoscopy w/balloon dilat.
45388...............................  Colonoscopy w/ablation.
45398...............................  Colonoscopy w/band ligation.
47000...............................  Needle biopsy of liver.
47382...............................  Percut ablate liver rf.
47383...............................  Perq abltj lvr cryoablation.
49405...............................  Image cath fluid colxn visc.
49406...............................  Image cath fluid peri/retro.
49407...............................  Image cath fluid trns/vgnl.
49411...............................  Ins mark abd/pel for rt perq.
49418...............................  Insert tun ip cath perc.
49440...............................  Place gastrostomy tube perc.
49441...............................  Place duod/jej tube perc.
49442...............................  Place cecostomy tube perc.
49446...............................  Change g-tube to g-j perc.
50200...............................  Renal biopsy perq.
50382...............................  Change ureter stent percut.
50384...............................  Remove ureter stent percut.
50385...............................  Change stent via transureth.
50386...............................  Remove stent via transureth.
50387...............................  Change nephroureteral cath.
50430...............................  Njx px nfrosgrm &/urtrgrm.
50432...............................  Plmt nephrostomy catheter.
50433...............................  Plmt nephroureteral catheter.
50434...............................  Convert nephrostomy catheter.
50592...............................  Perc rf ablate renal tumor.
50593...............................  Perc cryo ablate renal tum.
50693...............................  Plmt ureteral stent prq.
50694...............................  Plmt ureteral stent prq.
50695...............................  Plmt ureteral stent prq.
51702...............................  Insert temp bladder cath.
51703...............................  Insert bladder cath complex.
51720...............................  Treatment of bladder lesion.
51784...............................  Anal/urinary muscle study.
55700...............................  Biopsy of prostate.
57155...............................  Insert uteri tandem/ovoids.
58558...............................  Hysteroscopy biopsy.
58559...............................  Hysteroscopy lysis.
58560...............................  Hysteroscopy resect septum.
58561...............................  Hysteroscopy remove myoma.
58563...............................  Hysteroscopy ablation.
585X1...............................  Laps abltj uterine fibroids.
630X1...............................  Ndsc dcmprn 1 ntrspc lumbar.
66720...............................  Destruction ciliary body.
67101...............................  Repair detached retina.
67105...............................  Repair detached retina.
69300...............................  Revise external ear.
767X1...............................  Us abdl aorta screen aaa.
77332...............................  Radiation treatment aid(s).
77333...............................  Radiation treatment aid(s).
77334...............................  Radiation treatment aid(s).
77470...............................  Special radiation treatment.
77600...............................  Hyperthermia treatment.
77605...............................  Hyperthermia treatment.
77610...............................  Hyperthermia treatment.
77615...............................  Hyperthermia treatment.
91110...............................  Gi tract capsule endoscopy.
91111...............................  Esophageal capsule endoscopy.
92132...............................  Cmptr ophth dx img ant segmt.
92133...............................  Cmptr ophth img optic nerve.
92134...............................  Cptr ophth dx img post segmt.
92235...............................  Eye exam with photos.
92240...............................  Icg angiography.
92250...............................  Eye exam with photos.
922X4...............................  Fluorescein icg angiography.
92960...............................  Cardioversion electric ext.
93312...............................  Echo transesophageal.
93314...............................  Echo transesophageal.
93451...............................  Right heart cath.
93452...............................  Left hrt cath w/ventrclgrphy.
93453...............................  R&l hrt cath w/ventriclgrphy.
93454...............................  Coronary artery angio s&i.
93455...............................  Coronary art/grft angio s&i.
93456...............................  R hrt coronary artery angio.
93457...............................  R hrt art/grft angio.
93458...............................  L hrt artery/ventricle angio.
93459...............................  L hrt art/grft angio.
93460...............................  R&l hrt art/ventricle angio.
93461...............................  R&l hrt art/ventricle angio.
93464...............................  Exercise w/hemodynamic meas.
93505...............................  Biopsy of heart lining.
93566...............................  Inject r ventr/atrial angio.
93567...............................  Inject suprvlv aortography.
93568...............................  Inject pulm art hrt cath.
935X1...............................  Perq transcath cls mitral.
935X2...............................  Perq transcath cls aortic.
93642...............................  Electrophysiology evaluation.
93644...............................  Electrophysiology evaluation.
95144...............................  Antigen therapy services.
95165...............................  Antigen therapy services.
95957...............................  Eeg digital analysis.
961X0...............................  Pt-focused hlth risk assmt.
961X1...............................  Caregiver health risk assmt.
96440...............................  Chemotherapy intracavitary.
96931...............................  Rcm celulr subcelulr img skn.
96932...............................  Rcm celulr subcelulr img skn.
97X64...............................  Pt re-eval est plan care.
97X68...............................  Ot re-eval est plan care.
991X1...............................  Mod sed same phys/qhp <5 yrs.
991X2...............................  Mod sed same phys/qhp 5/>yrs.
991X5...............................  Mod sed oth phys/qhp 5/>yrs.
G0341...............................  Percutaneous islet celltrans.
GMMM1
------------------------------------------------------------------------


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                                                Table 26--Invoices Received for Existing Direct PE Inputs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                          Estimated non-
                                                                                                                                             facility
                                                                                                                                              allowed
          CPT/HCPCS codes                   Item name            CMS code       Current price   Updated price   Percent      Number of     services for
                                                                                                                 change      invoices       HCPCS codes
                                                                                                                                            using this
                                                                                                                                               item
--------------------------------------------------------------------------------------------------------------------------------------------------------
19030, 19081, 19082, 19281, 19282,   room, digital           EL013                 168,214.00      362,935.00        116              10       2,294,862
 19283, 19284, 77053, 77054, 770X1,   mammography.
 770X2, 770X3.
31575, 31576, 31577, 31578, 31579,   video system,           ES031                  33,232.50       15,045.00        -55               1       1,497,130
 317X1, 317X2, 317X3, 31580, 31584,   endoscopy (processor,
 31587, 315X1, 315X2, 315X3, 315X4,   digital capture,
 315X5, 315X6, 190+ other codes.      monitor, printer,
                                      cart).
58555, 58562, 58563, 58565.........  endoscope, rigid,       ES009                   4,990.50        6,207.50         24               1             672
                                      hysteroscopy.
88323, 88355, 88380, 88381.........  stain, eosin..........  SL201                       0.04            0.07         55               5          45,393
88360, 88361.......................  Antibody Estrogen       SL493                       3.19           14.00        339               4         216,208
                                      Receptor monoclonal.
91110..............................  kit, capsule endoscopy  SA005                     450.00          520.00         16               1          30,464
                                      w-application
                                      supplies (M2A).
91110, 91111.......................  video system, capsule   ES029                  17,000.00       12,450.00        -27               1          30,586
                                      endoscopy (software,
                                      computer, monitor,
                                      printer).
91111..............................  kit, capsule, ESO,      SA094                     450.00          472.80          5               1             122
                                      endoscopy w-
                                      application supplies
                                      (ESO).
95145, 95146, 95148, 95149.........  antigen, venom........  SH009                      16.67           20.14         21               4          50,772
95147, 95148, 95149................  antigen, venom, tri-    SH010                      30.22           44.05         46               3          37,955
                                      vespid.
122 codes..........................  light source, xenon...  EQ167                   6,723.33        7,000.00          4               1       2,149,616
59 codes...........................  fiberscope, flexible,   ES020                   6,301.93        4,250.00        -33               1         581,924
                                      rhinolaryngoscopy.
--------------------------------------------------------------------------------------------------------------------------------------------------------


                              Table 27--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
----------------------------------------------------------------------------------------------------------------
31575, 31579, 317X3, 31580,     rhinolaryngoscope  ES063                8,000.00               1         541,537
 31584, 31587, 315X1, 315X2,     , flexible,
 315X3, 315X4, 315X5, 315X6.     video, non-
                                 channeled.
31576, 31577, 31578, 317X1,     rhinolaryngoscope  ES064                9,000.00               1             756
 317X2.                          , flexible,
                                 video, channeled.
31576, 31577, 31578...........  Disposable biopsy  SD318                   26.84               1             574
                                 forceps.
31579.........................  stroboscopy        ES065               19,100.00               1          54,466
                                 system.
317X3.........................  Voice              SJ090                  575.00               1              99
                                 Augmentation Gel.
36X41.........................  Claravein Kit....  SA122                  890.00               1             264
36X41, 364X2..................  Sotradecol         SH108                  110.20               1             528
                                 Sclerosing Agent.
55700.........................  Biopsy Guide.....  EQ375                7,000.00               0          85,731
58558.........................  BLADE INCSR 2.9MM  SF059                  599.00               1           2,677
58558.........................  Hysteroscopic      EQ378               14,698.38               1           2,677
                                 fluid management
                                 system.
58558.........................  Hysteroscopic      EQ379               19,857.50               1           2,677
                                 Resection System.
770X1, 770X2, 770X3...........  PACS Mammography   ED054              103,616.47               8       2,274,249
                                 Workstation.
70540, 70542, 70543; over 400   Professional PACS  ED053               14,616.93               9      32,571,650
 additional codes.               Workstation.

[[Page 46377]]

 
77332.........................  knee wedge/foot    EQ376                3,290.00               1          48,831
                                 block system.
77333.........................  Thermoplastic      SD321                   23.90               1           3,493
                                 tissue bolus
                                 30X30X0.3cm.
77333.........................  water bath,        EP120                2,350.00               1           3,493
                                 digital control.
77333, 77334..................  Supine Breast/     EQ377                5,773.15               1         290,969
                                 Lung Board.
77334.........................  Urethane Foaming   SL519                   53.50               1         287,476
                                 Agent.
88184, 88185..................  flow cytometry     EQ380               14,000.00               1       1,680,252
                                 analytics
                                 software.
95144, 95165..................  antigen vial       SK127                    1.50               2       6,464,311
                                 transport
                                 envelope.
961X1.........................  Beck Depression    SK128                    2.26               1               1
                                 Inventory,
                                 Second Edition
                                 (BDI-II).
96416.........................  IV infusion pump,  EQ381                 2384.45               1         117,248
                                 ambulatory.
96931, 96932..................  Imaging Tray.....  SA121                   34.75               1               5
96931, 96932..................  adhesive ruler...  SK125                    9.95               1               5
96931, 96932, 96934, 96935....  reflectance        ES056               98,500.00               1               9
                                 confocal imaging
                                 system.
97X66, 97X67, 97X68...........  environmental      ES057               25,000.00               1         115,107
                                 module--bathroom.
97X66, 97X67..................  kit, vision......  ES058                  410.00               1          86,912
GDDD1.........................  patient lift       EF045                2,824.33               3      15,115,789
                                 system.
GDDD1.........................  wheelchair         EF046                  875.92               3      15,115,789
                                 accessible scale.
GDDD1.........................  leg positioning    EF047                1,076.50               3      15,115,789
                                 system.
----------------------------------------------------------------------------------------------------------------

III. Other Provisions of the Proposed Rule for PFS

A. Chronic Care Management (CCM) and Transitional Care Management (TCM) 
Supervision Requirements in Rural Health Clinics (RHCs) and Federally 
Qualified Health Centers (FQHCs)

    In the CY 2016 PFS final rule with comment period (80 FR 71080 
through 71088), we finalized policies for payment of CCM services in 
RHCs and FQHCs. Payment for CCM services in RHCs and FQHCs was 
effective 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 
are 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. Payment is 
made when CPT code 99490 is billed alone or with other payable services 
on a RHC or FQHC claim, and the rate is based on the PFS national 
average non-facility payment rate. The requirement that RHC or FQHC 
services be furnished face-to-face was waived for CCM services 
furnished to a RHC or FQHC patient because CCM services are not 
required to be furnished face-to-face.
    Medicare payment for TCM services furnished by a RHC or FQHC 
practitioner was effective January 1, 2013, consistent with the 
effective date of payment for TCM services under the PFS (77 FR 68978 
through 68994; also, see CMS-Pub. 100-02, Medicare Benefit Policy 
Manual, chapter 13, section 110.4).
    TCM services are billable only when furnished within 30 days of the 
date of the patient's discharge from a hospital (including outpatient 
observation or partial hospitalization), skilled nursing facility, or 
community mental health center. Communication (direct contact, 
telephone, or electronic) with the patient or caregiver must commence 
within 2 business days of discharge, and a face-to-face visit must 
occur within 14 days of discharge for moderate complexity decision 
making (CPT code 99495), or within 7 days of discharge for high 
complexity decision making (CPT code 99496). The TCM visit is billed on 
the day that the TCM visit takes place, and only one TCM visit may be 
paid per beneficiary for services furnished during that 30 day post-
discharge period. If the TCM visit occurs on the same day as another 
billable visit, only one visit may be billed. TCM and CCM cannot be 
billed during the same time period for the same patient.
    In the CY 2016 PFS final rule with comment period (80 FR 71087), we 
responded to comments requesting that we make an exception to the 
supervision requirements for auxiliary staff furnishing CCM and TCM 
services incident to physician services in RHCs and FQHCs (80 FR 
71087). Auxiliary staff in RHCs and FQHCs furnish services incident to 
a RHC or FQHC visit and include nurses, medical assistants, and other 
clinical staff who work under the direct supervision of a RHC or FQHC 
practitioner. The commenters suggested that the regulatory language be 
amended to be consistent with the provision in Sec.  410.26(b)(5) for 
CCM and TCM services under the PFS, which states that services and 
supplies furnished incident to CCM and TCM services can be furnished 
under general supervision of the physician (or other practitioner) when 
they are provided by clinical staff. It further specifies 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, but only the 
supervising physician (or other practitioner) may bill Medicare for 
incident to services. We responded that due to the differences between 
physician offices and RHCs and FQHCs in their models of care and 
payment structures, we believe that the direct supervision requirement 
for services furnished by auxiliary staff is appropriate for RHCs and 
FQHCs, but that we would consider changing this in future rulemaking if 
RHCs and FQHCs find that requiring direct supervision presents a 
barrier to furnishing CCM services.
    Since payment for CCM in RHCs and FQHCs began on January 1, 2016, 
some RHCs and FQHCs have informed us that, in their view, the direct 
supervision requirement for auxiliary

[[Page 46378]]

staff has limited their ability to furnish CCM services. Specifically, 
these RHCs and FQHCs have stated that the direct supervision 
requirement has prevented them from entering into contracts with third 
party companies to provide CCM services, especially during hours that 
they are not open, and that they are unable to meet the CCM 
requirements within their current staffing and budget constraints.
    To bill for CCM services, RHCs and FQHCs must ensure that there is 
access to care management services on a 24 hour a day, 7 day a week 
basis. This includes providing the patient with a means to make timely 
contact with RHC or FQHC practitioners who have access to the patient's 
electronic care plan to address his or her urgent chronic care needs. 
The RHC or FQHC must ensure the care plan is available electronically 
at all times to anyone within the RHC or FQHC who is providing CCM 
services.
    Once the RHC or FQHC practitioner has initiated CCM services and 
the patient has consented to receiving this service, CCM services can 
be furnished by a RHC or FQHC practitioner, or by auxiliary personnel, 
as defined in Sec.  410.26(a)(1), which includes nurses, medical 
assistants, and other staff working under physician supervision who 
meet the requirements to provide incident to services. Auxiliary 
personnel in RHCs and FQHCs must furnish services under direct 
supervision, which requires that a RHC or FQHC practitioner be present 
in the RHC or FQHC and immediately available to furnish assistance and 
direction. The RHC or FQHC practitioner does not need to be present in 
the room when the service is furnished.
    Although many RHCs and FQHCs prefer to furnish CCM and TCM services 
utilizing existing staff, some RHCs and FQHCs would like to contract 
with a third party to furnish aspects of their CCM and TCM services, 
but cannot do so because of the direct supervision requirement. Without 
the ability to contract with a third party, these RHCs and FQHCs have 
stated that they find it difficult to meet the CCM requirements for 24 
hours a day, 7 days a week access to services.
    To enable RHCs and FQHCs to effectively contract with third parties 
to furnish aspects of CCM and TCM services, we propose to revise Sec.  
405.2413(a)(5) and Sec.  405.2415(a)(5) to state that services and 
supplies furnished incident to TCM and CCM services can be furnished 
under general supervision of a RHC or FQHC practitioner. The proposed 
exception to the direct supervision requirement would apply only to 
auxiliary personnel furnishing TCM or CCM incident to services, and 
would not apply to any other RHC or FQHC services. The proposed 
revisions for CCM and TCM services and supplies furnished by RHCs and 
FQHCs are consistent with Sec.  410.26(b)(5), which allows CCM and TCM 
services and supplies to be furnished by clinical staff under general 
supervision when billed under the PFS.

B. FQHC-Specific Market Basket

1. Background
    Section 10501(i)(3)(A) of the Affordable Care Act (Pub. L. 111-148 
and Pub. L. 111-152) added section 1834(o) of the Act to establish a 
payment system for the costs of FQHC services under Medicare Part B 
based on prospectively set rates. In the Prospective Payment System 
(PPS) for FQHC Final Rule published in the May 2, 2014 Federal Register 
(79 FR 25436), we implemented a methodology and payment rates for the 
FQHC PPS. The FQHC PPS base payment rate was determined using FQHC cost 
report and claims data and was effective for FQHC payments from October 
1, 2014, through December 31, 2015 (implementation year). The adjusted 
base payment rate for the implementation year was $158.85 (79 FR 
25455). When calculating the FQHC PPS payment, the base payment rate is 
multiplied by the FQHC geographic adjustment factor (GAF) based on the 
location of the FQHC, and adjusted for new patients or when an initial 
preventive physical examination or annual wellness visit are furnished. 
Beginning on October 1, 2014, FQHCs began to transition to the FQHC PPS 
based on their cost reporting periods. As of January 1, 2016, all FQHCs 
are paid under the FQHC PPS.
    Section 1834(o)(2)(B)(ii) of the Act requires that the payment for 
the first year after the implementation year be increased by the 
percentage increase in the MEI. Therefore, in CY 2016, the FQHC PPS 
base payment rate was increased by the MEI. The MEI was based on 2006 
data from the American Medical Association (AMA) for self-employed 
physicians and was used in the PFS Sustainable Growth Rate (SGR) 
formula to determine the conversion factor for physician service 
payments. (See the CY 2014 PFS final rule (78 FR 74264) for a complete 
discussion of the 2006-based MEI). Section 1834(o)(2)(B)(ii) of the Act 
also requires that beginning in CY 2017, the FQHC PPS base payment rate 
will be increased by the percentage increase in a market basket of FQHC 
goods and services, or if such an index is not available, by the 
percentage increase in the MEI.
    For CY 2017, we are proposing to create a 2013-based FQHC market 
basket. The proposed market basket uses Medicare cost report (MCR) data 
submitted by freestanding FQHCs. In the following discussion, we 
provide an overview of the proposed market basket and describe the 
methodologies used to determine the cost categories, cost weights, and 
price proxies. In addition, we compare the growth rates of the proposed 
FQHC market basket to the growth rates of the MEI.
2. Overview of the FQHC Market Basket
    The 2013-based FQHC market basket is a fixed-weight, Laspeyres-type 
price index. A Laspeyres price index measures the change in price, over 
time, of the same mix of goods and services purchased in the base 
period. Any changes in the quantity or mix of goods and services (that 
is, intensity) purchased over time relative to a base period are not 
measured.
    The index itself is constructed in three steps. First, a base 
period is selected (in this proposed rule, the base period is CY 2013), 
total base period costs are estimated for a set of mutually exclusive 
and exhaustive cost categories, and the proportion of total costs that 
each cost category represents is calculated. These proportions are 
called cost weights. Second, each cost category is matched to an 
appropriate price or wage variable, referred to as a price proxy. These 
price proxies are derived from publicly available statistical series 
that are published on a consistent schedule (preferably at least on a 
quarterly basis). Finally, the cost weight for each cost category is 
multiplied by the established price proxy index level. The sum of these 
products (that is, the cost weights multiplied by their price levels) 
for all cost categories yields the composite index level of the market 
basket for the given time period. Repeating this step for other periods 
produces a series of market basket levels over time. Dividing the 
composite index level of one period by the composite index level for an 
earlier period produces a rate of growth in the input price index over 
that timeframe.
    As previously noted, the market basket is described as a fixed-
weight index because it represents the change in price over time of a 
constant mix (quantity and intensity) of goods and services needed to 
furnish FQHC services. The effects on total costs resulting from 
changes in the mix of goods and services purchased subsequent to the 
base period are not

[[Page 46379]]

measured. For example, a FQHC hiring more nurses to accommodate the 
needs of patients would increase the volume of goods and services 
purchased by the FQHC, but would not be factored into the price change 
measured by a fixed-weight FQHC market basket. Only when the index is 
rebased would changes in the quantity and intensity be captured, with 
those changes being reflected in the cost weights. Therefore, we rebase 
the market baskets periodically so that the cost weights reflect a 
current mix of goods and services purchased (FQHC inputs) to furnish 
FQHC services.
3. Creating a FQHC Market Basket
    In 2015, we began researching the possibility of creating a FQHC 
market basket that would be used in place of the MEI to update the FQHC 
PPS base payment rate annually. An FQHC market basket should reflect 
the cost structures of FQHCs while the MEI reflects the cost structures 
of self-employed physician offices. At the time of implementation of 
the FQHC PPS, a FQHC market basket had not been developed, and 
therefore, the law stipulated that the FQHC PPS base payment rate be 
updated by the MEI for the first year after implementation (CY 2016). 
In subsequent years, the FQHC PPS base payment rate should be annually 
updated by a FQHC market basket, if available.
    The MEI cost weights were derived from data collected by the AMA on 
the Physician Practice Expense Information Survey (PPIS), since 
physicians, unlike other Medicare providers, are not required to 
complete and submit a Medicare Cost Report. FQHCs submit expense data 
annually on the Medicare Cost Report form CMS-222-92 (OMB No: 0938-
0107), ``Independent Rural Health Clinic and Freestanding Federally 
Qualified Health Center Cost Report''; therefore, we were able to 
estimate relative cost weights specific to FQHCs. We define a ``major 
cost weight'' as one calculated using the Medicare cost reports (for 
example, FQHC practitioner compensation). However, the Medicare cost 
report data allows multiple methods for reporting detailed expenses, 
either in detailed cost center lines or more broadly reported in 
general categories of expenses. An alternative data source is used to 
disaggregate further residual costs that could not be classified into a 
major cost category directly using only the Medicare Cost Report data. 
We estimated the cost weights for each year 2009 through 2013 and found 
the cost weights from each year to be similar, which provided 
confidence in the derived cost weights.
    In summary, our research over the past year allowed us to evaluate 
the appropriateness of using freestanding FQHC Medicare cost report 
data to calculate the major cost weights for a FQHC market basket. We 
believe that the proposed methodologies described below create a FQHC 
market basket that reflects the cost structure of FQHCs. Therefore, we 
believe that the use of this proposed 2013-based FQHC market basket to 
update FQHC PPS base payment rate would more accurately reflect the 
actual costs and scope of services that FQHCs furnish compared to the 
2006-based MEI.
4. Development of Cost Categories and Cost Weights for the Proposed 
2013-Based FQHC Market Basket
a. Use of Medicare Cost Report Data
    The proposed 2013-based FQHC market basket consists of eight major 
cost categories, which were derived from the CY 2013 Medicare cost 
reports for freestanding FQHCs. These categories are FQHC-Practitioner 
Compensation, Other Clinical Compensation, Non-Health Compensation, 
Fringe Benefits, Pharmaceuticals, Fixed Capital, Moveable Capital, and 
an All Other (Residual) cost category. The All Other (Residual) cost 
category reflects the costs not captured in the other seven cost 
categories. The CY 2013 Medicare cost reports include all FQHCs whose 
cost reporting period began on or after January 1, 2013, and prior to 
or on December 31, 2013. We selected CY 2013 as the base year because 
the Medicare cost reports for that year were the most recent, complete 
set of Medicare cost report data available for FQHCs at the time of 
development of the cost share weights and proposed 2013-based FQHC 
market basket. As stated above, we compared the cost share weights from 
the MCR for CY 2009 through CY 2013 and the CY 2013 weights were 
consistent with the weights from prior years.
    We began with all FQHCs with reporting periods in CY 2013 (that is, 
between and including January 1, 2013, and December 31, 2013). We then 
excluded FQHCs missing ``total costs'' (that is, any FQHC that did not 
report expenses on Worksheet A, Column 7, Line 62). This edit removed 
83 providers from our analysis. Next, we compared the total Medicare 
allowable costs (that is, total costs eligible for reimbursement under 
the FQHC PPS) to total costs reported on the Medicare cost report. We 
kept FQHCs whose Medicare-allowable costs accounted for 60 percent or 
more of total costs to remove FQHCs whose costs were primarily driven 
by services not covered under the FQHC benefit. For example, FQHCs that 
reported a majority of costs for dental services were excluded from the 
sample. This edit removed 33 FQHCs from our analysis. We used the 
remaining Medicare cost reports to calculate the costs for the eight 
major cost categories (FQHC Practitioner Compensation, Other Clinical 
Compensation, Non-Health Compensation, Fringe Benefits, 
Pharmaceuticals, Fixed Capital, Moveable Capital, and All Other 
(Residual) costs).
    The resulting 2013-based FQHC market basket cost weights reflect 
Medicare allowable costs. We propose to define Medicare allowable costs 
for freestanding FQHC facilities as: Worksheet A, Columns 1 and 2, cost 
centers lines 1 through 51 but excluding line 20, which is professional 
liability insurance (PLI). We exclude PLI costs from the total Medicare 
allowable costs because FQHCs that receive section 330 grant funds also 
are eligible to apply for medical malpractice coverage under Federally 
Supported Health Centers Assistance Act (FSHCAA) of 1992 (Pub. L. 102-
501) and FSHCAA of 1995 (Pub. L. 104-73 amending section 224 of the 
Public Health Service Act). Below we derive the eight major cost 
categories.
    (1) FQHC Practitioner Compensation: A FQHC practitioner is defined 
as one of the following occupations: Physicians, NPs, PAs, CNMs, 
Clinical Psychologist (CPs), and Clinical Social Worker (CSWs). Under 
certain conditions, a FQHC visit also may be provided by qualified 
practitioners of outpatient DSMT and MNT when the FQHC meets the 
relevant program requirements for provision of these services. FQHC 
Practitioner Compensation costs are derived as the sum of compensation 
and other costs as reported on Worksheet A; columns 1 and 2; lines 1, 
2, 3, 6, 7, 13, 14. The Medicare cost reports also captures ``Other'' 
compensation costs (the sum of costs reported on Worksheet A; columns 1 
and 2; lines 9, 10, 11, and 15). We allocate a portion of these 
compensation costs to FQHC Practitioner compensation by multiplying 
this amount by the ratio of FQHC Practitioner compensation costs to the 
sum of FQHC Practitioner compensation costs and Other Clinical 
compensation costs. We believe that the assumption of distributing the 
costs proportionally is reasonable since there is no additional detail 
on the specific occupations these compensation costs represent. We also 
include a proportion of Fringe Benefit

[[Page 46380]]

costs as described in section III.B.1.a.iv of this proposed rule.
    (2) Other Clinical Compensation: Other Clinical Compensation 
includes any health-related clinical staff who does not fall under the 
definition of a FQHC practitioner from paragraph (1) (FQHC Practitioner 
Compensation). Other Clinical Compensation costs are derived as the sum 
of compensation and other costs as reported on Worksheet A; columns 1 
and 2; lines 4, 5, and 8. Similar to the FQHC Practitioner 
compensation, we also allocate a proportion of the ``Other'' Clinical 
compensation costs by multiplying this amount by the ratio of Other 
Clinical Compensation costs to the sum of FQHC Practitioner 
Compensation costs and Other Clinical compensation costs. Given the 
ambiguity in the costs reported on these lines, we believe that the 
assumption of distributing the costs proportionally is reasonable since 
there is no additional detail on the specific occupations these 
compensation costs represent. We also include a proportion of Fringe 
Benefit costs as described in section III.B.1.a.iv of this proposed 
rule.
    (3) Non-Health Compensation: Non-Health Compensation includes 
compensation costs for Office Staff, Housekeeping & Maintenance, and 
Pharmacy. Non-Health Compensation costs are derived as the sum of 
compensation costs as reported on Worksheet A; column 1 only for lines 
32 and 51; and Worksheet A; both columns 1 and 2 for line 38. We only 
use the costs from column 1 for housekeeping and maintenance and 
pharmacy since we believe that there are considerable costs other than 
compensation that could be reported for these categories. We use the 
costs from both column 1 and column 2 for office salaries (line 38) 
since only salaries or compensation should be reported on this line. We 
also include a proportion of Fringe Benefit costs as described in 
section III.B.1.a.iv of this proposed rule.
    (4) Fringe Benefits: Worksheet A; columns 1 and 2; line 45 of the 
Medicare cost report captures fringe benefits and payroll tax expenses. 
We proposed to estimate the fringe benefit cost weight as the fringe 
benefits costs divided by total Medicare allowable costs. We propose to 
allocate the Fringe Benefits cost weight to the three compensation cost 
categories (FQHC practitioner compensation, other clinical 
compensation, and non-health compensation) based on their relative 
proportions. The fringe benefits ratio is equal to the compensation 
cost weight as a percent of the sum of the compensation cost weights 
for all three types of workers. These allocation ratios are 46 percent, 
14 percent, and 40 percent, respectively. Therefore, we propose to 
allocate 46 percent of the fringe benefits cost weight to the FQHC 
practitioner cost weight, 14 percent of the fringe benefits cost weight 
to the clinical compensation cost weight, and 40 percent of the fringe 
benefits cost weight to the non-health compensation cost weight. Table 
28 shows the three compensation category cost weights after the fringe 
benefit cost weight is allocated for the proposed 2013-based FQHC 
market basket.

   Table 28--Compensation Category Cost Weights After Fringe Benefits
                               Allocation
------------------------------------------------------------------------
                                           Before fringe   After fringe
              Cost category                  benefits        benefits
                                          allocation (%)  allocation (%)
------------------------------------------------------------------------
FQHC Practitioner Compensation..........            26.8            31.8
Other Clinical Compensation.............             8.1             9.5
Non-Health Compensation.................            23.1            27.4
Fringe Benefits (distribute to comp)....            10.7             0.0
------------------------------------------------------------------------

    We believe that distributing the fringe benefit expenses reported 
on line 45 using the provider-specific compensation ratios is 
reasonable.
    (5) Pharmaceuticals: Drugs and biologicals that are not usually 
self-administered, and certain Medicare-covered preventive injectable 
drugs are paid incident to a FQHC visit. Therefore, pharmaceutical 
costs include the non-compensation costs reported on Worksheet A, 
column 2, for the pharmacy cost center (line 51). We note that 
pharmaceutical costs are not included in the MEI since pharmaceutical 
costs are paid outside of the PFS.
    (6) Fixed Capital: Fixed capital costs are equal to the sum of 
costs for rent, interest on mortgage loans, depreciation on buildings 
and fixtures, and property tax as reported on Worksheet A; columns 1 
and 2; lines 26, 28, 30, and 33.
    (7) Moveable Capital: Moveable capital costs are equal to the sum 
of costs for depreciation of medical equipment, office equipment, and 
other equipment as reported on Worksheet A; column 1 and 2; lines 19, 
31, and 39.
    (8) All Other (Residual): After estimating the expenses for the 
seven cost categories listed above, we summed all remaining costs 
together for each FQHC to come up with All Other (Residual) costs. The 
costs included in the All Other (Residual) category include all costs 
reported for medical supplies, transportation, allowable GME pass 
through costs, facility insurance, utilities, office supplies, legal, 
accounting, administrative insurance, telephone, housekeeping & 
maintenance, nondescript healthcare costs, nondescript facility costs, 
and nondescript administrative costs.
    Although a cost weight for these categories could be obtained 
directly from the costs reported in that cost center's respective line 
on the cost report form, some FQHCs reported significant costs in other 
(specify), or ``free form,'' lines which made it difficult to determine 
the accuracy of these costs. For example, some FQHCs reported costs 
only in the free form lines and not in the cost center specific lines, 
while other FQHCs reported costs in both the cost center specific lines 
and the free form lines. Since a majority of FQHCs used the free form 
lines, relying solely on the costs reported in the cost center specific 
lines for costs could lead to an inaccurate cost weights in the market 
basket. For example, if a FQHC reported all other healthcare costs in 
line 21 rather than breaking the healthcare costs into the detailed 
cost centers (lines 17 through 20.50), then the cost weight for medical 
supplies could be lower than it should be if we did not allocate the 
costs reported in the free form lines to medical supplies.
    Section III.B.1.b explains the method used to allocate the residual 
costs to more detailed cost categories.
    After we derived costs for the eight major cost categories for each 
FQHC using the Medicare cost report data as previously described, we 
addressed data outliers using the following steps. First,

[[Page 46381]]

we divided the costs for each of the eight categories by total Medicare 
allowable costs for each FQHC. We then removed those FQHCs whose 
derived cost weights fell in the top and bottom 5 percent of provider 
specific derived cost weights. Five percent is the standard trim 
applied for all CMS market basket cost weights. After these outliers 
were removed, we summed the costs for each category across all 
remaining FQHCs. We then divided this by the sum of total Medicare 
allowable costs across all remaining FQHCs to obtain a cost weight for 
the proposed 2013-based FQHC market basket for the given category. See 
Table 29 for the resulting cost weights for these major cost categories 
that we obtained from the Medicare cost reports.

  Table 29--Major Cost Categories as Derived From Medicare Cost Reports
------------------------------------------------------------------------
                                                             2013 FQHC
                      Cost category                         weight (%)
------------------------------------------------------------------------
FQHC Practitioner Compensation..........................            26.8
Other Clinical Compensation.............................             8.1
Non-Health Compensation.................................            23.1
Fringe Benefits (distribute to compensation)............            10.7
Fixed Capital...........................................             4.5
Moveable Capital........................................             1.7
Non Salary Pharmaceuticals..............................             5.1
All Other (Residual)....................................            20.1
------------------------------------------------------------------------
Totals may not sum to 100.0% due to rounding.

b. Derivation of Detailed Cost Categories From the All Other (Residual) 
Cost Weight
    The All Other Residual cost weight was derived from summing all 
expenses reported on the Medicare cost report Worksheet A, columns 1 
and 2 for medical supplies (line 17), transportation (line 18), 
allowable GME pass through costs (line 20.50), facility insurance (line 
27), utilities (line 29), office supplies (line 40), legal (line 41), 
accounting (line 42), administrative insurance (line 43), telephone 
(line 44), non-compensation housekeeping & maintenance (line 32, column 
2 only), nondescript healthcare costs (lines 21-23), nondescript 
facility costs (lines 34-36), and nondescript administrative costs 
(lines 54-56).
    To further divide the ``All Other'' residual cost weight (20.1 
percent) estimated from the CY 2013 Medicare cost report data into more 
detailed cost categories, we propose to use the relative cost shares 
from the 2006-based MEI for nine detailed cost categories: Utilities; 
Miscellaneous Office Expenses; Telephone; Postage; Medical Equipment; 
Medical Supplies; Professional, Scientific, & Technical Services; 
Administrative & Facility Services; and Other Services. For example, 
the Utilities cost represents 7 percent of the sum of the 2006-based 
MEI ``All Other'' cost category weights; therefore, the Utilities cost 
weight would represent 7 percent of the proposed 2013-based FQHC market 
basket's ``All Other'' cost category (20.066 percent), yielding a 
``final'' Utilities proposed cost weight of 1.4 percent in the proposed 
2013-based LTCH market basket (7 percent * 20.1 percent = 1.4 percent).
    Table 30 shows the cost weight for each matching category from the 
2006-based MEI, the percent each cost category represents of the 2006-
based MEI ``All Other'' cost weight, and the resulting proposed 2013-
based FQHC market basket cost weights for detailed cost categories.

                             Table 30--Proposed Detailed FQHC Cost Category Weights
----------------------------------------------------------------------------------------------------------------
                                                                                  Percent of the
                                                                  2006-based MEI  2006-based MEI  Proposed 2013-
             Proposed FQHC detailed cost categories                cost weights    ``All Other''    based FQHC
                                                                        (%)         cost weight    detailed cost
                                                                                        (%)         weights (%)
----------------------------------------------------------------------------------------------------------------
Total All Other (Residual)......................................          17.976         100.000            20.1
Utilities.......................................................           1.266             7.0             1.4
Miscellaneous Office Expenses...................................           2.478            13.8             2.8
Telephone.......................................................           1.501             8.4             1.7
Postage.........................................................           0.898             5.0             1.0
Medical Equipment...............................................           1.978            11.0             2.2
Medical supplies................................................           1.760             9.8             2.0
Professional, Scientific, & Tech. Services......................           2.592            14.4             2.9
Administrative & Facility Services..............................           3.052            17.0             3.4
Other Services..................................................           2.451            13.6             2.7
----------------------------------------------------------------------------------------------------------------

    FQHCs have liberty in how and where certain costs are reported on 
the Medicare cost report form. We believe that, given the ambiguity in 
how the data are reported for these overhead cost centers on the FQHC 
cost report form, relying on the relative shares determined from the 
MEI is reasonable. We hope that future cost data from the upcoming 
revised FQHC cost report form will allow us to better estimate the 
detailed cost weights for these categories directly. All FQHCs will 
report costs on the new forms for cost report periods for CY 2016 
expenses. For details regarding how the 2006-based MEI cost categories 
were derived, see the CY 2011 PFS final rule with comment period (75 FR 
73262 through 73267). The following is a description of the types of 
expenses included in detailed cost categories derived from the All 
Other (Residual) cost category:
     Utilities: Includes expenses classified in the fuel, oil 
and gas, water and sewage, and electricity industries. These types of 
industries are classified in NAICS and include NAICS 2211 (Electric 
power generation, transmission, and distribution), 2212 (Natural gas 
distribution), and 2213 (Water, sewage, and other systems).
     Miscellaneous Office Expense: Includes expenses for office 
expenses not reported in other categories, miscellaneous expenses, 
included but not limited to, paper (such as paper towels), printing 
(such as toner for printers), miscellaneous chemicals (such as soap and 
hand sanitizer).
     Telephone: Includes expenses classified in NAICS 517

[[Page 46382]]

(Telecommunications) and NAICS 518 (Internet service providers), and 
NAICS 515 (Cable and other subscription programming). Telephone 
service, which is one component of the Telecommunications expenses, 
accounts for the majority of the expenditures in this cost category.
     Postage: Includes expenses classified in NAICS 491 (Postal 
services) and NAICS 492 (Courier services).
     Medical Equipment Expenses: Includes the expenses related 
to maintenance contracts, and the leases or rental of medical equipment 
used in diagnosis or treatment of patients. It would also include the 
expenses for any medical equipment that was purchased in a single year 
and not financed.
     Medical Supplies Expenses: Includes the expenses related 
to medical supplies such as sterile gloves, needles, bandages, specimen 
containers, and catheters. We note that the Medical Supply cost 
category does not include expenses related to pharmaceuticals (drugs 
and biologicals).
     Professional, Scientific, & Technical Services: Includes 
the expenses for any professional services purchased from an outside 
agency or party and could include fees including but not limited to, 
legal, marketing, professional association memberships, licensure fees, 
journal fees, continuing education.
     Administrative & Facility Services: Includes the expenses 
for any administrative and facility services purchased from an outside 
agency or party and could include fees including but not limited to, 
accounting, billing, office management services, security services, 
transportation services, landscaping, or professional car upkeep.
     Other Services: Includes other service expenses including, 
but not limited to, nonresidential maintenance and repair, machinery 
repair, janitorial, and security services.
    Table 31 shows the proposed cost categories and weights for the 
2013-based FQHC market basket. The resulting cost weights include 
combining the cost weights derived from the Medicare Cost Report Data 
(shown in Table 29), distributing the fringe benefits weight across the 
three compensation cost categories (shown in Table 28), and 
disaggregating the residual cost weight into detailed cost categories 
(shown in Table 30). Additionally, we compare the cost weights of the 
proposed 2013-based FQHC market basket to the cost weights in the 2006-
based MEI, where we have grouped the cost weights from the MEI to align 
with the FQHC proposed cost categories.

                  Table 31--Proposed FQHC Market Basket and MEI, Cost Categories, Cost Weights
----------------------------------------------------------------------------------------------------------------
                                                   2013 FQHC       2006 MEI
              FQHC cost category                    weight          weight              MEI cost category
                                                   (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
FQHC Market Basket............................           100.0         100.000  MEI.
    Total Compensation........................            68.7          67.419     Total Compensation.
        FQHC Practitioner Compensation........            31.7          50.866       Physician Compensation.
        Other Clinical Compensation...........             9.5           6.503       Other Clinical
                                                                                      Compensation.
        Non-health Compensation...............            27.4          10.050       Non-health Compensation.
    All Other Products........................            16.1          14.176     All Other Products.
        Utilities.............................             1.4           1.266     Utilities.
        Miscellaneous Office Expenses.........             2.8           2.478     Miscellaneous Office
                                                                                    Expenses.
        Telephone.............................             1.7           1.501       Telephone.
        Postage...............................             1.0           0.898       Postage.
        Medical Equipment.....................             2.2           1.978       Medical Equipment.
        Medical Supplies......................             2.0           1.760       Medical Supplies.
        Professional Liability Insurance......  ..............           4.295       Professional Liability
                                                                                      Insurance.
        Pharmaceuticals.......................             5.1  ..............       Pharmaceuticals.
       All Other Services.....................             9.0           8.095     All Other Services.
        Professional, Scientific & Technical               2.9           2.592       Professional, Scientific &
         Services.                                                                    Technical Services.
        Administrative & Facility Services....             3.4           3.052       Administrative & Facility
                                                                                      Services.
        Other Services........................             2.7           2.451       Other Services.
    Capital...................................             6.1          10.310     Capital.
        Fixed Capital.........................             4.5           8.957       Fixed Capital.
        Moveable Capital......................             1.7           1.353       Moveable Capital.
----------------------------------------------------------------------------------------------------------------

    Although the overall cost structure of the MEI, the index currently 
used to update the FQHC PPS base payment, is similar to the proposed 
FQHC cost structure, there are a few key differences.
    First, though total compensation costs in the proposed FQHC market 
basket and the MEI are each approximately 67-68 percent of total costs, 
non-health compensation accounts for a larger share of compensation 
costs in the FQHC setting than in the self-employed physician office. 
Likewise, physician compensation accounts for a larger percentage of 
costs in the MEI than FQHC practitioner compensation accounts for in 
the proposed FQHC market basket.
    Second, the proposed FQHC market basket includes a cost category 
for pharmaceuticals, while drug costs are excluded from the MEI. Drug 
costs are an expense in the FQHC PPS base payment rate since drugs and 
biologicals that are not usually self-administered, and certain 
Medicare-covered preventive injectable drugs are paid incident to a 
visit while drug costs are reimbursed separately under the PFS.
    Third, as mentioned previously, PLI expenditures are excluded from 
the proposed FQHC market basket since most FQHCs PLI costs are covered 
under the Federal Tort Claims Act, while in the MEI the PLI costs are a 
significant expense for self-employed physicians. Finally, fixed 
capital expenses, which include costs such as office rent and 
depreciation, are about half of the share in the FQHC market basket as 
they are in the MEI.
c. Selection of Price Proxies for the Proposed 2013-Based FQHC Market 
Basket
    After establishing the 2013 cost weights for the proposed FQHC 
market basket, an appropriate price proxy was selected for each cost 
category. The proposed price proxies are chosen from a set of publicly 
available price indexes

[[Page 46383]]

that best reflect the rate of price change for each cost category in 
the FQHC market basket. All of the proxies for the proposed 2013-based 
FQHC market basket are based on indexes published by the Bureau of 
Labor Statistics (BLS) and are grouped into one of the following BLS 
categories:
     Producer Price Indexes: Producer Price Indexes (PPIs) 
measure price changes for goods sold in markets other than the retail 
market. PPIs are preferable price proxies for goods and services that 
businesses purchase as inputs. For example, we are proposing to use a 
PPI for prescription drugs, rather than the Consumer Price Index (CPI) 
for prescription drugs, because healthcare providers generally purchase 
drugs directly from a wholesaler. The PPIs that we are proposing to use 
measure price changes at the final stage of production.
     Consumer Price Indexes: CPIs measure change in the prices 
of final goods and services bought by the typical consumer. Because 
they may not represent the price encountered by a producer, we are 
proposing to use CPIs only if an appropriate PPI is not available, or 
if the expenditures are more like those faced by retail consumers in 
general rather than by purchasers of goods at the wholesale level.
     Employment Cost Indexes: Employment Cost Indexes (ECIs) 
measure the rate of change in employee wage rates and employer costs 
for employee benefits per hour worked. These indexes are fixed-weight 
indexes and strictly measure the change in wage rates and employee 
benefits per hour. Appropriately, they are not affected by shifts in 
employment mix.
    We evaluate the price proxies using the criteria of reliability, 
timeliness, availability, and relevance. Reliability indicates that the 
index is based on valid statistical methods and has low sampling 
variability. Timeliness implies that the proxy is published regularly, 
preferably at least once a quarter. Availability means that the proxy 
is publicly available. Finally, relevance means that the proxy is 
applicable and representative of the cost category weight to which it 
is applied. We believe the proposed PPIs, CPIs, and ECIs selected meet 
these criteria.
    Table 32 lists all price proxies that we are proposing to use for 
the 2013-based FQHC market basket. Below is a detailed explanation of 
the price proxies that we are proposing for each cost category weight. 
We note that many of the proxies that we are proposing for the 2013-
based FQHC market basket are the same as those used for the 2006-based 
MEI.
    (1) FQHC Practitioner Compensation: We are proposing to use the ECI 
for Total Compensation for Private Industry Workers in Professional and 
Related) (BLS series code CIU2010000120000I) to measure price growth of 
this category. There is no specific ECI for physicians and, therefore, 
similar to the MEI, we are proposing to use an index that is based on 
professionals that receive advanced training. We note that the 2006-
based MEI has a separate cost category for Physician Wages and Salaries 
and Physician Benefits. For these cost categories, the MEI uses the ECI 
for Wages and Salaries and ECI for Benefits for Professional and 
Related Occupations.
    (2) Other Clinical Compensation: We are proposing to use the ECI 
for Total Compensation for all Civilian Workers in Health Care and 
Social Assistance (BLS series code CIU1016200000000I) to measure the 
price growth of this cost category. This cost category consists of 
compensation costs for Nurses, Laboratory Technicians, and all other 
health staff not included in the FQHC practitioner compensation 
category. Based on the clinical composition of these workers, we 
believe that the ECI for health-related workers is an appropriate proxy 
to measure compensation price pressures for these workers. The MEI uses 
the ECI for Wages and Salaries and benefits for Hospitals.
    (3) Non-Health Compensation: We are proposing to use the ECI for 
Total Compensation for Private Industry Workers in Office and 
Administrative Support (BLS series code CIU2010000220000I) to measure 
the price growth of this cost category. The Non-health compensation 
cost weight is predominately attributable to administrative and 
facility type occupations, as reported in the data from the Medicare 
cost reports. We note the MEI has a composite index of four price 
proxies, with the majority of the composite index accounted for by 
administrative occupations, proxied by the ECI for Wages & Salaries of 
Office and Administrative Support (Private).
    (4) Utilities: We are proposing to use the CPI for Fuel and 
Utilities (BLS series code CUUR0000SAH2) to measure the price growth of 
this cost category. This is the same proxy used in the 2006-based MEI.
    (5) Miscellaneous Office Expenses: We are proposing to use the CPI 
for All Items Less Food and Energy (BLS series code CUUR0000SA0L1E) to 
measure the price growth of this cost category. We believe that using 
the CPI for All Items Less Food and Energy avoids double counting of 
changes in food and energy prices already captured elsewhere in the 
market basket. We note the MEI does not have a separate cost category 
for miscellaneous office expenses.
    (6) Telephone Services: We are proposing to use the CPI for 
Telephone Services (BLS series code CUUR0000SEED) to measure the price 
growth of this cost category. This is the same price proxy used in the 
2006-based MEI.
    (7) Postage: We are proposing to use the CPI for Postage (BLS 
series code CUUR0000SEEC01) to measure the price growth of this cost 
category. This is the same proxy used in the 2006-based MEI.
    (8) Medical Equipment: We are proposing to use the PPI Commodities 
for Surgical and Medical Instruments (BLS series code WPU1562) as the 
price proxy for this category. This is the same proxy used in the 
current 2006-based MEI.
    (9) Medical Supplies: We are proposing to use a 50/50 blended index 
comprised of the PPI Commodities for Medical and Surgical Appliances 
and Supplies (BLS series code WPU156301) and the CPI-U for Medical 
Equipment and Supplies (BLS series code CUUR0000SEMG). The 50/50 blend 
is used in all market baskets where we do not have an accurate split 
available. We believe FQHCs purchase the types of supplies contained 
within these proxies, including such items as bandages, dressings, 
catheters, intravenous equipment, syringes, and other general 
disposable medical supplies, via wholesale purchase, as well as at the 
retail level. Consequently, we are proposing to combine the two 
aforementioned indexes to reflect those modes of purchase. This is the 
same proxy used in the 2006-based MEI.
    (10) Pharmaceuticals: We are proposing to use the PPI Commodities 
for Pharmaceuticals for Human Use, Prescription (BLS series code 
WPUSI07003) to measure the price growth of this cost category. We note 
the MEI does not have a separate cost category for Pharmaceuticals. 
This price proxy is used to measure prices of Pharmaceuticals in other 
CMS market baskets, such as 2010-based Inpatient Prospective Payment 
System and 2010-based Skilled Nursing Facility market baskets.
    (11) Professional, Scientific, & Technical Services: We are 
proposing to use the ECI for Total Compensation for Private Industry 
Workers in Professional, Scientific, and Technical Services (BLS series 
code CIU2015400000000I) to measure the price growth of this cost 
category. This

[[Page 46384]]

is the same proxy used in the 2006-based MEI.
    (12) Administrative & Facility Services: We are proposing to use 
the ECI Total Compensation for Private Industry Workers in Office and 
Administrative Support (BLS series code CIU2010000220000I) to measure 
the price growth of this cost category. This is the same price proxy 
used in the 2006-based MEI.
    (13) Other Services: We are proposing to use the ECI for Total 
Compensation for Private Industry Workers in Service Occupations (BLS 
series code CIU2010000300000I) to measure the price growth of this cost 
category. This is the same price proxy used in the 2006-based MEI.
    (14) Fixed Capital: We are proposing to use the PPI Industry for 
Lessors of Nonresidential Buildings (BLS series code PCU531120531120) 
to measure the price growth of this cost category. This is the same 
price proxy used in the 2006-based MEI. We believe this is an 
appropriate proxy since fixed capital expenses in FQHCs should reflect 
inflation for the rental and purchase of business office space.
    (15) Moveable Capital: We are proposing to use the PPI Commodities 
for Machinery and Equipment (series code WPU11) to measure the price 
growth of this cost category as this cost category represents 
nonmedical moveable equipment. This is the same proxy used in the 2006-
based MEI.
    Table 32 lists the proposed price proxies for each cost category in 
the proposed FQHC market basket.

Table 32--Proposed Cost Categories and Price Proxies for the FQHC Market
                                 Basket
------------------------------------------------------------------------
             Cost category                      FQHC price proxies
------------------------------------------------------------------------
FQHC Practitioner Compensation.........  ECI--for Total Compensation for
                                          Private Industry Workers in
                                          Professional and Related.
Other Clinical Compensation............  ECI--for Total Compensation for
                                          all Civilian Workers in Health
                                          Care and Social Assistance.
Non-health Compensation................  ECI--for Total Compensation for
                                          Private Industry Workers in
                                          Office and Administrative
                                          Support.
Utilities..............................  CPI-U for Fuels and Utilities.
Miscellaneous Office Expense...........  CPI-U for All Items Less Food
                                          And Energy.
Telephone..............................  CPI-U for Telephone.
Postage................................  CP-U for Postage.
Medical Equipment......................  PPI Commodities for Surgical
                                          and Medical Instruments.
Medical supplies.......................  Blend: PPI Commodities for
                                          Medical and Surgical
                                          Appliances and Supplies and
                                          CPI for Medical Equipment and
                                          Supplies.
Pharmaceuticals........................  PPI Commodities for
                                          Pharmaceuticals for Human Use,
                                          Prescription.
Professional, Scientific, and Technical  ECI--for Total Compensation for
 Services.                                Private Industry Workers in
                                          Professional, Scientific, and
                                          Technical Services.
Administrative & Facility Services.....  ECI--for Total Compensation for
                                          Private Industry Workers in
                                          Office and Administrative
                                          Support.
Other Services.........................  ECI--for Total compensation for
                                          Private industry workers in
                                          Service Occupations.
Fixed Capital..........................  PPI Industry--for Lessors of
                                          nonresidential buildings.
Moveable Capital.......................  PPI Commodities--for Machinery
                                          and Equipment.
------------------------------------------------------------------------

d. Inclusion of Multi-Factor Productivity in the Proposed FQHC Market 
Basket
    Section 1834(o)(2)(B)(ii) of the Act describes the methods for 
determining updates to FQHC PPS payment. After the first year of 
implementation, the FQHC PPS base payment rate must be increased by the 
percentage increase in the MEI. In subsequent years, the FQHC PPS base 
payment rate shall be increased by the percentage increase in a market 
basket of FQHC goods and services as established through regulations 
or, if not available, the MEI published in the PFS final rule.
    The MEI published in the PFS final rule has a productivity 
adjustment. The MEI has been adjusted for changes in productivity since 
its inception. In the CY 2003 PFS final rule with comment period (67 FR 
80019), we implemented a change in the way the MEI was adjusted to 
account for changes in productivity. The MEI used for the 2003 
physician payment update incorporated changes in the 10-year moving 
average of private nonfarm business (economy-wide) multifactor 
productivity. Previously, the index incorporated changes in 
productivity by adjusting the labor portions of the index by the 10-
year moving average of private nonfarm business (economy-wide) labor 
productivity.
    In 2012, we convened the MEI Technical Panel to review all aspects 
of the MEI including inputs, input weights, price-measurement proxies, 
and productivity adjustment. For more information regarding the MEI 
Technical Panel, see the CY 2014 PFS final rule with comment period (78 
FR 74264). The MEI Technical Panel was asked to review the approach of 
adjusting the MEI by the 10-year moving average of private nonfarm 
business productivity. As described in the CY 2014 PFS final rule with 
comment period (78 FR 74271), the MEI Technical Panel concluded in 
Finding 5.1 that ``such an adjustment continues to be appropriate. This 
adjustment prevents `double counting' of the effects of productivity 
improvements, which would otherwise be reflected in both (i) the 
increase in compensation and other input price proxies underlying the 
MEI, and (ii) the growth in the number of physician services performed 
per unit of input resources, which results from advances in 
productivity by individual physician practices.''
    We are proposing to include a productivity adjustment similar to 
the MEI in the proposed FQHC market basket. We believe that applying a 
productivity adjustment is appropriate because this would be consistent 
with the MEI, which has an embedded productivity adjustment. We note 
that the MEI Technical Panel concluded that a productivity adjustment 
is appropriate for the MEI given the type of services performed in 
physician's offices. Specifically, the MEI Technical Panel report 
states that ``The input price increases within the MEI are reflected in 
the price proxies, such as changes in wages and benefits. Wages 
increase, in part, due to the ability of workers to increase the amount 
of output per unit of input. Absent a productivity

[[Page 46385]]

adjustment in the MEI, physicians would be receiving increased payments 
resulting both from their ability to increase their individual outputs 
and from the productivity gains already reflected in the wage proxies 
used in the index. The productivity adjustment used in the MEI ensures 
the productivity gains reflected in increased outputs are not double 
counted, or paid for twice. Currently, the productivity adjustment in 
the MEI is based on changes in economy-wide productivity based on the 
rationale that the price proxy for physician income reflects changes in 
economy-wide wages. Implicitly, this assumes physicians can achieve the 
same level of productivity as the average general wage earner.'' We 
believe that the services performed in FQHC facilities are similar to 
those covered by the MEI, and therefore, a productivity adjustment is 
appropriate to avoid double counting of the effects of productivity 
improvements.
    We propose to use the most recent estimate of the 10-year moving 
average of changes in annual private nonfarm business (economy-wide) 
multifactor productivity (MFP), which is the same measure of MFP used 
in the MEI. The BLS publishes the official measure of private nonfarm 
business MFP. (See http://www.bls.gov/mfp for the published BLS 
historical MFP data). For the final FQHC market basket update, we 
propose to use the most recent historical estimate of annual MFP as 
published by the BLS. Generally, the most recent historical MFP 
estimate is lagged two years from the payment year. Therefore, we 
propose to use the 2015 MFP as published by BLS in the CY2017 FQHC 
market basket update.
    We note that MFP is derived by subtracting the contribution of 
labor and capital input growth from output growth. Since at the time of 
the proposed rule the 2015 MFP has not been published by BLS, we rely 
on a projection of MFP. The projection of MFP is currently produced by 
IHS Global Insight (IGI), a national economic forecasting firm with 
which CMS contracts to forecast the components of the market basket and 
MFP. A complete description of the MFP projection methodology is 
available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MedicareProgramRatesStats/MarketBasketResearch.html.
    Using IGI's first quarter 2016 forecast, the productivity 
adjustment for CY 2017 (the 10-year moving average of MFP for the 
period ending CY 2015) is projected to be 0.4 percent. If more recent 
data are subsequently available (for example, a more recent estimate of 
the market basket and MFP adjustment), we would use such data to 
determine the CY 2017 increase in the proposed FQHC market basket in 
the final rule.
5. CY 2017 Proposed Market Basket Update: Proposed CY 2017 FQHC Market 
Basket Update Compared to the MEI Update for CY 2017
    For CY 2017, we are proposing to use the proposed 2013-based FQHC 
market basket increase factor to update the FQHC PPS base payment rate. 
Consistent with CMS practice, we estimated the market basket update for 
the FQHC PPS based on the most recent forecast from IGI. Identical to 
the MEI, we are proposing to use the update based on the most recent 
historical data available at the time of publication of the final rule. 
For example, the final CY 2017 FQHC update would be based on the four-
quarter moving-average percent change of the FQHC market basket through 
the second quarter of 2016 (based on the final rule's statutory 
publication schedule). For the proposed rule, we do not have the second 
quarter of 2016 historical data and, therefore, we will use the most 
recent projection available.
    Based on IGI's first quarter 2016 forecast with historical data 
through the fourth quarter of 2015, the projected proposed FQHC market 
basket increase factor for CY 2017 would be 1.7 percent. This reflects 
a 2.1-percent increase of FQHC input prices and a 0.4-percent 
adjustment for productivity. We are also proposing that if more recent 
data are subsequently available (for example, a more recent estimate of 
the market basket or MFP) we would use such data, to determine the CY 
2017 update in the final rule.
    For comparison, the 2006-based MEI is projected to be 1.3 percent 
in CY 2017; this estimate is based on IGI's first quarter 2016 forecast 
(with historical data through the fourth quarter of 2015). Table 33 
compares the proposed 2013-based FQHC market basket updates and the 
2006-based MEI market basket updates for CY 2017.

          Table 33--FQHC Market Basket and MEI, Cost Categories, Cost Weights, MFP, and CY 2017 Update
----------------------------------------------------------------------------------------------------------------
                                                        CY 2017 Update
              FQHC cost category               --------------------------------         MEI cost category
                                                   (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
FQHC Market Basket............................             1.7             1.3  MEI.
Productivity adjustment.......................             0.4             0.4  Productivity adjustment.
FQHC Market Basket (unadjusted)...............             2.1             1.7  MEI (unadjusted).
    Total Compensation........................             2.1             2.0     Total Compensation.
        FQHC Practitioner Comp................             1.9             2.0       Physician Compensation.
        Other Clinical Compensation...........             1.9             2.0       Other Clinical
                                                                                      Compensation.
        Non-health Compensation...............             2.4             2.4       Non-health Compensation.
    All Other Products........................             2.6            -0.6     All Other Products.
        Utilities.............................            -3.9            -3.9       Utilities.
        Miscellaneous Office Expenses.........             2.0            -1.7       Miscellaneous Office
                                                                                      Expenses.
        Telephone.............................             0.4             0.4       Telephone.
        Postage...............................             0.3             0.3       Postage.
        Medical Equipment.....................             1.2             1.2       Medical Equipment.
        Medical Supplies......................            -0.4            -0.4       Medical Supplies.
        Professional Liability Insurance......  ..............            -0.4       Professional Liability
                                                                                      Insurance.
        Pharmaceuticals.......................             7.8  ..............       Pharmaceuticals.
    All Other Services........................             2.0             2.0     All Other Services.
        Professional, Scientific & Technical               1.5             1.5       Professional, Scientific &
         Services.                                                                    Technical Services.
        Administrative & Facility Services....             2.4             2.4       Administrative & Facility
                                                                                      Services.
        Other Services........................             1.9             1.9       Other Services.
    Capital...................................             1.6             1.9     Capital.
        Fixed Capital.........................             2.1             2.1       Fixed Capital.
        Moveable Capital......................             0.1             0.1       Moveable Capital.
----------------------------------------------------------------------------------------------------------------


[[Page 46386]]

    For CY 2017, the proposed 2013-based FQHC market basket update (1.7 
percent) is 0.4 percent higher than the 2006-based MEI (1.3 percent). 
The 0.4 percentage point difference stems mostly from the inclusion of 
pharmaceuticals in the proposed FQHC market basket. Prices for 
pharmaceuticals are projected to grow 7.8 percent, faster than the 
other components in the market basket. This cost category and 
associated price pressures are not included in the MEI.
    We propose to update the FQHC PPS base payment rate by 1.7 percent 
for CY 2017 based on the proposed 2013-based FQHC market basket. The 
proposed FQHC market basket would more accurately reflect the actual 
costs and scope of services that FQHCs furnish compared to the 2006-
based MEI. We invite public comment on all aspects of the FQHC market 
basket proposals.

C. 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) of the Act directing us to establish a program to 
promote the use of appropriate use criteria (AUC) for advanced 
diagnostic imaging services. The CY 2016 PFS final rule with comment 
period addressed the initial component of the new Medicare AUC program, 
specifying applicable AUC. In that rule we established evidence-based 
process and transparency requirements for the development of AUC, 
defined provider-led entities (PLEs) and established the process by 
which PLEs may become qualified to develop, modify or endorse AUC. The 
first list of qualified PLEs are expected to be posted on the CMS Web 
site by the end of June 2016 at which time their AUC libraries will be 
considered to be specified AUC for purposes of section 1834(q)(2)(A) of 
the Act.
    This rule proposes requirements and processes for specification of 
qualified clinical decision support mechanisms (CDSMs) under the 
Medicare AUC program; the initial list of priority clinical areas; and 
exceptions to the requirement that ordering professionals consult 
specified applicable AUC when ordering applicable imaging services.
1. Background
    AUC 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). For purposes of this program, 
AUC are a set or library of individual appropriate use criteria. Each 
individual criterion is an evidence-based guideline for a particular 
clinical scenario. Each scenario in turn starts with a patient's 
presenting symptoms and/or condition. 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 clinical presentation.
    AUC need to be integrated as seamlessly as possible into the 
clinical workflow. CDSMs are the electronic portals through which 
clinicians would access the AUC during the patient workup. While CDSMs 
can be standalone applications that require direct entry of patient 
information, they may be more effective when they automatically 
incorporate information such as specific patient characteristics, 
laboratory results, and lists of co-morbid diseases from Electronic 
Health Records (EHRs) and other sources. Ideally, practitioners would 
interact directly with the CDSM through their primary user interface, 
thus minimizing interruption to the clinical workflow.
    Consistent with definitions of CDSM by the Agency for Healthcare 
Research and Quality (AHRQ) (http://www.ahrq.gov/professionals/prevention-chronic-care/decision/clinical/index.html), and the Office 
of the National Coordinator for Health Information Technology (ONC) 
(https://www.healthit.gov/policy-researchers-implementers/clinical-decision-support-cds), within Health IT applications, a CDSM is a 
functionality that provides persons involved in care processes with 
general and person-specific information, intelligently filtered and 
organized, at appropriate times, to enhance health and health care.
2. Previous CDSM Experience
    In the CY 2016 PFS final rule with comment period, we included a 
discussion of the Medicare Imaging Demonstration (MID), which was 
required by section 135(b) of the MIPPA, in addition to independent 
experiences of implementing AUC by several healthcare systems and 
academic medical centers. Two key aspects of that discussion remain 
relevant to the CDSM component of this program. First, AUC, and the 
CDSMs through which clinicians access AUC, must be integrated into the 
clinical workflow and facilitate, not obstruct, evidence-based care 
delivery. For instance, a CDSM external to a provider's primary user 
interface could utilize an application program interface (API), a set 
of protocols and tools specifying how software components should 
interact, to pull relevant information into the decision support 
application. By adhering to common interoperability standards, such as 
the national standards advanced through certified health IT (see 2015 
edition of criteria available in the Federal Register (80 FR 62601) and 
described in the Interoperability Standards Advisory at https://www.healthit.gov/standards-advisory), CDSMs could both ensure 
integration of patient-specific data from EHRs, and allow clinicians to 
optimize the time spent using the tool.
    Second, the ideal AUC is an evidence-based guide that starts with a 
patient's specific clinical condition or presentation (symptoms) and 
assists the clinician in the overall patient workup, treatment, and 
follow-up. Imaging would appear as key nodes within the clinical 
management decision tree.
    Other options outside of certified EHR technology exist to access 
AUC through CDSMs. Stand-alone, internet-based CDSMs are available and, 
although they will not interact with EHR data, can nonetheless search 
for and present AUC relevant to a patient's presenting symptoms or 
condition.
    In communicating an appropriateness rating to the ordering 
practitioner, some CDSMs provide a scale with numeric ratings, some 
output a red, yellow, or green light while others provide a dichotomous 
yes or no. At this time, we do not believe there is one correct 
approach to communicating the level of appropriateness to the ordering 
professional. However, section 1834(q)(4)(B) of the Act requires that 
information be reported on the claim form as to whether the service 
would or would not adhere to the specified AUC consulted through a 
particular CDSM, or whether the AUC was not applicable to the service. 
We are requesting feedback from commenters regarding how 
appropriateness ratings provided by CDSMs could be interpreted and 
recorded for the purposes of this program.
    There are different views about the comprehensiveness of AUC that 
should be accessible within CDSMs. Some stakeholders believe that the 
CDSM should contain as comprehensive a collection of AUC as possible, 
incorporating individual criteria from across all specified AUC 
libraries. The intent would be for ordering professionals to avoid the 
frustration, experienced and voiced by many clinicians participating in 
the MID, of spending time navigating the CDSM only to find that no 
criterion for their patient's specific clinical condition exists.
    Other stakeholders believe, based on decades of experience rolling 
out AUC in the context of robust quality improvement programs that it 
is best to

[[Page 46387]]

start with a CDSM that contains AUC for a few clinical areas where 
impact is large and evidence is strong. This would ensure that quality 
AUC are developed, and that clinicians and entire care teams could 
fully understand the AUC they are using, including when they do not 
apply to a particular patient.
    As we stated in the CY 2016 PFS final rule with comment period, 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 fewer resources that wants to simply adopt 
and start using 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 
PLEs, and an array of CDSMs from which clinicians may choose.
3. Priority Clinical Areas
    We established in the CY 2016 PFS final rule with comment period 
that we would identify priority clinical areas through rulemaking, and 
that these may be used in the determination of outlier ordering 
professionals (a future phase of the Medicare AUC program). The concept 
of priority clinical areas allows us to implement an AUC program that 
combines the focused and comprehensive approaches to implementation 
discussed above. Although potentially large volumes of AUC (as some 
PLEs have large libraries of AUC) would become specified across 
clinical conditions and advanced imaging technologies, we believe this 
rapid and comprehensive roll out of specified AUC should be balanced 
with a more focused approach when 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.
    As we describe earlier, CDSMs are the access point for ordering 
professionals to consult AUC. We believe the combination of the 
comprehensive and focused approaches should be applied to CDSM 
requirements as we consider a minimum floor of AUC that must be made 
available to ordering professionals through qualified CDSMs. AUC that 
reasonably address the entire clinical scope of priority clinical areas 
could establish a minimum floor of AUC to be included in qualified 
CDSMs, and the number of priority clinical areas could be expanded 
through annual rulemaking and in consultation with physicians and other 
stakeholders. This allows priority clinical areas to roll out 
judiciously, and build over time.
4. Statutory Authority
    Section 218(b) of the PAMA added a new section 1834(q) of the Act 
entitled, ``Recognizing Appropriate Use Criteria for Certain Imaging 
Services,'' which directs the Secretary to establish a new program to 
promote the use of AUC. Section 1834(q)(3)(A) of the Act requires the 
Secretary to specify qualified CDSMs that could be used by ordering 
professionals to consult with specified applicable AUC for applicable 
imaging services.
5. 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) 
identification of 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)). As we will discuss later in this preamble, 
we did not identify mechanisms for consultation by April 1, 2016 and 
will not have specified or published the list of qualified CDSMs by 
January 1, 2017; therefore, ordering professionals will not be required 
to consult CDSMs, and furnishing professionals will not be able to 
report information on the consultation, by this date.
a. Establishment of AUC
    In the CY 2016 PFS final rule with comment period, we addressed the 
first component under section 1834(q)(2) of the Act--the requirements 
and process for establishment and specification of applicable AUC, 
along with relevant aspects of the definitions under section 1834(q)(1) 
of the Act. This included defining the term PLE and finalizing 
requirements for the rigorous, evidence-based process by which a PLE 
would develop AUC, upon which qualification is based, as provided in 
section 1834(q)(2)(B) of the Act and in the CY 2016 PFS final rule with 
comment period. Using this process, once a PLE is qualified by CMS, the 
AUC that are developed, modified or endorsed by the qualified PLE are 
considered to be specified applicable AUC under section 1834(q)(2)(A) 
of the Act. We defined the term PLE to include national professional 
medical societies, health systems, hospitals, clinical practices and 
collaborations of such entities such as the High Value Healthcare 
Collaborative or the National Comprehensive Cancer Network. Qualified 
PLEs may collaborate with third parties that they believe add value to 
their development of AUC, provided such collaboration is transparent. 
We expect qualified PLEs to have sufficient infrastructure, resources, 
and the relevant experience to develop and maintain AUC according to 
the rigorous, transparent, and evidence-based processes detailed in the 
CY 2016 PFS final rule with comment period.
    A timeline and process was established for PLEs to apply to become 
qualified with the first list of qualified PLEs expected to be 
published at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Appropriate-Use-Criteria-Program/index.html by 
June 30, 2016.
b. Mechanism for AUC Consultation
    The second major component of the Medicare AUC program is the 
specification of qualified CDSMs that could be used by ordering 
professionals for consultation with specified applicable AUC under 
section 1834(q)(3) of the Act. We envision a CDSM as an interactive 
tool that communicates AUC information to the user. Information 
regarding the clinical presentation of the patient would be 
incorporated into the CDSM from another health IT system or through 
data entry by the ordering professional. At a minimum, the tool would 
provide immediate feedback to the ordering professional on the 
appropriateness of one or more imaging services. Ideally, CDSMs would 
be integrated within or seamlessly interoperable with existing health 
IT systems and would automatically receive patient data from the EHR or 
through an API or other connection. Such integration would minimize 
burden on practitioners and avoid duplicate documentation. Also useful 
to clinicians would be the ability to switch between CDSMs that can 
interoperate based on common standards.
    Section 1834(q)(3)(A) of the Act states that the Secretary must 
specify qualified CDSMs in consultation with physicians, practitioners, 
health care technology experts, and other stakeholders. This

[[Page 46388]]

paragraph authorizes the Secretary to specify mechanisms that could 
include: CDS modules within certified EHR technology; private sector 
CDSMs that are independent of certified EHR technology; and a CDSM 
established by the Secretary. The Secretary does not propose to 
establish a CDSM at this time.
    All CDSMs 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 documentation supporting 
the appropriateness of the applicable imaging service that is ordered; 
where there is more than one applicable appropriate use criterion 
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 CDSM 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 CDSMs.
    As we explained in the CY 2016 PFS proposed and final rules with 
comment period, 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 continue to 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, as we would have 
had to interpret and analyze the new statutory language, and develop 
proposed plans for implementation in under one month. As we did prior 
to the CY 2016 PFS proposed rule when we met extensively with 
stakeholders to gain insight and hear their comments and concerns about 
the AUC program, we have used the time prior to the CY 2017 PFS 
proposed rule to meet with many of the same stakeholders but also a new 
group of stakeholders specifically related to CDSMs. In addition, we 
are continuing our stepwise approach to implementing this AUC program. 
The first phase of the AUC program (specifying AUC including defining 
what AUC are and specifying the process for developing them) was 
accomplished through last year's CY 2016 PFS final rule with comment 
period. For this second phase, we will use this CY 2017 PFS rulemaking 
process as the vehicle to establish requirements for CDSMs, and the 
process to specify qualified CDSMs, in a transparent manner that allows 
for stakeholder and public involvement. Therefore, the final CDSM 
requirements and process for CDSMs to become qualified would be 
published in the CY 2017 PFS final rule with comment period on or about 
November 1, 2016.
c. AUC Consultation and Reporting
    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 qualified 
CDSM 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 CDSM. The statute distinguishes between 
the ordering and furnishing professional, recognizing that the 
professional who orders an applicable imaging service is usually not 
the same professional who bills Medicare for that service 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 an 
exception due to a significant hardship. 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 systems.
    Since a list of qualified CDSMs is not yet available and will not 
be available by January 1, 2017, we will not require ordering 
professionals to meet this requirement by that date.
d. Identification of Outliers
    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 are not proposing to implement these sections in the 
CY 2017 PFS proposed rule, we propose below a list of priority clinical 
areas which may serve as part of the basis for identifying outlier 
ordering professionals.
6. Proposals for Implementation
    We propose to amend our regulations at Sec.  414.94, ``Appropriate 
Use Criteria for Certain Imaging Services.''
a. Definitions
    In Sec.  414.94(b), we propose to codify and add language to 
clarify some of the definitions provided in section 1834(q) 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 propose to codify to 
facilitate understanding and encourage public comment on the AUC 
program.
    We propose to define CDSM under Sec.  414.94(b) as an interactive, 
electronic tool for use by clinicians that communicates AUC information 
to the user and assists them in making the most appropriate treatment 
decision for a patient's specific clinical condition. A CDSM would 
incorporate specified applicable AUC sets from which an ordering 
professional could select. A CDSM may be a module within or available 
through certified EHR technology (as defined in section 1848(o)(4) of 
the Act) or private sector mechanisms independent from certified EHR 
technology. If within or available through certified EHR technology, a 
qualified CDSM would incorporate relevant patient-specific information 
into the assessment of the appropriateness of an applicable imaging 
service.
    As prescribed in section 1834(q) of the Act and Sec.  414.94(b) of 
our regulations, the Medicare AUC program imposes requirements only for 
applicable imaging services furnished in applicable settings. Further, 
as specified in section 1834(q)(4)(D) of the Act, we propose to amend 
our regulation at Sec.  414.94(b) to state that the applicable payment 
systems for the Medicare AUC program are the PFS under section

[[Page 46389]]

1848(b) of the Act, the prospective payment system for hospital 
outpatient department services under section 1833(t) of the Act, and 
the ambulatory surgical center payment systems under section 1833(i) of 
the Act. Applicable payment systems are relevant to implementation of 
section 1834(q)(4)(B) of the Act, entitled ``Reporting by Furnishing 
Professionals.''
    We remind readers that in PFS rulemaking for CY 2016 we defined 
applicable imaging service in Sec.  414.94(b) as an advanced diagnostic 
imaging service as defined in 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.
b. Priority Clinical Areas
    We propose to establish a new Sec.  414.94(e)(5) to set forth the 
initial list of priority clinical areas.
    To compile this proposed list we performed an analysis of Medicare 
claims data using the CMS Chronic Conditions Data Warehouse (CCW) as 
the primary data source. The CCW contains 100 percent of Medicare 
claims for beneficiaries who are enrolled in the fee-for-service (FFS) 
program. Data were derived from the CCW's 2014 Part B non-institutional 
claim line file, which includes Part B services furnished during CY 
2014. This is the main file containing final action claims data for 
non-institutional health care providers, including physicians, 
physician assistants, clinical social workers, nurse practitioners, 
independent clinical laboratories, and freestanding ambulatory surgical 
centers. The Part B non-institutional claim line file contains the 
individual line level information from the claim and includes 
Healthcare Common Procedure Coding System (HCPCS) code(s), diagnosis 
code(s) using the International Classification of Diseases, Ninth 
Revision (ICD-9), service dates, and Medicare payment amount. A 
publicly available version of this dataset can be downloaded from the 
CMS Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Appropriate-Use-Criteria-Program/index.html. We encourage stakeholders to review this dataset as a 
source that may help inform public comments related to the proposed 
priority clinical areas.
    In the CY 2016 PFS final rule with comment period, we stated that 
when identifying priority clinical areas we may consider factors such 
as incidence and prevalence of disease, the volume and variability of 
utilization of imaging services, the strength of evidence for their 
use, and applicability of the clinical area to the Medicare population 
and to a variety of care settings.
    Using the 2014 Medicare claims data referenced above, we ranked 
ICD-9 codes by the frequency with which they were used as the primary 
indication for specific imaging procedures, which in turn were 
identified by the volume of individual Current Procedural Terminology 
(CPT) codes for which payments were made in 2014. We extracted the top 
135 ICD-9 codes from this list and formed clinically-related 
categories. Next, we searched manually through an electronic list of 
all ICD-9 codes to find others that would plausibly fit into each 
clinical grouping. This process required subjective clinical judgment 
on whether a particular ICD-9 code should be included in a given 
clinical group. The top eight clinical groupings (by volume of 
procedures) are what we are proposing as the initial list of priority 
clinical areas. The eight clinical areas account for roughly 40 percent 
of part B advanced diagnostic imaging services paid for by Medicare in 
2014. We are aware that some stakeholders have suggested beginning the 
AUC program with no more than five priority clinical areas while others 
have suggested a far greater number. We believe the proposed eight 
priority clinical areas strike a reasonable balance that allows us to 
focus on a significant range and volume of advanced diagnostic imaging 
services.
    We also considered extracting pulmonary embolism as a separate 
priority clinical area from the chest pain grouping based on 
stakeholder consultation and feedback. However, we decided not to 
identify pulmonary embolism separately, but are asking for public 
comment on whether pulmonary embolism should be included as a stand-
alone priority clinical area. Based on our consultations with 
physicians, practitioners and other stakeholders, as required by 
section 218(b) of the PAMA, we attempted to be inclusive when grouping 
ICD-9 codes into cohesive clinical areas. As an example of how we 
derived the priority clinical area for low back pain, we grouped 
together 10 ICD-9 codes, incorporating six from the top 135 and four 
from the manual search of all ICD-9 codes. Included in this grouping 
are the ICD-9 codes for displacement of lumbar intervertebral disc 
without myelopathy (722.10), degeneration of lumbar of lumbosacral 
intervertebral disc (722.52), intervertebral disc disorder with 
myelopathy lumbar region (722.73), post-laminectomy syndrome of lumbar 
region (722.83), lumbago (724.2), sciatica (724.3), thoracic or 
lumbosacral neuritis or radiculitis unspecified (724.4), spinal 
stenosis, lumbar region, without neurogenic claudication (724.02), 
lumbosacral spondylosis without myelopathy (721.3), and spondylosis 
with myelopathy lumbar region (721.42) which resulted in 1,883,617 
services. To see all of the priority clinical area groupings of 
diagnosis codes, a table is available on the CMS Web site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Appropriate-Use-Criteria-Program/index.html.
    Using the above methodology, we developed and are proposing eight 
priority clinical areas. These reflect both the significance and the 
high prevalence of some of the most disruptive diseases in the Medicare 
population.

                    Table 34--Proposed Priority Clinical Areas With Corresponding Claims Data
----------------------------------------------------------------------------------------------------------------
                                                                      % Total          Total          % Total
         Proposed priority clinical area          Total services   services \1\      payments       payments/1
----------------------------------------------------------------------------------------------------------------
Chest Pain (includes angina, suspected              4,435,240.00              12   $ 470,395,545              14
 myocardial infarction, and suspected pulmonary
 embolism)......................................
Abdominal Pain (any locations and flank pain)...    2,973,331.00               8     235,424,592               7
Headache, traumatic and non-traumatic...........    2,107,868.00               6      89,382,087               3
Low back pain...................................    1,883,617.00               5     180,063,352               5
Suspected stroke................................    1,810,514.00               5     119,574,141               4
Altered mental status...........................    1,782,794.00               5      83,296,007               3
Cancer of the lung (primary or metastatic,          1,114,303.00               3     154,872,814               5
 suspected or diagnosed)........................

[[Page 46390]]

 
Cervical or neck pain...........................    1,045,381.00               3      83,899,299               3
----------------------------------------------------------------------------------------------------------------
\1\ Percentage of 2014 Part B non-institutional claim line file for advanced imaging services from Medicare
  claims for beneficiaries who are enrolled in the fee-for-service (FFS) program (source: CMS Chronic Conditions
  Data Warehouse).

    CMS also engaged the CMS Alliance to Modernize Healthcare (CAMH) 
Federally Funded Research and Development Center (FFRDC), the MITRE 
Corporation (MITRE), to begin developing efficient and effective 
processes for managing current and future health technology 
assessments. MITRE generated an independent report that presents a 
summary of findings from claims data from the Medicare population and 
their utilization of advanced imaging procedures. Coupled with our 
internal analysis, this report has assisted in identification of 
proposed priority clinical areas for the Medicare AUC program for 
advanced diagnostic imaging services. Analysis and methods for this 
report are available at https://www.mitre.org/publications/technical-papers/claims-data-analysis-to-define-priority-clinical-areas-for-advanced.
    While this year we are proposing priority clinical areas based on 
an analysis of claims data alone, we may use a different approach in 
future rulemaking cycles. As we provided in Sec.  414.94(e) of our 
regulations, we may consider factors other than volume when proposing 
priority clinical areas including incidence and prevalence of disease, 
variability of use of particular imaging services, strength of evidence 
supporting particular imaging services and the applicability of a 
clinical area to a variety of care settings and to the Medicare 
population.
    We encourage public comments on this proposed initial list of 
priority clinical areas, including recommendations for other clinical 
areas that we should include among our list of priority clinical areas. 
In particular, we are interested in comments on the above methodology 
or alternate options; whether the proposed priority clinical areas are 
appropriate including information on the extent to which these proposed 
priority clinical areas may be represented by clinical guidelines or 
AUC in the future. Furthermore, we are interested in public comments, 
supported by published information, with respect to varying levels of 
evidence that exist across as well as within priority clinical areas.
c. CDSM Qualifications and Requirements
    We are proposing to add a new Sec.  414.94(g)(1) to our regulations 
to establish requirements for qualified CDSMs. Section 
1834(q)(3)(A)(iii) of the Act provides relative flexibility for 
qualified CDSMs, and states that they may include mechanisms that are 
within certified EHR technology, private sector mechanisms that are 
independent from certified EHR technology or mechanisms that are 
established by the Secretary.
    We believe that, at least initially, it is in the best interest of 
the program to establish CDSM requirements that are not prescriptive 
about specific IT standards. Rather, we are proposing an approach that 
focuses on the functionality and capabilities of qualified CDSMs. The 
CDSM, EHR and health IT environments are constantly changing and 
improving and we want to allow room for growth and innovation. However, 
in the future, as more stakeholders and other entities including the 
ONC, AHRQ, and relevant standards development organizations come to 
consensus regarding standards for CDSMs, then we may consider pointing 
to such standards as a requirement for qualified CDSMs under this 
program. We believe standards would make it possible to achieve 
interoperability, allowing any CDSM to incorporate any standardized AUC 
and for sets of AUC to be easily interchangeable among various CDSMs. 
We will continue to work with the ONC and AHRQ to facilitate movement 
in this direction.
    Recent work under the federally-sponsored Clinical Quality 
Framework (CQF) initiative has successfully developed an integrated 
approach that harmonizes standards for electronic clinical quality 
measurement with those that enable shareable clinical decision support 
artifacts (for example, AUC). The CQF initiative is working to support 
semantically interoperable data exchange for (1) sending patient data 
to a service for clinical decision support guidance and receiving 
clinical decision support guidance or quality measurement results in 
return, and (2) enabling a system to consume and internally execute 
decision support artifacts. As this standard is considered sufficiently 
mature for widespread adoption, the ONC may consider it for use in 
future editions of certification criteria for health IT. While the 
current regulation requires no specific standard, the CMS and ONC are 
supportive of this approach and additional information can be found at 
http://hl7-fhir.github.io/cqif/cqif.html.
    Under Sec.  414.94(g)(1), we propose to codify in regulations the 
seven requirements for qualified CDSMs set forth in section 
1834(q)(3)(B)(ii) of the Act. The Act requires qualified CDSMs to make 
available to the ordering professional specified applicable AUC and the 
supporting documentation for the applicable imaging service ordered. We 
do not interpret this requirement to mean that every qualified CDSM 
must make available every specified applicable AUC. In the CY 2016 PFS 
final rule with comment period we allowed for the approval of massive 
libraries of AUC (resulting from approvals for qualified PLEs with 
comprehensive and extensive libraries), yet we expressed our intention 
to establish priority clinical areas. While there is a statutory 
requirement to consult AUC for each applicable imaging service, we 
recognize that ordering professionals may choose to thoroughly improve 
their understanding of, and focus their internal quality improvement 
(QI) programs on, those priority clinical areas; and these areas will 
in turn serve as the basis for future outlier calculations.
    Consistent with that approach, we propose to add a requirement in 
Sec.  414.94(g)(1)(iii) that qualified CDSMs must make available to 
ordering professionals, at a minimum, specified applicable AUC that 
reasonably encompass the entire clinical scope of all priority clinical 
areas. We encourage and expect some CDSMs, based on the needs of the 
professionals they serve, will choose to include a far more 
comprehensive set of AUC going above and beyond the minimum set as we 
understand many ordering professionals want such comprehensive access 
to AUC. When this Medicare AUC program is fully implemented, all 
ordering professionals must consult specified applicable AUC through a 
qualified

[[Page 46391]]

CDSM for every applicable imaging service that would be furnished in an 
applicable setting and paid for under an applicable payment system in 
order for payment to be made for the service. However, when identifying 
the outlier ordering professionals who will be subject to prior 
authorization beginning in 2020, we anticipate focusing on consultation 
with specified applicable AUC within priority clinical areas rather 
than the universe of specified applicable AUC. The concept of priority 
clinical areas will allow us to implement an AUC program that combines 
two approaches to implementation allowing clinicians flexibility to 
either engage with a rapid rollout of comprehensive specified 
applicable AUC or adopt a focused approach to consulting AUC. Thus, 
they can choose their approach and select a CDSM and AUC set(s) that 
fit their needs and preferences, while being sure that each qualified 
CDSM will include AUC that address all priority clinical areas.
    We further propose to add a requirement in Sec.  414.94(g)(1)(iv) 
of our regulations that qualified CDSMs must be able to incorporate 
specified applicable AUC from more than one qualified PLE. We believe 
this approach ensures that CDSMs can expand the AUC libraries they can 
provide access to in order to represent AUC across all priority 
clinical areas (consistent with the requirements under proposed Sec.  
414.94(g)(1)(iii)). We do not necessarily expect that a single 
qualified PLE will develop AUC addressing every priority clinical area 
domain, especially since we believe that over time and through future 
rulemaking, the list of priority clinical areas will expand and cross 
additional clinical domains. Ensuring that qualified CDSMs are not 
limited in their technology to incorporating AUC from only one 
qualified PLE will help to ensure that ordering professionals will not 
be in a position of consulting a CDSM that cannot offer them access to 
AUC that address all priority clinical areas. As stakeholders continue 
to advance CDSM technology, we look forward to standards being 
developed and widely accepted so that AUC are incorporated in a 
standardized format across CDSM platforms. Increasing standardization 
in this area will move the industry closer to the goal of 
interoperability across CDSMs and EHRs.
    We also propose to add a requirement in Sec.  414.94(g)(1)(i) that 
specified applicable AUC and related documentation supporting the 
appropriateness of the applicable imaging service ordered must be made 
available within the qualified CDSM. For example, the ordering 
professional would have immediate access to the full appropriate use 
criterion, citations supporting the criterion and a summary of key 
evidence supporting the criterion.
    We propose to add a requirement in Sec.  414.94(g)(1)(ii), 
consistent with section 1834(q)(3)(B)(ii)(II) of the Act, that the 
qualified CDSM must clearly identify the appropriate use criterion 
consulted if the tool makes available more than one criterion relevant 
to a consultation for a patient's specific clinical scenario. We 
believe this is important since CDSMs that choose to incorporate a 
comprehensive AUC library may be offering the ordering professional 
access to AUC from multiple qualified PLEs. In such scenarios, it is 
important that the ordering professional knows which appropriate use 
criterion is being consulted and have the option to choose one over the 
other if more than one criterion applies to the scenario.
    We propose to add a requirement in Sec.  414.94(g)(1)(v), 
consistent with section 1834(q)(3)(B)(ii)(III) of the Act, that the 
qualified CDSM must provide to the ordering professional a 
determination, for each consultation, of the extent to which an 
applicable imaging service is consistent with specified applicable AUC 
or a determination of ``not applicable'' when the mechanism does not 
contain a criterion that would apply to the consultation. This 
determination would communicate the appropriateness of the applicable 
imaging service to the ordering professional. In addition to this 
determination, we also propose that the CDSM provide the ordering 
professional with a determination of ``not applicable'' when the 
mechanism does not contain an appropriate use criterion applicable to 
that patient's specific clinical scenario.
    We propose to add a requirement in Sec.  414.94(g)(1)(vi), 
consistent with section 1834(q)(3)(B)(ii)(IV) of the Act, that the 
qualified CDSM must generate and provide to the ordering professional 
certification or documentation that documents which qualified CDSM was 
consulted, the name and NPI of the ordering professional that consulted 
the CDSM and whether the service ordered would adhere to applicable 
AUC, whether the service ordered would not adhere to such criteria, or 
whether such criteria was not applicable for the service ordered. We 
propose to require under Sec.  414.94(g)(1)(vi)(A) that this 
certification or documentation must be issued each time an ordering 
professional consults the qualified CDSM. Since Medicare claims will be 
filed only for services that are rendered to beneficiaries, we will not 
see CDSM consultation information on the claim form specific to imaging 
services that are not ordered. We believe that for the CDSM to be able 
to provide meaningful feedback to ordering professionals, information 
regarding consultations that do not result in imaging is just as 
important as information on consultations that do result in an order 
for advanced imaging.
    Thus, we propose to require under Sec.  414.94(g)(1)(vi)(B) that 
the documentation or certification provided by the qualified CDSM must 
include a unique consultation identifier. This would be a unique code 
issued by the CDSM that is specific to each consultation by an ordering 
professional. This type of unique code may serve as a platform for 
future collaboration and aggregation of consultation data across CDSMs. 
In addition, at some point in the future, this unique code may assist 
in more seamlessly bringing Medicare data together with CDSM clinical 
data to maximize quality improvement in clinical practices and to 
iteratively improve the AUC itself.
    We propose in Sec.  414.94(g)(1)(vii), consistent with section 
1834(q)(3)(B)(ii)(V) of the Act, that the specified applicable AUC 
content within qualified CDSMs be updated at least every 12 months to 
reflect revisions or updates made by qualified PLEs to their AUC sets 
or to an individual appropriate use criterion. We propose 12 months as 
the maximum acceptable delay for updating content. We believe that in 
most cases it will be possible to update AUC content more frequently 
than every 12 months, particularly for cloud-based CDSMs. We further 
propose in Sec.  414.94(g)(1)(vii)(A) that qualified CDSMs have a 
protocol in place to more expeditiously remove AUC that are determined 
by the qualified PLE to be potentially dangerous to patients and/or 
harmful if followed.
    In addition, we propose in Sec.  414.94(g)(1)(vii)(B) that 
qualified CDSMs must make available for consultation specified 
applicable AUC that address any new priority clinical areas within 12 
months of the priority clinical area being finalized by CMS. We believe 
this would allow the CDSM sufficient time to incorporate the AUC into 
the CDSM. Thus, any new priority clinical areas finalized, for example, 
in the CY 2018 PFS final rule with comment period that would be 
effective January 1, 2018, would need to be incorporated into a 
qualified CDSM by January 1, 2019. To accommodate this time frame, we 
would accept a not applicable determination from a CDSM

[[Page 46392]]

for a consultation on a priority clinical area for dates of service 
through the 12-month period that ends, in this example, on January 1, 
2019. We note that all qualified CDSMs that are approved by June 30, 
2017 should be capable of supporting AUC for all priority clinical 
areas that are finalized in the CY 2017 PFS final rule with comment 
period.
    We propose to add a requirement in Sec.  414.94(g)(1)(viii), 
consistent with section 1834(q)(3)(B)(ii)(VI) of the Act, that the 
qualified mechanism must meet privacy and security standards under 
applicable provisions of law. Potentially applicable laws may include 
the HIPAA Privacy and Security rules.
    We propose to add a requirement in Sec.  414.94(g)(1)(ix), 
consistent with section 1834(q)(3)(B)(ii)(VII) of the Act, that 
qualified CDSMs must provide ordering professionals aggregate feedback 
in the form of an electronic report on an annual basis (at minimum) 
regarding their consultations with specified applicable AUC. Our intent 
is to require records to be retained in a manner consistent with the 
HIPAA Security Rule. To provide such feedback, and to make detailed 
consultation information available to ordering professionals, 
furnishing professionals (when they have authorized access to the 
CDSM), auditors and CMS, we propose in Sec.  414.94(g)(1)(x) that a 
qualified CDSM must maintain electronic storage of clinical, 
administrative and demographic information of each unique consult for a 
minimum of 6 years. We believe CDSMs could fulfill this requirement in 
a number of ways, including involving a third party in the storage of 
information as well as for providing feedback to ordering 
professionals. We recognize that these requirements represent a minimum 
floor that clinicians may choose to expand upon in their local QI 
programs.
    In the event requirements under Sec.  414.94(g)(1) are modified 
through rulemaking during the course of a qualified CDSM's 5-year 
approval cycle, we propose in Sec.  414.94(g)(1)(xi) that the CDSM 
would be required to comply with the modification(s) within 12 months 
of the effective date of the modification.
d. Process for CDSMs To Become Qualified and Determination of Non-
Adherence
    We propose that CDSMs must apply to CMS to be specified as a 
qualified CDSM. We propose that CDSM developers who believe their 
mechanisms meet the regulatory requirements must submit an application 
to us that documents adherence to each of the requirements to be a 
qualified CDSM.
    We propose to require in Sec.  414.94(g)(2) that CDSM developers 
must submit applications to CMS for review that document adherence to 
each of the CDSM requirements. Applications to be specified as a 
qualified CDSM must be submitted by January 1 of a year in order to be 
reviewed within that year's review cycle. For example, the first 
applications would be accepted from the date of publication of the PFS 
final rule until January 1, 2017. A determination on whether the 
applicants are qualified would be made by June 30, 2017. Applications 
must be submitted electronically to [email protected]. This 
process and timeline mirror the qualified PLE application and approval 
process and timeline. As we did for qualified PLEs, we will post a list 
of all applicants that we determine to be qualified CDSMs to our Web 
site at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Appropriate-Use-Criteria-Program/index.html by 
June 30. We propose that all qualified CDSMs must reapply every 5 years 
and their applications must be received by January 1 during the 5th 
year that they are qualified CDSMs. It is important to note that, as 
with PLE applications, the application for qualified CDSMs is not a CMS 
form; rather it is created by the applicant. A CDSM that is specified 
as qualified for the first 5-year cycle beginning on July 1, 2017 would 
be required to submit an application for requalification by January 1, 
2022. A determination would be made by June 30, 2022, and, if approved, 
the second 5-year cycle would begin on July 1, 2022.
    An example of our proposed timeline for applications and the 
approval cycle is as follows:
     Year 1 = July 2017 to June 2018.
     Year 2 = July 2018 to June 2019.
     Year 3 = July 2019 to June 2020.
     Year 4 = July 2020 to June 2021.
     Year 5 = July 2021 to June 2022 (reapplication is due by 
January 1, 2022).
    We believe it is important for us to have the ability to remove 
from the list of specified qualified CDSMs a CDSM that we determine 
fails to adhere to any of the qualification requirements, including 
removal outside of the proposed 5-year cycle. We propose to state under 
Sec.  414.94(h) that, at any time, we may remove from the list of 
qualified CDSMs a CDSM that fails to meet the criteria to be a 
qualified CDSM or consider this information during the requalification 
process. Such determinations may be based on public comment or our own 
review and we may consult with the National Coordinator for Health 
Information Technology or her designee to assess whether a qualified 
CDSM continues to adhere to requirements.
    We invite comments on how we could streamline and strengthen the 
approval process for CDSMs in future program years. For instance, CMS 
may consider a testing framework for CDSMs that would validate 
adherence to specific standards that enable seamless incorporation of 
AUC across CDSMs.
e. Consultation by Ordering Professional and Reporting by Furnishing 
Professional
    Although we continue to aggressively move forward to implement this 
AUC program, ordering professionals will not be expected to consult 
qualified CDSMs by January 1, 2017. At the earliest, under this 
proposal, the first qualified CDSM(s) will be specified on June 30, 
2017. We anticipate that some ordering professionals could be able to 
begin consulting AUC through qualified CDSMs very quickly as some may 
already be aligned with a qualified CDSM.
    We anticipate that furnishing professionals may begin reporting as 
early as January 1, 2018. This reporting delay is necessary to allow 
time for ordering practitioners who are not already aligned with a 
qualified CDSM to research and evaluate the qualified CDSMs so they may 
make an informed decision. While there will be further rulemaking next 
year, we are announcing this date because the agency expects physicians 
and other stakeholders/regulated parties to begin preparing themselves 
to begin reporting on that date. We will adopt procedures for capturing 
this information on claims forms and the timing of the reporting 
requirement through PFS rulemaking for CY 2018.
    As we expect to implement the AUC consultation and reporting 
requirements under section 1834(q)(4)(A) and (B) of the Act on January 
1, 2018, we are interested in receiving feedback from the public to 
include a discussion of specific operational considerations that we 
should take into account and include in such rulemaking. For example, 
commenters could consider alternatives for reporting data on claims and 
for seeking exceptions, as discussed below. We also seek information on 
the barriers to implementation along this timeline that allows ordering 
and furnishing professionals to be prepared to consult AUC and report 
consultation information on the claims and whether

[[Page 46393]]

separate rulemaking outside of the payment rule cycle would be 
preferred.
    Under section 1834(q)(4)(B) of the Act, Medicare claims for 
applicable imaging services furnished in applicable settings can only 
be paid under the applicable payment systems if certain information is 
included on the claim including: Which qualified CDSM was consulted by 
the ordering professional for the service; whether the service, based 
on the CDSM consultation, adheres to specified applicable AUC, does not 
adhere to specified applicable AUC or whether no criteria in the CDSM 
were applicable to the patient's clinical scenario; and, the national 
provider identifier (NPI) of the ordering professional. This section 
further allows payment for these services only if the claim contains 
such information beginning January 1, 2017. To develop and 
operationalize a meaningful solution to collecting new AUC 
consultation-related information on the claims, we must diligently 
evaluate our options taking into account the vast number of claims 
impacted and the limitations of the legacy claims processing system. 
While we could have moved more quickly to establish some sort of AUC 
consultation indicator for Medicare claims, any such indicator would 
have been a relatively meaningless token. Additionally, in the case of 
advanced imaging services, related claims are already required to 
append certain HCPCS modifiers and G codes for purposes of proper 
payments. In the recent implementation of section 218(a) of the PAMA, 
we established a HCPCS modifier for CT services rendered on machines 
that do not meet an equipment standard. It is important that we 
understand and evaluate how the additional requirements for AUC 
reporting would impact the information that is already required for 
advanced imaging services. Moving too quickly to satisfy the reporting 
requirement could inadvertently result in technical and operational 
problems that could cause delays in payments.
    Section 1834(q)(4)(C) of the Act includes exceptions that allow 
claims to be paid even though they do not include the information about 
AUC consultation by the ordering professional. We believe that, unless 
a statutory exception applies, an AUC consultation must take place for 
every order for an applicable imaging service furnished in an 
applicable setting and under an applicable payment system. We further 
believe that section 1834(q)(4)(B) of the Act accounts for the 
possibility that AUC may not be available in a particular qualified 
CDSM to address every applicable imaging service that might be ordered; 
and thus, the furnishing professional can meet the requirement to 
report information on the ordering professional's AUC consultation by 
indicating that AUC is not applicable to the service ordered.
    We are considering the mechanisms for appending the AUC 
consultation information to various types of Medicare claims and expect 
to develop requirements for appending such information in the CY 2018 
PFS rulemaking process. Stakeholders interested in sharing feedback 
related to reporting and claims processing are welcome to do so as part 
of the comment period for this proposed rule. We are particularly 
interested in receiving feedback on, for example, whether the 
information should be collected using HCPCS level II G codes or HCPCS 
modifiers. We will use this feedback to inform CY 2018 rulemaking.
f. Exceptions To Consulting and Reporting Requirements
    Section 1834(q)(4)(C) of the Act provides for certain exceptions to 
the AUC consultation and reporting requirements under section 
1834(q)(4)(B) of the Act. First, the statute provides for an exception 
under section 1834(q)(4)(C)(i) of the Act where an applicable imaging 
service is ordered for an individual with an emergency medical 
condition as defined in section 1867(e)(1) of the Act. We believe this 
exception is warranted because there can be situations in which a delay 
in action would jeopardize the health or safety of individuals. Though 
we believe they occur primarily in the emergency department, these 
emergent situations could potentially arise in other settings. 
Furthermore, we recognize that most encounters in an emergency 
department are not for an emergency medical condition as defined in 
section 1867(e)(1) of the Act.
    We propose to provide for an exception to the AUC consultation and 
reporting requirements under Sec.  414.94(i)(1) for an applicable 
imaging service ordered for an individual with an emergency medical 
condition as defined in section 1867(e)(1) of the Act. For example, if 
a patient, originally determined by the clinician to have an emergency 
medical condition prior to ordering an applicable imaging service, is 
later determined not to have had an emergency medical condition at that 
time, the relevant claims for applicable imaging services would still 
qualify for an exception. To meet the exception for an emergency 
medical condition as defined in section 1867(e)(1) of the Act, the 
clinician only needs to determine that the medical condition manifests 
itself by acute symptoms of sufficient severity (including severe pain) 
such that the absence of immediate medical attention could reasonably 
be expected to result in: Placing the health of the individual (or a 
woman's unborn child) in serious jeopardy; serious impairment to bodily 
functions; or serious dysfunction of any bodily organ or part. Orders 
for advanced imaging services for beneficiaries with an emergency 
medical condition as defined under section 1867(e)(1) of the Act are 
excepted from the requirement to consult AUC. We intend through the CY 
2018 PFS proposed rule to propose more details around how this 
exception will be identified on the Medicare claim.
    The second exception is under section 1834(q)(4)(ii) of the Act for 
applicable imaging services ordered for an inpatient and for which 
payment is made under Medicare Part A. We propose to codify this 
exception in new Sec.  414.94(i)(2). While we are including this 
exception consistent with statute, we note that if payment is made 
under Medicare Part A, the service would not be paid under an 
applicable payment system, such that the AUC consultation and reporting 
requirements under Sec.  414.94 would never apply.
    The third exception is under section 1834(q)(4)(iii) of the Act for 
applicable imaging services ordered by an ordering professional who the 
Secretary determines, on a case-by-case basis and subject to annual 
renewal, that consultation with applicable AUC would result in a 
significant hardship, such as in the case of a professional practicing 
in a rural area without sufficient Internet access. We propose to 
codify this exception in new Sec.  414.94(i)(3) by specifying that 
ordering professionals who are granted a significant hardship exception 
for purposes of the Medicare EHR Incentive Program payment adjustment 
under Sec.  495.102(d)(4)(i), (ii), or (iii)(A)(B) of our regulations 
would also be granted a significant hardship exception for purposes of 
the AUC consultation requirement. We are proposing, to the extent 
technically feasible, that the year for which the eligible professional 
is excepted from the EHR Incentive Program payment adjustment is the 
same year that the ordering professional is excepted from the 
requirement to consult AUC through a qualified CDSM. We propose not to 
adopt the Meaningful Use significant hardship exception under Sec.  
495.102(d)(4)(iv)(C) as an exception for purposes of the AUC 
consultation requirement. Therefore, ordering professionals with a 
primary specialty of anesthesiology, radiology or

[[Page 46394]]

pathology will not be categorically excepted from AUC consultation 
requirements.
    We believe there is substantial overlap between the eligible 
professionals that would seek a hardship exception under the EHR 
Incentive Program and those ordering professionals that would seek a 
hardship exception under the AUC program and, as such, this proposal 
would be administratively efficient. Using an existing program is the 
most efficient and expeditious manner to implement the significant 
hardship exception under the Medicare AUC program. We also believe it 
is the only administratively feasible option for a national significant 
hardship identification process that can be implemented by January 1, 
2018, though we intend to revisit this option for years after 2018 as 
the current EHR Incentive Program payment adjustment is set to expire 
after the 2018 payment year as the Merit-Based Incentive Payment System 
takes effect. In addition, below we discuss considerations for a 
supplemental process to account for hardships for ordering 
professionals that are not eligible to apply for a significant hardship 
under the EHR Incentive Program (for example, non-physician 
practitioners) and ordering professionals that incur a significant 
hardship outside of the EHR Incentive Program application deadline.
    The criteria for significant hardships under the EHR Incentive 
Program relate to insufficient internet connectivity, practicing for 
less than 2 years, practicing at multiple locations with the inability 
to control the availability of Certified EHR Technology, lack of face-
to-face interaction with patients or a primary specialty designation of 
anesthesiology, radiology or pathology. We believe that most of these 
criteria would be relevant to demonstrate a significant hardship for 
ordering professionals to consult AUC. Regarding hardship exceptions 
for certain specialty designations, based on Medicare claims data for 
advanced imaging services from the first 6 months of 2014, 
approximately 1.2 percent of those claims were for advanced imaging 
services that had been ordered by a professional with one of the three 
primary specialty designations. While their combined ordering volume is 
small, we do not believe that categorical exclusion of certain 
specialties of which the practitioner selected as their primary 
specialty designation for Medicare enrollment would necessarily be 
appropriate under the AUC program. Since eligible professionals in 
these three specialties are categorically excepted from the EHR 
Incentive Program payment adjustment, few of them would have applied 
for an exception on the other grounds. Therefore, we must consider 
another mechanism to evaluate whether ordering practitioners with these 
medical specialties experience a significant hardship for purposes of 
the AUC program.
    We understand that there are differences between the purpose and 
timing of significant hardship exceptions for the EHR Incentive Program 
and the Medicare AUC program. Foremost, a significant hardship under 
the EHR Incentive Program is generally based on a hardship that 
occurred in a prior period, impacting meaningful EHR use that would 
affect payments in a subsequent calendar year. For example, a 
professional that submits an application in March 2017 and qualifies 
for the hardship exception under the EHR Incentive Program would be 
exempt from the EHR payment adjustment for calendar year 2018. Although 
significant hardship exceptions for the EHR payment adjustment year 
generally are based on the existence of a hardship in a prior period, 
we believe it would be appropriate for these professionals to also 
qualify for a significant hardship exception for purposes of the AUC 
consultation requirement during calendar year 2018. It is also our 
best, most efficient, administratively feasible means of determining 
significant hardships for ordering professionals for CY 2018.
    We also recognize the possibility that an ordering professional 
could suffer a significant hardship during the AUC program year, and 
therefore, is immediately unable to consult AUC. In addition, while 
again we believe there is significant overlap, there may be 
circumstances where an ordering professional is not considered to be an 
eligible professional under the EHR Incentive Program (for example, an 
ordering professional that is not a physician). We are seeking feedback 
from commenters regarding processes that could be put in place to 
accommodate ordering professionals with primary specialties that 
categorically receive significant hardship exceptions under the EHR 
Incentive Program, real-time hardships that arise during a year, and 
ordering professionals that are not eligible to apply using the EHR 
Incentive Program significant hardship exception process and need to 
seek a significant hardship exception for the purposes of the AUC 
program. We believe this would involve only a small number of ordering 
professionals. To the extent technically feasible, some possibilities 
for implementing such hardship exceptions may include Medicare 
Administrative Contractors granting hardships on a case-by-case basis 
or establishing another mechanism to allow for self-attestation of a 
significant hardship for a defined period of time (for example, a 
calendar quarter or a calendar year). We intend to propose a process in 
the CY 2018 PFS proposed rule.
    We invite the public to comment on our proposal for ordering 
professionals granted a hardship exception for the EHR Incentive 
Program for payment year 2018 to also be granted a hardship exception 
to the Medicare AUC program for those years. We propose that the year 
the practitioner is excepted from the EHR Incentive Program payment 
adjustment is the same year that the practitioner would be excepted 
from consulting AUC.
6. Summary
    Section 1834(q) of the Act includes rapid timelines for 
establishing a Medicare AUC program for advanced diagnostic imaging 
services. The number of clinicians impacted by the scope of this 
program is massive as it will apply to every physician or other 
practitioner who orders or furnishes applicable 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 broad.
    We continue to 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 CDSM 
developers. It is for these reasons we are proposing to continue a 
stepwise approach, adopted through notice and comment rulemaking. We 
propose this second component to the program to specify qualified 
CDSMs, identify the initial list of priority clinical areas, and 
establish requirements related to CDSMs, as well as consulting and 
reporting exceptions. However, we also recognize the importance of 
moving expeditiously to accomplish a fully implemented program. Under 
this proposal, the first list of qualified CDSMs will be posted no 
later than June 30, 2017, allowing ordering professionals to begin 
aligning themselves with a qualified CDSM. We anticipate that 
furnishing professionals could begin reporting AUC information starting 
as early as January 1, 2018, but will provide details in CY 2018 PFS

[[Page 46395]]

rulemaking for how to report that information on claims.
    In summary, we propose definitions of terms and processes necessary 
to implement the second component of the AUC program. We invite the 
public to submit comments on these proposals. We are particularly 
seeking comment on the proposed priority clinical areas and the 
requirements that must be met by CDSMs to become qualified. We believe 
the proposed requirements for qualified CDSMs will allow for 
flexibility so mechanisms can continue to reflect innovative concepts 
in decision support and develop customer-driven products to ultimately 
provide information to the ordering professional in such a manner that 
will maximize appropriate ordering of advanced diagnostic imaging while 
seamlessly integrating into workflow. As the stakeholders continue to 
move to a place of consensus-based standards deemed ready for 
deployment, we may become more prescriptive in future requirements for 
CDSMs. We also seek comment on the exceptions to the requirements to 
consult applicable AUC using CDSMs.

D. Reports of Payments or Other Transfers of Value to Covered 
Recipients: Solicitation of Public Comments

1. Background
    In the February 8, 2013 Federal Register (78 FR 9458), we published 
the ``Transparency Reports and Reporting of Physician Ownership or 
Investment Interests'' final rule (Open Payments Final Rule) which 
implemented section 1128G of the Act, as added by section 6002 of the 
Affordable Care Act. Under section 1128G(a)(1) of the Act, 
manufacturers of covered drugs, devices, biologicals, and medical 
supplies (applicable manufacturers) are required to submit on an annual 
basis information about certain payments or other transfers of value 
made to physicians and teaching hospitals (collectively called covered 
recipients) during the course of the preceding calendar year. Section 
1128G(a)(2) of the Act requires applicable manufacturers and applicable 
group purchasing organizations (GPOs) to disclose any ownership or 
investment interests in such entities held by physicians or their 
immediate family members, as well as information on any payments or 
other transfers of value provided to such physician owners or 
investors. The Open Payments program creates transparency around the 
nature and extent of relationships that exist between drug, device, 
biologicals and medical supply manufacturers, and physicians and 
teaching hospitals (covered recipients and physician owner or 
investors). The implementing regulations are at 42 CFR part 402, 
subpart A, and part 403, subpart I.
    In addition to the Open Payments final rule, we issued final 
regulations in the CY 2015 PFS final rule with comment period (79 FR 
67758) that revised the Open Payments regulations. Specifically, we: 
(1) Deleted of the definition of ``covered device''; (2) removed the 
continuous medical education (CME) exclusion; (3) expanded the marketed 
name reporting requirements to biologicals and medical supplies; and 
(4) required stock, stock options, and any other ownership interests to 
be reported as distinct forms of payment.
    Since the publication and implementation of the Open Payments Final 
Rule and the CY 2015 PFS, various stakeholders have provided feedback 
to us regarding aspects of the Open Payment program. We have identified 
areas in the rule that might benefit from revision. In order to 
consider the views of all stakeholders, we are soliciting comments to 
inform future rulemaking. We do not intend to finalize any requirements 
related to Open Payments directly as a result of this proposed rule; 
rather, we expect to conduct future rulemaking. We are particularly 
interested in receiving comments on the following:
     We would like to know if the nature of payment categories 
as listed at Sec.  403.904(e)(2) are inclusive enough to facilitate 
reporting of all payments or transfers of value to covered recipient 
physicians and teaching hospitals. We also seek feedback on further 
categorization of reported research payments.
     Although there is a 5-year record retention requirement at 
Sec.  403.912(e), our regulations are currently silent on how long 
applicable manufacturers and applicable GPOs remain obligated to report 
on past years of payments or ownership or investment interests. We are 
soliciting feedback on how many years an applicable manufacturer or 
applicable GPO should continue to monitor and report on past program 
years for Open Payments reporting purposes.
     We are continuing to refresh all years of program data in 
addition to newly submitted payment records. We are interested in 
receiving feedback on how many years of Open Payments data is relevant 
to our stakeholders to help us determine how many years to continue to 
publish and refresh annually on our Web site. In addition, we are 
looking for feedback on how many years may be useful or relevant to 
Open Payments data users as archive files available for download on our 
Web site.
     We are seeking feedback on a requirement for all 
applicable manufacturers and applicable GPOs as defined in Sec.  
403.902 to register each year, regardless of whether the entity will be 
reporting payments or other transfers of value, or ownership or 
investment interests for the program year. We also seek comment on 
requiring applicable manufacturers and applicable GPOs to include the 
reason for not reporting any payments or other transfers of value, or 
ownership or investment interests.
     We are constantly striving to ensure that all published 
Open Payments data is valid and reliable. As part of this effort we are 
seeking comment on a requirement for applicable manufacturers and 
applicable GPOs to pre-vet payment information with covered recipients 
and physicians owners or investors before reporting to the Open 
Payments system, which we understand is an increasingly common 
practice. Specifically, we would like feedback on pre-vetting based on 
threshold payment values or random samplings of covered recipients. We 
are also interested in hearing how applicable manufacturers and 
applicable GPOs are successfully pre-vetting payment or transfer of 
value records.
     We continue to receive feedback that the current 
definition of a covered recipient teaching hospital, as defined at 
Sec.  403.902, makes reporting payments or transfers of value difficult 
for applicable manufacturers. Section 1128G of the Act is silent on the 
definition of a covered recipient teaching hospital. We are soliciting 
feedback on the specific hurdles that the current definition presents. 
Additionally we would like to receive proposed alternative 
operationally feasible definitions or definitional elements of a 
covered recipient teaching hospital.
     We have heard from stakeholders that verifying receipt of 
payments or transfers of value to teaching hospitals is a difficult 
process on the recipient end for a various number of reasons (such as 
size of hospitals, number of departments, etc.). Without context around 
a payment record, teaching hospitals have reported difficulties 
verifying payments attributed to them. This leads to payment disputes. 
We are seeking feedback on adding a new non-public data element to 
assist in review and affirmation of payment records. Some examples 
might be hospital contact name or department etc. Would a free form 
text field be preferable?

[[Page 46396]]

Should this field be mandatory to facilitate review of any attributed 
payments to a teaching hospital?
     Some reporting entities have expressed interest to upload 
data into the Open Payments system before the end of the calendar year 
for which the data is collected. We believe this may increase data 
validity and minimize disputes. We solicit feedback on the benefit for 
applicable manufacturers and applicable GPOs to report data to CMS 
early or ongoing throughout the year.
     We recognize that some entities may experience mergers, 
acquisitions, corporate organizations and reorganizations, and other 
structural corporate changes. We seek feedback on how we might change 
our reporting requirements to ensure that industry can properly, and 
easily, represent these changes while still monitoring for compliance 
with reporting requirements.
     We have received feedback from industry that there is 
confusion surrounding requirements for reporting ownership and 
investment interests. Keeping in mind that these reporting requirements 
are statutorily mandated, we solicit feedback on operationally feasible 
definitions regarding ownership or investment interests. Specifically, 
we would like feedback on the terms ``value or interest'' and ``dollar 
amount invested.'' We also solicit comments on additional terms that 
may require further clarification to facilitate compliance with 
reporting requirements.
     We solicit ideas on how to define physician-owned 
distributors (PODs) for data reporting purposes, as well as what data 
elements PODs should be required to report. We also seek feedback on 
what portion of the reported data we should share on our Web site.
     From a data collection perspective, we welcome suggestions 
on ways to streamline or make the process more efficient, while 
facilitating our role in oversight, compliance, and enforcement.
     With respect to all solicitations, we are requesting an 
estimate of the time and cost burden associated with reporting for 
purposes of compliance with the Paperwork Reduction Act.

E. Release of Part C Medicare Advantage Bid Pricing Data and Part C and 
Part D Medical Loss Ratio (MLR) Data

1. Background
    As part of the annual bidding process required under section 
1854(a) of the Act, Medicare Advantage organizations (MAOs) submit bids 
for each plan they wish to offer in the upcoming contract year 
(calendar year). We refer to each of these bids as a Medicare Advantage 
(MA) plan bid. As required by sections 1857(e)(4) and 1860D-12(b)(3)(D) 
of the Act, data supporting medical loss ratios (MLR) are submitted 
annually to us by MAOs and Part D sponsors, respectively. Using this 
authority, we codified the MLR submission requirement in the MLR final 
rule for Part C and Part D published in the Federal Register (78 FR 
31284) on May 23, 2013.
    We are proposing to release to the public MA bid pricing data and 
Part C and Part D MLR data on a specific schedule and subject to 
specified exclusions. We propose to add contract terms and expand the 
basis and scope of our regulations on MA bidding and Part C and Part D 
MLR submission to incorporate section 1106(a) of the Act (42 U.S.C. 
1306(a)), which authorizes disclosure of information filed with this 
agency in accordance with regulations adopted by the agency. (See 
Parkridge Hospital, Inc. v. Califano, 625 F.2d 719, 724-25 (6th Cir. 
1980). A substantive regulation issued following rulemaking provides 
the legal authorization for government officials to disclose commercial 
information that would otherwise be required to be kept confidential in 
accordance with 18 U.S.C. 1905. See Chrysler Corp. v. Brown, 441 U.S. 
281, 306-08 (1979). We note as well that under 45 CFR 401.105(a),\6\ we 
have adopted a regulation that permits publication and release of data 
that would not be exempt from disclosure under FOIA or prohibited from 
disclosure under other law, even if a request has not been submitted. 
We further note that because we collect Part D MLR information under 
section 1860D-12(b)(3)(D) of the Act, we have the authority to use such 
information for purposes of improving public health through research on 
the utilization, safety, effectiveness, quality and efficiency of 
health care services. We propose to adopt a regulation that clearly 
identifies the categories of data from submitted bids and reports of 
medical loss ratios that will be released so as to avoid repeating FOIA 
analyses and reviews of each request, to standardize the disclosure and 
the procedures for disclosure, and in the interest of furthering goals 
related to the MA and Part D programs.
---------------------------------------------------------------------------

    \6\ The regulation, which implements 42 U.S.C. 1306(a), provides 
that the Freedom of Information Act rules shall be applied to every 
proposed disclosure of information. If, considering the 
circumstances of the disclosure, the information would be made 
available in accordance with the Freedom of Information Act rules, 
then the information may be disclosed regardless of whether the 
requester or beneficiary of the information has a statutory right to 
request the information under the Freedom of Information Act, 5 
U.S.C. 552, or whether a request has been made.
---------------------------------------------------------------------------

    The purposes underlying these proposed data releases include 
allowing public evaluation of the MA and Part D programs encouraging 
research into these programs and better ways to provide health care, 
and reporting to the public regarding federal expenditures and other 
statistics involving these programs. In particular, we believe that 
facilitating public research using this bid pricing data could lead to 
better understanding of the costs and utilization trends in MA and 
support future policymaking for the MA program. For example, MA bid 
pricing data (which contains actual and projected cost figures) could 
be used to understand patterns of health care utilization such as how 
projected and actual costs may differ across geographic areas and 
different beneficiary populations. Release of MLR data from the MA and 
Part D programs could lead to research into how managed care in the 
Medicare population differs from and is similar to managed care in 
other populations (such as the individual and group markets) where MLR 
data is also released publicly; such research could inform future 
administration of these programs. Further, we believe that making 
certain MA bid pricing data and Part C and Part D MLR data available 
publicly aligns with Presidential initiatives to improve management and 
transparency of federal information. The President's January 21, 2009, 
Memorandum on Transparency and Open Government (74 FR 4685) instructed 
federal agencies to take specific actions to implement increased data 
transparency and access to federal datasets. Subsequent Presidential 
memoranda (including the May 23, 2012 memorandum Building a 21st 
Century Digital Government and May 9, 2013 memorandum Making Open and 
Machine Readable the New Default for Government Information) further 
stated the policy initiative to increase open access to and 
interoperability among such government data sets. These memoranda 
demonstrate a commitment to making information about government 
activities and government spending available to the public and using 
the internet as a means of public disclosure in order to eliminate as 
many barriers as possible to public access to such information. Our 
proposal would promote accountability in the MA and Part D programs, by 
making MLR information publicly available for use by beneficiaries who 
are making enrollment choices and by allowing the

[[Page 46397]]

public to see whether and how privately-operated MA and Part D plans 
administer Medicare--and supplemental--benefits in an effective and 
efficient manner. Disclosing MA pricing data would provide the public 
with insight as to how public dollars are spent in this aspect of the 
Medicare program. Further, we have received requests under FOIA for 
data of the type of the pricing data we propose to release here and we 
anticipate that, as the MLR Reports from MA and Part D plans are 
submitted, we will receive requests for those reports and that data.
    These interests, however, must also be balanced with the need to 
protect the privacy of individuals, the confidentiality of information 
about Medicare beneficiaries, and the proprietary interests of the MA 
and Part D plans that submit the information. While transparency in 
governmental activities and spending is important, we recognize that 
some of the information we collect in the form of MA bid pricing 
submissions and Part C and Part D MLR reports should not be publicly 
disclosed. We believe that our proposal balances these various 
interests and goals, both in carving out from the planned and 
authorized releases certain specific data, and (in the case of the MA 
bid pricing data) in delaying the release past the point of the 
commercial usefulness of the data.
    We are seeking to balance protection of the proprietary interests 
of MAOs and Part D sponsors with the need to effectively and 
transparently administer federal health care programs and to encourage 
research into better ways to provide health care. Further, we believe 
that adopting a fixed schedule for release of this information and 
standardizing releases of this data through this rule, will reduce the 
burdens on the public, CMS, and the submitters of the data that are 
associated with individual requests for information. Proposing a rule 
for these releases provides the opportunity for a fulsome and public 
dialogue that is not always the case with individual requests for 
information. We encourage commenters to identify and explain additional 
uses of the information we propose here to release and to suggest 
additional protections from release if commenters disagree with how we 
have balanced the competing interests. We hope to receive comments from 
all viewpoints to ensure that the lines for releasing and protecting 
information are appropriately drawn.
2. MA Bid Submission and Pricing Data
    We make monthly prospective payments to MAOs for providing Part C 
coverage to Medicare beneficiaries enrolled in their MA plans. As 
mandated in section 1854 of the Act, amended by Title II of the 
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 
(MMA) (Pub. L. 108-173), our payments to MAOs for their MA plan 
enrollees are based on bids that MAOs must submit to us no later than 
the first Monday in June for the upcoming contract year. Each MA plan 
bid is an estimate of the plan's revenue requirement to cover plan 
benefits for a projected population. The monthly aggregate bid amount 
for an MA plan is composed of estimated benefit expenses (direct 
medical expenses), non-benefit expenses (administrative expenses), and 
a gain/loss margin (profit) for coverage of original Medicare benefits, 
Part C supplemental benefits (if any), and Part D benefits (if any). We 
are not proposing to release Part D bid pricing data in this rule. 
Also, cost plans operated under section 1876 and section 1833 of the 
Act, Program for All Inclusive Care for the Elderly (PACE) 
organizations, and Medicare-Medicaid demonstration plans operated under 
the Financial Alignment Initiative (https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/FinancialAlignmentInitiative/FinancialModelstoSupportStatesEffortsinCareCoordination.html) do not 
submit Part C bids to us so pricing data relating to those plans is not 
part of this proposed rule.
    Section 1854(a) of the Act requires that MA bid submissions, 
including coverage, cost-sharing, and pricing, be in a form and manner 
specified by the Secretary. The statute, as specified in paragraphs 
(a)(1), (a)(3), and (a)(6), requires that bids include the plan type, 
the plan's geographic service area, projected enrollment under the 
plan, bid amounts for the provision of Part C benefits, bid amounts for 
Part D benefits (if offered by the MA plan), descriptions of 
beneficiary cost-sharing liability for each type of benefit, the plan's 
use of the beneficiary rebate (if any), and the actuarial basis for 
determining the bid pricing amounts. Part C benefits include basic 
benefits (that is, the benefits available under Original Medicare Parts 
A and B) and non-Medicare supplemental benefits (both mandatory and 
optional); supplemental benefits may include benefits not available 
under Original Medicare (for example, vision and dental benefits) or 
the reduction in cost-sharing obligations of enrollees compared to 
Original Medicare.
    The regulation at Sec.  422.254 addresses the content of the bid 
submission as well but does not specify the form or manner of the 
submission. We developed standardized templates for MAOs to populate 
and upload to our Health Plan Management System (HPMS) as the bid 
submission described in the statute and regulation. These standardized 
MA bid submission templates collect the information required under 
Sec.  422.254, and organize the information as follows:
     Plan Benefit Package (PBP) information (describing the 
Part C benefits and cost-sharing for each MA plan);
     Service Area information (identifying geographic areas 
where an MA plan is to be offered by the MAO);
     Plan Crosswalk information (identifying plan 
consolidations, terminations, and/or service area changes from one year 
to the next); and
     The MA bid pricing data for each PBP (that is, each MA 
plan). MA bid pricing data is uploaded to HPMS in a template referred 
to as the MA Bid Pricing Tool (MA BPT).
    Currently, we publicly release information on the Plan Benefit 
Package, service area, and plan crosswalks each year. These data sets 
can be found on our Web site at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/MCRAdvPartDEnrolData/index.html, under the subpages Benefits-Data, MA-
Contract-Service-Area-by-State-County, and Plan-Crosswalks, 
respectively.
    In this rule, we propose to release MA bid pricing data, as defined 
at proposed Sec.  422.272, which would be implemented as a release of 
data housed in the MA BPT for each MA plan subject to specified 
exclusions from release (noted in this section of the proposed rule). 
The MA BPT is a standardized Excel workbook with multiple worksheets 
and special functions built-in (for example, validation features). 
There are also separate BPTs used to price two types of MA plans: 
Medicare Medical Savings Account plans (the MSA BPT); and End-Stage 
Renal Disease-only special needs plans (the ESRD-SNP BPT). The MSA BPT 
was first released for calendar year (CY) 2009 bidding, and the ESRD-
SNP BPT was first released for CY 2014 bidding. We maintain and update 
these three MA BPT formats under OMB #0938-0944, and release annual 
versions every April.
    The MA BPT templates can be found on our Web site at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Bid-Forms-Instructions.html, accompanied

[[Page 46398]]

by instructions on how to populate the tool and a data dictionary for 
all data elements. Information pertaining to the MSA BPT and the ESRD-
SNP BPT can be found in the Appendices within the general MA BPT 
instructions, which can be found on the Bid-Forms Web site.
    Below we describe the general categories of MA bid pricing data 
contained in the MA BPT templates, indicating the associated BPT 
worksheet. Worksheets 1 through 6 of the MA BPT template collect 
information for the development and identification of the revenue 
requirements for basic benefits and mandatory supplemental benefits. 
Optional supplemental benefits, which enrollees may opt to purchase 
separately, are addressed in a separate worksheet. The BPT as a whole 
collects the information described in Sec.  422.254(b), (c) and (d) for 
coordinated care and private fee-for-service plans and in Sec.  
422.254(b) and (e) for MA-MSA plans. The regulation describes the 
required bid elements in general terms, which we implemented and 
operationalized at a detailed level in the BPT.
a. MA Base Period Experience and Projection Assumptions (MA BPT 
Worksheet 1)
    MAOs must report base period experience data, which is defined as 
claims incurred in the calendar year 2 years prior to the contract year 
for which the bid is being submitted, for basic benefits and mandatory 
supplemental benefits. For example, for CY 2017 bids (which must be 
submitted June 6, 2016), the base period data is for CY 2015. For the 
historical period, MAOs report the plan's actual allowed per member per 
month (PMPM) cost, unit cost and utilization by service type (for 
example, inpatient, outpatient, etc.); cost sharing and net costs are 
also reported. MAOs must also report actual enrollment and revenue, as 
well as expenses for claims, administration, and gain/loss margin, for 
this base period. Finally, MAOs must report the assumptions they use to 
project (that is, trend) the base period claims experience to the 
contract year for which they are bidding.
b. MA Projected Allowed Costs (MA BPT Worksheet 2)
    MAOs provide the projected allowed PMPM costs, unit costs, and 
utilization by service type for the contract year, using the claims 
experience and projection assumptions described previously; such 
information demonstrates the actuarial bases of the bid. Allowed costs 
are ``gross'' costs, that is, before the application of any beneficiary 
cost sharing. Total projected allowed costs are reported separately for 
dual eligible beneficiaries without full Medicare cost-sharing 
liability versus other beneficiaries. MAOs may also enter manual rates 
and the credibility assumptions used to blend together manual rates 
with projected experience.
c. MA Projected Cost Sharing (MA BPT Worksheet 3)
    MAOs present the effective value of a plan's level of cost-sharing 
by service type, which must include both in-network and out-of-network 
cost sharing (copays and coinsurance) and other amounts such as plan 
deductibles and the plan's out-of-pocket maximum cost-sharing amount.
d. MA Projected Revenue Requirement (MA BPT Worksheet 4)
    MAOs then combine their allowed cost data and cost sharing 
information (described in sections III.E.2.b. and c. of this proposed 
rule) to calculate the plan's projected revenue requirement, which 
consists of benefit costs (direct medical costs) net of cost-sharing, 
non-benefit expenses (administrative costs), and gain/loss margin. The 
plan's projected revenue requirement is allocated to the following: 
Medicare-covered A/B services, prescription drug coverage (if the plan 
is an MA-PD plan), and non-Medicare covered services (mandatory 
supplemental benefits under the plan).\7\ MAOs report the revenue 
requirement separately for dual eligible beneficiaries without full 
Medicare cost-sharing liability versus other enrolled beneficiaries. 
They also report administrative expenses by category (for example, 
direct versus indirect administration) and information related to the 
plan's gain/loss (profit) margin.
---------------------------------------------------------------------------

    \7\ We are not proposing to release any Part D bid pricing data 
as part of this proposed rule. Therefore, for any MA-PD bid, the 
Part D information underlying the pricing of Part D benefits would 
be redacted from any data release under this rule. However, the 
amount of beneficiary rebate applied to buy-down the Part D premiums 
if any, is included at Sec.  422.264(b)(2) as a use of Part C 
dollars, so will be included in the MA bid pricing data release. See 
section III.E.3.a.1.
---------------------------------------------------------------------------

    MAOs have the option of reporting enrollment, revenue and expense 
information related to their plan enrollees with End Stage Renal 
Disease (ESRD) on worksheet 4; these costs are otherwise excluded from 
bid development. (We have the authority to determine whether and when 
it is appropriate to apply the bidding methodology to ESRD MA 
enrollees, as set forth at Sec.  422.254(a)(2).) MAOs also have the 
option of reporting information related to Medicaid revenue and 
expenses for dual eligible beneficiaries.
    The plan's expected risk profile (average risk score) is reflected 
in the projected revenue requirements (costs) for both A/B and 
supplemental bid amounts. That is, the projected costs will reflect the 
expected risk profile of that plan's population because the utilization 
projections built into the costs projected in the bid reflect the 
underlying risk and need for services of the expected enrollees for 
that plan. When these projected costs are divided by the plan's 
projected risk score for a projected enrollment, the costs become 
``standardized.'' Standardized costs have a risk score equal to one, 
which means that they reflect the risk profile of the average Medicare 
beneficiary.
e. MA BPT Benchmark (Worksheet 5)
    The MA BPT illustrates development of the plan-specific A/B 
benchmark, based on the service area of the plan and the county rates 
(or MA regional rates) applicable to the plan; the benchmark is 
identified and calculated using information provided by the plan and 
county rate information announced by CMS. See Sec.  422.254 and Sec.  
422.258. The service-area level benchmark represents the upper limit 
that the federal government will pay PMPM for coverage of A/B benefits 
in the defined service area, given the plan's quality rating, prior to 
risk adjusting payments. The service-area level benchmark for (non-
regional) plans that cover multiple counties is a weighted average of 
the projected plan enrollment and the applicable county ratebook 
amounts.
    For benchmark development, the MAO reports the following: Projected 
enrollment in member months per county; projected average risk score 
for the projected enrollment in each county in the plan's service area; 
and a plan-level factor for the proportion of beneficiaries with 
Medicare as Secondary Payer. Plan-level projected member months and 
risk scores are reported separately for dual eligible beneficiaries 
without full Medicare cost-sharing liability versus other 
beneficiaries.
    The MA BPT is programmed to compare the A/B bid amount from the MAO 
to the benchmark to determine whether the plan has a beneficiary rebate 
(defined at Sec.  422.266) and must submit information required by 
Sec.  422.254(d). If the plan A/B bid amount is lower than the plan 
benchmark, a percentage of the difference determines the beneficiary 
rebate amount (where the percentage is based on the plan's quality 
rating). If the bid is greater than benchmark, the plan must charge a

[[Page 46399]]

member premium for coverage of A/B benefits.
f. MA Bid Summary (MA BPT Worksheet 6)
    The MA BPT presents a summary of key figures developed in the tool, 
including the bid, benchmark, projected risk score, and rebate amount, 
to support the final step of bid pricing--development of the 
beneficiary premium (if any) for the plan. To determine the premium, 
MAOs indicate how the rebate amount will be allocated. Under Sec.  
422.266(b), the rebate must be allocated to some combination of MA 
mandatory supplemental benefits (defined at Sec.  422.2), which can 
include buy down of original Medicare A/B cost-sharing and offering 
additional benefits not covered by original Medicare; and buy down of 
the Part D basic premium, the Part D supplemental premium, and/or the 
Part B premium.
g. Optional Supplemental Benefits (MA BPT Worksheet 7)
    MAOs may offer optional supplemental benefits, which plan enrollees 
may opt to purchase for a separate, additional premium. MAOs present 
the actuarial pricing elements for any optional supplemental benefit 
packages to be offered during the contract year, up to a maximum of 5 
packages. Not all MA plans offer optional supplemental benefits. MAOs 
report projected member months, allowed costs PMPM, cost sharing, 
administrative costs and gain/loss margin for each optional 
supplemental benefit package. MAOs also report base period experience 
for optional supplemental benefits, including revenue, enrollment, 
claim expenses, administrative expenses, and gain/loss margin. The 
information is reported separately as enrollees must make a separate 
election to purchase these benefits, and for coordinated care plans and 
private fee-for-service plans they cannot be funded by beneficiary 
rebates.
h. MSA BPT and ESRD-SNP BPT
    Regarding the MSA BPT and ESRD-SNP BPT, the same general 
requirements apply: Submission of base period experience data; 
projected allowed costs by service type; projected enrollee cost-
sharing payments; projected revenue requirements (medical, 
administrative, and margin); and development of the plan benchmark 
against which the bid is compared. Unique to the MSA BPT is development 
of the beneficiary deposit amount for the high-deductible plan. Unique 
to the ESRD-SNP BPT are service categories such as dialysis and 
nephrologist.
i. Additional Documentation
    In addition to the categories of data noted in this section of the 
proposed rule, MAOs must also submit supporting documentation to 
substantiate the actuarial basis of pricing and an actuarial 
certification of the bid for their MA BPTs, MSA BPTs, and ESRD-SNP 
BPTs, as required at Sec. Sec.  422.254(b)(5) and 422.256(c)(5).
3. Proposed Regulatory Changes for Release of MA Bid Pricing Data
    We are proposing to amend our MA regulations to provide for the 
release of certain MA bid pricing data. We propose to release to the 
public each year, after the first Monday in October, MA bid pricing 
data that we accepted or approved for a contract year at least 5 years 
prior to the upcoming calendar year, subject to specific exclusions 
described in proposed Sec.  422.272(c). We believe this disclosure is 
consistent with Presidential directives to make information available 
to the public, and with our goals of allowing public evaluation of the 
MA program, encouraging research into better ways to provide health 
care, and reporting to the public regarding federal expenditures and 
other statistics involving this program. For example, MA bid pricing 
data (which contains actual and projected cost figures) could be used 
to understand patterns of health care utilization such as how projected 
and actual costs may differ across geographic areas and different 
beneficiary populations, which could inform future bidding and payment 
policies. Further, releasing pricing data, particularly in conjunction 
with information already released under Sec.  422.504(n), will provide 
insight into the use of public funds for the MA program, providing 
appropriate transparency about the administration of the program.
    We propose to codify the requirements for release of MA bid pricing 
data for MA plan bids accepted or approved by us by adding a new Sec.  
422.272 to subpart F of part 422. First, we discuss the definition of 
MA bid pricing data, then our proposal to release MA bid pricing data 
for MA plan bids accepted or approved by us, and the types of 
information we propose be excluded from these data releases. Next, we 
discuss the specific proposal for the timing of the public data 
release. Finally, we solicit public comment on approaches to releasing 
more recent MA bid pricing data. We also solicit comment on our goals 
and purposes stated above for the release of MA bid pricing data.
(a) Terminology
    At Sec.  422.272(a), we propose a definition of MA bid pricing data 
to mean the information that MAOs must submit for the annual bid 
submission for each MA plan, in a form and manner specified by us. 
Specifically, we propose that MA bid pricing data includes the 
information described at Sec.  422.254(a)(1) and the information 
required for MSA plans at Sec.  422.254(e). We use Sec.  422.254(a)(1) 
in our proposed definition because it provides an overview of the 
submission requirements in our MA bidding regulations. Specifically, 
Sec.  422.254(a)(1) references Sec.  422.254(b), (c), and (d), which 
address, respectively, general bid requirements, information required 
for coordinated care plans and private fee-for-service plans, and 
information on beneficiary rebates. At Sec.  422.272(a)(2), we propose 
to include in the definition the information required for bids for MSA 
plans, set forth at Sec.  422.254(e), which includes the amount of plan 
deductible for the high-deductible plan.
    By proposing to define MA bid pricing data at Sec.  422.272(a) 
using cross-references to existing regulation at Sec.  422.254(a)(1) 
and (e), we are proposing in operational terms that the term encompass 
all plan-specific data fields in the MA BPT, the MSA BPT, and the ESRD-
SNP BPT, that is, the figures that MAOs input and those that are 
calculated within the BPT. The BPTs also include data that are not 
plan-specific, which consist of look-up tables built-in to facilitate 
calculations. We do not propose to include these look-up tables as part 
of the proposed definition of MA bid pricing data, as they are not 
submitted by the MAO. These look-up tables are hidden Excel worksheets 
(which can be ``unhidden'' within Excel), and are currently available 
to the public in the BPT templates on the CMS Web site at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Bid-Forms-Instructions.html. Selected data from the look-up tables are reflected 
in each MA plan's BPT. For example, there is a look-up table in the 
BPTs with the county rates for the contract year and when the MAO 
enters a state-county code, the BPT extracts the appropriate rate 
amount for the county from the look-up table and populates the 
appropriate data field.
    Our proposed definition of MA bid pricing data references elements 
required at Sec.  422.254(b) and includes information described in 
section III.E.2. (MA Bid Pricing Data) of this proposed rule: The 
estimated revenue required by an MA plan for providing original

[[Page 46400]]

Medicare benefits and mandatory supplemental health care benefits, if 
any (composed of direct medical costs by service type, administrative 
costs and return on investment); and the plan pricing of enrollee cost-
sharing for original Medicare benefits and mandatory supplemental 
benefits. In addition, the definition references the MA bid pricing 
data elements required at Sec.  422.254(c), which include more detail 
about the Medicare-covered and supplemental bid amounts such as the 
actuarial bases for the bid amounts, projected enrollment, and data 
specific to regional MA plans.
    Finally, we propose to define MA bid pricing data to include 
elements required at Sec.  422.254(d), thus incorporating a reference 
to the forms of beneficiary rebate at Sec.  422.266(b). That is, for 
plans that bid below the benchmark for their service areas, the term 
would include the beneficiary rebate amounts that are allocated in the 
BPTs to the uses allowed in law: Reduction of cost-sharing below 
original Medicare levels, offering additional benefits not covered by 
original Medicare, and reduction of the Part D basic premium, the Part 
D supplemental premium, and/or the Part B premium. Unlike the 
underlying components of the Part D pricing (that is, pricing 
information related to the Part D benefit analogous to the information 
included in the MA BPT), we consider beneficiary rebate amounts that 
are applied to reduce the Part D basic and supplemental premiums to be 
Part C amounts that are part of the MA bid pricing submission, not the 
Part D bid pricing submission.
(b) Release of Accepted or Approved MA Bid Pricing Data With a 5 Year 
Lag
    In Sec.  422.272(b), we propose to authorize the public release of 
MA bid pricing data for the MA plan bids that were accepted or approved 
by us for a contract year under Sec.  422.256. We propose that the 
annual release will contain MA bid pricing data from the final list of 
MA plan bids accepted or approved by us for a contract year that is at 
least 5 years prior to the upcoming calendar year.
    We use the phrase ``accepted or approved'' in the proposed 
regulation text because both terms are used in existing regulation when 
referring to MA bids. We consider these words to mean the same thing in 
the context of MA bid pricing submissions, and we use both words in 
proposed Sec.  422.272(b) to mirror existing regulation. For example, 
existing Sec.  422.256(b) states that CMS can only accept bids that 
meet the standards in that paragraph. However, Sec.  422.256(b)(4)(i) 
and (ii) use the phrase ``CMS approves a bid. . . .'' The phrases 
``decline to accept'' and ``decline to approve'' are used at Sec.  
422.254(a)(5) and Sec.  422.256(a), respectively. In the remainder of 
this preamble, we will use the term ``accepted'' to represent the 
phrase ``accepted or approved.''
    During our annual bid review process, we determine which MAOs must 
submit one or more updated versions of the initial MA BPT for one or 
more of their MA plans, in response to questions from our bid 
reviewers. In addition, as part of the bid pricing submission process, 
an MAO may have to adjust its allocation of beneficiary rebate dollars 
for some or all of its MA plans that offer Part D and for their 
regional PPOs, after we publicly release the Part D national average 
bid amount and the final MA regional plan benchmarks. Any reallocation 
of rebate dollars results in a revised MA bid, which must be submitted 
to us as an updated version of the original submission. Finally, on 
occasion an MAO will withdraw an MA plan after we have accepted the 
plan bid. For these reasons, we propose that the MA bid pricing data to 
be released will only be the data found in the final list of accepted 
bids; for operational purposes, this means the final accepted MA BPTs, 
MSA BPTs, and ESRD-SNP BPTs, subject to exclusions noted in proposed 
paragraph (c).
    Finally, in Sec.  422.272(b), we propose to authorize the annual 
release of MA bid pricing data for a contract year that is at least 5 
years prior to the upcoming calendar year. We believe that 5 years is 
an appropriate length of time for the MA bid pricing data to no longer 
be competitively sensitive. (The base period data on actual expenses in 
the MA BPT, MSA BPT, and ESRD-SNP BPT is 2 years older than the data 
for the bidding year--see the description of the MA BPT category MA 
Base Period Experience and Projection Assumptions in section III.E.2. 
of this proposed rule.) Since this will be an annual release, over time 
the public would have the ability to trend bid cost projections across 
years, to compare actual costs from the MA BPT with projections from 
prior years, and to observe bidding patterns over ever-longer periods 
of time.
    We are seeking to balance the protection of commercially sensitive 
information with our goals to effectively administer federal health 
care programs, increase data transparency regarding federal 
expenditures, and encourage research into better ways to provide health 
care. We propose that a 5-year delay renders multi-year comparisons of 
pricing trends less relevant to the current year of MA plan pricing. 
The time lag represents a buffer between the development and 
implementation of pricing strategies that can be distilled from data 
multiple years for and the observed relationship and trend from one 
year to the next, thus mitigating possible competitive disadvantage 
from the proposed data disclosure. For example, an MAO looking to enter 
a new MA market is significantly less likely to gain an unfair 
commercial advantage from being able to examine and trend 5-year-old 
bid pricing data than if the MAO were able to examine and trend more 
recent bid pricing data.
    We solicit comment on the proposed 5 year delay for reducing 
competitive disadvantages to MAOs. We solicit comments explaining 
whether a shorter period would suffice to protect MAOs from competitive 
harm associated from the disclosure of confidential commercial 
information or if a longer period is necessary to adequately protect 
the information and assure the continued submission of accurate data.
(c) Exclusions From Release
    In Sec.  422.272(c), we propose that several types of MA bid 
pricing information be excluded from the data releases under paragraph 
(b). First, we note that we are not proposing to release Part D bid 
pricing data in this rule. For this reason, the exclusion from release 
at proposed Sec.  422.272(c)(1) is information pertaining to the Part D 
prescription drug bid amount for an MA plan offering Part D benefits, 
specifically the information required for Part D bid submission at 
Sec.  422.254(b)(1)(ii), (c)(3)(ii), and (c)(7). We consider this 
exclusion at proposed Sec.  422.272(c)(1) to include the following 
amounts in the MA BPT that pertain to the Part D premiums: The Part D 
basic premium before and after application of beneficiary rebate 
amounts; the Part D supplemental premium before and after application 
of beneficiary rebate amounts; the combined MA plus Part D total plan 
premium; and the target Part D basic premium.
    Regarding Part D bid pricing data, section 1860D-15(f) of the Act 
contains protections for data submitted by Part D Sponsors in 
accordance with section 1860D-15; these protections would generally 
prohibit public release of such data. We propose that the Part D bid 
pricing elements listed in this section of the proposed rule, which 
appear in the MA bid pricing tools, would be excluded from release. 
However, we note that the Part C statute does not establish similar 
protections for MA bid pricing data, and we believe that MA

[[Page 46401]]

bid pricing data is not subject to the protections imposed by section 
1860D-15 of the Act.
    Second, at Sec.  422.272(c)(2), we propose to exclude from release 
two categories of additional information that we require to verify the 
actuarial bases of the MA plan bids. At paragraph (c)(2)(i), we propose 
to exclude from release any narrative information in the MA BPT, MSA 
BPT, and ESRD SNP BPT regarding base period factors, manual rates, 
cost-sharing methodology, optional supplemental benefits, or other 
topics for which narratives are required by us under Sec.  422.254. 
These narrative fields provide additional information to allow us to 
verify the actuarial bases of the bid, as described at Sec.  
422.256(c)(5). For the base period narratives, MAOs are asked to 
describe the source of the base period experience data, and any other 
utilization adjustment factors, unit cost adjustment factors, and 
additive adjustment factors that the MAO applied. For projected allowed 
costs, the narrative field captures descriptions of manual rates 
including trending assumptions in the manual rates. For projected cost 
sharing, the narrative fields contains a description of the methodology 
for reflecting the impact of maximum cost-sharing. Finally, for 
optional supplemental benefits, there is a general comments field. The 
proposed regulation text would also exclude from release any other 
narrative fields in the BPT that we may require as the bid submission 
process changes over time. We propose to exclude these text fields in 
the BPTs. MAOs may populate them with information pertinent to more 
than the individual MA plan bid in which the narrative is included, 
such as regional or national-level information on an MAO's approach to 
cost-sharing methodology or projection factors. For example, MAOs may 
provide information on provider contracting, such as the fee schedules. 
Further, these explanations and additional information provide insight 
into the exercise of actuarial judgment in developing the bids. We 
believe that it is reasonable to treat such summary statements of MAO 
methodology or strategy as information proprietary to the MAO that 
should remain protected from public disclosure. The release of such 
information (for example, fee schedules or national pricing strategy) 
may provide an unfair commercial advantage to certain entities, such as 
new market entrants, and likely would impair the government's ability 
to obtain such information in the future, since MAOs have greater 
discretion in deciding what written information to share with us and 
would likely attempt to avoid sharing fee schedule and pricing strategy 
information.
    Another category of information that we propose to exclude from 
release, at Sec.  422.272(c)(2)(ii), is the supporting documentation 
that MAOs submit to us to support the actuarial bases of each MA plan 
bid; these materials are collected outside of the BPT templates so this 
proposed exclusion would be operationalized by withholding from release 
any materials submitted as part of an MA bid that were not part of the 
BPT worksheet submission. Supporting documentation for each MA plan bid 
can consist of multiple text, spreadsheet, and email files. MAOs submit 
the first round of supporting documentation with the initial bid 
submission. Subsequently, during the bid review process, our reviewers 
may communicate requests for additional supporting documentation, and 
in response, MAOs may submit multiple updated versions of an MA plan's 
BPT and additional supporting documentation. There are no standard 
formats for supporting documentation. A range of files (Word, Adobe, 
Excel, and email formats) may be uploaded for each of the MA plan bids, 
and there is no way to identify clearly which data elements in any of 
the supporting documentation for an MA plan bid applies to the final 
accepted version of the bid. Supporting documentation often links a 
particular plan bid to an MAO's broader pricing approaches, such as 
financial arrangements with providers, and we believe that such 
analytical information at a regional or national level could be 
commercially sensitive information in a way that the cost and 
enrollment estimates in the BPT are not, since such strategic pricing 
and contracting information could provide an unfair commercial 
advantage to certain entities, such as new market entrants, who would 
not need to release such strategic information. We also are concerned 
whether release of supporting documentation could have a chilling 
effect on the scope of information provided by MAOs for future bidding 
and our ability to accurately evaluate bids. We rely on MAOs to provide 
detailed explanations of the bids in order for CMS to fully understand 
the judgment calls underlying the assumptions reflected in the bids. If 
MAOs believe that the explanations and additional information are not 
protected from disclosure, they may provide less information and less 
explanation. In order to preserve the access we have, we are proposing 
to protect this information.
    Third, at Sec.  422.272(c)(3), we propose to exclude from release 
any information identifying Medicare beneficiaries and other 
individuals. We believe that this identifying information should be 
excluded from a public data release to protect the privacy of 
individuals, including but not limited to protecting the 
confidentiality of information about Medicare beneficiaries. Regarding 
Medicare beneficiaries, we propose to exclude from release any MA bid 
pricing data element that is based on fewer than 11 Medicare 
beneficiaries as we believe that this threshold establishes the point 
at which individual-level data can be discerned. Following our 
longstanding data release policy for protecting individually 
identifiable information, in the event that data fields in an MA BPT, 
MSA BPT, or ESRD SNP BPT are populated with fewer than 11 MA plan 
members (or 132 member months, assuming each individual is counted for 
12 months), we would suppress all of those data fields in the public 
release file for that MA plan bid under our proposed rule. We are not 
proposing to build this threshold into the regulation text, however, as 
we believe that technology and the ability to reverse-engineer data to 
identify beneficiaries may change over time. We may revisit this 
threshold as we administer the data releases proposed here (and in 
other Medicare contexts) and will make adjustments as necessary to 
ensure that we do not disclose data that could be used to identify 
beneficiaries. For example, data fields with member months, utilizers, 
and utilization per 1,000 could be populated based on fewer than 11 MA 
plan members and would be suppressed from the release under this 
proposed rule. Protection of information that could identify Medicare 
beneficiaries, particularly in the context of their receipt of health 
care services, is a long-standing principle of ours in the context of 
the Medicare program. Incorporating this principle and the necessary 
protection of this data into this proposal to disclose information is 
appropriate.
    Regarding other individuals, we require the names and contact 
information of certifying actuaries and MA plan contacts in the MA bid 
submission, that is, in certain fields in the MA BPT, MSA BPT, and 
ESRD-SNP BPT, and we also require the names and contact information in 
the actuarial certifications submitted by actuaries who prepared the 
bids. We propose to exclude this information from the release that we 
propose to implement. The actuarial certification consists of 
standardized language that we

[[Page 46402]]

developed for the purpose of bidding; for example, the language notes 
that the actuary is a member of the American Academy of Actuaries, 
federal law and CMS guidance regarding MA bids were followed, the data 
and assumptions used in the development of the bid are reasonable, and 
Actuarial Standards of Practice were applied. (Certifying actuaries may 
choose whether to append additional language.) We do not believe that 
these bid certification paragraphs represent information that serves 
the goals for this proposed release of MA bid pricing data (for 
example, to inform research and public evaluation of the MA program and 
to be transparent about spending). In addition, identifying specific 
individuals who have worked on a bid for an MAO appears an unnecessary 
intrusion into the personal privacy of these individuals. In sum, we 
propose to not release any information identifying individual actuaries 
or their associated certification paragraphs, to protect individual 
names and to not expend resources separating names from each of the 
hundreds of identical or similar paragraphs of attestation language.
    Finally, at Sec.  422.272(c)(4), we propose to exclude from release 
bid review correspondence between us (including our contractors) and 
the MAO, and internal bid review reports (for example, bid desk review 
documentation housed in the HPMS Bid Desk Review module, which supports 
the automated aspects of bid review). First, bid review correspondence 
(emails) often involves follow-up questions requesting clarification of 
supporting documentation, so our concerns described above regarding the 
release of supporting documentation apply to bid review correspondence. 
Second, it would not be operationally feasible to determine which set 
of bid review emails between our reviewers and MAOs and which internal 
bid review reports pertain to the final accepted/approved bid for an MA 
plan, which is the data we propose to release.
(d) Timing of MA Bid Pricing Data Release
    At Sec.  422.272(d), we propose the timing of the release of MA bid 
pricing data as provided in paragraph (b) and limited by the exclusions 
in paragraph (c). We propose that the annual release would occur after 
the first Monday in October. We selected the first Monday in October as 
the date after which the release could occur each year because the 
annual bidding cycle has come to a close at this point and we have 
completed the approval of MA plan bids for the upcoming contract year 
(calendar year). For example, after the first Monday in October 2016, 
the bids for contract year 2017 have been accepted; thus, a public 
release in December 2016 or January 2017 would be a release of the 
final accepted MA bid pricing data for a contract year not more recent 
than 2012.
    Under this example, our December 2016 release of MA bid pricing 
data under this proposed rule may include the following: (1) The 
accepted MA BPT worksheets for 2012 in their entirety, subject to the 
exceptions Sec.  422.272(c); (2) the accepted MSA BPT worksheets for 
2012 in their entirety, subject to the same exceptions; (3) accepted MA 
BPTs for 2006 through 2011, subject to the same exceptions; and (4) MSA 
BPTs for 2009 through 2011 (as 2009 was the first year this BPT was 
used), subject to the same exceptions, because these years are more 
than 5 years prior to 2017. However, under the example of a December 
2016 release, we would not release any Part C pricing data for ESRD-
SNPs because the ESRD-SNP BPT was used for the first time for contract 
year 2014; the first time that data from accepted ESRD-SNP BPTs could 
be released under this proposal is after the first Monday in October 
2018.
    While we propose to authorize release of this data after the first 
Monday in October each year, we are not committing to a specific date 
for each annual release. We will provide details on each year's release 
schedule through sub-regulatory communications. We anticipate that as 
the release process becomes more standardized over the years, we will 
be able to release these files closer to the proposed regulatory 
timeline. In addition, we intend that the first time we implement a 
public release MA bid submission data, we may release data for multiple 
contract years that meet the criterion of at least 5 years prior to the 
upcoming calendar year.
    As mentioned in the Background (section III.E.1), in crafting this 
proposal to release MA bid pricing data, we are seeking to balance 
proprietary interests with our mission to effectively administer 
federal health care programs and increase data transparency. We are 
soliciting comments on the approach we are proposing for the public 
release of MA bid pricing data based on a 5-year lag in the data, and 
whether that is the appropriate timeframe to apply to this data 
release. We also seek comment on the scope of the proposed release of 
BPT worksheets and data elements. We are particularly interested in 
whether of the MA bid pricing data we are proposing to release contains 
proprietary information, and if so, are requesting detailed 
explanations of good cause for its redaction from public availability 
and suggestions for what safeguards might be implemented to 
appropriately protect those portions of the data. Detailed explanations 
should contain specific examples which show how this information 
disclosure could cause substantial competitive harm to MAOs. Specific 
examples should (1) cite the particular information proposed to be 
released and explain how that information differs from publicly 
available data; (2) point to the particular entity or entity type that 
could gain an unfair competitive advantage from the information 
release; and (3) fully explain the mechanism by which the release of 
that particular information would create an unfair competitive 
advantage for that particular entity. Similarly, we are interested in 
comments that our proposed scope for release is too narrow and 
unnecessarily protects data that is not confidential and should not be 
protected. We are soliciting comments and explanations that show how 
the data is not confidential, could not be used to create unfair 
competitive disadvantage, and that its release would not have a 
chilling effect on the nature and scope of the data that we currently 
receive from MAOs in the bid submissions. As noted above, we view this 
rulemaking as the opportunity to solicit wide ranging comments on this 
issue in order to chart the wisest course for release of pricing data 
in support of our goals.
4. Proposed Technical Change
    We propose to amend Sec.  422.250 on the basis and scope of the MA 
program to add a reference to section 1106 of the Act. As discussed in 
the Background (section E.1.), section 1106(a) of the Act (42 U.S.C. 
1306(a)) provides us the authority to enact regulations that would 
enable the agency to release information filed with this agency.
5. Other Approaches To Release of MA Bid Pricing Data
    We are also considering whether to release MA bid pricing data for 
years more recent than the 5-year data lag proposal. In 2011, an 
academic researcher submitted a request to CMS for certain data 
elements regarding the 2009 MA Base Period Experience in the 2011 MA 
bid pricing submissions. We rejected the request under Exemption 4 to 
the FOIA, 5 U.S.C. 552(b)(4), which exempts from disclosure trade 
secrets and confidential or privileged commercial or financial 
information that is obtained from a person. In a 2013 opinion, Biles v. 
Dep't of Health and Human Services, 931 F. Supp. 2d 211 (D.D.C. 2013), 
the U.S. District Court for

[[Page 46403]]

the District of Columbia ordered the release of the requested bid 
information, rejecting HHS's argument that release would cause 
substantial competitive harm to the private companies that submit bid 
data to CMS. The court remarked that the HHS statements about 
substantial competitive harm were conclusory. As a result of this 
ruling, we released the requested data to the academic researcher (and 
the public) at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/DataRequests.html. In light of this 
litigation, as well as anticipated additional requests for more recent 
MA bid pricing data, we are soliciting public comments on a range of 
approaches we could implement to release data more recent than the 
proposal we are currently setting forth for consideration.
    For example, we are considering whether to release MA bid pricing 
data on a shorter timeframe than the proposed 5-year lagged timeframe, 
which could be as recent as MA bid pricing data from the previously-
concluded MA contract year. We are also seeking comment as to whether 
the relationship between the passage of time and commercial sensitivity 
of the bid data changes more rapidly for some MA bid pricing data 
elements than others. If commenters believe this to be the case, we are 
seeking the submission of detailed analysis that sets forth which data 
elements meet this standard and why.
    If unfair competitive harm is included as a rationale for us to 
consider in withholding some or all elements of more recent MA bid 
pricing data from release, either to external researchers subject to 
some limitations in redisclosure of the data or the public at large, we 
seek evidence of this competitive harm linked to particular bid data 
elements, and a fulsome discussion as to how each of the elements 
identified could be used by a competitor to directly harm a competing 
MAO. See section III.E.3.d above for detail on what a fulsome 
discussion would include, in our explanation of ``specific examples.'' 
If there are commercially sensitive data elements in the MA bids, we 
also seek comment as to whether there are safeguards that might be 
appropriately implemented to protect those identified data elements, 
while still allowing releases of more recent data.
    Finally, we are seeking comment regarding to whom we should release 
more recent MA bid pricing data. Specifically, should such a release be 
made fully available to the public at large, or only to researchers who 
have studies approved through an application process and who are 
subject to our long-standing data sharing procedures. If we were to 
release MA bid pricing data for years more recent than the 5 year 
lagged data we propose here, we also seek comment on whether to use the 
existing policies for the release of Part D prescription drug event 
(PDE) data at Sec.  423.505(m) and Part C encounter data at Sec.  
422.310(f)(2). We also seek comment on whether research results from 
the analysis of MA bid pricing data should be subject to additional 
restrictions, such as a prohibition of publication of MA bid pricing 
data at the plan level or prohibitions on the identification of the 
applicable MAO that submitted the data. We seek comment on whether 
external researchers should be able to use MA bid pricing data for 
commercial purposes rather than to produce research that could be 
useful to us in our administration of the Medicare program generally. 
We are considering limiting conditions of this type as means to release 
as much data while protecting what should be protected.
    As discussed in section III.E.3.d above, we are seeking comment on 
our proposal that 5 years is an appropriate length of time for the MA 
bid pricing data we are proposing to release to no longer be 
competitively sensitive. In addition, in setting forth this section 
III.E.5 discussion, we are also soliciting comments on how we can best 
serve the needs of the public through the sharing of MA bid pricing 
data that is less than 5 years old while at the same time addressing 
the concerns of MAOs that we appropriately guard against the potential 
misuse of data in ways that would undermine protections put in place to 
ensure nondisclosure of proprietary data. The purpose of this 
solicitation is to both inform our decision-making process about the 5-
year threshold proposed above, as well as to inform future policy 
development.
6. Background on Part C and Part D Medical Loss Ratio Data
    Section 1103 of Title I, Subpart B of the Health Care and Education 
Reconciliation Act (Pub. L. 111-152) amends section 1857(e) of the Act 
to add medical loss ratio (MLR) requirements to Medicare Part C. An MLR 
is expressed as a percentage, generally representing the percentage of 
revenue used for patient care rather than for such other items as 
administrative expenses or profit. Because section 1860D-12(b)(3)(D) of 
the Act incorporates by reference the requirements of section 1857(e) 
of the Act, these MLR requirements also apply to the Part D program. In 
the May 23, 2013 final rule (78 FR 31284), we codified the MLR 
requirements for MAOs and Part D sponsors in the regulations at part 
422, subpart X, and part 423, subpart X.
    For contracts beginning in 2014 or later, MAOs, cost plans, and 
Part D sponsors are required to report their MLRs and are subject to 
financial and other penalties for a failure to meet the statutory 
requirement that they have an MLR of at least 85 percent (see Sec.  
422.2410 and Sec.  423.2410). The statute imposes several levels of 
sanctions for failure to meet the 85 percent minimum MLR requirement, 
including remittance of funds to CMS, a prohibition on enrolling new 
members, and ultimately contract termination. The minimum MLR 
requirement in section 1857(e)(4) of the Act creates incentives for 
MAOs and Part D sponsors to reduce administrative costs, such as 
marketing costs, profits, and other uses of the funds earned by plan 
sponsors, and helps to ensure that taxpayers and enrolled beneficiaries 
receive value from Medicare health plans.
    Under the regulations at Sec.  422.2410 and Sec.  422.2460, with 
respect to MAOs, and Sec.  423.2410 and Sec.  423.2460, with respect to 
Part D sponsors, for each contract year, each MAO and Part D sponsor is 
required to submit a report to us, in a timeframe and manner that we 
specify, which includes the data needed to calculate and verify the MLR 
and remittance amount, if any, for each contract. The information that 
MAOs and Part D sponsors report to us includes incurred claims for 
medical services and prescription drug costs, expenditures on 
activities that improve health care quality, taxes, licensing and 
regulatory fees, non-claims costs, and revenue.
    We have developed a standardized MLR Report template, called the 
MLR Report, for MAOs and Part D sponsors to populate with the data used 
to calculate the MLR and remittance amount owed to us under Sec.  
422.2410 and Sec.  423.2410, if any. The MLR Report is a standardized 
Excel workbook with three worksheets and special functions built in 
(for example, validation features). We maintain and update the MLR 
Report data collection format under OMB #0938-1232.
    For each contract year beginning in 2014 or later, MAOs and Part D 
sponsors are required to enter their MLR data and upload their MLR 
Reports to our Health Plan Management System (HPMS). Based on the data 
entered by the MAO or Part D sponsor, the Report calculates the MLR for 
the contract. An MA or Part D contract's MLR is increased by a 
credibility factor if the contract's experience for the contract

[[Page 46404]]

year is partially credible in actuarial terms, as provided at Sec.  
422.2440 and Sec.  423.2440. Finally, we also require MAOs and Part D 
sponsors to include in their MLR Reports a detailed description of the 
methods used to allocate expenses, including how each specific expense 
meets the criteria for the expense category to which it was assigned. 
The MLR Report is on our Web site at https://www.cms.gov/Medicare/Medicare-Advantage/Plan-Payment/medicallossratio.html, accompanied by 
instructions on how to populate the Report.
    Below we describe the categories of Part C and Part D MLR data 
submitted in the MLR Reports:
     Revenue. MAOs and Part D sponsors must report revenue 
received under the contract. The MLR Report includes separate lines for 
MAOs and Part D sponsors to report the amounts of revenue received, 
such as beneficiary premiums; MA plan payments (based on A/B bids); MA 
rebates; Part D direct subsidies; federal reinsurance subsidies; Low 
Income Premium Subsidy Amounts; risk corridor payments; and MSA 
enrollee deposits (see Sec.  422.2420(c)(1) and Sec.  423.2420(c)(1)).
     Claims. MAOs and Part D sponsors must report incurred 
claims for clinical services and prescription drug costs, including 
categories such as the following: Direct claims paid to providers 
(including under capitation contracts with physicians) for covered 
services; for an MA contract that includes MA-PD plans, or a Part D 
contract, the MLR Report must include drug costs provided to all 
enrollees under the contract; liability and reserves for claims 
incurred during the contract year; paid and accrued medical incentive 
pools and bonuses; reserves for contingent benefits and the medical or 
Part D claim portion of lawsuits; MA rebate amounts that are used to 
reduce enrollees' Part B premiums; total fraud reduction expenses and 
total claim payment recoveries as a result of fraud reduction efforts; 
MSA enrollee deposits; and direct and indirect remuneration (see Sec.  
422.2420(b) and Sec.  423.2420(b)).
     Federal and State Taxes and Licensing or Regulatory Fees. 
The MLR Report includes MAOs and Part D sponsors' outlays for taxes and 
fees, such as federal income taxes and other federal taxes; state 
income, excise, business, and other taxes; state premium taxes; 
allowable community benefit expenditures; and licensing and regulatory 
fees (see Sec.  422.2420(c)(2) and Sec.  423.2420(c)(2)).
     Health Care Quality Improvement Expenses Incurred. MAOs 
and Part D sponsors must enter their expenditures for health care 
quality improvement. Expenditures are categorized separately depending 
on the primary purpose of the activity. Quality improvement expenses 
are reported in categories such as: (1) Expenses for improving health 
outcomes through the implementation of activities such as quality 
reporting, effective case management, care coordination, chronic 
disease management, and medication and care compliance initiatives; (2) 
expenses for implementing activities to prevent hospital readmissions; 
(3) expenses for activities primarily designed to improve patient 
safety, reduce medical errors, and lower infection and mortality rates; 
(4) expenses for activities primarily designed to implement, promote, 
and increase wellness and health activities; (5) expenditures to 
enhance the use of health care data to improve quality, transparency, 
and outcomes and support meaningful use of health information 
technology; or (6) allowable ICD-10 implementation costs (see Sec.  
422.2430(a)(1) and Sec.  423.2430(a)(1)).
     Non-Claims Costs. MAOs and Part D sponsors must report 
expenditures for non-claims costs, such as administrative fees, direct 
sales salaries and benefits, brokerage fees and commissions, regulatory 
fines and penalties, cost containment expenses not included as quality 
improvement expenses, all other claims adjustment expenses, non-
allowable community benefit expenditures, and non-allowable ICD-10 
implementation costs (see Sec.  422.2430(b) and Sec.  423.2430(b)).
     Employer Group Waiver Plan (EGWP) Reporting Methodology. 
We only apply the MLR requirement to the Medicare-funded portion of 
EGWPs. MLR Reports submitted for MA or Part D contracts that include 
EGWPs must specify the percentage of the contract's total revenue that 
was funded by Medicare. The MLR Report must also identify the 
methodology that the MAO or Part D sponsor used to determine the 
Medicare-funded portion of the EGWP (see Sec.  422.2420 and Sec.  
423.2420).
     Total Member Months. MAOs and Part D sponsors must report 
all member months across all plans under the contract (see Sec.  
422.2440 and Sec.  423.2440).
     Plan-Specific Data. MAOs and Part D sponsors enter a list 
of all of the plans offered under the contract, and the member months 
associated with each plan entered. They must provide additional details 
about each plan that is listed, including whether the plan is a Special 
Needs Plan for beneficiaries who are dually eligible for both Medicare 
and Medicaid (D-SNP); whether the plan's defined service area includes 
counties in one of the territories; and plan-level cost and revenue 
information for D-SNPs in territories (see Sec.  422.2420(a) and Sec.  
423.2420(a)).
     Medical Loss Ratio Numerator. This is a calculated field 
that is the sum of all amounts reported as claims or as health care 
quality improvement expenses in the MLR Report (see Sec.  422.2420(b) 
and Sec.  423.2420(b)).
     Medical Loss Ratio Denominator. This field is calculated 
by taking the contract's total revenue and deducting the sum of the 
reported licensing or regulatory fees, federal and state taxes, and 
allowable community benefit expenditures (see Sec.  422.2420(c) and 
Sec.  423.2420(c)).
     Credibility Adjustment. An MAO or Part D sponsor may add a 
credibility adjustment to a contract's MLR if the contract's experience 
is partially credible, as determined by us (see Sec.  422.2440(d) and 
Sec.  423.2440(d)). If a contract receives a credibility adjustment 
(determined by the number of total member months under the contract), 
this field is populated by a percentage that represents the credibility 
adjustment factor (see Sec.  422.2440(a) and Sec.  423.2440(a)).
     Unadjusted MLR. This is a calculated field that reflects 
the MLR for an MA or Part D contract before application of the 
credibility adjustment (see Sec.  422.2440 and Sec.  423.2440).
     Adjusted MLR. This is a calculated field that represents 
the MLR after the application of the credibility adjustment factor (see 
Sec.  422.2440(a) and Sec.  423.2440(a)).
     Remittance Amount Due to CMS for the Contract Year. The 
MLR Report includes any amounts that the MAO or Part D sponsor must 
remit to us. The MLR Report identifies the amount of the remittance 
that is allocated to Parts A and B, and the amount allocated to Part D 
(see Sec.  422.2410(c) and Sec.  423.2410(c)).
7. Proposed Regulatory Changes for Release of MLR Data
a. Proposed Addition of Sec.  422.2490 and Sec.  423.2490 Authorizing 
Release of Part C and Part D Medical Loss Ratio Data
    We are proposing to add new contract requirements, codified in new 
regulations at Sec. Sec.  422.504 and 422.2490 of part 422, with 
respect to Part C MLR data, and Sec. Sec.  423.505 and 423.2490 of part 
423, with respect to Part D MLR data, to authorize release to the 
public by CMS of certain MLR data submitted by MAOs and Part D 
sponsors. We propose to define Part C MLR data at Sec.  422.2490(a), 
and Part D MLR data at

[[Page 46405]]

Sec.  423.2490(a), as the data the MAOs and Part D sponsors submit to 
us in their annual MLR Reports, as required under existing Sec.  
422.2460 and Sec.  423.2460. At Sec.  422.2490(b) and Sec.  
423.2490(b), we propose certain exclusions to the definitions of Part C 
MLR data and Part D MLR data, respectively. Finally, we propose at 
Sec.  422.2490(c) and Sec.  423.2490(c) to release the Part C MLR data 
and Part D MLR data, respectively, for each contract for each contract 
year, no earlier than 18 months after the end of the applicable 
contract year.
    Generally, the MLR for each MA and Part D contract reflects the 
ratio of costs (numerator) to revenues (denominator) for all enrollees 
under the contract. For an MA contract, the MLR reflects the percentage 
of revenue received under the contract spent on incurred claims for all 
enrollees, prescription drug costs for those enrollees in MA plans 
under the contract offering the Part D benefit, quality initiatives 
that meet the requirements at Sec.  422.2430, and amounts spent to 
reduce Part B premiums. The MLR for a Part D contract reflects the 
percentage of revenue received under the contract spent on incurred 
claims for all enrollees for Part D prescription drugs, and on quality 
initiatives that meet the requirements at Sec.  423.2430. The 
percentage of revenue that is used for other items such as 
administration, marketing, and profit is excluded from the numerator of 
the MLR (see Sec.  422.2401 and Sec.  423.2401; Sec.  422.2420(b)(4) 
and Sec.  423.2420(b)(4); Sec.  422.2430(b) and Sec.  423.2430(b)).
    As discussed in section III.F.1. of this proposed rule, our 
proposed release of Part C and Part D MLR data is in keeping with 
Presidential initiatives to improve federal management of information 
resources by increasing data transparency and access to federal 
datasets. In proposing this release, we are also seeking to align with 
current disclosures of MLR data that issuers of commercial health plans 
submit each year as required by section 2718 of the Public Health 
Service Act. We have published similar commercial MLR data on our Web 
site at https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
    The MLR data that we propose to release will enable enrollees, 
consumers, regulators, and others to see how much of plan sponsors' 
revenue is used to pay for services, quality improving activities, and 
Part B premium rebates versus how much is used to pay for ``non-
claims,'' or administrative expenses, incurred by the plan sponsor. We 
believe that the release of this data will facilitate public evaluation 
of the MA and Part D programs by providing insight into the efficiency 
of health insurers' operations. In addition, we believe that our 
proposed policy for the release of certain MLR data will provide 
beneficiaries with information that can be used to assess the relative 
value of Medicare health and drug plans.
b. Exclusions From the Release of Part C and Part D MLR Data
    For the purpose of this data release under proposed Sec.  422.2490 
and Sec.  423.2490, we would exclude four categories of information 
from the release of Part C and Part D MLR data, as described at 
proposed Sec.  422.2490(b) and Sec.  423.2490(b), respectively. First, 
at Sec.  422.2490(b)(1) and Sec.  423.2490(b)(1), we propose to exclude 
from release any narrative information that MAOs and Part D sponsors 
submit to support the amounts that they include in their MLR Reports, 
such as descriptions of the methods used to allocate expenses. MAOs and 
Part D sponsors are required to describe the methods they used to 
allocate expenses, including incurred claims, quality improvement 
expenses, federal and state taxes and licensing or regulatory fees, and 
other non-claims costs. A detailed description of each expense element 
should be provided, including how each specific expense meets the 
criteria for the type of expense in which it is categorized. We believe 
that descriptions of expense allocation methods should be excluded 
because MAOs and Part D sponsors may be required to provide information 
that is pertinent to more than the individual MA or Part D contract for 
which the MLR Report is being submitted (see, for example, Sec.  
422.2420(d)(1)(ii) and Sec.  423.2420(d)(1)(ii), which requires that 
expenditures that benefit multiple contracts, or contracts other than 
those being reported, be reported on a pro rata share), such as an 
MAO's or Part D sponsor's proprietary approach to setting payment rates 
in contracts with providers, or its strategies for investing in 
activities that improve health quality. We are concerned that MAOs and 
Part D sponsors would be reluctant to submit narrative descriptions 
that include information that they regard as proprietary if they know 
that it will be disclosed to the public, which could impair our ability 
to assess the accuracy of their allocation methods.
    Second, at Sec.  422.2490(b)(2) and Sec.  423.2490(b)(2), we 
propose to exclude from release any plan-level information that MAOs 
and Part D sponsors submit in their MLR Reports. Some of the plan-level 
data in MAO's and Part D sponsors' MLR Reports is also included in 
their plan bids as base period experience data, such as plan IDs, plan 
member months, and Medicaid per member per month gain/loss. As 
discussed in our proposal to release certain MA bid pricing data, we 
believe bid data would no longer be competitively sensitive after 5 
years; however, we do not believe that bid data becomes no longer 
competitively sensitive within the 18-month timeframe for our proposed 
release of MLR data. Therefore, we will exclude from our proposed 
release plan-level data that is included as base period experience data 
in plan bids. We also propose to exclude the plan-level information 
submitted in MLR Reports because we do not regard it as relevant to the 
purposes of our proposed release of Part C and Part D MLR data, which 
include giving the public access to data that can be used to evaluate 
the efficiency of MAOs and Part D sponsors and providing enrollees with 
information that can be used to compare the relative value of health 
plans. For example, our proposed release would exclude MAOs' and Part D 
sponsors' responses to questions in the MLR Report that ask whether 
each plan under a contract is a Special Needs Plan for beneficiaries 
who are dually eligible for both Medicare and Medicaid (D-SNP), or 
whether the plan's defined service area includes counties in one of the 
territories.
    Third, at Sec.  422.2490(b)(3) and Sec.  423.2490(b)(3), we propose 
to exclude from release any information identifying Medicare 
beneficiaries or other individuals. This exclusion is proposed for the 
same reason we propose to exclude similar information from MA bid 
submission data that will be released; we believe that it is important 
to protect the privacy of individuals identified in these submissions, 
particularly Medicare beneficiaries. Protection of information that 
could identify Medicare beneficiaries, particularly in the context of 
their receipt of health care services, is a long-standing principle of 
ours in the context of the Medicare program. Incorporating this 
principle and the necessary protection of this data into this proposal 
to disclose information is appropriate. With respect to Medicare 
beneficiaries, we propose to exclude from release any information (that 
is, data elements) in an MLR Report for a contract if the total number 
of beneficiaries under the contract is fewer than 11, as we believe 
that this threshold establishes the point at which individual-level 
data can be discerned. Following our longstanding data release policy 
for protecting

[[Page 46406]]

individually identifiable information, if a data field in the MLR 
Report for an MA or Part D contract is calculated based on figures 
associated with fewer than 11 enrollees (or 132 member months, assuming 
each individual is counted for 12 months), we would suppress all the 
data from such fields in the public release file for that contract. We 
are not proposing to build this threshold into the regulation text, 
however, as we believe that as technology changes and the ability to 
reverse-engineer data to identify beneficiaries may change over time. 
We may revisit this threshold as we administer the data releases 
proposed here (and in other Medicare contexts) and will make 
adjustments as necessary to ensure that we do not disclose data that 
could be used to identify beneficiaries.
    Regarding other individuals, we require that MAOs and Part D 
sponsors provide in their MLR Reports the names and contact information 
of individuals who can answer questions about the data submitted in an 
MLR Report. We propose to exclude this information from release. We do 
not believe that the release of this information serves the purposes of 
our proposed release of certain MLR data, which are to provide the 
public with data that can be used to evaluate MA and Part D contracts' 
efficiency, and to provide beneficiaries with information that can be 
used to compare the relative value of Medicare plans. Further, release 
of this identifying and contact information appears to be an 
unnecessary intrusion into information about private individuals.
    Fourth, at Sec.  422.2490(b)(4) and Sec.  423.2490(b)(4), we 
propose to exclude from release any MLR review correspondence. In the 
course of the MLR review process, our reviewers may engage in 
correspondence with MAOs and Part D sponsors in order to validate 
amounts included in their MLR Reports. Such correspondence may include 
requests for evidence of amounts reported to us. Responses to these 
requests could include competitively-sensitive information, such as 
MAOs' and Part D sponsors' negotiated rates of reimbursement. Release 
of this correspondence could cause MAOs to be less forthcoming in the 
information provided to CMS, which would impede the ability of the 
agency to verify the information submitted by MAOs and Part D sponsors.
c. Timing of Release of Part C and Part D MLR Data
    We are proposing to release the MLR data specified in this rule for 
each MA and Part D contract on an annual basis no earlier than 18 
months after the end of the contract year to which the MLR data 
applies. We are proposing to follow the commercial MLR approach in 
making the data we receive in MLR Reports available to the public. For 
Part C and Part D MLR reporting, the data is due about 12 months after 
the end of the contract year. After we receive MAOs' and Part D 
sponsors' MLR Reports, we anticipate that it will take up to six months 
for us to review and finalize the data submitted by MAOs and Part D 
sponsors.
    We believe that our proposed release of contract-level MLR data 
strikes the appropriate balance between safeguarding information that 
could be commercially sensitive or proprietary and providing enrollees 
of health plans, consumers, regulators, and others with a measure that 
can be used to evaluate health insurers' efficiency. The Part C MLR 
data and Part D MLR data that we propose to release is aggregated at 
the contract level. Costs in the MLR numerator are aggregated across 
providers, beneficiaries, and sites of service. Costs and revenues are 
further aggregated across all plans under the contract. We do not 
believe that there is a realistic possibility that the MLR data that we 
propose to release could be disaggregated or reverse engineered to 
reveal commercially sensitive or proprietary information. We seek 
comment on this point and on our analysis of the commercial sensitivity 
of this information.
    We believe the availability of the Part C MLR data and Part D MLR 
data we are proposing to release will provide beneficiaries a measure 
by which they can compare the relative value of Medicare products. Our 
proposed release of MLR data will permit enrollees of health plans, 
consumers, regulators, and others to take into consideration MLRs when 
evaluating health insurers' efficiency.
    We also believe the availability of MLR data will enhance the 
competitive nature of the MA and Part D programs. The proposed access 
to data will support potential plan sponsors in evaluating their 
participation in the Part C and D programs and will facilitate the 
entry into new markets of existing plan sponsors. In knowing historical 
MLR data, new business partners might emerge, and better business 
decisions might be made by existing partners. As a result, we believe 
that releasing Part C and Part D MLR data as proposed is both necessary 
and appropriate for the effective operation of these programs.
    We seek comment on the release of Part C MLR data and Part D MLR 
data as outlined above. We solicit comment on whether the Part C MLR 
data and Part D MLR data we propose to release contain proprietary 
information, and if so, what safeguards might be appropriate to protect 
those data, such as recommended fields to be redacted, the minimum 
length of time that such data remains commercially sensitive, and any 
suggestions for publishing aggregations of Part C MLR data and Part D 
MLR data in lieu of publishing the MLR data as submitted by MAOs and 
Part D sponsors. We invite commenters to provide analysis and 
explanations to support comments that information should be protected 
for a longer--or shorter--period of time so that we may properly 
evaluate our proposal in adopting a final rule. Analysis and 
explanations should (1) cite the particular information proposed to be 
released and explain how that information differs from publicly 
available data; (2) point to the particular entity or entity type that 
could gain an unfair competitive advantage from the information 
release; and (3) fully explain the mechanism by which the release of 
that particular information would create an unfair competitive 
advantage for that particular entity.
    We also solicit comment on whether MLR data that is associated 
single-plan contracts is more commercially sensitive than MLR data that 
is associated with contracts that include multiple plans, and if so, 
whether we should take any protective measures when releasing the MLR 
data for single-plan contracts, such as redacting data fields that 
could be used to identify the contract, withholding the MLR data for 
all single-plan contracts and instead publishing a data set consisting 
of figures that have been averaged across all single-plan contracts, or 
by releasing a more limited data set for single-plan contracts.
8. Proposed Technical Changes
    We are proposing to amend Sec.  422.2400, which identifies the 
basis and scope of the MLR regulations for MAOs, and Sec.  423.2400, 
which identifies the basis and scope of the MLR regulations for Part D 
sponsors, to add a reference to section 1106 of the Act, which governs 
the release of information gathered in the course of administering our 
programs under the Act.

F. Prohibition on Billing Qualified Medicare Beneficiary Individuals 
for Medicare Cost-Sharing

    We remind all Medicare providers (including providers of services 
defined in section 1861 of the Act and

[[Page 46407]]

physicians) that federal law prohibits them from collecting Medicare 
Part A and Medicare Part B deductibles, coinsurance, or copayments, 
from beneficiaries enrolled in the Qualified Medicare Beneficiaries 
(QMB) program (a Medicaid program which helps certain low-income 
individuals with Medicare cost-sharing liability). In July 2015, we 
released a study finding that confusion and inappropriate balance 
billing persist notwithstanding laws prohibiting Medicare cost-sharing 
charges for QMB individuals, Access to Care Issues Among Qualified 
Medicare Beneficiaries (QMB) (``Access to Care'') https://www.cms.gov/Medicare-Medicaid-Coordination/Medicare-and-Medicaid-Coordination/Medicare-Medicaid-Coordination-Office/Downloads/Access_to_Care_Issues_Among_Qualified_Medicare_Beneficiaries.pdf.
    These findings underscore the need to re-educate providers about 
proper billing practices for QMB enrollees.
    In 2013, approximately 7 million Medicare beneficiaries were 
enrolled in the QMB program. State Medicaid programs are liable to pay 
Medicare providers who serve QMB individuals for the Medicare cost-
sharing. However, as permitted by federal law, states can limit 
provider payment for Medicare cost-sharing to the lesser of the 
Medicare cost-sharing amount, or the difference between the Medicare 
payment and the Medicaid rate for the service. Regardless, Medicare 
providers must accept the Medicare payment and Medicaid payment (if 
any, and including any permissible Medicaid cost sharing from the 
beneficiary) as payment in full for services rendered to a QMB 
individual. Medicare providers who violate these billing prohibitions 
are violating their Medicare Provider Agreement and may be subject to 
sanctions. (See sections 1902(n)(3); 1905(p); 1866(a)(1)(A); 1848(g)(3) 
of the Act.)
    Providers should take steps to educate themselves and their staff 
about QMB billing prohibitions and to exempt QMB individuals from 
impermissible Medicare cost-sharing billing and related collection 
efforts. For more information about these requirements, steps to 
identify QMB patients and ways to promote compliance, see https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/se1128.pdf.
    Given that original Medicare providers may also serve Medicare 
Advantage enrollees, we note that the CY 2017 Medicare Advantage Call 
Letter reiterates the billing prohibitions applicable to dual eligible 
beneficiaries (including QMBs) enrolled in Medicare Advantage plans and 
the responsibility of plans to adopt certain measures to protect dual 
eligible beneficiaries from unauthorized charges under Sec.  
422.504(g). (See pages 181-183 at https://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/Downloads/Announcement2017.pdf).

G. Recoupment or Offset of Payments to Providers Sharing the Same 
Taxpayer Identification Number

1. Overview and Background
    Medicare payments to providers and suppliers may be offset or 
recouped, in whole or in part, by a Medicare contractor if the Medicare 
contractor or CMS has determined that a provider or supplier has been 
overpaid. Historically, we have used the Medicare provider billing 
number or National Provider Identifier (NPI) to recoup overpayments 
from Medicare providers and suppliers until these debts were paid in 
full or eligible for referral to the Department of Treasury (Treasury) 
for further collection action under the Debt Collection Improvement Act 
of 1996 and the Digital Accountability and Transparency Act of 2014. 
Once an overpayment is referred to Treasury, the Treasury's Debt 
Management Services uses various tools to collect the debt, including 
offset of federal payments against entities that share the same 
provider Taxpayer Identification Number (TIN). Hence, Treasury has the 
ability to collect our overpayments using the provider TIN and we pay a 
fee for every collection made.
    On March 23, 2010, the Affordable Care Act (ACA) was enacted. 
Section 6401(a)(6) of the Affordable Care Act established a new section 
1866(j)(6) of the Act. Section 1866j(6) of the Act allows the Secretary 
to make any necessary adjustments to the payments to an applicable 
provider of services or supplier to satisfy any amount due from an 
obligated provider of services or supplier. The statute defines an 
applicable provider of services or supplier (applicable provider) as a 
provider of services or supplier that has the same taxpayer 
identification number as the one assigned to the obligated provider of 
services or supplier. The statute defines the obligated provider of 
services or supplier (obligated provider) as a provider of services or 
supplier that owes a past-due overpayment to the Medicare program. For 
purposes of this provision, the applicable and obligated providers must 
share a TIN, but may possess a different billing number or National 
Provider Identifier (NPI) number than one another.
    For example, a health care system may own a number of hospital 
providers and these providers may share the same TIN while having 
different NPI or Medicare billing numbers. If one of the hospitals in 
this system receives a demand letter for a Medicare overpayment, then 
that hospital (Hospital A) will be considered the obligated provider 
while its sister hospitals (Hospitals B and C) will be considered the 
applicable providers. This authority allows us to recoup the 
overpayment of the obligated provider, Hospital A, against any or all 
of the applicable providers, Hospitals B and C, with which it, Hospital 
A, shares a TIN.
2. Provisions of the Proposed Regulations
    If CMS or a Medicare contractor has decided to put into effect an 
offset or recoupment, then Sec.  405.373(a) requires the Medicare 
contractor to notify the provider or supplier in writing of its 
intention to fully or partially offset or recoup payment and the 
reasons for the offset or recoupment. Currently, the written demand 
letter sent by the Medicare contractor to a provider or supplier serves 
as notification of the overpayment and intention to recoup or offset if 
the obligated provider, Hospital A, fails to repay the overpayment in a 
timely manner.
    With the passage of section 1866(j)(6) of the Act, the requirements 
in Sec.  405.373(a) could be interpreted to require the Medicare 
contractor to provide notification to both the obligated provider, 
Hospital A, and the applicable provider, Hospital B, of its intention 
to recoup or offset payment. Because we don't think it is necessary to 
provide separate notice to both the obligated provider and the 
applicable provider, we propose to amend the notice requirement in 
Sec.  405.373. Specifically, we propose to create a new paragraph (f) 
in Sec.  405.373 to state that Sec.  405.373(a) does not apply in 
instances where the Medicare Administrative Contractor intends to 
offset or recoup payments to the applicable provider of services or 
supplier to satisfy an amount due from an obligated provider of 
services or supplier when the applicable and obligated provider of 
services or supplier share the same Taxpayer Identification Number.
    Before the effective date of this rule, we intend to notify all 
potentially affected Medicare providers of the implementation of 
section 1866j(6) of the Act through Medicare Learning Network (MLN) or 
MLN Connects Provider eNews article(s), an update to

[[Page 46408]]

the current Internet Only Manual instructions including, the Medicare 
Financial Management Manual, and the addition of clarifying language in 
the demand letters issued to obligated providers. We believe these 
actions would provide adequate notice to providers and suppliers 
sharing a TIN, if they choose, provide the opportunity to implement a 
tracking system of Medicare overpayments on the corporate level for the 
affected providers. We also believe these actions are sufficient 
because of Treasury's analogous practice of offsetting using a TIN 
without furnishing notice to all potentially affected providers and 
suppliers. It has been a long standing practice for Treasury to offset 
federal payments using the TIN and Treasury currently does not issue a 
notice of intent to recoup or offset to applicable providers and 
suppliers when Treasury recoups CMS overpayments.
    Additionally, in our review of Sec.  405.373(a) and (b), we propose 
to replace the terms intermediary and carrier with the term Medicare 
Administrative Contractor as intermediaries and carriers no longer 
exist.

H. Accountable Care Organization (ACO) Participants Who Report 
Physician Quality Reporting System (PQRS) Quality Measures Separately

    The Affordable Care Act gives the Secretary authority to 
incorporate reporting requirements and incentive payments from certain 
Medicare programs into the Shared Savings Program, and to use 
alternative criteria to determine if payments are warranted. 
Specifically, section 1899(b)(3)(D) of the Act affords the Secretary 
discretion to incorporate reporting requirements and incentive payments 
related to the physician quality reporting initiative (PQRI), under 
section 1848 of the Act, including such requirements and such payments 
related to electronic prescribing, electronic health records, and other 
similar initiatives under section 1848, and permits the Secretary to 
use alternative criteria than would otherwise apply (under section 1848 
of the Act) for determining whether to make such payments.
    Current Shared Savings Program regulations at Sec.  425.504(c) do 
not allow eligible professionals (EPs) billing through the Taxpayer 
Identification Number (TIN) of an Accountable Care Organization (ACO) 
participant to participate in PQRS outside of the Shared Savings 
Program, and these EPs and the ACO participants through which they bill 
may not independently report for purposes of the PQRS apart from the 
ACO. This policy was designed to ease reporting burden for individual 
EPs and group practices and promote integration of providers and 
suppliers within the ACO in order to help achieve the Shared Savings 
Program goals of improving quality and coordination of care. While over 
98 percent of ACOs satisfactorily report their quality data annually, 
if an ACO fails to satisfy the PQRS reporting requirements, the 
individual EPs and group practices participating in that ACO will 
receive the PQRS payment adjustment along with the automatic VM 
downward payment adjustment.
    We are proposing to amend the regulation at Sec.  425.504 to permit 
EPs that bill under the TIN of an ACO participant to report separately 
for purposes of the 2018 PQRS payment adjustment when the ACO fails to 
report on behalf of the EPs who bill under the TIN of an ACO 
participant. Specifically, we are proposing to remove the requirement 
at Sec.  425.504(c)(2) so that, for purposes of the reporting period 
for the 2018 PQRS payment adjustment (that is, January 1, 2016, through 
December 31, 2016), EPs who bill under the TIN of an ACO participant 
have the option of reporting separately as individual EPs or group 
practices. If the ACO fails to satisfactorily report on behalf of such 
EPs or group practices, we are proposing to consider this separately 
reported data for purposes of determining whether the EPs or group 
practices are subject to the 2018 PQRS payment adjustment. We are also 
proposing to amend Sec.  425.504(c)(2) to apply only for purposes of 
the 2016 payment adjustment. We propose at Sec.  425.504(d) the revised 
requirements for the 2017 and 2018 PQRS payment adjustment under the 
Shared Savings Program. We discuss the proposed changes for the 2017 
PQRS payment adjustment under the Shared Savings Program in more detail 
later in this section.
    We note that the registration deadline for participating in the 
PQRS Group Practice Reporting Option (GPRO) is June 30 of the 
applicable reporting period. Since affected EPs are not able to 
register for the PQRS GPRO by the applicable deadline for the 2018 PQRS 
payment adjustment, we propose that such EPs would not need to register 
for the PQRS GPRO for the 2018 PQRS payment adjustment, but rather mark 
the data as group data in their submission. Thus, we are proposing to 
eliminate a registration process for groups submitting data using third 
party entities. When groups submit data utilizing third party entities, 
such as a qualified registry, QCDR, direct EHR product, or EHR data 
submission vendor, we are able to obtain group information from the 
third party entity and discern whether the data submitted represents 
group submission or individual submission once the data is submitted. 
In addition, we propose that an affected EP may utilize the secondary 
reporting period either as an individual EP using one of the registry, 
qualified clinical data registry (QCDR), direct Electronic Health 
Record (EHR) product, or EHR data submission vendor reporting options 
or as a group practice using one of the registry, QCDR, direct EHR 
product, or EHR data submission vendor reporting options. We note that 
this would exclude, for individual EPs, the claims reporting option 
and, for group practices, the Web Interface and certified survey vendor 
reporting options.
    Furthermore, we recognize that certain EPs are similarly situated 
with regard to the 2017 PQRS payment adjustment, which will be applied 
beginning on January 1, 2017. We believe it is appropriate and 
consistent with our stated policy goals to afford these EPs the benefit 
of this proposed policy change. Accordingly, as noted above,we are 
proposing to permit EPs that bill through the TIN of an ACO participant 
to report separately for purposes of the 2017 PQRS payment adjustment 
if the ACO failed to report on behalf of the EPs who bill under the TIN 
of an ACO participant. Specifically, we are proposing to remove the 
requirements at Sec.  425.504(c)(2) so that, for purposes of the 
reporting period for the 2017 PQRS payment adjustment, EPs who bill 
under the TIN of an ACO participant have the option of reporting 
separately as individual EPs or group practices. As noted above, we are 
proposing to amend Sec.  425.504(c)(2) to apply only for purposes of 
the 2016 payment adjustment. We propose at Sec.  425.504(d) the revised 
requirements for the 2017 and 2018 PQRS payment adjustment under the 
Shared Savings Program.
    The previously established reporting period for the 2017 PQRS 
payment adjustment is January 1, 2015, through December 31, 2015. To 
allow affected EPs that participate in an ACO to report separately for 
purposes of the 2017 PQRS payment adjustment, we are proposing at Sec.  
414.90(j)(1)(ii) to establish a secondary PQRS reporting period for the 
2017 PQRS payment adjustment for individual EPs or group practices who 
bill under the TIN of an ACO participant if the ACO failed to report on 
behalf of such individual EPs or group practices during the previously 
established reporting period for the

[[Page 46409]]

2017 PQRS payment adjustment. This option is limited to EPs that bill 
through the TIN of an ACO participant in an ACO that failed to 
satisfactorily report on behalf of its EPs and would not be available 
to EPs that failed to report for purposes of PQRS outside the Shared 
Savings Program.
    In addition, we propose that these affected EPs may utilize the 
secondary reporting period either as an individual EP using the 
registry, QCDR, direct EHR product, or EHR data submission vendor 
reporting options or as a group practice using one of the registry, 
QCDR, direct EHR product, or EHR data submission vendor reporting 
options. We note that this would exclude, for individual EPs, the 
claims reporting option and, for group practices, the Web Interface and 
certified survey vendor reporting options.
    We note that the registration deadline for the participating in the 
PQRS GPRO is June 30 of the applicable reporting period. Since the 
applicable deadline for the 2017 PQRS payment adjustment has passed, we 
propose that such EPs would not need to register for the PQRS GPRO for 
the 2017 PQRS payment adjustment, but rather would be able to report as 
a group practice via the registry, QCDR, direct EHR product, or EHR 
data submission vendor reporting options. Therefore, we propose at 
Sec.  414.90(j)(4)(v) that sections Sec.  414.90(j)(8)(ii), (iii), and 
(iv) would apply to affected EPs reporting as individuals using this 
secondary reporting period for the 2017 PQRS payment adjustment. In 
addition, we propose at Sec.  414.90(j)(7)(viii) that sections Sec.  
414.90(j)(9)(ii), (iii), and (iv) would apply to affected EPs reporting 
as group practices using this secondary reporting period for the 2017 
PQRS payment adjustment. Further, we propose at Sec.  414.90(k)(4)(ii) 
that Sec.  414.90(k)(5) would apply to affected EPs reporting as 
individuals or group practices using this secondary reporting period 
for the 2017 PQRS payment adjustment.
    We are also proposing that the secondary reporting period for the 
2017 PQRS payment adjustment would coincide with the reporting period 
for the 2018 PQRS payment adjustment (that is, January 1, 2016 through 
December 31, 2016). In addition, for operational reasons and to 
minimize any additional burden on affected EPs (who are already 
required to report for CY 2016 for purposes of the 2018 PQRS payment 
adjustment), we propose to assess the individual EP or group practice's 
2016 data using the applicable satisfactory reporting requirements for 
the 2018 PQRS payment adjustment (including, but not limited to, the 
applicable PQRS measure set). We invite comment on any 2018 
requirements that may need to be modified when applied for purposes of 
the 2017 PQRS payment adjustment,
    As a result, individual EP or group practice 2016 data could be 
used with respect to the secondary reporting period for the 2017 
payment adjustment or for the 2018 payment adjustment or for both 
payment adjustments if the ACO in which the affected EPs participate 
failed to report for purposes of the applicable payment adjustment. We 
believe this change to our program rules is necessary for affected 
individual EPs and group practices to be able to take advantage of the 
additional flexibility proposed at section III.K.1.e. for the Shared 
Savings Program. If an affected individual EP or group practice decides 
to use the secondary reporting period for the 2017 payment adjustment, 
it is important to note that this EP or group practice should expect to 
receive a PQRS payment adjustment for services furnished in 2017 until 
CMS is able to determine that the EP or group practice satisfactorily 
reported for purposes of the 2017 PQRS payment adjustment. First, we 
would need to process the data submitted for 2016. Second, we would 
need to determine whether or not the individual EP or group practice 
met the applicable satisfactory reporting requirements for the 2018 
PQRS payment adjustment. Third, we would need to update the individual 
EP or group practice's status so that the EP or group practice stops 
receiving a negative payment adjustment on claims for services 
furnished in 2017 and reprocess all claims that were previously paid. 
In addition, as discussed further in section III.L. of this proposed 
rule, the EP or group practice would also avoid the automatic downward 
VM adjustment, but would not qualify for an upward adjustment since the 
ACO failed to report.
    Since EPs and group practices taking advantage of this secondary 
reporting period for the 2017 PQRS payment adjustment will have missed 
the deadline for submitting an informal review request for the 2017 
PQRS payment adjustment, we propose the informal review submission 
periods for these EPs or group practices would occur during the 60 days 
following the release of the PQRS feedback reports for the 2018 PQRS 
payment adjustment.
    We request comments on these proposals.

I. Medicare Advantage Provider Enrollment

1. Background
a. General Overview
    The Medicare program is the primary payer of health care for 
approximately 54 million beneficiaries and enrollees. Section 1802(a) 
of the Act permits beneficiaries to obtain health services from any 
individual or organization qualified to participate in the Medicare 
program. Providers and suppliers furnishing items or services must 
comply with all applicable Medicare requirements stipulated in the Act 
and codified in the regulations. These requirements are meant to 
promote quality care while protecting the integrity of the program. As 
a major component of our fraud prevention activities, we have increased 
our efforts to prevent unqualified individuals or organizations from 
enrolling in Medicare.
    The term ``provider of services'' is defined in section 1861 of the 
Act as a hospital, a critical access hospital (CAH), a skilled nursing 
facility (SNF), a comprehensive outpatient rehabilitation facility 
(CORF), a home health agency (HHA), or a hospice. The term ``supplier'' 
is defined in section 1861(d) of the Act as, unless context otherwise 
requires, a physician or other practitioner, facility or other entity 
(other than a provider of services) that furnishes items or services 
under title XVIII of the Act. Other supplier categories may include, 
for example, physicians, nurse practitioners, and physical therapists.
    Providers and suppliers that fit into these statutorily defined 
categories may enroll in Medicare if they meet the proper screening and 
enrollment requirements. This proposed rule would require MA 
organization providers and suppliers to be enrolled in Medicare in an 
approved status. We generally refer to an ``approved status'' as a 
status whereby a provider or supplier is enrolled in, and is not 
revoked from, the Medicare program. For example, a provider or supplier 
that has submitted an application, but has not completed the enrollment 
process with their respective Medicare Administrative Contractor (MAC), 
is not enrolled in an approved status. The submission of an enrollment 
application does not deem a provider or supplier enrolled in an 
approved status. A provider or supplier that is currently revoked from 
Medicare is not in an approved status. Out-of network or non-contract 
providers and suppliers are not required to enroll in

[[Page 46410]]

Medicare to meet the requirements of this proposed rule.
b. Background
    To receive payment for a furnished Medicare Part A or Part B 
service or item, or to order, certify, or prescribe certain Medicare 
services, items, and drugs, a provider or supplier must enroll in 
Medicare. The enrollment process requires the provider or supplier to 
complete, sign, and submit to its assigned Medicare contractor the 
appropriate Form CMS-855 enrollment application. The CMS-855 
application form captures information about the provider or supplier 
that is needed for CMS or its contractors to screen the provider or 
supplier and determine whether the provider or supplier meets all 
Medicare requirements. This screening prior to enrollment helps to 
ensure that unqualified individuals and entities do not bill Medicare 
and that the Medicare Trust Funds are accordingly protected. Data 
collected and verified during the enrollment process generally 
includes, but is not limited to: (1) Basic identifying information (for 
example, legal business name, tax identification number); (2) state 
licensure information; (3) practice locations; and (4) information 
regarding ownership and management control.
    We strive to further strengthen its provider and supplier 
enrollment process to prevent and deter problematic providers and 
suppliers from entering the Medicare program. This includes, but is not 
limited to, enhancing its program integrity monitoring systems and 
revising its provider and supplier enrollment regulations in 42 CFR 
424, subpart P, and elsewhere as needed. With authority granted by the 
Act, including provisions in the Affordable Care Act and Medicare 
Access and CHIP Reauthorization Act, we have revised our provider and 
supplier enrollment regulations by issuing the following:
     In the February 2, 2011 Federal Register (76 FR 5861), we 
published a final rule with comment period titled, ``Medicare, 
Medicaid, and Children's Health Insurance Programs; Additional 
Screening Requirements, Application Fees, Temporary Enrollment 
Moratoria, Payment Suspensions and Compliance Plans for Providers and 
Suppliers.'' This final rule with comment period implemented major 
Affordable Care Act provisions, including the following:
    ++ A requirement that institutional providers and suppliers must 
submit application fees as part of the Medicare, Medicaid, and CHIP 
provider and supplier enrollment processes.
    ++ Establishment of Medicare, Medicaid, and CHIP provider and 
supplier risk-based enrollment screening categories and corresponding 
screening requirements.
    ++ Authority that enabled imposition of temporary moratoria on the 
enrollment of new Medicare, Medicaid, and CHIP providers and suppliers 
of a particular type (or the establishment of new practice locations of 
a particular type) in a geographic area.
     In the April 27, 2012 Federal Register (77 FR 25284), we 
published a final rule titled, ``Medicare and Medicaid Programs; 
Changes in Provider and Supplier Enrollment, Ordering and Referring, 
and Documentation Requirements and Changes in Provider Agreements.'' 
The rule implemented another major Affordable Care Act provision and 
required, among other things, that providers and suppliers that order 
or certify certain items or services be enrolled in or validly opted-
out of the Medicare program.
    ++ This requirement was expanded to include prescribers of Medicare 
Part D drugs in the final rule published in the May 23, 2014 Federal 
Register (79 FR 29844) titled, ``Medicare Program; Contract Year 2015 
Policy and Technical Changes to the Medicare Advantage and the Medicare 
Prescription Drug Benefit Programs.''
    Through improved processes and systems, since March 2011 we have:
     Saved over $927 million by revoking Medicare Part A and B 
providers and suppliers that did not comply with Medicare requirements;
     Avoided over $2.4 billion in costs by preventing further 
billing from revoked and deactivated Medicare Part A and B providers 
and suppliers;
     Deactivated more than 543,163 Medicare Part A and B 
providers and suppliers that did not meet Medicare enrollment 
standards;
     Revoked enrollment and billing privileges under Sec.  
424.535 for more than 34,888 Medicare Parts A and B providers and 
suppliers that did not meet Medicare enrollment standards, and
     Denied 4,949 applications for providers and suppliers in 
Medicare Parts A and B that did not meet Medicare enrollment standards 
within a recent 12-month period.\8\
---------------------------------------------------------------------------

    \8\ Taken from Shantanu Agrawal, M.D. testimony to Congress on 
July 22, 2015 http://www.aging.senate.gov/imo/media/doc/CMS%20_Agrawal_7_22_15.pdf.
---------------------------------------------------------------------------

    The public may review CMS' Reports to Congress each year for more 
information on program integrity efforts, including how we calculate 
savings to the Medicare and Medicaid programs. The Department of Health 
and Human Services Office of Inspector General (OIG), Government 
Accountability Office (GAO), and other federal agencies routinely 
review Medicare's provider and supplier enrollment processes and 
systems, including a recent study stating that ``as part of an overall 
effort to enhance program integrity and reduce fraud risk, effective 
enrollment-screening procedures are essential to ensure that ineligible 
or potentially fraudulent providers or suppliers do not enroll in the 
Medicare program.'' (GAO-15-448) The enrollment screening authorities 
granted in the Affordable Care Act and used to prevent and detect 
ineligible or potentially fraudulent providers and suppliers from 
enrolling in the Medicare program are working to protect beneficiaries 
and the Medicare Trust Funds.
    Under applicable provisions of the Tax Equity and Fiscal 
Responsibility Act (TEFRA) of 1982, Medicare began to pay health plans 
on a prospective risk basis for the first time. The Balanced Budget Act 
of 1997 (BBA) modified these provisions and established a new Part C of 
the Medicare program, known as Medicare+Choice (M+C), effective January 
1999. As part of the M+C program, the BBA authorized us to contract 
with public or private organizations to offer a variety of health plan 
options for enrollees, including both traditional managed care plans 
(such as those offered by HMOs, as defined in section 1876 of the Act) 
and new options not previously authorized.
    The M+C program was renamed the Medicare Advantage (MA) program 
under Title II of the Medicare Prescription Drug, Improvement, and 
Modernization Act of 2003 (MMA) (Pub. L. 108-173), which was enacted on 
December 8, 2003. The MMA updated and improved the choice of plans for 
enrollees under MA and changed how benefits are established and 
payments are made. Under the MMA, enrollees may choose from additional 
plan options. In addition, Title I of the MMA established the Medicare 
prescription drug benefit (Part D) program and amended the MA program 
to allow most MA plans to offer prescription drug coverage.
    All Medicare health plans, with the exception of PACE 
organizations, operating in geographic areas that we determine to have 
enough qualified providers and suppliers with which to contract in 
order for enrollees to have access to all Medicare Part A and Part B 
services, must develop a network of qualified providers and suppliers 
that

[[Page 46411]]

meet our network adequacy standards. As a condition of contracting with 
us, the health plans' contracted network of providers and suppliers 
must be approved by us as part of application approval (Sec.  417.406). 
PACE organizations must furnish comprehensive medical, health, and 
social services that integrate acute and long-term care in at least the 
PACE center, the participant's home, or inpatient facilities, and must 
ensure accessible and adequate services to meet the needs of its 
participants. Under current guidance, Medicare health plans may include 
in their networks providers and suppliers that are not enrolled in 
Medicare.
2. Provisions of the Proposed Regulation
a. Need for Regulatory Action
    This proposed rule would require providers or suppliers that 
furnish health care items or services to a Medicare enrollee who 
receives his or her Medicare benefit through an MA organization to be 
enrolled in Medicare and be in an approved status. The term ``MA 
organization'' refers to Medicare Advantage plans and also MA plans 
that provide drug coverage, otherwise known as an MA-PD plan. This 
proposal would create consistency with the provider and supplier 
enrollment requirements for all other Medicare (Part A, Part B, and 
Part D) programs. We believe that this proposed rule is necessary to 
help ensure that Medicare enrollees receive items or services from 
providers and suppliers that are fully compliant with the requirements 
for Medicare enrollment and that are in an approved enrollment status 
in Medicare. This proposed rule would assist our efforts to prevent 
fraud, waste, and abuse and to protect Medicare enrollees by carefully 
screening all providers and suppliers, especially those that 
potentially pose an elevated risk to Medicare, to ensure that they are 
qualified to furnish Medicare items and services. Out-of network or 
non-contract providers and suppliers are not required to enroll in 
Medicare to meet the requirements of this proposed rule.
    We consider provider and supplier enrollment to be the gateway to 
the Medicare program and to beneficiaries. Requiring enrollment of 
those that wish to furnish Medicare items or services gives us improved 
oversight of the providers and suppliers treating beneficiaries and the 
Medicare Trust Funds dollars spent on their care. However, Medicare 
does not have direct oversight over all providers and suppliers in MA 
organizations. We note that Sec.  422.204 requires MA organizations to 
conduct screening of their providers. We believe that we, through our 
enrollment processes, can further ensure that only qualified providers 
and suppliers treat Medicare beneficiaries by conducting rigorous 
screening and rescreening of providers and suppliers that include, for 
example, risk-based site visits and, in some cases, fingerprint-based 
background checks. We also has access to information not available to 
MA organizations, making oversight to ensure compliance with all 
federal and state requirements more robust. We also continually review 
provider and supplier enrollment information from multiple sources, 
such as judicial, law enforcement, state licensure, professional 
credentialing, and other databases. In short, we collect and carefully 
review and verify information prior to the provider's or supplier's 
enrollment and, of great importance, continue this monitoring 
throughout the period of enrollment. Section 422.204, on the other 
hand, neither requires MA organizations to, for instance, review a 
provider or supplier's final adverse action history (as defined in 
Sec.  424.502), nor to verify a provider or supplier's practice 
location, ownership, or general identifying information.
    We believe that MA organization enrollees should have the same 
protections against potentially unqualified or fraudulent providers and 
suppliers as those afforded to beneficiaries under the fee-for-service 
and Part D programs. Indeed, Medicare beneficiaries and enrollees, the 
Medicare Trust Funds, and the program at large, are at risk when 
providers and suppliers that have not been adequately screened and 
reviewed furnish, order, certify, or prescribe Medicare services and 
items and receive Medicare payments. For instance, a network provider 
with a history of performing medically unnecessary tests, treatments, 
or procedures could threaten enrollees' welfare, as could a physician 
who routinely overprescribes dangerous drugs. This could also result in 
improper Medicare payments, harming the Medicare Trust Funds and 
taxpayers. Requiring enrollment allows us to have proper oversight of 
providers and suppliers. Under the provisions of this proposed rule, if 
a provider or supplier fails to meet our requirements or violates 
federal rules and regulations, we may revoke their enrollment, thereby 
removing them from consideration as an MA organization provider or 
supplier.
    Information regarding a provider or supplier's enrollment status is 
housed in our enrollment repository called the Provider Enrollment, 
Chain and Ownership System (PECOS). A link to that information is 
located on the CMS Web site. Initial data show a large percent of 
Medicare Advantage providers and suppliers are already enrolled in 
Medicare. We do not believe that this proposed rule would have a 
significant impact on MA organizations' ability to establish networks 
of contracted providers that meet CMS' MA network requirements. 
However, we are soliciting industry comment on the potential impact of 
this proposed rule on MA organizations ability to establish or maintain 
an adequate networks of providers.
    We believe that preventing questionable providers or suppliers from 
participating in the MA program and removing existing unqualified 
providers and suppliers would help ensure that fewer enrollees are 
exposed to risks and potential harm, and that taxpayer monies are spent 
appropriately. Such a policy would also help comply with the GAO's 
recommendation that we improve its provider and supplier enrollment 
processes and systems to increase the protection of all beneficiaries 
and the Medicare Trust Funds. (GAO-15-448). The additional resources 
and oversight that we provide in its processes for enrolling providers 
and suppliers will enhance and complement the screening processes that 
MA organizations already are required to perform.
b. Statutory Authority
    The following are the principal legal authorities for our proposed 
provisions:
     Section 1856(b) of the Act provides that the Secretary 
shall establish by regulation other standards for Medicare+Choice 
organizations and plans ``consistent with, and to carry out, this 
part.'' In addition, Sec.  1856(b) states that these standards 
supersede any state law or regulation (other than those related to 
licensing or plan solvency) for all MA organizations.
     Sections 1102 and 1871 of the Act, which provide general 
authority for the Secretary to prescribe regulations for the efficient 
administration of the Medicare program.
     Section 1866(j) of the Act, which provides specific 
authority with respect to the enrollment process for providers and 
suppliers in the Medicare program.
3. Major Provisions
    Given the foregoing and the need to safeguard the Medicare program 
and its enrollees, we propose several provisions in this proposed rule.
    Although existing regulations at Sec.  422.204 address basic 
requirements for MA provider credentialing, we propose

[[Page 46412]]

in Sec.  422.204(b)(5) to require plans to verify that they are 
compliant with the provider and supplier enrollment requirements. We 
believe this addition would help facilitate MA organizations' 
compliance.
    In Sec. Sec.  422.222, 417.478, 460.68, and 460.32, we propose to 
add a requirement that providers and suppliers enroll in Medicare in an 
approved status in order to provide health care items or services to a 
Medicare enrollee who receives his or her Medicare benefit through an 
MA organization. This requirement would apply to network providers and 
suppliers; first-tier, downstream, and related entities (FDR); 
providers and suppliers participating in the Program of All-inclusive 
Care for the Elderly (PACE); suppliers in Cost HMOs or CMPs; providers 
and suppliers participating in demonstration programs; providers and 
suppliers in pilot programs; locum tenens suppliers; and incident-to 
suppliers. MA organizations that do not ensure that providers and 
suppliers comply with the provider and supplier enrollment requirements 
may be subject to sanctions and termination. Considering the serious 
risks to the Medicare program and enrollees from fraudulent or 
unqualified providers and suppliers, we believe that these are 
appropriate sanctions.
    Current rules allow MA organizations to contract with different 
entities to provide services to beneficiaries. These contracted 
entities are referred to as first-tier, downstream, and related 
entities or FDRs, as defined in Sec.  422.500.
    PACE is a Medicare and Medicaid program that helps people meet 
their health care needs in the community instead of going to a nursing 
home or other care facility, wherein a team of health care 
professionals works with participants and their families to make sure 
participants get the coordinated care they need. A participant enrolled 
in PACE must receive Medicare and Medicaid benefits solely through the 
PACE organization. To ensure consistency within our programs, we 
believe that our proposed provider and supplier enrollment requirements 
should extend to this program.
    Medicare Cost HMOs or CMPs are a type of Medicare health plan 
available in certain areas of the country. Some Cost HMOs or CMPs only 
provide coverage for Part B services. Cost HMOs or CMPs do not include 
Part D. These plans are either sponsored by employer or union group 
health plans or offered by companies that do not provide Part A 
services.
    Demonstrations and pilot programs, also called research studies, 
are special projects that test improvements in Medicare coverage, 
payment, and quality of care. They usually operate only for a limited 
time for a specific group of people and/or are offered only in specific 
areas. Providers and suppliers in these programs would not be exempt 
from the requirements of this proposed rule.
    In Sec.  422.224, we also propose to prohibit MA organizations from 
paying individuals or entities that are excluded by the OIG or revoked 
from the Medicare program. In this proposal, there would be a first 
time allowance for payment; as part of this, the MA organization would 
be required to notify the provider or supplier and the enrollee that no 
future payment shall be made to, or on behalf of, the revoked or 
excluded provider or supplier. We believe such notification is 
necessary because enrollees and beneficiaries often do not know when 
their provider or supplier is excluded by the OIG or revoked from 
Medicare. We understand that MA organizations have little or no notice 
when enrollees seek out-of-network providers and suppliers and only 
obtain this information once an item or service has been provided. It 
is probable that some out-of-network providers or suppliers cannot meet 
Medicare enrollment requirements and therefore may be unable to enroll. 
We believe the proposals included in this proposed rule will allow for 
notification to be given to the enrollee and the provider or supplier 
that no further payments shall be made. We believe such excluded or 
revoked individuals and entities pose a significant risk to enrollees 
and should not receive federal dollars, even if payment is made through 
an intermediary such as an MA organization.
    In Sec.  422.501(c)(2), we propose to add to language to the MA 
organization application requirements requiring MA organizations to 
provide documentation that all applicable providers and suppliers are 
enrolled in Medicare in an approved status. We believe that this would 
assist CMS in the MA organization application process by requiring MA 
organizations to provide assurance that the designated providers and 
suppliers are properly screened and enrolled in Medicare.
    In Sec.  422.504(a)(6), we propose to add language to the 
conditions to which an MA organization must agree in its contract with 
us. MA organizations must agree to comply with all applicable provider 
requirements in subpart E of this part, including provider 
certification requirements, anti-discrimination requirements, provider 
participation and consultation requirements, the prohibition on 
interference with provider advice, limits on provider indemnification, 
rules governing payments to providers, and limits on physician 
incentive plans. In Sec.  422.504(a)(6), we propose to extend this 
requirement to suppliers, not just limit it to providers. In this same 
section, we also propose to add a requirement at for MA organizations 
to comply with the provider and supplier enrollment requirements 
referenced in Sec.  422.222. We believe these revisions would help 
facilitate the MA plan's compliance with Sec.  422.222.
    In Sec. Sec.  422.504(i)(2)(v), 417.484, and 460.70, we propose to 
add provisions that requires MA organizations, Cost plans, and PACE 
organizations to require all FDRs and contracted entities to agree to 
comply with the provider and supplier enrollment provision.
    In Sec. Sec.  422.510(a)(4)(xiii) and 460.50, we propose provisions 
that would give us the authority to terminate a contract if an MA 
organization or PACE organization fails to meet provider and supplier 
enrollment requirements in accordance with Sec.  422.222 and payment 
prohibitions in Sec.  422.224. This section is necessary to ensure plan 
compliance with Sec. Sec.  422.222 and 422.224 and to provide an 
appropriate remedy with respect to plans that fail to comply.
    We also propose to add provisions to Sec. Sec.  422.752(a) and 
460.40 that would give us the authority to impose sanctions if an MA 
organization or PACE organizations fails to meet provider and supplier 
enrollment requirements in accordance with Sec. Sec.  422.222 and 
422.224. As with proposed Sec.  422.510(a)(13), we believe this section 
is necessary to ensure plan compliance with Sec. Sec.  422.222 and 
422.224 and to furnish an appropriate remedy regarding plans that do 
not comply.
    Finally, we propose to make these provisions effective the first 
day of the next plan year that begins 2 years from the date of 
publication of the CY 2017 PFS final rule with comment period.
    We believe this would give all stakeholders sufficient time to 
prepare for these requirements. We are unable to impose new 
requirements on MA organizations mid-year and therefore must wait to 
make these rules effective. We seek public comment on our proposed 
effective date.

[[Page 46413]]

J. Proposed Expansion of the Diabetes Prevention Program (DPP) Model

1. Background
    In January 2015, the Administration announced the vision of 
``Better Care, Smarter Spending, Healthier People'' with emphases on 
improving the way providers are paid, improving and innovating in care 
delivery, and sharing information to support better decisions.
    Diabetes is at epidemic levels in the Medicare population, 
affecting more than 25 percent of Americans aged 65 or older.\9\ Care 
for Americans aged 65 and older with diabetes accounts for roughly $104 
billion annually, and these costs are growing; by 2050, diabetes 
prevalence is projected to increase 2 to 3 fold if current trends 
continue.\10\ Fortunately, Type 2 diabetes is typically preventable 
with appropriate lifestyle changes.
---------------------------------------------------------------------------

    \9\ Centers for Medicare and Medicaid Services. Chronic 
Conditions among Medicare Beneficiaries, Chartbook, 2012 Edition. 
Baltimore, MD. 2012.
    \10\ Boyle, J.P., Thompson, T.J., Gregg, E.W., Barker, L.E., & 
Williamson, D.F. (2010). Projection of the year 2050 burden of 
diabetes in the US adult population: Dynamic modeling of incidence, 
mortality, and prediabetes prevalence. Popul Health Metr, 8(1), 29.
---------------------------------------------------------------------------

    A diabetes prevention program is an evidence-based intervention 
targeted to individuals with prediabetes, meaning those who have blood 
sugar that is higher than normal but not yet in the diabetes range. The 
risk of progression to Type 2 diabetes in an individual with 
prediabetes is around 5-10 percent per year, or about 5-20 times higher 
than in individuals with normal blood glucose.\11\ The National 
Diabetes Prevention Program (DPP) administered by the Centers for 
Disease Control and Prevention (CDC), is a structured health behavior 
change program delivered in community and health care settings by 
trained community health workers or health professionals. The National 
DPP consists of 16 intensive ``core'' sessions of a CDC-approved 
curriculum in a group-based setting that provides practical training in 
long-term dietary change, increased physical activity, and problem-
solving strategies for overcoming challenges to sustaining weight loss 
and a healthy lifestyle. After the 16 core sessions, monthly 
maintenance sessions help to ensure that the participants maintain 
healthy behaviors. The primary goal of the intervention is to reduce 
incidence of Type 2 diabetes by achieving at least 5 percent average 
weight loss among participants. To learn more about the National DPP 
please visit http://www.cdc.gov/diabetes/prevention/lifestyle-program/index.html.
---------------------------------------------------------------------------

    \11\ Zhang, X., Gregg, E.W., Williamson, D.F., Barker, L.E., 
Thomas, W., Bullard, K.M., & Albright, A.L. (2010). A1C level and 
future risk of diabetes: a systematic review. Diabetes Care, 33(7), 
1665-1673.
---------------------------------------------------------------------------

    In 2012, the Center for Medicare & Medicaid Innovation (the 
Innovation Center) awarded a Health Care Innovation Award (HCIA) to The 
Young Men's Christian Association (YMCA) of the USA (Y-USA) to test 
whether DPP services could be successfully furnished by non-physician, 
community-based organizations to Medicare beneficiaries diagnosed with 
prediabetes and therefore at high risk for development of Type 2 
diabetes. The HCIA model tests are being conducted under the authority 
of section 1115A of the Act (added by section 3021 of the Affordable 
Care Act) (42 U.S.C. 1315a). The statute authorizes the Innovation 
Center to test innovative health care payment and service delivery 
models that have the potential to reduce Medicare, Medicaid, and 
Children's Health Insurance Program (CHIP) expenditures while 
preserving or enhancing the quality of patient care.
    Between February 2013 and June 2015, the Y-USA, in partnership with 
17 local YMCAs, the Diabetes Prevention and Control Alliance, and seven 
other non-profit organizations, enrolled a total of 7,804 Medicare 
beneficiaries into the model. Enrolled beneficiaries represented a 
diverse geography across the eight states of Arizona, Delaware, 
Florida, Indiana, Minnesota, New York, Ohio, and Texas. According to 
the second year independent evaluation report of the Y-USA Diabetes 
Prevention Program model, Medicare beneficiaries demonstrated high 
rates of participation and sustained engagement in the Diabetes 
Prevention Program. Approximately 83 percent of recruited Medicare 
beneficiaries attended at least 4 core sessions and approximately 63 
percent completed 9 or more core sessions. The first and second 
independent evaluation reports are available on the Innovation Center's 
Web site at https://innovation.cms.gov/initiatives/Health-Care-Innovation-Awards/.
2. Certification of the Medicare Diabetes Prevention Program (MDPP)
    CMS' Office of the Actuary has determined that DPP is likely to 
reduce Medicare expenditures if made available to eligible Medicare 
beneficiaries based on historical evidence from evaluations of the Y-
USA DPP and other DPPs in the CDC Diabetes Prevention Recognition 
Program. In addition, to evaluate the longer-term impact of the 
program, the CMS Actuary developed a model to estimate lifetime per 
participant savings of a Medicare beneficiary receiving DPP services.
    The full CMS Actuary Report is available at https://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/Downloads/Diabetes-Prevention-Certification-2016-03-14.pdf.
3. Requirements for Expansion
    Section 1115A(c) of the Act provides the Secretary with the 
authority to expand (including implementation on a nationwide basis) 
through rulemaking the duration and scope of a model that is being 
tested under section 1115A(b) of the Act 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 spending without reducing 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 program spending; and (3) the 
Secretary determines that the expansion would not deny or limit the 
coverage or provision of benefits.
     Improved Quality of Care without Increased Spending: 
Weight loss is a key indicator of success among persons enrolled in a 
DPP. According to the second year independent evaluation of the Y-USA 
DPP HCIA project, those beneficiaries who attended at least one core 
session lost an average of 7.6 pounds while beneficiaries who attended 
at least four core sessions lost an average of 9 pounds. BMI was 
reduced from 32.9 to 31.5 among Medicare beneficiaries that attended at 
least four core sessions. Based on these findings and results from 
other DPP evaluations demonstrating the effectiveness of the program in 
preventing diabetes onset, the Secretary determined that expansion of 
the DPP will reduce spending and improve the quality of care.
     Impact on Medicare Spending: The CMS Chief Actuary has 
certified that expansion of the DPP would not result in an increase of 
Medicare spending.
     No Alteration in Coverage or Provision of Benefits: The 
DPP, if implemented in Medicare, would provide services in addition to 
existing Medicare services, and beneficiaries receiving DPP services 
would retain all benefits covered in traditional Medicare. Therefore, 
the Secretary has determined that expansion of DPP would not deny or 
limit the coverage or provision of Medicare benefits for Medicare 
beneficiaries.

[[Page 46414]]

4. Proposed Expansion of Medicare Diabetes Prevention Program
    We propose to expand the duration and scope of the DPP model test 
by expanding DPP under section 1115A(c) of the Act, and we propose to 
refer to this expanded model as the Medicare Diabetes Prevention 
Program (MDPP). In this section of this proposed rule, we propose a 
basic framework for the MDPP. If finalized, we will engage in 
additional rulemaking, likely within the next year, to establish 
specific requirements of the MDPP. We seek comment on all of the 
proposals below and on any other policy or operational issues that need 
to be considered in implementing this expansion. The MDPP will become 
effective January 1, 2018.
     MDPP as an ``Additional Preventive Service'' under section 
1861(ddd) of the Act: CMS Authority to to Designate MDPP as an 
``Additional Preventive Service'': We propose to designate MDPP 
services as ``additional preventive services'' available under Medicare 
Part B. Section 1861(ddd) defines ``additional preventive services'' as 
services that are not preventive services or personalized prevention 
plan services (as those terms defined in section 1861(ddd)(3)(A) and 
(C)) that identify medical conditions or risk factors and that the 
Secretary determines are (A) reasonable and necessary for the 
prevention or early detection of an illness or disability; (B) 
recommended with a grade of A or B by the United States Preventive 
Services Task Force (USPSTF); and (C) appropriate for individuals 
entitled to benefits under Part A or enrolled in Part B.
    We believe that MDPP services are generally consistent with the 
types of additional preventive services that are appropriate for 
Medicare beneficiaries. In particular, we believe that MDPP services we 
are proposing under the expanded MDPP model meet the requirements of 
section 1861(ddd)(1)(A) of the Act because they are specifically 
designed to prevent prediabetes from advancing into diabetes. MDPP 
services do not meet the requirement in section 1861(ddd)(1)(B) of the 
Act that they have received a recommendation with a grade of A or B by 
the USPSTF. However, under section 1115A(d)(1) of the Act, the 
Secretary has authority to waive certain requirements. We propose to 
use this waiver authority to waive section 1861(ddd)(1)(B) of the Act 
with respect to MDPP services because they have been recommended by the 
Community Preventive Services Task Force, which is similar to the 
USPSTF, and therefore a USPSTF recommendation is not necessary. We 
believe that MDPP services are appropriate for individuals entitled to 
benefits under part A or enrolled in Part B, and thus meet the 
requirements of section 1861(ddd)(1)(C) of the Act, because findings 
from the second year independent evaluation of the Y-USA DPP HCIA 
project and results from other DPP evaluations demonstrate 
effectiveness of the program in preventing diabetes onset and thus 
improve quality of care for Medicare beneficiaries.
    Section 1861(ddd)(2) of the Act requires the Secretary to make the 
determinations required under section 1861(ddd)(1) of the Act using the 
process for making national coverage determinations (NCDs). However, we 
propose to waive this requirement because using the NCD process to 
implement the MDPP would create implementation problems, especially as 
this rule proposes to create a supplier class and this is an issue that 
the NCD process does not address.
    We seek comment on these proposals.
    MDPP Benefit Description: We propose MDPP to be a 12 month program 
using the CDC-approved DPP curriculum, consisting of 16 core sessions 
over 16-26 weeks and the option for monthly core maintenance sessions 
over 6 months thereafter if the beneficiary achieves and maintains a 
minimum weight loss in accordance with the CDC Diabetes Prevention 
Recognition Program Standards and Operating Procedures. CDC-approved 
DPP session curriculum requirements are detailed below.
CDC-Approved DPP Session Curriculum Requirements
    During the first 6 months (weeks 1-26) of the DPP intervention, 
each of the 16 core sessions must address one of these curriculum 
topics, and all topics must be addressed by the end of the 16 sessions.

1. Welcome to the National Diabetes Prevention Program
2. Self-Monitoring Weight and Food Intake
3. Eating Less
4. Healthy Eating
5. Introduction to Physical Activity (Move Those Muscles)
6. Overcoming Barriers to Physical Activity (Being Active--A Way of 
Life)
7. Balancing Calorie Intake and Output
8. Environmental Cues to Eating and Physical Activity
9. Problem Solving
10. Strategies for Healthy Eating Out
11. Reversing Negative Thoughts
12. Dealing with Slips in Lifestyle Change
13. Mixing Up Your Physical Activity: Aerobic Fitness
14. Social Cues
15. Managing Stress
16. Staying Motivated, Program Wrap Up

    The last 6 months (weeks 27-52) of the DPP 12-month intervention 
must include at least one core maintenance session delivered in each of 
the 6 months (for a minimum of six sessions), and all core maintenance 
sessions must address different topics.

1. Welcome to the Second Phase of the Program
2. Healthy Eating: Taking It One Meal at a Time
3. Making Active Choices
4. Balance Your Thoughts for Long-Term Maintenance
5. Healthy Eating With Variety and Balance
6. Handling Holidays, Vacations, and Special Events
7. More Volume, Fewer Calories (Adding Water Vegetables and Fiber)
8. Dietary Fats
9. Stress and Time Management
10. Healthy Cooking: Tips for Food Preparation and Recipe Modification
11. Physical Activity Barriers
12. Preventing Relapse
13. Heart Health
14. Life With Type 2 Diabetes
15. Looking Back and Looking Forward

    CDC-approved curriculum can be found at http://www.cdc.gov/diabetes/prevention/pdf/curriculum_toc.pdf.
    We propose that the MDPP expanded model will use the CDC-approved 
curriculum. We also propose that beneficiaries who meet the coverage 
criteria that we propose below would be able to enroll in the MDPP only 
once; however, we propose that those beneficiaries who complete the 12 
month program and achieve and maintain a required minimum level of 
weight loss would be eligible for additional monthly maintenance 
sessions for as long as the weight loss is maintained. We propose that 
these ongoing maintenance sessions adhere to the same curriculum 
requirements as the core maintenance sessions. We propose to require 
that each MDPP session be at least an hour in duration.
    We propose to describe the services that would be covered under the 
Medicare Diabetes Prevention Program expanded model at Sec.  410.79. 
Consistent with our statutory authority, we will continue to test and 
evaluate the nationwide MDPP as finalized. In the

[[Page 46415]]

future, we will assess whether the nationwide implementation of the 
MDPP is continuing to reduce Medicare spending without reducing quality 
of care or improve the quality of patient care without increasing 
spending, and could modify the nationwide MDPP as appropriate. We seek 
comment on this proposal.
     Enrollment of New Medicare Suppliers:
    MDPP Supplier Enrollment Requirements: As of 2015, more than 800 
organizations have preliminary or full recognition from the CDC 
Diabetes Prevention Recognition Program (DPRP) to provide DPP services. 
These organizations have served more than 40,000 participants. More 
than 60 health plans provide some coverage of DPP services.
    We propose that any organization recognized by the CDC (that is, 
those with preliminary or full recognition) to provide DPP services 
would be eligible to apply for enrollment in Medicare as a supplier 
beginning on or after January 1, 2017. This proposal would promote 
timely enrollment of CDC-recognized organizations before billing 
begins, and would permit full implementation of the MDPP expansion by 
January 1, 2018. We propose that MDPP suppliers would be subject to the 
enrollment regulations set forth in 42 CFR part 424, subpart P. 
Organizations seeking to enroll in Medicare specifically to become MDPP 
Suppliers would be subject to screening under Sec.  424.518. We are 
considering what level of application screening is most appropriate, 
and we are currently proposing that potential MDPP Suppliers be 
screened according to the high categorical risk category defined in 
Sec.  424.518(c) because we acknowledge that MDPP may bring 
organization types that are entirely new to Medicare. We also believe 
that MDPP suppliers have some similarities to home health agencies 
because non-medical personnel may deliver MDPP services in a non-
clinical setting, such as at Y-USA. We seek comments on this approach.
    As suppliers, enrolled MDPP organizations would be obligated to 
comply with all statutes and regulations that establish generally 
applicable requirements for Medicare suppliers. For example, there are 
regulations that specify time limits for filing claims (Sec.  424.44), 
requirements to report and return overpayments (Sec.  401.305), and 
procedures for suspending, offsetting or recouping Medicare payments in 
certain situations (Sec.  405.371).
    We propose that before enrolling in Medicare, DPP organizations 
must have either preliminary or full CDC recognition status. 
Organizations that apply for CDC recognition can attain preliminary CDC 
recognition within 1 year of applying, and full upon demonstrating 
program effectiveness within 24-36 months of applying. We propose that 
if an organization loses its CDC recognition status at any point, or 
withdraws from the CDC recognition program at any point, or fails to 
move from preliminary to full recognition within 36 months of applying 
for CDC recognition, the organization would be subject to revocation of 
its Medicare billing privileges for MDPP services as provided by 42 CFR 
part 424, subpart P. Under the CDC standards for recognition, an 
organization that loses its CDC recognition (and thus, under our 
proposal, would no longer be able to bill Medicare for MDPP services) 
must wait 12 months before reapplying for recognition. We propose that 
DPP organizations would be eligible to re-enroll in Medicare as an MDPP 
supplier if, after reapplying for CDC recognition, the organization 
again achieves preliminary recognition. CDC's standards for recognition 
as a DPP organization can be found at http://www.cdc.gov/diabetes/prevention/pdf/dprp-standards.pdf.
    We propose to permit CDC-recognized organizations who are not 
already enrolled in Medicare (on the basis of being an existing 
Medicare provider or supplier) to apply to enroll any time on or after 
January 1, 2017. Existing Medicare providers and suppliers that wish to 
bill for MDPP services would have to inform us of that intention and 
satisfy all other requirements, but would not need to enroll a second 
time. These existing Medicare providers and suppliers would be eligible 
to bill for MDPP services furnished on or after January 1, 2018. We 
also considered an alternative approach where existing Medicare 
providers and suppliers would have to submit a separate enrollment 
application (including any applicable enrollment application fee) and 
be separately screened to be eligible to bill for MDPP services. We 
seek comments on our approach.
    Requirements for MDPP Coaches: We propose to require personnel who 
would deliver MDPP services, referred to hereafter as ``coaches'', to 
obtain a National Provider Identifier (NPI) to help ensure the coaches 
meet CMS program integrity standards. We are also considering requiring 
that coaches enroll in the Medicare program in addition to obtaining an 
NPI, and we seek comment on this approach. An alternative policy we 
considered was to require DPP organizations to collect and submit to 
Medicare information on the coaches who would deliver MDPP services, 
which could include identifying information such as first and last name 
and social security number. However, we determined that doing so would 
require CMS implement a new process, rather than leveraging an existing 
process, and increase CMS use of social security numbers as a primary 
identifier. In addition, by requiring coaches to obtain NPIs, we align 
with current process for provider enrollment and program integrity 
efforts. We propose to require MDPP suppliers to submit the active and 
valid NPIs of all coaches who would furnish MDPP services on behalf of 
the MDPP supplier as an employee or contractor. If MDPP suppliers fail 
to provide active and valid NPIs of their coaches, or if the coaches 
fail to obtain or lose their active and valid NPIs, the MDPP supplier 
may be subject to compliance action or revocation of MDPP supplier 
status.
    Revocation of MDPP billing privileges: We propose that all MDPP 
suppliers would be required to comply with the requirements of 42 CFR 
part 424. If an MDPP supplier has its Medicare enrollment revoked or 
deactivated for reasons independent of DPRP recognition, that supplier 
would lose its ability to bill Medicare for MDPP services but would not 
automatically lose its DPRP recognition from the CDC. We propose that 
existing Medicare providers and suppliers who lose CDC recognition 
would lose their Medicare billing privileges with respect to MDPP 
services, but may continue to bill for other non-MDPP Medicare services 
for which they are eligible to bill. We propose that MDPP Suppliers 
that have their Medicare billing privileges revoked or that lose 
billing privileges for MDPP may appeal these decisions in accordance 
with the procedures specified in 42 CFR part 405, subpart H, 42 CFR 
part 424, and 42 CFR part 498. We propose to add a new Sec.  424.59 to 
our regulations to specify the suppliers who would be eligible for 
Medicare enrollment and billing for MDPP services. We seek comment on 
this proposal.
     Expected MDPP Reimbursement:
    Expected MDPP Reimbursement Structure: We plan to reimburse for 
MDPP services at the times and in the amounts set forth in the Table 
35, with payment tied to number of sessions attended and achievement of 
a minimum weight loss of 5 percent of baseline weight (body weight 
recorded during the beneficiary's first core session). MDPP suppliers 
would be required to attest to beneficiary session attendance and 
weight loss at the time claims are submitted to Medicare for payment. 
Each beneficiary's attendance

[[Page 46416]]

must be documented through paper or electronic means and that each 
beneficiary's weight must be measured and recorded every MDPP session 
the beneficiary attends. MDPP suppliers would be required to securely 
maintain beneficiary attendance records and measured weights and make 
them available to CMS or its designee for audit at any time.

                       Table 35--DPP Payment Model
------------------------------------------------------------------------
                                                           Payment per
                                                        beneficiary (non-
                                                           cumulative)
------------------------------------------------------------------------
                              Core Sessions
------------------------------------------------------------------------
1 session attended....................................               $25
4 sessions attended...................................                50
9 sessions attended...................................               100
Achievement of minimum weight loss of 5% from baseline               160
 weight...............................................
                                                       -----------------
Achievement of advanced weight loss of 9% from                      * 25
 baseline weight......................................
                                                       -----------------
    Maximum Total for Core sessions...................               360
------------------------------------------------------------------------
  Maintenance Sessions (Maximum of 6 monthly sessions over 6 months in
                                 Year 1)
------------------------------------------------------------------------
3 Maintenance sessions attended (with maintenance of                  45
 minimum requiredweight loss from baseline)...........
6 Maintenance sessions attended (with maintenance of                  45
 minimum required weight loss from baseline)..........
                                                       -----------------
    Maximum Total for Maintenance sessions............                90
                                                       -----------------
        Maximum Total for first year..................               450
------------------------------------------------------------------------
  Maintenance Sessions After Year 1 (Minimum of 3 sessions attended per
                           quarter/no maximum)
------------------------------------------------------------------------
3 Maintenance sessions attended plus maintenance of                   45
 minimum required weight loss from baseline...........
6 Maintenance sessions attended plus maintenance of                   45
 minimum required weight loss from baseline...........
9 Maintenance sessions attended plus maintenance of                   45
 minimum required weight loss from baseline...........
12 Maintenance sessions attended plus maintenance of                  45
 minimum required weight loss from baseline...........
                                                       -----------------
    Maximum Total After First Year....................              180
------------------------------------------------------------------------
* In addition to $160 above.

    Submission of Claims for MDPP Services: As Table 35 illustrates, 
proposed payments would be heavily weighted toward achievement of 
weight loss over the first 6 months, and no payments would be available 
after the first 6 months without achievement of the minimum weight 
loss. In the proposed payment structure, claims for payment would be 
submitted following the achievement of core session attendance, minimum 
weight loss, maintenance session attendance, and maintenance of minimum 
weight loss. For example, MDPP suppliers would not be able to submit 
another claim after session one until the beneficiary has completed 
four sessions, and maintenance sessions would not qualify for payment 
unless minimum weight loss is achieved and maintained. Similar value-
based payments are being offered by commercial insurers and accepted by 
DPP organizations. We seek comment on this payment structure. We seek 
comment on whether to update payment rates annually through an existing 
fee schedule, such as the PFS, or establish a new fee schedule for MDPP 
suppliers.
     IT infrastructure and capabilities: We propose 
that in order to receive payment, MDPP suppliers would be required to 
submit claims to Medicare using standard claims forms and procedures. 
Claims would be submitted in batches that contain beneficiary Protected 
Health Information (PHI) and Personally Identifiable Information (PII), 
including the Health Insurance Claim Number (HICN). Most Medicare 
claims are submitted electronically except in limited situations. We 
provide a free software package called PC-ACE Pro32 that creates a 
patient database and allows organizations to electronically submit 
claims to Medicare Part A and B. We understand there are several other 
electronic claims submissions software packages available in the market 
for purchase. We encourage current and prospective DPP organizations to 
investigate adopting these systems to enhance the efficiency of claims 
submission, and we seek comment on the capacity of DPP organizations to 
integrate these systems into their workflows. If this provision is 
finalized, we would provide technical assistance to MDPP suppliers to 
comply with the Medicare claims submission standards. We seek comment 
from current and prospective DPP organizations on their ability to 
transmit claims to Medicare in a timely and secure manner.
    We propose to require MDPP suppliers to maintain a crosswalk 
between the beneficiary identifiers they submit to CMS for billing 
purposes and the beneficiary identifiers they provide CDC for the 
beneficiary level-clinical data. We propose that MDPP suppliers provide 
this crosswalk to the CMS evaluator on a regular basis. We seek comment 
on this approach.
    We plan to propose to require MDPP suppliers to maintain records 
that document the MDPP services provided to beneficiaries. We propose 
that these records must contain detailed documentation of the services 
provided, including but not limited to the beneficiary's eligibility 
status, sessions attended, the coach furnishing the session attended, 
the date and place of service of sessions attended, and weight. MDPP 
suppliers would be required to maintain these records within a larger 
medical record, or within a medical record that an MDPP supplier

[[Page 46417]]

establishes for the purposes of administering MDPP. Consistent with the 
requirement in Sec.  424.516(f) we propose that these records be 
retained for 7 years from the date of service and that MDPP suppliers 
would provide CMS or a Medicare contractor access to these records upon 
request. We propose to require MDPP suppliers to accurately track 
payments and resolve any discrepancies between claims and the 
beneficiary record within their medical record. We also propose that 
MDPP suppliers would be required to maintain and handle any beneficiary 
PII and PHI in compliance with HIPAA, other applicable privacy laws and 
CMS standards. If this provision is finalized, we intend to provide 
education and technical assistance to DPP organizations to mitigate the 
risk of data discrepancies and audits. We seek comment on our approach. 
We would address specific recordkeeping requirements and standards in 
future rulemaking.
     MDPP Eligible beneficiaries: We propose that coverage of 
MDPP services would be available for beneficiaries who meet the 
following criteria: (1) Are enrolled in Medicare Part B; (2) have as of 
the date of attendance at the first Core Session a body mass index 
(BMI) of at least 25 if not self-identified as Asian and a BMI of at 
least 23 if self-identified as Asian. The CDC standards have defined a 
lower BMI for Asian individuals based on data that show Asians develop 
abnormal glucose levels at a lower BMI; (3) have within the 12 months 
prior to attending the first Core Session a hemoglobin A1c test with a 
value between 5.7 and 6.4 percent, or a fasting plasma glucose of 110-
125 mg/dL, or a 2-hour post-glucose challenge of of 140-199 mg/dL (oral 
glucose tolerance test). We use this definition of prediabetes instead 
of the definition in Sec.  410.18 because the 2016 American Diabetes 
Association Standards of Care includes the use of a hemoglobin A1c test 
to diagnose prediabetes and the CMS actuarial certification uses the 
World Health Organization definition of prediabetes as a fasting plasma 
glucose of 110-125 mg/dL; (4) have no previous diagnosis of Type 1 or 
Type 2 diabetes. A beneficiary with previous diagnosis of gestational 
diabetes is eligible for MDPP; and (5) does not have end-stage renal 
disease (ESRD).
    The National DPP currently allows community-referral such as by Y-
USA and self-referral of patients, in addition to referral by 
physicians and other health care practitioners, if the patient presents 
DPP-qualifying blood test results that the DPP organization keeps on 
record. We propose to similarly permit beneficiaries who meet the 
proposed criteria above to obtain MDPP services by self-referral, 
community-referral, or health care practitioner-referral.
    We propose to establish the beneficiary eligibility criteria at 
Sec.  410.79. We seek comment on this proposal.
     Program integrity: We propose all DPP organizations that 
are eligible and wish to bill Medicare would enroll as MDPP suppliers, 
and thus would be required to comply with applicable Medicare supplier 
enrollment, program integrity, and payment rules. We recognize the 
potential for fraud and abuse by filing inaccurate claims and/or 
duplicative claims on beneficiaries' sessions attended or weight loss 
achieved. We also recognize beneficiaries may move between MDPP 
suppliers, and we intend to address in future rulemaking requirements 
to prevent duplication of a beneficiary's claims for the same services 
by more than one MDPP supplier. We are also concerned about the 
potential for beneficiary inducement or coercion and the potential 
program risks posed by permitting a new type of organization to receive 
payment from CMS for providing MDPP services. We intend to develop 
policies, and will propose them in future rulemaking, to mitigate these 
risks, and monitor the MDPP expansion to ensure MDPP suppliers meet all 
applicable CMS program integrity and supplier enrollment standards. We 
intend to develop system checks to identify where CMS may need to audit 
an MDPP supplier's medical records. We are considering ways CMS could 
cross reference the data DPP organizations are currently required to 
report to the CDC to identify potential discrepancies with data 
submitted to us. We seek comment on such approaches. Finally, MDPP 
suppliers would be subject to audits and reviews performed by CMS 
program integrity and/or review or audit contractors in addition to 
program-specific audits. We seek comment on these approaches and others 
to mitigate these risks and strategies to ensure program integrity.
     Site of service: Currently, CDC-recognized DPP 
organizations deliver DPP services in-person or virtually via a 
telecommunications system or other remote technology. The majority of 
current DPP organizations provide DPP services in-person, but an 
emerging body of literature supports the effectiveness of virtual 
sessions delivered remotely. We propose to allow MDPP suppliers to 
provide MDPP services via remote technologies. As part of our 
evaluation of the MDPP expansion, to the extent feasible, we will 
evaluate the effectiveness of MDPP services, particularly in relation 
to virtual versus in-person services, and, using the evaluation data, 
may modify or terminate this component of the expansion as appropriate. 
To permit such evaluation, we are considering specifying the nature of 
the virtual service and the site of the service in codes included on 
claims submitted for payment, as well as collecting information on the 
nature of the virtual service and the site of service at the 
beneficiary level from MDPP suppliers. We seek comment on this 
approach. Under this last example, MDPP suppliers would be expected to 
maintain this information as part of the beneficiary level cross walk 
discussed under the IT Infrastructure and Capabilities section of this 
proposed rule.
    We plan to monitor administrative claims for virtual services to 
identify any unusual and/or adverse utilization of the DPP benefit. We 
seek comment on specific monitoring activities or program integrity 
safeguards with respect to virtual services, in addition to the time 
period in which such enhanced monitoring activities should occur.
    We note that MDPP services provided via a telecommunications system 
or other remote technology will not be part of the current Medicare 
telehealth benefits and have no impact on how telehealth services are 
defined by Medicare. We recognize that the provision of MDPP services 
by such virtual methods may introduce additional risks for fraud and 
abuse, and if this proposal is finalized, we would propose specific 
policies in future rulemaking to mitigate these risks. We thus seek 
comment on whether there are quality or program integrity concerns 
regarding the use of virtual sessions, or whether they offer comparable 
or higher quality MDPP services when compared to in-person services. We 
seek comment on strategies to strengthen program integrity and minimize 
the potential for fraud and abuse in virtual sessions.
     Learning activities: The CDC provides technical assistance 
to DPP organizations recognized by the DPRP to improve performance. We 
intend to coordinate with CDC to supplement this technical assistance 
with education, training and technical assistance on data security, 
claims submission and medical record keeping. We seek comment on what 
additional technical assistance would be needed by providers and other 
organizations in order to expand the MDPP model.
     Quality monitoring and reporting: We seek comment on the 
quality metrics

[[Page 46418]]

that should be reported by MDPP suppliers in addition to the reporting 
elements required on Medicare claims submissions outlined above 
(attendance and weight loss) or by the CDC recognition program. We seek 
comment specifically on what quality metrics should be considered for 
public reporting (not for payment) to guide beneficiary choice of MDPP 
suppliers.
     Timing of the MDPP expansion: Expanding the MDPP model 
will be a technically and logistically complex undertaking. One option 
may be to expand the MDPP nationally in its first year of 
implementation. Another option is a ``phase-in'' approach, where the 
MDPP is expanded initially for a period of time in certain geographic 
markets or regions, or is furnished by a subpopulation of MDPP 
suppliers, with the goal of addressing technical issues prior to 
broader expansion. We seek comment on expanding DPP nationally, and 
specifically on what factors we should consider in the selection of 
initial MDPP suppliers.

K. 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) (November 2011 final rule)). A 
subsequent major update to the program rules appeared in the June 9, 
2015 Federal Register (Medicare Shared Savings Program; Accountable 
Care Organizations Final Rule (80 FR 32692) (June 2015 final rule)). A 
final rule addressing changes related to the program's financial 
benchmark methodology appeared in the June 10, 2016 Federal Register 
(Medicare Program; Medicare Shared Savings Program; Accountable Care 
Organizations--Revised Benchmark Rebasing Methodology, Facilitating 
Transition to Performance-Based Risk, and Administrative Finality of 
Financial Calculations (81 FR 37950) (June 2016 final rule)). As noted 
below, we have also made use of the annual PFS rules to address quality 
reporting and certain other issues.
    Additionally, on April 27, 2016, the Department of Health and Human 
Services (HHS) issued a proposed rule to implement key provisions of 
the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and 
establish a new Quality Payment Program (QPP) (Medicare Program; Merit-
Based Incentive Payment System (MIPS) and Alternative Payment Model 
(APM) Incentive under the Physician Fee Schedule, and Criteria for 
Physician-Focused Payment Models (81 FR 28162) (QPP proposed rule)). 
The QPP proposed rule would establish a new program under which 
Medicare would reward physicians for providing high-quality care, 
instead of paying them only for the number of tests or procedures 
provided. The QPP proposed rule addresses issues related to APMs, such 
as the Medicare Shared Savings Program, and issues related to reporting 
for purposes of MIPS by eligible clinicians (ECs) that are 
participating in APMs.
    Our intent in this proposed rule is to propose further refinements 
to the Shared Savings Program rules, and we have identified several 
policies that we propose to update or revise. First, we discuss and 
propose policies related to ACO quality reporting including proposing 
changes to the quality measures used to assess ACO quality performance, 
changes in the methodology used in our quality validation audits and 
the way in which the results of these audits may affect an ACO's 
sharing rate, various issues related to alignment with policies 
proposed in the QPP proposed rule, and revisions related to the 
terminology used in quality assessment such as ``quality performance 
standard'' and ``minimum attainment level.'' We are also proposing 
conforming changes to our regulatory text. Next, we address several 
issues unrelated to quality reporting and assessment. Specifically, we 
propose to implement a process by which beneficiaries may voluntarily 
align with an ACO by designating an ACO professional as responsible for 
their overall care. We also propose to introduce beneficiary 
protections related to use of the SNF 3-Day Waiver. Finally, we are 
proposing to make technical changes to certain rules related to merged 
and acquired TINs and the minimum savings rate (MSR) and minimum loss 
rate (MLR) that would be used during financial reconciliation for ACOs 
that fall below 5,000 assigned beneficiaries.
1. ACO Quality Reporting
    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 and recent CY PFS final rules with 
comment period (77 FR 69301 through 69304; 78 FR 74757 through 74764; 
79 FR 67907 through 67931; and 80 FR 71263 through 712710), we have 
established the quality performance standard that ACOs must meet to be 
eligible to share in savings that are generated. For example, 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 for 2 years. We made further updates to 
the quality measure set, established policies to address outdated 
measures, and made conforming changes to align with PQRS in the CY 2016 
PFS final rule with comment period. Through these previous rulemakings, 
we have worked to improve the alignment of quality performance 
measures, submission methods, and incentives under the Shared Savings 
Program and PQRS. Currently, eligible professionals billing through the 
TIN of an ACO participant may avoid the downward PQRS

[[Page 46419]]

payment adjustment when the ACO satisfactorily reports the ACO GPRO 
measures on their behalf using the CMS web interface.
    We are proposing several changes and other revisions to our 
policies related to the quality measures and quality performance 
standard in this rule, including the following:
     Changes to the measure set used in establishing the 
quality performance standard;
     Changes to the methodology used to validate quality data 
submitted by the ACO along with penalties that may apply if the audit 
match rate is less than 90 percent;
     Revisions to the use of the terms ``quality performance 
standard'' and ``minimum attainment level'' in the regulation text;
     Revisions related to use of flat percentages to establish 
quality benchmarks; and
     Alignment with policies proposed in the QPP proposed rule.
a. Changes to the Quality Measure Set Used in Establishing the Quality 
Performance Standard
(1) Background
    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 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 subsequent PFS final 
rules with comment period, we made a number of updates to the set of 
measures that make up the quality performance standard. For example, in 
the CY 2015 PFS final rule with comment period, we added new measures 
that ACOs must report, retired measures that no longer aligned with 
updated clinical guidelines, reduced the sample size for measures 
reported through the CMS web interface, established a schedule for the 
phase in of new quality measures, and established an additional reward 
for quality improvement. The revisions to the measures set made in the 
CY 2016 PFS final rule with comment period, resulted in a net increase 
in the quality measure set from 33 measure to 34 measures.
    Quality measures are submitted by the ACO through the CMS 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 CMS web interface are also used to determine 
whether eligible professionals participating in an ACO avoid the PQRS 
and automatic Physician Value Modifier (VM) payment adjustments for 
2015 and subsequent years. Currently, 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 CMS web interface. Beginning 
with the 2017 VM, ACO performance on the CMS web interface measures and 
all cause readmission measure will be used in calculating the quality 
component of the VM for groups and solo practitioners 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 
have 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, which is currently titled Percent of 
PCPs Who Successfully Meet Meaningful Use Requirements.
    In selecting the original 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 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. In the CY 2016 PFS final rule with comment 
period, in modifying the measures set we sought to include both process 
and outcome measures, including patient experience of care (80 FR 71263 
through 71268). 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. However, as other CMS quality reporting programs, such 
as PQRS, move to more outcomes-based measures and fewer process 
measures over time, we have indicated that 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.
    We are also 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 and reduce reporting burden. 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.
    The Core Quality Measures Collaborative was formed in 2014, as a 
collaboration between CMS, providers, and other stakeholders, with the 
goal of aligning quality measures for reporting across public and 
private stakeholders in order to reduce provider reporting burden. On 
February 16, 2016, the Core Quality Measures Collaborative recommended 
a core quality measure set that aligns and simplifies quality reporting 
across multiple payers (https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-02-16.html) and made specific recommendations for ACOs (https://

[[Page 46420]]

www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-
Instruments/QualityMeasures/Downloads/ACO-and-PCMH-Primary-Care-
Measures.pdf). We proposed to integrate several recommendations made by 
the Core Quality Measures Collaborative into the CMS web interface as 
part of the QPP proposed rule (81 FR 28399). Groups that are eligible 
to report using the CMS web interface for purposes of reporting quality 
measures to CMS for various quality reporting initiatives such as PQRS, 
the Shared Savings Program are required to report on all measures 
included in the CMS web interface. In addition, in the QPP proposed 
rule, we proposed that groups would also be required to report on all 
CMS web interface measures.
(2) Proposals
    In efforts to continue to align with other CMS initiatives and 
reduce provider confusion and the burden of reporting, we propose 
modifications to the quality measure set that an ACO is required to 
report. Specifically, to align the Shared Savings Program quality 
measure set with the measures recommended by the Core Quality Measures 
Collaborative and proposed for reporting through the CMS web interface 
under the QPP proposed rule, we propose to add, and in some cases to 
replace, existing quality measures with the following:
     ACO-12 Medication Reconciliation Post-Discharge (NQF 
#0097). This measure addresses adverse drug events (ADEs) through 
medication reconciliation, which is an important aspect of care 
coordination. According to HHS' Agency for Healthcare Research and 
Quality (AHRQ), ADEs account for nearly 700,000 emergency department 
visits and 100,000 hospitalizations each year.\12\ The ACO-12 
Medication Reconciliation measure was previously in the Shared Savings 
Program measure set, however, it was replaced with ACO-39, 
Documentation of Current Medications in the Medical Record (79 FR 67912 
through 67914). The Core Quality Measures Collaborative, in 
coordination with providers and stakeholders, determined the original 
Medication Reconciliation measure would be more appropriate for 
alignment across quality reporting initiatives. Based on this 
recommendation, we have proposed to require reporting of the measure 
through the CMS web interface in the QPP proposed rule (81 FR 28403). 
In an effort to align with the QPP proposals, we therefore propose to 
replace the Documentation of Current Medications in the Medical Record 
measure (ACO-39) by reintroducing Medication Reconciliation (ACO-12) in 
the Care Coordination/Patient Safety domain. We note that in accordance 
with our policy for newly introduced measures, this measure would phase 
into pay for performance after two years as pay for reporting, unless 
the measure has been finalized only as pay for reporting. We propose to 
phase the measure into pay for performance in accordance with the 
schedule outlined in Table 36 which is consistent with the original 
phase in schedule for the measure under the 2011 final rule.
---------------------------------------------------------------------------

    \12\ ``Medication Errors.'' AHRQ. https://psnet.ahrq.gov/primers/primer/23/medication-errors.
---------------------------------------------------------------------------

     ACO-44 Use of Imaging Studies for Low Back Pain (NQF 
#0052). Imaging utilization is an important area for quality 
measurement, because of the wide use of imaging services. This measure 
reports the percentage of patients with a primary diagnosis of low back 
pain that did not have an imaging study (for example, MRI, CT scan) 
within 28 days of the diagnosis. (A higher score indicates higher 
performance). The Use of Imaging Studies for Low Back Pain quality 
measure is specified for patients 18-50 years of age. This age range 
could result in smaller case sizes for some ACOs; however, it addresses 
the appropriate use of imaging for low back pain, which is a condition 
that affects a high volume of adults in the United States. We propose 
adding this measure in the Care Coordination/Patient Safety domain to 
address a gap in measures related to resource utilization and align 
with the ACO measures recommended by the Core Quality Measures 
Collaborative core measure set (https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityMeasures/Downloads/ACO-and-PCMH-Primary-Care-Measures.pdf). We note the measure is also 
proposed in the QPP proposed rule for measuring the quality of care 
furnished by individual and specialty ECs (81 FR 28399 and 28460 Tables 
A and E). If finalized, the measure would not be reported through the 
CMS web interface. Instead, it would be calculated using Medicare 
claims data without any additional provider reporting requirement. We 
note that in accordance with our policy for newly introduced measures, 
this measure would be designated as pay for reporting in 2017 and 2018, 
and then phase into pay for performance. We propose to phase the 
measure into pay for performance in accordance with the schedule 
outlined in Table 36. Specifically, following the initial 2 years of 
pay for reporting, we propose to phase in the measure to pay for 
performance starting with PY2 of an ACO's first agreement period. We 
believe this is reasonable because there is no reporting burden on the 
part of the ACO and because many stakeholders have some familiarity 
with similar claims-based outcomes measures. However, given the 
possible small case sizes due to the measure specifications, we seek 
comment on if this measure should be phased in to pay for performance 
or whether it should remain pay for reporting for all three performance 
years.
    By aligning the Shared Savings Program measures with the Core 
Quality Measures Collaborative recommendations and proposals under the 
QPP proposed rule, we hope to reduce the burden of provider data 
collection and reporting of measures that do not align across public 
and private quality reporting initiatives. Therefore, we propose to 
retire or replace the following measures in order to reduce provider 
reporting burden by reducing the number of measures that must be 
reported and because these measures do not align with the core measure 
set recommendations from the Core Quality Measures Collaborative and 
the measures that we proposed for reporting through the CMS web 
interface in the QPP proposed rule:
     ACO-39 Documentation of Current Medications in the Medical 
Record.
     ACO-21 Preventive Care and Screening: Screening for High 
Blood Pressure and Follow-up Documented.
     ACO-31 Heart Failure (HF): Beta-Blocker Therapy for Left 
Ventricular Systolic Dysfunction (LVSD).
     ACO-33 Angiotensin-Converting Enzyme (ACE) Inhibitor or 
Angiotensin Receptor Blocker (ARB) Therapy--for patients with CAD and 
Diabetes or Left Ventricular Systolic Dysfunction (LVEF <40%).
    In addition to our proposals above to modify the quality measure 
set to align with the Core Quality Measures Collaborative and the 
proposed modifications to the measures reported through the CMS web 
interface under the QPP proposed rule, we propose a few additional 
modifications as follows:
    First, we propose to retire the two AHRQ Ambulatory Sensitive 
Conditions Admission measures (ACO-9 and ACO-10). Although ACO-9 and 
ACO-10 address admissions for patients with heart failure, chronic 
obstructive pulmonary disease (COPD), and asthma, we introduced two 
all-cause, unplanned admission measures for heart failure

[[Page 46421]]

and multiple chronic conditions (ACO-37 and ACO-38, respectively) in 
the 2015 PFS final rule (79 FR 67911-67912). We believe ACO-37 and ACO-
38 report on a similar population with similar conditions as ACO-9 and 
ACO-10. Therefore, in order to continue our efforts to reduce 
redundancies within the Shared Savings Program measure set, we propose 
to remove ACO-9 and ACO-10 from the measure set.
    Second, while we are proposing above to remove ACO-9 and ACO-10, we 
continue to believe AHRQ's Prevention Quality Indicator (PQI) measures 
are important because they report on inpatient hospital admissions of 
patients with clinical conditions that could potentially be prevented 
with high-quality outpatient care. Coordination of patient care and 
patient access to primary care services can often prevent complications 
or hospital admissions. AHRQ's PQI #91 Ambulatory Sensitive Condition 
Acute Composite is a composite measure, currently used in the Physician 
Value-Based Payment Modifier, which includes PQIs reporting on 
admissions related to dehydration, bacterial pneumonia, and urinary 
tract infections (PQIs #10, 11, and 12). Dehydration, bacterial 
pneumonia, and urinary tract infection admissions may occur as a result 
of inadequate access to ambulatory care or poorly coordinated 
ambulatory care. As a result, we propose adding ACO-43 Ambulatory 
Sensitive Condition Acute Composite (AHRQ PQI #91) to the Care 
Coordination/Patient Safety domain. The measure will be risk-adjusted 
for demographic variables and comorbidities. In accordance with our 
policy for newly introduced measures, we propose that this measure be 
pay for reporting for two years, and then phase into pay for 
performance in accordance with the schedule outlined in Table 36.
    Table 36 lists the Shared Savings Program quality measure set and 
summarizes our proposed measure changes, which will be used to assess 
quality performance starting with the 2017 performance year. We note 
that, consistent with our rules at Sec.  425.502(a)(4), all newly 
introduced measures are set at the level of complete and accurate 
reporting for the first two reporting periods for which reporting of 
the measures is required. Therefore, the proposed new measures 
discussed above, including the Medication Reconciliation measure, would 
be pay for reporting for the 2017 and 2018 performance years. Beginning 
in the 2019 performance year, these quality measures will be assessed 
according to the phase-in schedule noted in Table 36.
    As a result of these proposed measure changes, each of the four 
domains will include the following number of quality measures (See 
Table 37 for details.):

 Patient/Caregiver Experience of Care--8 measures
 Care Coordination/Patient Safety--10 measures
 Preventive Health--8 measures
 At Risk Population--5 measures (3 individual measures and a 2-
component diabetes composite measure)

    Table 37 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 changes to the quality measures.

                   Table 36--Measures for Use in the Establishing Quality Performance Standard That ACOs Must Meet for Shared Savings
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            Pay for performance phase in
                                                                                        NQF #/measure      Method of data    R--reporting P--performance
            Domain                ACO measure #      Measure title     New measure         steward           submission    -----------------------------
                                                                                                                               PY1       PY2       PY3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            AIM: Better Care for Individuals
--------------------------------------------------------------------------------------------------------------------------------------------------------
Patient/Caregiver Experience..  ACO-1............  CAHPS: Getting    ...............  N#0005 AHRQ......  Survey...........        R         P         P
                                                    Timely Care,
                                                    Appointments,
                                                    and Information.
                                ACO-2............  CAHPS: How Well   ...............  NQF #0005 AHRQ...  Survey...........        R         P         P
                                                    Your Providers
                                                    Communicate.
                                                    \13\
                                ACO-3............  CAHPS: Patients'  ...............  NQF #0005 AHRQ...  Survey...........        R         P         P
                                                    Rating of
                                                    Provider. \2\
                                ACO-4............  CAHPS: Access to  ...............  NQF #N/A CMS/AHRQ  Survey...........        R         P         P
                                                    Specialists.
                                ACO-5............  CAHPS: Health     ...............  NQF #N/A CMS/AHRQ  Survey...........        R         P         P
                                                    Promotion and
                                                    Education.
                                ACO-6............  CAHPS: Shared     ...............  NQF #N/A CMS/AHRQ  Survey...........        R         P         P
                                                    Decision Making.
                                ACO-7............  CAHPS: Health     ...............  NQF #N/A CMS/AHRQ  Survey...........        R         R         R
                                                    Status/
                                                    Functional
                                                    Status.
                                ACO-34...........  CAHPS:            ...............  NQF #N/A CMS/AHRQ  Survey...........        R         P         P
                                                    Stewardship of
                                                    Patient
                                                    Resources.
Care Coordination/Patient       ACO-8............  Risk-             ...............  Adapted NQF #1789  Claims...........        R         R         P
 Safety.                                            Standardized,                      CMS.
                                                    All Condition
                                                    Readmission.
                                ACO-35...........  Skilled Nursing   ...............  Adapted NQF #2510  Claims...........        R         R         P
                                                    Facility 30-Day                    CMS.
                                                    All-Cause
                                                    Readmission
                                                    Measure (SNFRM).
                                ACO-36...........  All-Cause         ...............  NQF #TBD CMS.....  Claims...........        R         R         P
                                                    Unplanned
                                                    Admissions for
                                                    Patients with
                                                    Diabetes.
                                ACO-37...........  All-Cause         ...............  NQF #TBD CMS.....  Claims...........        R         R         P
                                                    Unplanned
                                                    Admissions for
                                                    Patients with
                                                    Heart Failure.
                                ACO-38...........  All-Cause         ...............  NQF #TBD CMS.....  Claims...........        R         R         P
                                                    Unplanned
                                                    Admissions for
                                                    Patients with
                                                    Multiple
                                                    Chronic
                                                    Conditions.

[[Page 46422]]

 
                                ACO-43...........  Ambulatory                     X   AHRQ.............  Claims...........        R         P         P
                                                    Sensitive
                                                    Condition Acute
                                                    Composite (AHRQ
                                                    Prevention
                                                    Quality
                                                    Indicator (PQI)
                                                    #91).
                                ACO-11...........  Use of certified               X   NQF #N/A CMS.....  As proposed in           R         P         P
                                                    EHR technology.                                       the QPP proposed
                                                                                                          rule.
                                ACO-12...........  Medication                     X   NQF #0097 CMS....  CMS Web Interface        R         P         P
                                                    Reconciliation
                                                    Post-Discharge.
                                ACO-13...........  Falls: Screening  ...............  NQF #0101 NCQA...  CMS Web Interface        R         P         P
                                                    for Future Fall
                                                    Risk.
                                ACO-44...........  Use of Imaging                 X   NQF #0052 NCQA...  Claims...........        R         P         P
                                                    Studies for Low
                                                    Back Pain.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           AIM: Better Health for Populations
--------------------------------------------------------------------------------------------------------------------------------------------------------
Preventive Health.............  ACO-14...........  Preventive Care   ...............  NQF #0041 AMA-     CMS Web Interface        R         P         P
                                                    and Screening:                     PCPI.
                                                    Influenza
                                                    Immunization.
                                ACO-15...........  Pneumonia         ...............  NQF #0043 NCQA...  CMS Web Interface        R         P         P
                                                    Vaccination
                                                    Status for
                                                    Older Adults.
                                ACO-16...........  Preventive Care   ...............  NQF #0421 CMS....  CMS Web Interface        R         P         P
                                                    and Screening:
                                                    Body Mass Index
                                                    (BMI) Screening
                                                    and Follow Up.
                                ACO-17...........  Preventive Care   ...............  NQF #0028 AMA-     CMS Web Interface        R         P         P
                                                    and Screening:                     PCPI.
                                                    Tobacco Use:
                                                    Screening and
                                                    Cessation
                                                    Intervention.
                                ACO-18...........  Preventive Care   ...............  NQF #0418 CMS....  CMS Web Interface        R         P         P
                                                    and Screening:
                                                    Screening for
                                                    Clinical
                                                    Depression and
                                                    Follow-up Plan.
                                ACO-19...........  Colorectal        ...............  NQF #0034 NCQA...  CMS Web Interface        R         R         P
                                                    Cancer
                                                    Screening.
                                ACO-20...........  Breast Cancer     ...............  NQF #2372 NCQA...  CMS Web Interface        R         R         P
                                                    Screening.
                                ACO-42...........  Statin Therapy    ...............  NQF #N/A CMS.....  CMS Web Interface        R         R         R
                                                    for the
                                                    Prevention and
                                                    Treatment of
                                                    Cardiovascular
                                                    Disease.
Clinical Care for At Risk       ACO-40...........  Depression        ...............  NQF #0710 MNCM...  CMS Web Interface        R         R         R
 Population--Depression.                            Remission at
                                                    Twelve Months.
Clinical Care for At Risk       ACO-27...........  Diabetes          ...............  NQF #0059 NCQA     CMS Web Interface        R         P         P
 Population--Diabetes.                              Composite (All                     (individual
                                                    or Nothing                         component).
                                                    Scoring): ACO-
                                                    27: Diabetes
                                                    Mellitus:
                                                    Hemoglobin A1c
                                                    Poor Control.
                                ACO-41...........  ACO-41:           ...............  NQF #0055 NCQA     CMS Web Interface        R         P         P
                                                    Diabetes: Eye                      (individual
                                                    Exam.                              component).
Clinical Care for At Risk       ACO-28...........  Hypertension      ...............  NQF #0018 NCQA...  CMS Web Interface        R         P         P
 Population--Hypertension.                          (HTN):
                                                    Controlling
                                                    High Blood
                                                    Pressure.
Clinical Care for At Risk       ACO-30...........  Ischemic          ...............  NQF #0068 NCQA...  CMS Web Interface        R         P         P
 Population--Ischemic Vascular                      Vascular
 Disease.                                           Disease (IVD):
                                                    Use of Aspirin
                                                    or Another
                                                    Antithrombotic.
--------------------------------------------------------------------------------------------------------------------------------------------------------

     
---------------------------------------------------------------------------

    \13\ The quality measure title has been updated to ``Providers'' 
and is not only referencing ``Doctors.''

      Table 37--Number of Measures and Total Points for Each Domain Within the Quality Performance Standard
----------------------------------------------------------------------------------------------------------------
                                           Number of                                   Total
                Domain                    individual       Total measures  for       possible     Domain  weight
                                           measures         scoring  purposes         points         (percent)
----------------------------------------------------------------------------------------------------------------
Patient/Caregiver Experience..........               8  8 individual survey                   16              25
                                                         module measures.
Care Coordination/Patient Safety......              10  10 measures, including                22              25
                                                         double-scored EHR
                                                         measure.
Preventive Health.....................               8  8 measures..............              16              25

[[Page 46423]]

 
At-Risk Population....................               5  3 individual measures,                 8              25
                                                         plus a 2-component
                                                         diabetes composite
                                                         measure that is scored
                                                         as one measure.
                                       -------------------------------------------------------------------------
    Total in all Domains..............              31  30......................              62             100
----------------------------------------------------------------------------------------------------------------

b. Improving the Process Used To Validate ACO Quality Data Reporting
(1) Background
    In the November 2011 final rule, we finalized a proposal to retain 
the right to validate the data ACOs enter into the Web Interface (76 FR 
67893 through 67894). This validation process, referred to as the 
Quality Measures Validation audit, was based on the process used in 
Phase I of the Physician Group Practice (PGP) demonstration. The policy 
was finalized at Sec.  425.500(e). In this audit process, CMS selects a 
subset of Web Interface measures, and selects a random sample of 30 
confirmed and completely reported beneficiaries for each measure in the 
subset. The ACO provides medical records to support the data reported 
in the Web Interface for those beneficiaries. A measure-specific audit 
performance rate is then calculated using a multi-phased audit process:
     Phase 1: Eight randomly selected medical records for each 
audited measure are reviewed to determine if the medical record 
documentation supports what was reported (that is, a match). If all 
records reviewed support what was reported, the audit ends. If any 
records do not support what was reported (that is, a mismatch), the 
audit process continues in a second phase for any measure with a 
mismatch identified.
     Phase 2: The remaining 22 medical records are reviewed for 
any measure that had a mismatch identified in Phase 1. If less than 90 
percent of the medical records provided for a measure support what was 
reported, the audit process continues to Phase 3.
     Phase 3: For each measure with a match rate less than 90 
percent, CMS provides education to the ACO about how to correct 
reporting and the ACO is given an opportunity to resubmit the 
measure(s) in question.
    If at the conclusion of the third phase there is a discrepancy 
greater than 10 percent between the quality data reported and the 
medical records provided during the audit, the ACO will not be given 
credit for meeting the quality target for any measure(s) for which the 
mismatch rate exists.
    Since publication of the initial program rules in 2011, we have 
gained experience in conducting audits and believe that certain 
modifications to our rules should be made in order to increase the 
statistical rigor of the audit methodology, streamline audit 
operations, and more closely align the Quality Measures Validation 
audit used in Shared Savings Program audits with other CMS quality 
program audits including those performed in the Physician Quality 
Reporting Program and the Hospital Inpatient and Outpatient Quality 
Reporting programs. Below, we propose four improvements to the 
previously described process. The proposed changes address the number 
of records to be reviewed per measure, the number of audit phases, the 
calculation of an audit match rate and the consequences if the audit 
match rate falls below 90 percent.
(2) Proposals
    First, we propose to increase the number of records audited per 
measure to achieve a high level of confidence that the true audit match 
rate is within 5 percentage points of the calculated result. The 
November 2011 final rule indicated that CMS would review as few as 8 
records (Phase 1 only) or as many as 30 records (Phase 1 and 2) per 
audited measure. With this phased methodology, the total number of 
records reviewed for each ACO varies (range of 40 to 150 records per 
audited ACO during the Performance Year 2014 audit). A sample size 
analysis found that the number of reviewed records needs to increase in 
order to provide the desired high level of confidence that the audited 
sample is representative of the ACO's quality reporting performance. We 
note that the precise number of records requested for review would 
vary, depending on the desired confidence level, the number of measures 
audited, and the expected match rate. Therefore, we are not proposing a 
specific number of records that would be requested for purposes of ACO 
quality validation audits in the future. However, based on an analysis 
using the poorest expected match rate, the highest degree of confidence 
and an estimated number of measures to be audited, we do not anticipate 
more than 50 records will be requested per audited measure.
    Second, we propose to modify our regulations in order to conduct 
the quality validation audit in a single step rather than the current 
multi-phased process described at Sec.  425.500(e)(2). We propose to 
use a more streamlined approach in which all records selected for audit 
are reviewed in a single step and some activities currently conducted 
in phase 3 would be removed from the audit process entirely while 
others would instead be addressed at the conclusion of the audit. 
During the proposed single step, we would review all submitted medical 
records and calculate the match rate. The education we currently 
provide to ACOs and the opportunity for ACOs to explain the mismatches 
that occur in Phase 3 of the current process would continue, but would 
occur at the conclusion of the audit. Under this proposal, there would 
not be an the opportunity for ACOs to correct and resubmit data for any 
measure with a >10 percent mismatch because we have learned through our 
experience with program operations that resubmission of CMS Web 
Interface measure data after the close of the CMS Web Interface is not 
feasible. Instead, we propose that an ACO's quality score would be 
affected by an audit failure as described below, without requiring re-
opening of the CMS Web Interface. This single step process would allow 
us to maintain the desired level of confidence that the true audit 
match rate is within 5 percentage points of the calculated result and 
to complete the audit in a more timely manner. Therefore, we propose to 
remove the provision at Sec.  425.500(e)(2) that requires 3 phases of 
medical record review. In so doing, we propose to redesignate Sec.  
425.500(e)(3) as Sec.  425.500(e)(2).
    Third, we propose to revise Sec.  425.500(e)(3) in order to provide 
for an

[[Page 46424]]

assessment of the ACO's overall audit match rate across all measures, 
instead of assessing the ACO's audit mismatch rate at the measure 
level. Specifically, we propose to calculate an overall audit match 
rate which would be derived by dividing the total number of audited 
records that match the information reported in the Web Interface by the 
total number of records audited. This is a change from the current 
audit performance calculation methodology, which calculates a measure 
specific mismatch rate. We believe that making this change is necessary 
to minimize the number of records that must be requested in order to 
achieve the desired level of statistical certainty as described in our 
first proposal in this section. Our analysis suggests that we would 
have to request a much larger number of records (approximately 200 per 
measure) from the ACO during a quality validation audit of individual 
measures to achieve a 90 percent confidence interval for each measure. 
In addition, combining all records to calculate an overall audit match 
rate is less subject to variability based on the specific subset of 
measures chosen for audit each year and better aligns with the 
methodology used by other CMS quality program audits.
    Fourth, we propose to revise the redesignated provision at Sec.  
425.500(e)(2), to indicate that if an ACO fails the audit (that is, has 
an overall audit match rate of less than 90 percent), the ACO's overall 
quality score would be adjusted proportional to its audit performance. 
Currently, our regulation at Sec.  425.500(e)(3) states that if, at the 
conclusion of the audit process there is a discrepancy greater than 10 
percent between the quality data reported and the medical records 
provided, the ACO will not be given credit for meeting the quality 
target for any measures for which this mismatch rate exists. In light 
of our proposed modifications to the quality validation audit process 
above in which we propose to assess and validate the ACO's performance 
overall rather than the ACO's performance on each measure, we believe a 
modification to this requirement is necessary to reflect an overall 
adjustment. Therefore, we propose to modify the provision at newly 
redesignated Sec.  425.500(e)(2) to state that if an ACO fails the 
audit (that is, has an audit match rate of less than 90 percent), the 
ACO's overall quality score will be adjusted proportional to the ACO's 
audit performance. The audit-adjusted quality score will be calculated 
by multiplying the ACO's overall quality score by the ACO's audit match 
rate. For example, if an ACO's quality score is 75 percent and the 
ACO's audit match rate is 80 percent, the ACO's audit-adjusted quality 
score is 60 percent. The audit-adjusted quality score would be the 
quality score that is used to determine the percentage of any earned 
savings that the ACO may share or the percentage of any losses for 
which the ACO is accountable.
    Finally, we propose to add a new requirement at Sec.  425.500(e)(3) 
that in addition to the adjustment in the ACO's overall quality score, 
any ACO that has an audit match rate of less than 90 percent, may be 
required to submit a corrective action plan (CAP) under Sec.  425.216 
for CMS approval. In the CAP, the ACO may be required to explain the 
cause of its audit performance and how it plans to improve the accuracy 
of its quality reporting in the future. In addition, CMS maintains the 
right, as described in Sec.  425.500(f), to terminate or impose other 
sanctions on any ACO that does not report quality data accurately, 
completely or timely.
    We invite comment on the proposed improvements to the process used 
to validate ACO quality data reporting.
c. Technical Changes Related to Quality Reporting Requirements
    The Shared Savings Program quality reporting rules were originally 
established through rulemaking in the November 2011 final rule. In this 
section, we make several proposals regarding the quality performance 
standard that an ACO must meet to be eligible to share in savings. Part 
of the determination of whether an ACO has met the quality reporting 
standard in each year is dependent on the ACO meeting the minimum 
attainment level for certain measures. We discuss how the ``minimum 
attainment'' requirement has been implemented to date and propose a 
modification that we believe is more consistent with our policies for 
assessing an ACO's performance over time. Finally, we propose to move 
references to compliance actions from Sec.  425.502(d)(2)(ii) to a more 
appropriate provision at Sec.  425.316(c).
    First, we propose to make technical revisions to ensure stakeholder 
understanding of the definition of the quality performance standard. 
The quality performance standard is established under Subpart F for 
each performance year (Sec.  425.502(a)). For the first performance 
year of an ACO's first agreement period, the quality performance 
standard is defined as complete and accurate reporting of all quality 
measures. For each subsequent performance year, quality measures phase 
in to pay for performance, and although the ACO must continue to report 
all measures completely and accurately, the ACO will also be assessed 
on performance based on the quality performance benchmark and minimum 
attainment level of certain measures that are designated as pay for 
performance. The quality performance standard that applies to an ACO's 
final year in its first agreement period also applies to each year of 
an ACO's subsequent agreement period (Sec.  425.502(a)(3)) (79 FR 67925 
through 67926). ACOs must meet or exceed the minimum quality 
performance standard in a given performance year to be eligible to 
receive payments for shared savings (Sec.  425.100(b)). Conversely, 
failure to meet the quality performance standard in a given performance 
year makes ACOs ineligible to share in savings, even if generated, and 
such ACOs may be subject to compliance actions.
    Our intent in the November 2011 final rule was to establish a 
single quality performance standard that would apply for each 
performance year in which an ACO participates in the program. Because 
the quality performance standard changes, depending on the performance 
year, the ACO may be subject to multiple quality performance standards 
over the course of its 3-year agreement period. We recognize that some 
of the language used in subsequent revisions to our regulations may 
have generated some confusion related to this issue. For example, as 
explained above, the quality performance standard refers to the overall 
standard the ACO must meet, however, in Sec.  425.502(a)(4), we state 
that the quality performance standard for a newly introduced measure is 
set at the level of complete and accurate reporting for the first two 
reporting periods for which reporting of the measure is required. We 
wish to clarify that while there are certain standards that must be met 
for each measure or in each domain, there is one overall quality 
performance standard that must be met in each performance year by an 
ACO. We propose to make conforming changes to the regulations text to 
remove references to the quality performance standard in contexts where 
it does not appear to apply to the overall quality performance standard 
(see Sec.  425.316(c)(2), Sec.  425.502(a)(4), and Sec.  
425.502(d)(1)). We do not believe that modifications necessarily must 
be made to the regulations text in all instances where there is a 
reference to multiple quality performance standards, however, because 
we recognize that the quality performance standard varies

[[Page 46425]]

depending on the performance year in question as indicated at Sec.  
425.502(a)(1)-(3) or, for example, where we refer to ACOs having to 
meet quality performance standards to be eligible to share in savings 
(Sec.  425.100(b)). Therefore, we propose to retain certain references 
to multiple quality performance standards, such as the one found in 
Sec.  425.100(b), because we believe the use of the plural is 
appropriate in certain contexts.
    Second, we wish to address the concept of the minimum attainment 
level and its use in determining whether an ACO has met the quality 
performance standard. As noted above, beginning in the second year of 
an ACO's first agreement period, the quality performance standard is 
met by complete and accurate reporting on all measures, but also 
includes meeting the minimum attainment level on ``certain'' measures. 
As provided at Sec.  425.502(b)(1), we designate a performance 
benchmark and minimum attainment level for each measure. Pursuant to 
Sec.  425.502(b)(3), the minimum attainment level is set at 30 percent 
or the 30th percentile of the performance benchmark. In Sec.  
425.502(c)(1) through (c)(2), we state that performance below the 
minimum attainment level for a measure will receive zero points for 
that measure and performance equal to or greater than the minimum 
attainment level for a measure will receive points on a sliding scale 
based on the level of performance. Finally, Sec.  425.502(d) outlines 
quality performance requirements for the four domains, stating that the 
ACO must report all measures in a domain and must score above the 
minimum attainment level determined by CMS on 70 percent of the 
measures in each domain. If the ACO fails to achieve the minimum 
attainment level on at least 70 percent of the measures in a domain, 
CMS will take compliance action. Additionally, the ACO must achieve the 
minimum attainment level for at least one measure in each of the four 
domains to be eligible to share in savings. In guidance, we have 
interpreted the quality performance requirements for domains to apply 
only to pay for performance measures because minimum attainment applies 
only to ``certain'' measures according to the definition of the quality 
performance standard in Sec.  425.502(a)(3), and we have interpreted 
the reference to ``certain'' measures in Sec.  425.502(a)(2) to mean 
pay for performance measures. As a result of this interpretation, we 
believe an inconsistency in the application of the policy goals 
outlined in our November 2011 final rule has arisen. In particular, we 
believe certain current policies are inconsistent with our goal of 
holding ACOs to higher quality reporting standards over time. 
Specifically, because measures are phased-in from pay for reporting to 
pay for performance over the course of an ACO's first 3-year agreement 
period, there are no pay for performance measures during PY1 and fewer 
pay for performance measures in each domain in PY2 compared to PY3. 
Thus, under our current interpretation of the rules, it is not possible 
to take compliance actions against an ACO in its first performance year 
for failure to achieve the minimum attainment level on at least 70 
percent of the measures in a domain because there are no pay for 
performance measures on which to assess performance on a domain. 
Additionally, because there are fewer pay for performance measures in 
PY2 than in PY3, it is more likely that a compliance action would be 
taken against an ACO due to failure to meet the minimum attainment 
level on 70 percent of the pay for performance measures in a domain in 
PY2 than in PY3. Since publication of the November 2011 final rule, we 
have used the annual PFS rule to update the measures that ACOs are 
required to report. Each time a new measure is added, the measure is 
designated as pay for reporting for the first 2 years it is in use so 
that we can establish a performance benchmark prior to using it as a 
pay for performance measure. This, in turn, diminishes even further the 
number of pay for performance measures available in a domain in PY2 and 
PY3 or in an ACO's second or subsequent agreement period, making it 
more likely that ACOs would be subject to compliance action. Based on 
this experience, we believe it would be more consistent with our policy 
goals to take all measures into account when determining whether a 
compliance action should be taken against an ACO based on its quality 
performance in one or more domains.
    Therefore, we propose to take all measures into account when 
determining ACO performance at the domain level for purposes of 
compliance actions. Additionally, we believe that compliance actions 
should be addressed at Sec.  425.316 rather than in the quality 
reporting section, and therefore, we propose to move the provisions 
governing the specific performance levels at which a compliance action 
would be triggered from Sec.  425.502 to Sec.  425.316. Specifically, 
we propose the following modifications to our regulations:
     Revise introductory text at Sec.  425.502(a) to make it 
clear that the quality performance standard is the overall standard the 
ACO must meet to qualify to share in savings.
     Replace the word ``certain'' in Sec.  425.502(a)(2) and 
(3) with ``all,'' so that the term ``minimum attainment level'' clearly 
applies to both pay for reporting and pay for performance measures.
     At Sec.  425.502(a)(4), make modifications to remove the 
reference to the quality performance standard each time it appears to 
avoid causing confusion between the standards for individual measures 
and the overall quality performance standard.
     At Sec.  425.502(b)(3), define ``minimum attainment 
level'' for both pay for reporting and pay for performance measures. We 
propose to set the minimum attainment level for pay for performance 
measures at the 30th percent or 30th percentile of the quality 
benchmark. We propose to set the minimum attainment level for pay for 
reporting measures at the level of complete and accurate reporting.
     At Sec.  425.502(c)(2), we propose to revise the 
regulation text to specify that only pay for performance measures are 
assessed on a sliding scale.
     At Sec.  425.502(c)(5), we propose to add a provision to 
specify that pay for reporting measures earn the maximum number of 
points for a measure when the minimum attainment level is met.
     Finally, we propose to modify Sec.  425.502(d) to refer 
generally to compliance actions that may be taken for low quality 
performance. We propose to address specific levels of quality domain 
performance at which compliance action would be triggered by modifying 
Sec.  425.316(c)(1).
d. Technical Change to Application of Flat Percentages for Quality 
Benchmarks
    In the CY 2014 PFS final rule with comment period (78 FR 74761-
74763), we finalized a methodology to spread clustered measures when 
setting quality benchmarks to promote a clinically meaningful 
assessment of ACO quality. Specifically, we finalized a policy that CMS 
would set quality benchmarks using flat percentages for a clustered 
measure when the national FFS data results in the 60th percentile for 
the measure are equal to or greater than 80.00 percent. We noted that 
the methodology would not apply to measures whose performance rates are 
calculated as ratios, for example, measures such as the two ACO 
Ambulatory Sensitive Conditions Admissions and the All Condition 
Readmission measures. Similarly, in the CY 2015 PFS final rule with 
comment period (79 FR 67925), we finalized a

[[Page 46426]]

policy to address ``topped out'' measures by also setting benchmarks 
using flat percentages when the 90th percentile is equal to or greater 
than 95 percent. Although similar to the ``cluster'' policy finalized 
in the CY 2014 PFS final rule with comment period, we included measures 
whose performance rates are calculated as ratios. We believed this 
policy was appropriate because measures calculated and reported as 
ratios may become topped out and expressed our desire to treat all 
topped out measures consistently.
    Since the CY 2015 PFS final rule with comment period, we have 
determined that converting measures calculated and reported as ratios 
into benchmarks expressed as percentiles and percentages creates 
confusion in the interpretation of quality results and may yield 
results that are contrary to the intended purpose of using flat 
percentages. As a result, we propose no longer applying the flat 
percentage policy to performance measures calculated as ratios, such as 
the Ambulatory Sensitive Conditions Admissions measures and the All-
Cause Readmission measure. In addition, we propose two technical 
changes to address typographical errors in Sec.  425.502(a)(1), which 
contains a duplicative reference to CMS, and in Sec.  
425.502(b)(2)(ii), which contains an extra ``t'' at the end of 
``percent.''
e. Incorporation of Other Reporting Requirements Related to the PQRS
    The Affordable Care Act gives the Secretary authority to 
incorporate reporting requirements and incentive payments from certain 
Medicare programs into the Shared Savings Program, and to use 
alternative criteria to determine if payments are warranted. 
Specifically, section 1899(b)(3)(D) of the Act affords the Secretary 
discretion to incorporate reporting requirements and incentive payments 
related to the physician quality reporting initiative (PQRI), under 
section 1848 of the Act, including such requirements and such payments 
related to electronic prescribing, electronic health records, and other 
similar initiatives under section 1848, and permits the Secretary to 
use alternative criteria than would otherwise apply (under section 1848 
of the Act) for determining whether to make such payments. Under this 
authority, in the November 2011 final rule, we incorporated certain 
reporting requirements and payment rules related to the PQRS into the 
Shared Savings Program at Sec.  425.504 for ``eligible professionals'' 
(EPs) who bill under the TIN of an ACO participant within an ACO. Thus, 
the Shared Savings Program rules provide that EPs who bill under the 
TIN of an ACO participant within an ACO may only participate under 
their ACO participant TIN as a group practice under PQRS under the 
Shared Savings Program for purposes of qualifying for a PQRS incentive 
(prior to 2015) or avoiding the payment adjustment (starting in 2015). 
In other words, the current regulations prohibit ACO participant TINs 
and the EPs billing through those TINs from participating in PQRS 
outside of the Shared Savings Program such that these entities may not 
independently report for purposes of PQRS apart from the ACO.
    An ACO, reporting on behalf of its EPs for purposes of PQRS, is 
required to satisfactorily submit through the CMS web interface all of 
the ACO GPRO measures that are part of the Shared Savings Program 
quality performance standard. Under Sec.  425.504(c), for 2016 and 
subsequent years, if an ACO fails to satisfactorily report all of the 
ACO GPRO measures through the CMS web interface each EP who bills under 
the TIN of an ACO participant within the ACO will receive a downward 
adjustment, as described in Sec.  414.90(e) for that year. The current 
regulations do not provide any mechanism for these EPs to report 
separately or otherwise avoid the downward payment adjustment if the 
ACO fails to satisfactorily report on their behalf.
    We stated in the November 2011 final rule that there were two main 
reasons for not allowing EPs who bill under the TIN of an ACO 
participant to report outside of their ACO for purposes of PQRS: (1) 
The Shared Savings Program is concerned with measuring the quality of 
care furnished by the ACO to its patient population as a whole, and not 
that of individual ACO providers/suppliers, and (2) allowing EPs that 
bill under the TIN of an ACO participant to earn more than one PQRS 
incentive goes against the rules of traditional PQRS (76 FR 67901 
through 67902).
    Since publication of the November 2011 final rule, we have gained 
experience with these policies and program operations and believe it is 
necessary to propose a change in policy in order to be able to accept 
and use data that is separately reported outside the ACO by EPs billing 
through the TIN of an ACO participant within an ACO for purposes of 
PQRS under limited circumstances for the final two years of PQRS before 
it sunsets and is replaced by the Quality Payment Program (QPP). We 
continue to believe that in most cases it is appropriate to assess EPs 
that bill through the TIN of an ACO participant under the PQRS as a 
group practice because as noted in the November 2011 final rule, the 
Shared Savings Program is concerned with measuring the quality of care 
furnished to an assigned population of FFS beneficiaries by the ACO, as 
a whole, and not that of individual ACO providers/suppliers. We believe 
this framework promotes clinical integration among the ACO providers/
suppliers, which is an important aspect of the Shared Savings Program. 
In addition, it is consistent with the requirement under Sec.  
425.108(d) that each ACO provider/supplier must demonstrate a 
meaningful commitment to the mission of the ACO to ensure its likely 
success. Because an ACO cannot be successful in the Shared Savings 
Program without satisfying the quality reporting requirements, we 
believe a meaningful commitment by ACO providers/suppliers to the 
mission of the ACO includes assisting with and engaging in annual 
quality reporting through the ACO. Further, ACO reporting reduces 
burden for those in small or solo practices, and places a focus on 
population health by encouraging care coordination by ACO providers/
suppliers to improve the health of the broader patient population for 
which they are responsible. Finally, we believe that such group 
reporting is consistent with group reporting under various other CMS 
initiatives and therefore, we do not intend to remove the requirement 
that ACOs report on behalf of the EPs who bill under the TIN of an ACO 
participant. As a corollary, we would continue to use ACO data 
preferentially for purposes of assessing or determining an EP's quality 
performance for purposes of programs such as PQRS or, by extension, the 
VM.
    However, we believe that when an ACO does not satisfactorily report 
for purposes of PQRS, it may be appropriate to accept and use data that 
is reported outside the ACO. For PQRS to be able to accept and use data 
reported outside the ACO, however, we must modify the provision at 
Sec.  425.504 prohibiting EPs that bill under the TIN of an ACO 
participant in an ACO to report separately for purposes of PQRS. We are 
therefore proposing to modify Sec.  425.504 to lift the prohibition on 
separate reporting for purposes of the 2017 and 2018 PQRS payment 
adjustment. We believe this change to our program rules is necessary 
for several reasons.
    First, we believe it is necessary to protect EPs that participate 
in ACOs that fail to satisfactorily report all of the ACO GPRO 
measures. Although 98 percent of ACOs successfully complete required 
quality reporting annually, there have been a few instances where

[[Page 46427]]

an ACO has failed to report all of the required measures, for example, 
where an ACO has terminated its participation in the Shared Savings 
Program and did not quality report on behalf of the EPs that bill under 
the TIN of an ACO participant at the end of the performance year as 
required under our close-out procedures. In other instances, some ACOs 
continued to participate in the Shared Savings Program but failed to 
complete quality reporting in a timely manner. In these instances, the 
lack of complete quality reporting by the ACO translated into a failure 
for the EPs within the ACO to receive a PQRS incentive (or to avoid the 
PQRS downward adjustment) for that year.
    Second, PQRS has transitioned away from providing incentive 
payments to applying only downward payment adjustments to payments 
under the Medicare Physician Fee Schedule, making it even more 
important for EPs to ensure they comply with the reporting requirements 
for PQRS. Under the current rules, EPs who bill under the TIN of an ACO 
participant within an ACO must ultimately rely on the ACO to report on 
their behalf. These EPs are only able to encourage and facilitate ACO 
reporting, but lack the ability to ensure that the ACO satisfactorily 
reports in order to prevent application of the payment adjustment. The 
proposed change to allow EPs to report separately would provide them a 
mechanism over which they have direct control to ensure satisfactory 
reporting occurs. Additionally, we note that because there are no more 
payment incentives under the PQRS, there is no longer any concern that 
an EP may inadvertently receive duplicative PQRS incentive payments 
from CMS. Specific issues and policies related to data reported by EPs 
apart from an ACO for purposes of avoiding the PQRS payment adjustment 
for payment years 2017 and 2018 are addressed in section III.H. of this 
proposed rule.
    Third, under the VM, if the ACO satisfactorily reports quality data 
on their behalf, groups and solo practitioners that bill under the TIN 
of an ACO participant will be evaluated under the quality tiering 
methodology and could qualify for an upward payment adjustment if the 
ACO satisfactorily reports on their behalf. However, if the ACO does 
not satisfactorily report quality data as required under Sec.  425.504 
then groups and solo practitioners that bill under the TIN of an ACO 
participant fall into Category 2 for the VM and are subject to a 
downward payment adjustment. In section III.G. of this proposed rule, 
we make proposals for how quality data reported by EPs billing under 
the TINs of ACO participants that is reported apart from the ACO for 
purposes of avoiding the VM downward payment adjustment for 2017 and 
2018.
    For the reasons noted above, we believe it is appropriate to retain 
the provisions under Sec.  425.504 that require the ACO to report all 
of the ACO GPRO measures to satisfactorily report on behalf of the EPs 
who bill under the TIN of an ACO participant for purposes of the PQRS 
payment adjustment, however, we are proposing to modify the provisions 
that prohibit EPs that bill under the TIN of an ACO participant to 
report apart from the ACO. Specifically, we propose to add a 
redesignated and revised paragraph at Sec.  425.504(d) to address the 
requirement that the ACO report on behalf of the eligible professionals 
who bill under the TIN of an ACO participant for purposes of the of the 
2017 and 2018 PQRS payment adjustment. Under this revised provision the 
prohibition on separate quality reporting for purposes of the PQRS 
payment for 2017 and 2018 would be removed. We also propose to make a 
technical change to Sec.  425.504 to move existing Sec.  425.504(d) to 
Sec.  425.504(c)(5) because the intent of this provision was to 
parallel the language of Sec.  425.504(b)(6) for purposes of the 
payment adjustment for 2016 and subsequent years. We reiterate our 
intent that data reported by an ACO would continue to be preferentially 
used for purposes of other CMS initiatives that rely on such data, 
including the PQRS and the VM, as discussed in sections III.I. and 
III.M., respectively. If an EP who bills under the TIN of an ACO 
participant chooses to report apart from the ACO, the EP's data may be 
used for purposes of PQRS and VM only when complete ACO reported data 
is not available.
    Additionally, we note that under the Shared Savings Program, only 
the quality data reported by the ACO as required under Sec.  425.500 
would be used to assess the ACO's performance under the Shared Savings 
Program. In other words, quality data submitted separately from the ACO 
will not be considered under the Shared Savings Program. We request 
comments on this proposal.
f. Alignment With the Quality Payment Program (QPP)
1. Background and Introduction to the Quality Payment Program
    The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) 
(Pub. L. 114-10, enacted April 16, 2015), amended title XVIII of the 
Act to repeal the Medicare sustainable growth rate (SGR) and strengthen 
Medicare access by improving physician payments and making other 
improvements, to reauthorize the Children's Health Insurance Program, 
and for other purposes. The statute established the Merit-Based 
Incentive Payment System (MIPS), a new program for certain Medicare-
participating practitioners. MIPS consolidates components of three 
existing programs, the PQRS, the Physician Value Modifier (VM), and the 
Medicare Electronic Health Record (EHR) Incentive Program for EPs. The 
statute also established incentives for participation in certain 
alternative payment models (APMs). On April 27, 2016, the Department of 
Health and Human Services (HHS) issued a proposed rule to implement key 
provisions of the MACRA and establish a new Quality Payment Program 
(QPP) (Medicare Program; Merit-Based Incentive Payment System (MIPS) 
and Alternative Payment Model (APM) Incentive under the Physician Fee 
Schedule, and Criteria for Physician-Focused Payment Models (81 FR 
28162 through 28586) (the QPP proposed rule)). The QPP proposed rule 
proposes to implement a Quality Payment Program (QPP) that replaces a 
patchwork system of Medicare reporting programs with a flexible system 
that allows practitioners to choose from two paths that link quality to 
payments: the Merit-Based Incentive Payment System (MIPS) and Advanced 
Alternative Payment Models (APMs). As proposed, MIPS and the APM 
incentive will impact practitioner payments beginning in payment year 
2019 based on 2017 reporting. MIPS is a new program that combines parts 
of the Physician Quality Reporting System (PQRS), Value Modifier (VM) 
and Medicare Electronic Health Record (EHR) Incentive Program into a 
single program in which eligible clinicians (ECs) will be measured over 
4 categories which include quality, resource use, clinical practice 
improvement, and advancing care information. The QPP proposed rule 
specifically addresses ECs that participate in APMs and Advanced APMs, 
such as the Shared Savings Program. Specifically, for ECs participating 
in APMs, the QPP proposed rule proposes to:
     Establish criteria for reporting under each of the 4 
categories. For example, the QPP proposed rule proposes for the quality 
performance category to use quality information submitted by the ACO 
through the CMS web interface to assess each EC billing under the TIN 
of an ACO participant. For assessing performance in the

[[Page 46428]]

category of advancing care information for ECs billing under the TIN of 
an ACO participant, the QPP proposed rule proposes to aggregate EC-
reported data to calculate an ACO score which is applied to each 
participating EC.
     Define an Advanced APM as one that meets several criteria 
including requiring participants to use certified EHR technology 
(CEHRT). As proposed under the QPP proposed rule, only Tracks 2 and 3 
of the Shared Savings Program have the potential to meet all criteria 
necessary for designation as an Advanced APM. As proposed, in order to 
meet the CEHRT requirement, the Medicare Shared Savings Program must 
hold ACOs accountable for their participating eligible clinicians' use 
of CEHRT by applying a penalty or reward based on the degree of use of 
CEHRT (such as the percentage of EPs that are using CEHRT or the care 
coordination or other activities they perform using CEHRT).
    We therefore reviewed the Shared Savings Program rules and 
identified several modifications to program rules that we believe must 
be proposed in order to support and align with this effort. These 
proposed modifications are discussed in more detail below and include:
     Revisions to Sec. Sec.  425.504 and 425.506 to sunset 
Shared Savings Program alignment with PQRS and the EHR Incentive 
Program starting with quality reporting period 2017 (corresponding to 
payment year 2019).
     Addition of new paragraph Sec.  425.506(e) and section 
Sec.  425.508 to align with the proposed Quality Payment Program, 
including rules addressing annual assessment of an ACO ECs' use of 
CEHRT and for ACO reporting of certain quality measures to satisfy the 
quality performance category on behalf of the eligible clinicians who 
bill under the TIN of an ACO participant.
     Modifications to the EHR measure title and specifications 
necessary to align with the proposed QPP criteria for determining 
Advanced APM status, including scoring requirements for the limited 
circumstances when the measure is designated as pay for reporting.
2. Proposals Related to Sunsetting PQRS and EHR Incentive Program 
Alignment and Alignment With APM Reporting Requirements Under the 
Quality Payment Program
    The Shared Savings Program has established rules at Sec. Sec.  
425.504 and 425.506 incorporating reporting requirements related to 
PQRS and the EHR Incentive Program. The current provision at Sec.  
425.504(c), addresses the PQRS payment adjustment for 2016 and 
subsequent years. Under the existing Shared Savings Program rules, 
which we propose to modify as discussed in the immediately preceding 
section, EPs who bill under the TIN of an ACO participant within an ACO 
may only participate under their ACO participant TIN as a group 
practice under the PQRS Group Practice Reporting Option for purposes of 
the PQRS payment adjustment under the Shared Savings Program. ACOs must 
submit all of the ACO GPRO measures to satisfactorily report on behalf 
of their eligible professionals for purposes of the PQRS payment 
adjustment. Under the current rules, if an ACO does not satisfactorily 
report, each EP participating in the ACO receives a payment adjustment 
under PQRS. As discussed in this rule, we have proposed to revise the 
rules to allow EPs who bill under the TIN of an ACO participant within 
an ACO to report separately from their ACO for purposes of the PQRS 
payment adjustment for 2017 and 2018.
    At Sec.  425.506, we address alignment with the EHR Incentive 
Program. Specifically, at Sec.  425.506(a), we assert that ACOs, ACO 
participants, and ACO providers/suppliers are encouraged to develop a 
robust EHR infrastructure, which aligns with our eligibility criteria 
under Sec.  425.112 that require ACOs to define care coordination 
processes, which may include the use of enabling technologies such as 
CEHRT. At Sec.  425.506(b) and (c) we state that the quality measure 
regarding EHR adoption is measured based on a sliding scale and that it 
is weighted twice that of any other measure for scoring purposes and 
determining compliance with quality performance requirements for 
domains. To align with the EHR incentive program we state in Sec.  
425.506(d), that EPs participating in an ACO under the Shared Savings 
Program satisfy the CQM reporting component of meaningful use for the 
Medicare EHR Incentive Program when the EP extracts data necessary for 
the ACO to satisfy the quality reporting requirements under the Shared 
Savings Program from CEHRT and when the ACO reports the ACO GPRO 
measures through a CMS web interface. EPs are responsible for meeting 
the rest of the EHR incentive program requirements apart from the ACO.
    As noted in this section of the proposed rule, the VM, PQRS and the 
EHR incentive programs are sunsetting and the last quality reporting 
period under these programs is proposed to be 2016, which would impact 
payments in 2018. Quality reporting under the QPP, as proposed, would 
begin in 2017 for payment year 2019. In order to align with the 
policies proposed in the QPP proposed rule, we propose to amend 
Sec. Sec.  425.504 and 425.506 to indicate that these reporting 
requirements apply to ACOs and their EPs through the 2016 performance 
year. Specifically, at Sec.  425.504(c) we propose to remove the phrase 
``for 2016 and subsequent performance years'' each time it appears and 
add in its place the phrase ``for 2016.'' As noted in section III.H. of 
this rule, we propose a technical change to redesignate paragraph (d) 
as paragraph (c)(5) and then to add new paragraph (d) to address PQRS 
alignment rules for the 2017 and 2018 PQRS payment adjustment. 
Similarly, at Sec.  425.506, we propose to revise paragraph (d) to 
indicate that the last reporting year for the EHR Incentive program is 
2016. As stated in this section of the proposed rule, the PQRS and EHR 
incentive programs are sunsetting and we have proposed that the Quality 
Payment Program will begin with the 2017 reporting year, and payment 
adjustments will take effect in 2019 for eligible clinicians.
    In addition, we propose to require ACOs, on behalf of the ECs who 
bill under the TIN of an ACO participant, to report quality measures 
through the CMS web interface in order to satisfy the QPP quality 
performance category. Currently, ACOs are required under Sec.  425.504 
to report measures on behalf of the EPs who bill under the TIN of an 
ACO participant for purposes of PQRS. Under the QPP proposed rule, the 
quality data submitted to the CMS web interface by ACOs would satisfy 
the quality performance category for ECs participating in the ACO. 
Therefore, in order to align with the QPP proposals, we propose to add 
a new paragraph at Sec.  425.508(a) that parallels the current 
requirement at Sec.  425.504 for reporting on behalf of EPs who bill 
under the TIN of an ACO participant for purposes of PQRS. Specifically, 
we propose to require that ACOs, on behalf of ECs who bill under the 
TIN of an ACO participant, must submit all the ACO CMS web interface 
measures required by the Shared Savings Program using a CMS web 
interface, to meet reporting requirements for the quality performance 
category under MIPS. We also propose to maintain flexibility for EPs to 
report quality performance category data separately from the ACO, and 
therefore, do not propose to include a provision that would restrict an 
EP from reporting outside the ACO. The intent is to permit flexibility 
in reporting quality data. Under the Shared

[[Page 46429]]

Savings Program, however, no quality data reported apart from the ACO 
will be considered for purposes of assessing the quality performance of 
the ACO. We note that the QPP proposed rule does not address what, if 
any, separately reported EC quality performance category data might be 
considered, however, we believe it is important to retain flexibility 
in the event we finalize a policy under the QPP that would permit 
consideration of quality performance category data that is submitted 
separately by ECs participating in ACOs.
3. Proposals Related to Alignment With the Quality Payment Program 
(QPP)
    In the QPP proposed rule (81 FR 28296) we outlined and defined the 
proposed criteria for Advanced APMs, APMs through which ECs would have 
the opportunity to become Qualified Participants as specified in 
section 1833(z)(3)(C) and (D) of the Act. First, under MACRA, for an 
APM to be considered an Advanced APM, it must meet three requirements: 
(1) Require participants to use certified EHR technology; (2) provide 
payment for covered professional services based on quality measures 
comparable to those used in the quality performance category of MIPS; 
and (3) be either a Medical home Model expanded under section 1115A(c) 
of the Act or bear more than an nominal amount of risk for monetary 
losses. In the QPP proposed rule, we proposed criteria for each of 
these requirements (81 FR 28296). As proposed under the QPP proposed 
rule, significant distinctions between the design of different tracks 
or options within an APM mean that certain tracks or options could meet 
the proposed Advanced APM criteria while other tracks or options may 
not. Because of this, only Tracks 2 and 3 of the Shared Savings Program 
would have the potential to meet all criteria necessary for designation 
as an Advanced APM. Under the approach discussed in the QPP proposed 
rule, while all ACOs would meet the criterion for provider payment 
based on quality measures comparable to those used in the quality 
performance category of MIPS, only Tracks 2 and 3 would appear to the 
meet the proposed financial risk standard to bear more than a nominal 
amount of risk for monetary losses.
    For purposes of meeting the CEHRT requirement, we proposed in the 
QPP proposed rule to adopt for Advanced APMs the definition of CEHRT 
that is proposed for MIPS and the APM incentive under Sec.  414.1305 
(see 81 FR 28299 for more detailed information). We also noted in the 
QPP proposed rule that the statute does not specify the number of ECs 
who must use CEHRT or how CEHRT must be used in an Advanced APM. For 
this reason, we stated we believed it was reasonable to use discretion 
when proposing details on how APMs might meet criteria. In the QPP 
proposed rule, we proposed that an Advanced APM must require at least 
50 percent of ECs who are enrolled in Medicare (or each hospital if 
hospitals are the APM participants) to use the certified health IT 
functions outlined in the proposed definition of CEHRT to document and 
communicate clinical care with patients and other health care 
professionals. However, we stated we believed it was appropriate to 
propose an alternative criterion for CEHRT use for the Shared Savings 
Program because, although the Shared Savings Program requires ACOs to 
encourage and promote the use of enabling technologies (such as EHRs) 
to coordinate care for assigned beneficiaries, the Shared Savings 
Program does not require a specific level of CEHRT use for 
participation in the program. Instead, the Shared Savings Program, as 
noted above, includes an assessment of EHR use as part of the quality 
performance standard which directly impacts the amount of shared 
savings/shared losses generated by the ACO. We therefore proposed an 
alternative criterion available only to the Shared Savings Program. 
Specifically, we proposed that the alternative criterion would allow 
the Shared Savings Program to satisfy the EHR criterion if it holds APM 
Entities accountable for their ECs' use of CEHRT by applying a 
financial penalty or reward based on the degree of CEHRT use (such as 
the percentage of ECs that use CEHRT or the engagement in care 
coordination or other activities using CEHRT). We noted that the 
current EHR quality measure at ACO #11, as noted above, assesses the 
degree to which certain ECs in the ACO successfully meet the 
requirements of the EHR Incentive Program, which requires the use of 
CEHRT by certain ECs in the ACO, and we stated that ``[s]uccessful 
reporting of the measure for a performance year gives the ACO points 
toward its overall quality score, which in turn affects the amount of 
shared savings or shared losses an ACO could earn or be liable for, 
respectively.'' (81 FR 28300). Finally, we stated that we believed the 
alternative criterion meets the statutory requirement because the 
``proposed alternative criterion builds on established Shared Savings 
Program rules and incentives that directly tie the level of CEHRT use 
to the ACO's financial reward which in turn has the effect of directly 
incentivizing ever-increasing levels of CEHRT use among EPs.''
    In light of these QPP proposals, we are proposing several 
modifications to our program rules in order to align with the QPP 
proposals.
    First, we propose to modify the title and specifications of the EHR 
quality measure (ACO #11). This measure is currently titled Percent of 
PCPs Who Successfully Meet Meaningful Use Requirements. Under the 
current Shared Savings Program rules, ACOs must report on and are held 
accountable for certain measures that make up the quality reporting 
standard. One of these measures, ACO #11, assesses the degree of CEHRT 
use by primary care physicians participating in the ACO and performance 
on this measure is weighted twice that of any other measure for scoring 
purposes. To calculate this measure, CMS collects information submitted 
by PCPs through the EHR Incentive Program and determines the rate of 
CEHRT use by PCPs participating in the ACO. Specifically, as explained 
in our guidance [https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/2015-ACO11-Percent-PCP-Successfully-Meeting-Meaningful-Use-Requirement.pdf ], the denominator 
is based on all PCPs who are participating in the ACO in the reporting 
year under the Shared Savings Program and the numerator for the measure 
is based on the PCPs included in the denominator who successfully 
qualify to participate in either the Medicare or Medicaid EHR Incentive 
Program in the year indicated. Results of this measure are used in 
determining the ACO's overall quality score which in turn determines 
the ACO's final sharing/loss rate and the amount of shared savings 
earned (or shared losses owed) by the ACO.
    Additionally, under the proposed policies included in the QPP 
proposed rule, ECs participating in an ACO would satisfy the Advancing 
Care Information category by reporting meaningful use of EHRs apart 
from the ACO (81 FR 28247, Table 15). Similar to the process currently 
used under the Shared Savings Program to determine what practitioners 
have met criteria for meaningful use for the ACO #11 measure, we 
anticipate accessing EC-reported data under the Advancing Clinical 
Information category to assess the ACO's overall use of CEHRT. Because 
the current measure only assesses the degree of use of CEHRT by primary 
care physicians participating in the ACO, we propose to modify the EHR

[[Page 46430]]

measure to align with the QPP proposals. Specifically, we propose to 
change the specifications of the EHR measure to assess the ACO on the 
degree of CEHRT use by all providers and suppliers designated as ECs 
under the QPP proposed rule that are participating in the ACOs rather 
than narrowly focusing on the degree of use of CEHRT of only the 
primary care physicians participating in the ACO. We believe this 
modification to the specifications for ACO #11 would better align with 
the QPP proposals and ensure a subset of ACOs in the Shared Savings 
Program could qualify to be Advanced APM entities. We would also modify 
the title of the measure to remove the reference to PCPs. We believe 
the modification in the specifications of ACO #11 will be extensive and 
will require ECs to gain familiarity with the reporting requirements 
under the QPP proposed rule. We therefore propose that this measure 
would be considered a newly introduced measure and set at the level of 
complete and accurate reporting for the first two reporting period for 
which reporting of the measures is required according to our rules at 
Sec.  425.502(a)(4). Therefore, the measure would be pay for reporting 
for the 2017 and 2018 performance years. We further propose to define 
requirements specific to this measure for the limited circumstances in 
which it is designated as pay for reporting. Specifically, we propose 
to include the requirement at Sec.  425.506(e)(1) that during years in 
which ACO #11 is designated as a pay for reporting measure, in order 
for us to determine that the ACO has met requirements for complete and 
accurate reporting, at least one EC as we have proposed to define the 
term in the Proposed QPP rule, participating in the ACO must meet the 
reporting requirements under the Advancing Clinical Information 
category under the QPP, as proposed under the QPP proposed rule. We 
believe this proposal would safeguard the ability of Tracks 2 and 3 to 
fully meet all criteria for designation as Advanced APMs as proposed in 
the QPP proposed rule by ensuring the letter and spirit of the 
statutory criteria are met, even in the limited circumstances when ACO 
#11 is designated as pay for reporting under the Shared Savings 
Program. Beginning in the 2019 performance year, ACO #11 would be 
assessed according to the phase-in schedule noted in Table 36 which 
remains consistent with the current phase-in schedule under which the 
measure will be phased in to pay for performance starting with PY2 of 
an ACO's first agreement period and for all performance years of any 
subsequent agreement periods, assuming no major changes to the measure 
that would cause us to consider the measure to be a newly introduced 
measure and revert it to pay for reporting. We therefore further 
propose to add Sec.  425.506(e)(2) reiterating our current requirement 
at Sec.  425.506(b) that during pay for performance years, assessment 
of EHR adoption is measured based on a sliding scale. We do not intend 
that our proposal to use this measure to assess the degree of CEHRT use 
by ECs participating in the ACO for purposes of meeting the CERHT 
criterion for Advanced APMs under the QPP to change the way we treat 
the measure under pay for performance now. Similar to the current 
method used by the Shared Savings Program to calculate the EHR measure, 
the data will continue to be derived using EC reported EHR data that is 
required and collected by MIPS as proposed in the QPP proposed rule. 
Additionally, the measure will remain double weighted. We propose to 
retain the existing EHR measure requirements at Sec.  425.506(a)-(c) 
and to modify Sec.  425.506(d) to sunset the current EHR reporting 
requirement as noted in the prior section.
    Finally, consistent with our statements in the QPP proposed rule as 
noted above, we do not believe that any additional modifications or 
exceptions to current program rules (other than the ones proposed here, 
specifically, that the measure specifications and title of ACO #11 be 
modified to include all ECs and not just PCPs, and the proposal for how 
an ACO would demonstrate complete and accurate reporting) must be made 
in order to be consistent with the spirit and intent of the statute and 
the QPP proposed criteria. Rather, the existing Shared Savings Program 
rules are sufficient to meet the QPP proposed criteria for Tracks 2 and 
3 to be designated as eligible APMs because the EHR quality measure 
will always be used to impact the amount of shared savings or losses of 
an ACO, regardless of whether it is designated as pay for performance 
or pay for reporting. We note that the EHR measure has an especially 
significant impact on the overall quality scoring for an ACO because it 
is double-weighted compared to any other measure. In spite of this, we 
are considering additional options regarding the treatment of the EHR 
measure under the Shared Savings Program in order to further enhance 
the importance of this measure and its impact on an ACO's quality 
performance score and to improve alignment with the intent of the 
policies proposed in the QPP proposed rule. Specifically, we are 
considering whether to finalize a policy that would require the EHR 
measure to be P4P in all performance years, including the first year of 
an ACO's first agreement period. Additionally, we are considering 
whether to finalize a policy that would require the EHR measure to 
remain P4P, even when a new EHR measure is introduced or there are 
significant modifications to the specifications for the measure. Such 
modifications may require additional changes or alternative approaches 
to certain current Shared Savings Program rules related to quality 
benchmarking and scoring. We anticipate that if such modifications are 
made, they would only apply to the EHR measure and would not impact 
current scoring and benchmarking rules for other quality measures that 
make up the quality performance standard. For example, if a final 
policy is adopted that requires the EHR measure to remain P4P in the 
face of changes to the measure, we anticipate that we would need to 
establish a benchmark appropriate for the measure that does not depend 
on FFS or ACO generated data and distributing points on a sliding scale 
according to the benchmark because no FFS or ACO generated data would 
be available to do so in the first 2 years of the use of the new 
measure. For example, we may use a flat rate to assess performance or 
create a scale that aligns with our final QPP policies (for example, 
assessing ACO performance on a scale from 0-50 percent or 0-75 percent) 
and incrementally making points available depending on level of 
attainment. Additionally, we would consider exempting the EHR measure 
from ``minimum attainment level'' rules that would normally apply to a 
pay for performance measure, at least for the first 2 years of 
implementation and/or the first year of the first agreement period 
since the measure would be new to the ACO. Finally, we would consider 
whether these modifications should apply to the EHR measure only for 
tracks that could meet the requirements for designation as Advanced 
APMs under the forthcoming QPP final rule; we note that under the QPP 
proposed rule, only Tracks 2 and 3 would be designated as Advanced 
APMs. We seek comment on how best to conform to the intent and spirit 
of the QPP requirements to ensure that clinicians have assurance they 
are participating in an Advanced APM. We specifically seek comment on 
our proposals and the alternatives considered.

[[Page 46431]]

    Finally, we note that the CMS web interface measures, including 
those proposed in the QPP proposed rule, are consistent across CMS 
reporting programs. We do not believe it is beneficial to propose CMS 
web interface measures for ACO quality reporting separately. Therefore, 
to avoid confusion and duplicative rulemaking, we propose that any 
future changes to the CMS web interface measures would be proposed 
through rulemaking for the QPP and would be applicable to ACO quality 
reporting under the Shared Savings Program.
4. Incorporating Beneficiary Preference Into ACO Assignment
a. Background
    Under section 1899(c) of the Act, beneficiaries are required to be 
assigned to an ACO participating in the Shared Savings Program based on 
the beneficiary's utilization of primary care services rendered by 
physicians participating in the ACO. Medicare FFS beneficiaries do not 
enroll in the Shared Savings Program, and they retain the right to seek 
Medicare-covered services from any Medicare-enrolled provider or 
supplier of their choosing. No exclusions or restrictions based on 
health conditions or similar factors are applied in the assignment of 
Medicare FFS beneficiaries. Thus, a beneficiary's choice to receive 
primary care services furnished by physicians and certain non-physician 
practitioners that are ACO professionals in the ACO, determines the 
beneficiary's assignment to an ACO under the Shared Savings Program. As 
discussed in detail in the November 2011 Medicare Shared Savings 
Program final rule (76 FR 67851 through 67870), we finalized a claims-
based hybrid approach (called preliminary prospective assignment with 
retrospective reconciliation) for assigning beneficiaries to an ACO. 
Under this approach, beneficiaries are preliminarily assigned to an ACO 
at the beginning of a performance year to help the ACO refine its care 
coordination activities, but final beneficiary assignment is determined 
at the end of each performance year based on where beneficiaries chose 
to receive a plurality of their primary care services during the 
performance year. We adopted this policy because we believe that the 
methodology balances beneficiary freedom to choose healthcare providers 
under FFS Medicare with the ACO's desire to have information about the 
FFS beneficiaries that are likely to be assigned at the end of the 
performance year. We believe this methodology accomplishes an 
appropriate balance because ACOs have the greatest opportunities to 
impact the quality and cost of the care of beneficiaries that choose to 
receive care from providers and suppliers participating in the ACO 
during the course of the year.
    A beneficiary is eligible for assignment to an ACO under Sec.  
425.402 if the beneficiary had a primary care service with a physician 
who is an ACO professional, and thus, is eligible for assignment to the 
ACO under the statutory requirement to base assignment on ``utilization 
of primary care services'' furnished by physicians who are ACO 
professionals in the ACO. The beneficiary is then assigned to the ACO 
if the allowed charges for primary care services furnished to the 
beneficiary by all primary care physicians who are ACO professionals 
and non-physician ACO professionals in the ACO are greater than the 
allowed charges for such services provided by primary care physicians, 
nurse practitioners, physician assistants, and clinical nurse 
specialists who are ACO professionals in another ACO or not affiliated 
with any ACO and are identified by a Medicare-enrolled TIN. The second 
step of the assignment process considers the remainder of beneficiaries 
who have received at least one primary care service from an ACO 
physician with a specialty designation specified in Sec.  425.402(c) , 
but have received no services from a primary care physician, nurse 
practitioner, physician assistant, or clinical nurse specialist either 
inside or outside the ACO. These beneficiaries are assigned to the ACO 
if the allowed charges for primary care services furnished by 
physicians who are ACO professionals in the ACO with one of the 
specialty designations specified in Sec.  425.402(c) are greater than 
the allowed charges for primary care services furnished by physicians 
with such specialty designations in another ACO or who are not 
affiliated with any ACO and are identified by a Medicare-enrolled TIN. 
The ``two step'' assignment process simultaneously maintains the 
requirement to focus on primary care services in beneficiary 
assignment, while recognizing the necessary and appropriate role of 
specialists and non-physician practitioners in providing primary care 
services, such as in areas with primary care physician shortages. We 
revised this two-step claims based methodology in the June 2015 Final 
Rule as discussed in detail in that final rule (80 FR 32743 through 
32758) and finalized a policy that would exclude services provided by 
certain physician specialties from step 2 of the assignment process.
    Additionally, in the June 2015 final rule, and in response to 
stakeholders, we implemented an option for ACOs to participate in a new 
two-sided performance-based risk track, Track 3. Under Track 3, 
beneficiaries are prospectively assigned to the ACO at the beginning of 
the performance year using the same two-step methodology, based on the 
most recent 12 months for which data are available, which reflects 
where beneficiaries have chosen to receive primary care services during 
that period. The ACO is held accountable for beneficiaries that are 
prospectively assigned to it for the performance year. Under limited 
circumstances, a beneficiary may be excluded from the prospective 
assignment list, for example, if the beneficiary enrolls in Medicare 
Advantage or no longer lives in the United States or U.S. territories 
and possessions, based on the most recent available data in our 
beneficiary records at the end of the performance year. A beneficiary 
is not excluded from the ACO's prospective assignment list at the time 
of reconciliation because the beneficiary chose to receive most or all 
of his or her primary care during the performance year from providers 
and suppliers outside the ACO. Additionally, no beneficiaries are added 
to the ACO's prospective assignment list at the time of reconciliation 
because a beneficiary chose to receive a plurality of his or her 
primary care during the performance year from ACO professionals 
participating in the ACO. Offering this alternative approach to 
beneficiary assignment responds to stakeholders who expressed a desire 
for a prospective assignment approach. These stakeholders believe 
prospective assignment will provide more certainty about the 
beneficiaries for whom the ACO will be held accountable during the 
performance year, thus enabling ACOs to redesign their patient care 
processes to more efficiently and effectively improve care for specific 
FFS beneficiaries rather than for all FFS beneficiaries. We note, 
however, that such certainty is limited because prospectively aligned 
beneficiaries who meet the exclusion criteria specified in Sec.  
425.401(b) during the performance year will not be aligned to the ACO 
at the end of the year; and further, as noted, beneficiaries remain 
free under FFS Medicare to choose the healthcare providers from whom 
they receive services.
    Because of uncertainty inherent in FFS Medicare where there is no 
beneficiary lock-in or enrollment, both patient advocacy groups and 
ACOs have expressed interest in and support for

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enhancing claims-based assignment of beneficiaries to ACOs by taking 
into account beneficiary attestation regarding the healthcare provider 
that they consider to be responsible for coordinating their overall 
care. Stakeholders believe that incorporating this information and 
giving beneficiaries the opportunity to voluntarily ``align'' with the 
ACO in which their primary healthcare provider participates will 
improve the patient centeredness of the assignment methodology. In 
theory, active beneficiary acknowledgement of the practitioner they 
believe to be responsible for their overall care could enhance 
engagement and the beneficiary's commitment to receive the bulk of his 
or her primary care from the designated practitioner. In turn, some 
stakeholders believe this could reduce year-to-year ``churn'' in 
beneficiary assignment lists and, in the case of prospective 
assignment, potentially increase certainty further because the increase 
in beneficiary engagement may encourage the beneficiary to receive care 
during the performance year from ACO providers/suppliers, to the extent 
that the beneficiary is aware of which providers and suppliers 
participate in the ACO. However, we note that such a process would not 
obligate the beneficiary to receive care from ACO providers/suppliers 
because the beneficiary would retain freedom under FFS Medicare to 
receive services from whichever provider or supplier the beneficiary 
chooses. Thus, while taking beneficiary attestation into account in the 
assignment algorithm may improve beneficiary engagement and therefore 
reduce year-to-year ``churn'' in beneficiary assignment of such 
patients, it may not result in the sort of certainty that some ACOs 
desire, particularly with respect to where beneficiaries choose to 
receive services.
    To begin to address these concerns, the Center for Medicare & 
Medicaid Innovation (Innovation Center) began conducting a test of 
beneficiary attestation (which was referred to as voluntary alignment, 
a term that we will also use in the context of the Shared Savings 
Program) in the Pioneer ACO Model (see https://innovation.cms.gov/initiatives/Pioneer-aco-model/) for the 2015 performance year.
    In the Pioneer ACO Model, for a Pioneer ACO to participate in 
voluntary alignment for performance year four (Pioneer ACO contract 
year 2015), the Pioneer ACO was required to submit an application to 
CMS in the summer of performance year three (Pioneer ACO contract year 
2014) in which the ACO explained its plan for contacting beneficiaries. 
ACOs that were approved to participate in voluntary alignment were 
limited to contacting only those beneficiaries who appeared on the 
ACO's then current (Pioneer ACO contract year 2014) and prior year's 
(Pioneer ACO contract year 2013) prospective assignment lists.
    The ACOs sent letters to beneficiaries during a specified period 
asking the beneficiaries to confirm whether a listed Pioneer Provider/
Supplier was their ``main doctor.'' The Innovation Center imposed 
certain safeguards on the participating ACOs to protect against actions 
that could improperly influence a beneficiary's decision to complete 
the voluntary alignment form. The ACOs collected responses and turned 
them in to CMS in fall 2014, before the start of the 2015 performance 
year. Beneficiaries who confirmed a care relationship with the Pioneer 
Provider/Supplier listed on the form, and met all other eligibility 
criteria for alignment, were prospectively aligned to the Pioneer ACO 
for the upcoming performance year, regardless of whether or not the 
practitioners participating in the Pioneer ACO rendered the plurality 
of the beneficiary's primary care services during the alignment period. 
We refer to the procedures used under the Pioneer ACO Model as ``the 
manual process.''
    Because the testing of beneficiary attestation in the Pioneer ACO 
Model was just beginning at the time of the publication of the December 
2014 proposed rule, in that proposed rule we indicated our interest in 
beneficiary attestation, but did not make any specific proposals. 
However, we welcomed comments on whether it would be appropriate to 
offer a beneficiary attestation process to ACOs participating under 
two-sided risk financial arrangements under the Shared Savings Program 
in the future (79 FR 72826 through 72829). We noted that if we were to 
offer a beneficiary attestation process for ACOs in performance-based 
risk tracks, we would anticipate initially implementing beneficiary 
attestation in a manner consistent with the beneficiary attestation 
process tested under the Pioneer ACO Model (79 FR 72829).
    Beneficiary and ACO participation in and experience with voluntary 
alignment under the Pioneer ACO Model to date has been mixed. 
Initially, beneficiaries often seemed confused about the implications 
of attesting to a care relationship with a Pioneer Provider/Supplier, 
based on the letters they received from Pioneer ACOs. Beneficiaries, 
for example, were often unfamiliar with the name of the Pioneer ACO. 
Although most Pioneer ACOs initially expressed high interest in 
beneficiary attestation, only half participated. Those that did not 
participate cited cost/benefit concerns. To address concerns expressed 
by ACOs and beneficiaries, the beneficiary attestation process was 
updated for the Pioneer ACO Model for PY 2016, with letters sent to 
beneficiaries during the summer of 2015. The new beneficiary 
attestation process includes updated language in the letters to 
beneficiaries and the attestation form to reduce beneficiary confusion. 
The letters now include plainer language, refer to a specific 
healthcare provider (in addition to the ACO), and Pioneer Providers/
Suppliers are permitted to discuss beneficiary attestation with 
beneficiaries and respond to questions. Other significant changes to 
the process include a longer voluntary alignment period and the ability 
for ACOs to provide the letter/form to beneficiaries via email, patient 
portal, or other electronic method (in which case the forms must be 
returned with a ``wet-ink'' signature, such as by returning the 
original signed form by mail. (We continue to view this updated process 
to be a manual process.) In addition there was a change to the 
voluntary alignment eligibility criteria. For performance year four 
(Pioneer ACO contract year 2015), only those beneficiaries who were 
identified on a Pioneer ACO's prospective alignment list from 
performance year two (Pioneer ACO contract year 2013) or performance 
year three (Pioneer ACO contract year 2014) were eligible to 
voluntarily align with the Pioneer ACO for performance year four, 
assuming all other eligibility criteria were met. For performance year 
five (Pioneer ACO contract year 2016), CMS changed the criteria to 
allow beneficiaries to voluntarily align into the performance year five 
aligned population if, among other requirements, the beneficiary had at 
least one paid claim for a Qualified E/M service, as defined in section 
2.4 of Appendix C of the Pioneer ACO Agreement, furnished by a Pioneer 
Provider/Supplier on or after January 1, 2013. Based on some initial 
feedback, beneficiaries appear to be wary of the implications of 
designating a ``main doctor'' but are much more amenable to this type 
of information request when it comes from their physician or other 
practitioner, rather than from an ACO. However, information is not yet 
available on the impact or results of the modifications made to the 
beneficiary attestation process in the Pioneer ACO Model. The Next 
Generation ACO Model, which started operation on

[[Page 46433]]

January 1, 2016, includes a beneficiary attestation policy similar to 
the updated manual process used under the Pioneer ACO model. In order 
for a Medicare FFS beneficiary to be eligible to voluntarily align with 
a Next Generation ACO for performance year two (Next Generation ACO 
contract year 2017), the beneficiary must have had at least one paid 
claim for a qualified evaluation and management service on or after 
January 1, 2014, with an entity that was a Next Generation Participant 
during performance year one, among other requirements.
    To date, the Innovation Center has done limited analyses of the 
updated voluntary alignment process for effects on beneficiary 
engagement. Early experience indicates that for the participating ACOs, 
the number of prospectively assigned beneficiaries per ACO increased by 
0.2 to 2.7 percent relative to the number of beneficiaries who would 
have otherwise been assigned. However, there is not yet enough 
information to determine whether beneficiary attestation under the 
manual process has had an impact on increasing certainty that a 
beneficiary will continue to choose to receive primary care or other 
services from practitioners participating in an ACO. For example, we 
would like to know how many of the beneficiaries who ``attested'' into 
alignment to the ACO continued to seek primary care services from ACO 
professionals during the performance year, which might demonstrate 
increased engagement on the part of the beneficiary. The Innovation 
Center found that ACOs were implementing the beneficiary attestation 
process under the Pioneer ACO Model as they described in their 
applications, and no marketing abuses have been observed to date.
    Based on valuable experience gained through development and testing 
of beneficiary attestation processes through the Pioneer ACO Model, the 
manual process developed thus far appears to be resource intensive and 
may not significantly impact beneficiary assignment to ACOs. We also 
note that a similar manual process for sending letters to beneficiaries 
to provide them notice of their opportunity to opt out of claims data 
sharing was removed from the Shared Savings Program in the June 2015 
final rule (see 80 FR 32743). This data sharing opt out process was 
removed because it was resource intensive and cumbersome for ACOs and 
CMS, and was confusing for beneficiaries. Instead, based on stakeholder 
comments, we finalized a process to provide beneficiaries the 
opportunity to decline claims data sharing directly by contacting the 
Medicare program (through 1-800-MEDICARE) rather than through the ACO. 
This more direct process started at the end of 2015 and so far appears 
to be working well, as it has not generated the number of complaints 
and concerns raised by the initial manual process.
b. Proposals
    We continue to believe that it may be desirable to incorporate 
beneficiary attestation into the assignment of beneficiaries to ACOs 
participating in the Shared Savings Program, to supplement and enhance 
the current claims-based algorithm driven methodology as described in 
more detail in this section of the proposed rule. We agree with 
stakeholders that supplementing the current assignment process with a 
voluntary alignment process that incorporates beneficiary attestation 
about their ``main doctor'' could help ACOs to increase patient 
engagement, improve care management and health outcomes, and lower 
expenditures for beneficiaries. Incorporating beneficiary attestation 
into the beneficiary assignment process could further strengthen the 
current claims-based, two-step assignment process. For example, 
although we defined certain HCPCS codes at Sec.  425.20 as being 
``primary care services,'' the use of these codes may not fully capture 
the extent of the primary care relationship a beneficiary has with his 
or her provider. Supplementing the claims-based assignment algorithm 
with beneficiary attestations could further assure that beneficiaries 
are assigned to ACOs based on their relationship with providers that 
they believe to be truly responsible for their overall care.
    We believe that it would be appropriate to implement, at a minimum, 
a voluntary alignment process under the Shared Savings Program that 
would be similar to the updated manual process we have implemented 
under the Pioneer ACO Model and that will be used under the Next 
Generation ACO Model. However, based on the valuable knowledge and 
experience we have gained through these Innovation Center models, we 
are concerned that the manual voluntary alignment process used for the 
Pioneer ACO Model and that will be used under the Next Generation ACO 
Model is resource intensive for both ACOs and CMS. The voluntary 
alignment process under the Pioneer ACO Model requires individual ACOs 
to directly obtain information from beneficiaries by sending them a 
form letter approved by CMS that includes a copy of a CMS-approved form 
that the beneficiary may complete to confirm their care relationship 
with a provider or supplier that is participating in the ACO (that is, 
their ``main doctor''), whose services are considered in the alignment 
process. The ACOs then communicate these beneficiary attestations to 
CMS. However, not all beneficiaries that submit an attestation form may 
be eligible to be aligned to the ACO. Accordingly, we must review the 
submissions, and provided the beneficiary is otherwise eligible for 
alignment to the ACO, this confirmation (or attestation) is then used 
to align the beneficiary to the ACO. If we were to implement a similar 
manual process under the Shared Savings Program, we believe it would be 
appropriate to limit voluntary alignment to Track 3 ACOs for the 
reasons explained later in this section. Additionally, the timing and 
requirements of the process would prohibit beneficiaries from 
voluntarily aligning to ACOs that initially join the Shared Savings 
Program under Track 3 for the ACO's first performance year because, 
consistent with the coluntary alignment process under the Pioneer ACO 
and Next Generation ACO models explained above, an ACO would only be 
permitted to contact beneficiaries that were aligned prospectively to 
the ACO in the current or prior years. Thus, a beneficiary's 
designation of an ACO professional as responsible for coordinating 
their overall care would impact an ACO's prospective assignment list 
starting in PY2, assuming the ACO met all requirements necessary for 
the incorporation of this information during PY1, including applying 
for participation in voluntary alignment, sending letters, collecting 
beneficiary preferences, and timely submitting all required information 
to CMS.
    Because of the limitations of the manual process, we have 
considered ways that voluntary alignment might be implemented in a more 
automated and direct way under the Shared Savings Program, potentially 
having a more significant impact on beneficiary engagement while 
reducing burdens on ACOs, ACO participants, ACO providers/suppliers, 
ACO professionals, beneficiaries, and CMS. Automating a process for 
Medicare FFS beneficiaries to designate their ``main doctor'' or the 
other healthcare provider they believe is responsible for their overall 
care could align with agency goals to provide increased focus on 
patient centered care, and improve beneficiary engagement. We believe 
strengthening primary care is critical to an effective health care 
system. Automating a

[[Page 46434]]

process for beneficiaries to designate their ``main doctor'' or the 
healthcare provider they believe is responsible for their overall care 
could encourage beneficiaries to partner with a healthcare provider to 
better coordinate their care, including care with specialists, and 
would help to support the continued development of a health care system 
that results in healthier people and smarter spending of our health 
care dollars. Incorporating beneficiary preferences through voluntary 
alignment could also help to increase the accuracy of the assignment 
process. If a beneficiary is aligned to the ACO in which the healthcare 
provider who they believe is responsible for coordinating their overall 
care is participating, there may be an increased probability that the 
beneficiary's care will be coordinated, resulting in smarter spending 
of health care dollars, including spending on care by specialists.
    We are therefore proposing to implement an automated approach under 
which we could determine which healthcare provider a FFS beneficiary 
believes is responsible for coordinating their overall care (their 
``main doctor'') using information that is collected in an automated 
and standardized way directly from beneficiaries (through a system 
established by us, such as MyMedicare.Gov), rather than requiring 
individual ACOs, ACO participants, or ACO professionals to directly 
obtain this information from beneficiaries annually and then 
communicate these beneficiary attestations to CMS. We believe such an 
approach would be more efficient for ACOs and their participants, 
beneficiaries, and CMS. We anticipate that, to the extent feasible, the 
operational process for beneficiaries to voluntarily align with an ACO 
by designating a ``main doctor'' or primary healthcare provider would 
be incorporated into existing processes. For example, currently 
Medicare FFS beneficiaries already have the ability to obtain an 
account at www.MyMedicare.gov and save information about their 
``favorite'' providers from that Web site's Physician Compare function, 
so one possibility would be to include an additional feature in 
MyMedicare.Gov that would allow beneficiaries to indicate which of 
their ``favorite'' healthcare providers they consider to be responsible 
for their overall care. Another possibility would be to permit 
beneficiaries to directly choose their ``main doctor'' through 1-800-
Medicare or through Physician Compare with a link to MyMedicare.Gov, 
similar to the mechanism that is currently available to select a 
``favorite'' healthcare provider through Physician Compare. We would 
notify beneficiaries of this opportunity and encourage them to 
designate their primary healthcare provider and explain how to do this 
through beneficiary outreach materials such as through the Medicare & 
You Handbook (see https://www.medicare.gov/medicare-and-you/medicare-and-you.html), the required Shared Savings Program notifications under 
Sec.  425.312, and/or other beneficiary outreach activities or 
materials. CMS would issue, either directly or indirectly through 
template language, all written communications to beneficiaries 
detailing the automated process for voluntary alignment.
    We propose to make such an automated mechanism available for 
beneficiaries to voluntarily align with the provider or supplier that 
they believe is responsible for coordinating their overall care 
starting early in 2017, making it possible for us to use beneficiary 
attestations for assigning beneficiaries to ACOs in all three tracks 
for the 2018 performance year. For example, if the automated mechanism 
is available for beneficiaries in early 2017, we would be able to use 
the information in the fall of 2017 to develop ACO assignment lists for 
2018 for ACOs that are currently participating in the Shared Saving 
Program, as well as those applying for participation. Voluntary 
alignment data would be accessed and incorporated in the beneficiary 
assignment process each time we run the assignment algorithm. Under the 
automated approach, beneficiaries would be able to change their 
attestation about their ``main doctor'' at any time, however, we note 
there may be a lag in using the information to update an ACO's 
assignment list depending on the timing of the beneficiary's updated 
designation and the track under which the ACO is participating. For 
example, we propose that beneficiaries who designate an ACO 
professional in a Track 3 ACO as their ``main doctor'' would be 
prospectively assigned to that Track 3 ACO based on their designation 
prior to the start of the performance year as currently provided under 
Sec.  425.400(a)(3). These beneficiaries would remain assigned to the 
Track 3 ACO until the end of the benchmark or performance year, even if 
they subsequently designate a practitioner outside the ACO as their 
``main doctor'', unless they meet any of the exclusion criteria under 
Sec.  425.401(b). We considered incorporating voluntary alignment as 
part of the exclusion criteria under 425.401(b), however, we believe it 
would be appropriate, when incorporating voluntary alignment for Track 
3 ACOs, to continue the current prospective assignment policy provided 
under Sec.  425.400(a)(3) because the intent of prospective assignment 
is to provide stability in ACOs' beneficiary assignment lists to allow 
ACOs to coordinate care appropriately for the patients assigned to 
them. This policy would also align with our policy regarding the SNF 3-
day rule waiver under Sec.  425.612, which is limited to eligible 
beneficiaries who have been prospectively aligned to a Track 3 ACO, 
because it is important for the ACO to have clear information about 
which beneficiaries are eligible to receive SNF services pursuant to 
the waiver. The updated designation would, however, be considered when 
conducting beneficiary assignment for the subsequent benchmark or 
performance year.
    Further, we propose to incorporate voluntary alignment for ACOs in 
Tracks 1 and 2 on a quarterly basis; that is, beneficiaries who are not 
currently assigned to a Track 3 ACO and who voluntarily align with a 
healthcare provider that is an ACO professional participating in an ACO 
under Track 1 or 2 would be reflected in the ACO's next preliminary 
prospective or final assignment list as provided under Sec.  
425.400(a)(2). We believe this policy would be appropriate because it 
aligns with the current timing for updates to Track 1 and 2 ACO 
assignment lists.
    Finally, we propose that if a beneficiary voluntarily aligns with a 
provider or supplier whose services would be considered in assignment 
but who is not participating in an ACO as an ACO professional, the 
beneficiary would not be eligible for alignment to an ACO, even if the 
beneficiary would have otherwise been assigned to an ACO under our 
claims-based approach.
    We further propose that, if this automated voluntary alignment 
process is not operationally ready for implementation under the 
proposed timeframe, we would implement a manual voluntary alignment 
process for Track 3 ACOs only that builds upon experience previously 
gained under the Pioneer ACO Model. Because a manual voluntary 
alignment process is resource intensive for both ACOs and CMS, we 
believe that if it were necessary to adopt a manual voluntary alignment 
process under the Shared Savings Program, it would be appropriate to 
initially limit it to ACOs participating in the Shared Savings Program 
under Track 3 because beneficiaries are prospectively aligned to Track 
3 ACOs (as they are to ACOs under the Pioneer ACO Model and the

[[Page 46435]]

Next Generation Model). The process and timing for sending letters to 
beneficiaries regarding voluntary alignment under the manual process 
was developed specifically for prospective alignment and for a limited 
number ACOs. It is likely that attempting to implement such a manual 
process for the hundreds of ACOs in Track 1 and Track 2, whose 
beneficiaries are only preliminarily prospectively aligned with 
retrospective reconciliation, would result in operational challenges 
for ACOs and CMS and could have unintended consequences that could be 
confusing or harmful to beneficiaries. Because it is impossible to 
anticipate what issues might arise if we were to try to implement a 
manual process across a large number of ACOs operating under a 
preliminary prospective assignment methodology with retrospective 
reconciliation, we are not confident at this time that we can propose 
appropriate procedures and any additional safeguards that might be 
necessary to allow implementation in all tracks. Therefore, we propose 
that if an automated process is not available to allow beneficiaries to 
designate their primary healthcare provider in time to allow the 
information to be considered for beneficiary assignment for performance 
year 2018, we would implement voluntary alignment in a step-wise 
fashion over time, beginning with ACOs in Track 3, whose beneficiaries 
are prospectively assigned. Limiting voluntary alignment to ACOs to 
which beneficiaries are prospectively aligned would permit ACOs and CMS 
to initially focus limited resources on voluntary alignment efforts on 
a population of beneficiaries that can be identified for targeting and 
outreach regarding the voluntary alignment process and the benefits of 
designating an ACO professional as responsible for coordinating their 
overall care.
    More specifically, we propose that if we determine, by no later 
than spring 2017, that an automated voluntary alignment process is not 
ready for implementation to allow beneficiaries to voluntarily align 
with ACO across all three Tracks for the 2018 performance year, then we 
would implement an alternative manual voluntary alignment process to 
allow beneficiaries to align with Track 3 ACOs for the 2018 performance 
year and until such time as an automated process is available. This 
proposed alternative manual voluntary alignment process for Track 3 
ACOs would be similar to the updated process that was used under the 
Pioneer ACO Model to allow beneficiaries to voluntarily align with 
participating ACOs for the 2016 performance year and that we will 
follow under the Next Generation ACO Model for the 2017 performance 
year. Early each year, starting in 2017, Track 3 ACOs would notify us 
as to whether they want to participate in voluntary alignment for the 
upcoming performance year. Specifically, similar to the process used 
under the Pioneer ACO Model and the Next Generation ACO Model, each 
spring starting in 2017, those Track 3 ACOs that have notified CMS that 
they would like to participate in voluntary alignment would be required 
to provide us with a list of the beneficiaries they plan to contact to 
request that the beneficiary designate an ACO professional whose 
services are considered in assignment as their ``main doctor.'' The 
ACOs must also submit to CMS for approval the criteria used to identify 
the listed beneficiaries. We would review these beneficiary lists to 
determine if the beneficiary is eligible to be contacted regarding 
voluntary alignment depending on whether the beneficiary was 
prospectively assigned yo the ACO in prior performance years, similar 
to the approach used under the Pioneer ACO Model and the Next 
Generation ACO Model approach as described above. ACOs could then 
contact the eligible beneficiaries by sending them a form letter 
approved by CMS, similar to the letter ACOs sent under the Pioneer ACO 
Model for 2016, that would include a copy of a CMS-approved form that 
the beneficiary could complete to confirm their care relationship with 
an ACO professional, whose services are considered in the assignment 
process, who the ACO believes may be their ``main doctor.'' 
Alternatively, the ACO could provide an opportunity for beneficiaries 
to obtain a copy of the CMS-approved form in the offices of ACO 
professionals that furnish primary care services on which assignment is 
based.
    Under the manual voluntary alignment process, by September of each 
year, Track 3 ACOs participating in voluntary alignment for the 
upcoming performance year would notify CMS as to which beneficiaries 
had agreed to voluntarily align with their ACO for the upcoming 
performance year by submitting a form designating an ACO professional 
whose services are considered in alignment as responsible for 
coordinating their overall care. We would verify that the beneficiaries 
are still eligible for assignment to the ACO, and prospectively assign 
all eligible beneficiaries to the Track 3 ACO for the upcoming 
performance year. We would repeat this process annually; that is, under 
this process, beneficiaries would be required to voluntarily align each 
year by submitting a new form confirming a care relationship with an 
ACO professional whose services are used in assignment. This approach 
would enable us to begin the process of incorporating beneficiary 
attestations into the assignment of beneficiaries to Track 3 ACOs until 
a more automated, direct method of voluntary alignment is operationally 
feasible. We believe even this more limited approach to voluntary 
alignment may increase patient centeredness over the current approach 
of assigning beneficiaries to ACOs based only on the claims-based 
algorithm driven methodology for the reasons discussed above and 
because some level of additional beneficiary engagement in the 
alignment process may be preferable to no beneficiary engagement.
    Therefore, regardless of process (manual or automatic), we are 
proposing to begin to incorporate beneficiary attestation into the 
assignment methodology for the Shared Savings Program, effective for 
assignment for the 2018 performance year. In brief, under the proposal, 
an eligible beneficiary would be assigned to an ACO based on the 
existing claims-based assignment process unless the beneficiary has 
designated a healthcare provider as being responsible for their overall 
care. If an eligible beneficiary has made such a designation then the 
voluntary alignment would override the claims based assignment process. 
Under an automated process, beneficiaries would be able to modify their 
designation at any time (not just annually, as under a manual process), 
however, as noted above, there may necessarily be a lag before that 
information can be incorporated into the assignment methodology for 
purposes of determining an ACO's assignment list, depending on the 
timing of the designation and the track in which the ACO is 
participating. The latest that the information would be updated would 
be prior to the start of the next performance year at a timepoint 
designated by CMS in cases where beneficiaries are prospectively 
aligned to a Track 3 ACO. There may also be a lag when a beneficiary 
voluntarily aligns with a practitioner identified by an NPI who is an 
ACO professional in an ACO, but chooses to leave the ACO during a 
performance year. For example, there may be situations in which an 
eligible beneficiary voluntarily aligns to a practitioner billing under 
ACO participant TIN A in ACO A participating in Track 3 and becomes

[[Page 46436]]

prospectively assigned for performance year 2018 on that basis. In the 
first quarter of 2018, the practitioner reassigns billing rights to ACO 
participant TIN B in ACO B, thus switching ACOs. Under our proposal, 
the beneficiary would remain prospectively aligned to ACO A for the 
duration of performance year 2018. Similarly, there may be situations 
in which an eligible beneficiary voluntarily aligns to a practitioner 
billing under ACO participant TIN in ACO C participating in Track 1 
using an automated process and becomes preliminarily prospectively 
aligned during the first quarter of a performance year. In the second 
quarter of the performance year, the practitioner reassigns billing 
rights to a non-ACO participant TIN. Under our proposals, the next time 
a preliminary prospective assignment list is issued, the beneficiary 
would no longer appear on ACO C's list. Moreover, voluntary alignment 
in no way limits or changes benefits under FFS Medicare. Because of 
this, a beneficiary that meets the eligibility criteria may voluntarily 
align with a practitioner participating in an ACO, become aligned to 
the ACO, but subsequently choose to receive all his or her primary care 
from a practitioner that is unaffiliated with the ACO. In this case, 
the beneficiary would continue to be assigned to the ACO based upon the 
beneficiary's designation of an ACO professional as their ``main 
doctor'' for the remainder of the performance year under the manual 
process, and indefinitely until the beneficiary changes his or her 
designation under the automated process. Finally, we can imagine a 
scenario where a beneficiary designates as their ``main doctor'' a 
practitioner that is unaffiliated with any ACO and therefore the 
beneficiary is not assigned to an ACO even though the ACO's 
practitioners provided a plurality of the beneficiary's primary care 
services and would have otherwise been held accountable for the 
beneficiary's care. Given the high interest in taking beneficiary 
preferences for alignment into account and the potential for improving 
beneficiary engagement, we believe these scenarios, which may involve 
undesirable effects on the accuracy of beneficiary alignment, can be 
limited when beneficiaries are provided sufficient information about 
the importance of keeping the designation of their ``main doctor'' up 
to date.
    We emphasize that we do not intend for the voluntary alignment 
process (whether automated or manual) to be used as a mechanism for 
ACOs (or their ACO participants, ACO providers/suppliers, ACO 
professionals or other individuals or entities performing functions or 
services on behalf of the ACO) to target beneficiaries for whose 
treatment the ACO might expect to earn shared savings, or to avoid 
those for whose treatment the ACO might be less likely to generate 
shared savings. Further, as discussed in more detail later in this 
section, we do not believe ACOs or others should be permitted to offer 
gifts or other inducements to beneficiaries, nor should they be allowed 
to withhold or threaten to withhold services, for the purposes of 
coercing or influencing beneficiaries' voluntary alignment decisions. 
However, we believe it is important to promote engagement and 
discussion between beneficiaries and their healthcare providers and 
therefore do not propose to prohibit an ACO or its ACO participants, 
ACO providers/suppliers, or ACO professionals from providing a 
beneficiary with accurate descriptive information about the potential 
patient care benefits of designating an ACO professional as responsible 
for the beneficiary's overall care.
    Accordingly, we propose to revise the regulations governing the 
assignment methodology to add a new paragraph (e) to Sec.  425.402. 
Under this paragraph, if an automated system is available by spring of 
2017 to allow a beneficiary to designate an ACO professional whose 
services are used in alignment as responsible for coordinating their 
overall care and for CMS to process the designation electronically, 
then the voluntary alignment process would be available for ACOs 
participating in Track 1, Track 2, or Track 3, as specified in Sec.  
425.600(a) of this part. However, if such an electronic system is not 
available by spring of 2017, then CMS will specify the form and manner 
in which a beneficiary may designate an ACO professional whose services 
are used in assignment as responsible for coordinating their overall 
care using a manual process, but the voluntary alignment process will 
be limited to ACOs participating in Track 3 until an automated system 
is available. In either case, under the proposal, beginning in 
performance year 2018 beneficiaries that have voluntarily aligned with 
an ACO by designating an ACO professional whose services are used in 
assignment as responsible for coordinating their overall care will be 
added to the ACO's list of assigned beneficiaries, for a performance 
year under the following conditions:
     The beneficiary must have had at least one primary care 
service with a physician who is an ACO professional in the ACO and who 
is a primary care physician as defined under Sec.  425.20 of this 
subpart or who has one of the primary specialty designations included 
in Sec.  425.402(c).
     The beneficiary must meet the assignment eligibility 
criteria established in Sec.  425.401, and must not be excluded by the 
criteria at Sec.  425.401(b).
     The beneficiary must have designated an ACO professional 
who is a primary care physician as defined at Sec.  425.20 of this 
part, a physician with a specialty designation included at Sec.  
425.402(c) of this subpart, or a nurse practitioner, physician 
assistant, or clinical nurse specialist as responsible for their 
overall care.
     The designation must be made in the form and manner and by 
a deadline determined by CMS. In contrast, if a beneficiary designates 
a provider or supplier outside the ACO, who is a primary care physician 
as defined at Sec.  425.20 of this part, a physician with a specialty 
designation included at Sec.  425.402(c), or a nurse practitioner, 
physician assistant, or clinical nurse specialist, as responsible for 
coordinating their overall care, the beneficiary will not be added to 
the ACO's list of assigned beneficiaries for a performance year, even 
if the beneficiary would otherwise be included in the ACO's assigned 
beneficiary population under the assignment methodology in Sec.  
425.402(b).
    Further, we propose that the ACO, ACO participants, ACO providers/
suppliers, ACO professionals, and other individuals or entities 
performing functions or services related to ACO activities are 
prohibited from directly or indirectly, committing any act or omission, 
or adopting any policy that coerces or otherwise influences a Medicare 
beneficiary's decision to designate or not designate an ACO 
professional as responsible for coordinating their overall care, 
including but not limited to the following:
     Offering anything of value to the Medicare beneficiary as 
an inducement for influencing the Medicare beneficiary's decision to 
designate or not to designate an ACO professional as responsible for 
coordinating their overall care. Any items or services provided in 
violation of this prohibition will not be considered to have a 
reasonable connection to the medical care of the beneficiary, as 
required under Sec.  425.304(a)(2);

[[Page 46437]]

     Withholding or threatening to withhold medical services or 
limiting or threatening to limit access to care; and
     Including any voluntary alignment or change of preference 
forms requiring a beneficiary signature with any other materials or 
forms, including but not limited to any other materials requiring the 
signature of the Medicare beneficiary. (We note this requirement would 
only be applicable if we implement a manual process);
    To maintain flexibility for ACOs, ACO participants, ACO providers/
suppliers, ACO professionals, beneficiaries, and CMS, we would intend 
to provide further operational details regarding the voluntary 
alignment process and the applicable implementation timelines through 
subregulatory guidance and other outreach activities.
    We seek comments on this proposal, on the effective date, and on 
any other related issues that we should consider for the final rule to 
address issues related to voluntary alignment under the Shared Savings 
Program. In particular, we seek comment on whether voluntary alignment 
is an appropriate mechanism for assigning beneficiaries retrospectively 
to an ACO. Specifically, is it appropriate to retrospectively align a 
beneficiary to an ACO, if the beneficiary designated an ACO 
professional whose services are used in assignment as responsible for 
the beneficiary's overall care, but did not receive a plurality of 
primary care services from ACO professionals in the ACO during the 
performance year? We seek comment on whether including voluntary 
alignment information in our assignment algorithm should be 
discretionary, that is, whether ACOs should be permitted to opt into or 
out of voluntary alignment. We seek comment on whether we should 
exclude a beneficiary from an ACO's prospective assignment list for a 
performance year if later during the performance year the beneficiary 
voluntarily aligns with a healthcare provider that is not an ACO 
professional in the ACO. We also seek input on how concerns about ACO 
avoidance of at risk beneficiaries might be addressed.
    We also note that under the proposed automated voluntary alignment 
process, a beneficiary's designation of a healthcare provider as 
responsible for coordinating their overall care would stay in effect 
until the beneficiary chose to make a subsequent change. We have 
concerns that in some cases a beneficiary may develop a closer 
healthcare relationship with a primary care provider who is different 
than the one they initially designated but the beneficiary might not 
necessarily change their designation to reflect this new choice. 
However, requiring a beneficiary to update his or her designation 
annually seems burdensome. Therefore, under the proposal we would 
continue to use their designation and rely on appropriate information 
shared with beneficiaries at the point of care to ensure the 
beneficiary's designation is kept up to date. We seek comment on this 
issue and our proposal under the automated system to continue to use a 
beneficiary's designation of the healthcare provider responsible for 
coordinating their overall care until it is changed.
    In addition, although we are not proposing to specify operational 
processes in regulations, nevertheless we also welcome suggestions 
regarding the operational process, implementation timelines, and 
related issues regarding the process for beneficiaries to voluntarily 
align with an ACO, including how to strengthen ACOs' beneficiary 
engagement activities. We note that although we are proposing to 
establish a process under which beneficiaries may designate their 
``main doctor'' who they consider responsible for coordinating their 
overall care, in establishing the operational processes for allowing 
beneficiaries to designate their ``main doctor'' we may not explicitly 
use the phrase ``responsible for coordinating overall care'' which we 
have included in the proposed provision at Sec.  425.402(e). Instead, 
we may consider using other terminology based on focus group testing 
and/or other feedback from beneficiary representatives. We welcome 
comments on what terminology would be preferable to ensure 
beneficiaries understand the significance of designating a provider or 
supplier as responsible for coordinating their overall care. We will 
consider such suggestions further as we develop program guidance and 
outreach activities for beneficiaries and ACOs.
3. SNF 3-Day Rule Waiver Beneficiary Protections
a. Background
    The Medicare SNF benefit is for beneficiaries who require a short-
term intensive stay in a SNF, requiring skilled nursing, or skilled 
rehabilitation care, or both. Under section 1861(i) of the Act, 
beneficiaries must have a prior inpatient hospital stay of no fewer 
than three consecutive days in order to be eligible for Medicare 
coverage of inpatient SNF care. In the June 2015 final rule (80 FR 
32804 through 32806), we provided ACOs participating in Track 3 with 
additional flexibility to attempt to increase quality and decrease 
costs by allowing these ACOs to apply for a waiver of the SNF 3-day 
rule for their prospectively assigned beneficiaries when they are 
admitted to certain ``SNF affiliates,'' that is, SNFs with whom the ACO 
has executed SNF affiliate agreements. (See Sec.  425.612(a)(1)). 
Waivers are effective upon CMS notification of approval for the waiver 
or the start date of the ACO's participation agreement, whichever is 
later. (See Sec.  425.612(c)). We stated in the June 2015 final rule 
that the SNF 3-day rule waiver would be effective for services 
furnished on or after January 1, 2017. Program requirements for this 
waiver are codified at Sec.  425.612. These requirements are primarily 
based on criteria previously developed under the Pioneer ACO Model. 
Specifically, under Sec.  425.612(a)(1), we waive the requirement in 
section 1861(i) of the Act for a 3-day inpatient hospital stay prior to 
a Medicare covered post-hospital extended care service for eligible 
beneficiaries prospectively assigned to ACOs participating in Track 3 
that have been approved to implement the waiver that receive otherwise 
covered post-hospital extended care services furnished by an eligible 
SNF that has entered into a written agreement to partner with the ACO 
for purposes of this waiver. All other provisions of the statute and 
regulations regarding Medicare Part A post-hospital extended care 
services continue to apply.
    We believe that clarity regarding whether a waiver applies to SNF 
services furnished to a particular beneficiary is important to help 
ensure compliance with the conditions of the waiver and also improve 
our ability to monitor waivers for misuse. Therefore, in the June 2015 
final rule, we limited the waiver to ACOs in Track 3 because under the 
prospective assignment methodology used in Track 3, beneficiaries are 
assigned in advance to the ACO for the entire performance year (unless 
they meet any of the exclusion criteria under Sec.  425.401(b) during 
the performance year), so it will be clearer to a Track 3 ACO whether 
the waiver applies to SNF services furnished to a particular 
beneficiary than it would be to an ACO in Track 1 or 2, where 
beneficiaries are assigned using a preliminary prospective assignment 
methodology with retrospective reconciliation (80 FR 32804). An ACO's 
use of the SNF 3-day rule waiver will be associated with a distinct and 
easily identifiable event, specifically, admission of a prospectively 
assigned beneficiary to a previously identified SNF affiliate without 
prior inpatient

[[Page 46438]]

hospitalization or after an inpatient hospitalization of fewer than 3 
days.
    Based on our experiences under the Pioneer ACO Model, and in 
response to comments, we established certain requirements under Sec.  
425.612 for ACOs, ACO providers/suppliers, SNF affiliates, and 
beneficiaries with respect to the SNF 3-day rule waiver under the 
Shared Savings Program. All ACOs electing to participate in Track 3 
will be offered the opportunity to apply for a waiver of the SNF 3-day 
rule for their prospectively assigned beneficiaries at the time of 
their initial application to participate in Track 3 of the program and 
annually thereafter while participating in Track 3. We anticipate 
accepting the first SNF 3-day rule waiver applications from Track 3 
ACOs later this summer. As set forth at Sec.  425.612(a)(1)(i), in 
their waiver applications, ACOs must demonstrate that they have the 
capacity to identify and manage beneficiaries who would be either 
directly admitted to a SNF or admitted to a SNF after an inpatient 
hospitalization of fewer than 3 days. As part of the application 
process, the ACO will be required to submit a list of the SNFs with 
which the ACO will partner (called ``SNF affiliates'') along with 
executed SNF affiliate agreements for each listed SNF. These SNF 
affiliates will be subject to program integrity screening under Sec.  
425.612(b). Additionally, the ACO must submit narratives describing how 
the ACO plans to implement the waiver, including the communication plan 
between the ACO and its SNF affiliates; a care management plan for 
beneficiaries admitted to a SNF affiliate; a beneficiary evaluation and 
admission plan approved by the ACO medical director and the healthcare 
professional responsible for the ACO's quality improvement and 
assurance processes; and a description of any financial relationships 
between the ACO, SNF, and acute care hospitals.
    To be eligible to receive covered SNF services under the waiver, a 
beneficiary must be prospectively assigned to the ACO for the 
performance year in which he or she is admitted to the SNF affiliate, 
may not reside in a SNF or other long-term care setting, must be 
medically stable and have an identified skilled nursing or 
rehabilitation need that cannot be provided as an outpatient, and must 
meet the other requirements set forth at Sec.  425.612(a)(1)(ii).
    For a SNF to be eligible to partner with ACOs for purposes of the 
waiver, a SNF must have an overall quality rating of 3 or more stars 
under the CMS 5 Star Quality Rating System, must sign a written 
agreement with the ACO, which we refer to as the ``SNF affiliate 
agreement,'' that includes elements determined by CMS, including: A 
clear indication of the effective dates of the SNF affiliate agreement; 
agreement to comply with Shared Savings Program rules, including but 
not limited to those specified in the participation agreement between 
the ACO and CMS; agreement to validate beneficiary eligibility to 
receive covered SNF services under the waiver prior to admission; 
remedial processes and penalties for noncompliance with the terms of 
the waiver, and other requirements set forth at Sec.  
425.612(a)(1)(iii). The SNF affiliate agreement must include these 
elements to ensure that the SNF affiliate understands its 
responsibilities related to implementation of the SNF 3-day rule 
waiver.
    We indicated in the June 2015 final rule that the SNF 3-day rule 
waiver would be effective no earlier than January 1, 2017; thereafter, 
the waiver will be effective upon CMS notification to the ACO of 
approval for the waiver or the start date of the ACO's participation 
agreement, whichever is later, and will not extend beyond the term of 
the ACO's participation agreement. If CMS terminates the participation 
agreement under Sec.  425.218, then the waiver will end on the date 
specified by CMS in the notice of termination. If the ACO terminates 
its participation agreement, then the waiver will end on the effective 
date of termination as specified in the written notification required 
under Sec.  425.220.
    We also indicated in the June 2015 final rule that we established 
the timeline for implementation of the SNF 3-day rule waiver to allow 
for development of additional subregulatory guidance, including 
necessary education and outreach for ACOs, ACO participants, ACO 
providers/suppliers, and SNF affiliates. We noted that we would 
continue to evaluate the waiver of the SNF 3-day rule, including 
further lessons learned from Innovation Center models in which a waiver 
of the SNF 3-day rule is being tested. We indicated that in the event 
we determined that additional safeguards or protections for 
beneficiaries or other changes were necessary, such as to incorporate 
additional protections for beneficiaries into the ACO's participation 
agreement or SNF affiliate agreements, we would propose the necessary 
changes through future rulemaking.
    In considering additional beneficiary protections that may be 
necessary to ensure proper use of the SNF 3-day rule waiver under the 
Shared Savings Program, we note that there are existing, well 
established payment and coverage policies for SNF services based on 
sections 1861(i), 1862(a)(1), and 1879 of the Act that include 
protections for beneficiaries from liability for certain non-covered 
SNF charges. These existing payment and coverage policies for SNF 
services continue to apply to SNF services furnished to beneficiaries 
assigned to ACOs participating in the Shared Savings Program, including 
services furnished pursuant to the SNF 3-day rule waiver. (For example, 
see the Medicare Claims Processing Manual, Chapter 30--Financial 
Liability Protections, section 70, available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c30.pdf; 
Medicare Coverage of Skilled Nursing Facility Care beneficiary booklet, 
Section 6: Your Rights & Protections, available at https://www.medicare.gov/Pubs/pdf/10153.pdf; and Medicare Benefit Policy 
Manual, Chapter 8--Coverage of Extended Care (SNF) Services Under 
Hospital Insurance available at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/bp102c08.pdf). In general, CMS 
requires that the SNF inform a beneficiary in writing about services 
and fees before the beneficiary is admitted to the SNF (Sec.  
483.10(b)(6)); the beneficiary cannot be charged by the SNF for items 
or services that were not requested (Sec.  483.10(c)(8)(iii)(A)); a 
beneficiary cannot be required to request extra services as a condition 
of continued stay (Sec.  483.10(c)(8)(iii)(B)); and the SNF must inform 
a beneficiary that requests an item or service for which a charge will 
be made that there will be a charge for the item or service and what 
the charge will be (Sec.  483.10(c)(8)(iii)(C)). (See also section 6 of 
Medicare Coverage of Skilled Nursing Facility Care at https://www.medicare.gov/Pubs/pdf/10153.pdf.)
b. Proposals
    Since publication of the June 2015 final rule, we have continued to 
learn from implementation and refinement of the SNF 3-day rule waiver 
in the Pioneer ACO Model (see https://innovation.cms.gov/initiatives/Pioneer-aco-model/) and the Next Generation ACO Model (see https://innovation.cms.gov/initiatives/Next-Generation-ACO-Model). Based on 
these experiences, we believe there are situations where it would be 
appropriate to require additional beneficiary financial protections 
under the SNF 3-day rule waiver for the Shared Savings Program. 
Specifically, we are concerned about potential

[[Page 46439]]

beneficiary financial liability for non-covered Part A SNF services 
that might be directly related to use of the SNF 3-day rule waiver 
under the Shared Savings Program.
    First, one example of a scenario under which a beneficiary may be 
at financial risk relates to the quarterly exclusions from a Track 3 
ACO's prospective assignment list. For example, assume a beneficiary 
was prospectively assigned to a Track 3 ACO that has been approved for 
the SNF 3-day rule waiver (a waiver-approved ACO), but during the first 
quarter of the year, the beneficiary's Part B coverage terminated and 
the beneficiary is therefore no longer eligible to be assigned to the 
ACO. As a result, the beneficiary would be excluded from the ACO's 
prospective assignment list because the beneficiary meets one or more 
of the exclusion criteria specified at Sec.  425.401(b). That is, 
although SNF services are covered under Part A, not Part B, the 
beneficiary would be dropped from the ACO's prospective assignment list 
if during the performance year the beneficiary is no longer enrolled in 
Part B and thus no longer eligible to be assigned to the ACO. We are 
concerned about some very limited situations, such as when a 
beneficiary's Part B coverage terminates during a quarter when the 
beneficiary is also receiving SNF services. The beneficiary may be 
admitted to a SNF without a prior 3-day inpatient hospital stay after 
his or her Part B coverage ended, but before the beneficiary appears on 
a quarterly exclusion list. It is not operationally feasible for CMS to 
notify the ACO and for the ACO, in turn, to notify its SNF affiliates, 
ACO participants, and ACO providers/suppliers immediately of the 
beneficiary's exclusion. The lag in communication may then cause the 
SNF affiliate to unknowingly admit a beneficiary who no longer 
qualifies for the waiver without a prior 3-day inpatient hospital stay. 
Absent specific beneficiary protections, we are concerned that the 
beneficiary could be charged for such non-covered SNF services. We do 
not believe it would be appropriate for CMS to hold the beneficiary or 
the SNF affiliate financially liable for such services. We believe we 
should allow for a reasonable amount of time for CMS to communicate 
beneficiary exclusions to an ACO and for the ACO to communicate the 
exclusions to its SNF affiliates, ACO participants, and ACO providers/
suppliers. Typically there would be no way for the SNF affiliate to 
verify in real-time that a beneficiary continues to be prospectively 
assigned to the ACO; the SNF affiliate must rely upon the assignment 
list and quarterly exclusion lists provided by CMS to the ACO and 
communicated by the ACO to its SNF affiliates, ACO participants, and 
ACO providers/suppliers. Further, the beneficiary does not receive a 
notification regarding his or her eligibility for the SNF 3-day rule 
waiver prior to receiving SNF services under the waiver, so 
beneficiaries are not able to check their own eligibility.
    To address delays in communicating beneficiary exclusions from the 
prospective assignment list, the Pioneer ACO Model and Next Generation 
ACO Model provide for a 90-day grace period that functionally acts as 
an extension of beneficiary eligibility for the SNF 3-day rule waiver 
and permits some additional time for the ACO to receive quarterly 
exclusions lists from CMS and communicate beneficiary exclusions to its 
SNF affiliates. We believe that it would be appropriate, in order to 
protect beneficiaries from potential financial liability related to the 
SNF 3-day rule waiver under the Shared Savings Program, to establish a 
similar 90-day grace period in the case of a beneficiary who was 
prospectively assigned to a waiver-approved ACO at the beginning of the 
performance year but is later excluded from assignment to the ACO.
    Therefore, we believe it is necessary for purposes of carrying out 
the Shared Savings Program to allow these formerly assigned 
beneficiaries to receive covered SNF services under the SNF 3-day rule 
waiver when the beneficiary is admitted to a SNF affiliate within a 90-
day grace period following the date that CMS delivers the quarterly 
beneficiary exclusion list to an ACO. The equitable and efficient 
implementation of the SNF 3-day rule waiver is necessary to further 
support ACOs' efforts to increase quality and decrease costs under two-
sided performance-based risk arrangements. (See 80 FR 32804 for a 
detailed discussion of the rationale for establishing the SNF 3-day 
rule waiver). Based upon the experience in the Pioneer ACO Model, we 
believe it is not possible to adopt such a waiver without providing 
some protection for certain beneficiaries who were prospectively 
assigned to the ACO at the start of the year, but are subsequently 
excluded from assignment. Accordingly, we are proposing to modify the 
waiver to include a 90-day grace period to allow sufficient time for 
CMS to notify the ACO of any beneficiary exclusions, and for the ACO 
then to inform its SNF affiliates, ACO participants, and ACO providers/
suppliers of those exclusions.
    More specifically, we propose to modify the waiver under Sec.  
425.612(a)(1) to include a 90-day grace period that would permit 
payment for SNF services provided to beneficiaries who were initially 
on the ACO's prospective assignment list for a performance year but 
were subsequently excluded during the performance year. CMS would make 
payments for SNF services furnished to such a beneficiary under the 
terms of the SNF 3-day rule waiver if the following conditions are met:
     The beneficiary was prospectively assigned to a waiver-
approved ACO at the beginning of the performance year but was excluded 
in the most recent quarterly exclusion list.
     The SNF affiliate services are furnished to a beneficiary 
admitted to the SNF affiliate within 90 days following the date that we 
deliver the quarterly exclusion list to the ACO.
     We would have otherwise made payment to the SNF affiliate 
for the services under the SNF 3-day rule waiver, but for the 
beneficiary's exclusion from the waiver-approved ACO's prospective 
assignment list.
    We further note that we anticipate that there would be very few 
instances where it would be appropriate for SNF services to qualify for 
payment under this 90-day grace period. This is because this waiver 
only allows for payment for claims that meet all applicable 
requirements except the requirement for a prior 3-day inpatient 
hospital stay. For example, assume that a beneficiary who had been 
assigned to a waiver-approved ACO was admitted to a SNF without a prior 
3-day inpatient hospital stay after his or her enrollment in an MA 
Plan, but before the beneficiary appears on a quarterly exclusion list. 
In this case, these SNF services would not be covered under FFS because 
the waiver does not expand coverage to include services furnished to 
Medicare beneficiaries enrolled in MA Plans. Both beneficiaries and 
healthcare providers are expected to know that the beneficiary is 
covered under an MA plan and not FFS Medicare.
    Second, we are concerned that there could be other more likely 
scenarios where a beneficiary could be charged for non-covered SNF 
services that were a result of an ACO's or SNF's inappropriate use of 
the SNF 3-day rule waiver. Specifically, we are concerned that a 
beneficiary could be charged for non-covered SNF services if a SNF 
affiliate were to admit a FFS beneficiary who is not prospectively 
assigned to the waiver-approved ACO, and payment for SNF services is 
denied for lack of a qualifying inpatient hospital stay.

[[Page 46440]]

    We believe this situation could occur as a result of a breakdown in 
one or more of processes the ACO and SNF affiliate are required to have 
in place to implement the waiver. For example, the SNF affiliate and 
the admitting ACO provider/supplier may not verify that the beneficiary 
appears on the ACO's prospective assignment list prior to admission, as 
required under the SNF 3-day rule waiver (Sec.  
425.612(a)(1)(iii)(B)(4)) and the terms of the SNF's affiliate 
agreement with the ACO. In this scenario, Medicare would deny payment 
of the SNF claim under existing FFS rules because the beneficiary did 
not have a qualifying inpatient hospital stay. We are concerned that, 
once the claim is rejected, the beneficiary may not be protected from 
financial liability, and thus could be charged by the SNF affiliate for 
these non-covered SNF services that were a result of an inappropriate 
attempt to use the waiver, potentially subjecting the beneficiary to 
significant financial liability. However, in this scenario, a SNF with 
a relationship to the ACO submitted the claim that was rejected for 
lack of a qualifying inpatient hospital stay, but that otherwise would 
have been paid by Medicare. In this circumstance, we propose to assume 
the SNF's intent was to rely upon the SNF 3-day waiver, but the waiver 
requirements were not met. We believe it is reasonable to assume the 
SNF's intent was to use the SNF 3-day rule waiver because, as a SNF 
affiliate, the SNF should be well aware of the ability to use the SNF 
3-day rule waiver and, by submitting the claim, demonstrated an 
expectation that CMS would pay for SNF services that would otherwise 
have been rejected for lack of a 3-day inpatient hospital stay. We 
believe that in this scenario, the rejection of the claim under the SNF 
3-day rule waiver could easily have been avoided if the ACO, the 
admitting ACO provider/supplier, and the SNF affiliate had confirmed 
that the requirements for use of the SNF 3-day rule waiver were 
satisfied. Because each of these entities is in a better position to 
know the requirements of the waiver and ensure that they are met than 
the beneficiary is, we believe that the ACO and/or the SNF affiliate 
should be accountable for such rejections and the SNF affiliate should 
be prevented from attempting to charge the beneficiary for the non-
covered SNF stay.
    To address situations similar to this scenario where the 
beneficiary may be subject to financial liability due to an eligible 
SNF submitting a claim that is not paid only as a result of the lack of 
a qualifying inpatient hospital stay, the Next Generation ACO Model 
generally places the financial responsibility on the SNF, where the SNF 
knew or reasonably could be expected to have known that payment would 
not be made for the non-covered SNF services. In such cases, CMS makes 
no payment for the services and the SNF may not charge the beneficiary 
for the services and must return any monies collected from the 
beneficiary. Additionally, under the Next Generation ACO Model, the ACO 
must indemnify and hold the beneficiary harmless for payment for the 
services. We believe it is appropriate to propose to adopt a similar 
policy under the Shared Savings Program because, under Sec.  
425.612(a)(1)(iii)(B), to be a SNF affiliate, a SNF must agree to 
validate the eligibility of a beneficiary to receive covered SNF 
services in accordance with the waiver prior to admission to the SNF, 
and otherwise comply with the requirements and conditions of the Shared 
Savings Program. SNF affiliates are required to be familiar with the 
SNF 3-day rule and the terms and conditions of the SNF 3-day rule 
waiver for the Shared Savings Program, and should know to verify that a 
FFS Medicare beneficiary who is a candidate for admission has completed 
a qualifying hospital stay or that the admission meets the criteria 
under a waiver of the SNF 3-day rule that is properly in place. 
Additionally, ACOs and their SNF affiliates are required to develop 
plans that will govern communication and beneficiary evaluation and 
admission prior to use of the SNF 3-day rule waiver. In these 
circumstances, we believe it is reasonable that the ultimate 
responsibility and liability for a non-covered SNF admission should 
rest with the admitting SNF affiliate.
    Therefore, to protect FFS beneficiaries from being charged in 
certain circumstances for non-covered SNF charges related to the waiver 
of the SNF 3-day rule under the Shared Savings Program, potentially 
subjecting such beneficiaries to significant financial liability, we 
are proposing to add certain beneficiary protection requirements in 
Sec.  425.612(a)(1). These requirements would apply to SNF services 
furnished by a SNF affiliate that would otherwise have been covered 
except for the lack of a qualifying hospital stay preceding the 
admission to the SNF affiliate. Specifically, we propose that we would 
make no payment to the SNF, and the SNF may not charge the beneficiary 
for the non-covered SNF services, in the event that a SNF that is a SNF 
affiliate of a Track 3 ACO that has been approved for the SNF 3-day 
rule waiver admits a FFS beneficiary who was never prospectively 
assigned to the waiver-approved ACO (or was assigned but later excluded 
and the 90 day grace period has lapsed), and the claim is rejected only 
for lack of a qualifying inpatient hospital stay.
    In this situation, we propose that we would apply the following 
rules:
     We would make no payment to the SNF affiliate for such 
services.
     The SNF affiliate must not charge the beneficiary for the 
expenses incurred for such services; and the SNF affiliate must return 
to the beneficiary any monies collected for such services.
     The ACO may be required to submit a corrective action plan 
to CMS for approval as specified at Sec.  425.216(b) addressing what 
actions the ACO will take to ensure that the SNF 3-day rule waiver is 
not misused in the future. If after being given an opportunity to act 
upon the corrective action plan the ACO fails to come into compliance, 
approval to use the waiver will be terminated in accordance with Sec.  
425.612(d). We note that in accordance with our existing program rules 
at Sec. Sec.  425.216 and 425.218, CMS retains the authority to take 
corrective action, including terminating an ACO for non-compliance with 
program rules. A misuse of a waiver under Sec.  425.612 would 
constitute non-compliance with program rules. Accordingly, we propose 
to codify at new provision Sec.  425.612(d)(4) that misuse of a waiver 
under Sec.  425.612 may result in CMS taking remedial action against 
the ACO under Sec. Sec.  425.216 and 425.218, up to and including 
termination of the ACO from the Shared Savings Program.
    We propose that if the SNF submitting the claim is a SNF affiliate 
for a waiver-approved ACO, and the only reason for the rejection of the 
claim is lack of a qualifying inpatient hospital stay, then CMS would 
assume the SNF intended to rely upon the SNF 3-day rule waiver. We 
would not assume the SNF intended to rely upon the SNF 3-day rule 
waiver if the SNF is not a SNF affiliate of a waiver-approved ACO 
because the waiver is not available to SNFs more broadly. We believe 
intended reliance on the waiver is an important factor in determining 
whether the additional beneficiary protections proposed here should 
apply as explained above. Outside the context of an intent to rely on 
the SNF 3-day rule waiver, we do not believe it would be necessary to 
include additional beneficiary protections under the Shared Savings 
Program because there is no reason for either the beneficiary or the 
SNF to expect that different coverage rules would apply to SNF 
services. In these other situations,

[[Page 46441]]

the beneficiary protections generally applicable under traditional FFS 
Medicare, noted earlier in this section, continue to apply.
    As previously noted in this section, we anticipate accepting the 
first SNF 3-day rule waiver applications from Track 3 ACOs later this 
summer. We strongly believe it is important to ensure that 
beneficiaries have appropriate financial protections against misuse of 
the waiver prior to approving any SNF 3-day rule waiver applications. 
We also recognize that ACOs and their SNF affiliates could be reluctant 
to enter into a SNF affiliate agreement without there being clarity as 
to their potential responsibility for non-covered SNF services related 
to the waiver. For these reasons, although we will still accept 
applications from Track 3 ACOs for the SNF 3-day rule waiver later this 
summer, in the event we finalize any of the proposed beneficiary 
protections in the CY 2017 PFS final rule with comment period, we plan 
to develop a process for ACOs to confirm that they and their SNF 
affiliates agree to comply with all requirements related to the SNF 3-
day rule waiver, including any new requirements adopted in this 
rulemaking. ACOs and SNF affiliates that do not agree to comply with 
all requirements would be ineligible for the SNF 3-day rule waiver. We 
note that this confirmation process may delay approval of ACOs' 
applications for the SNF 3-day rule waiver; however, we do not 
anticipate approval would be delayed beyond the first quarter of 2017.
    We seek comments on these proposals. We note that under our 
proposed beneficiary protection provision, a SNF affiliate would be 
prohibited from charging a beneficiary for non-covered SNF services 
even in cases where the beneficiary explicitly requested or agreed to 
being admitted to the SNF in the absence of a qualifying 3-day hospital 
stay if all other requirements for coverage are met. We therefore 
specifically seek comment on whether it is reasonable to hold SNFs that 
are SNF affiliates responsible for all claims that are rejected solely 
as a result of lack of a qualifying inpatient hospital stay. We also 
seek comment on whether the ACO rather than or in addition to the SNF 
affiliate, should be held liable for such claims and under what 
circumstances. We also seek comment on our proposal to modify the 
waiver under Sec.  425.612(a)(1) to include a 90-day grace period for 
beneficiaries prospectively assigned to a waiver-approved ACO at the 
start of the performance year but later excluded. We seek comment on 
the proposed length of the grace period, and in particular whether the 
grace period should be less than 90 days, given our expectation that 
ACOs will share the quarterly beneficiary exclusion lists with their 
SNF affiliates, ACO participants, and ACO providers/suppliers in a 
timely manner. Finally, we seek comment on any other related issues 
that we should consider in connection with these proposals to protect 
beneficiaries from significant financial liability for non-covered SNF 
services related to the waiver of the SNF 3-day rule under the Shared 
Savings Program.
4. Technical Changes
a. Financial Reconciliation for ACOs That Fall Below 5,000 Assigned 
Beneficiaries
    Section 1899(b)(2)(D) of the Act includes a requirement that a 
participating ACO must have a minimum of 5,000 Medicare FFS 
beneficiaries assigned to it. Currently, the regulations at Sec.  
425.110(b) indicate that if at any time during the performance year, an 
ACO's assigned population falls below 5,000, the ACO may be subject to 
the actions described in Sec. Sec.  425.216 and 425.218; the 
regulations further indicate at Sec.  425.110(b)(1) that while under a 
CAP, the ACO remains eligible for shared savings and losses and the MSR 
and MLR (if applicable) is set ``at a level consistent with the number 
of assigned beneficiaries.'' We have applied this rule in the past to 
perform financial reconciliation for ACOs that fell below 5,000 
assigned beneficiaries. In these cases, the ACO was subject to a CAP 
and financial reconciliation was based on a variable MSR/MLR that was 
determined by the number of assigned beneficiaries. For example, we 
have calculated the ACO's MSR based on an expanded sliding scale that 
include a range of 3,000 to 4,999 assigned beneficiaries with a 
corresponding MSR range of 5.0 to 3.9 percent.
    However, ACOs under risk-based tracks are not limited to financial 
reconciliation under a variable MSR/MLR that is based on the number of 
assigned beneficiaries. In the June 2015 final rule (see 80 FR 32769- 
32771, and 32779-32780), we finalized a policy that provides ACOs under 
two-sided performance-based risk tracks with an opportunity to choose 
among several options for establishing their MSR/MLR. In addition to 
being able to choose a symmetrical MSR/MLR that varies based on the 
ACO's number of assigned beneficiaries, ACOs under two-sided 
performance-based risk tracks can also choose from a menu of non-
variable MSR/MLR options (either a 0 percent MSR/MLR or a symmetrical 
MSR/MLR in a 0.5 percent increment between 0.5 through 2.0 percent).
    We believe it is important to clarify the policy regarding 
situations where an ACO under a two-sided performance-based risk track 
has chosen a non-variable MSR/MLR at the start of the agreement period 
but has fallen below 5,000 assigned beneficiaries at the time of 
financial reconciliation. As discussed in detail in the June 2015 final 
rule, we continue to believe that ACOs under two-sided performance-
based risk tracks are best positioned to determine the level of risk 
that they are prepared to accept. Therefore, we are proposing to update 
the regulations at Sec.  425.110(b)(1) to be consistent with the 
regulatory changes in the June 2015 final rule that permit ACOs under a 
two-sided performance-based risk track (Track 2 and Track 3) to choose 
their own MSR/MLR from a menu of options. Specifically, we are 
proposing to update the regulations at Sec.  425.110(b)(1) to indicate 
that in the event an ACO falls below 5,000 assigned beneficiaries at 
the time of financial reconciliation, the ACO participating under a 
two-sided risk track will be eligible to share in savings (or losses) 
and the MSR/MLR will be set at a level consistent with the choice of 
MSR/MLR that the ACO made at the start of the agreement period. If the 
Track 2 or Track 3 ACO selected a symmetrical MSR/MLR option based on a 
fixed percentage (for example, zero percent or a percentage between 0.5 
and 2 percent) regardless of ACO size, then the current methodology for 
use of a variable MSR/MLR based on the ACO's number of assigned 
beneficiaries would not apply. For example, if at the beginning of the 
agreement period the ACO chose a 1.0 percent MSR/MLR and the ACO's 
assigned population falls below 5,000, the MSR/MLR will remain 1.0 
percent for purposes of financial reconciliation while the ACO is under 
a CAP. Further, as we noted in earlier rulemaking, if the ACO has 
elected a variable MSR/MLR, the methodology for calculating the 
variable MSR/MLR under a two-sided model is consistent with the 
methodology for calculating the variable MSR that is required under the 
under the one-sided model (Track 1) (see 80 FR 32769 through 32771; 
32779 through 32780). Under the one-sided shared savings model (Track 
1), we have accounted for circumstances where an ACO's number of 
assigned beneficiaries falls below 5,000, by expanding the variable MSR 
range based on input from the CMS Office of the Actuary (OACT). Thus, 
in the case where a Track 2 or Track 3 ACO selects a variable MSR/MLR 
based on its number of assigned

[[Page 46442]]

beneficiaries, and the ACO's number of assigned beneficiaries falls 
below 5,000, we would continue to use an approach for determining the 
MSR/MLR range consistent with the approach for calculating the MSR 
range under the one-sided model.
b. Requirements for Merged or Acquired TINs
    ACOs frequently request that we take into account the claims billed 
by the TINs of practices that have been acquired by sale or merger for 
the purpose of meeting the minimum assigned beneficiary threshold, 
establishing a more accurate financial benchmark, and determining the 
prospective or preliminary prospective assignment list for the upcoming 
performance year. In response to these inquiries, we initially 
developed subregulatory guidance that allowed claims billed under the 
TIN of a merged or acquired entity to be considered in certain 
circumstances. In that guidance we indicated that the merged or 
acquired entity's TIN may no longer be used to bill Medicare. In the 
June 2015 final rule, we codified the policies outlined in this 
guidance allowing for consideration of claims billed under merged or 
acquired entities' TINs for purposes of beneficiary assignment and 
establishing the ACO's benchmark, provided certain requirements were 
met (Sec. Sec.  425.204(g), 425.118(a)(2)). However, the regulation at 
Sec.  425.204(g) indicates that an ACO may request that CMS consider, 
for purposes of beneficiary assignment and establishing the ACO's 
benchmark under Sec.  425.602, claims billed by ``Medicare-enrolled'' 
entities' TINs that have been acquired through sale or merger by an ACO 
participant. Because the regulation at Sec.  425.204(g) refers to such 
merged or acquired TINs as ``Medicare-enrolled,'' we have received 
inquiries from ACOs regarding whether such merged or acquired TINs must 
continue to be Medicare-enrolled after the merger or acquisition has 
been completed and the TINs are no longer used to bill Medicare.
    It was not our intent to establish such a requirement. We do not 
believe there would be a program purpose to require the TIN of a merged 
or acquired entity to maintain Medicare enrollment if it is no longer 
used to bill Medicare. Therefore, to address this issue, we are 
proposing a technical change to Sec.  425.204(g) to clarify that the 
merged/acquired TIN is not required to remain Medicare enrolled after 
it has been merged or acquired and no longer used to bill Medicare.

L. 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 clinicians based on the quality and cost of care 
provided to their patients, increase the transparency of health care 
quality information and to assist clinicians and beneficiaries in 
improving medical decision-making and health care delivery. As stated 
in the CY 2016 PFS final rule with comment period (80 FR 71277), 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 Merit-based Incentive Payment System (MIPS) 
that shall apply to payments for items and services furnished on or 
after January 1, 2019.
2. Overview of Existing Policies for the VM
    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. 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. In the CY 2016 PFS final rule with comment period (80 FR 
71277 through 71279), we finalized that in the CY 2018 payment 
adjustment period, the VM will apply to nonphysician EPs who are 
physician assistants (PAs), nurse practitioners (NPs), clinical nurse 
specialists (CNSs), and certified registered nurse anesthetists (CRNAs) 
in groups with 2 or more EPs and to PAs, NPs, CNSs, and CRNAs who are 
solo practitioners.
3. Provisions of This Proposed Rule
    As a general summary, we are proposing to update the VM informal 
review policies and establish how the quality and cost composites under 
the VM would be affected for the CY 2017 and CY 2018 payment adjustment 
periods in the event that unanticipated program issues arise.
a. Expansion of the Informal Inquiry Process To Allow Corrections for 
the VM
    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.
    In the CY 2015 PFS 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

[[Page 46443]]

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 Quality and Resource Use Reports (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 PFS 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.
    In the CY 2016 PFS final rule with comment period (80 FR 71294 
through 71295), for the CY 2017 and CY 2018 payment adjustment periods, 
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. We also finalized 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 stated 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. 
Additionally, we finalized that we would 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.
    As a result of issues that we became aware of prior to and during 
the CY 2016 VM informal review process that are discussed below, we 
have learned that re-running QRURs and recalculating the quality 
composite is not always practical or possible, given the diversity and 
magnitude of the errors, timing of when we become aware of an error, 
and practical considerations in needing to compute a final VM upward 
payment adjustment factor after the performance period has ended based 
on the aggregate amount of downward payment adjustments. Furthermore, 
this approach can create uncertainty for groups and solo practitioners 
about their final VM payment adjustment making it difficult for them to 
plan and make forecasts.
     Electronic Health Record (EHR) and Qualified Clinical Data 
Registry (QCDR) Issues: CMS was unable to determine the accuracy of 
PQRS data submitted via EHR and QCDR for the CY 2014 performance period 
due to data integrity issues. Consequently, if a group (as identified 
by its Medicare Taxpayer Identification Number (TIN)) or the EPs in a 
group reported PQRS measures only through the EHR or QCDR reporting 
mechanism, then the TIN's quality composite score for the CY 2016 VM 
was based on the TIN's performance on the CMS-calculated quality 
outcome measures and the Consumer Assessment of Healthcare Providers 
and Systems (CAHPS) for PQRS survey measures (if applicable). If a TIN 
was classified as ``low quality'' based on its performance on these 
measures, then we reclassified the TIN as ``average quality.'' If the 
TIN's initial quality tier designation was ``average quality'' or 
``high quality'', then that quality tier designation was retained. 
Without the additional PQRS data submitted via EHR and QCDR, we were 
concerned that a low quality designation based on the three CMS-
calculated quality outcome measures and CAHPS for PQRS survey measures 
(if applicable) may not necessarily represent a TIN's quality 
performance If the TIN also reported PQRS measures for the CY 2014 
performance period through reporting mechanisms other than EHR or QCDR, 
then those PQRS quality measures, along with CMS-calculated quality 
outcome measures, and CAHPS for PQRS survey measures (if applicable), 
were used to calculate the TIN's quality composite score for the CY 
2016 VM.
     Incomplete Claims Identification Issue: After the release 
of the 2014 Annual QRURs in September 2015, we discovered a defect in 
the program used to identify the claims from CY 2014, which is the 
performance period for the VM CY 2016 payment adjustment period: Only 
claims from January 12 through December 31 were identified; claims from 
January 1 through January 11 were incorrectly omitted from 2016 VM 
calculations. These missing claims accounted for 2.73 percent of the CY 
2014 claims. We re-ran all of the 2014 annual QRURs to correct this 
issue, including recalculating benchmarks and standard deviations for 
the cost measures to avoid disadvantaging groups as a result of using 
artificially low cost benchmarks. Of the approximately 13,800 TINs 
subject to the CY 2016 VM, 28 TINs received a lower VM and 8 TINs 
received a higher VM. There were also 27 TINs newly subject to the CY 
2016 VM. Out of these 27 TINs, 12 were classified as Category 1 TINs 
and 15 were classified as Category 2 TINs. TINs were not held harmless 
from a lower VM resulting from these corrections. We notified the TINs 
that were affected by this issue.
     Specialty Adjustment Issue: In the course of performing 
quality assurance for the 2015 Mid-Year QRURs, we discovered a defect 
in the program used to specialty-adjust the cost measures. As a result 
of this defect, we determined that the CY 2016 VM for 28 TINs (out of 
approximately 13,800 TINs subject to the CY 2016 VM) were incorrectly 
calculated. Holding the benchmarks for the cost measures and the mean 
cost

[[Page 46444]]

composite score constant, 8 TINs would have had a lower VM and 20 TINs 
would have had a higher VM in CY 2016. We corrected the cost composite 
designation for the 20 TINs whose CY 2016 VM was higher after the 
recalculation and left the original cost composite designation for the 
8 TINs whose VM was adversely affected by the recalculation.
    Due to the volume and complexities of the informal review issues, 
the inconsistency of available PQRS data to calculate a TIN's quality 
composite, the case-by-case nature of the informal review process, and 
the condensed timeline to calculate an accurate VM upward payment 
adjustment factor, we believe that we need to update the VM informal 
review policies and establish in rulemaking how the quality and cost 
composites under the VM would be affected if unanticipated issues arise 
(for example, the program issues described above, errors made by a 
third-party such as a vendor, or errors in our calculation of the 
quality and/or cost composites). The intent of these proposals are not 
to provide relief for EPs and groups who fail to report under PQRS, but 
rather to provide a mechanism for addressing unexpected issues such as 
the data integrity issues discussed above.
    Recalculating the quality composite is operationally complex, and 
does not align with the current timeline given the volume of informal 
reviews and the need to calculate the VM upward payment adjustment 
factor as close to the beginning of the payment adjustment period as 
possible. We want to close out as many informal reviews as possible 
before the VM upward payment adjustment factor is calculated, to lend 
confidence to the adjustment factor and to provide finality for the 
clinicians, and to minimize claims reprocessing. Limiting the potential 
movement of TINs between VM quality tiers based on informal review may 
result in a more accurate adjustment factor calculation and provide 
greater predictability for the CMS' Office of the Actuary (OACT) in 
making assumptions around the adjustment factor including assumptions 
around the impact of outstanding informal reviews at the time of the 
calculations. We believe that our proposals would help groups and solo 
practitioners to better predict the outcome of their final VM 
adjustment and reduce uncertainty as we continue to improve our 
systems.
    Table 38 summarizes our proposals.

                           Table 38--Proposed Quality and Cost Composite Status for TINs Due to Informal Review Decisions and Widespread Quality and Cost Data Issues
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Scenario 1: TINS moving from Category   Scenario 2: Non-GPRO Category 1 TINs      Scenario 3: Category 1 TINs with        Scenario 4: Category 1 TINs with
                                   2 to Category 1 as a  result of PQRS      with additional EPs avoiding PQRS        widespread quality data issues           widespread claims data issues
                                      or VM informal  review process      payment adjustment as a result of PQRS -------------------------------------------------------------------------------
                                 ----------------------------------------         informal review process
                                                                         ---------------------------------------- Initial  composite  Revised  composite     Recalculated     Revised  composite
                                  Initial  composite  Revised  composite  Initial  composite  Revised  composite                                               composite
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Quality.........................  N/A...............  Average...........  Low...............  Average...........  N/A...............  Average...........  Low...............  Average.
                                  N/A...............  Average...........  Average...........  Average...........  N/A...............  Average...........  Average...........  Average.
                                  N/A...............  Average...........  High..............  High..............  N/A...............  Average...........  High..............  High.
Cost............................  Low...............  Low...............  Low...............  Low...............  Low...............  Low...............  Low...............  Low.
                                  Average...........  Average...........  Average...........  Average...........  Average...........  Average...........  Average...........  Average.
                                  High..............  Average...........  High..............  High..............  High..............  Average...........  High..............  Average.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Scenario 1: TINs Moving From Category 2 to Category 1 as a Result of 
PQRS or VM Informal Review Process
    For the CY 2017 VM, Category 1 will include those groups that meet 
the criteria to avoid the CY 2017 PQRS payment adjustment as a group 
practice participating in the PQRS Group Practice Reporting Option 
(GPRO) in CY 2015 and groups that have at least 50 percent of the 
group's EPs meet the criteria to avoid the CY 2017 PQRS payment 
adjustment as individuals (80 FR 71280). Category 1 also includes those 
solo practitioners that meet the criteria to avoid the CY 2017 PQRS 
payment adjustment as individuals. Category 2 will include groups and 
solo practitioners that are subject to the CY 2017 VM and do not fall 
within Category 1 (79 FR 67939). We finalized a similar two-category 
approach for the CY 2018 VM based on participation in the PQRS by 
groups and solo practitioners in 2016 (80 FR 71280 through 71281).
    If a TIN is initially classified as Category 2, and subsequently, 
through the PQRS or VM informal review process, the TIN is classified 
as Category 1 then we propose to classify the TIN's quality composite 
as ``average quality'' instead of attempting to calculate the quality 
composite. We also propose to calculate the TIN's cost composite using 
the quality-tiering methodology. If the TIN is classified as ``high 
cost'' based on its performance on the cost measures, then we propose 
to reclassify the TIN's cost composite as ``average cost.'' If the TIN 
is classified as ``average cost'' or ``low cost'', then we propose that 
the TIN would retain the calculated cost tier designation. We note that 
in the CY 2016 PFS final rule with comment period (80 FR 71280), we 
finalized a policy for the CY 2017 and 2018 payment adjustment periods 
that when 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 for the relevant performance period. 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 the purposes of applying the VM. 
Consequently, because of this policy we anticipate that the number of 
TINs who could fall into Scenario 1 would be minimal; however, we 
believe it is necessary to have a policy in the event that CMS 
determines on informal review that Category 2 TINs were negatively 
impacted by a third-party vendor error or CMS made an error in the 
calculation of the quality composite. We propose to apply these 
policies for the CY 2017 VM and CY 2018 VM.
    Calculating the quality composite for a TIN that was initially 
classified as Category 2 would be operationally complex given the 
timeline for determining and applying the VM adjustments for all TINs 
subject to the VM, the volume of informal reviews, the need to 
calculate the VM upward payment adjustment factor as close to the 
beginning of the payment adjustment period as possible, and uncertainty 
about the availability of the

[[Page 46445]]

PQRS quality data. Therefore, classifying the quality composite as 
``average quality'' would offer a predictable decision for all informal 
reviews where a TIN changes classification from Category 2 to Category 
1.
    Our proposal to calculate the cost composite and assign ``average 
cost'' if the cost composite is initially classified as ``high cost'' 
would alleviate concerns from stakeholders that a TIN may receive a 
downward VM payment adjustment under the quality-tiering methodology as 
a result of being classified as average quality and high cost. Under 
our proposal discussed above, for TINs in Scenario 1, we would not 
consider a TIN's actual performance on the quality measures or 
calculate a quality composite score; rather, we would classify the 
TIN's quality composite as average quality for the reasons stated 
above. In this scenario, we do not believe that we should retain a 
TIN's ``high cost'' designation when the TIN's actual cost performance 
is not being compared to the TIN's actual quality performance, as it is 
possible the TIN might have scored high quality if actual performance 
had been considered. We believe that these proposals would help groups 
and solo practitioners to better predict the outcome of their final VM 
adjustment and reduce uncertainty about the impact of the informal 
review. Additionally, it is important to note that groups or solo 
practitioners who submit an informal review request would not 
automatically be covered by the policy proposed for Scenario 1. We 
would verify on informal review that the group or solo practitioner did 
submit complete and accurate data and did meet the criteria to avoid 
the PQRS payment adjustment to be included in Category 1.
    We request comments on these proposals.
Scenario 2: Non-GPRO Category 1 TINs With Additional EPs Avoiding PQRS 
Payment Adjustment as a Result of PQRS Informal Review Process
    For the CY 2017 VM, Category 1 will include groups that have at 
least 50 percent of the group's EPs meet the criteria to avoid the CY 
2017 PQRS payment adjustment as individuals (80 FR 71280). A similar 
policy was finalized for the CY 2018 VM (80 FR 71280). If a TIN is 
classified as Category 1 for the CY 2017 VM by having at least 50 
percent of the group's EPs meet the criteria to avoid the CY 2017 PQRS 
payment adjustment as individuals, and subsequently, through the PQRS 
informal review process, it is determined that additional EPs that are 
in the TIN also meet the criteria to avoid the CY 2017 PQRS payment 
adjustment as individuals, then we propose the following policies to 
determine the TIN's quality and cost composites:
     If the TIN's quality composite is initially classified as 
``low quality'', then we propose to reclassify the TIN's quality 
composite as ``average quality.'' If the TIN's quality composite is 
initially classified as ``average quality'' or ``high quality'', then 
we propose that the TIN would retain that quality tier designation.
     We would maintain the cost composite that was initially 
calculated.
    We propose to apply these policies for the CY 2017 VM and CY 2018 
VM. Under these policies, we would not recalculate the TIN's quality 
composite to include the additional EPs that were determined to have 
met the criteria to avoid the PQRS payment adjustment as individuals 
through the PQRS informal review process. As discussed under Scenario 
1, recalculating the quality composite is operationally complex, and we 
may not have PQRS data for the additional EPs because they did not meet 
the criteria to avoid the PQRS payment adjustment during the initial 
determination. In addition, we seek to avoid a situation where by 
recalculating the quality composite, a TIN may be subject to a lower 
quality tier designation because a few EPs in the TIN independently 
pursued PQRS informal reviews. As stated above, we are proposing to 
reclassify a TIN's quality composite as average quality if it is 
initially classified as ``low quality'' in order to avoid a situation 
where we do not have the PQRS quality data for those few EPs whose 
quality performance could have bumped the TIN up from a low quality 
designation as the EPs did not meet the criteria to avoid the PQRS 
payment adjustment during the initial determination. Additionally, it 
is important to note that TINs whose EPs submit an informal review 
request would not automatically be covered by the policy proposed for 
Scenario 2. We would verify on informal review that an EP did submit 
complete and accurate data and did meet the criteria to avoid the PQRS 
payment adjustment as an individual in order for the TIN to be included 
in Category 1.
    We request comments on these proposals.
Scenario 3: Category 1 TINs With Widespread Quality Data Issues
    In cases where there is a systematic issue with any of a Category 1 
TIN's quality data that renders it unusable for calculating a TIN's 
quality composite, we propose to classify the TIN's quality composite 
as average quality. For this proposal, we consider widespread quality 
data issues, as issues that impact multiple TINs and we are unable to 
determine the accuracy of the data submitted via these TINs (for 
example, the EHR and QCDR issues for the CY 2014 performance period as 
described above). This proposal would offer a predictable designation 
for all TINs under this scenario.
    We also propose to calculate the TIN's cost composite using the 
quality-tiering methodology. If the TIN is classified as ``high cost'' 
based on its performance on the cost measures, then we propose to 
reclassify the TIN's cost composite as ``average cost.'' If the TIN is 
classified as ``average cost'' or ``low cost'', then we propose that 
the TIN would retain the calculated cost tier designation. We propose 
to apply these policies for the CY 2017 VM and CY 2018 VM.
    As discussed under Scenario 1, our proposal to calculate the cost 
composite and assign ``average cost'' if the cost composite is 
initially classified as ``high cost'' would alleviate concerns from 
stakeholders that a TIN may receive a downward VM payment adjustment 
under the quality-tiering methodology as a result of being classified 
as average quality and high cost. Similarly, for TINs in Scenario 3, we 
would not consider a TIN's actual performance on the quality measures 
or calculate a quality composite score; rather, we would classify the 
TIN's quality composite as average quality for the reasons stated 
above. In this scenario, we do not believe that we should retain a 
TIN's high cost designation when the TIN's actual cost performance is 
not being compared to the TIN's actual quality performance, as it is 
possible the TIN might have scored high quality if actual performance 
had been considered. We would continue to show and designate these 
groups as high cost in their annual QRURs so they have the opportunity 
to understand and improve their performance, but under our proposal, we 
would classify their cost composite as average cost for purposes of 
determining their VM adjustment. Additionally, it is important to note 
that groups or solo practitioners would only be covered by the policy 
proposed for Scenario 3 once we verify that the group or solo 
practitioner did submit complete and accurate data and did meet the 
criteria to avoid the PQRS payment adjustment in order to be included 
in Category 1.
    We request comments on these proposals.
    Further, we note that we expect quality data issues such as these 
to be

[[Page 46446]]

significantly limited moving forward. We have included new front-end 
edits to the data submission process to catch errors that result in 
such quality data issues early enough to be corrected. Additionally, we 
note that TINs are ultimately responsible for the data that are 
submitted by their third-party vendors and expect that TINs are holding 
their vendors accountable for accurate reporting. While we understand 
that data submission requirements are evolving and that both vendors 
and CMS are developing capabilities for reporting and assessing 
performance, we are considering further policies to promote complete 
and accurate reporting by registries and other third-party entities 
that submit data on behalf of groups and EPs.
Scenario 4: Category 1 TINs With Widespread Claims Data Issues
    If we determine after the release of the Quality and Resource Use 
Reports (QRURs) that there is a widespread claims data issue that 
impacts the calculation of the quality and/or cost composites for 
Category 1 TINs, we propose to recalculate the quality and cost 
composites for affected TINs. For this proposal, we consider widespread 
claims data issues, as issues that impact multiple TINs and require the 
recalculation of the quality and/or cost composites (for example, the 
incomplete claims identification and specialty adjustment issues 
described above).
    After recalculating the composites, if the TIN's quality composite 
is classified as low quality, then we propose to reclassify the quality 
composite as average quality, and conversely, if the TIN's cost 
composite is classified as high cost, we propose to reclassify the cost 
composite as average cost. If the TIN is classified as average quality, 
high quality, average cost or low cost, then we propose that the TIN 
would retain the calculated quality or cost tier designation. We are 
proposing to assign average quality if the quality composite is 
classified as low quality and assign average cost if the cost composite 
is classified as high cost after recalculating the quality and cost 
composites because, after a claims data issue is identified, it would 
take approximately 6 weeks to recalculate the composites and notify 
groups and solo practitioners about their recalculated VM. Given that 
the VM informal review period lasts for 60 days after the release of 
the QRURs and the timing of when we become aware of an error, we would 
likely not be able to notify groups and solo practitioners about their 
recalculated VM before the end of the informal review period. We 
believe these proposed policies are necessary to provide certainty for 
groups and solo practitioners about their final VM payment adjustment 
and due to the condensed timeline to calculate an accurate VM upward 
payment adjustment factor.
    We propose to apply these policies for the CY 2017 VM and CY 2018 
VM.
    We request comments on these proposals.
    The proposals described in this section would allow us to make 
predictable decisions as a result of informal reviews and unanticipated 
issues that may arise, providing greater certainty for groups and solo 
practitioners about impact of their results, as we foresee that several 
of the issues that impacted the CY 2016 VM, as described above, may 
continue to impact the CY 2017 and CY 2018 VM and/or new unanticipated 
issues may be identified. The proposals would also minimize the need to 
use PQRS data to recalculate the quality composite and prevent 
situations where we are making decisions on a case-by-case basis based 
on the TIN's PQRS reporting mechanism.
b. Application of the VM to Participant TINs in Shared Savings Program 
ACOs That Do Not Complete Quality Reporting
    In the CY 2015 PFS final rule with comment period (79 FR 67946), 
for groups and solo practitioners, as identified by their TIN, that 
participate in a Shared Savings Program ACO, we finalized 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. 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. In the CY 2016 PFS proposed rule with 
comment period (80 FR 41899), we proposed to continue this policy in 
the CY 2018 payment adjustment period for all groups and solo 
practitioners subject to the VM that participate in a Shared Savings 
Program ACO and finalized our proposal in the CY 2016 PFS final rule 
(80 FR 71285).
    As discussed in sections III.I. and III.L.1.e. of this proposed 
rule, we are proposing to remove the prohibition on EPs who are part of 
a group or solo practitioner that participates in a Shared Savings 
Program ACO, for purposes of PQRS reporting for the CY 2017 and CY 2018 
payment adjustments, to report outside the ACO. As a result of this 
proposed policy, the EPs in groups and those who are solo practitioners 
would be allowed to report to the PQRS as a group (using one of the 
group registry, QCDR, or EHR reporting options) or individually (using 
the registry, QCDR, or EHR reporting option) outside of the ACO. This 
section addresses how we propose to use the PQRS data reported by EPs 
outside of the ACO for the CY 2018 VM when the ACO does not 
successfully report quality data on behalf of their EPs for purposes of 
PQRS as required by the Shared Savings Program under Sec.  425.504.
    For the CY 2018 payment adjustment period, if a Shared Savings 
Program ACO does not successfully report quality data on behalf of 
their EPs for purposes of PQRS as required by the Shared Savings 
Program under Sec.  425.504, then we propose to use the data reported 
to the PQRS by the EPs (as a group (using one of the group registry, 
QCDR, or EHR reporting options) or as individuals (using the registry, 
QCDR, or EHR reporting option) under the participant TIN) outside of 
the ACO to determine whether the TIN would fall in Category 1 or 
Category 2 under the VM. We propose to apply the two-category approach 
finalized for the CY 2018 VM (80 FR 71280) based on participation in 
the PQRS by groups and solo practitioners to determine whether groups 
and solo practitioners that participate in a Shared Savings Program 
ACO, but report to the PQRS outside of the ACO, would fall in Category 
1 or Category 2 under the VM. This proposed 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 by EPs in the event the ACO 
does not successfully report quality data as required by the Shared 
Savings Program under Sec.  425.504. For example, if groups that 
participate in a Shared Savings Program ACO in 2016 report quality data 
to the PQRS outside of the ACO and meet the criteria to avoid PQRS 
payment adjustment for CY 2018 as a group using one of the group 
registry, QCDR, or EHR reporting options or have at least 50 percent of 
the group's EPs meet the criteria to avoid the PQRS payment adjustment 
for CY 2018 as individuals using the registry, QCDR, or EHR reporting 
option by

[[Page 46447]]

reporting quality data to PQRS outside of the ACO, then they would be 
included in Category 1 for the CY 2018 VM. If solo practitioners that 
participate in a Shared Savings Program ACO in 2016 report quality data 
to the PQRS outside of the ACO and meet the criteria to avoid the PQRS 
payment adjustment for CY 2018 as individuals using the registry, QCDR, 
or EHR reporting option, then they would also be included in Category 
1. Category 2 would include those groups and solo practitioners subject 
to the CY 2018 VM that participate in a Shared Savings Program ACO and 
do not fall within Category 1.
    As finalized for the CY 2018 payment adjustment period (80 FR 
71285), all groups and solo practitioners that participate in a Shared 
Savings Program ACO and fall in Category 2 will be subject to an 
automatic downward payment adjustment under the VM. For groups and solo 
practitioners that participate in a Shared Savings Program ACO that did 
not successfully report quality data as required by the Shared Savings 
Program under Sec.  425.504 and are in Category 1 as a result of 
reporting quality data to the PQRS outside of the ACO, we propose to 
classify their quality composite for the VM for the CY 2018 payment 
adjustment period as ``average quality.'' As finalized in the CY 2015 
PFS final rule with comment period (79 FR 67943), the cost composite 
for groups and solo practitioners that participate in a Shared Savings 
Program ACO will be classified as ``average cost.'' Because we would 
not have the ACO's quality data for these groups and solo 
practitioners, we believe it would be appropriate to use the quality 
data they reported to the PQRS outside the ACO to determine whether 
they avoided the PQRS payment adjustment and whether they would be in 
Category 1 or 2 for purposes of the VM, but not to calculate a quality 
composite using the quality-tiering methodology. As we stated 
previously, we continue to believe that it is appropriate to calculate 
a quality composite for groups and solo practitioners participating in 
the Shared Savings Program based on the ACO's quality data (79 FR 
67944). This proposal is not intended to encourage groups and solo 
practitioners that participate in a Shared Savings Program ACO to 
report to the PQRS outside the ACO, but in the event the ACO does not 
successfully report quality data on behalf of their EPs for purposes of 
PQRS, to provide them with a safeguard that would allow them to avoid 
the PQRS payment adjustment and the automatic downward adjustment under 
the VM. We encourage groups and solo practitioners to continue to 
report through the ACO in order to promote clinical and financial 
integration within the ACO and for the Medicare beneficiaries they 
treat. For groups and solo practitioners that participate in a Shared 
Savings Program ACO that successfully reports quality data on behalf of 
their EPs for purposes of PQRS as required by the Shared Savings 
Program under Sec.  425.504, we will calculate their VM for the CY 2018 
payment adjustment period according to the policies established in the 
CY 2015 PFS final rule with comment period (79 FR 67941 to 67947 and 79 
FR 67956 to 67957) and CY 2016 PFS final rule with comment period (80 
FR 71283 to 71286 and 80 FR 71294). We solicit comment on these 
proposals. We are also proposing corresponding revisions to Sec.  
414.1210(b)(2).
    As discussed in section III.H. of this proposed rule, to allow 
affected EPs that participate in an ACO to report separately for the CY 
2017 PQRS payment adjustment, we are proposing a secondary PQRS 
reporting period for EPs that were in an ACO that did not successfully 
report quality data on behalf of the EPs in the group and those who are 
solo practitioners. Specifically, we are proposing that affected 
individual EPs or groups, who report under an ACO, may separately 
report outside the ACO either as individual EPs (using the registry, 
QCDR, or EHR reporting option) or using one of the group registry, 
QCDR, or EHR reporting options (note these EPs and groups would not 
need to register for one of these group reporting options, but rather 
mark the data as group data in their submission) during a secondary 
PQRS reporting period for the CY 2017 PQRS payment adjustment if they 
were a participant in an ACO that did not successfully report quality 
data on their behalf during the established reporting period for the CY 
2017 PQRS payment adjustment. We are proposing the secondary PQRS 
reporting period for the CY 2017 PQRS payment adjustment would coincide 
with the reporting period for the CY 2018 PQRS payment adjustment (that 
is, January 1, 2016 through December 31, 2016).
    This section addresses how we propose to use, for purposes of the 
CY 2017 VM, the PQRS data reported by the EPs in the group and those 
who are solo practitioners outside of the ACO using the secondary PQRS 
reporting period when the ACO did not successfully report quality data 
on behalf of their EPs for purposes of PQRS as required by the Shared 
Savings Program under Sec.  425.504 for the CY 2017 PQRS payment 
adjustment. For the CY 2017 payment adjustment period, if a Shared 
Savings Program ACO did not successfully report quality data on behalf 
of their EPs for purposes of PQRS as required by the Shared Savings 
Program under Sec.  425.504 for the CY 2017 PQRS payment adjustment, 
then we propose to use the data reported to the PQRS by the EPs (as a 
group using one of the group registry, QCDR, or EHR reporting options 
or as individuals using the registry, QCDR, or EHR reporting option) 
under the participant TIN) outside of the ACO during the secondary PQRS 
reporting period to determine whether the TIN would fall in Category 1 
or Category 2 under the VM. We propose to apply the two-category 
approach finalized for the CY 2017 VM (79 FR 67938 to 67939 and as 
revised in 80 FR 71280 to 71281) based on participation in the PQRS by 
groups and solo practitioners to determine whether groups and solo 
practitioners that participate in a Shared Savings Program ACO, but 
report to the PQRS outside of the ACO, would fall in Category 1 or 
Category 2 under the VM. In section III.H. of this proposed rule, we 
are proposing to assess the individual EP or group's 2016 data 
submitted outside the ACO and during the secondary PQRS reporting 
period against the reporting requirements for the CY 2018 PQRS payment 
adjustment. Therefore, we propose that groups that meet the criteria to 
avoid PQRS payment adjustment for CY 2018 as a group practice 
participating in the PQRS GPRO (using one of the group registry, QCDR, 
or EHR reporting options) or have at least 50 percent of the group's 
EPs meet the criteria to avoid the PQRS payment adjustment for CY 2018 
as individuals (using the registry, QCDR, or EHR reporting option), 
based on data submitted outside the ACO and during the secondary PQRS 
reporting period, would be included in Category 1 for the CY 2017 VM. 
We also propose that solo practitioners that meet the criteria to avoid 
the PQRS payment adjustment for CY 2018 as individuals using the 
registry, QCDR, or EHR reporting option, based on data submitted 
outside the ACO and during the secondary PQRS reporting period, would 
be included in Category 1 for the CY 2017 VM. Category 2 would include 
those groups and solo practitioners subject to the CY 2017 VM that 
participate in a Shared Savings Program ACO and do not fall within 
Category 1.
    As finalized for the CY 2017 payment adjustment period (79 FR 
67946), all groups and solo practitioners that

[[Page 46448]]

participate in a Shared Savings Program ACO and fall in Category 2 will 
be subject to an automatic downward payment adjustment under the VM. 
For groups and solo practitioners that participate in a Shared Savings 
Program ACO that did not successfully report quality data as required 
by the Shared Savings Program under Sec.  425.504 and are in Category 1 
as a result of reporting quality data to the PQRS outside of the ACO 
using the secondary PQRS reporting period, we propose to classify their 
quality composite for the VM for the CY 2017 payment adjustment period 
as ``average quality'' for the same reasons described above for the CY 
2018 payment adjustment period. As finalized in the CY 2015 PFS final 
rule with comment period (79 FR 67943), the cost composite for groups 
and solo practitioners that participate in a Shared Savings Program ACO 
will be classified as ``average cost.''
    If EPs who are part of a group or a solo practitioner that 
participated in a Shared Savings Program ACO in 2015 that did not 
successfully report quality data on their behalf decide to use the 
secondary PQRS reporting period, it is important to note that such 
groups and solo practitioners should expect to be initially classified 
as Category 2 and receive an automatic downward adjustment under the VM 
for items and services furnished in CY 2017 until CMS is able to 
determine whether the group or solo practitioner met the criteria to 
avoid the PQRS payment adjustment as described above. First, we would 
need to process the data submitted for 2016. Second, we would need to 
determine whether or not the group or solo practitioner would be 
classified as Category 1 or Category 2 for the CY 2017 VM and notify 
the group or solo practitioner if there is a change in the VM status. 
Third, we would need to update the group or solo practitioner's status 
so that they will stop receiving an automatic downward adjustment under 
the VM for items and services furnished in CY 2017 and reprocess all 
claims that were previously paid. Since groups and solo practitioners 
taking advantage of this secondary reporting period for the 2017 VM 
will have missed the deadline for submitting an informal review request 
for the 2017 VM, we propose the informal review submission periods for 
these groups and solo practitioners would occur during the 60 days 
following the release of the QRURs for the 2018 VM.
    We request comment on these proposals. We are also proposing 
corresponding revisions to Sec.  414.1210(b)(2).

M. Physician Self-Referral Updates

1. Unit-Based Compensation in Arrangements for the Rental of Office 
Space or Equipment
a. The Physician Self-Referral Statute and Regulations
(1) Section 1877 of the Act
    Section 6204 of the Omnibus Budget Reconciliation Act of 1989 (Pub. 
L. 101- 239) (OBRA 1989), enacted on December 19, 1989, added section 
1877 to the Act. 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. Additionally, the statute mandates refunding any amount 
collected under a bill for an item or service furnished under a 
prohibited referral. Finally, the statute imposes reporting 
requirements and provides for sanctions, including civil monetary 
penalty provisions. Section 1877 of the Act became effective on January 
1, 1992.
    Section 4207(e) of the Omnibus Budget Reconciliation Act of 1990 
(Pub. L. 101-508) (OBRA 1990), enacted on November 5, 1990, amended 
certain provisions of section 1877 of the Act to clarify definitions 
and reporting requirements relating to physician ownership and 
referrals and to provide an additional exception to the prohibition. 
Several subsequent laws further changed section 1877 of the Act. 
Section 13562 of the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 
103- 66) (OBRA 1993), enacted on August 10, 1993, expanded the referral 
prohibition to cover certain other ``designated health services'' in 
addition to clinical laboratory services, modified some of the existing 
statutory exceptions, and added new exceptions. Section 152 of the 
Social Security Act Amendments of 1994 (SSA 1994) (Pub. L. 103-432), 
enacted on October 31, 1994, amended the list of designated health 
services, changed the reporting requirements at section 1877(f) of the 
Act, and modified some of the effective dates established by OBRA 1993. 
Some provisions relating to referrals for clinical laboratory services 
were effective retroactively to January 1, 1992, while other provisions 
became effective on January 1, 1995.
(2) Regulatory History
(a) General Background
    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.
    Following 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 January 4, 2001 Federal Register (66 FR 856) as a 
final rule with comment period. The second final rulemaking (Phase II) 
was published in the March 26, 2004 Federal Register (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 September 5, 2007 Federal Register (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 (73 FR 48434) (the FY 2009 IPPS final 
rule). That rulemaking made various revisions to the physician self-
referral regulations, including provisions that prohibited certain per 
unit-of-service (often referred to as ``per-click'') and percentage-
based compensation formulas for determining the rental charges for 
office space and equipment lease arrangements.
    We issued additional final regulations after passage of the 
Affordable Care Act. In the CY 2011 PFS final rule with comment period 
(75 FR 73170), we codified a disclosure requirement established by the 
Affordable Care Act for the in-office ancillary services exception. We 
also issued regulations in the CY 2011 OPPS final rule with comment 
period (75 FR 71800), the CY

[[Page 46449]]

2012 OPPS final rule with comment period (76 FR 74122), and 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. Finally, in the CY 2016 PFS final rule (80 
FR 70886), we issued regulations to accommodate delivery and payment 
system reform, reduce burden, and to facilitate compliance. In that 
rulemaking, we established two new exceptions, clarified certain 
provisions of the physician self-referral law, updated regulations to 
reflect changes in terminology, and revised definitions related to 
physician-owned hospitals. One of the new exceptions, the exception for 
timeshare arrangements at Sec.  411.357(y), includes a prohibition on 
certain per unit-of-service compensation formulas.
(b) Unit-Based Compensation
    We have addressed the issue of unit-based compensation in several 
rulemakings. Sections 1877(e)(1)(A)(iv) and (B)(iv) of the Act provide 
that, for an arrangement for the rental of office space or equipment to 
satisfy the relevant exceptions to the physician self-referral law, the 
rental charges over the term of the lease must 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. Interpreting this ``volume or 
value'' standard in the 1998 proposed rule, we proposed that 
compensation could be based on units of service (for example, ``per-
use'' equipment rentals) provided that the units of service did not 
include services provided to patients who were referred by the 
physician receiving the payment. For example, a physician who owned a 
lithotripter could rent it to a hospital on a per-procedure basis, 
except for lithotripsies for patients referred by the physician owner. 
Instead, payments for the use of the lithotripter for those patients 
would have to use a methodology that did not vary with referrals. (63 
FR 1714; see also 66 FR 876). We further proposed that arrangements in 
which a physician rents equipment to an entity that furnishes a 
designated health service, such as a hospital that rents an MRI 
machine, with the physician receiving rental payments on a ``per-use'' 
or ``per-click'' basis (that is, a rental payment is generated each 
time the machine is used) do not prohibit the physician from otherwise 
referring to the entity, provided that these kinds of arrangements are 
typical and comply with the fair market value and other standards that 
are included under the rental exception. However, because a physician's 
compensation under this exception cannot reflect the volume or value of 
the physician's own referrals, we proposed that the rental payments may 
not reflect ``per-use'' or ``per-click'' payments for patients who are 
referred for the service by the physician lessor. (63 FR 1714)
    After reviewing the public comments in response to the 1998 
proposed rule, we finalized in Phase I significant revisions with 
respect to the scope of the volume or value standard. We revised our 
interpretation of the ``volume or value'' standard for purposes of 
section 1877 of the Act to permit, among other things, payments based 
on a unit of service, provided that the unit-based payment is fair 
market value and does not vary over time. (66 FR 876 through 879) 
Importantly, we permitted unit-based compensation formulas, even when 
the physician receiving the payment has generated the payment through a 
DHS referral. To reach this position, we reviewed the legislative 
history with respect to the statutory exceptions for the rental of 
office space and equipment and concluded that Congress intended that 
unit-of-service-based payments be protected under certain 
circumstances. (66 FR 878) Specifically, with respect to the exceptions 
for the rental of office space and equipment, the Conference Committee 
report, H. Rep. No. 213, 103rd Cong., 1st Sess. (1993) (the House 
Conference Report) states at page 814 that the conferees ``intend[ed] 
that rental charges for [office] space and equipment leases may be 
based on daily, monthly, or other time-based rates, or rates based on 
units of service furnished, so long as the amount of the time-based or 
units of service rates does not fluctuate during the contract period 
based on the volume or value of referrals between the parties to the 
lease or arrangement.'' However, we stated our unequivocal belief that 
arrangements in which the lessor is compensated each time that the 
lessor refers a patient to the lessee for a service performed in the 
leased office space or using the leased equipment have an obvious 
potential for abuse and could incent overutilization (66 FR 878). We 
indicated that we would continue to monitor financial arrangements in 
the health care industry and would revisit particular regulatory 
decisions if we determine that there has been abuse or overutilization 
(66 FR 860).
    In the CY 2008 PFS proposed rule (72 FR 38122), we stated that 
arrangements between a physician lessor and an entity lessee under 
which the physician lessor receives unit-of-service payments are 
inherently susceptible to abuse because the physician lessor has an 
incentive to profit from referring a higher volume of patients to the 
lessee. We proposed that space and equipment leases may not include 
per-click payments to a physician lessor for services rendered by an 
entity lessee to patients who are referred by a physician lessor to the 
entity (72 FR 38183). We also solicited comments on the question of 
whether we should prevent per-click payments in situations in which the 
physician is the lessee and a DHS entity is the lessor. The CY 2008 PFS 
proposed rule also included eight other significant proposed revisions 
to the physician self-referral regulations. Due to the large number of 
physician self-referral proposals, the significance of the provisions 
both individually and in concert with each other, and the volume of 
public comments received in response to the CY 2008 PFS proposed rule, 
we declined to finalize our proposals, including our proposal to 
prohibit certain per unit-of-service compensation formulas in 
arrangements for the rental of office space and equipment, in the CY 
2008 PFS final rule (72 FR 66222).
    After consideration of the public comments and our independent 
research, we finalized regulations prohibiting certain per-unit of 
service compensation formulas for determining office space and 
equipment rental charges in the FY 2009 IPPS final rule (73 FR 48434). 
Specifically, we revised Sec.  411.357(a)(4) and (b)(4) to prohibit 
rental charges for the rental of office space or equipment that are 
determined using a formula based on per-unit of service rental charges, 
to the extent that such charges reflect services provided to patients 
referred by the lessor to the lessee. In doing so, we relied on our 
authority in section 1877(e)(1)(A)(vi) and (B)(vi) of the Act, which 
permits the secretary to impose by regulation other requirements needed 
to protect against program or patient abuse. We also revised the 
exceptions at Sec. Sec.  411.357(l) and (p) for fair market value 
compensation and indirect compensation arrangements, respectively, to 
include similar limitations on the formula for determining office space 
and equipment rental charges, as applicable. We did so using our 
authority at section 1877(b)(4) of the Act, as those exceptions were 
established using that authority. (See 73 FR 48713 through 48721) We 
determined it necessary to limit the type

[[Page 46450]]

of per-click compensation formulas available for arrangements for the 
rental of office space and equipment because we believe that 
arrangements under which a lessor receives unit-of-service payments are 
inherently susceptible to abuse. Specifically, we believe that the 
lessor has an incentive to profit from referring a higher volume of 
patients to the lessee and from referring patients to the lessee that 
might otherwise go elsewhere for services.
b. Development of This Rulemaking
(1) Council for Urological Interests v. Burwell
    On June 12, 2015, the D.C. Circuit (the Court) issued an opinion in 
Council for Urological Interests v. Burwell, 790 F.3d 212 (D.C. Cir. 
2015), that addressed the prohibition on per-click rental charges for 
the lease of equipment found at Sec.  411.357(b)(4)(ii)(B). In its 
ruling, the Court agreed with CMS that section 1877(e)(1)(B)(vi) of the 
Act provides the Secretary the authority to prohibit per-click leasing 
arrangements. 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. To the contrary, the statutory text of the 
exception clearly provides the Secretary with the discretion to 
impose any additional requirements that she deems necessary ``to 
protect against program or patient abuse.'' (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. It stated that 
the legislative history ``simply indicates that, as written, the 
rental-charge clause [in section 1877(e)(1)(B)(iv) of the Act] does not 
preclude per-click leases'' and stated further that ``[n]othing in the 
legislative history suggests a limit on [the Secretary's] authority to 
prohibit per-click leases under section 1877(e)(1)(B)(vi) of the 
Act).'' Id. at 222.
    The Court also concluded, however, that CMS's discussion of the 
House Conference Report in the FY 2009 IPPS final rule contained an 
unreasonable interpretation of the conferees' statements concerning 
sections 1877(e)(1)(A)(iv) and (B)(iv) of the Act, and it remanded the 
case to the agency to permit a fuller consideration of the legislative 
history. This rulemaking addresses that decision.
(2) The FY 2009 IPPS Final Rule
    As discussed above, in the FY 2009 IPPS final rule, we revised the 
exceptions for the rental of office space and equipment to include in 
each a requirement that the rental charges for the office space or 
equipment are not determined using a formula based on per-unit of 
service rental charges, to the extent that such charges reflect 
services provided to patients referred by the lessor to the lessee. We 
explained that our decision to add this requirement was ultimately 
based on our authority under section 1877(e)(1)(B)(vi) of the Act to 
promulgate ``other requirements'' needed to protect against program or 
patient abuse. However, we also discussed certain legislative history 
contained in the 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 states that--

    The conferees intend that charges for space and equipment leases 
may be based on daily, monthly, or other 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 based on the volume or value of referrals between 
the parties to the lease or arrangement. (H.R. Rep. No. 103-213, at 
814 (1993).)

    In the FY 2009 IPPS final rule, we noted that CMS had previously 
concluded that this language indicated that Congress intended to permit 
leases that included per-click payments, even for patients referred by 
the physician lessor (66 FR 940), but asserted that the language could 
also be interpreted as excluding from the office space and equipment 
lease exceptions those lease arrangements that include per-click 
payments for services provided to patients referred from one party to 
the other (73 FR 48716). Specifically, we stated that, where the total 
amount of rent (that is, the rental charges) over the term of the lease 
is directly affected by the number of patients referred by one party to 
the other, those rental charges can arguably be said to ``take into 
account'' or ``fluctuate during the contract period based on'' the 
volume or value of referrals between the parties. The Court found this 
revised interpretation to be an unreasonable reading of the language of 
the House Conference Report. The Court remanded Sec.  
411.357(b)(4)(ii)(B) to the Secretary for further proceedings 
consistent with its opinion, and directed that the Secretary should 
consider whether a ban on per-click equipment leases is consistent with 
the House Conference Report.
c. Re-proposal of Limitation on the Types of Per-Unit of Service 
Compensation Formulas for Determining Office Space and Equipment Rental 
Charges
    In this proposed rule, we are re-proposing certain requirements for 
arrangements involving the rental of office space or equipment. 
Specifically, using the same language in existing Sec. Sec.  
411.357(a)(5)(ii)(B), (b)(4)(ii)(B), (l)(3)(ii), and (p)(1)(ii)(B), we 
are proposing to include at Sec. Sec.  411.357(a)(5)(ii)(B), 
(b)(4)(ii)(B), (l)(3)(ii), and (p)(1)(ii)(B) a requirement that rental 
charges for the office space or equipment are not determined using a 
formula based on per-unit of service rental charges, to the extent that 
such charges reflect services provided to patients referred by the 
lessor to the lessee. We are using the authority granted to the 
Secretary in sections 1877(e)(1)(A)(vi) and (B)(vi) of the Act to re-
propose this requirement in the exceptions at Sec.  411.357(a) and (b) 
for the rental of office space and equipment, respectively. We are 
using the authority granted to the Secretary in section 1877(b)(4) of 
the Act to re-propose this requirement in the exceptions at Sec.  
411.357(l) and (p) for fair market value compensation and indirect 
compensation arrangements, respectively.
    We emphasize that we are not proposing an absolute prohibition on 
rental charges based on units of service furnished. In general, per-
unit of service rental charges for the rental of office space or 
equipment are permissible. We are proposing to limit the general rule 
by prohibiting per-unit of service rental charges where the lessor 
generates the payment from the lessee through a referral to the lessee 
for a service to be provided in the rented office space or using the 
rented equipment. Thus, per-unit of service rental charges for the 
rental of office space or equipment would be permissible, but only in 
those instances where the referral for the service to be provided in 
the rented office space or using the rented equipment did not come from 
the lessor.
(1) Authority
    In accordance with the Court's opinion in Council for Urological

[[Page 46451]]

Interests, we set forth below the Secretary's authority to include in 
the exceptions applicable to office space and equipment leases a 
requirement that rental charges are not determined using a formula 
based on per-unit of service rental charges that reflect services 
provided to patients referred by the lessor to the lessee. Our 
determination follows the Court's reasoning, which we excerpt below, in 
rejecting the Council for Urological Interests' assertion that the 
Secretary lacks the authority to impose a ban on ``per-click'' 
equipment--and by correlation--office space leases. We also describe 
why limiting the types of per-click rental charges that would not 
violate the physician self-referral law's referral and claims 
submission prohibitions is consistent with the language of the House 
Conference Report.
    As the Court stated, the physician self-referral law gives the 
Secretary power to add requirements as needed to protect against 
program or patient abuse, even if Congress did not anticipate such 
abuses at the time of enactment of the statute. Specifically, although 
Congress may not have originally included a ban on per-click rental 
charges in office space and equipment lease arrangements, it 
``empowered the Secretary to make her own assessment of the needs of 
the Medicare program and regulate accordingly.'' (Council for 
Urological Interests, 790 F.3d at 220.) The statute explicitly permits 
the Secretary to impose additional conditions on arrangements for the 
rental of office space or equipment, and nowhere expressly states that 
per-click rates must always be permitted. Thus, as the Court confirmed, 
the Secretary's regulation ``can properly be classified as an `other' 
requirement expressly permitted by sections 1877(e)(1)(A)(vi) and 
(B)(vi) of the Act.'' (Id.)
    The Secretary's authority to impose requirements regarding the type 
of compensation formulas upon which office space and equipment rental 
charges may be based is not constrained by the House Conference Report. 
As discussed elsewhere in this proposed rule, we acknowledge that the 
language in the House Conference Report states Congress' intent at the 
time of enactment of the physician self-referral law that sections 
1877(e)(1)(A)(iv) and (B)(iv) of the Act not be interpreted as 
prohibiting charges for the rental of office space or equipment that 
are based on units of service furnished. We do not purport here to 
interpret this language as implying anything other than the conferees' 
understanding--at the time of enactment of the statute--that the 
statute as written did not prohibit rental charges based on units of 
service rates. But Congress also gave the Secretary the authority in 
sections 1877(e)(1)(A)(vi) and (B)(vi) of the Act to impose by 
regulation other requirements as needed to protect against program or 
patient abuse, which could only happen after the enactment of the 
statute. Nowhere in the House Conference Report did Congress express an 
intent to limit the authority granted to the Secretary in sections 
1877(e)(1)(A)(vi) and (B)(vi) of the Act (as enacted). In fact, the 
House Conference Report was completely silent regarding sections 
1877(e)(1)(A)(vi) and (B)(vi) of the Act, leaving the express words of 
the statute to speak for themselves. As the Court noted--

    The conference report . . . states only that rental charges 
``may'' be based on units of service. The language is not 
obligatory. Instead, it simply indicates that, as written, the 
rental-charge clause [(section 1877(e)(1)(B)(iv) of the Act)] does 
not preclude per-click leases. But, as we have already explained, 
there is more to the statute than this clause, and to qualify for 
the exception, a rental agreement must comply with all six clauses, 
not merely the rental-charge clause alone. The final clause 
[(section 1877(e)(1)(B)(vi) of the Act)] gives the Secretary the 
authority to add further requirements. Nothing in the legislative 
history suggests a limit on this authority. We conclude that the 
statute does not unambiguously forbid the Secretary from banning 
per-click leases as she evaluates the needs of the Medicare system 
and its patients. (790 F.3d at 221-22 (footnote omitted))

    Moreover, as the Court further noted, a statement that unit of 
service-based rental charges are not precluded by sections 
1877(e)(1)(A)(iv) and (B)(iv) of the Act as they are written is not 
equivalent to a statement that the Secretary must continue to permit 
such charges as she reevaluates, in light of experience, the operation 
of the statute and the need to protect the Medicare program and its 
beneficiaries against abuse. (Id. at 222 n.7; see also id. at 222 n.6 
(``Congress has expressly delegated to the Secretary the authority to 
promulgate additional requirements, as she has done here, and the 
legislative history does not clearly impose a constraint on that 
power.'')).
    The Secretary has broad authority under sections 1877(e)(1)(A)(vi) 
and (B)(vi) of the Act to impose conditions on arrangements for the 
rental of office space or equipment in order to protect against program 
or patient abuse. That authority is not limited by the express words of 
the statute as it is in other provisions of section 1877 of the Act. In 
agreement, the Court in Council for Urological Interests explained--

    . . . Congress knew how to limit the Secretary's authority to 
impose additional requirements to the various exceptions [to the 
physician self-referral law]. In [section 1877(e)(2) of the Act], 
Congress excludes bona fide employment relationships from the 
definition of compensation arrangements. This provision states that 
the employment relationship must comply with various requirements, 
including that the pay not be determined ``in a manner that takes 
into account (directly or indirectly) the volume or value of any 
referrals by the referring physician.'' This employment exception 
also allows the Secretary to impose ``other requirements,'' just as 
the equipment rental exception. But the statute then goes on to say 
that the listed requirements ``shall not prohibit the payment of 
remuneration in the form of a productivity bonus based on services 
performed personally by the physician.'' This language shows that 
Congress knew how to cabin the Secretary's authority to impose 
``other'' requirements and that it knew how to further clarify what 
it meant by compensation that does not take into account the volume 
of business generated between parties. That Congress employed 
neither of these tools with reference to the [exception for the 
rental of office space or equipment] again supports reading the 
statute as giving the Secretary broad discretion as she regulates in 
this area. (790 F.3d at 221 (citations omitted))

    The Secretary's authority to limit the use of per-unit of service 
rental charges in arrangements for the rental of office space or 
equipment is particularly clear when the exceptions for the rental of 
office space and equipment are compared to other provisions in section 
1877 of the Act. According to the Court in Council for Urological 
Interests--

    [T]he statute elsewhere expressly permits charging per-click 
fees in other contexts, showing that Congress knew how to authorize 
such payment terms when it wanted to. In [section 1877(e)(7)(A) of 
the Act], Congress created an exception to the [physician self-
referral law] that allows the continuation of certain group practice 
arrangements with a hospital. . . . The provision states that ``[a]n 
arrangement between a hospital and a group under which designated 
health services are provided by the group but are billed by the 
hospital'' is excepted from the ban on referrals if, among other 
things, ``the compensation paid over the term of the agreement is 
consistent with fair market value and the compensation per unit of 
services is fixed in advance and is not determined in a manner that 
takes into account the volume or value of any referrals or other 
business generated between the parties.'' Comparing this provision 
to the [exceptions for the rental of office space and equipment] 
shows that Congress knew how to permit per-click payments 
explicitly, suggesting that the omission in this particular context 
was deliberate. . . . In other words, Congress's decision not to 
include similar language in the [exceptions for the rental of

[[Page 46452]]

office space and equipment] supports our conclusion that the statute 
is silent regarding the permissibility of per-click leases for 
equipment rentals. (790 F.3d at 220-21 (citations omitted))

    In summary, as we stated in the FY 2009 IPPS final rule (73 FR 
48716), the physician self-referral statute responds to the context of 
the times in which it was enacted (by addressing known risks of 
overutilization and, in particular, by creating exceptions for common 
business arrangements), and also incorporates sufficient flexibility to 
adapt to changing circumstances and developments in the health care 
industry. For example, in section 1877(b)(4) of the Act, Congress 
authorized the Secretary to protect additional beneficial arrangements 
by promulgating new regulatory exceptions. In addition, Congress 
included the means to address evolving fraud risks by inserting into 
many of the exceptions--and notably, for our purposes, in the lease 
exceptions--specific authority for the Secretary to add conditions as 
needed to protect against abuse. This design reflects a recognition 
that a fraud and abuse law with sweeping coverage over most of the 
health care industry could not achieve its purpose over the long term 
if it were frozen in time. In short, the statute evidences Congress' 
foresight in anticipating that the nature of fraud and abuse--and of 
beneficial industry arrangements--might change over time. (73 FR 48716 
(citations omitted))
    As we did in 2007 when we first proposed to impose additional 
requirements for rental charges in arrangements for the rental of 
office space and equipment, and in 2008 when we finalized regulations 
incorporating such additional requirements, we are relying in this 
proposal on the Secretary's clear authority in sections 
1877(e)(1)(A)(vi) and (B)(vi) of the Act to impose such other 
requirements needed to protect against program or patient abuse. With 
respect to our proposal to include the same requirements at Sec.  
411.357(l) and (p), we have determined that the proposed revisions to 
Sec.  411.357(l) and (p) are necessary to meet the standard set forth 
in section 1877(b)(4) of the Act, which authorizes the Secretary to 
establish exceptions to the statute's referral and billing prohibitions 
only where the excepted financial relationships do not pose a risk of 
program or patient abuse.
(2) Rationale for Proposal
    As we discussed in prior rulemakings, including the 1998 proposed 
rule, a number of studies prior to the enactment of the physician self-
referral law found that physicians who had financial relationships with 
entities to which they referred patients ordered more services than 
physicians without such financial relationships (63 FR 1661). Studies 
conducted since that time, including recent studies by GAO, indicate 
that financial self-interest continues to affect physicians' medical 
decision making.
    In the FY 2009 IPPS final rule, we discussed in detail our 
rationale for finalizing the limitation on per-unit of service rental 
charges in arrangements for the rental of office space or equipment. We 
noted primary concerns regarding the potential for overutilization, 
patient steering and other anti-competitive effects, and reduction in 
quality of care and patient outcomes, as well as concerns regarding the 
potential for increased costs to the Medicare program. For the reasons 
set forth in the FY 2009 IPPS final rule, some of which are restated 
below, we believe that, in order to protect against program or patient 
abuse, it is necessary to impose additional requirements on 
arrangements for the rental of office space or equipment. Specifically, 
we believe that it is necessary to prohibit rental charges that are 
determined using a formula based on per-unit of service rental charges 
to the extent that such charges reflect services provided to patients 
referred by the lessor to the lessee of the office space or equipment.
    Commenters responding to our proposal in the CY 2008 PFS proposed 
rule to impose additional requirements for office space and equipment 
lease arrangements provided compelling information regarding potential 
program or patient abuse. We were persuaded in 2008 to finalize 
requirements limiting per-unit of service rental charges in the 
exceptions applicable to the rental of office space or equipment, and 
believe today that these requirements continue to be necessary, due to 
our concerns that ``per-click'' lease arrangements in which the lessor 
makes referrals to the lessee that generate payments to the lessor--
     Creates an incentive for overutilization of imaging 
services (as described by MedPAC in its comments to our proposal in the 
CY 2008 PFS proposed rule), as well as other services, including 
therapeutic services;
     Creates an incentive for physicians to narrow their choice 
of treatment options to those for which they will realize a profit, 
even where the best course of action may be no treatment;
     Influence physicians to refer to the lessee instead of 
referring to another entity that utilizes the same or different (and 
perhaps more efficacious) technology to treat the patient's condition;
     Result in physicians steering patients to equipment they 
own, even if it means having the patient travel to a non-convenient 
site for services using the leased equipment; and
     Increase costs to the Medicare program when referring 
physicians pressure hospitals to use their leasing company despite not 
being the low cost provider.
    Most recently, in the CY 2016 PFS final rule, we expressed our 
continued concern that, when physicians have a financial incentive to 
refer a patient to a particular entity, this incentive can affect 
utilization, patient choice, and competition. Physicians can 
overutilize by ordering items and services for patients that, absent a 
profit motive, they would not have ordered. A patient's choice is 
diminished when physicians steer patients to less convenient, lower 
quality, or more expensive providers of health care, just because the 
physicians are sharing profits with, or receiving remuneration from, 
the providers. And lastly, where referrals are controlled by those 
sharing profits or receiving remuneration, the medical marketplace 
suffers if new competitors cannot win business with superior quality, 
service, or price (80 FR 41926). In that rule, in establishing the 
exception at Sec.  411.357(y) for timeshare arrangements, we determined 
it necessary to exclude from the exception 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 
explained our belief that timeshare arrangements based on percentage 
compensation or per-unit of service compensation formulas present a 
risk of program or patient abuse because they may incentivize 
overutilization and patient steering. We noted, by way of example, that 
a per-patient compensation formula could incent 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. (80 FR 71331 through 71332) Similarly, 
we believe that arrangements utilizing rental charges for the rental of 
office space or equipment that are determined

[[Page 46453]]

using a formula that rewards the lessor for each service the lessor 
refers to the lessee are susceptible to this and other abuse.
    Finally, we note that we are not alone in our concern regarding 
overutilization and steering of beneficiaries resulting from 
arrangements in which a physician's referral may provide future 
remuneration back to the physician. In two notable advisory opinions, 
OIG expressed its concern with per-unit of service compensation 
arrangements. Specifically, in Advisory Opinion 03-08, OIG stated that 
`` `[p]er patient,' `per click,' `per order,' and similar payment 
arrangements with parties in a position, directly or indirectly, to 
refer or recommend an item or service payable by a federal health care 
program are disfavored under the anti-kickback statute. The principal 
concern is that such arrangements promote overutilization . . . .'' In 
Advisory Opinion 10-23, OIG noted that the arrangement that was the 
subject of the opinion ``involves a `per-click' fee structure, which is 
inherently reflective of the volume or value of services ordered and 
provided . . . .''
2. Technical Correction: Advisory Opinions Relating to Physician 
Referrals, Procedure for Submitting a Request
    We are proposing to revise Sec.  411.372(a) by making a minor 
technical correction to change the instructions for submitting a 
request for an advisory opinion relating to physician referrals. The 
current language in this subsection directs a requesting party to 
submit its request to a physical address that is out of date. In an 
effort to expedite the receipt and processing of these requests, and to 
account for any future changes, we are proposing to revise paragraph 
(a) to state a party or parties must submit a request for an advisory 
opinion to CMS according to the instructions specified on the CMS Web 
site.
    We note that, at the time of this rulemaking, the correct address 
for such advisory opinion requests is: Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Office of Financial 
Management, Division of Premium Billing and Collections, Mail Stop C3-
09-27, Attention: Advisory Opinions, 7500 Security Boulevard, 
Baltimore, MD 21244-1850. However, we note that this address is subject 
to change, per this technical correction, and that parties seeking to 
submit a request for an advisory opinion relating to physician 
referrals will need to refer to the instructions on the CMS Web site.

IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA), we are required to 
publish a 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is submitted to 
the Office of Management and Budget (OMB) for review and approval.
    To fairly evaluate whether an information collection should be 
approved by OMB, section 3506(c)(2)(A) of the PRA 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.
    We are soliciting public comment on each of the required issues 
under section 3506(c)(2)(A) of the PRA for the following information 
collection requirements (ICRs).

A. Wage Estimates

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' May 2015 National Occupational Employment and Wage 
Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 39 presents the mean hourly wage, 
the cost of fringe benefits (calculated at 100 percent of salary), and 
the adjusted hourly wage.

                          TABLE 39--National Occupational Employment and Wage Estimates
----------------------------------------------------------------------------------------------------------------
                                                                                                     Adjusted
                Occupation title                    Occupation      Mean hourly   Fringe benefit  hourly wage ($/
                                                       code         wage ($/hr)       ($/hr)            hr)
----------------------------------------------------------------------------------------------------------------
Compliance Officer..............................         13-1041           33.26           33.26           66.52
Epidemiologist..................................         19-1040           36.97           36.97           73.94
Medical Scientist...............................         19-1042           45.06           45.06           90.12
Medical Secretary...............................         43-6013           16.50           16.50           33.00
Non-Physician Practitioner (Health Diagnosing            29-1000           46.65           46.65           93.90
 and Treating Practitioners)....................
Office and Administrative Support Operations....         43-0000           17.47           17.47           34.94
Physicians and Surgeons.........................         29-1060           97.33           97.33          194.66
Physicians and Surgeons, All Other..............         29-1069           95.05           95.05          190.10
Statistician....................................         15-2041           40.60           40.60           81.20
----------------------------------------------------------------------------------------------------------------

    As indicated, 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. Proposed Information Collection Requirements (ICRs) and Burden 
Estimates

1. ICRs Regarding the Physician Quality Reporting System (PQRS) (Sec.  
414.90)
    For individual EPs or group practices, who choose to separately 
report quality measures during the proposed secondary PQRS reporting 
period for the 2017 PQRS payment adjustment, who bill under the TIN of 
an ACO participant if the ACO failed to report on behalf of such EPs or 
group practices during the previously established reporting period for 
the 2017 PQRS payment adjustment, we do not believe the individual EP 
or group practice incurs any additional burden. The associated 
reporting burden which is currently approved by OMB under control 
number 0938-1059 (CMS-10276) explains that the PQRS annual burden 
estimate was calculated separately for (1) individual eligible 
professionals and group practices using the claims (for eligible 
professionals only), (2) qualified registry and QCDR,

[[Page 46454]]

(3) EHR-based reporting mechanisms, and (4) group practices using the 
GPRO. We estimated 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 satisfactory reporting, 
satisfactory participation in a QCDR) for the 2018 PQRS payment 
adjustment. This is a high estimate according to the 2014 PQRS 
Reporting Experience and Trends Report which found approximately 
822,000 EPs participated in PQRS in 2014. Therefore, the additional EPs 
who choose to report separately from the ACOs have already been 
accounted for in the PQRS burden. We estimate there were approximately 
1,947 EPs that are part of the 218 participant TINs that are under the 
8 ACOs that failed to successfully report their 2015 quality data. 
There is no change in the reporting mechanisms or reporting criteria 
for PQRS. It is important to note that if the ACO fails to report on 
behalf of an EP or group practice and the EP or group practice does not 
utilize this secondary reporting period they may be subject to a 
downward adjustment.
2. ICRs Regarding Appropriate Use Criteria for Advanced Diagnostic 
Imaging Services (Sec.  414.94)
    Consistent with section 1834(q) of the Act (as amended by section 
218(b) of the PAMA), we have proposed specific requirements for 
clinical decision support mechanisms (CDSMs) that can be qualified 
CDSMs under Sec.  414.94 of our regulations as part of the Medicare 
appropriate use criteria (AUC) program. CDSMs that believe they meet 
the requirements to be qualified CDSMs (for the purpose of this 
section) may apply to CMS to be specified as a qualified CDSM.
    Applications must be submitted electronically and demonstrate how 
the CDSM meets the requirements under Sec.  414.94(g)(1). Specifically, 
applications must demonstrate how the CDSM: (1) Makes available 
specified applicable AUC and related documentation supporting the 
appropriateness of the applicable imaging service ordered; (2) 
identifies the appropriate use criterion consulted in the event the 
CDSM makes available more than one criterion relevant to a consultation 
for a patient's specific clinical scenario; (3) makes available, at a 
minimum, specified applicable AUC that reasonably encompass the entire 
clinical scope of all priority clinical areas identified in Sec.  
414.94(e)(5); (4) has the technical capability to incorporate specified 
applicable AUC from more than one qualified PLE; (5) determines the 
extent to which an applicable imaging service is consistent with a 
specified applicable appropriate use criterion consulted for a 
patient's specific clinical scenario, or a determination of ``not 
applicable'' when the mechanism does not contain a criterion applicable 
to that patient's specific clinical scenario; (6) generates and 
provides a certification or documentation each time an ordering 
professional consults a qualified CDSM that includes a unique 
consultation identifier to the ordering professional that documents 
which qualified CDSM was consulted, the name and national provider 
identifier (NPI) of the ordering professional that consulted the CDSM, 
and whether the service ordered would adhere to specified applicable 
AUC or whether specified applicable AUC was not applicable to the 
service ordered; (7) updates AUC content at least every 12 months to 
reflect revisions or updates made by qualified PLEs to their AUC sets 
or an individual appropriate use criterion; (8) has a protocol to 
expeditiously remove AUC determined by the qualified PLE to be 
potentially dangerous to patients and/or harmful if followed; (9) makes 
available for consultation specified applicable AUC that reasonably 
encompass the entire clinical scope of any new priority clinical area 
within 12 months of the priority clinical area being finalized by CMS; 
(10) meets privacy and security standards under applicable provisions 
of law; (11) provides the ordering professional aggregate feedback 
regarding their consultation with specified applicable AUC in the form 
of an electronic report on an annual basis; (12) maintains electronic 
storage of clinical, administrative, and demographic information of 
each unique consultation for a minimum of 6 years; and (13) complies 
with modification(s) to any requirements under Sec.  414.94(g)(1) made 
through rulemaking within 12 months of the effective date of the 
modification.
    To be specified as a qualified CDSM by CMS, mechanism developers 
must document adherence to the requirements in their application for 
CMS review and use the application process identified in Sec.  
414.94(g)(2) which includes: (1) Applications submitted by CDSMs 
documenting adherence to each requirement outlined in Sec.  
414.94(g)(1) must be received annually by January 1; (2) all approved 
qualified CDSMs in each year will be included on the list of qualified 
CDSMs posted to the CMS Web site by June 30 of that year; (3) approved 
CDSMs are qualified for a period of 5 years; and (4) all qualified 
CDSMs must re-apply every 5 years and applications must be received by 
CMS by January 1 of the 5th year after the developer's most recent 
approval date. If a qualified CDSM 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(g)(2) is the time and effort it would take each of the 
approximately 30 CDSM developers (as estimated by CMS, the Office of 
the National Coordinator (ONC), and the Agency for Healthcare Research 
and Quality (AHRQ)) that have interests in incorporating AUC 
consultation into their mechanisms' functionality to compile, review 
and submit documentation demonstrating adherence to the proposed CDSM 
requirements. We anticipate 30 respondents based on the number of 
existing CDSMs that have expressed an interest in incorporating AUC for 
advanced diagnostic imaging, as well as our estimation of the number of 
CDSM developers that may be interested in incorporating AUC for 
advanced diagnostic imaging in the future as their mechanisms develop 
and evolve. Each respondent will voluntarily compile, review and submit 
documentation that demonstrates their adherence to the proposed CDSM 
requirements listed above.
    We estimate it would take 10 hours at $68.18/hr for a business 
operations specialist to compile, prepare and submit the required 
information, 2.5 hours at $86.72/hr for a computer system analyst to 
review and approve the submission, 2.5 hours at $135.58/hr for a 
computer and information systems manager to review and approve the 
submission, and 5 hours at $131.02/hr for a lawyer to review and 
approve the submission. In this regard, we estimate 20 hours per 
submission at a cost of $1,892.65. In aggregate, we estimate 600 hours 
(20 hr x 30 submissions) at $56,779.50 ($1,892.65 x 30 submissions).
    After the anticipated initial 30 respondents, we expect less than 
10 applicants to apply to become qualified CDSMs annually. Since we 
estimate fewer than 10 respondents, the information collection 
requirements and burden are exempt (5 CFR 1320.2(c)) from the 
requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et 
seq).
    Given that qualified CDSMs must re-apply every 5 years, in years 6-
10, we expect the initial 30 entities will re-apply. The ongoing burden 
for re-applying is expected to be half the

[[Page 46455]]

burden of the initial application process. The CDSM developers will be 
able to make modifications to their original application which should 
result in a burden of 5 hr at $68.18/hr for a business operations 
specialist to compile, prepare and submit the required information, 
1.25 hr at $86.72/hr for a computer system analyst to review and 
approve the submission, 1.25 hr at $135.58/hr for a computer and 
information systems manager to review and approve the submission, and 
2.5 hr at $131.02/hr for a lawyer to review and approve the submission. 
Annually, we estimate 10 hr per submission at a cost of $946.33 per 
CDSM developer. In aggregate, we estimate 300 hr (10 hr x 30 
submissions) at $28,389.90 ($946.33 x 30 submissions).
    As regulatory requirements become more complex, we will look to 
innovative technologies that minimize the burden on an organizations' 
budget and manpower. To this end, the proposed CDSM functionality 
requirements identified in Sec.  414.94(g)(1) will help practitioners 
meet the requirements of the AUC program. While the CDSM application 
process proposed in Sec.  414.94(g)(2) is a new burden under this 
program, the CDSM functionality requirements proposed in Sec.  
414.94(g)(1) do not add burden as they are functions of the CDSM. These 
mechanisms function consistently with their voluntary and 
individualized design so the proposed requirements in Sec.  
414.94(g)(1) are either part of a mechanism's functionality or not. If 
CDSM developers wish to become qualified under this program, they may 
choose to develop the functionality of their mechanisms consistent with 
these requirements to be qualified, but all CDSMs are not required to 
participate in this program. For example, a CDSM that does not 
incorporate AUC for any advanced diagnostic imaging services would 
likely choose not to seek to become qualified under this Medicare AUC 
program. As such, only CDSMs that wish to participate in the Medicare 
AUC for advanced diagnostic imaging services program are required to 
apply for qualification and, in choosing to seek qualification, CDSM 
developers would also choose to incorporate the proposed requirements 
into their mechanism's functionality.
    The proposed requirements and burden will be submitted to OMB under 
control number 0938--New (CMS-10624).
3. ICRs Regarding the Enrollment of MA Providers, Suppliers, and First-
Tier, Downstream, and Related Entities (FDRs) (Sec.  422.222)
    There are approximately 1.9 million providers and suppliers 
nationwide that are enrolled in Medicare. Through our analysis of 
currently available encounter data provided by MA organizations, we 
have found that some providers and suppliers that furnish items or 
services to MA organization enrollees are not enrolled in Medicare in 
an approved status. Based on preliminary data, we estimate that 64,000 
MA providers and suppliers would have to enroll in Medicare pursuant to 
proposed Sec.  422.222 in order to treat enrollees.
    About half of the approximately 64,000 unenrolled providers and 
suppliers, or 32,000, are individuals and the other half are 
organizations. We do not have data at this point to confirm the number 
of unenrolled individuals who are physicians as opposed to non-
physician practitioners. For purposes of fulfilling the requirements of 
the PRA, we will project that one-half (16,000) are physicians and the 
other half (16,000) are practitioners.
    Consistent with our prior time (per respondent) estimates, we 
project that it would take 3 hours at $194.66/hr for a physician and 
$93.30/hr for a non-physician practitioner to complete their individual 
enrollments. For organizations (office and administrative support 
personnel), we estimate it would take 6 hours at $34.94/hr, since 
organizations typically submit more data than individuals. For 
physicians, we estimate 48,000 hours (16,000 applicants x 3 hours) at a 
cost of $9,343,680 (48,000 hr x $194.66/hr). For non-physician 
practitioners, we estimate 48,000 hours (16,000 applicants x 3 hours) 
at a cost of $4,478,400 (48,000 hr x $93.30/hr). For organizations, we 
estimate 192,000 hours (32,000 applicants x 6 hours) at a cost of 
$6,708,480 (192,000 hr x $34.94). In aggregate, we estimate 288,000 
hours at $20,530,560.
    When projected annually over OMB's maximum 3-year approval period, 
we estimate 96,000 hours at a cost of $6,843,520.
    For physicians and non-physician practitioners, the proposed 
requirements and annualized burden (32,000 hours) will be submitted to 
OMB under control number 0938-0685 (Form CMS-855I) because physicians 
and non-physician practitioners enroll via the Form CMS-855I. For 
organizations, the proposed requirements and annualized burden (64,000 
hours) will be submitted to OMB under control number 0938-0685 
(21,333.3 hours for Form CMS-855A and 21,333.3 hours for Form CMS-855B) 
and control number 0938-1056 (21,333.3 hours for Form CMS-855S). The 
specific form to be completed would depend upon the provider or 
supplier type at issue. For instance, and consistent with current 
enrollment policy, certified providers and certain certified suppliers 
would complete the Form CMS-855A; group practices, ambulance suppliers, 
and certain other supplier types would complete the Form CMS-855B; 
suppliers of durable medical equipment, prosthetics, orthotics and 
supplies (DMEPOS) would complete the Form CMS-855S.
    Please note that breakout of the organization burden (dividing 
64,000 hours by 3 forms) is an estimate. Logistically this is necessary 
for the purposes of submitting burden for approval. We have no way of 
estimating the number of providers/suppliers that will complete the 
individual forms. We welcome comment to help us derive a more reliable 
breakout.
4. ICRs Regarding Application Requirements (Sec.  422.501) and 
Termination of Contract by CMS (Sec.  422.510)
    Changes proposed for Sec. Sec.  422.501 and 422.510 involve only 
CMS contract changes and will not result in any external charges or 
operational costs to MA organizations. Many MA organizations already 
require Medicare enrollment for all their network providers and 
suppliers. So there will be no additional costs to most MA and MA- PD 
plans. The only tangible costs would be to those providers or suppliers 
that are not enrolled and those costs are estimated above.
5. ICRs Regarding the Release of Medicare Advantage Bid Pricing Data 
(Sec.  422.272) and the Release of Part C and Part D Medical Loss Ratio 
(MLR) Data (Sec. Sec.  422.2490 and 423.2490)
    Section 422.272 proposes an annual public release of MA bid pricing 
data (with specified exceptions from release), which would occur after 
the first Monday in October and would contain MA bid pricing data that 
was approved by CMS for a contract year at least five years prior to 
the upcoming calendar year. Under Part C, MA organizations (MAOs) are 
required to submit bid data to CMS each year for MA plans they wish to 
offer in the upcoming contract year (calendar year), under current 
authority at Sec.  422.254.
    Proposed Sec. Sec.  422.2490 (for Part C) and 423.2490 (for Part D) 
would also provide for the public release of Part C and Part

[[Page 46456]]

D MLR data for each contract year, which would occur no sooner than 18 
months after the end of the contract year for which the MLR Report was 
submitted. Starting with contract year 2014, if an MAO or Part D 
sponsor fails to spend at least 85 percent of the revenue received 
under an MA or Part D contract on incurred claims and quality improving 
activities, the MAO or Part D sponsor must remit to the Secretary the 
product of: (1) The contract's total revenue; and (2) the difference 
between 85 percent and the contract's MLR. For each contract year, each 
MAO and Part D sponsor must submit an MLR Report to CMS which includes 
the data needed by the MAO or Part D sponsor to calculate and verify 
the MLR and remittance amount, if any, for each contract. The proposed 
rule would allow us to release the Part C and Part D MLR data contained 
in the MLR Reports that we receive from MAOs and Part D sponsors, with 
specified exceptions to release.
    The proposed provisions on release of MA bid pricing data and 
release of Part C and Part D MLR data do not change any of the existing 
requirements regarding submission of bid data and MLR data by MAOs or 
Part D sponsors. Nor does this rule propose any new or revised 
reporting, recordkeeping, or third-party disclosure requirements. 
Although the proposed provisions have no impact on respondent 
requirements or burden, the changes will be submitted to OMB for 
approval under control number 0938-0944 (CMS-10142) for MA bid pricing 
data and 0938-1232 (CMS-10476) for Part C and Part D MLR data.
6. ICRs Regarding the Medicare Shared Savings Program (Part 425)
    Section 1899(e) of the Act provides that chapter 35 of title 44 of 
the U.S. Code, which includes such provisions as the PRA, shall not 
apply to the Shared Savings Program.

C. Summary of Annual Burden Estimates for Proposed Requirements

                                           Table 40--Proposed Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Burden per     Total annual
   Regulation section(s) under      OMB Control No.     Respondents     Total responses      response         burden       Labor cost of    Total cost
       title 42 of the CFR                                                                    (hours)         (hours)     reporting  ($)       ($) *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec.   414.94(g)(2).............  0938--New.........              30  30................              20             600          varies          56,780
Sec.   414.94(g)(2) (reapply)...  0938--New.........  ..............  30................              10             300          varies          28,390
Sec.   422.222 (physicians and    0938-0685.........          32,000  10,666.6 (32,000                 3          32,000          varies       4,607,360
 non-physician practitioners).                                         responses
                                                                       annualized over 3
                                                                       years).
Sec.   422.222 (organizations)..  0938-0685.........          32,000  7,111.1 for two                  6        42,666.6           34.94       1,490,771
                                                                       CMS-855 forms
                                                                       (21,333.3
                                                                       responses
                                                                       annualized over 3
                                                                       years).
Sec.   422.222 (organizations)..  0938-1056.........  ..............  3,555.6 for one                  6        21,333.3           34.94         745,386
                                                                       CMS-855 form.
                                 -----------------------------------------------------------------------------------------------------------------------
    Total.......................  ..................          64,030  64,060............  ..............          96,900          varies       6,928,687
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This rule does not propose any non-labor costs.

D. Associated Information Collections Not Specified in Regulatory Text

    In this proposed rule, we make reference to proposed associated 
information collection requirements that were not discussed in the 
regulation text contained in this proposed rule. The following is a 
discussion of those requirements.
1. Global Surgical Services
    Section II.D.2. of this proposed rule details our plans for a 
proposed claims based reporting program for global surgical services. 
Specifically, that section describes our proposal for claims-based data 
collection that would be applicable to 10- and 90-day global services 
furnished on or after January 1, 2017, including who would be required 
to report, what they would be required to report, and how reports would 
be submitted. As currently proposed, this data collection would be 
subject to the PRA. As stated in section 220 of the Protecting Access 
to Medicare Act (PAMA) of 2014 (Pub. L. 113-93), Chapter 35 of title 
44, United States Code, shall not apply to information collected or 
obtained under this paragraph. Specifically, information collected to 
ensure the accurate valuation of services under the Physician Fee 
Schedule which includes but is not limited to surveys of physicians, 
other suppliers, providers of services, manufacturers, and vendors; 
surgical logs, billing systems, or other practice or facility records; 
electronic health records; and, any other mechanism deemed appropriate 
by the Secretary.
2. Survey of Practitioners
    As discussed earlier in section II.D.6. e.(1)-(2) of this document, 
we are proposing to conduct a survey of providers to help us explore 
options and collect data with respect to assessing and revaluing the 
global surgery services. If we finalize this proposal, the associated 
information collection request will be exempt from the PRA. As stated 
in stated in section 220 of PAMA of 2014, Chapter 35 of title 44, 
United States Code, shall not apply to information collected to ensure 
the accurate valuation of services under the Physician Fee Schedule. 
Consequently, the information collection requirements associated with 
this proposed survey need not be reviewed by the Office of Management 
and Budget.
3. Data Collection for Accountable Care Organizations
    In section II.D6.e.(3) of this document, we propose to conduct a 
survey of ACOs on a number of issues surrounding pre- and post-
operative surgical services. Once developed and implemented, the survey 
would be exempt from the PRA. As stated in section 3022 of the 
Affordable Care Act, Chapter 35 of title 44, United States Code, shall 
not apply to the Medicare Shared Savings Program. Similarly, as stated 
in stated in section 220 of PAMA of 2014, Chapter 35 of title 44, 
United States Code, shall not apply to information collected to ensure 
the accurate valuation of services under the Physician Fee Schedule. 
Consequently, the information collection requirements associated with 
this proposed survey need not be reviewed by the Office of Management 
and Budget.

E. Submission of PRA-Related Comments

    We have submitted a copy of this proposed rule to OMB for its 
review of the rule's information collection and recordkeeping 
requirements. These requirements are not effective until they have been 
approved by the OMB.

[[Page 46457]]

    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/PaperworkReductionActof1995, 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 submit your comments 
electronically as specified in the ADDRESSES section of this proposed 
rule and identify the rule (CMS-1654-P) the ICR's CFR citation, CMS ID 
number, and OMB control number.
    ICR-related comments are due September 13, 2016.

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. Regulatory Impact Analysis

A. Statement of Need

    This proposed rule is necessary to make payment and policy changes 
under the Medicare PFS and to make 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 proposed 
rule is also necessary to make changes to payment policy and other 
related policies for Medicare Part B, Part D, and Medicare Advantage.

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 proposed rule would 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 an 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 
proposed rule 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 603 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 proposed rule 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 2016, that 
threshold is approximately $146 million. This proposed rule 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 issues 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 proposed rule; details the costs and benefits of the rule; 
analyzes alternatives; and presents the measures we would use to 
minimize the burden on small entities. As indicated elsewhere in this 
proposed rule, we are proposing 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 proposed rule. We are unaware of any relevant federal rules that 
duplicate, overlap, or conflict with this proposed rule. The relevant 
sections of this proposed rule contain a description of significant 
alternatives if applicable.

[[Page 46458]]

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 expenditures for PFS services 
compare payment rates for CY 2016 with proposed payment rates for CY 
2017 using CY 2015 Medicare utilization. The payment impacts in this 
proposed rule 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). Section 101(a) of the MACRA 
repealed the previous statutory update formula amended section 1848(d) 
of the Act to specify the update adjustment factors for calendar years 
2015 and beyond. For 2017, the specified update is 0.5 percent.
    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 2017 net reduction in expenditures resulting from proposed 
adjustments to relative values of misvalued codes to be 0.51 percent. 
Since, if finalized, this amount would exceed the 0.5 percent target 
established by the Achieving a Better Life Experience Act of 2014 
(ABLE) (Division B of Pub. L. 113-295, enacted December 19, 2014), 
there is no residual difference between the target for the year and the 
estimated net reduction in expenditures (the ``Target Recapture 
Amount'') by which to reduce payments made under the PFS. As a result, 
we estimate that the proposed PFS rates would not produce a CY 2017 
Target Recapture Amount applicable to the CY 2017 CF. However, we note 
that the final Target Recapture Amount will be calculated based on the 
adjustments to misvalued codes as finalized in the CY 2017 PFS Final 
Rule.
    Effective January 1, 2012, we implemented an MPPR of 25 percent on 
the professional component (PC) of advanced imaging services. Section 
502(a)(2)(A) of the Consolidated Appropriations Act of 2016 (Pub. L 
114-113, enacted on December 18, 2015) added a new section 1848(b)(10) 
of the Act which revises the multiple procedure payment reduction on 
the professional component of imaging services from 25 percent to 5 
percent, effective January 1, 2017. Section 502(a)(2)(B) added a new 
subclause at section 1848(c)(2)(B)(v)(XI) which exempts the MPPR 
reductions attributable to the new 5 percent MPPR on the PC of imaging 
from the PFS budget neutrality provision. However, the provision does 
not exempt the change from the 25 percent MPPR from PFS budget 
neutrality. Therefore, for CY 2017 we must calculate PFS rates in a 
manner that exempts the 5 percent MPPR from budget neutrality but 
ensures that the elimination of the 25 percent MPPR is included in PFS 
budget neutrality. We note that the application of the 25 percent MPPR 
has been applied in a budget neutral fashion to date.
    The CY 2017 proposed PFS rates exclude the 5 percent MPPR for the 
professional component of imaging services by calculating the rates as 
if the discount does not occur, consistent with our approach to other 
discounts that occur outside of PFS budget neutrality. In order to 
implement the change from the 25 percent discount in 2016 to the 5 
percent discount in 2017 within PFS budget neutrality, we measured the 
difference in total RVUs for the relevant services assuming an MPPR of 
25 percent and the total RVUs for the same services without an MPPR and 
then applied that difference as an adjustment to the conversion factor 
to account for the increased expenditures attributable to the change, 
within PFS budget neutrality. This approach is consistent with the 
statutory provision that requires the 5 percent MPPR to be implemented 
outside of PFS budget neutrality.
    To calculate the proposed conversion factor for this year, we 
multiply the product of the current year conversion factor and the 
update adjustment factor by the budget neutrality adjustment and the 
imaging MPPR adjustment described in the preceding paragraphs. We 
estimate the CY 2017 PFS conversion factor to be 35.7751, which 
reflects the budget neutrality adjustment, the 0.5 percent update 
adjustment factor specified under section 1848(d)(18) of the Act, and a 
the adjustment due to the non-budget neutral 5 percent MPPR for the 
professional component of imaging services. We did not need to apply an 
adjustment for atarget recapture for the reasons described above. We 
estimate the CY 2017 anesthesia conversion factor to be 21.9756, which 
reflect the same overall PFS adjustments.

   Table 41--Calculation of the Proposed CY 2017 PFS Conversion Factor
------------------------------------------------------------------------
 Conversion factor in effect in CY
               2016                                           35.8043
------------------------------------------------------------------------
Update Factor.....................  0.50 percent          ..............
                                     (1.0050).
CY 2017 RVU Budget Neutrality       -0.51 percent         ..............
 Adjustment.                         (0.9949).
CY 2017 Target Recapture Amount...  0 percent (1.0000)..  ..............
CY 2017 Imaging MPPR Adjustment...  -0.07 percent         ..............
                                     (0.9993).

[[Page 46459]]

 
CY 2017 Conversion Factor.........  ....................         35.7751
------------------------------------------------------------------------


   Table 42--Calculation of the Proposed CY 2017 Anesthesia Conversion
                                 Factor
------------------------------------------------------------------------
     CY 2016 national average
   anesthesia conversion factor                               21.9935
------------------------------------------------------------------------
Update Factor.....................  0.50 percent          ..............
                                     (1.0050).
CY 2017 RVU Budget Neutrality       -0.51 percent         ..............
 Adjustment.                         (0.9949).
CY 2017 Target Recapture Amount...  0 percent (1.0000)..  ..............
CY 2017 Imaging MPPR Adjustment...  -0.07 percent         ..............
                                     (0.9993).
CY 2017 Conversion Factor.........  ....................         21.9756
------------------------------------------------------------------------

    Table 43 shows the payment impact on PFS services of the proposals 
contained in this proposed rule. 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 would be 
different from those shown in Table 43 (CY 2017 PFS Estimated Impact on 
Total Allowed Charges by Specialty). The following is an explanation of 
the information represented in Table 43.
     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 2015 utilization and CY 
2016 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 2017 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 2017 impact on total allowed charges of the changes in the 
PE RVUs.
     Column E (Impact of RVU Changes): This column shows the 
estimated CY 2017 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 2017 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 43--CY 2017 PFS Estimated Impact on Total Allowed Charges by Specialty *
----------------------------------------------------------------------------------------------------------------
                                      Allowed     Impact of Work   Impact of PE    Impact of MP      Combined
            Specialty              Charges (mil)    RVU Changes     RVU Changes     RVU Changes      Impact **
(A)                                          (B)             (C)             (D)             (E)             (F)
----------------------------------------------------------------------------------------------------------------
TOTAL...........................         $89,467              0%              0%              0%              0%
ALLERGY/IMMUNOLOGY..............             230               0               1               0               2
ANESTHESIOLOGY..................           1,977               0              -1               0               0
AUDIOLOGIST.....................              61               0               0               0               1
CARDIAC SURGERY.................             322               0               0               0               0
CARDIOLOGY......................           6,461               0               0               0               1
CHIROPRACTOR....................             779               0               0               0               0
CLINICAL PSYCHOLOGIST...........             727               0               0               0               0
CLINICAL SOCIAL WORKER..........             601               0               0               0               0
COLON AND RECTAL SURGERY........             160               0               0               0               0
CRITICAL CARE...................             308               0               0               0               0
DERMATOLOGY.....................           3,305               0               0               0               1
DIAGNOSTIC TESTING FACILITY.....             750               0              -2               0              -2
EMERGENCY MEDICINE..............           3,133               0               0               0               0
ENDOCRINOLOGY...................             458               1               1               0               2
FAMILY PRACTICE.................           6,087               1               1               0               3
GASTROENTEROLOGY................           1,744               0               0               0              -1
GENERAL PRACTICE................             451               1               1               0               2
GENERAL SURGERY.................           2,157               0               0               0               0
GERIATRICS......................             211               1               1               0               2
HAND SURGERY....................             182               0               0               0               0
HEMATOLOGY/ONCOLOGY.............           1,746               1               1               0               2
INDEPENDENT LABORATORY..........             701               0              -5               0              -5
INFECTIOUS DISEASE..............             652               0               0               0               1
INTERNAL MEDICINE...............          10,849               1               1               0               2
INTERVENTIONAL PAIN MGMT........             767               1               0               0               0
INTERVENTIONAL RADIOLOGY........             315              -1              -5               0              -7
MULTISPECIALTY CLINIC/OTHER PHYS             128               1               1               0               1

[[Page 46460]]

 
NEPHROLOGY......................           2,205               0              -1               0              -1
NEUROLOGY.......................           1,514               1               1               0               1
NEUROSURGERY....................             784              -1               0               0              -1
NUCLEAR MEDICINE................              47               0               0               0               0
NURSE ANES/ANES ASST............           1,211               0               0               0               0
NURSE PRACTITIONER..............           2,974               1               1               0               2
OBSTETRICS/GYNECOLOGY...........             647               0               1               0               1
OPHTHALMOLOGY...................           5,493               0              -2               0              -2
OPTOMETRY.......................           1,213               0              -1               0              -1
ORAL/MAXILLOFACIAL SURGERY......              48               0               0               0               0
ORTHOPEDIC SURGERY..............           3,685               0               0               0               0
OTHER...........................              26               0               0               0               0
OTOLARNGOLOGY...................           1,208               0               0               0               0
PATHOLOGY.......................           1,127               0              -2               0              -2
PEDIATRICS......................              61               1               1               0               2
PHYSICAL MEDICINE...............           1,062               0               0               0               1
PHYSICAL/OCCUPATIONAL THERAPY...           3,395               0               0               0               1
PHYSICIAN ASSISTANT.............           1,959               0               1               0               1
PLASTIC SURGERY.................             374               0               0               0               0
PODIATRY........................           1,954               0               0               0               1
PORTABLE X-RAY SUPPLIER.........             104               0              -1               0              -1
PSYCHIATRY......................           1,250               1               1               0               1
PULMONARY DISEASE...............           1,759               0               0               0               1
RADIATION ONCOLOGY..............           1,720               0               0               0               0
RADIATION THERAPY CENTERS.......              43               0              -1               0              -1
RADIOLOGY.......................           4,670               0              -1               0              -1
RHEUMATOLOGY....................             536               1               1               0               2
THORACIC SURGERY................             356               0               0               0               0
UROLOGY.........................           1,764              -1               0               0              -1
VASCULAR SURGERY................           1,045               0              -2               0              -2
----------------------------------------------------------------------------------------------------------------
** Column F may not equal the sum of columns C, D, and E due to rounding.

2. CY 2017 PFS Impact Discussion
a. Changes in RVUs
    The most widespread specialty impacts of the proposed RVU changes 
are generally related to the proposed changes to RVUs for specific 
services resulting from the Misvalued Code Initiative, including 
proposed RVUs for new and revised codes. Several specialties, including 
interventional radiology and independent labs, would experience 
significant decreases to overall payments for services that they 
frequently furnish as a result of revisions to the coding structure or 
the proposed inputs used to develop RVUs for the codes that describe 
particular services. Other specialties, including endocrinology and 
family practice, would experience significant increases to payments for 
similar reasons.
b. Impact
    Column F of Table 43 displays the estimated CY 2017 impact on total 
allowed charges by specialty of all the RVU changes. A table shows the 
estimated impact on total payments for selected high volume procedures 
of all of the changes is available under ``downloads'' on CY 2017 PFS 
proposed rule Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/. 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 on the CMS Web site at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/.

D. Effect of Proposed Changes in Telehealth List

    As discussed in section II.I. of this proposed rule, 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 relative to overall PFS expenditures.

E. Geographic Practice Cost Indices (GPCIs)

    Based upon statutory requirements, we are proposing new GPCIs for 
each Medicare payment locality. The proposed GPCIs incorporate updated 
data and cost share weights as discussed in II.E. The Act requires that 
updated GPCIs be phased in over two years. Addendum D shows the 
estimated effects of the revised GPCIs on area GAFs for the transition 
year (CY 2017) and the fully implemented year (CY 2018). The GAFs 
reflect the use of the updated underlying GPCI data, and the cost share 
weights remain unchanged from the previous (seventh) GPCI update. The 
GAFs are a weighted composite of each area's work, PE and malpractice 
expense GPCIs using the national GPCI cost share weights. While we do 
not actually use the GAFs in computing the fee schedule payment for a 
specific service, they are useful in comparing overall areas costs and 
payments. The actual effect on payment for any actual service will 
deviate from the GAF to the extent that the proportions of work, PE and 
malpractice

[[Page 46461]]

expense RVUs for the service differ from those of the GAF.
    The most significant changes occur in 19 non-California payment 
localities, where the fully implemented (CY 2018) GAF moves up by more 
than 1 percent (14 payment localities) or down by more than 2 percent 
(5 payment localities).

F. Other Provisions of the Proposed Regulation

1. Proposal To Change Direct Supervision Requirement to General 
Supervision for CCM Services Furnished Incident to RHCs and FQHCs
    In section III.A., we proposed to revise Sec.  405.2413(a)(5) and 
Sec.  405.2415(a)(5) to state that services and supplies furnished 
incident to TCM and CCM services can be furnished under general 
supervision of a RHC or FQHC practitioner. In section III.A., we 
proposed revising the CCM requirements for RHCs and FQHCs to be 
consistent with the proposed revisions to the CCM requirements for 
practitioners billing under the PFS. These proposed revisions will 
allow RHCs and FQHCs to provide TCM and CCM services at the level that 
was projected when the programs were authorized and therefore no impact 
on spending is expected.
    As outlined in section III.A., we proposed to change the direct 
supervision requirement to a general supervision for CCM services 
furnished incident to RHCs and FQHCs. This regulatory change was 
already made for CCM services furnished by practitioners billing the 
PFS, and changes to RHC and FQHC regulations have no impact on 
regulations for practitioners billing under the PFS. The impact on RHCs 
and FQHCs in 2017 is negligible, as estimates are rounded to the 
nearest 5 million and 2017 was too small of an impact to have a notable 
effect on the estimate.
2. FQHC-Specific Market Basket
    As discussed in section III.B of this proposed rule, we are 
proposing to create a 2013-based FQHC market basket to update the FQHC 
PPS base payment rate. Table 44 shows the 5-year and 10-year fiscal 
cost estimates from switching from a MEI-adjusted base payment rate to 
a FQHC PPS market basket-adjusted base payment rate. This was 
determined by compiling data on historical FQHC spending, projecting it 
forward, and creating two separate baselines. The first baseline 
assumed an MEI price update and the second baseline assumed an FQHC 
specific market basket price update which was created by the Office of 
the Actuary within CMS. The utilization of services was held constant 
between the two baselines, and therefore, the impact table specifically 
captures the change in price from now growing at an FQHC MB update 
relative to how it was growing at the MEI updates. We estimate that 
this would cost approximately 170 million dollars over 10 years from FY 
2017-2026, 35 million of which would be paid for through beneficiary 
premiums and the remaining 135 million would be paid for through Part 
B.
[GRAPHIC] [TIFF OMITTED] TP15JY16.096

3. Appropriate Use Criteria for Advanced Diagnostic Imaging Services
    We are proposing and requesting public comment on clinical decision 
support mechanism (CDSM) requirements as well as an application process 
that CDSM developers must comply with for their mechanisms to be 
specified as qualified under this program. These proposals would not 
impact CY 2017 physician payments under the PFS.
4. Reports of Payments or Other Transfers of Value to Covered 
Recipients
    We are soliciting comments to inform future rulemaking. We do not 
intend to finalize any requirements directly as a result of this 
proposed rule; so there is no impact to CY 2017 physician payments 
under the PFS.
5. Release of Part C Medicare Advantage Bid Pricing Data and Part C and 
Part D Medical Loss Ratio (MLR) Data
    Under section III.E. of the preamble of this proposed rule, we are 
proposing to revise the existing regulations by adding Sec.  422.272 to 
provide for an annual public release of MA bid pricing data (with 
specified exceptions from release). The annual release would occur 
after the first Monday in October and would contain MA bid pricing data 
that was accepted or approved by CMS for a contract year at least 5 
years prior to the upcoming calendar year. Under current authority at 
Sec.  422.254, MA organizations (MAOs) are required to submit bid 
pricing data to CMS each year for MA plans they wish to offer in the 
upcoming contract year (calendar year).
    In addition, the proposed rule adds Sec.  422.2490 for Part C and 
Sec.  423.2490 for Part D to provide for an annual public release of 
Part C and Part D medical loss ratio (MLR) data (with specified 
exceptions from release). This annual release would occur no sooner 
than 18 months after the end of the contract year for which MLR data 
was reported to CMS. Starting with contract year 2014, each MAO or Part 
D sponsor that fails to spend at least 85 percent of revenue received 
under an MA or Part D contract on incurred claims and quality improving 
activities must remit the difference to the government. Under current 
authority at Sec.  422.2460 and Sec.  423.2460, each year MAOs and Part 
D sponsors must submit an MLR Report to CMS, which includes the data 
needed by the MAO or Part D sponsor to calculate and verify the MLR and 
remittance amount, if any, for each contract.
    We are proposing to add regulatory language to authorize CMS' 
release of such data to the public. We have determined that the 
proposed regulatory amendments do not impose any mandatory costs on the 
public or entities that seek to download and use the released data. We 
expect that this

[[Page 46462]]

data will be available to the public from the CMS Web site (https://www.cms.gov/). The public may elect to download the data files, which 
will not impose mandatory costs on any user. Therefore, we have 
determined that there are not any economically significant effects of 
the proposed provisions. We also have determined that the proposed 
regulatory amendments would not impose a burden on the entity 
requesting or downloading data files.
6. Prohibition on Billing Qualified Medicare Beneficiary Individuals 
for Medicare Cost-Sharing
    We are restating information to inform providers to take steps to 
educate themselves and their staff about QMB billing prohibitions and 
to exempt QMB individuals from Medicare cost-sharing billing and 
related collection efforts. Therefore, there is no impact to CY 2017 
physician payments under the PFS.
7. Recoupment or Offset of Payments to Providers Sharing the Same 
Taxpayer Identification Number
    This proposed rule implements section 1866(j) of the Act which 
grants the Secretary the authority to authority to make any necessary 
adjustments to the payments of an applicable provider of services or 
supplier who shares a TIN with an obligated provider of services or 
supplier that has an outstanding Medicare overpayment. The Secretary is 
authorized to adjust the payments of such applicable provider, 
regardless of whether that applicable provider is assigned a different 
Medicare billing number or National Provider Identifier (NPI) number 
from the obligated provider with the outstanding Medicare overpayment. 
The concept of offsetting or recouping payments of providers sharing a 
TIN to satisfy a Medicare overpayment is analogous to Treasury's 
current practice of offsetting against entities that share a TIN to 
collect Medicare overpayments. This proposed rule would help support 
our efforts to safeguard the Medicare Trust Funds by collecting its own 
overpayments more quickly and reducing the accounts receivable 
delinquency rates reported in the Treasury Report on Receivables. This 
proposed rule also helps the obligated provider because we would 
collect the overpayments more quickly; thus reducing the additional 
interest assessments that would continue on the provider's outstanding 
delinquent balance until paid in full. Therefore, there is no impact to 
CY 2017 physician payments under the PFS.
8. Provider Enrollment Part C Program
    This proposed rule would require that providers and suppliers must 
be enrolled in Medicare in approved status in order to render services 
to beneficiaries in the Medicare Advantage program. This proposed rule 
will not have a significant economic impact on a substantial number of 
small businesses because the number not enrolled in Medicare appears to 
be small in comparison to the general population of providers. The 
completion of the Form CMS-855 (as explained in section III) would be 
required very infrequently, in many cases either only one time or once 
every several years. Also, the hour and cost burden per provider or 
supplier will not pose a significant burden on a provider and supplier, 
especially when considering the overall revenue that providers and 
suppliers receive per year. We thus do not believe our proposal would 
impact a substantial number of small businesses.
    Virtually all of the quantifiable costs associated with this 
proposed rule involve the paperwork burden to providers and suppliers 
(see section IV. of this proposed rule). The estimates presented in 
this section do not address the potential financial benefits of this 
proposed rule from the standpoint of the rule's effectiveness in 
preventing or deterring certain providers from enrolling in or 
maintaining their enrollment in Medicare. We simply have no means of 
quantifying these benefits in monetary terms.
    There are three main uncertainties associated with this proposed 
rule. First, we are uncertain as to the number of providers and 
suppliers that would be required to enroll in Medicare under Sec.  
422.222. Second, we cannot estimate the savings in fraud and abuse 
prevention that would accrue from this rule. Third, since we have no 
systematic method to know how many FDRs may be used by MA or MA-PD 
organizations to deliver services to Medicare beneficiaries, therefore, 
we cannot estimate the possible impact to FDRs.
9. Proposed Expansion of the Diabetes Prevention Program (DPP) Model
    In this rule, we propose to expand the Diabetes Prevention Program 
(DPP) Model in accordance with section 1115A(c) of the Act, and we 
propose to refer to this expanded model as the Medicare Diabetes 
Prevention Program (MDPP). We propose that MDPP will become effective 
January 1, 2018, and CMS will continue to test and evaluate MDPP as 
finalized. In the future, CMS will assess whether the nationwide 
implementation of the MDPP is continuing to either reduce Medicare 
spending without reducing quality of care or improve the quality of 
patient care without increasing spending, and could modify the 
nationwide MDPP as appropriate. In this proposed rule, we propose a 
basic framework for the MDPP. If finalized, we will engage in 
additional rulemaking, likely within the next year, to establish 
specific requirements of the MDPP. The comments received from this 
proposed rule will inform key design parameters of the MDPP. 
Modifications to the proposed MDPP could result in changes to our 
current financial projections and therefore affect economic impact 
estimates of MDPP. For these reasons, it is premature to provide an 
impact statement at this time. We intend to provide an impact statement 
in future rulemaking.
10. Medicare Shared Savings Program
    We are proposing certain rules having to do with ACO quality 
reporting: (1) We are proposing conforming changes to align with the 
policies included in the QPP proposed rule, including changes to the 
quality measure set; (2) we are proposing to streamline the quality 
validation audit process and use the results to modify an ACO's overall 
quality score; (3) we are proposing revisions to references to the 
Quality Performance Standard and Minimum Attainment; (4) we are 
clarifying that measures calculated as ratios are excluded from use of 
flat percentages when such benchmarks appear ``clustered'' or ``topped 
out''; and (5) we are proposing to modify our PQRS alignment rules to 
permit flexibility for EPs to report quality data to PQRS to avoid the 
PQRS and VM downward adjustments for 2017 and 2018 in cases where an 
ACO fails to report on their behalf. In addition, we are proposing 
updates to the assignment methodology to include beneficiaries who 
identify ACO professionals as being responsible for coordinating their 
overall care.
    We are also proposing additional beneficiary protections when ACOs 
in Track 3 make use of the SNF 3-day rule waiver. Finally, we are 
proposing certain technical changes and clarifications related to 
reconciliation for ACOs that fall below 5,000 assigned beneficiaries 
and related to our policies for consideration of claims billed by 
merged and acquired TINs.
    Because the proposed policies are not expected to substantially 
change the quality reporting burden for ACOs participating in the 
Shared Savings Program and their ACO participants or change the 
financial calculations, we do

[[Page 46463]]

not anticipate any impact for these proposals.
11. 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.
    In the CY 2015 PFS final rule with comment period (79 FR 67936 and 
67941 through 67942), 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, including physicians that 
participate in an ACO under the Shared Savings Program. In the CY 2014 
PFS final rule with comment period (78 FR 74771 through 74772), we 
established CY 2015 as the performance period for the VM that will be 
applied to payments during CY 2017. In CY 2017, the VM will be waived 
for groups and solo practitioners, as identified by their TIN, if at 
least one EP who billed for Medicare PFS items and services under the 
TIN during 2015 participated in the Pioneer ACO Model or the 
Comprehensive Primary Care initiative in 2015 (80 FR 71288).
    In the CY 2015 PFS final rule with comment period (79 FR 67938 
through 67939), we adopted a two-category approach for the CY 2017 VM 
based on participation in the PQRS by groups and solo practitioners. 
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. We finalized in the CY 2016 
PFS final rule with comment period (80 FR 71280 through 71281) that, 
for the CY 2017 VM, 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. 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. Lastly, Category 
1 will include those solo practitioners that meet the criteria to avoid 
the PQRS payment adjustment for CY 2017 as individuals.
    For groups and solo practitioners that participated in an ACO under 
the Shared Savings Program in CY 2015, they are considered to be 
Category 1 for the CY 2017 VM if the ACO in which they participated 
successfully reported on quality measure via the GPRO Web Interface in 
CY 2015 (79 FR 67946). As discussed in sections III.I. and III.L.1.e. 
of this proposed rule, we are proposing to remove the prohibition on 
EPs who are part of a group or solo practitioner that participates in a 
Shared Savings Program ACO, for purposes of PQRS reporting for the CY 
2017 and CY 2018 payment adjustments, to report outside the ACO. In 
section III.L.3.b. of this proposed rule, we are proposing for the CY 
2017 payment adjustment period, if a Shared Savings Program ACO did not 
successfully report quality data as required by the Shared Savings 
Program under Sec.  425.504 for the CY 2017 PQRS payment adjustment, 
then we propose to use the data reported to the PQRS by the EPs (as a 
group using one of the group registry, QCDR, or EHR reporting options 
or as individuals using the registry, QCDR, or EHR reporting option) 
under the participant TIN) outside of the ACO during the secondary PQRS 
reporting period to determine whether the TIN would fall in Category 1 
or Category 2 under the VM. We are proposing that groups that meet the 
criteria to avoid PQRS payment adjustment for CY 2018 as a group 
practice participating in the PQRS GPRO (using one of the group 
registry, QCDR, or EHR reporting options) or have at least 50 percent 
of the group's EPs meet the criteria to avoid the PQRS payment 
adjustment for CY 2018 as individuals (using the registry, QCDR, or EHR 
reporting option), based on data submitted outside the ACO and during 
the secondary PQRS reporting period, would be included in Category 1 
for the CY 2017 VM. We are also proposing that solo practitioners that 
meet the criteria to avoid the PQRS payment adjustment for CY 2018 as 
individuals using the registry, QCDR, or EHR reporting option, based on 
data submitted outside the ACO and during the secondary PQRS reporting 
period, would be included in Category 1 for the CY 2017 VM. Category 2 
would include those groups and solo practitioners subject to the CY 
2017 VM that participate in a Shared Savings Program ACO 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 of physicians 
with 10 or more EPs and -2.0 percent for groups of physicians with 
between 2 to 9 EPs and physician solo practitioners.
    In the CY 2015 PFS final rule with comment period (79 FR 67939 
through 67941), we finalized that quality-tiering, which is the 
methodology for evaluating performance on quality and cost measures for 
the VM, will apply to all groups of physicians and physician solo 
practitioners in Category 1 for the VM for CY 2017. However, groups of 
physicians with between 2 to 9 EPs and physician solo practitioners 
will be subject only to upward or neutral adjustments derived under 
quality-tiering, while groups of physicians with 10 or more EPs will be 
subject to upward, neutral, or downward adjustments derived under 
quality-tiering. That is, groups of physicians with between 2 to 9 EPs 
and physician solo practitioners in Category 1 would be held harmless 
from any downward adjustments derived under quality-tiering for the CY 
2017 VM.
    Under the quality-tiering methodology, each group and solo 
practitioner's quality and cost composites will be 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 will compare their quality of 
care composite classification with the cost composite classification to 
determine their VM adjustment for the CY 2017 payment adjustment period 
according to the amounts in Tables 45 and 46.

 Table 45--CY 2017 VM Payment Adjustment Amounts Under Quality-Tiering for Groups of Physicians With Two to Nine
                                      EPs and Physician Solo Practitioners
----------------------------------------------------------------------------------------------------------------
                      Cost/quality                          Low quality      Average quality      High quality
----------------------------------------------------------------------------------------------------------------
Low cost...............................................              +0.0%            * +1.0x            * +2.0x
Average cost...........................................              +0.0%              +0.0%            * +1.0x

[[Page 46464]]

 
High cost..............................................              +0.0%              +0.0%              +0.0%
----------------------------------------------------------------------------------------------------------------
* Groups and solo practitioners eligible for an additional +1.0x if reporting 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 46--CY 2017 VM Payment Adjustment Amounts Under Quality-Tiering for Groups of Physicians With Ten or More
                                                       EPs
----------------------------------------------------------------------------------------------------------------
                      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 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.

    Under the quality-tiering methodology, for groups and solo 
practitioners that participated in a Shared Savings ACO that 
successfully reports quality data for CY 2015, the cost composite will 
be classified as ``Average'' and the quality of care composite will be 
based on ACO-level quality measures. We will compare their quality of 
care composite classification with the ``Average'' cost composite 
classification to determine their VM adjustment for the CY 2017 payment 
adjustment period according to the amounts in Tables 45 and 46.
    We are proposing in section III.M.3.b. of this proposed rule, for 
groups and solo practitioners that participate in a Shared Savings 
Program ACO that did not successfully report quality data for CY 2015 
and are in Category 1 as a result of reporting quality data to the PQRS 
outside of the ACO using the secondary PQRS reporting period, we are 
proposing to classify their quality composite for the VM for the CY 
2017 payment adjustment period as ``average quality.'' Their cost 
composite will be classified as ``average cost'' (79 FR 67943).
    To ensure budget neutrality, we first aggregate the downward 
payment adjustments in Tables 45 and 46 for those groups and solo 
practitioners in Category 1 with the automatic downward payment 
adjustments of -2.0 percent or -4.0 percent for groups and solo 
practitioners subject to the VM that fall within Category 2. Using the 
aggregate downward payment adjustment amount, we then calculate the 
upward payment adjustment factor (x). We plan to incorporate 
assumptions about the number of physicians in groups and physician solo 
practitioners in the ACOs that did not successfully report their CY 
2015 quality data whose status could potentially change from Category 2 
to Category 1 if the group or solo practitioner satisfactorily report 
their 2016 data during the secondary PQRS reporting period. 
Additionally, as we had done when calculating the upward payment 
adjustment factor for the 2016 VM, we will also incorporate adjustments 
made for estimated changes in physician behavior (i.e., changes in the 
volume and/or intensity of services delivered and shifting of services 
to TINs that receive higher VM adjustments) and estimated impact of 
pending PQRS and VM informal reviews. These calculations will be done 
after the performance period has ended.
    At the time of this proposed rule, we have not completed the 
analysis of the impact of the VM in CY 2017 on physicians in groups 
with 2 or more EPs and physician solo practitioners based on their 
performance in CY 2015. In the CY 2017 PFS final rule with comment 
period, we will present the number of groups of physicians and 
physician solo practitioners that will be subject to the VM in CY 2017.
12. Physician Self-Referral Updates
    The physician self-referral update provisions are discussed in 
section III.M of this proposed rule. We are re-proposing regulatory 
provisions prohibiting certain per-unit of service compensation 
formulas for determining rental charges in the exceptions for the 
rental of office space, rental of equipment, fair market value 
compensation, and indirect compensation arrangements. These provisions 
are necessary to protect against potential abuses such as 
overutilization and anti-competitive behavior. We believe that most 
parties comply with these regulatory provisions since they originally 
became effective on October 1, 2009, and the re-proposed regulations 
text is identical to the existing regulations text. Therefore, we do 
not believe that the proposals will have a significant burden.

G. Alternatives Considered

    This proposed rule 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. For purposes of the 
payment impact on PFS services of the proposals contained in this 
proposed rule, we presented the estimated impact on total allowed 
charges by specialty. The alternatives we considered, as discussed in 
the preceding preamble sections, would result in different proposed 
payment rates, and therefore result in different estimates than those 
shown in Table 43 (CY 2017 PFS Estimated Impact on Total Allowed 
Charges by Specialty). For example, the estimated increases to primary 
care specialties would be lessened without the proposals to revise 
payment policies for certain care management and patient-specific 
services as described in section II.E. However, because PFS rates are 
based on relative value units, the proposed rates reflect all of the 
proposed changes and eliminating some of the proposed changes might 
have multi-faceted impacts on the payment rates for other services.

H. Impact on Beneficiaries

    There are a number of changes in this proposed rule 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

[[Page 46465]]

used to calculate payments under the PFS, would have a positive impact 
and improve the quality and value of care provided to Medicare 
beneficiaries. In particular, we believe that improving payment for 
primary care and care management services based more accurate 
assessment of patient needs and the resources involved in caring for 
them will benefit beneficiaries by improving care coordination and 
providing more effective treatment, particularly to those beneficiaries 
with behavioral health conditions and mobility-related disabilities.
    Most of the aforementioned proposed 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 our Public User File Impact on Payment for 
Selected Procedures table available on the CMS Web site at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/, the CY 2016 national payment amount in the 
nonfacility setting for CPT code 99203 (Office/outpatient visit, new) 
was $108.85, which means that in CY 2016, a beneficiary would be 
responsible for 20 percent of this amount, or $21.77. Based on this 
proposed rule, using the CY 2017 CF, the CY 2017 national payment 
amount in the nonfacility setting for CPT code 99203, as shown in the 
Impact on Payment for Selected Procedures table, is $108.76, which 
means that, in CY 2017, the proposed beneficiary coinsurance for this 
service would be $21.75.
    As discussed in section III.B of this proposed rule, we are 
proposing that beginning on January 1, 2017, the FQHC base rate would 
be updated using a FQHC-specific market basket instead of using the MEI 
to more accurately reflect changes in the cost of furnishing FQHC 
services. This would result in a higher payment to FQHCs, and since 
coinsurance is 20 percent of the lesser of the FQHC's charge for the 
specific payment code or the PPS rate, beneficiary coinsurance would 
also increase. The FQHC market basket cost estimates in Table 44 
includes a premium offset line which is the amount of cost that would 
be offset by the beneficiaries. The beneficiaries would pay 
approximately $5 million and $35 million over the 5 and 10 year 
projection windows.

I. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Table 47 (Accounting 
Statement), we have prepared an accounting statement. This estimate 
includes growth in incurred benefits from CY 2016 to CY 2017 based on 
the FY 2017 President's Budget baseline.

Table 47--Accounting Statement: Classification of Estimated Expenditures
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
CY 2017 Annualized Monetized Transfers....  Estimated increase in
                                             expenditures of $0.5
                                             billion for PFS CF update.
From Whom To Whom?                          Federal Government to
                                             physicians, other
                                             practitioners and providers
                                             and suppliers who receive
                                             payment under Medicare.
------------------------------------------------------------------------


   Table 48--Accounting Statement: Classification of Estimated Costs,
                          Transfer, and Savings
------------------------------------------------------------------------
                 Category                             Transfers
------------------------------------------------------------------------
CY 2017 Annualized Monetized Transfers of   $0.1 billion.
 beneficiary cost coinsurance.
From Whom to Whom?                          Federal Government to
                                             Beneficiaries.
------------------------------------------------------------------------

J. 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.

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, Biologics, Drugs, Health 
facilities, Health professions, Kidney diseases, Medicare, Reporting 
and recordkeeping requirements.

42 CFR Part 417

    Administrative practice and procedure, Grant programs--health, 
Health care, Health insurance, Health maintenance organizations (HMO), 
Loan programs--health, Medicare, Reporting and recordkeeping 
requirements.

42 CFR Part 422

    Administrative practice and procedure, Health facilities, Health 
maintenance organizations (HMO), Medicare, Penalties, Privacy, 
Reporting and recordkeeping requirements.

42 CFR Part 423

    Administrative practice and procedure, Emergency medical services, 
Health facilities, Health maintenance organizations (HMO), Medicare, 
Penalties, Privacy, Reporting and recordkeeping requirements.

42 CFR Part 424

    Emergency medical services, Health facilities, Health professions, 
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 460

    Aged, Health care, Health records, Medicaid, Medicare, Reporting 
and recordkeeping requirements.

    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services proposes to amend 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).


[[Page 46466]]


0
2. Section 405.373 is amended by--
0
a. Revising paragraphs (a) introductory text and (b).
0
b. Adding paragraph (f).
    The revisions and addition read as follows:


Sec.  405.373  Proceeding for offset or recoupment.

    (a) General rule. Except as specified in paragraphs (b) and (f) of 
this section, if the Medicare Administrative Contractor or CMS has 
determined that an offset or recoupment of payments under Sec.  
405.371(a)(2) should be put into effect, the Medicare Administrative 
Contractor must--
* * * * *
    (b) Paragraph (a) of this section does not apply if the Medicare 
Administrative Contractor, after furnishing a provider a written notice 
of the amount of program reimbursement in accordance with Sec.  
405.1803, recoups payment under paragraph (c) of Sec.  405.1803. (For 
provider rights in this circumstance, see Sec. Sec.  405.1809, 
405.1811, 405.1815, 405.1835, and 405.1843.)
* * * * *
    (f) Paragraph (a) of this section does not apply in instances where 
the Medicare Administrative Contractor intends to offset or recoup 
payments to the applicable provider of services or supplier to satisfy 
an amount due from an obligated provider of services or supplier when 
the applicable and obligated provider of services or supplier share the 
same Taxpayer Identification Number.
0
3. Section 405.2413 is amended by revising paragraph (a)(5) to read as 
follows:


Sec.  405.2413  Services and supplies incident to a physician's 
services.

    (a) * * *
    (5) Furnished under the direct supervision of a physician, except 
that services and supplies furnished incident to transitional care 
management and chronic care management services can be furnished under 
general supervision of a physician when these services or supplies are 
furnished by auxiliary personnel, as defined in Sec.  410.26(a)(1) of 
this chapter.
* * * * *
0
4. Section 405.2415 is amended by revising paragraph (a)(5) to read as 
follows:


Sec.  405.2415  Incident to services and direct supervision.

    (a) * * *
    (5) Furnished under the direct supervision of a nurse practitioner, 
physician assistant, or certified nurse-midwife, except that services 
and supplies furnished incident to transitional care management and 
chronic care management services can be furnished under general 
supervision of a nurse practitioner, physician assistant, or certified 
nurse-midwife, when these services or supplies are furnished by 
auxiliary personnel, as defined in Sec.  410.26(a)(1) of this chapter.
* * * * *

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

0
5. 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, and 1395ddd).

0
6. Section 410.26 is amended by--
0
a. Redesignating paragraphs (a)(3) through (7) as paragraphs (a)(4) 
through (8), respectively.
0
b. Adding new paragraph (a)(3).
0
c. Revising paragraph (b)(5).
    The addition and revision reads as follows:


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

    (a) * * *
    (3) General supervision means the level of supervision by the 
physician (or other practitioner) of auxiliary personnel as defined in 
Sec.  410.32(b)(3)(i).
* * * * *
    (b) * * *
    (5) In general, services and supplies must be furnished under the 
direct supervision of the physician (or other practitioner). Designated 
non-face-to-face care management services can be furnished under 
general supervision of the physician (or other practitioner) when these 
services or supplies are provided 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) who is treating the patient more 
broadly. However, only the supervising physician (or other 
practitioner) may bill Medicare for incident to services.
* * * * *
0
7. Section 410.79 is added to subpart B to read as follows:


Sec.  410.79  Medicare diabetes prevention program expanded model: 
Conditions of coverage.

    (a) Medicare Diabetes Prevention Program (MDPP) services will be 
available beginning on January 1, 2018.
    (b) Definitions. For the purposes of this section the following 
definitions apply:
    Baseline weight refers to the eligible beneficiary's body weight 
recorded during that beneficiary's first core session.
    CDC-approved DPP core curriculum (core curriculum) refers to the 
content of the core sessions delivered during the first 6 months of the 
MDPP core benefit. All of the following 16 covered topics must be 
addressed:
    (i) Welcome to the National Diabetes Prevention Program.
    (ii) Self-Monitoring weight and food intake.
    (iii) Eating less.
    (iv) Healthy eating.
    (v) Introduction to physical activity (Move those muscles).
    (vi) Overcoming barriers to physical activity (Being active--A way 
of life).
    (vii) Balancing calorie intake and output.
    (viii) Environmental cues to eating and physical activity.
    (ix) Problem solving.
    (x) Strategies for healthy eating out.
    (xi) Reversing negative thoughts.
    (xii) Dealing with slips in lifestyle change.
    (xiii) Mixing up your physical activity: Aerobic fitness.
    (xiv) Social cues.
    (xv) Managing stress.
    (xvi) Staying motivated, Program wrap up.
    CDC-approved DPP maintenance curriculum (maintenance curriculum) 
refers to the content of the core maintenance Sessions and ongoing 
maintenance sessions that are delivered as part of the MDPP core 
benefit and MDPP maintenance benefit, respectively. Core maintenance 
sessions and ongoing maintenance sessions must address one or more of 
the following topics:
    (i) Welcome to the second phase of the program.
    (ii) Healthy eating: Taking it one meal at a time.
    (iii) Making active choices.
    (iv) Balance your thoughts for long-term maintenance.
    (v) Healthy eating with variety and balance.
    (vi) Handling holidays, vacations, and special events.
    (vii) More volume, fewer calories (adding water, vegetables, and 
fiber).
    (viii) Dietary fats.
    (ix) Stress and time management.
    (x) Healthy cooking: Tips for food preparation and recipe 
modification.
    (xi) Physical activity barriers.
    (xii) Preventing relapse.
    (xiii) Heart health.

[[Page 46467]]

    (xiv) Life with Type 2 Diabetes.
    (xv) Looking back and looking forward.
    Coach means an individual person who furnishes MDPP services on 
behalf of an MDPP supplier as an employee or contractor.
    Core maintenance sessions refers to the 6 months of monthly 
sessions delivered after the core sessions and are included in the core 
benefit. All core maintenance sessions must address different 
maintenance curriculum topics.
    Core sessions refers to the 16 sessions that are furnished over a 
period of between 16 and 26 weeks that teach the core curriculum. Each 
of the core sessions must address one of the core curriculum topics, 
and all topics must be addressed by the end of the 16 sessions.
    Diabetes Prevention Recognition Program (DPRP) means a program 
administered by the Centers for Disease Control and Prevention (CDC) 
that recognizes organizations that are able to deliver diabetes 
prevention program (DPP) services, follow the CDC-approved DPP 
curriculum, and meet CDC's performance standards and reporting 
requirements.
    Evaluation weight refers to the beneficiary's body weight updated 
from the first core session and recorded before or during that 
beneficiary's final core session.
    Full DPRP recognition refers to the designation from the CDC that 
an organization has consistently delivered CDC-approved DPP sessions, 
met CDC-performance standards and met CDC reporting requirements for at 
least 24-36 months following the organization's application to 
participate in the DPRP.
    MDPP core benefit (core benefit) means a 12-month intensive 
behavioral change program that applies the core curriculum. The core 
benefit consists of 16 core sessions and 6 core maintenance sessions.
    MDPP eligible beneficiary means an individual who satisfies the 
criteria defined in Sec.  410.79(c)(1).
    MDPP maintenance benefit (maintenance benefit) is furnished after 
core benefit has been completed and that covers beneficiaries who 
achieve and maintain the required minimum weight loss percentage.
    MDPP services means the core sessions, core maintenance sessions, 
and ongoing maintenance sessions.
    MDPP supplier means an entity that has either preliminary or full 
DPRP recognition and is enrolled in Medicare to bill for MDPP services.
    Medicare Diabetes Prevention Program (MDPP) refers to an expanded 
model under section 1115A(c) of the Act that makes MDPP services 
available to beneficiaries who meet the eligibility requirements 
specified in paragraph (c)(1) of this section.
    National Diabetes Prevention Program (DPP) means an evidence-based 
intervention targeted to individuals with pre-diabetes that is 
delivered in community and health care settings and administered by the 
Centers for Disease Control and Prevention (CDC).
    Ongoing maintenance sessions refers to the monthly sessions 
furnished after the core benefit has been completed and that teach the 
maintenance curriculum.
    Preliminary DPRP recognition refers to the designation from the CDC 
that an organization has delivered CDC-approved DPP sessions and has 
met CDC DPRP performance standards and reporting requirements for 12 
consecutive months immediately following the organization's application 
to participate in the DPRP.
    Required minimum weight loss means the percentage by which the 
evaluation weight is less than the baseline weight. The required 
minimum weight loss percentage is 5 percent.
    (c) General rule--(1) Beneficiary inclusion criteria. Medicare Part 
B pays for MDPP services for beneficiaries who meet all of the 
following criteria:
    (i) Are enrolled in Medicare Part B.
    (ii) Have as of the date of attendance at the first core session a 
body mass index (BMI) of at least 25 if not self-identified as Asian 
and a BMI of at least 23 if self-identified as Asian.
    (iii) Have within the 12 months prior to attending the first core 
session a hemoglobin A1c test with a value between 5.7 and 6.4 percent, 
a fasting plasma glucose of 110-125 mg/dL, or a 2-hour plasma glucose 
of 140-199 mg/dL (oral glucose tolerance test).
    (iv) Have no previous diagnosis of Type 1 or Type 2 diabetes.
    (v) Does not have end-stage renal disease (ESRD).
    (2) Medicare diabetes prevention program services--(i) Core 
sessions and core maintenance sessions. MDPP suppliers must furnish to 
eligible beneficiaries the core benefit, which includes at least 16 
core sessions that apply the core curriculum and 6 core maintenance 
sessions. All core sessions and core maintenance sessions shall have a 
duration of at least one hour. Sessions may be provided in-person or 
via remote technologies. MDPP suppliers shall address all 16 topics in 
the core curriculum in the core sessions and at least 6 topics in the 
maintenance curriculum in the core maintenance sessions.
    (ii) Ongoing maintenance sessions. MDPP Suppliers shall furnish 
ongoing maintenance sessions to MDPP eligible beneficiaries who have 
achieved and maintained the required minimum weight loss percentage 
after they have completed the core maintenance sessions. All ongoing 
maintenance sessions shall have a duration of at least one hour. 
Sessions may be provided in-person or via remote technologies.
    (d) Limitations on coverage of Medicare diabetes prevention program 
services. (1) The MDPP core benefit is available only once per lifetime 
per MDPP eligible beneficiary.
    (2) The MDPP maintenance benefit is available only if the MDPP 
eligible beneficiary has achieved and maintains the required minimum 
weight loss percentage.

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

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

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

0
9. Section 411.357 is amended by revising paragraphs (a)(5)(ii)(B), 
(b)(4)(ii)(B), (l)(3)(ii), and (p)(1)(ii)(B) to read as follows:


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

* * * * *
    (a) * * *
    (5) * * *
    (ii) * * *
    (B) Per-unit of service rental charges, to the extent that such 
charges reflect services provided to patients referred by the lessor to 
the lessee.
* * * * *
    (b) * * *
    (4) * * *
    (ii) * * *
    (B) Per-unit of service rental charges, to the extent that such 
charges reflect services provided to patients referred by the lessor to 
the lessee.
* * * * *
    (l) * * *
    (3) * * *
    (ii) Per-unit of service rental charges, to the extent that such 
charges reflect services provided to patients referred by the lessor to 
the lessee.
* * * * *
    (p) * * *
    (1) * * *
    (ii) * * *
    (B) Per-unit of service rental charges, to the extent that such 
charges reflect

[[Page 46468]]

services provided to patients referred by the lessor to the lessee.
* * * * *
0
10. Section 411.372 is amended by revising paragraph (a) to read as 
follows:


Sec.  411.372  Procedure for submitting a request.

    (a) Format for a request. A party or parties must submit a request 
for an advisory opinion to CMS according to the instructions specified 
on the CMS Web site.
* * * * *

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

0
11. 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
12. Section 414.22 is amended by revising paragraphs (b)(5) 
introductory text, (b)(5)(i)(A), (b)(5)(i)(B), and (b)(5)(ii) to read 
as follows:


Sec.  414.22  Relative value units (RVUs).

* * * * *
    (b) * * *
    (5) For services furnished in 2002 and subsequent years, the 
practice expense RVUs are based entirely on relative practice expense 
resources.
    (i) * * *
    (A) Facility practice expense RVUs. The facility practice expense 
RVUs apply to services furnished to patients in a hospital (except for 
some services furnished in a provider-based department), a skilled 
nursing facility, a community mental health center, a hospice, or an 
ambulatory surgical center, or in a wholly owned or wholly operated 
entity providing preadmission services under Sec.  412.2(c)(5) of this 
chapter, or via telehealth under Sec.  410.78 of the chapter.
    (B) Nonfacility practice expense RVUs. The nonfacility practice 
expense RVUs apply to services furnished to patients in all locations 
other than those listed in paragraph (A) including, but not limited to, 
a physician's office, the patient's home, a nursing facility, or a 
comprehensive outpatient rehabilitation facility (CORF).
* * * * *
    (ii) Only one practice expense RVU per code can be applied for each 
of the following services: Services that have only technical component 
practice expense RVUs or only professional component practice expense 
RVUs; evaluation and management services, such as hospital or nursing 
facility visits that are furnished exclusively in one setting; and 
major surgical services.
* * * * *


Sec.  414.32  [Removed]

0
13. Section 414.32 is removed.
0
14. Section 414.90 is amended by adding paragraphs (j)(1)(ii), 
(j)(4)(v), (j)(7)(viii) and (k)(4)(ii) to read as follows:


Sec.  414.90  Physician Quality Reporting System (PQRS).

* * * * *
    (j) * * *
    (1) * * *
    (ii) Secondary Reporting Period for the 2017 PQRS payment 
adjustment for certain eligible professionals or group practices--
Individual eligible professionals or group practices, who bill under 
the TIN of an ACO participant if the ACO failed to report data on 
behalf of such EPs or group practices during the previously established 
reporting period for the 2017 PQRS payment adjustment, may separately 
report during a secondary reporting period for the 2017 PQRS payment 
adjustment. The secondary reporting period for the 2017 PQRS payment 
adjustment for the affected individual eligible professionals or group 
practices is January 1, 2016 through December 31, 2016.
* * * * *
    (4) * * *
    (v) Paragraphs (j)(8)(ii), (iii), and (iv) of this section apply to 
individuals reporting using the secondary reporting period established 
under paragraph (j)(1)(ii) of this section for the 2017 PQRS payment 
adjustment.
* * * * *
    (7) * * *
    (viii) Paragraphs 414.90(j)(9)(ii), (iii), and (iv) of this section 
apply to group practices reporting using the secondary reporting period 
established under paragraph (j)(1)(ii) of this section for the 2017 
PQRS payment adjustment.
* * * * *
    (k) * * *
    (4) * * *
    (ii) Section 414.90(k)(5) applies to individuals and group 
practices reporting using the secondary reporting period established 
under paragraph (j)(1)(ii) of this section for the 2017 PQRS payment 
adjustment.
* * * * *
0
15. Section 414.94 is amended by--
0
a. Amending paragraph (b) to add the definitions of ``Applicable 
payment system'' and ``Clinical decision support mechanism'' in 
alphabetical order.
0
b. Adding paragraphs (e)(5), (g), (h), and (i).
    The additions read as follows:


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

* * * * *
    (b) * * *
    Applicable payment system means the following:
    (i) The physician fee schedule established under section 1848(b) of 
the Act;
    (ii) The prospective payment system for hospital outpatient 
department services under section 1833(t) of the Act; and
    (iii) The ambulatory surgical center payment systems under section 
1833(i) of the Act.
* * * * *
    Clinical decision support mechanism (CDSM) means the following: An 
interactive, electronic tool for use by clinicians that communicates 
AUC information to the user and assists them in making the most 
appropriate treatment decision for a patient's specific clinical 
condition. Tools may be modules within or available through certified 
EHR technology (as defined in section 1848(o)(4)) of the Act or private 
sector mechanisms independent from certified EHR technology or 
established by the Secretary.
* * * * *
    (e) * * *
    (5) Priority clinical areas include the following:
    (i) Chest pain (including angina, suspected myocardial infarction 
and suspected pulmonary embolism).
    (ii) Abdominal pain (any location including flank pain).
    (iii) Headache (non-traumatic and traumatic).
    (iv) Altered mental status.
    (v) Low back pain.
    (vi) Suspected stroke.
    (vii) Cancer of the lung (primary or metastatic, suspected or 
diagnosed).
    (viii) Cervical or neck pain.
* * * * *
    (g) Qualified clinical decision support mechanisms (CDSMs). 
Qualified CDSMs are those specified as such by CMS. Qualified CDSMs 
must adhere to the requirements described in paragraph (g)(1) of this 
section.
    (1) Requirements for qualification of CDSMs. A CDSM must meet all 
of the following requirements:
    (i) Make available specified applicable AUC and the related 
documentation supporting the appropriateness of the applicable imaging 
service ordered.
    (ii) Identify the appropriate use criterion consulted if the CDSM 
makes available more than one criterion relevant to a consultation for 
a patient's specific clinical scenario.

[[Page 46469]]

    (iii) Make available, at a minimum, specified applicable AUC that 
reasonably encompass the entire clinical scope of all priority clinical 
areas identified in paragraph (e)(5) of this section.
    (iv) Be able to incorporate specified applicable AUC from more than 
one qualified PLE.
    (v) Determines, for each consultation, the extent to which the 
applicable imaging service is consistent with specified applicable AUC 
or a determination of ``not applicable'' when the mechanism does not 
contain a criterion that would apply to the consultation.
    (vi) Generate and provide a certification or documentation to the 
ordering professional that documents which qualified CDSM was 
consulted; the name and national provider identifier (NPI) of the 
ordering professional that consulted the CDSM; and whether the service 
ordered would adhere to specified applicable AUC, whether the service 
ordered would not adhere to specified applicable AUC or whether 
specified applicable AUC was not applicable to the service ordered.
    (A) Certification or documentation must be issued each time an 
ordering professional consults a qualified CDSM.
    (B) Certification or documentation must include a unique 
consultation identifier generated by the CDSM.
    (vii) Update AUC content at least every 12 months to reflect 
revisions or updates made by qualified PLEs to their AUC sets or an 
individual appropriate use criterion.
    (A) A protocol must be in place to expeditiously remove AUC 
determined by the qualified PLE to be potentially dangerous to patients 
and/or harmful if followed.
    (B) Specified applicable AUC that reasonably encompass the entire 
clinical scope of any new priority clinical area must be made available 
for consultation through the qualified CDSM within 12 months of the 
priority clinical area being finalized by CMS.
    (viii) Meet privacy and security standards under applicable 
provisions of law.
    (ix) Provide to the ordering professional aggregate feedback 
regarding their consultations with specified applicable AUC in the form 
of an electronic report on at least an annual basis.
    (x) Maintain electronic storage of clinical, administrative, and 
demographic information of each unique consultation for a minimum of 6 
years.
    (xi) Comply with modification(s) to any requirements under 
paragraph (g)(1) of this section made through rulemaking within 12 
months of the effective date of the modification.
    (2) Process to specify qualified CDSMs. (i) The CDSM developer must 
submit an application to CMS for review that documents adherence to 
each of the CDSM requirements outlined in paragraph (g)(1) of this 
section;
    (ii) Applications must be received by CMS annually by January 1;
    (iii) All qualified CDSMs specified by CMS in each year will be 
included on the list of specified qualified CDSMs posted to the CMS Web 
site by June 30 of that year; and
    (iv) Qualified CDSMs are specified by CMS as such for a period of 5 
years.
    (v) Qualified CDSMs are required to re-apply during the fifth year 
after they are specified by CMS in order to maintain their status as 
qualified CDSMs. This application must be received by CMS by January 1 
of the 5th year after the developers' most recent approval date.
    (h) Identification of non-adherence to requirements for qualified 
CDSMs. (1) If a qualified CDSM is found non-adherent to the 
requirements in paragraph (g)(1) of this section, CMS may terminate its 
qualified status or may consider this information during 
requalification.
    (i) Exceptions. Consulting and reporting requirements are not 
required for orders for applicable imaging services made by ordering 
professionals under the following circumstances:
    (1) Emergency services when provided to individuals with emergency 
medical conditions as defined in section 1867(e)(1) of the Act.
    (2) For an inpatient and for which payment is made under Medicare 
Part A.
    (3) Ordering professionals who are granted a significant hardship 
exception to the Medicare EHR Incentive Program payment adjustment for 
that year under Sec.  495.102(d)(4) of this chapter, except for those 
granted such an exception under Sec.  495.102(d)(4)(iv)(C) of this 
chapter.
0
16. Section 414.1210 is amended by revising paragraphs (b)(2)(i)(B), 
(C), (D), and (F) to read as follows:


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

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (B) For groups and solo practitioners that participate in a Shared 
Savings Program ACO that successfully reports quality data as required 
by the Shared Savings Program under Sec.  425.504, 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. For the CY 2017 and 2018 payment adjustment periods, for groups 
and solo practitioners who participate in a Shared Savings Program ACO 
that does not successfully report quality data as required by the 
Shared Savings Program under Sec.  425.504 and who meet the 
requirements to avoid the PQRS payment adjustment for CY 2018 by 
reporting to the PQRS outside the ACO, the quality composite is 
classified as ``average'' under Sec.  414.1275(b).
    (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 (or groups and solo practitioners that participate in 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 period, except that if 
the ACO (or groups and solo practitioners that

[[Page 46470]]

participate in 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.
* * * * *
    (F) For groups and solo practitioners that participate in a Shared 
Savings Program ACO that successfully reports quality data as required 
by the Shared Savings Program under Sec.  425.504 of this chapter, 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.
* * * * *

PART 417--HEALTH MAINTENANCE ORGANIZATIONS, COMPETITIVE MEDICAL 
PLANS, AND HEALTH CARE PREPAYMENT PLANS

0
17. The authority citation for part 417 continues to read as follows:

    Authority: Secs. 1102 and 1871 of the Social Security Act (42 
U.S.C. 1302 and 1395hh), secs. 1301, 1306, and 1310 of the Public 
Health Service Act (42 U.S.C. 300e, 300e-5, and 300e-9), and 31 
U.S.C. 9701.

0
18. Section 417.478 is amended by adding paragraph (e) to read as 
follows:


Sec.  417.478  Requirements of other laws and regulations.

* * * * *
    (e) Sections 422.222 and 422.224 of this chapter which requires all 
providers or suppliers, as defined in section 1861 of the Act, to be 
enrolled in Medicare in an approved status and prohibits payment to 
providers and suppliers that are excluded or revoked.
0
19. Section 417.484 is amended by adding paragraph (b)(3) to read as 
follows:


Sec.  417.484  Requirement applicable to related entities.

    (b) * * *
    (3) All providers and suppliers, as defined in section 1861 of the 
Act, are enrolled in Medicare in an approved status.

PART 422--MEDICARE ADVANTAGE PROGRAM

0
20. The authority citation for part 422 continues to read as follows:

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

0
21. Section 422.1 is amended by redesignating paragraphs (a)(1)(i) 
through (x) as paragraphs (a)(1)(ii) through (xi) and adding new 
paragraph (a)(1)(i) to read as follows:


Sec.  422.1  Basis and scope.

    (a) * * *
    (1) * * *
    (i) 1106--Disclosure of information in possession of agency.
* * * * *
0
22. Section 422.204 is amended by adding paragraph (b)(5) to read as 
follows:


Sec.  422.204  Provider selection and credentialing.

* * * * *
    (b) * * *
    (5) Ensures compliance with the provider and supplier enrollment 
requirements at Sec.  422.222.
0
23. Section 422.222 is added to subpart E to read as follows:


Sec.  422.222  Enrollment of MA organization network providers and 
suppliers; first-tier, downstream, and related entities (FDRs); and 
providers and suppliers in Program of All-inclusive Care for the 
Elderly (PACE) plans, cost HMO or CMP, and demonstration and pilot 
programs.

    (a) Providers or suppliers that are types of individuals or 
entities that can enroll in Medicare in accordance with section 1861 of 
the Act, must be enrolled in Medicare and be in an approved status in 
Medicare in order to provide health care items or services to a 
Medicare enrollee who receives his or her Medicare benefit through an 
MA organization. This requirement applies to all of the following 
providers and suppliers:
    (1) Network providers and suppliers.
    (2) First-tier, downstream, and related entities (FDR).
    (3) Providers and suppliers in Program of All-inclusive Care for 
the Elderly (PACE) plans.
    (4) Providers and suppliers in Cost HMOs or CMPs, as defined in 42 
CFR part 417.
    (5) Providers and suppliers participating in demonstration 
programs.
    (6) Providers and suppliers in pilot programs.
    (7) Locum tenens suppliers.
    (8) Incident-to suppliers.
    (b) MA organizations that do not ensure that providers and 
suppliers comply with paragraph (a) of this section, may be subject to 
sanctions under Sec.  422.750 and termination under Sec.  422.510.
0
24. Section 422.224 is added to subpart E to read as follows:


Sec.  422.224  Payment to providers or suppliers excluded or revoked.

    (a) An MA organization may not pay, directly or indirectly, on any 
basis, for items or services (other than emergency or urgently needed 
services as defined in Sec.  422.2) furnished to a Medicare enrollee by 
any individual or entity that is excluded by the Office of the 
Inspector General (OIG) or is revoked from the Medicare program except 
as provided in paragraph (b) of this section.
    (b) If an MA organization receives a request for payment by, or on 
behalf of, an individual or entity that is excluded by the OIG or is 
revoked in the Medicare program, the MA organization must notify the 
enrollee and the excluded or revoked individual or entity in writing, 
as directed by contract or other direction provided by CMS, that future 
payments must not be made. Payment may not be made to, or on behalf of, 
an individual or entity after the first payment is made or as permitted 
in-writing by CMS.
0
25. Section 422.250 is revised to read as follows:


Sec.  422.250  Basis and scope.

    This subpart is based largely on section 1854 of the Act, but also 
includes provisions from sections 1853 and 1858 of the Act, and is also 
based on section 1106 of the Act. It sets forth the requirements for 
the Medicare Advantage bidding payment methodology, including CMS' 
calculation of benchmarks, submission of plan bids by Medicare 
Advantage (MA) organizations, establishment of beneficiary premiums and 
rebates through comparison of plan bids and benchmarks, negotiation and 
approval of bids by CMS, and the release of MA bid submission data.
0
26. Section 422.272 is added to subpart F to read as follows:

[[Page 46471]]

Sec.  422.272  Release of MA bid pricing data.

    (a) Terminology. For purposes of this section, the term ``MA bid 
pricing data'' means the following information that MA organizations 
must submit for each MA plan bid for the annual bid submission:
    (1) The pricing-related information described at Sec.  
422.254(a)(1); and
    (2) The information required for MSA plans, described at Sec.  
422.254(e).
    (b) Release of MA bid pricing data. Subject to paragraph (c) of 
this section and to the annual timing identified in paragraph (d) of 
this section, CMS will release to the public MA bid pricing data for MA 
plan bids accepted or approved by CMS for a contract year under Sec.  
422.256. The annual release will contain MA bid pricing data from the 
final list of MA plan bids accepted or approved by CMS for a contract 
year that is at least 5 years prior to the upcoming calendar year.
    (c) Exclusions from release of MA bid pricing data. For the purpose 
of this section, the following information is excluded from the data 
released under paragraph (b) of this section:
    (1) For an MA plan bid that includes Part D benefits, the 
information described at Sec.  422.254(b)(1)(ii), (c)(3)(ii), and 
(c)(7);
    (2) Additional information that CMS requires to verify the 
actuarial bases of the bids for MA plans for the annual bid submission 
as follows:
    (i) Narrative information on base period factors, manual rates, 
cost-sharing methodology, optional supplement benefits, and other 
required narratives; and
    (ii) Supporting documentation.
    (3) Any information that could be used to identify Medicare 
beneficiaries and other individuals.
    (4) Bid review correspondence and reports.
    (d) Timing of data release. CMS will release MA bid pricing data as 
provided in paragraph (b) of this section on an annual basis after the 
first Monday in October.
0
27. Section 422.501 is amended by adding paragraph (c)(1)(iv) and 
revising paragraph (c)(2) to read as follows:


Sec.  422.501  Application requirements.

* * * * *
    (c) * * *
    (1) * * *
    (iv) Documentation that all providers and suppliers in the MA or 
MA-PD plan who can enroll in Medicare, are enrolled in an approved 
status.
    (2) The authorized individual must thoroughly describe how the 
entity and MA plan meet, or will meet, all the requirements described 
in this part, including providing documentation that all providers and 
suppliers referenced in Sec.  422.222 are enrolled in Medicare in an 
approved status.
* * * * *
0
28. Section 422.504 is amended by--
0
A. Revising paragraph (a)(6).
0
B. Adding paragraph (i)(2)(v).
0
C. Revising paragraph (n).
    The revisions and addition read as follows:


Sec.  422.504  Contract provisions.

* * * * *
    (a) * * *
    (6) To comply with all applicable provider and supplier 
requirements in subpart E of this part, including provider 
certification requirements, anti-discrimination requirements, provider 
participation and consultation requirements, the prohibition on 
interference with provider advice, limits on provider indemnification, 
rules governing payments to providers, limits on physician incentive 
plans, and Medicare provider and supplier enrollment requirements.
* * * * *
    (i) * * *
    (2) * * *
    (v) They will require all of their providers and suppliers to be 
enrolled in Medicare in an approved status consistent with Sec.  
422.222.
* * * * *
    (n) Acknowledgements of CMS release of data--(1) Summary CMS 
payment data. The contract must provide that the MA organization 
acknowledges that CMS releases to the public summary reconciled CMS 
payment data after the reconciliation of Part C and Part D payments for 
the contract year as follows:
    (i) For Part C, the following data--
    (A) Average per member per month CMS payment amount for A/B 
(original Medicare) benefits for each MA plan offered, standardized to 
the 1.0 (average risk score) beneficiary.
    (B) Average per member per month CMS rebate payment amount for each 
MA plan offered (or, in the case of MSA plans, the monthly MSA deposit 
amount).
    (C) Average Part C risk score for each MA plan offered.
    (D) County level average per member per month CMS payment amount 
for each plan type in that county, weighted by enrollment and 
standardized to the 1.0 (average risk score) beneficiary in that 
county.
    (ii) For Part D plan sponsors, plan payment data in accordance with 
Sec.  423.505(o) of this subchapter.
    (2) MA bid pricing data and Part C MLR data. The contract must 
provide that the MA organization acknowledges that CMS releases to the 
public data as described at Sec. Sec.  422.272 and 422.2490.
* * * * *
0
29. Section 422.510 is amended by adding paragraph (a)(4)(xiii) to read 
as follows:


Sec.  422.510  Termination of contract by CMS.

    (a) * * *
    (4) * * *
    (xiii) Fails to meet provider and supplier enrollment requirements 
in accordance with Sec. Sec.  422.222 and 422.224.
* * * * *
0
30. Section 422.752 is amended by adding paragraph (a)(13) to read as 
follows:


Sec.  422.752  Basis for imposing intermediate sanctions and civil 
money penalties.

    (a) * * *
    (13) Fails to comply with Sec. Sec.  422.222 and 422.224, that 
requires the MA organization to ensure providers and suppliers are 
enrolled in Medicare and not make payment to excluded or revoked 
individuals or entities.
* * * * *
0
31. Section 422.2400 is revised to read as follows:


Sec.  422.2400  Basis and scope.

    This subpart is based on sections 1857(e)(4), 1860D-12(b)(3)(D), 
and 1106 of the Act, and sets forth medical loss ratio requirements for 
Medicare Advantage organizations, financial penalties and sanctions 
against MA organizations when minimum medical loss ratios are not 
achieved by MA organizations, and release of medical loss ratio data to 
entities outside of CMS.
0
32. Section 422.2490 is added to subpart X to read as follows:


Sec.  422.2490  Release of Part C MLR data.

    (a) Terminology. Subject to the exclusions in paragraph (b) of this 
section, Part C MLR data consists of the information contained in 
reports submitted under Sec.  422.2460.
    (b) Exclusions from Part C MLR data. For the purpose of this 
section, the following items are excluded from Part C MLR data:
    (1) Narrative descriptions that MA organizations submit to support 
the information reported to CMS pursuant to the reporting requirements 
at Sec.  422.2460, such as descriptions of expense allocation methods;
    (2) Information that is reported at the plan level, such as the 
number of member months associated with each plan under a contract;

[[Page 46472]]

    (3) Any information that could be used to identify Medicare 
beneficiaries and other individuals; and
    (4) MLR review correspondence.
    (c) Data release. CMS releases to the public Part C MLR data, for 
each contract for each contract year, no earlier than 18 months after 
the end of the applicable contract year.

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

0
33. The authority citation for part 423 continues to read as follows:

    Authority:  Sections 1102, 1106, 1860D-1 through 1860D-42, and 
1871 of the Social Security Act (42 U.S.C. 1302, 1306, 1395w-101 
through 1395w-152, and 1395hh).

0
34. Section 423.505 is amended by revising paragraph (o) to read as 
follows:


Sec.  423.505  Contract provisions.

* * * * *
    (o) Acknowledgements of CMS release of data--(1) Summary CMS 
payment data. The contract must provide that the Part D sponsor 
acknowledges that CMS releases to the public summary reconciled Part D 
payment data after the reconciliation of Part D payments for the 
contract year as follows:
    (i) The average per member per month Part D direct subsidy 
standardized to the 1.0 (average risk score) beneficiary for each Part 
D plan offered.
    (ii) The average Part D risk score for each Part D plan offered.
    (iii) The average per member per month Part D plan low-income cost 
sharing subsidy for each Part D plan offered.
    (iv) The average per member per month Part D Federal reinsurance 
subsidy for each Part D plan offered.
    (v) The actual Part D reconciliation payment data summarized at the 
Parent Organization level including breakouts of risk sharing, 
reinsurance, and low income cost sharing reconciliation amounts.
    (2) Part D MLR data. The contract must provide that the Part D 
sponsor acknowledges that CMS releases to the public data as described 
at Sec.  423.2490.
* * * * *
0
35. Section 423.2400 is revised to read as follows:


Sec.  423.2400  Basis and scope.

    This subpart is based on sections 1857(e)(4), 1860D-12(b)(3)(D), 
and 1106 of the Act, and sets forth medical loss ratio requirements for 
Part D sponsors, financial penalties and sanctions against Part D 
sponsors when minimum medical loss ratios are not achieved by Part D 
sponsors and release of medical loss ratio data to entities outside of 
CMS.
0
36. Section 423.2490 is added to subpart X to read as follows:


Sec.  423.2490  Release of Part D MLR data.

    (a) Terminology. Subject to the exclusions in paragraph (b) of this 
section, Part D MLR data consists of the information contained in 
reports submitted under Sec.  423.2460.
    (b) Exclusions from Part D MLR data. For the purpose of this 
section, the following items are excluded from Part D MLR data:
    (1) Narrative descriptions that Part D sponsors submit to support 
the information reported to CMS pursuant to the reporting requirements 
at Sec.  423.2460, such as descriptions of expense allocation methods;
    (2) Information that is reported at the plan level, such as the 
number of member months associated with each plan under a contract;
    (3) Any information that could be used to identify Medicare 
beneficiaries and other individuals; and
    (4) MLR review correspondence.
    (c) Data release. CMS releases to the public Part D MLR data, for 
each contract for each contract year, no earlier than 18 months after 
the end of the applicable contract year.

PART 424--CONDITIONS FOR MEDICARE PAYMENT

0
37. The authority citation for part 424 continues to read as follows:

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

0
38. Section 424.59 is added to subpart D to read as follows:


Sec.  424.59  Payment to organizations that provide Medicare Diabetes 
Prevention Program Services.

    (a) Conditions for enrollment. An entity that is not already 
enrolled in Medicare on the basis of being an existing Medicare 
provider or supplier may enroll as an MDPP supplier if it satisfies the 
following criteria:
    (1) Has Full DPRP recognition, or has preliminary DPRP recognition 
and progresses to full DPRP recognition within 36 months of the date 
upon which it applied for DPRP recognition.
    (2) Has obtained and maintains an active and valid TIN and NPI at 
the organizational level.
    (3) Has passed application screening at a high categorical risk 
level per Sec.  424.518(c).
    (4) All coaches who will be furnishing MDPP services on the 
entity's behalf have obtained and maintain active and valid NPIs.
    (b) Conditions for existing Medicare providers or suppliers. An 
existing Medicare provider or supplier that wishes to bill for MDPP 
would not have to submit a separate enrollment application but must 
satisfy the following criteria:
    (1) Has Full DPRP recognition, or has preliminary DPRP recognition 
and progresses to full DPRP recognition within 36 months of the date 
upon which it applied for DPRP recognition.
    (2) All coaches who will be furnishing MDPP services on the 
entity's behalf have obtained and maintain active and valid NPIs.
    (c) Conditions for payment of claims for MDPP services provided. An 
MDPP supplier must meet all of the following requirements in order to 
receive payment for claims made for MDPP Services provided:
    (1) Establishes and maintains a recordkeeping system that is 
adequate to document and monitor beneficiaries' session attendance and 
weight at every MDPP session. MDPP suppliers are required to maintain 
and handle any beneficiary PII and PHI in compliance with HIPAA, other 
applicable privacy laws and CMS standards.
    (2) Maintains a crosswalk between the beneficiary identifiers 
submitted to CMS for billing and the beneficiary identifiers submitted 
to CDC for beneficiary level-clinical data.
    (3) Attests that the MDPP eligible beneficiary for which it is 
submitting a claim has attended 1, 4 or 9 core sessions, and, if 
applicable, achieved the required minimum weight loss percentage 
specified in Sec.  410.79 of this chapter.
    (4) If applicable, attests that the MDPP eligible beneficiary for 
which it is submitting a claim has maintained the required minimum 
weight loss percentage and attended core maintenance sessions.
    (5) If applicable, attests that the MDPP eligible beneficiary for 
which it is submitting a claim has maintained the required minimum 
weight loss percentage and attended ongoing maintenance sessions.
    (6) Submits any documentation requested by CMS or a Medicare 
contractor to substantiate the attestations described in this section 
or claims submitted for payment under the Medicare program.
    (7) Submits any documentation requested by CMS or a Medicare 
contractor to support supplier or coach enrollment in Medicare.
    (8) Complies with the requirements of subpart P of this part.
    (9) Retains beneficiary records for 7 years from the date of 
service, and upon request of CMS or a Medicare contractor provides 
access to such records.

[[Page 46473]]

    (i) The records must contain detailed documentation of the services 
provided including the beneficiary's eligibility status, sessions 
attended, the coach furnishing the session attended, the date and place 
of service of sessions attended, and weight.
    (ii) The records shall be maintained within a larger medical 
record, or within a medical record that an MDPP supplier establishes 
for the purposes administering MDPP.
    (d) Loss of MDPP billing privileges. An MDPP supplier is subject to 
revocation of Medicare billing privileges for MDPP services if any of 
the following occur:
    (1) Fails to move from Preliminary to Full Recognition within 36 
months of applying for DPRP recognition.
    (2) Loses its DPRP recognition or withdraws from seeking DPRP 
recognition.
    (3) Medicare suppliers that lose DPRP recognition will lose 
Medicare billing privileges for MDPP services, but may continue to bill 
for non-MDPP services for which they remain eligible to bill.
    (e) Restoration of MDPP billing privileges; appeal rights. An MDPP 
supplier that has lost its MDPP billing privileges may:
    (1) Become eligible to bill for MDPP services again if it reapplies 
for DPRP recognition, successfully achieves preliminary DPRP 
recognition, and, as applicable, reenrolls in Medicare as an MDPP 
supplier subject to Sec.  424.59(a).
    (2) Appeal in accordance with the procedures specified in 42 CFR 
part 405, subpart H, 42 CFR part 424, and 42 CFR part 498.

PART 425--MEDICARE SHARED SAVINGS PROGRAM

0
39. Authority: Secs. 1102, 1106, 1871, and 1899 of the Social Security 
Act (42 U.S.C. 1302 and 1395hh).
0
40. Section 425.110 is amended by revising paragraph (b)(1) to read as 
follows:


Sec.  425.110  Number of ACO professionals and beneficiaries.

* * * * *
    (b) * * *
    (1) While under the CAP, the ACO remains eligible for shared 
savings and losses.
    (i) For ACOs with a variable MSR and MLR (if applicable), the MSR 
and MLR (if applicable) will be set at a level consistent with the 
number of assigned beneficiaries.
    (ii) For ACOs with a fixed MSR/MLR, the MSR/MLR will remain fixed 
at the level consistent with the ACO's choice of MSR and MLR that the 
ACO made at the start of the agreement period.
* * * * *


Sec.  425.204  [Amended]

0
41. Sec.  425.204 is amended by--
0
a. Amending paragraph (g) heading to remove the phrase ``and acquired 
Medicare-enrolled TINs'' and adding in its place the phrase ``and 
acquired entities' TINs''.
0
b. Amending paragraph (g) introductory text to remove the phrase 
``claims billed by Medicare-enrolled entities' TINs that'' and adding 
in its place the phrase ``claims billed under the TINs of entities 
that''.
0
c. Amending paragraph (g)(1) introductory text to remove the phrase 
``an acquired Medicare-enrolled entity's TIN'' and adding in its place 
the phrase ``an acquired entity's TIN''.
0
d. Amending paragraph (g)(1)(i) to remove the phrase ``the acquired 
entity's Medicare-enrolled TIN'' and adding in its place the phrase 
``the acquired entity's TIN''
0
e. Amending paragraph (g)(2)(i)(A) to remove the phrase ``Identifies by 
Medicare-enrolled TIN'' and adding in its place the phrase ``Identifies 
by TIN''.


Sec.  425.316  [Amended]

0
42. Amend 425.316--
0
a. In paragraph (c)(1), by removing the phrase ``minimum attainment 
level in one or more domains as determined under Sec.  425.502 and may 
be subject to a CAP. CMS, may forgo the issuance'' and adding in its 
place the phrase ``minimum attainment level on at least 70 percent of 
the measures, as determined under Sec.  425.502, in one or more domains 
and may be subject to a CAP. CMS may forgo the issuance''.
0
b. In paragraph (c)(2) by removing the phrase ``quality performance 
standards'' and adding in its place the phrase ``quality performance 
standard''.
0
43. Section 425.402 is amended by adding paragraph (e) to read as 
follows:


Sec.  425.402  Basic assignment methodology.

* * * * *
    (e) Beginning in performance year 2018, CMS will supplement the 
claims-based assignment methodology described in this section with 
information provided by beneficiaries regarding the provider or 
supplier they consider responsible for coordinating their overall care. 
If a system is available by spring 2017 to allow a beneficiary to 
designate a provider or supplier as responsible for coordinating their 
overall care and CMS to process the designation electronically, then 
the voluntary alignment process under paragraph (e) will be available 
for ACOs participating in Track 1, Track 2, or Track 3, as specified in 
Sec.  425.600(a). If such an electronic system is not available by 
spring 2017, CMS will specify the form and manner in which a 
beneficiary may designate a provider or supplier as responsible for 
coordinating their overall care using a manual process, but the 
voluntary alignment process will be limited to ACOs participating in 
Track 3 until an electronic system is available.
    (1) Notwithstanding the assignment methodology under paragraph (b) 
of this section, beneficiaries who designate an ACO professional 
participating in an ACO as responsible for coordinating their overall 
care will be added to the ACO's list of assigned beneficiaries for a 
performance year under all of the following conditions:
    (i) The beneficiary must have had at least one primary care service 
with a physician who is an ACO professional in the ACO and who is a 
primary care physician as defined under Sec.  425.20 or who has one of 
the primary specialty designations included in paragraph (c) of this 
section.
    (ii) The beneficiary meets the eligibility criteria established at 
Sec.  425.401(a) and must not be excluded by the criteria at Sec.  
425.401(b).
    (iii) The beneficiary must have designated an ACO professional who 
is a primary care physician as defined at Sec.  425.20, a physician 
with a specialty designation included at paragraph (c) of this section, 
or a nurse practitioner, physician assistant, or clinical nurse 
specialist as responsible for their overall care.
    (iv) If a beneficiary has designated a provider or supplier outside 
the ACO who is a primary care physician as defined at Sec.  425.20, a 
physician with a specialty designation included at paragraph (c) of 
this section, or a nurse practitioner, physician assistant, or clinical 
nurse specialist, as responsible for coordinating their overall care, 
the beneficiary will not be added to the ACO's list of assigned 
beneficiaries for a performance year under the assignment methodology 
in paragraph (b).
    (2) The ACO, ACO participants, ACO providers/suppliers, ACO 
professionals, and other individuals or entities performing functions 
and services related to ACO activities are prohibited from providing or 
offering gifts or other remuneration to Medicare beneficiaries as 
inducements for influencing a Medicare beneficiary's decision to 
designate or not to designate an ACO professional under paragraph (e) 
of this section. The ACO, ACO participants, ACO providers/suppliers, 
ACO professionals, and other individuals or entities performing 
functions and services related to ACO activities must not, directly or 
indirectly, commit any

[[Page 46474]]

act or omission, nor adopt any policy that coerces or otherwise 
influences a Medicare beneficiary's decision to designate or not to 
designate an ACO professional as responsible for coordinating their 
overall care under paragraph (e) of this section, including but not 
limited to the following:
    (i) Offering anything of value to the Medicare beneficiary as an 
inducement for influencing the Medicare beneficiary's decision to 
designate or not to designate an ACO professional as responsible for 
coordinating their overall care under paragraph (e) of this section. 
Any items or services provided in violation of paragraph (e)(3) will 
not be considered to have a reasonable connection to the medical care 
of the beneficiary, as required under Sec.  425.304(a)(2);
    (ii) Withholding or threatening to withhold medical services or 
limiting or threatening to limit access to care.
    (iii) If a manual process is implemented by CMS, including any 
voluntary alignment form that requires a beneficiary signature with any 
other materials or forms, including but not limited to, any other 
materials requiring the signature of the Medicare beneficiary.
0
44. Section 425.500 is amended by revising paragraphs (e)(2) and (3) to 
read as follows:


Sec.  425.500  Measures to assess the quality of care furnished by an 
ACO.

* * * * *
    (e) * * *
    (2) If, at the conclusion of the audit process the overall audit 
match rate between the quality data reported and the medical records 
provided under paragraph (e)(1) of this section is less than 90 
percent, CMS will adjust the ACO's overall quality score proportional 
to the ACO's audit performance.
    (3) If, at the conclusion of the audit process CMS determines there 
is an audit match rate of less than 90 percent, the ACO may be required 
to submit a CAP under Sec.  425.216 for CMS approval.
* * * * *
0
45. Section 425.502 is amended by--
0
a. Revising paragraph (a) introductory text.
0
b. In paragraph (a)(1), removing the phrase ``period, CMS, CMS 
defines'' and adding in its place the phrase ``period, CMS defines''
0
c. In paragraphs (a)(2) and (a)(3), removing the phrase ``level of 
certain measures'' and adding in its place ``level of all measures''
0
d. In paragraph (a)(4), removing the phrases ``The quality performance 
standard for a newly'' and ``periods, the quality performance standard 
for the measure'' and adding in its place the phrases ``A newly'' and 
``periods, the measure'', respectively.
0
e. In paragraph (b)(2)(ii), removing the phrase ``95 percentt'' and 
adding in its place the phrase ``95 percent''.
0
f. Revising paragraph (b)(3).
0
g. In paragraph (c)(2), removing the phrase ``level for a measure'' and 
adding in its place the phrase ``level for a pay-for-performance 
measures''.
0
h. Adding paragraph (c)(5).
0
i. In paragraph (d), removing the phrase ``quality performance 
requirements'' each time it appears and adding in its place the phrase 
``quality requirements''.
0
j. In paragraph (d)(1) introductory text, removing the phrase 
``individual quality performance standard measures'' and adding in its 
place the phrase ``individual measures''.
0
k. Revising paragraph (d)(2)(ii).
    The revisions and addition read as follows:


Sec.  425.502  Calculating the ACO quality performance score.

    (a) Establishing a quality performance standard. CMS designates the 
quality performance standard in each performance year. The quality 
performance standard is the overall standard the ACO must meet in order 
to be eligible for shared savings.
* * * * *
    (b) * * *
    (3) The minimum attainment level for pay for performance measures 
is set at 30 percent or the 30th percentile of the performance 
benchmark. The minimum attainment level for pay for reporting measures 
is set at the level of complete and accurate reporting.
* * * * *
    (c) * * *
    (5) Performance equal to or greater than the minimum attainment 
level for pay-for-reporting measures will receive the maximum available 
points.
* * * * *
    (d) * * *
    (2) * * *
    (ii) CMS may take the compliance actions described in Sec.  425.216 
for ACOs exhibiting poor performance on a domain, as determined by CMS 
under Sec.  425.316.
0
46. Section 425.504 is amended by--
0
a. Amending paragraph (c) to remove the phrase ``for 2016 and 
subsequent years'' everywhere it appears and adding in its place the 
phrase ``for 2016''.
0
b. Redesignating paragraph (d) as paragraph (c)(5).
0
c. Adding new paragraph (d).
    The addition reads as follows:


Sec.  425.504  Incorporating reporting requirements related to the 
Physician Quality Reporting System Incentive and Payment Adjustment.

* * * * *
    (d) Physician Quality Reporting System payment adjustment for 2017 
and 2018. (1) ACOs, on behalf of eligible professionals who bill under 
the TIN of an ACO participant, must submit all of the ACO GPRO measures 
determined under Sec.  425.500 using a CMS web interface, to 
satisfactorily report on behalf of their eligible professionals for 
purposes of the Physician Quality Reporting System payment adjustment 
under the Shared Savings Program for 2017 and 2018.
    (2) Eligible professionals who bill under the TIN of an ACO 
participant within an ACO participate under their ACO participant TIN 
as a group practice under the Physician Quality Reporting System Group 
Practice Reporting Option of the Shared Savings Program for purposes of 
the Physician Quality Reporting System payment adjustment under the 
Shared Savings Program for 2017 and 2018.
    (3) If an ACO, on behalf of eligible professionals who bill under 
the TIN of an ACO participant, does not satisfactorily report for 
purposes of the Physician Quality Reporting System payment adjustment 
for 2017 or 2018, each eligible professional who bills under the TIN of 
an ACO participant will receive a payment adjustment, as described in 
Sec.  414.90(e) of this chapter, unless such eligible professionals 
have reported quality measures apart from the ACO in the form and 
manner required by the Physician Quality Reporting System.
    (4) For eligible professionals subject to the Physician Quality 
Reporting System payment adjustment under the Medicare Shared Savings 
Program for 2017 or 2018, the Medicare Part B Physician Fee Schedule 
amount for covered professional services furnished during the program 
year is equal to the applicable percent of the Medicare Part B 
Physician Fee Schedule amount that would otherwise apply to such 
services under section 1848 of the Act, as described in Sec.  414.90(e) 
of this chapter.
    (5) The reporting period for a year is the calendar year from 
January 1 through December 31 that occurs 2 years prior to the program 
year in which the payment adjustment is applied, unless otherwise 
specified by CMS under the Physician Quality Reporting System.
0
47. Section 425.506 is amended by--
0
a. Revising the section heading.
0
b. Amending paragraph (d) to remove the phrase ``Eligible professionals 
participating in an ACO'' and adding in

[[Page 46475]]

its place the phrase ``Through reporting period 2016, eligible 
professionals participating in an ACO''
0
c. Adding paragraph (e).
    The revision and addition read as follows:


Sec.  425.506  Incorporating reporting requirements related to adoption 
of certified electronic health record technology.

* * * * *
    (e) For 2017 and subsequent years, CMS will annually assess the 
degree of use of certified EHR technology by eligible clinicians 
billing through the TINs of ACO participants for purposes of meeting 
the CEHRT criterion necessary for Advanced Alternative Payment Models 
under the Quality Payment Program.
    (1) During years in which the measure is designated as pay for 
reporting, in order to demonstrate complete and accurate reporting, at 
least one eligible clinician billing through the TIN of an ACO 
participant must meet the reporting requirements under the Advancing 
Clinical Information category under the Quality Payment Program.
    (2) During years in which the measure is designated as pay for 
performance, the quality measure regarding EHR adoption will be 
measured based on a sliding scale.
0
48. Section 425.508 is added to subpart F to read as follows:


Sec.  425.508  Incorporating quality reporting requirements related to 
the Quality Payment Program.

    (a) For 2017 and subsequent reporting years. ACOs, on behalf of 
eligible clinicians who bill under the TIN of an ACO participant, must 
submit all of the CMS web interface measures determined under Sec.  
425.500 to satisfactorily report on behalf of their eligible clinicians 
for purposes of the quality performance category of the Quality Payment 
Program.
    (b) [Reserved]
0
49. Section 425.612 is amended by--
0
a. Amending paragraph (a)(1) introductory text to remove the phrase 
``ACOs participating in Track 3 that receive otherwise'' and adding in 
its place the phrase ``ACOs participating in Track 3, and as provided 
in paragraph (a)(1)(iv) of this section during a grace period for 
beneficiaries excluded from prospective assignment to a Track 3 ACO, 
who receive otherwise''.
0
b. Adding paragraphs (a)(1)(iv), (a)(1)(v), and (d)(4).
    The additions read as follows:


Sec.  425.612  Waivers of payment rules or other Medicare requirements.

    (a) * * *
    (1) * * *
    (iv) For a beneficiary who was included on the prospective 
assignment list under Sec.  425.400(a)(3) for a performance year for a 
Track 3 ACO for which a waiver of the SNF 3-day rule has been approved 
under paragraph (a)(1) of this section, but who was subsequently 
excluded from the ACO's prospective assignment list, CMS makes payment 
for SNF services furnished to the beneficiary by a SNF affiliate if the 
following conditions are met:
    (A) The beneficiary was prospectively assigned to the ACO at the 
beginning of the applicable performance year but was excluded in the 
most recent quarterly update to the prospective assignment list under 
Sec.  425.401(b).
    (B) The SNF services are furnished to a beneficiary who was 
admitted to a SNF affiliate within 90 days following the date that CMS 
delivers the quarterly exclusion list to the ACO.
    (C) But for the beneficiary's exclusion from the ACO's prospective 
assignment list, CMS would have made payment to the SNF affiliate for 
such services under the waiver under paragraph (a)(1) of this section.
    (v) The following beneficiary protections apply when a beneficiary 
receives SNF services without a prior 3-day inpatient hospital stay 
from a SNF affiliate that intended to provide services pursuant to a 
SNF 3-day rule waiver under paragraph (a)(1) of this section, but the 
beneficiary was not prospectively assigned to the ACO and was not in 
the 90 day grace period under paragraph (a)(1)(iv) of this section. The 
SNF affiliate services must be non-covered only because the SNF 
affiliate stay was not preceded by a qualifying hospital stay under 
section 1861(i) of the Act.
    (A) A SNF is presumed to intend to provide services pursuant to the 
SNF 3-day rule waiver under paragraph (a)(1) of this section if the SNF 
submitting the claim is a SNF affiliate of an ACO for which such a 
waiver has been approved.
    (B) CMS makes no payments for SNF services to a SNF affiliate of an 
ACO for which a waiver of the SNF 3-day rule has been approved when the 
SNF affiliate admits a FFS beneficiary who was never prospectively 
assigned to the ACO or was prospectively assigned but was later 
excluded and the 90 day grace period under paragraph (a)(1)(iv) of this 
section has lapsed.
    (C) In the event that CMS makes no payment for SNF services 
furnished by a SNF affiliate as a result of paragraph (a)(1)(v)(B) of 
this section and the only reason the claim was non-covered is due to 
the lack of a qualifying inpatient stay, the following beneficiary 
protections will apply:
    (1) The SNF must not charge the beneficiary for the expenses 
incurred for such services; and
    (2) The SNF must return to the beneficiary any monies collected for 
such services; and
    (3) The ACO may be required to submit a corrective action plan 
under Sec.  425.216(b) for CMS approval. If after being given an 
opportunity to act upon the corrective action plan the ACO fails to 
come into compliance with the requirements of paragraph (a)(1), 
approval for the SNF 3-day rule waiver under this section will be 
terminated as provided under paragraph (d) of this section.
* * * * *
    (d) * * *
    (4) CMS reserves the right to take compliance action, including 
termination, against an ACO for noncompliance with program rules, 
including misuse of a waiver under this section, as specified at 
Sec. Sec.  425.216 and 425.218.
* * * * *

PART 460--PROGRAMS OF ALL-INCLUSIVE CARE FOR THE ELDERLY (PACE)

0
50. The authority citation for part 460 continues to read as follows:

    Authority: Secs. 1102, 1871, 1894(f), and 1934(f) of the Social 
Security Act (42 U.S.C. 1302, 1395, 1395eee(f), and 1396u-4(f)).

0
51. Section 460.32 is amended by adding paragraph (a)(14) to read as 
follows:


Sec.  460.32  Content and terms of PACE program agreement.

    (a) * * *
    (14) Name and National Provider Identifier (NPI) of all providers 
and suppliers, as defined in 1861 of the Act, reflecting enrollment in 
Medicare in an approved status.
* * * * *
0
52. Section 460.40 is amended by adding paragraph (j) to read as 
follows:


Sec.  460.40  Violations for which CMS may impose sanctions.

* * * * *
    (j) Employs or contracts with any provider or supplier, as defined 
in section 1861 of the Act, that is not enrolled in Medicare in an 
approved status.
0
53. Section 460.50 is amended by revising paragraph (b)(1)(ii) to read 
as follows:


Sec.  460.50  Termination of PACE program agreement.

    (b) * * *

[[Page 46476]]

    (1) * * *
    (ii) The PACE organization failed to comply substantially with 
conditions for a PACE program or PACE organization under this part, or 
with terms of its PACE program agreement, including employing or 
contracting with any provider or supplier, as defined in section 1861 
of the Act, that is not enrolled in Medicare in an approved status.
* * * * *
0
54. Section 460.68 is amended by adding paragraph (a)(4) to read as 
follows:


Sec.  460.68  Program integrity.

    (a) * * *
    (4) That are not enrolled in Medicare in an approved status, if 
they are a provider or supplier that is eligible to enroll in Medicare, 
as defined in section 1861 of the Act.
* * * * *
0
55. Section 460.70 is amended by revising paragraph (b)(1)(ii) to read 
as follows:


Sec.  460.70  Contracted services.

* * * * *
    (b) * * *
    (1) * * *
    (ii) A practitioner or supplier must meet Medicare or Medicaid 
requirements applicable to the services it furnishes, including 
enrollment in Medicare in an approved status, if they are a provider or 
supplier that is eligible to enroll in Medicare, as defined in section 
1861 of the Act.
* * * * *

    Dated: June 2, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: June 23, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-16097 Filed 7-7-16; 4:15 pm]
 BILLING CODE 4120-01-P