[Federal Register Volume 87, Number 222 (Friday, November 18, 2022)]
[Rules and Regulations]
[Pages 69404-70700]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-23873]



[[Page 69403]]

Vol. 87

Friday,

No. 222

November 18, 2022

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 and Medicaid Programs; CY 2023 Payment Policies Under the 
Physician Fee Schedule and Other Changes to Part B Payment and Coverage 
Policies; Medicare Shared Savings Program Requirements; Implementing 
Requirements for Manufacturers of Certain Single-dose Container or 
Single-use Package Drugs To Provide Refunds With Respect to Discarded 
Amounts; and COVID-19 Interim Final Rules; Final and Interim Final 
Rules

  Federal Register / Vol. 87 , No. 222 / Friday, November 18, 2022 / 
Rules and Regulations  

[[Page 69404]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Centers for Medicare & Medicaid Services

42 CFR Parts 405, 410, 411, 414, 415, 423, 424, 425, and 455

[CMS-1770-F, CMS-1751-F2, CMS-1744-F2, CMS-5531-IFC]
RINs 0938-AU81, 0938-AU95, 0938-AU31, 0938-AU32


Medicare and Medicaid Programs; CY 2023 Payment Policies Under 
the Physician Fee Schedule and Other Changes to Part B Payment and 
Coverage Policies; Medicare Shared Savings Program Requirements; 
Implementing Requirements for Manufacturers of Certain Single-dose 
Container or Single-use Package Drugs To Provide Refunds With Respect 
to Discarded Amounts; and COVID-19 Interim Final Rules

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

ACTION: Final rule and interim final rules.

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SUMMARY: This major final rule addresses: changes to the physician fee 
schedule (PFS); other changes to Medicare Part B payment policies to 
ensure that payment systems are updated to reflect changes in medical 
practice, relative value of services, and changes in the statute; 
Medicare Shared Savings Program requirements; updates to the Quality 
Payment Program; Medicare coverage of opioid use disorder services 
furnished by opioid treatment programs; updates to certain Medicare and 
Medicaid provider enrollment policies, including for skilled nursing 
facilities; updates to conditions of payment for DMEPOS suppliers; 
HCPCS Level II coding and payment for wound care management products; 
electronic prescribing for controlled substances for a covered Part D 
drug under a prescription drug plan or an MA-PD plan under the 
Substance Use-Disorder Prevention that Promotes Opioid Recovery and 
Treatment (SUPPORT) for Patients and Communities Act (SUPPORT Act); 
updates to the Medicare Ground Ambulance Data Collection System; 
provisions under the Infrastructure Investment and Jobs Act; and 
finalizes the CY 2022 Methadone Payment Exception for Opioid Treatment 
Programs IFC. We are also finalizing, as implemented, a few provisions 
included in the COVID-19 interim final rules with comment period.

DATES: These regulations are effective on January 1, 2023.

FOR FURTHER INFORMATION CONTACT: 
[email protected], for any issues not identified 
below. Please indicate the specific issue in the subject line of the 
email.
    Michael Soracoe, (410) 786-6312, for issues related to practice 
expense, work RVUs, conversion factor, and PFS specialty-specific 
impacts.
    Kris Corwin, (410) 786-8864, for issues related to the comment 
solicitation on strategies for updates to practice expense data 
collection and methodology.
    Sarah Leipnik, (410) 786-3933, and Anne Blackfield, (410) 786-8518, 
for issues related to the comment solicitation on strategies for 
improving global surgical package valuation.
    Larry Chan, (410) 786-6864, for issues related to potentially 
misvalued services under the PFS.
    Kris Corwin, (410) 786-8864, Patrick Sartini, (410) 786-9252, and 
Larry Chan, (410) 786-6864, for issues related to telehealth services 
and other services involving communications technology.
    Regina Walker-Wren, (410) 786-9160, for issues related to nurse 
practitioner and clinical nurse specialist certification by the Nurse 
Portfolio Credentialing Center (NPCC).
    Lindsey Baldwin, (410) 786-1694, or 
[email protected], for issues related to PFS 
payment for behavioral health services.
    [email protected], for issues related to PFS 
payment for evaluation and management services.
    Geri Mondowney, (410) 786-1172, Morgan Kitzmiller, (410) 786-1623, 
Julie Rauch, (410) 786-8932, and Tamika Brock, (312) 886-7904, for 
issues related to malpractice RVUs and geographic practice cost indices 
(GPCIs).
    [email protected], for issues related to 
non-face-to-face nonphysician services/remote therapeutic monitoring 
services (RTM).
    Zehra Hussain, (214) 767-4463, or 
[email protected], for issues related to payment 
of skin substitutes.
    Pamela West, (410) 786-2302, for issues related to revisions to 
regulations to allow audiologists to furnish diagnostic tests, as 
appropriate without a physician order.
    Emily Forrest, (410) 786-8011, Laura Ashbaugh, (410) 786-1113, Anne 
Blackfield, (410) 786-8518, and Erick Carrera, (410) 786-8949, for 
issues related to PFS payment for dental services.
    Heidi Oumarou, (410) 786-7942, for issues related to the rebasing 
and revising of the Medicare Economic Index (MEI).
    Laura Kennedy, (410) 786-3377, Adam Brooks, (202) 205-0671, and 
Rachel Radzyner, (410) 786-8215, for issues related to requiring 
manufacturers of certain single-dose container or single-use package 
drugs payable under Medicare Part B to provide refunds with respect to 
discarded amounts.
    Laura Ashbaugh, (410) 786-1113, and Rasheeda Arthur, (410) 786-
3434, for issues related to Clinical Laboratory Fee Schedule.
    Lisa Parker, (410) 786-4949, or [email protected], for issues 
related to FQHCs.
    Michele Franklin, (410) 786-9226, or [email protected], for issues 
related to RHCs.
    Daniel Feller, (410) 786-6913, and Elizabeth Truong (410) 786-6005, 
for issues related to coverage of colorectal cancer screening.
    Heather Hostetler, (410) 786-4515, for issues related to removal of 
selected national coverage determinations.
    Lindsey Baldwin, (410) 786-1694, for issues related to Medicare 
coverage of opioid use disorder treatment services furnished by opioid 
treatment programs.
    Sabrina Ahmed, (410) 786-7499, or [email protected], 
for issues related to the Medicare Shared Savings Program (Shared 
Savings Program) Quality performance standard and quality reporting 
requirements.
    Aryanna Abouzari, (415) 744-3668, or 
[email protected], for issues related to the Shared 
Savings Program burden reduction proposal on OHCAs.
    Janae James, (410) 786-0801, or Elizabeth November, (410) 786-4518, 
or [email protected], for issues related to Shared 
Savings Program beneficiary assignment and financial methodology.
    Lucy Bertocci, (410) 786-4008, or [email protected], 
for inquiries related to Shared Savings Program advance investment 
payments, participation options and burden reduction policies.
    Rachel Radzyner, (410) 786-8215, and Michelle Cruse, (443) 478-
6390, for issues related to vaccine administration services.
    Katie Parker, (410) 786-0537, for issues related to medical 
necessity and documentation requirements for nonemergency, scheduled, 
repetitive ambulance services.
    Frank Whelan, (410) 786-1302, for issues related to Medicare 
provider

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enrollment regulation updates (including for skilled nursing 
facilities), State options for implementing Medicaid provider 
enrollment affiliation provisions, and conditions of payment for DMEPOS 
suppliers.
    Mei Zhang, (410) 786-7837, and Kimberly Go, (410)786-4560, for 
issues related to requirement for electronic prescribing for controlled 
substances for a covered Part D drug under a prescription drug plan or 
an MA-PD plan (section 2003 of the SUPPORT Act).
    Amy Gruber, (410) 786-1542, or [email protected], 
for issues related to the Medicare Ground Ambulance Data Collection 
System and Ambulance Fee Schedule (AFS).
    Sundus Ashar, [email protected], for issues related to 
HCPCS Level II Coding for skin substitutes.
    Renee O'Neill, (410) 786-8821, or Kati Moore, (410) 786-5471, for 
inquiries related to Merit-based Incentive Payment System (MIPS).
    Richard Jensen, (410) 786-6126, for inquiries related to 
Alternative Payment Models (APMs).
    Lindsey Baldwin, (410) 786-1694 for inquiries related to Opioid 
Treatment Programs: CY 2022 Methadone Payment Exception.

SUPPLEMENTARY INFORMATION: 

I. Executive Summary

    This major final rule revises payment polices under the Medicare 
PFS and makes other policy changes, including to the implementation of 
certain provisions of the Consolidated Appropriations Act, 2022 (CAA, 
2022) (Pub. L. 117-103, March 15, 2022), Protecting Medicare and 
American Farmers from Sequester Cuts Act (PMAFSCA) (Pub. L. 117-71, 
December 10, 2021), Infrastructure Investment and Jobs Act (Pub. L. 
117-58, November 15, 2021), Consolidated Appropriations Act, 2021 (CAA, 
2021) (Pub. L. 116-260, December 27, 2020), Bipartisan Budget Act of 
2018 (BBA of 2018) (Pub. L. 115-123, February 9, 2018) and the 
Substance Use-Disorder Prevention that Promotes Opioid Recovery and 
Treatment (SUPPORT) for Patients and Communities Act (the SUPPORT Act) 
(Pub. L. 115-271, October 24, 2018), related to Medicare Part B 
payment. In addition, this major final rule includes provisions 
regarding other Medicare payment policies described in sections III. 
and IV.

B. 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. In addition, the 
statute requires that each year we establish, by regulation, the 
payment amounts for physicians' services paid under the PFS, including 
geographic adjustments to reflect the variations in the costs of 
furnishing services in different geographic areas.
    In this major final rule, we are establishing RVUs for CY 2023 for 
the PFS 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 final rule also includes discussions 
and provisions regarding several other Medicare Part B payment 
policies.
    Specifically, this final rule addresses:
     Determination of PE RVUs (section II.B.)
     Potentially Misvalued Services Under the PFS (section 
II.C.)
     Payment for Medicare Telehealth Services Under Section 
1834(m) of the Act (section II.D.)
     Valuation of Specific Codes (section II.E.)
     Evaluation and Management (E/M) Visits (section II.F.)
     Geographic Practice Cost Indices (GPCI) (section II.G.)
     Determination of Malpractice Relative Value Units (RVUs) 
(section II.H.)
     Non-Face-to-Face/Remote Therapeutic Monitoring (RTM) 
Services (section II.I.)
     Payment for Skin Substitutes (section II.J.)
     Provision to Allow Audiologists to Furnish Certain 
Diagnostic Tests Without a Physician Order (section II.K.)
     Provisions on Medicare Parts A and B Payment for Dental 
Services (section II.L.)
     Rebasing and Revising the Medicare Economic Index (MEI) 
(section II.M.)
     Requiring Manufacturers of Certain Single-dose Container 
or Single-use Package Drugs to Provide Refunds with Respect to 
Discarded Amounts (Sec. Sec.  414.902 and 414.940) (section III.A.)
     Rural Health Clinics (RHCs) and Federally Qualified Health 
Centers (FQHCs) (section III.B.)
     Clinical Laboratory Fee Schedule: Revised Data Reporting 
Period and Phase-in of Payment Reductions, and Policies for Specimen 
Collection Fees and Travel Allowance for Clinical Diagnostic Laboratory 
Tests (section III.C.)
     Expansion of Coverage for Colorectal Cancer Screening and 
Reducing Barriers (section III.D.)
     Removal of Selected National Coverage Determinations 
(section III.E.)
     Modifications Related to Medicare Coverage for Opioid Use 
Disorder (OUD) Treatment Services Furnished by Opioid Treatment 
Programs (OTPs) (section III.F.)
     Medicare Shared Savings Program (section III.G.)
     Medicare Part B Payment for Preventive Vaccine 
Administration Services (section III.H.)
     Medical Necessity and Documentation Requirements for 
Nonemergency, Scheduled, Repetitive Ambulance Services (section III.I.)
     Medicare Provider and Supplier Enrollment and Conditions 
of DMEPOS Payment (section III.J.)
     State Options for Implementing Medicaid Provider 
Enrollment Affiliation Provision (section III.K.)
     Requirement for Electronic Prescribing for Controlled 
Substances for a Covered Part D Drug under a Prescription Drug Plan or 
an MA-PD Plan (section 2003 of the SUPPORT Act) (section III.L.)
     Medicare Ground Ambulance Data Collection System (GADCS) 
(section III.M.)
     Revisions to HCPCS Level II Coding Procedures for Skin 
Substitutes Products (section III.N.)
     Updates to the Quality Payment Program (section IV.)
     Opioid Treatment Programs: CY 2022 Methadone Payment 
Exception and Origin and Destination Requirements Under the Ambulance 
Fee Schedule (section V.A.)
     Finalizing provisions from the Medicare and Medicaid 
Programs; Policy and Regulatory Revisions in Response to the COVID-19 
Public Health Emergency (CMS-1744-IFC) (Section V.B.)
     Finalizing provisions from the Medicare and Medicaid 
Programs, Basic Health Program, and Exchanges; Additional Policy and 
Regulatory Revisions in Response to the COVID-19 Public Health 
Emergency and Delay of Certain Reporting Requirements for the Skilled 
Nursing Facility Quality Reporting Program (CMS-5531-IFC) (Section 
V.C.)
     Collection of Information Requirements (section VI.)
     Regulatory Impact Analysis (section VII.)
3. Summary of Costs and Benefits
    We have determined that this final rule is economically 
significant. For a detailed discussion of the economic

[[Page 69406]]

impacts, see section VII., Regulatory Impact Analysis, of this final 
rule.

B. Determination of PE 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 (MP) 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 Physician Fee Schedule (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 5-year review of work RVUs under the 
PFS and proposed changes to the PE methodology CY 2007 PFS 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 PE/HR by specialty that was obtained from the AMA's 
SMS. The AMA administered a new survey in CY 2007 and CY 2008, the 
Physician Practice Information Survey (PPIS). The PPIS is a 
multispecialty, nationally representative, PE survey of both physicians 
and 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 use crosswalks for specialties 
that did not participate in the PPIS. These crosswalks have been 
generally established through notice and comment rulemaking and are 
available in the file titled ``CY 2023 PFS final rule PE/HR'' on the 
CMS website under downloads for the CY 2023 PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
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
    We allocate the indirect costs at the code level based on the 
direct costs specifically associated with a code and the greater of 
either the clinical labor costs or the work RVUs. We also incorporate 
the survey data described earlier in the PE/HR discussion. The general 
approach to developing the

[[Page 69407]]

indirect portion of the PE RVUs is as follows:
     For a given service, we use 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, represent 25 percent of total costs for the specialties that 
furnish 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 RVU of 8.00 (2.00 is 25 percent of 8.00 and 6.00 is 75 
percent of 8.00).
     Next, we add 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 a work RVU of 
4.00 and the clinical labor portion of the direct PE RVU 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.
     Then, we incorporate 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 facility setting, where Medicare makes a separate payment 
to the facility for its costs in furnishing a service, 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.
(4) Services With Technical Components and Professional Components
    Diagnostic services are generally comprised of two components: a 
professional component (PC); and a technical component (TC). The PC and 
TC may be furnished independently or by different providers, or they 
may be furnished together as a global service. When services have 
separately billable PC and TC components, the payment for the global 
service equals the sum of the payment for the TC and PC. To achieve 
this, we use a weighted average of the ratio of indirect to direct 
costs across all the specialties that furnish the global service, TCs, 
and PCs; that is, we apply the same weighted average indirect 
percentage factor to allocate indirect expenses to the global service, 
PCs, and TCs for a service. (The direct PE RVUs for the TC and PC sum 
to the global.)
(5) PE RVU Methodology
    For a more detailed description of the PE RVU methodology, we 
direct readers to the CY 2010 PFS final rule with comment period (74 FR 
61745 through 61746). We also direct readers to the file titled 
``Calculation of PE RVUs under Methodology for Selected Codes'' which 
is available on our website under downloads for the CY 2023 PFS final 
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 in this final rule for individual 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 projected 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, use the CF to 
calculate a direct PE scaling adjustment to ensure that the aggregate 
pool of direct PE costs calculated in Step 3 does not vary from the 
aggregate pool of direct PE costs for the current year. Apply the 
scaling adjustment to the direct costs for each service (as calculated 
in Step 1).
    Step 5: Convert the results of Step 4 to an RVU scale for each 
service. To do this, divide the results of Step 4 by the CF. Note that 
the actual value of the CF used in this calculation does not influence 
the final direct cost PE RVUs as long as the same CF is used in Step 4 
and Step 5. Different CFs would result in different direct PE scaling 
adjustments, but this has no effect on the final direct cost PE RVUs 
since changes in the CFs and changes in the associated direct scaling 
adjustments 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 generally use an average of the 3 most recent years of available 
Medicare claims data to determine the specialty mix assigned to each 
code. Codes with low Medicare service volume require special attention 
since billing or enrollment irregularities for a given year can result 
in significant changes in specialty mix assignment. We finalized a 
policy in the CY 2018 PFS final rule (82 FR 52982 through 59283) to use 
the most recent year of claims data to determine which codes are low 
volume for the coming year (those that have fewer than 100 allowed 
services in the Medicare claims data). For codes that fall into this 
category, instead of assigning specialty mix based on the specialties 
of the practitioners reporting

[[Page 69408]]

the services in the claims data, we use the expected specialty that we 
identify on a list developed based on medical review and input from 
expert interested parties. We display this list of expected specialty 
assignments as part of the annual set of data files we make available 
as part of notice and comment rulemaking and consider recommendations 
from the RUC and other interested parties on changes to this list on an 
annual basis. Services for which the specialty is automatically 
assigned based on previously finalized policies under our established 
methodology (for example, ``always therapy'' services) are unaffected 
by the list of expected specialty assignments. We also finalized in the 
CY 2018 PFS final rule (82 FR 52982 through 52983) a policy to apply 
these service-level overrides for both PE and MP, rather than one or 
the other category.
    We did not make any proposals associated with the list of expected 
specialty assignments for low volume services, however we received 
public comments on this topic from interested parties. The following is 
a summary of the comments we received and our responses.
    Comment: Several commenters stated that they had performed an 
analysis to identify all codes that meet the criteria to receive a 
specialty override under this CMS policy and drafted updated 
recommendations for CY 2023. Commenters stated that the purpose of 
assigning a specialty to these codes was to avoid the major adverse 
impact on MP RVUs that result from errors in specialty utilization data 
magnified in representation (percentage) by small sample size. These 
commenters submitted a list of several dozen low volume HCPCS codes 
with recommended expected specialty assignments.
    Response: After reviewing the information provided by the 
commenters to determine that the submitted specialty assignments were 
appropriate for the service in question, we are finalizing the 
additions in Table 1 to the list of expected specialty assignments for 
low volume services.
BILLING CODE 4150-28-P

[[Page 69409]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.000


[[Page 69410]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.001

BILLING CODE 4150-28-C
    Comment: Commenters recommended an expected specialty assignment of 
interventional cardiology for CPT codes 33370, 33894, 33895, 33897, and 
33997.
    Response: We do not have PE/HR data for the interventional 
cardiology specialty as it was not part of the PPIS when it was 
conducted in 2007. We use the cardiology specialty for this specialty's 
PE/HR data, and therefore, we have crosswalked the CPT codes in 
question to the cardiology specialty on the list of expected specialty 
assignments for low volume services.
    Comment: Commenters also recommended an expected specialty 
assignment of hand surgery for CPT code 26705.
    Response: During our review of claims data for this code, we found 
that the most frequently reported specialty for CPT code 26705 was 
orthopedic surgery, reported more than twice as often as the hand 
surgery specialty. Therefore, we are finalizing orthopedic surgery and 
not hand surgery as the expected specialty assignment for CPT code 
26705.
    We also note for commenters that each HCPCS code that appears on 
the list of expected specialty assignments for low volume services 
remains on the list from year to year, even if the volume for the code 
in question rises to over 100 services for an individual calendar year. 
The HCPCS codes and expected specialty assignment remain on the list, 
and will be applied should the volume fall below 100 services in any 
calendar year; there is no need to ``reactivate'' individual codes as 
some commenters have suggested in past submissions.
    After consideration of the public comments, we are finalizing the 
updates to the list of expected specialty assignments for low volume 
services as detailed above.
    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 would be allocated 
using the work RVUs, and for the TC service, indirect PEs would 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 
titled ``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

[[Page 69411]]

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 to the 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 BN. 
(See ``Specialties excluded from ratesetting calculation'' later in 
this final rule.)
    Step 19: Apply the phase-in of significant RVU reductions and its 
associated adjustment. 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 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. To comply 
with section 1848(c)(7) of the Act, we adjust the PE RVUs to ensure 
that the total RVUs for all services that are not new or revised codes 
decrease by no more than 19 percent, and then apply a relativity 
adjustment to ensure that the total pool of aggregate PE RVUs remains 
relative to the pool of work and MP RVUs. For a more detailed 
description of the methodology for the phase-in of significant RVU 
changes, we refer readers to the CY 2016 PFS final rule with comment 
period (80 FR 70927 through 70931).
(e) Setup File Information
     Specialties excluded from ratesetting calculation: For the 
purposes of calculating the PE and MP RVUs, we exclude certain 
specialties, such as certain NPPs 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 2.
BILLING CODE 4150-28-P

[[Page 69412]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.002

BILLING CODE 4150-28-C
     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

[[Page 69413]]

accordingly. Table 3 details the manner in which the modifiers are 
applied.
[GRAPHIC] [TIFF OMITTED] TR18NO22.003

    We also adjust 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.
    Beginning in CY 2022, section 1834(v)(1) of the Act required that 
we apply a 15 percent payment reduction for outpatient occupational 
therapy services and outpatient physical therapy services that are 
provided, in whole or in part, by a physical therapist assistant (PTA) 
or occupational therapy assistant (OTA). Section 1834(v)(2)(A) of the 
Act required CMS to establish modifiers to identify these services, 
which we did in the CY 2019 PFS final rule (83 FR 59654 through 59661), 
creating the CQ and CO payment modifiers for services provided in whole 
or in part by PTAs and OTAs, respectively. These payment modifiers are 
required to be used on claims for services with dates of service 
beginning January 1, 2020, as specified in the CY 2020 PFS final rule 
(84 FR 62702 through 62708). We applied the 15 percent payment 
reduction to therapy services provided by PTAs (using the CQ modifier) 
or OTAs (using the CO modifier), as required by statute. Under sections 
1834(k) and 1848 of the Act, payment is made for outpatient therapy 
services at 80 percent of the lesser of the actual charge or applicable 
fee schedule amount (the allowed charge). The remaining 20 percent is 
the beneficiary copayment. For therapy services to which the new 
discount applies, payment will be made at 85 percent of the 80 percent 
of allowed charges. Therefore, the volume discount factor for therapy 
services to which the CQ and CO modifiers apply is: (0.20 + (0.80* 
0.85), which equals 88 percent.
    For anesthesia services, we do not apply adjustments to volume 
since we use the average allowed charge when simulating RVUs; 
therefore, the RVUs as calculated already reflect the payments as 
adjusted by modifiers, and no volume adjustments are necessary. 
However, a time adjustment of 33 percent is made only for medical 
direction of two to four cases since that is the only situation where a 
single practitioner is involved with multiple beneficiaries 
concurrently, so that counting each service without regard to the 
overlap with other services would overstate the amount of time spent by 
the practitioner furnishing these services.
     Work RVUs: The setup file contains the work RVUs from this 
final rule.
(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 in this final rule.
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 in this final rule.

    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.
    Useful Life: In the CY 2005 PFS final rule we stated that we 
updated the useful life for equipment items primarily based on the 
AHA's ``Estimated Useful Lives of Depreciable Hospital Assets'' 
guidelines (69 FR 66246). The most recent edition of these guidelines 
was published in 2018. This reference material provides an estimated 
useful life for hundreds of different

[[Page 69414]]

types of equipment, the vast majority of which fall in the range of 5 
to 10 years, and none of which are lower than 2 years in duration. We 
believe that the updated editions of this reference material remain the 
most accurate source for estimating the useful life of depreciable 
medical equipment.
    In the CY 2021 PFS final rule, we finalized a proposal to treat 
equipment life durations of less than 1 year as having a duration of 1 
year for the purpose of our equipment price per minute formula. In the 
rare cases where items are replaced every few months, we noted that we 
believe it is more accurate to treat these items as disposable supplies 
with a fractional supply quantity as opposed to equipment items with 
very short equipment life durations. For a more detailed discussion of 
the methodology associated with very short equipment life durations, we 
refer readers to the CY 2021 PFS final rule (85 FR 84482 through 
84483).
     Maintenance: We finalized the 5 percent factor for annual 
maintenance in the CY 1998 PFS final rule with comment period (62 FR 
33164). As we previously stated in the CY 2016 PFS final rule with 
comment period (80 FR 70897), we do not believe the annual maintenance 
factor for all equipment is precisely 5 percent, and we concur that the 
current rate likely understates the true cost of maintaining some 
equipment. We also noted that we believe it likely overstates the 
maintenance costs for other equipment. When we solicited comments 
regarding sources of data containing equipment maintenance rates, 
commenters were unable to identify an auditable, robust data source 
that could be used by CMS on a wide scale. We noted that we did not 
believe voluntary submissions regarding the maintenance costs of 
individual equipment items would be an appropriate methodology for 
determining costs. As a result, in the absence of publicly available 
datasets regarding equipment maintenance costs or another systematic 
data collection methodology for determining a different maintenance 
factor, we did not propose a variable maintenance factor for equipment 
cost per minute pricing as we did not believe that we have sufficient 
information at present. We noted that we would 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 (see 77 FR 68902 for a 
thorough discussion of this issue). 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 4.
[GRAPHIC] [TIFF OMITTED] TR18NO22.004

    We did not propose and we are not finalizing any changes to the 
equipment interest rates for CY 2023.
3. Adjusting RVUs To Match the PE Share of the Medicare Economic Index 
(MEI)
    For CY 2023, as explained in detail in section II.M. of this final 
rule, we proposed to rebase and revise the Medicare Economic Index 
(MEI) to reflect more current market conditions faced by physicians in 
furnishing physicians' services. The MEI is an index that measures 
changes in the market price of the inputs used to furnish physician 
services. This index measure is authorized under section 1842(b)(3) of 
the Act, and is developed by the CMS Office of the Actuary. We believe 
that the MEI is the best measure available of the relative weights of 
the three components in payments under the PFS--work, PE and 
malpractice. Accordingly, we believe that to assure that the PFS 
payments reflect the relative resources in each of these components as 
required by section 1848(c)(3) of the Act, the RVUs used in developing 
rates should reflect the same weights in each component as the MEI. In 
the past, we have proposed (and subsequently, finalized) to accomplish 
this by holding the work RVUs constant and adjusting the PE RVUs, the 
MP RVUs and the CF to produce the appropriate balance in RVUs among the 
PFS components and payment rates for individual services. The most 
recent adjustments to the RVUs to reflect changes in the MEI weights 
were made for the CY 2014 RVUs, when the MEI was last updated. In the 
CY 2014 PFS proposed rule (78 FR 43287 through 43288) and final rule 
(78 FR 74236 through 74237), we detailed the steps necessary to 
accomplish this result (see steps 3, 10, and 18). The CY 2014 proposed 
and final adjustments were consistent with our longstanding practice to 
make adjustments to match the RVUs for the PFS components with the MEI 
cost share weights for the components, including the adjustments 
described in the CY 1999 PFS final rule (63 FR 58829), CY 2004 PFS 
final rule (68 FR 63246 and 63247), and CY 2011 PFS final rule (75 FR 
73275).
    In the past when we have proposed a rebasing and/or revision of the 
MEI, as we discuss in section II.M. of this final rule, we typically 
have also proposed to modify steps 3 and 10 to adjust the aggregate 
pools of PE costs (direct PE in step 3 and indirect PE in step 10) in 
proportion to the change in the PE share in the rebased and revised MEI 
cost share weights, as previously described in the CY 2014 PFS final 
rule (78 FR 74236 and 74237), and to recalibrate the relativity 
adjustment that we apply in step 18 as described in the CY 2014 PFS 
final rule. Instead, we proposed to delay the adjustments to the PE 
pools in steps 3 and 10 and the recalibration of the relativity 
adjustment in step 18 until the public had an opportunity to comment on 
the proposed rebased and revised MEI, which is being finalized for CY 
2023, as discussed in section II.M. of this final rule. Because we 
proposed significant methodological and data source changes to the MEI 
for CY 2023 and significant time has elapsed since

[[Page 69415]]

the last rebasing and revision of the MEI, we explained that we believe 
it is important to allow public comment and finalization of the 
proposed MEI changes based on the review of public comment before we 
incorporated the updated MEI into PFS ratesetting, and we believe this 
is consistent with our efforts to balance payment stability and 
predictability with incorporating new data through more routine 
updates. We refer readers to the discussion of our comment solicitation 
in section II.B. of this final rule, where we review our ongoing 
efforts to update data inputs for PE to aid stability, transparency, 
efficiency, and data adequacy. Similarly, we delayed the implementation 
of the proposed rebased and revised MEI for use in the PE geographic 
practice cost index (GPCI) and solicited comment on appropriate timing 
for implementation for potential future rulemaking, discussed in detail 
in section II.G. and section VI. of this final rule.
    In light of the proposed delay in using the proposed update to the 
MEI to make the adjustments to the PE pools in steps 3 and 10 and the 
relativity adjustment in step 18, we solicited comment on when and how 
to best incorporate the proposed rebased and revised MEI discussed in 
section II.M. of the proposed rule into PFS ratesetting, and whether it 
would be appropriate to consider a transition to full implementation 
for potential future rulemaking. In section VI. of this final rule, we 
present the impacts of implementing the proposed rebased and revised 
MEI in PFS ratesetting through a 4-year transition and through full 
immediate implementation, that is, with no transition period. Given the 
significance of the impacts that result from a full implementation and 
the interaction with other CY 2023 proposals, we did not consider 
proposing to fully implement a rebased and revised MEI in PFS 
ratesetting for CY 2023. We solicited comment on other implementation 
strategies for potential future rulemaking that are not outlined in 
section VI. of this final rule.
    The following is a summary of the comments we received and our 
responses.
    Comment: Many commenters supported our proposed delayed 
implementation of the rebased and revised MEI in PFS ratesetting until 
the public had an opportunity to comment on the proposed changes to the 
MEI, as discussed in section II.M. of this final rule.
    Response: We thank the commenters for their support.
    Comment: Many commenters expressed concerns with the redistributive 
impacts discussed in section VI. of the proposed rule, where we 
discussed the alternative considered to implement the proposed rebased 
and revised MEI in PFS ratesetting through a 4-year transition for CY 
2023. Many of the commenters cited other proposals and their confluence 
with the proposed rebased and revised MEI as a source of their concerns 
regarding the implementation of the MEI in PFS ratesetting. Most 
commenters noted that the AMA has said it intends to collect practice 
cost data from physician practices in the near future and urged CMS to 
pause consideration of other sources for the MEI until the AMA's 
efforts have concluded. A few commenters urged CMS to implement the MEI 
for PFS ratesetting when appropriate using a 4-year transition to 
minimize shifts and maintain stability in PFS payments.
    Response: We appreciate commenters' feedback, specifically as it 
relates to updating PFS ratesetting, and will consider this information 
in future rulemaking. We note that we discuss comments relating to the 
proposed rebased and revised MEI in section II.M. of this final rule.
4. Changes to Direct PE Inputs for Specific Services
    This section focuses on specific PE inputs. The direct PE inputs 
are included in the CY 2023 direct PE input public use files, which are 
available on the CMS website under downloads for the CY 2023 PFS final 
rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
a. Standardization of Clinical Labor Tasks
    As we noted in the CY 2015 PFS final rule with comment period (79 
FR 67640 through 67641), we continue to make improvements 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 post service periods for each code. In addition to 
increasing the transparency of the information used to set PE RVUs, 
this level of detail 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 detailed 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 that setting and maintaining 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 simultaneously for all 
codes with the applicable clinical labor tasks, instead of waiting for 
individual codes to be reviewed.
    In the CY 2016 PFS final rule with comment period (80 FR 70901), we 
solicited comments on the appropriate standard minutes for the clinical 
labor tasks associated with services that use digital technology. After 
consideration of comments received, we finalized standard times for 
clinical labor tasks associated with digital imaging at 2 minutes for 
``Availability of prior images confirmed'', 2 minutes for ``Patient 
clinical information and questionnaire reviewed by technologist, order 
from physician confirmed and exam protocoled by radiologist'', 2 
minutes for ``Review examination with interpreting MD'', and 1 minute 
for ``Exam documents scanned into PACS'' and ``Exam completed in RIS 
system to generate billing process and to populate images into 
Radiologist work queue.'' In the CY 2017 PFS final rule (81 FR 80184 
through 80186), we finalized a policy 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 finalized a policy to establish 2 
minutes as the standard for the simple case, 3 minutes as the standard 
for the intermediate case, 4 minutes as the standard for the complex 
case, and 5 minutes as the standard for the highly complex case. These 
values were based upon a review of the existing minutes assigned for 
this clinical labor activity; we determined that 2 minutes is the 
duration for most services and a small number of codes

[[Page 69416]]

with more complex forms of digital imaging have higher values. We also 
finalized standard times for a series of clinical labor tasks 
associated with pathology services in the CY 2016 PFS final rule with 
comment period (80 FR 70902). We do not believe these activities would 
be dependent on number of blocks or batch size, and we believe that the 
finalized standard values accurately reflect the typical time it takes 
to perform these clinical labor tasks.
    In reviewing the RUC-recommended direct PE inputs for CY 2019, we 
noticed that the 3 minutes of clinical labor time traditionally 
assigned to the ``Prepare room, equipment and supplies'' (CA013) 
clinical labor activity were split into 2 minutes for the ``Prepare 
room, equipment and supplies'' activity and 1 minute for the ``Confirm 
order, protocol exam'' (CA014) activity. We proposed to maintain the 3 
minutes of clinical labor time for the ``Prepare room, equipment and 
supplies'' activity and remove the clinical labor time for the 
``Confirm order, protocol exam'' activity wherever we observed this 
pattern in the RUC-recommended direct PE inputs. Commenters explained 
in response that when the new version of the PE worksheet introduced 
the activity codes for clinical labor, there was a need to translate 
old clinical labor tasks into the new activity codes, and that a prior 
clinical labor task was split into two of the new clinical labor 
activity codes: CA007 (Review patient clinical extant information and 
questionnaire) in the preservice period, and CA014 (Confirm order, 
protocol exam) in the service period. Commenters stated that the same 
clinical labor from the old PE worksheet was now divided into the CA007 
and CA014 activity codes, with a standard of 1 minute for each 
activity. We agreed with commenters that we would finalize the RUC-
recommended 2 minutes of clinical labor time for the CA007 activity 
code and 1 minute for the CA014 activity code in situations where this 
was the case. However, when reviewing the clinical labor for the 
reviewed codes affected by this issue, we found that several of the 
codes did not include this old clinical labor task, and we also noted 
that several of the reviewed codes that contained the CA014 clinical 
labor activity code did not contain any clinical labor for the CA007 
activity. In these situations, we continue to believe that in these 
cases, the 3 total minutes of clinical staff time would be more 
accurately described by the CA013 ``Prepare room, equipment and 
supplies'' activity code, and we finalized these clinical labor 
refinements. For additional details, we direct readers to the 
discussion in the CY 2019 PFS final rule (83 FR 59463 and 59464).
    Following the publication of the CY 2020 PFS proposed rule, one 
commenter expressed concern with the published list of common 
refinements to equipment time. The commenter stated that these 
refinements were the formulaic result of the applying refinements to 
the clinical labor time and did not constitute separate refinements; 
the commenter requested that CMS no longer include these refinements in 
the table published each year. In the CY 2020 PFS final rule, we agreed 
with the commenter that these equipment time refinements did not 
reflect errors in the equipment recommendations or policy discrepancies 
with the RUC's equipment time recommendations. However, we believed 
that it was important to publish the specific equipment times that we 
were proposing (or finalizing in the case of the final rule) when they 
differed from the recommended values due to the effect that these 
changes can have on the direct costs associated with equipment time. 
Therefore, we finalized the separation of the equipment time 
refinements associated with changes in clinical labor into a separate 
table of refinements. For additional details, we direct readers to the 
discussion in the CY 2020 PFS final rule (84 FR 62584).
    Historically, the RUC has submitted a ``PE worksheet'' that details 
the recommended direct PE inputs for our use in developing PE RVUs. The 
format of the PE worksheet has varied over time and among the medical 
specialties developing the recommendations. These variations have made 
it difficult for both the RUC's development and our review of code 
values for individual codes. Beginning with its recommendations for CY 
2019, the RUC has mandated the use of a new PE worksheet for purposes 
of their recommendation development process that standardizes the 
clinical labor tasks and assigns them a clinical labor activity code. 
We believe the RUC's use of the new PE worksheet in developing and 
submitting recommendations will help us to simplify and standardize the 
hundreds of different clinical labor tasks currently listed in our 
direct PE database. As we did in previous calendar years, to facilitate 
rulemaking for CY 2023, we are continuing to display two versions of 
the Labor Task Detail public use file: one version with the old listing 
of clinical labor tasks, and one with the same tasks crosswalked to the 
new listing of clinical labor activity codes. These lists are available 
on the CMS website under downloads for the CY 2023 PFS final rule at 
http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
b. 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. Beginning in 
CY 2019 and continuing through CY 2022, we conducted a market-based 
supply and equipment pricing update, using information developed by our 
contractor, StrategyGen, which updated pricing recommendations for 
approximately 1300 supplies and 750 equipment items currently used as 
direct PE inputs. Given the potentially significant changes in payment 
that would occur, in the CY 2019 PFS final rule we finalized a policy 
to phase in our use of the new direct PE input pricing over a 4-year 
period using a 25/75 percent (CY 2019), 50/50 percent (CY 2020), 75/25 
percent (CY 2021), and 100/0 percent (CY 2022) split between new and 
old pricing. We believed that implementing the proposed updated prices 
with a 4-year phase-in would improve payment accuracy, while 
maintaining stability and allowing interested parties the opportunity 
to address potential concerns about changes in payment for particular 
items. This 4-year transition period to update supply and equipment 
pricing concluded in CY 2022; for a more detailed discussion, we refer 
readers to the CY 2019 PFS final rule with comment period (83 FR 59473 
through 59480).
    For CY 2023, we proposed to update the price of eight supplies and 
two equipment items in response to the public submission of invoices 
following the publication of the CY 2022 PFS final rule. The eight 
supply and equipment items with proposed updated prices are listed in 
the valuation of specific codes section of the preamble under Table 19, 
CY 2023 Invoices Received for Existing Direct PE Inputs.
    We received the following comments on our proposal to update the 
price of eight supplies and two equipment items in response to the 
public submission of invoices following the publication of the CY 2022 
PFS final rule:

[[Page 69417]]

    Comment: Several commenters submitted comments to clarify that the 
invoice they included in their submission that was identified as the 
Lysing Reagent (SL089) supply was intended for a different supply item, 
the Lysing Solution (SL039). The commenters stated that our proposed 
reduction of the price for the SL089 supply appeared to be based on the 
invoice they had as misidentified as being for the SL089 supply, when 
it was intended for the SL039 supply. The commenters asked CMS to 
disregard the earlier mistaken submission and submitted additional 
invoices with updated pricing for the SL089 supply for consideration to 
correct the oversight in their original submission.
    Response: We appreciate the clarification from the commenters and 
the updated invoices with pricing information for the SL089 supply. We 
are finalizing an increase in the price of the Lysing Reagent (SL089) 
supply to $5.53 based on the average of the ten submitted invoices from 
the commenter. (Note: the separate discussion of the SL039 supply below 
is based on a different invoice submitted by a different interested 
party unconnected to the SL089 supply. We believe it is appropriate to 
consider and revise the price for the SL089 supply based on the 
clarification and new invoices submitted by commenters for that supply. 
However, given that the invoice for SL039 submitted by these commenters 
was not intended to be submitted for the SL039 supply, we did not 
consider the invoice for SL039 that was mistakenly submitted by these 
commenters.)
    Comment: Several commenters stated their support for the proposed 
pricing changes to the EP014 and EP088 equipment items and the SA117, 
SK082, SL024, SL030, SL061, and SL469 supply items. The commenters 
urged CMS to finalize them as proposed in the final rule.
    Response: We appreciate the support for our proposed pricing from 
the commenters.
    In the proposed rule, we did not propose to update the price of 
another eight supplies and two equipment items which were the subject 
of public submission of invoices. Our rationale for not updating these 
prices is detailed below:
     Acetic acid 5% (SH001): We received an invoice submission 
that would suggest an increase in price from 3 cents per ml to 9.5 
cents per ml for the SH001 supply. However, the invoice stated that 
this price was for an ``Alcian Blue 1% in 3% Acetic Acid pH 2.5'' 
supply and it is not clear that this represents the same supply as the 
``Acetic acid 5%'' described by the SH001 supply item. We also do not 
believe that the typical price for this supply has increased 200 
percent in the 3 years since StrategyGen researched its pricing, 
especially given that we increased the price for the SH001 supply from 
1.2 cents in CY 2019 to its current price of 3 cents for CY 2022.
     Cytology, lysing soln (CytoLyt) (SL039): We received an 
invoice submission that would suggest an increase in price from 6 cents 
per ml to 80 cents per ml for the SL039 supply. We do not believe that 
the typical price for this supply has increased 1200% in the 3 years 
since StrategyGen researched its pricing, especially given that we 
increased the price for the SL039 supply from 3.4 cents in CY 2019 to 
its current price of 6 cents for CY 2022.
     Fixative (for tissue specimen) (SL068): We received an 
invoice submission that would suggest an increase in price from 1.3 
cents per ml to $4.87 for the SL068 supply. We believe that this was 
the result of confusion on the part of the interested party regarding 
the unit quantity for the SL068 supply. This item is paid on a per ml 
basis and not a per unit basis; there was not enough information on the 
submitted invoice to determine the price for the SL068 supply on a per 
ml basis.
     Ethanol, 100% (SL189): We received an invoice submission 
that would suggest an increase in price from 0.33 cents per ml to 1.2 
cents per ml for the SL189 supply. However, we noted that the invoice 
was based on the price for a single gallon of 100% ethanol which is 
typically sold in much larger quantities than a single gallon. We found 
that 100% ethanol was readily available for sale online in larger unit 
sizes and the current price of 0.33 cents per ml (based on the past 
StrategyGen market research) appears to be accurate based on online 
bulk pricing. We also found that the submitted invoices for the 
ethanol, 70% (SL190), ethanol, 95% (SL248), and stain, PAP OG-6 (SL491) 
supplies were also based on pricing for a single gallon. Each of these 
supply items was also available for purchase in larger unit quantities 
which indicated that the current pricing remained typical for these 
supplies. Therefore, we did not propose to update the prices for the 
SL189, SL190, SL248 or SL491 supply, as we do not believe that the 
higher prices paid for smaller quantities of these supplies would be 
typical.
     Biohazard specimen transport bag (SM008): We received an 
invoice submission that would suggest an increase in price from 8 cents 
to 45 cents for the SM008 supply. However, it is not clear that the 
item described on the invoice is the same item as the SM008 supply. The 
invoice states only that the price is for ``Supplied Case Red Bags'' 
which was not enough information to determine if this would be typical 
for the SM008 supply. We also do not believe that the typical price for 
this supply has increased 460 percent in the 3 years since StrategyGen 
researched its pricing, especially given that we increased the price 
for the SM008 supply from 3.5 cents in CY 2019 to its current price of 
8 cents for CY 2022.
     International Normalized Ratio (INR) analysis and 
reporting system w-software (EQ312): We did not receive an invoice for 
this equipment item, only a letter stating that the cost of the EQ312 
equipment should be increased from the current price of $19,325 to 
$1,600,000. We previously finalized a policy in the CY 2011 PFS final 
rule (75 FR 73205) to update supply and equipment prices through an 
invoice submission process. We require pricing data indicative of the 
typical market price of the supply or equipment item in question to 
update the price. It is not sufficient to state a different price 
without providing information to support a change in pricing. Since we 
did not receive an invoice to support the higher costs asserted in the 
letter, we did not propose a new price for the EQ312 equipment item. 
Interested parties are encouraged to submit invoices with their public 
comments or, if outside the notice and comment rulemaking process, via 
email at [email protected]. We also noted that in order 
to be considered a direct PE input, an equipment item must be 
individually allocable to a particular patient for a particular 
service. Costs associated with the implementation, maintenance, and 
upgrade of equipment that is not individually allocable to a particular 
patient for a particular service, or other costs associated with 
running a practice, would typically be classified as forms of indirect 
PE under our methodology.
    Prior to the publication of the proposed rule, the same interested 
parties that addressed the pricing of the EQ312 equipment item 
questioned the assignment of the General Practice specialty crosswalk 
for indirect PE for home Prothrombin Time (PT)/INR monitoring services. 
These individuals stated that the predominant code used for PT/INR 
monitoring (HCPCS code G0249) will be significantly and negatively 
impacted by the continuing implementation over a 4-year period of 
changes in the clinical labor rates

[[Page 69418]]

finalized in the CY 2022 PFS final rule (86 FR 65024). The individuals 
requested that CMS change the crosswalk for home PT/INR monitoring 
services to All Physicians or Pathology which would partially offset 
the reduction that HCPCS code G0249 is facing due to changes in the 
clinical labor rates.
    We noted for these interested parties in the CY 2021 PFS final rule 
(85 FR 84477 and 84478)that we finalized a crosswalk to the General 
Practice specialty for home PT/INR monitoring services (HCPCS codes 
G0248, G0249, and G0250). The data submitted by the commenters at the 
time indicated that the direct-to-indirect cost percentages to furnish 
home PT/INR monitoring are in the range of 31:69, similar to the ratio 
associated with the General Practice specialty. We disagreed, as we did 
in response to comments in the CY 2021 PFS final rule, that these home 
PT/INR monitoring services should be reassigned to a different 
specialty that is less reflective of the cost structure for these 
services to offset reductions in payment for the services that result 
from an unrelated policy proposal (the clinical labor pricing update). 
We also noted that we had not received any new information about PT/INR 
monitoring services since CY 2021 to indicate that Pathology would be 
more accurate choices for use in indirect PE allocation but are open to 
receiving new relevant information that CMS could consider in future 
rulemaking. As such, we did not propose to change the assigned 
specialty for PT/INR services; we direct interested parties to the 
previous discussion of this topic in the CY 2021 PFS final rule (85 FR 
84477 and 84478) and again in the CY 2022 PFS final rule (86 FR 65000). 
Interested parties are encouraged to submit new information to support 
the most accurate specialty choice to use in indirect PE allocation for 
PT/INR monitoring services distinct from what has previously been 
reviewed during the last two rule cycles.
    Comment: A commenter submitted additional direct and indirect cost 
data associated with pricing the INR analysis and reporting system w-
software (EQ312) equipment. The commenter stated that they arrived at 
this amount based upon detailed review of all of the software system 
and related expenses involved with furnishing home INR monitoring 
services, including up front equipment and software purchases that 
comprise direct equipment practice expenses, up front maintenance and 
support services that comprise indirect practice expenses, and 
recurring support and telecommunications services that also comprise 
indirect practice expenses. The commenter submitted invoices detailing 
a one-time direct cost of $69,621, a one-time indirect cost of 
$84,126.31, and recurring annual costs of $963,638.52 associated with 
the EQ312 equipment.
    Response: We agree with the commenter that the invoices support an 
increase in the purchase price of the equipment from the current 
$19,325 to the price of $69,621 listed on the invoices. However, we 
disagree that the one-time indirect cost of $84,126.31 or recurring 
annual costs of $963,638.52 listed on the invoices would constitute 
forms of direct PE which would be included in the equipment's price. 
The indirect costs on the submitted invoices are for project management 
and service order costs while the recurring annual costs comprise 
monthly maintenance and telecommunications expenses. We agree that 
these are real costs associated with the software, however they are 
classified as forms of indirect PE under our current methodology. The 
equipment cost formula that we use already incorporates maintenance and 
interest rates costs into the per-minute pricing calculation; if we 
were to include these expenses in the equipment cost as a form of 
direct PE, we would be making duplicative payment for the same 
expenses. We are therefore finalizing an increase in the price of the 
EQ312 equipment to $69,621 but not including the indirect and recurring 
annual costs in the equipment price as they are classified as forms of 
indirect PE.
    Comment: The same commenter reiterated their previous request made 
in PFS rulemaking for CY 2021 for CMS to change the crosswalk for home 
PT/INR monitoring services from the previously finalized General 
Practice specialty to the All Physicians or Pathology specialty. The 
commenter stated that the code used to report ongoing home PT/INR 
monitoring (HCPCS code G0249) will again be significantly and 
negatively impacted in CY 2023 as a result of changes in the clinical 
labor rates with the corresponding budget neutrality adjustment and the 
drop in the conversion factor. The commenter stated that the Pathology 
specialty provides a better reflection of the indirect to direct costs 
associated with home PT/INR monitoring and also reflects a more 
appropriate indirect practice cost index (IPCI) for a service with very 
high indirect costs, such as home PT/IN monitoring. The commenter 
stated their belief that the indirect cost data captured in their 
submitted invoices supports a crosswalk to the Pathology specialty 
given the higher indirect costs of furnishing these services, including 
the on-going software costs that are not captured in the direct PE 
input; and that this specialty crosswalk change would help offset the 
cuts in the proposed rate for HCPCS code G0249.
    Response: We continue to believe that assignment of the Pathology 
specialty for home PT/INR monitoring services as requested by the 
commenters would not be appropriate. As we stated in the proposed rule, 
we continue to disagree that these home PT/INR monitoring services 
should be reassigned to a different specialty that is less reflective 
of the cost structure for these services to offset reductions in 
payment that result from an unrelated policy proposal (the clinical 
labor pricing update). The commenter stated that home PT/INR monitoring 
services have high indirect expenses and suggested that this supported 
assignment of a specialty with a higher direct-to-indirect expense 
ratio than General Practice (which has a 31 to 69 percent ratio), such 
as Pathology (which has a 26 to 74 percent ratio). However, this is a 
misunderstanding of the direct-to-indirect ratio for each specialty, 
which is a ratio based on data from the Physician Practice Expense 
Information Survey (PPIS) conducted back in 2007. The direct-to-
indirect ratio is merely a ratio, and not indicative of a specialty 
having higher or lower indirect expenses in absolute terms. Higher 
indirect expenses for a specialty are not correlated with a higher 
percentage of indirects as compared with directs in that ratio; in 
fact, the Independent Diagnostic Testing Facility specialty has both 
the highest indirect expenses of any specialty, as well as a low direct 
to indirect ratio (50 to 50%) precisely because IDTFs also have very 
high direct expenses as well. Similarly, the Pathology specialty had 
lower indirect expenses on the PPIS than the General Practice 
specialty; this contradicts the commenter's contention that the high 
indirect costs for home PT/INR monitoring services would justify a 
change to the Pathology specialty. We continue to believe that the data 
submitted by the commenters in the CY 2021 PFS final rule (85 FR 84477 
and 84478) indicated that the direct-to-indirect cost percentages to 
furnish home PT/INR monitoring are not reflective of the Pathology 
specialty.
    We note that the PE methodology, which relies on the allocation of 
indirect costs based on the magnitude of direct costs, should 
appropriately reflect the typical costs for the specialty the 
commenters suggest. However, we are cognizant that approach may not 
work

[[Page 69419]]

in all cases, particularly for newer services with costs that are not 
well accounted for in our PE methodology, or services with cost 
structures that do not necessarily reflect the specialties furnishing 
them. Although we have previously assigned the General Practice 
specialty to these codes, interested parties have provided additional 
information about these services suggesting assignment to a different 
specialty for purposes of allocating indirect cost. We believe that, as 
we work to identify ways to update the PE methodology and our data 
sources to better reflect costs for all services and changes in medical 
practice, it is best to apply a consistent approach in setting rates 
that does not over-allocate cost, which could result in significant 
increases in payments for these services. Considering our concerns, we 
will switch the specialty assignment for these services to the All 
Physician specialty, consistent with how we have treated other new 
services that do not quite fit our PE methodology in recent rulemaking 
(see for example the discussion of HCPCS codes G2082 and G2083 in the 
CY 2022 PFS final rule (86 FR 65014 and 65015) and again in this rule). 
We believe this will allow for improved stability in payments, and 
preserve access to this care for beneficiaries, while we work to 
identify longer term solutions.
     Remote musculoskeletal therapy system (EQ402): We received 
an invoice submission for a price of $1,000 for the EQ402 equipment 
item. Since this equipment already has a price of $1,000 we did not 
propose to make any changes in the pricing; we thank the interested 
party for their invoice submission confirming the current price.
    The following are additional comments that we received associated 
with supply and equipment pricing:
    Comment: Several commenters requested the creation of a new supply 
code to describe an alternate form of a basic injection pack. 
Commenters stated that for many services the use of Chloraprep 
(chlorhexidine) for intact skin preparation has become more typical 
than Betadine (povidone-iodine solution) and that the current basic 
injection pack described by supply code SA041 no longer accurately 
reflects typical resource use. Commenters requested that CMS create an 
alternative pack which instead includes Chloraprep (chlorhexidine) so 
that specialties can select the injection pack with the most 
appropriate antiseptic. Commenters requested that the new pack should 
mirror the SA041 basic injection pack with the addition of the patient 
prep swab, 1.5 ml chloraprep (SJ081) supply and removal of the Betadine 
povidone soln (SJ041) and sponge tipped applicator (SG009) supplies.
    Response: We appreciate the feedback from the commenters on the 
changing nature of what supplies are typically included in basic 
injection packs, and as a result, we are creating an alternate 
injection pack with the new supply code SA135 which will be priced at 
$14.12 as detailed in Table 5.
[GRAPHIC] [TIFF OMITTED] TR18NO22.005

    After consideration of the public comments, we are finalizing the 
creation of the SA135 alternate injection pack. We note that this 
supply is not currently included in any CPT or HCPCS codes but has been 
added to our direct PE database for future use in services.
    Comment: A commenter expressed concern that the prices for the 
injectable fluorescein (SH033) and lidocaine (SH049) supplies were too 
low. The commenter submitted invoices for both supply items and 
requested that they be used to update their respective prices.
    Response: After reviewing the invoices, we are updating the price 
of the fluorescein injectable (5ml uou) (SH033) supply from $38.02 to 
$49.13 based on an average of prices from five submitted invoices. We 
did not include the sixth invoice for the SH033 supply (with a listed 
price of $64.80) in this average as it described a different type of 
injectable fluorescein from the other five invoices (it described 2 mL 
of a 25% solution as opposed to 5 mL of a 10% solution on the other 
five invoices).
    We are not updating the price of the lidocaine 2% w-epidural 
injectable (Xylocaine w-epi) (SH049) supply as the two submitted 
invoices were not usable for pricing. One of the invoices detailed a 
3.5% type of lidocaine while the SH049 supply code specifies that it is 
for 2% lidocaine. The other submitted invoice specifically noted that 
it was a ``preservative free'' version of lidocaine which was more 
expensive than the typical item; we do not agree that this invoice 
would be accurate for establishing a new national price for the SH049 
supply. We remain interested in additional information regarding 
updated pricing information for the SH049 and other supply/equipment 
codes; as noted below, interested parties are encouraged to submit 
invoices with their public comments or, if outside the notice and 
comment rulemaking

[[Page 69420]]

process, via email at [email protected].
    We did not make any proposals associated with HCPCS codes G0460 
(Autologous platelet rich plasma for chronic wounds/ulcers, including 
phlebotomy, centrifugation, and all other preparatory procedures, 
administration and dressings, per treatment) or G0465 (Autologous 
platelet rich plasma (prp) for diabetic chronic wounds/ulcers, using an 
FDA-cleared device (includes administration, dressings, phlebotomy, 
centrifugation, and all other preparatory procedures, per treatment)) 
in the CY 2023 PFS proposed rule. In the CY 2021 PFS final rule, we 
established contractor pricing for HCPCS code G0460 for CY 2021 (85 
FR84497-84498). In the CY 2022 PFS final rule, we finalized a policy to 
maintain contractor pricing for HCPCS code G0460 as we did not have 
sufficient information to establish national pricing, and we did not 
receive public comments on either the proposal or comment solicitation 
to support establishing a national payment rate (86 FR 65019-65020). It 
remains unclear to us what the typical supply inputs would be for HCPCS 
code G0460 and whether they would include the use of the new 3C patch 
system.
    Comment: Following the publication of the CY 2023 PFS proposed 
rule, we received two comments on the pricing of HCPCS codes G0460 and 
G0465, and the 3C patch system supply which is topically applied for 
the management of exuding cutaneous wounds, such as leg ulcers, 
pressure ulcers, and diabetic ulcers and mechanically or surgically-
debrided wounds. One commenter submitted invoices associated with the 
pricing of the 3C patch system (SD343) supply for which we established 
a price of $625.00 in the CY 2021 PFS final rule (85 FR 84498). The 
commenter requested that CMS update its supply database based on 
invoices submitted for SD343 to reflect an updated price of $750.00 per 
unit. The commenter also requested national pricing for HCPCS codes 
G0460 and G0465, expressing concern that insufficient payment 
disproportionately impacts vulnerable populations. The commenter 
requested a payment rate of $1,408.90 for HCPCS G0465 in the office 
setting, stating that this rate would appropriately account for the 
purchase of the 3C patch, as well as the other related costs and supply 
inputs required for point of care creation and administration.
    Another commenter requested the establishment of new codes to allow 
for quantity-specific payment when multiple patches are needed to treat 
wounds of various surface sizes. Both commenters stated that many 
months have passed since CMS updated NCD 270.3 in April 2021 (for 
Blood-Derived Products for Chronic, Non-Healing Wounds), however, the 
3C patch remains nearly inaccessible in the office and facility 
settings because of insufficient payment by MACs. Both commenters 
suggested that, to date, just one MAC has assigned a payment rate for 
HCPCS code G0465, which the commenters believe is too low to cover the 
cost to purchase and administer the patch. One commenter expressed 
support for the professional fee to administer the patch in the 
facility setting determined by this MAC, First Coast ($135.97), with 
the appropriate geographic adjustments, and urged CMS either to apply 
this rate nationally or to require MACs to set a carrier price in a 
timely and transparent manner. Both commenters stated that health care 
providers in the remaining MAC jurisdictions have faced denials even 
when they follow the coverage guidelines specified by our NCD 270.3. 
One commenter contended that, as of 2019, 27.5 percent of the 
traditional Medicare beneficiaries had a diabetes diagnosis. Both 
commenters highlighted that, within this population, the prevalence of 
diabetes is significantly higher among Medicare FFS beneficiaries who 
identify as Native American or Black/African American relative to their 
white counterparts, and furthermore, these historically underserved 
populations are also more likely to develop foot ulcers and infections 
that require amputation. The commenters stated that the 3C Patch has 
the potential to help cure these concerning health disparities and 
requested that we make the 3C Patch accessible by establishing national 
pricing for HCPCS codes G0460 and G0465.
    Response: We do not have enough information to establish national 
pricing at this time. We will consider the commenters' feedback for 
future rulemaking while maintaining contractor pricing for CY 2023, 
which will allow for more flexibility for contractors to establish 
appropriate pricing using available information. We appreciate the 
invoice submission with additional pricing information for the SD343 
supply and will update our supply database for supply code SD343 at a 
price of $678.57 based on an average of the submitted invoices.
(1) Invoice Submission
    We remind readers that 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. 
To be included in a given year's proposed rule, we generally need to 
receive invoices by the same February 10th deadline we noted for 
consideration of RUC recommendations. However, we will consider 
invoices submitted as public comments during the comment period 
following the publication of the PFS proposed rule, and would consider 
any invoices received after February 10th or outside of the public 
comment process as part of our established annual process for requests 
to update supply and equipment prices. Interested parties are 
encouraged to submit invoices with their public comments or, if outside 
the notice and comment rulemaking process, via email at 
[email protected].
c. Clinical Labor Pricing Update
    Section 220(a) of the PAMA provides that the Secretary may collect 
or obtain information from any eligible professional or any other 
source on the resources directly or indirectly related to furnishing 
services for which payment is made under the PFS, and that such 
information may be used in the determination of relative values for 
services under the PFS. Such information may include the time involved 
in furnishing services; the amounts, types and prices of PE inputs; 
overhead and accounting information for practices of physicians and 
other suppliers, and any other elements that would improve the 
valuation of services under the PFS.
    Beginning in CY 2019, we updated the supply and equipment prices 
used for PE as part of a market-based pricing transition; CY 2022 was 
the final year of this 4-year transition. We initiated a market 
research contract with StrategyGen to conduct an in-depth and robust 
market research study to update the supply and equipment pricing for CY 
2019, and we finalized a policy in CY 2019 to phase in the new pricing 
over a period of 4 years. However, we did not propose to update the 
clinical labor pricing, and the pricing for clinical labor has remained 
unchanged during this pricing transition. Clinical labor rates were 
last updated for CY 2002 using Bureau of Labor Statistics (BLS) data 
and other supplementary sources where BLS data were not available; we 
refer readers to the full discussion in the CY 2002 PFS final rule for 
additional details (66 FR 55257 through 55262).
    Interested parties raised concerns that the long delay since 
clinical labor

[[Page 69421]]

pricing was last updated created a significant disparity between CMS' 
clinical wage data and the market average for clinical labor. In recent 
years, a number of interested parties suggested that certain wage rates 
were inadequate because they did not reflect current labor rate 
information. Some interested parties also stated that updating the 
supply and equipment pricing without updating the clinical labor 
pricing could create distortions in the allocation of direct PE. They 
argued that since the pool of aggregated direct PE inputs is budget 
neutral, if these rates are not routinely updated, clinical labor may 
become undervalued over time relative to equipment and supplies, 
especially since the supply and equipment prices are in the process of 
being updated. There was considerable interest among interested parties 
in updating the clinical labor rates, and when we solicited comment on 
this topic in past rules, such as in the CY 2019 PFS final rule (83 FR 
59480), interested parties supported the idea.
    Therefore, we proposed to update the clinical labor pricing for CY 
2022, in conjunction with the final year of the supply and equipment 
pricing update (86 FR 39118 through 39123). We believed it was 
important to update the clinical labor pricing to maintain relativity 
with the recent supply and equipment pricing updates. We proposed to 
use the methodology outlined in the CY 2002 PFS final rule (66 FR 
55257), which draws primarily from BLS wage data, to calculate updated 
clinical labor pricing. As we stated in the CY 2002 PFS final rule, the 
BLS' reputation for publishing valid estimates that are nationally 
representative led to the choice to use the BLS data as the main 
source. We believe that the BLS wage data continues to be the most 
accurate source to use as a basis for clinical labor pricing and this 
data will appropriately reflect changes in clinical labor resource 
inputs for purposes of setting PE RVUs under the PFS. We used the most 
current BLS survey data (2019) as the main source of wage data for our 
CY 2022 clinical labor proposal.
    We recognized that the BLS survey of wage data does not cover all 
the staff types contained in our direct PE database. Therefore, we 
crosswalked or extrapolated the wages for several staff types using 
supplementary data sources for verification whenever possible. In 
situations where the price wages of clinical labor types were not 
referenced in the BLS data, we used the national salary data from the 
Salary Expert, an online project of the Economic Research Institute 
that surveys national and local salary ranges and averages for 
thousands of job titles using mainly government sources. (A detailed 
explanation of the methodology used by Salary Expert to estimate 
specific job salaries can be found at www.salaryexpert.com). We 
previously used Salary Expert information as the primary backup source 
of wage data during the last update of clinical labor pricing in CY 
2002. If we did not have direct BLS wage data available for a clinical 
labor type, we used the wage data from Salary Expert as a reference for 
pricing, then crosswalked these clinical labor types to a proxy BLS 
labor category rate that most closely matched the reference wage data, 
similar to the crosswalks used in our PE/HR allocation. For example, 
there is no direct BLS wage data for the Mammography Technologist 
(L043) clinical labor type; we used the wage data from Salary Expert as 
a reference and identified the BLS wage data for Respiratory Therapists 
as the best proxy category. We calculated rates for the ``blend'' 
clinical labor categories by combining the rates for each labor type in 
the blend and then dividing by the total number of labor types in the 
blend.
    As in the CY 2002 clinical labor pricing update, the proposed cost 
per minute for each clinical staff type was derived by dividing the 
average hourly wage rate by 60 to arrive at the per minute cost. In 
cases where an hourly wage rate was not available for a clinical staff 
type, the proposed cost per minute for the clinical staff type was 
derived by dividing the annual salary (converted to 2021 dollars using 
the Medicare Economic Index) by 2080 (the number of hours in a typical 
work year) to arrive at the hourly wage rate and then again by 60 to 
arrive at the per minute cost. We ultimately finalized the use of 
median BLS wage data, as opposed to mean BLS wage data, in response to 
comments in the CY 2022 PFS final rule. To account for the employers' 
cost of providing fringe benefits, such as sick leave, we finalized the 
use of a benefits multiplier of 1.296 based on a BLS release from June 
17, 2021 (USDL-21-1094). As an example of this process, for the 
Physical Therapy Aide (L023A) clinical labor type, the BLS data 
reflected a median hourly wage rate of $12.98, which we multiplied by 
the 1.296 benefits modifier and then divided by 60 minutes to arrive at 
the finalized per-minute rate of $0.28.
    After considering the comments on our CY 2022 proposals, we agreed 
with commenters that the use of a multi-year transition would help 
smooth out the changes in payment resulting from the clinical labor 
pricing update, avoiding potentially disruptive changes in payment for 
affected interested parties, and promoting payment stability from year-
to-year. We believed it would be appropriate to use a 4-year 
transition, as we have for several other broad-based updates or 
methodological changes. While we recognized that using a 4-year 
transition to implement the update means that we will continue to rely 
in part on outdated data for clinical labor pricing until the change is 
fully completed in CY 2025, we agreed with the commenters that these 
significant updates to PE valuation should be implemented in the same 
way, and for the same reasons, as for other major updates to pricing 
such as the recent supply and equipment update. Therefore, we finalized 
the implementation of the clinical labor pricing update over 4 years to 
transition from current prices to the final updated prices in CY 2025. 
We finalized the implementation of this pricing transition over 4 
years, such that one quarter of the difference between the current 
price and the fully phased-in price is implemented for CY 2022, one 
third of the difference between the CY 2022 price and the final price 
is implemented for CY 2023, and one half of the difference between the 
CY 2023 price and the final price is implemented for CY 2024, with the 
new direct PE prices fully implemented for CY 2025. An example of the 
transition from the current to the fully-implemented new pricing that 
we finalized in the CY 2022 PFS final rule is provided in Table 6.

[[Page 69422]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.006

(1) CY 2023 Clinical Labor Pricing Update Proposals
    For CY 2023, we received information from one interested party 
regarding the pricing of the Histotechnologist (L037B) clinical labor 
type. The interested party provided data from the 2019 Wage Survey of 
Medical Laboratories which supported an increase in the per-minute rate 
from the $0.55 finalized in the CY 2022 PFS final rule to $0.64. This 
rate of $0.64 for the L037B clinical labor type is a close match to the 
online salary data that we had for the Histotechnologist and matches 
the $0.64 rate that we initially proposed for L037B in the CY 2022 PFS 
proposed rule. Based on the wage data provided by the commenter, we 
proposed this $0.64 rate for the L037B clinical labor type for CY 2023; 
we also proposed a slight increase in the pricing for the Lab Tech/
Histotechnologist (L035A) clinical labor type from $0.55 to $0.60 as it 
is a blend of the wage rate for the Lab Technician (L033A) and 
Histotechnologist clinical labor types. We also proposed the same 
increase to $0.60 for the Angio Technician (L041A) clinical labor type, 
as we previously established a policy in the CY 2022 PFS final rule 
that the pricing for the L041A clinical labor type would match the rate 
for the L035A clinical labor type (86 FR 65032). The proposed pricing 
increase for these three clinical labor types is included in Table 7; 
the CY 2023 pricing for all other clinical labor types would remain 
unchanged from the pricing finalized in the CY 2022 PFS final rule.
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    Comment: Several commenters noted that there was an error in the 
proposed clinical labor pricing table in the CY 2023 PFS proposed rule 
(87 FR 45874) where the final rate per minute for the L041A Angio 
Technician clinical labor type was incorrectly listed at 0.58 rather 
than the correct 0.60 as specified in the preamble text.
    Response: We agree that the incorrect rate per minute for the L041A 
clinical labor type was reflected in Table 5 of the proposed rule, and 
have corrected this error in Table 7 of this final rule. We apologize 
for any confusion that may have been caused by this mistake.
    As was the case for the market-based supply and equipment pricing 
update, the clinical labor rates will remain open for public comment 
over the course of the 4-year transition period. We updated the pricing 
of a number of clinical labor types in the CY 2022 PFS final rule in 
response to information provided by commenters. For the full discussion 
of the clinical labor pricing update, we direct readers to the CY 2022 
PFS final rule (86 FR 65020 through 65037).
    The following is a summary of the comments we received and our 
responses.
    Comment: Several commenters stated their support for the proposed 
pricing updates to the Histotechnologist (L037B) and the Lab Tech/
Histotechnologist (L035A) clinical labor types and urged CMS to 
finalize the updated pricing.
    Response: We appreciate the support for our proposals from the 
commenters.
    Comment: Several commenters requested that CMS update the clinical 
labor description of the Angio Technician (L041A) clinical labor type 
to ``Vascular Interventional Technologist.'' The commenters stated that 
this updated title for the L041A clinical labor type would better align 
with industry recognition of the advanced certification required to 
assist physicians with minimally invasive, image-guided vascular 
procedures.
    Response: We appreciate the feedback and are finalizing a change in 
the descriptive text of the L041A clinical labor type from ``Angio 
Technician'' to ``Vascular Interventional Technologist'' as requested 
by the commenter.
    Comment: Several commenters disagreed with the proposed pricing for 
several different technologist clinical labor types. The commenters 
stated that basic certification is required for a radiologic 
technologist and that there are additional advanced modality 
certifications, such as for Computed Tomography (CT), Magnetic 
Resonance (MR), and Vascular Intervention (VI), which require 
additional educational programs and training for these advanced 
modalities/disciplines. The commenters stated that the proposed pricing 
for the Vascular Interventional Technologist (L041A), the Mammography 
Technologist (L043A), the CT Technologist (L046A), and the MRI 
Technologist (L047A) clinical labor types did not reflect the training 
and certification required for these occupations. The commenters 
submitted wage data from the 2022 Radiologic Technologist Wage and 
Salary Survey and requested that the pricing for these four clinical 
labor types be updated to reflect the wage data from the submitted 
survey.
    Response: When we initiated the clinical labor pricing update last 
year, we lacked specific wage data for the Vascular Interventional 
Technologist (L041A), the Mammography Technologist (L043A), and the CT 
Technologist (L046A) clinical labor types; and relied on crosswalks for 
their pricing. Based on the information contained in the 2022 
Radiologic Technologist Wage and Salary Survey, we now have specific 
wage data which will allow us to no longer rely on crosswalks for 
pricing for these clinical labor types. Therefore, we are finalizing an 
update in the pricing of these three clinical labor types: from 0.60 to 
0.84 for the Vascular Interventional Technologist (L041A), from 0.63 to 
0.79 for the Mammography Technologist (L043A), and from 0.76 to 0.78 
for the CT Technologist (L046A). For the MRI Technologist (L047A), we 
were able to make use of direct BLS wage data for the occupation. In 
addition, since we continue to believe that the BLS is the most 
accurate source of information for wage data, we are not finalizing an 
increase in the pricing of the L047A clinical labor type. As a 
reminder, CY 2023 is the second year of the four-year transition to the 
updated clinical labor pricing, and we will continue to transition the 
prices established for these three clinical labor types over the next 
two years of the update.
    Comment: A commenter thanked CMS for the agency's recent work in 
updating clinical labor pricing and stated that nurses and other 
nonphysician providers have been drastically undervalued for many years 
which could help to alleviate staffing shortages. The commenter stated 
that the table of clinical labor types in the proposed rule listed 
registered nurses (RNs) as their own category for labor pricing under 
the L051A clinical labor code, but then also included RNs in eight 
other categories of clinical labor with other practitioners. The 
commenter requested having RNs identified uniquely and removing the RN 
option from the other clinical labor categories, as the commenter 
stated that leaving RNs in other categories would only make the 
clinical labor update more confusing and could end up disadvantaging 
RNs in the long term which could exacerbate the current staffing 
shortage and worsen patient care.
    Response: We do not agree that RNs should be removed from the other 
eight clinical labor types currently listed in our direct PE database. 
There is a long history of using these ``blended'' clinical labor 
categories under the PFS, and together these eight clinical labor types 
make up the overwhelming majority of all clinical labor (especially the 
RN/LPN/MTA blend described by the L037D clinical labor code). In the 
absence of alternative pricing information to value these blended 
clinical labor types, we continue to believe that the proposed prices 
are the most accurate valuations. We also note for the commenter that 
the pricing for the RN (L051A) clinical labor type is drawn directly 
from BLS wage data and the inclusion of RNs in other ``blended'' 
clinical labor types has no effect on the pricing of the L051A category 
itself.
    Comment: A commenter stated that the current RN/LPN (L042A) 
clinical labor type assigned to CPT code 36516 did not accurately 
reflect the costs associated with this procedure. The

[[Page 69425]]

commenter stated that CPT code 36516 is a complex extracorporeal blood 
therapy procedure, conducted over a 5-1/2 to 6-hour period, that 
requires extensively trained and experienced nurse operators known as 
apheresis nurses. The commenter stated that the current assignment of 
the RN/LPN (L042A) clinical labor type for CPT code 36516 seriously 
undervalues the critical nurse labor cost component of this nearly six-
hour procedure and requested that CMS establish a new ``Apheresis 
Nurse'' clinical labor type with a valuation of approximately $1.14 per 
minute. The commenter also stated that there are additional supply 
items not currently captured in the direct PE inputs for CPT code 36516 
including a 4-liter accessory waste bag, several types of fluids, and 
biohazard waste costs.
    Response: We remind the commenter that we did not propose the 
creation of any new clinical labor types nor did we propose any changes 
in the direct PE inputs for CPT code 36516. If the commenter has reason 
to believe that the RN/LPN (L042A) clinical labor type is not capturing 
the typical labor costs associated with CPT code 36516 or that there 
are additional supply costs not being captured in its direct PE inputs, 
we encourage them to nominate CPT code 35616 as potentially misvalued 
for additional review.
    Comment: Several commenters stated that, to promote predictability 
and stability in physician payments and mitigate the financial impacts 
of significant fluctuations in physician payments that might accompany 
the clinical labor pricing update, CMS should consider using a 
threshold to limit the level of reductions in payments for specific 
services that would occur in a single year. Several commenters noted 
that in the CY 2023 Inpatient Prospective Payment System final rule, 
CMS implemented a permanent 5 percent cap on the reduction in an MS-
DRG's relative weight in a given fiscal year; the commenters suggested 
applying a similar cap of 5 percent, 10 percent, or 15 percent for the 
Physician Fee Schedule.
    Response: We agree with the commenters on the importance of 
avoiding potentially disruptive changes in payment for affected 
interested parties and the need to promote payment stability from year-
to-year. This is why we finalized the use of a multi-year transition 
for the clinical labor update in last year's CY 2022 PFS final rule to 
help smooth out the changes in payment resulting from the updated data 
(86 FR 65024). We also note for the commenters that section 1848(c)(7) 
of the Act, as added by section 220(e) of the PAMA, 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. For additional information regarding the phase-in 
of significant RVU reductions, we direct readers to the CY 2016 PFS 
final rule with comment period (80 FR 70927 through 70929). Given the 
mechanisms already in place to smooth payment changes and promote 
stability, and considering the need to establish appropriate resource-
based valuations, we do not believe the limitation suggested by 
commenters is warranted.
    Comment: Several commenters stated that CMS should prioritize 
stability and predictability over ongoing updates and temporarily 
freeze the implementation of further policy updates. These commenters 
requested that CMS pause the ongoing clinical labor pricing update to 
avoid significant payment redistributions associated with the pricing 
update.
    Response: We finalized the implementation of the clinical labor 
pricing update through the use of a 4-year transition in the CY 2022 
PFS final rule (86 FR 65024). As we stated at the time, although we 
recognize that payment for some services will be reduced as a result of 
the pricing update due to the budget neutrality requirements of the 
PFS, we do not believe that this is a reason to refrain from updating 
clinical labor pricing to reflect changes in resource costs over time. 
The PFS is a resource-based relative value payment system that 
necessarily relies on accuracy in the pricing of resource inputs; 
continuing to use clinical labor cost data that are nearly two decades 
old would maintain distortions in relativity that undervalue many 
services which involve a higher proportion of clinical labor. As noted 
above, we also finalized the implementation of the pricing update 
through a 4-year transition to help address the concerns of the 
commenters about stabilizing RVUs and reducing large fluctuations in 
year-to-year payments.
    After consideration of the comments, we are finalizing the clinical 
labor prices as shown in Table 8.
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    As was the case for the market-based supply and equipment pricing 
update, the clinical labor rates will remain open for public comment 
over the remaining course of the 4-year transition period. We welcome 
additional feedback on clinical labor pricing from commenters in next 
year's rulemaking cycle, especially any data that will continue to 
improve the accuracy of our finalized pricing.
d. Technical Corrections to Direct PE Input Database and Supporting 
Files
    We did not propose any technical corrections to the direct PE input 
database or supporting files in the proposed rule. However, commenters 
identified the following issues after we issued the CY 2023 PFS 
proposed rule:
    Comment: Several commenters requested that the SD332 bubble 
contrast supply, an ultrasound-specific contrast agent, should be 
removed from the direct PE inputs for CPT codes 76978 (Ultrasound, 
targeted dynamic microbubble sonographic contrast characterization 
(non-cardiac); initial lesion) and 76979 (Ultrasound, targeted dynamic 
microbubble sonographic contrast characterization (non-cardiac); each 
additional lesion with separate injection). Commenters stated that this 
supply item does not need to be included in the direct PE inputs for 
these two CPT codes because contrast agents are reported separately 
using existing HCPCS Level II supply codes, such as Q9950 (Injection, 
sulfur hexafluoride lipid microspheres, per ml).
    Response: We appreciate the additional information from the 
commenters indicating that the SD332 supply is duplicative for CPT 
codes 76978 and 76979 since the supply is separately reported using 
HCPCS Level II supply codes. Therefore, we are finalizing the removal 
of the SD332 supply from these two CPT codes.
    In the CY 2020 PFS final rule (84 FR 63102 through 63104), we 
created two new HCPCS G codes, G2082 and G2083, effective January 1, 
2020, on an interim final basis for the provision of self-administered 
esketamine. In the CY 2021 PFS final rule, we finalized a proposal to 
refine the values for HCPCS codes G2082 and G2083 using a building 
block methodology that summed the values associated with several codes 
(85 FR 84641 through 84642). Following the publication of the CY 2021 
PFS final rule, interested parties expressed concerns that the 
finalized PE RVU had decreased for HCPCS codes G2082 and G2083 as 
compared to the proposed valuation and as compared to the previous CY 
2020 interim final valuation. Interested parties questioned whether 
there had been an error in the PE allocation since CMS had finalized 
increases in the direct PE inputs for the services.
    We reviewed the indirect PE allocation for HCPCS codes G2082 and 
G2083 in response to the interested party inquiry and discovered a 
technical change that was applied in error. Specifically, we 
inadvertently assigned a different physician specialty than we intended 
(``All Physicians'') to HCPCS codes G2082 and G2083 for indirect PE 
allocation in our ratesetting process during valuation of these codes 
in the CY 2020 PFS final rule, and continued that assignment into the 
CY 2021 PFS proposed rule. This specialty assignment caused the PE 
value for these services to be higher than anticipated for CY 2020. We 
intended to revise the assigned physician specialty for these codes to 
``General Practice'' in the CY 2021 PFS final rule; however, we 
neglected to discuss this change in the course of PFS rulemaking for CY 
2021. Since we initially applied this technical change in the CY 2021 
PFS final rule without providing an explanation, we issued a correction 
notice (86 FR 14690) to remove this change from the CY 2021 PFS final 
rule, and to instead maintain the All Physicians specialty assignment 
through CY 2021. We apologize for any confusion this may have caused.
    For CY 2022, we finalized our proposal to maintain the currently 
assigned physician specialty for indirect PE allocation for HCPCS codes 
G2082 and G2083 to maintain payment consistency with the rates 
published in the CY 2020 PFS final rule and the CY 2021 PFS proposed 
rule. Although we had previously intended to assign the General 
Practice specialty to these codes, interested parties have provided 
additional information about these services suggesting that maintaining 
the All Physicians specialty assignment for these codes will help 
maintain payment stability and preserve access to this care for 
beneficiaries. We solicited public comments to help us discern which 
specialty would be the most appropriate to use for indirect PE 
allocation for HCPCS codes G2082 and G2083. We note that the PE 
methodology, which relies on the allocation of indirect costs based on 
the magnitude of direct costs, should appropriately reflect the typical 
costs for the specialty the commenters suggest. For example, we do not 
believe

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it would be appropriate to assign the Psychiatry specialty for these 
services given that HCPCS codes G2082 and G2083 include the high direct 
costs associated with esketamine supplies. The Psychiatry specialty is 
an outlier compared to most other specialties, allocating indirect 
costs at a 15:1 ratio based on direct costs because psychiatry services 
typically have very low direct costs. Assignment of most other 
specialties would result in allocation of direct costs at roughly a 3:1 
ratio. We requested that commenters explain in their comments how the 
indirect PE allocation would affect the payment for these services. 
Specifically, to ensure appropriate payment for HCPCS codes G2082 and 
G2083, we wanted to get a better understanding of the indirect costs 
associated with these services, relative to other services furnished by 
the suggested specialty.
    As we noted in the CY 2021 PFS final rule (85 FR 84498 through 
84499) and CY 2022 PFS final rule (86 FR 65042), the RAND Corporation 
was studying potential improvements to our PE allocation methodology 
and the data that underlie it. We were interested in exploring ways 
that the PE methodology can be updated, which could include 
improvements to the indirect PE methodology to address newer services 
similar to those described by G2082 and G2083 which have a direct to 
indirect ratio that does not match their most commonly billed 
specialties. In CY 2022, we agreed with the commenters who supported 
the proposal to maintain the currently assigned physician specialty 
(All Physicians) for indirect PE allocation for these codes. After 
consideration of the public comments, we finalized our proposal to 
maintain the All Physicians specialty for indirect PE allocation for 
HCPCS codes G2082 and G2083 for CY 2022.
    For CY 2023, we did not make any proposals regarding the assigned 
physician specialty for indirect PE allocation for HCPCS codes G2082 
and G2083; however, we received public comments on this topic from 
interested parties. The following is a summary of the comments we 
received and our responses.
    Comment: One commenter urged CMS to adopt a clear and recurring 
process to update, on an annual basis, supply costs for codes G2082 and 
G2083 with the most recently available wholesale acquisition cost (WAC) 
data and to include the ``Psychiatry'' specialty type in the allocation 
of the indirect PE for G2082 and G083. The commenter believed these 
recommended actions directly support the following two priority CMS 
initiatives: the CMS Behavioral Health Strategy and an approach to 
improve the PE methodology within the PFS. The commenter stated that 
the technical correction for CY 2021 to assign these HCPCS codes to the 
``All Physician'' specialty preserved Medicare beneficiary access and 
was an improvement over the original CMS intent to assign them to the 
``General Practice'' specialty but ``demonstrated the sensitive and 
intricate dependency of Medicare beneficiary access on reimbursement.''
    The commenter urged CMS to provide additional insight behind its 
specialty designation of ``All Physicians'' for HCPCS codes G2082 and 
G2083, and argued that CMS deviated from its normal practice of using 
the specialty mix contained in the claims data for these codes. The 
commenter stated that, while CMS has cited concerns in applying the 
actual specialty mix, CMS has not provided sufficient information or 
data to suggest that the rates produced when the ``Psychiatry'' 
specialty is included produces an inaccurate payment. The commenter 
also requested that CMS consider the implementation of policies that 
allow for the construction of specialty blends in unique cases, such as 
HCPCS codes G2082 and G2083, in which the agency has concerns about 
applying a service's actual specialty mix. The commenter stated that, 
based on utilization data published with the CY 2023 PFS proposed rule, 
over 70 percent of practitioners administering esketamine are 
psychiatrists. Considering that it is primarily psychiatrists 
administering esketamine and CMS recognizes the imperative to improve 
the indirect PE and PFS rate setting methodology for behavioral health 
services, the commenter recommended a transition of specialty 
designation for HCPCS codes G2082 and G2083 to its actual specialty mix 
through a three-year phased-in approach. The commenter recognized CMS' 
concerns about assigning the Psychiatry specialty for HCPCS codes G2082 
and G2083 given the higher supply costs for these services, but 
recommended that CMS adopt a specialty blend of three-fourths 
``Psychiatry'' specialty type and one-fourth ``All Physician'' 
specialty type. The commenter believed that this specialty blend would 
result in appropriate reimbursement and acknowledge the role of 
psychiatrists while also addressing our concerns.
    The commenter also stated that in CY 2021, CMS updated the price 
for the esketamine supply item for these codes using wholesale 
acquisition cost (WAC) data from the most recent available quarter, but 
did not again update the price using the latest WAC data in the CY 2022 
PFS final rule, or propose to update the price in the CY 2023 PFS 
proposed rule. The commenter stated that, based on WAC data on 
submitted invoices for the most recently available quarter, the supply 
input that describes 56 mg (supply code SH109) for HCPCS code G2082 
should be priced at $683.67, and the supply input describing 84 mg of 
esketamine (supply code SH110) for HCPCS code G2083 should be priced at 
$1025.50. The commenter urged CMS to align with its prior action and 
stated intention to address input price updates in future rulemaking by 
updating the supply pricing for SH109 and SH110 using WAC data 
annually, and to make clear the additional data or processes interested 
parties should follow to support annual updates for the esketamine 
supply items for these codes.
    Response: We continue to believe that the All Physicians specialty 
most accurately captures the indirect PE allocation associated with 
HCPCS codes G2082 and G2083. We do not assign a blended combination of 
specialties for any other services and the commenters did not provide 
new data to support a change in specialty assignment aside from noting 
that many practitioners who report HCPCS codes G2082 and G2083 are in 
the Psychiatry specialty. We continue to believe that it would not be 
accurate to assign the Psychiatry specialty for HCPCS codes G2082 and 
G2083 due to its outlier status among specialties, whereby Psychiatry 
allocates indirect costs at a 15:1 ratio based on direct costs as 
compared to most other specialties having approximately a 3:1 ratio. We 
do not believe that Psychiatry would be an accurate specialty 
designation for HCPCS codes G2082 and G2083 given the high direct costs 
associated with esketamine (which would translate into 
disproportionately high indirect PE allocation at the 15:1 ratio). We 
also disagree that these services should be reassigned to a different 
specialty to offset reductions in payment that result from an unrelated 
policy proposal (the clinical labor pricing update).
    However, to account for the cost of the provision of the self-
administered esketamine as a direct PE input, we agree with the 
commenters that we should update supply costs to reflect the wholesale 
acquisition cost (WAC) data from the most recent available quarter. For 
HCPCS code G2082, we are finalizing an updated price of $683.67 for the 
supply input that describes 56 mg (supply code SH109) and for HCPCS 
code G2083, we are finalizing an

[[Page 69429]]

updated price of $1025.50 for the supply input describing 84 mg of 
esketamine (supply code SH110) based on the submitted invoices.
    After consideration of the public comments, we continue to believe 
that the All Physician specialty is the most accurate specialty 
assignment for HCPCS codes G2082 and G2083, and we are not finalizing 
any changes to the specialty assignment. However, as noted above we are 
finalizing an increase in the price of the SH109 supply to $683.67 and 
an increase in the price of the SH110 supply to $1025.50 to reflect the 
updated market-based prices associated with esketamine. We also 
received comments on other policies relating to these services that 
were not addressed in the CY 2023 PFS proposed rule, and which we are 
not addressing in this final rule. We appreciate the feedback from the 
commenters and will take it into consideration for possible future 
rulemaking.
5. Soliciting Public Comment on Strategies for Updates To Practice 
Expense Data Collection and Methodology
    The PE inputs used in setting PFS rates, including both the 
development of PE RVUs and, historically, the relative shares among 
work, PE, and malpractice RVUs across the PFS, are central in 
developing accurate rates and maintaining appropriate relativity among 
PFS services and overall payment among the professionals and suppliers 
paid under the PFS. Consequently, the underlying PE data inputs are a 
consistent point of interest among interested parties. However, unlike 
other payment systems with cost reporting systems, PFS data inputs are 
primarily based on exogenous proprietary data that become available as 
the data are collected. Specifically, we rely on historical survey data 
(almost all of which is over a decade old), some publicly available 
data collected for other purposes (for example, Bureau of Labor 
Statistics (BLS) wage data), recommendations from the American Medical 
Association and other provider groups, and annual Medicare claims data.
a. History of Updates to PE Inputs
    Each year we continue to improve accuracy, predictability, and 
sustainability of updates to the PE valuation methodology to reduce the 
risks of possible misvaluation and other unintended outcomes. We have 
continued to develop policies geared toward providing more consistent 
updates to the direct PE inputs used in PFS ratesetting, including 
supply/equipment pricing and clinical labor rates. These efforts to 
develop these policies should contribute to improved standardization 
and transparency for all PE inputs used to update the PFS. As we 
continue our work to improve the information we use in our PE 
methodology, we issued a general comment solicitation to better 
understand how we might improve the collection of PE data inputs and 
refine the PE methodology.
    In recent years, we have refined specific PE data inputs using a 
combination of market research and publicly available data (for 
example, market research on medical supply and equipment items and BLS 
data to update clinical labor wages) to update the direct PE data 
inputs used in the PFS ratesetting process. Last year, we implemented a 
final transition year for supply and equipment pricing updates and 
started the first year of a 4-year phase-in update to the clinical 
labor rates. However, the indirect PE data inputs remain tied to legacy 
information that is well over a decade old. To build on much needed 
progress, we now believe indirect PE would also benefit from a refresh 
that implements similar standard and routine updates. We believe that a 
data refresh, and use of data sources that receive routine refreshes, 
would reduce the likelihood of unpredictable shifts in payment, 
especially when such shifts could be driven by the age of data 
available rather than comprehensive information about changes in actual 
costs.
b. Data Collection, Analysis and Findings
    In light of feedback from interested parties, CMS has prioritized 
stability and predictability over ongoing updates, and has taken a 
measured approach to updating PE data inputs. We have worked with 
interested parties and CMS contractors over a period of years to study 
the landscape and identify possible strategies to reshape the PE 
portion of physician payments. The fundamental issues are clear, but 
thought leaders and subject matter experts have advocated for more than 
one tenable approach to updating our PE methodology. Thus, we must 
balance the various interests of the public, and any path forward 
should allow for ongoing and routine cycles of PE updates.
    Of the various PE data inputs, we believe that indirect PE data 
inputs, which reflected costs such as office rent, IT costs, and other 
non-clinical expenses, present the opportunity to build consistency, 
transparency, and predictability into our methodology to update PE data 
inputs. The primary source for indirect PE information is the Physician 
Practice Information Survey (PPIS), fielded by the AMA. The survey was 
most recently conducted in 2007 and 2008 (reflecting 2006 data). The 
survey respondents were self-employed physicians and selected 
nonphysician practitioners.
    In general, interested parties have expressed the following 
concerns regarding CMS's approach to indirect PE allocation:
     CMS seems to rely on increasingly out-of-date data 
sources, and there is a dearth of mechanisms to update empirical 
inputs.
     The approach exacerbates payment differentials that 
possibly create inappropriate variation of reimbursement across 
ambulatory places of service (for example, significantly higher 
payments for the same service provided in a hospital outpatient 
department versus a physician office).
     CMS's method of indirect PE allocation may not accurately 
reflected variation in PE across different types of services, different 
practice characteristics, or evolving business models. Beyond these 
issues, we have also explored other concerns with our indirect PE 
allocation method in depth in previous rulemaking. For example, refer 
to our previous comment solicitation and discussion of resource costs 
for services involving the use of innovative technologies in our CY 
2022 PFS proposed rule (86 FR 39125). PE data inputs, and the 
methodological and evidence-based principles that shape use of such 
information in the context of reimbursement, are discussed in depth in 
a RAND Corporation (``RAND'') report prepared for CMS, entitled 
Practice Expense Methodology and Data Collection Research and Analysis, 
available at https://www.rand.org/pubs/research_reports/RR2166.html.\1\
---------------------------------------------------------------------------

    \1\ Burgette, Lane F., Jodi L. Liu, Benjamin M. Miller, Barbara 
O. Wynn, Stephanie Dellva, Rosalie Malsberger, Katie Merrell, et al. 
``Practice Expense Methodology and Data Collection Research and 
Analysis.'' RAND Corporation, April 11, 2018. https://www.rand.org/pubs/research_reports/RR2166.html.
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    Various interested parties have taken issue with the use of certain 
costs in our current PE allocation methodology that they do not believe 
are associated with increased indirect PE. Some interested parties 
argue that the costs of disposable supplies, especially expensive 
supplies, and equipment are not relevant to allocating indirect PE; or 
that similarly, work in the facility setting (for example, work RVUs 
for surgical procedures) is not relevant to allocating indirect PE,

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though they agree that work in the office setting may be relevant to 
allocating indirect PE.\2\ However, we do not believe that there is 
sufficient, if any, data or peer-reviewed evidence available to 
definitively show that shifting indirect PE allocations based on the 
setting of care, or based on specialty, would result in improved 
allocations of PE that reflect true costs. Further, varying indirect PE 
allocations based on setting of care or based on specialty might create 
unintended consequences such as reduced access to care for 
beneficiaries, or reduced competition and autonomy of small group 
practices or individual clinicians whose revenue is based in part on 
services furnished under contract in the facility setting.
---------------------------------------------------------------------------

    \2\ Kazungu, Jacob S., Edwine W. Barasa, Melvin Obadha, and Jane 
Chuma. ``What Characteristics of Provider Payment Mechanisms 
Influence Health Care Providers' Behaviour? A Literature Review.'' 
The International Journal of Health Planning and Management 33, no. 
4 (October 2018): e892-905. https://doi.org/10.1002/hpm.2565.
---------------------------------------------------------------------------

    We believe it is necessary to establish a roadmap toward more 
routine PE updates, especially because potentially improper or outdated 
allocation of PE across services may affect access to certain services, 
which could exacerbate disparities in care and outcomes. Establishing 
payments that better reflect current practice costs would mitigate 
possible unintended consequences, such as labor market distortions due 
to indirect cost allocations that do not reflect the current evolution 
of health care practice.\3\ Interested parties have reiterated their 
desire for CMS to move away from the current PE allocation approach and 
continued to raise concerns with CMS's methodology and the underlying 
PE data inputs. In response to these and other concerns, we continue to 
review the methodology we use to establish the PE RVUs and to identify 
refinements. As part of this effort, we have contracted with RAND to 
develop and assess potential improvements in the current methodology 
used to allocate indirect practice costs in determining PE RVUs for a 
service, model alternative methodologies for determining PE RVUs, and 
identify and assess alternative data sources that CMS could use to 
regularly update indirect practice cost estimates.\4\
---------------------------------------------------------------------------

    \3\ Laugesen, Miriam J. ``Regarding `Committee Representation 
and Medicare Reimbursements: An Examination of the Resource-Based 
Relative Value Scale.' '' Health Services Research 53, no. 6 
(December 2018): 4123-31. https://doi.org/10.1111/1475-6773.13084.
    \4\ Burgette, Lane F., Jodi L. Liu, Benjamin M. Miller, Barbara 
O. Wynn, Stephanie Dellva, Rosalie Malsberger, Katie Merrell, et al. 
``Practice Expense Methodology and Data Collection Research and 
Analysis.'' RAND Corporation, April 11, 2018. https://www.rand.org/pubs/research_reports/RR2166.html.
---------------------------------------------------------------------------

    In this final rule, we are signaling our intent to move to a 
standardized and routine approach to valuation of indirect PE and we 
solicited feedback from interested parties on what this may entail, 
given our discussion above. We would propose the new approach to 
valuation of indirect PE in future rulemaking.
    We solicited comment on the following topics related to 
identification of the appropriate instrument, methods, and timing for 
updating specialty-specific PE data:
     Potential approaches to design, revision, and fielding of 
a PE survey that foster transparency (for example, transparency in 
terms of the methods of survey design, the content of the survey 
instrument, and access to raw results for informing PFS ratesetting); 
and
     Mechanisms to ensure that data collection and response 
sampling adequately represent physicians and non-physician 
practitioners across various practice ownership types, specialties, 
geographies, and affiliations.
    We also solicited comment on any alternatives to the above that 
would result in more predictable results, increased efficiencies, or 
reduced burdens. For example:
     Use of statistical clustering or other methods that would 
facilitate a shift away from specialty-specific inputs to inputs that 
relate to homogenous groups of specialties without a large change in 
valuation relative to the current PE allocations.
     Avenues by which indirect PE can be moved for facility to 
non-facility payments, based on data reflecting site of service cost 
differences.
     Methods to adjust PE to avoid the unintended effects of 
undervaluing cognitive services due to low indirect PE.
     A standardized mechanism and publicly available means to 
track and submit structured data and supporting documentation that 
informs pricing of supplies or equipment.
     Sound methodological approaches to offset circularity 
distortions, where variable costs are higher than necessary costs for 
practices with higher revenue.
    We also solicited comment on the cadence, frequency, and phase-in 
of adjustments for each major area of prices associated with direct PE 
inputs (Clinical Labor, Supplies/Equipment). We requested that 
commenters address the following:
     Whether CMS should stagger updates year-to-year for each 
update, or establish ``milestone'' years at regular intervals during 
which all direct PE inputs would be updated in the same year.
     The optimal method of phasing in the aggregate effect of 
adjustments, such that the impacts of updates gradually ramp up to a 
full 100 percent over the course of a few years (for example, 25 
percent of the aggregate adjustment in Year 1, then 50 percent of the 
aggregate adjustment in Year 2, etc.).
     How often CMS should repeat the cycle to ensure that 
direct PE inputs are based on the most up-to-date information, 
considering the burden of data collection on both respondents and 
researchers fielding instruments or maintaining datasets that generate 
data.
    We received public comments on data collection, analysis and 
findings. The following is a summary of the comments we received and 
our responses.
    Comment: Most commenters that responded to this RFI recommended 
that CMS delay any change to update the indirect PE survey inputs. Many 
commenters urged CMS to wait for AMA data collection efforts prior to 
implementing changes. In responding to our RFI, the AMA RUC underscored 
that CMS wrote in this year's proposed rule that the AMA PPIS continues 
to be the best available source of data necessary for the purpose of 
calculating indirect PE. AMA also points to the fact that CMS has 
relied on AMA physician cost data for 50 years in updating the MEI and 
30 years updating the RBRVS. Additionally, the RUC urged that CMS 
continue to work with the AMA and various specialty societies involved 
in the previous data collection effort, and wait for an updated set of 
data to become available for use. The AMA indicated that it has 
continued work on updates and would likely be ready by early CY 2024 
with refreshed data. One commenter submitted a jointly-signed letter 
that did not support the AMA RUC approaches, and described a different 
means of data collection and analysis for updating the PE methodology. 
In addition to emphasizing some of the same themes noted in findings 
from RAND's review of the PE landscape, the letter recommended that CMS 
form an expert advisory group, multidisciplinary in composition, and 
backed with a dedicated research and development team of CMS staff, to 
support CMS' strategic plans to update PFS ratesetting. In this letter, 
the commenter also posited that indirect allocations would eventually 
be unnecessary, as the methodology could be evolved toward an entirely 
different means to capture actual costs of services. Overall, we 
received few direct responses to many

[[Page 69431]]

of the specific prompts included in our request for information.
    Response: We reiterate that we continue to believe that the current 
AMA PPIS data does represent the best available source of information 
at this time. However, as we continue to engage with a broad range of 
perspectives from interested parties who frequently ask for CMS policy 
to better reflect rapidly changing health care costs, we acknowledge, 
in consideration of these perspectives and our work to analyze these 
issues, that these concerns may be addressed by consistent and 
transparent data refreshes.
    We remain interested in possible alternatives to use of a sole 
source of data. We believe that transparency and repeatability should 
be key principles for examining future work to update indirect PE 
inputs. We have clear agreement among interested parties that the 
economic and medical landscapes have changed, and rapidly. Our intent 
remains to seek data that capture such changes on a more frequent 
basis, and allow for others to explore and study how best to assess and 
account for changes with more rapid feedback loops. Conversely, we 
understand that the competitive marketplace may create a dynamic 
whereby some market participants receive revenue for the licensing and 
sharing of proprietary information itself. We believe it remains 
important to avoid interference with this type of business arrangement 
between vendors and their customers, yet, we also believe that there is 
a strong public interest to support open, transparent, and low-cost 
means to conduct research on these topics. For example, we are not 
aware of any independent, third-party, peer-reviewed research focused 
on the characteristics of the health care labor market in light of 
advancements in automation (for example, empirical analysis of how 
software implementation may have a causal link to changes in the health 
care labor market). Simply put, there are no available studies that 
adequately answer the question, with sufficient predictive power and 
adequate empirical data, of how much clinical labor is saved, or 
replaced, by use of automation, in the context of furnishing 
practitioner services. Further, many, if not all examinations of 
automation and its effects on labor take a far broader focus than 
health care workforce only, and mainly use anecdotal information, with 
conclusions or hypotheses that focus on job gains/losses. We note that 
many commenters highlighted themes this year focusing on labor 
shortages, rather than labor surplusage. The comments that noted 
refreshed survey data alone would address the need for more precise, 
and up-to-date, allocations of indirect expenses seem discordant with 
other comments we received about updating our PE methodology to account 
for current advancements in automation, and associated software costs. 
Therefore, there are a number of competing concerns that CMS must take 
into account when considering updated data sources, which also should 
support and enable ongoing refinements to our PE methodology.
    For these reasons, it is possible that CMS would look to using 
verifiable, more objective data sets in the future to supplement or 
augment survey data alone. Such action would be similar to how certain 
specialty data are used in current indirect PE calculations, and 
sourced from specialty societies themselves, as required by statute, in 
some cases as PPIS data were not available. Alternatively, we may 
explore the use of data already in the public domain. We believe that 
fast-moving changes to the distribution of costs and use of evolving 
technology, and more generally the innovations in how vendors support 
practices, reshape indirect expenses in ways that would require 
flexible but standardized methods to account for these on a more 
frequent basis in our ratesetting methodology.
    We reiterate our needs described in our initial discussion for this 
RFI. We note that this interest to develop a roadmap for updates to our 
PE methodology is underpinned by a need to have better understanding of 
repeatability and reproducibility of results, as we move toward more 
consistent and frequent data collection. Some commenters expressed 
concerns over bias and validity. We believe some of those concerns may 
be alleviated by having means to refresh data and make transparent with 
more accuracy and precision how the information affects valuations for 
services payable under the PFS.
    Further, we note that it is possible that with the current timing 
for AMA's planned updates, we would be unable to refresh data for 
several years. This would result in CMS using data nearly 20 years old 
to form indirect PE inputs used to set rates for services on the PFS. 
As these survey data are static inputs, and leverage only the responses 
gathered at the time of collection, which are applied using a 
methodology without any dynamic variables, this is quite distinct from 
each of the MEI and various other inputs in PE methodology.
    We believe both the somewhat stale and static aspects of the PPIS, 
along with expected timing for updates is significantly at tension with 
the feedback we receive on a regular basis. Consistently, a broad range 
of perspectives across various interested parties frequently ask for 
CMS to better reflect costs in what has been a rapidly changing health 
care payment landscape. The medical community and others continue to 
point to shortcomings in our ratesetting methodology, which may be 
improved by consistent and transparent data refreshes.
    Additionally, we acknowledge that some hold disparate points of 
view about the above process of updating our PE methodology. We note 
that part of the public comment process aims to encourage thinking and 
build consensus, or identifies a lack of consensus. We appreciate the 
dialogue, multiple perspectives, and encourage that the broader 
national community of health policy thought leaders, health economists, 
and health systems researchers, all continue to have such conversations 
with one another and with CMS. A diversity of perspectives is important 
to foster a more robust set of options for the best available path 
forward.
    We again thank commenters for submitting feedback on our RFI. We 
reiterate that our RFI does not contain any specific proposals for CY 
2023. We will consider possible proposals in future rulemaking.
c. Changes to Health Care Delivery and Practice Ownership Structures, 
and Business Relationships Among Clinicians and Health Care 
Organizations
    Market consolidation, and shifts in workforce alignment, as well as 
an evolution in the type of business entities predominant in health 
care markets, all suggest significant transformation in the composition 
and proportions of practice expenses required to furnish care. These 
evolving conditions collectively highlight the need for a comprehensive 
update to PE data inputs, and possibly the PE methodology as a 
whole.\5\ Ideally, more comprehensive PE data inputs and a different PE 
calculation methodology would better account for indirect/overhead 
costs, current trends in the delivery of health care, the use of 
machine learning technology, and EHRs, and the cost differentials in

[[Page 69432]]

independent versus facility-based practices.
---------------------------------------------------------------------------

    \5\ Burgette, Lane F., Jodi L. Liu, Benjamin M. Miller, Barbara 
O. Wynn, Stephanie Dellva, Rosalie Malsberger, Katie Merrell, et al. 
``Practice Expense Methodology and Data Collection Research and 
Analysis.'' RAND Corporation, April 11, 2018. https://www.rand.org/pubs/research_reports/RR2166.html.
---------------------------------------------------------------------------

    We solicited comment on current and evolving trends in health care 
business arrangements, use of technology, or similar topics that might 
affect or factor into indirect PE calculations. We are interested in 
learning whether any PE data inputs may be obsolete, unnecessary, or 
misrepresentative of the actual costs involved in operating a medical 
practice.
    We received public comments on current and evolving trends in 
health care business arrangements, use of technology, or similar topics 
that might affect or factor into indirect PE calculations. The 
following is a summary of the comments we received and our responses.
    Comment: A few commenters responding to our prompt to explore 
avenues by which indirect PE can be moved for facility to non-facility 
payments, based on data reflecting site of service cost differences, 
suggested that indirect PE inputs should not be part of payment for the 
facility rate of payment.
    Commenters explained that because the facility bears the indirect 
costs for provision of services at the facility, and the physician or 
practitioner would receive indirect PE allocations for any in-office 
services, the indirect PE portion of the facility fee for a physician 
service is unwarranted.
    Response: We note that the face value of a change that would reduce 
the indirect PE portions of our current facility fees for physicians' 
services to zero may have merit. We have open questions about this 
feedback, which we will explore further in our ongoing research. We 
believe, and related feedback from interested parties suggests, there 
are two considerable shifts in today's healthcare business models. 
First, many physicians and NPP's have become employed staff, versus 
independent practitioners. Second, the landscape includes far more 
variation in the ways that organizations interact and contract for 
clinical staff and auxiliary personnel, and structure their 
compensation. We would aim to better understand whether potentially 
reducing to zero any indirect PE portion that is part of the facility 
fee for physician services may or may not reduce competition, or have 
the unintended effect of favoring certain forms of arrangements over 
others.
    Further, before proposing any policy, we would need to understand 
whether the policy could address related open questions. Our work with 
RAND to explore the relationship between different types of indirect 
costs and direct cost inputs remains one of few empirical efforts to 
examine the issue in-depth. In this year, and in previous years, when 
we have requested similar information from the public, we continue to 
receive anecdotal, if any evidence, when feedback from commenters aims 
to take issue with findings in the RAND studies.
d. Unintended Consequences and Missing Information
    We solicited comment on additional information that we may have not 
considered or discussed above about updating and maintaining PE data 
inputs, as well as any unintended impacts (or positive outcomes) that 
could result from changes to the overall strategy. We are especially 
interested in public comment on any concerns about beneficiaries' 
access to care, possible consolidation of group practices, or burden on 
small group or solo practitioners. We are also interested in public 
comments on any collateral program integrity or quality issues that 
could arise from potential updates. We requested that any respondents 
who provide feedback ensure that the response includes discussion of 
any possible health equity impacts.
    We received public comments on unintended consequences and missing 
information. The following is a summary of the comments we received and 
our responses.
    Comment: A few commenters expressed concern that topics of AI, a 
related evolution of software and technology used to support provision 
of services, and ties to health equity are not well-suited for the 
process of updates to our annual rulemaking cycle. Commenters expressed 
concerns that the public comment process alone is not sufficient to 
provide information, and requested a separate RFI. We received a 
similar response from many interested parties that question how CMS has 
in the past, and will in the future, address definition of topics and 
terms that shape our PE inputs.
    Response: We encourage interested parties to continue to provide 
feedback and suggestions to CMS that in general, give an evidentiary 
basis to shape optimal PE data collection and methodological 
adjustments over time. Submissions should discuss the feasibility and 
burden associated with implementation of any suggested adjustments, and 
should highlight opportunities to optimize the cadence, frequency, and 
phase-in of resulting adjustments. In the interim, we will continue to 
consider ways that we may engage in dialogue with interested parties to 
better understand how to address possible long-term policies and 
methods for PFS ratesetting.
6. Soliciting Public Comment on Strategies for Improving Global 
Surgical Package Valuation
    In preparation for future rulemaking, we solicited public comment 
on strategies to improve the accuracy of payment for the global 
surgical packages (herein referred to as ``global packages') under the 
PFS. Currently, there are over 4,000 physicians' services paid as 
global packages under the PFS. Global packages generally include the 
surgical procedure and any services typically provided during the pre- 
and postoperative periods (including evaluation and management (E/M) 
services and hospital discharge services). There are three types of 
global packages:
     The 0-day global package, which includes the procedure and 
the preoperative and postoperative physicians' services on the day of 
the procedure.
     The 10-day global package, which includes services on the 
day of, and 10 days after, the procedure.
     The 90-day global package, which includes services 
furnished one day prior to the procedure, and on the day of, and 90 
days immediately following the day of the procedure.
    More detail about how global packages are billed and what 
activities are included may be found in Chapter 12, Section 40, of the 
Medicare Claims Processing Manual (Pub. 100-04).
    We have applied the concept of global payment for some procedures 
since the inception of the PFS on January 1, 1992 (54 FR 59502). 
However, in the past decade we have engaged with interested parties 
regarding numerous concerns about the accuracy and validity of the 
valuation of global packages, with particular attention paid to the E/M 
visits included in the services. We have made previous requests for 
public feedback on global packages, including solicitations for 
information or data that could be used to help support more accurate 
valuations. We now wish to expand on our conversations with the public, 
considering the current status of a multi-year data collection and 
analysis project, as well as ongoing changes we have made to payments 
for other types of patient care that may impact the global packages.
a. History of Global Valuation Discussion
    In the CY 2013 PFS proposed rule (77 FR 44737 through 44738), we 
discussed two reports released by the HHS Office of the Inspector 
General in 2005 and

[[Page 69433]]

2012 with findings that practitioners were performing fewer E/M 
postoperative visits than had been included in the valuation for these 
global packages, suggesting that Medicare was paying for care that was 
not being delivered. In response to the concerns raised by the OIG 
reports, we solicited public feedback on methods of obtaining accurate 
and current data on E/M services furnished as part of a global package. 
We summarized public comment in the CY 2013 PFS final rule (77 FR 68911 
through 68913).
    In the CY 2015 PFS proposed rule (79 FR 40341), we delved into 
barriers to accurate valuation of global packages, especially as 
compared to other forms of bundled payments made under the inpatient or 
outpatient prospective payment systems. In addition to the ongoing 
concerns about whether E/M visits presumed to be furnished in 
connection with global packages were actually being performed by the 
physician receiving the global package payment, we noted issues such 
as:
     E/M services in the global period that occur post-
discharge are valued with PE values associated with follow-up visits in 
the physician's office. Many of these follow-up visits may occur in a 
hospital outpatient department where the physician may not incur many 
PE costs.
     The direct PE inputs often differ slightly between an E/M 
service furnished in a global period and a stand-alone E/M service. For 
example, follow-up visits for certain surgeries may include specialized 
clinical labor such as an RN rather than a general nurse blend.
     The types of physicians furnishing a specific service 
dictate the direct and indirect percentages, as well as the indirect 
practice cost index, in the PE methodology. Most surgical specialties 
have a lower direct percentage mix, resulting in higher indirect costs 
that extend to the E/M visits in the global periods.
     Because the E/M visits embedded in the global package are 
not reported separately and do not appear in claims data, it is 
difficult to quantify the number and level of E/M services furnished in 
connection with global packages under the fee-for-service system.
     In some cases we have limited billing of the 10- and 90-
day global packages in conjunction with some of the payment policies 
intended to encourage coordination of care through payments for non-
face-to-face services, such as transitional care management and chronic 
care management, because of presumed overlap between these services.
    To address these concerns, we solicited comment and finalized a 
policy in the CY 2015 PFS final rule (79 FR 67586) intended to, over a 
period of several years, transition all services with 10-day and 90-day 
global periods to 0-day global periods. As stated in the CY 2015 PFS 
final rule, we believed it would be more accurate to value the surgical 
procedure-day services separately from postop E/M visits, and would 
avoid potentially duplicative or unwarranted payments. For our full 
discussion and rationale, refer to 79 FR 67586 through 67591. 
Implementation of this policy, however, was halted by the Medicare 
Access and CHIP Reauthorization Act (MACRA) of 2015 (Pub. L. 110-14). 
Section 523(a) of the MACRA amended section 1848(c)(8) of the Act to 
prohibit the Secretary from implementing the transition policy 
finalized in the CY 2015 PFS final rule. The amendments to section 
1848(c)(8) of the Act also require CMS to collect additional data on 
how best to value global packages and to reassess every 4 years the 
continued need for this data collection. Section 1848(c)(8) of the Act 
directs CMS to use the information collected to improve the accuracy of 
valuation of these services under the PFS starting in CY 2019. (Refer 
to the CY 2016 PFS final rule at 80 FR 70915 for additional discussion 
of these requirements.)
    In response to the statutory requirements as added by section 
523(a) of the MACRA, we engaged in multiple discussions with interested 
parties about methods of data collection and analysis, including 
through public comment solicitation in the CY 2016 PFS proposed rule 
(80 FR 41707) and CY 2017 PFS proposed rule (81 FR 46191), a national 
listening session, and a town hall meeting. (Materials for the January 
20, 2016 listening session are available at https://www.cms.gov/Outreach-and-Education/Outreach/NPC/Downloads/2016-01-20-MCRA-Presentation.pdf. The transcript of the town hall meeting held August 
25, 2016 is available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Downloads/CY2017-PFS-FR-Townhall.pdf.) In the CY 2017 PFS final rule (81 FR 80209 through 
80213), we finalized a claims-based process to collect data from 
practitioners on both the number and level of postoperative visits 
furnished as part of the 10- and 90-day global packages. We also 
contracted with RAND to support this data collection and analysis.
b. Data Collection, Analysis, and Findings
    In 2019, RAND issued two reports based on its analysis of the data 
collected through the data collection process we established. The 
reports examined, using claims-based and survey-based data, the number 
of postoperative visits furnished during the 10- and 90-day global 
periods for certain high-volume procedures and the level of visits 
furnished for certain procedures. (Complete details about the data 
collected are discussed in the CY 2017 PFS final rule starting at 81 FR 
80212, the CY 2020 PFS final rule at 84 FR 62857, and in the reports 
themselves, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Global-Surgery-Data-Collection-.) 
Notably, RAND's analysis found that, according to claims-based data, 
the reported number of E/M visits matched the expected number (included 
for purposes of PFS valuation) for only 4 percent of reviewed 10-day 
global packages and 38 percent of reviewed 90-day global packages. 
Based on these analyses, RAND released a third report that analyzed the 
current valuation of global packages based on the difference between 
the number of postoperative E/M visits observed via the claims-based 
data collection process and the expected number of such E/M visits. The 
report modeled how valuation for global packages would change by 
adjusting the work RVUs, physician time, and direct PE inputs to 
reflect the observed number of E/M visits. The report provided 
hypothetical valuations for the global packages based on these 
adjustments. These three RAND reports were made available to the public 
and are available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Global-Surgery-Data-Collection.
    The RAND reports were shared with the public, and we received 
public comment about these reports in the CY 2020 PFS final rule (84 FR 
62866). Public commenters raised concerns about the findings in the 
reports, including questions as to whether the E/M visit data were 
collected from a true representative sample of practitioners, and 
various other challenges to the validity of the RAND methodology. Other 
members of the public, however, were supportive of our overall efforts 
to collect and analyze the data, and supplied additional data similarly 
suggesting that the 10- and 90-day global packages are overvalued. In 
2021, RAND responded to the CY 2020 public comments that were critical 
of

[[Page 69434]]

the methodologies used in the three earlier reports in a separate 
report entitled, ``Responses to Comments on RAND Global Services 
Reports,'' which is available at https://www.rand.org/content/dam/rand/pubs/research_reports/RR4300/RR4314-1/RAND_RR4314-1.pdf/.
    While some interested parties have challenged the methodology or 
conclusions of the RAND reports, we have not yet received data 
suggesting that postoperative E/M visits are being performed more 
frequently than indicated by the data collected and analyzed in the 
RAND reports. We continue to be concerned that our current valuations 
of the global packages reflect certain E/M visits that are not 
typically furnished in the global period, and thus, are not occurring. 
We also believe that RAND has adequately responded to critiques of its 
methodologies and findings. However, as part of our ongoing assessment 
of our data collection process, we continue to welcome any comments 
from the public on ideas for other sources of data that would help us 
to assess global package valuation (including the typical number and 
level of E/M services), as well as our data collection methodology and 
the RAND report findings. We received some public comments in our 
request for comments on possible additional data sources and on our 
data collection methodology. These comments are summarized as follows:
    Comment: Some commenters supported the findings and methodology of 
the RAND reports. Several commenters stated that the RAND's findings 
regarding E/M visit performance aligned with their own anecdotal 
observations and experiences. However, other commenters expressed 
skepticism of the RAND report findings and methodology, and many urged 
us to continue to rely on RUC valuations of global packages (including 
the number of embedded E/M visits included in the RUC surveys.) Several 
commenters observed that getting truly accurate information from claims 
data may be difficult; one commenter pointed out that since work done 
by NPPs or clinical staff is often not reported separately, it is 
difficult to get a complete picture of postoperative work. As in 
previous public discussions, commenters urged CMS to continue to 
examine claims data and electronic health records, or obtain 
postoperative E/M information through direct surveys of practitioners. 
Several commenters noted that we have spent many years performing data 
collection in response to the MACRA requirements, and one commenter 
requested that we cease our data collection efforts to avoid any 
additional burden on practitioner. Many commenters urged us to continue 
to work in collaboration with practitioners and other impacted parties 
to identify sources of postoperative E/M data and to maintain 
transparency about any additional collection efforts.
    Response: We found that the comments we received, particularly 
those critical of the RAND reports and methodology, echo the feedback 
we received several years ago when we shared the RAND reports for 
public comment. Please see the discussion of the RAND reports and 
findings in the CY 2020 PFS final rule (84 FR 62866) and RAND's 
responses to the CY 2020 public comments in the RAND report entitled, 
``Responses to Comments on RAND Global Services Reports,'' which is 
available at https://www.rand.org/content/dam/rand/pubs/research_reports/RR4300/RR4314-1/RAND_RR4314-1.pdf/. We note that we 
did not receive new data that might either affirm or contradict RAND's 
overall findings regarding E/M performance. We agree with commenters' 
observations that we have spent many years collecting and analyzing 
data regarding E/M performance in response to the MACRA requirements 
and other public concerns about the valuation of globals. While we will 
continue to evaluate potential sources of data regarding E/M 
performance, we agree with commenters who suggest that the overall lack 
of transparency within global packages can make identifying the nature 
of postoperative care provision difficult and continues to call into 
question the accuracy of globals that have been valued through standard 
valuation processes.
c. Changes to Health Care Delivery and Payment for E/M Services
    Since the inception of the PFS 30 years ago, there have been 
significant changes in health care, including improvements in medical 
and information technology, new models of health care delivery and 
coordination between multiple clinicians furnishing care to a single 
patient, and an expanding beneficiary population. (For information on 
Medicare service utilization, beneficiary demographics, provider 
characteristics, and payment models, please visit the resources at 
data.cms.gov.) We asked to hear from the public on whether the 
postoperative health care landscape has changed in ways that impact the 
relevance of the global packages.
    We believe that changes to health care delivery may impact proper 
valuation of global services. We solicited comment on whether changes 
to health care delivery, including changes in coordination of care and 
use of medical technology over the past 3 decades, as well as during 
the recent PHE, have impacted: the number and level of postoperative E/
M visits needed to provide effective follow-up care to patients; the 
timing of when postoperative care is being provided; and who is 
providing the follow-up care. We have formed hypotheses that some 
beneficiaries are not receiving the number of postoperative visits that 
were contemplated when valuing the global surgical packages or are not 
receiving any follow-up E/M visits at all during global periods either 
because the physician who performed the surgical procedure has 
determined they are unnecessary (perhaps due to improvements in medical 
technology or evolution in standards of care) or as the result of more 
comprehensive discharge planning. It has also been suggested by some 
interested parties that physicians are, in fact, performing the number 
of postoperative visits that were contemplated when valuing the global 
surgical packages, but the visits may, for various reasons, be 
scheduled outside the global period. Others have suggested that 
physicians are, without formally transferring follow-up care to another 
clinician, instructing patients to follow up with another physician or 
NPP (such as the patient's primary care physician or other 
practitioner), and that the other clinician then furnishes and bills 
for E/M services furnished for postoperative care (whether the care is 
performed during or after the global period). We appreciate comments on 
these ideas, and on other factors not mentioned here that could affect 
the ways that postoperative E/M care is provided.
    We also solicited comment on whether, or how, recent changes in the 
coding and valuation of separately billable E/M services may have 
impacted global packages. One change is the expansion of payment for 
non-face-to-face care management services. Historically, an advantage 
of global packages was that they compensated physicians for non-face-
to-face work related to the patient's transition from the hospital to 
the community, or management of other health care needs following a 
procedure or serious illness. Over the years, we have implemented 
payment for many care management services to better reflect non-face-
to-face time spent by physicians and clinical staff on behalf of 
patients with complex health care needs, including transitional care 
management services in CY 2013 (77 FR 68978); chronic care

[[Page 69435]]

management in CY 2015 (78 FR 74414) and CY 2019 (83 FR 58577); complex 
chronic care management in CY 2017 (81 FR 80244); and principal care 
management in CY 2020 (84 FR 62962). We solicit comment on whether 
global packages, and especially those with 10- and 90-day global 
periods, continue to serve a purpose when physicians could otherwise 
bill separately not only for the postoperative E/M visits they furnish, 
but also for aspects of postoperative care management they furnish for 
some patients. We also would like to hear generally what, if any, 
components of preoperative or postoperative care are currently only 
compensated as part of payment for global packages.
    We have also heard from some interested parties who believe that 
recent changes to the coding and valuation of standalone office and 
outpatient E/M visits finalized in the CY 2021 PFS final rule have 
skewed the relativity between these visits and the E/M visits included 
in the current global package valuations (which were not modified in 
response to the coding and valuation changes). In the CY 2020 PFS final 
rule (84 FR 62851 through 84 FR 62854), we finalized new--and generally 
increased, RVUs for the CPT-revised office and outpatient E/M code set. 
Some commenters encouraged us to increase the value of the E/M visits 
included in the global surgical packages commensurate with the 
increased RVUs for the standalone E/M visits. However, we declined to 
do so, noting that at the time that it was unclear whether it would be 
appropriate to treat the E/M visits reflected in global packages as 
discrete components of the package (in other words, to use a building-
block approach to calculating the value of the service, versus valuing 
the services using the more holistic magnitude estimation, or possibly 
another approach.) Furthermore, we cited the uncertainty as to whether 
the E/M services included in valuing the global packages are typically 
furnished as part of global surgery services, reasoning that if the 
number and level of E/M services for global packages is not 
appropriate, adopting increases in the value of E/M services in global 
surgery codes would exacerbate rather than ameliorate any potential 
relativity issues. (Refer to the CY 2020 PFS final rule at 84 FR 62856 
through 62860 for a complete summary of comments and our responses on 
the topic of increasing the value of E/M visits included in the global 
packages.) We welcomed additional comments on the perceived 
misalignment between the E/M visits included in global packages and 
separately billable E/M services, including thoughts on how this 
current tension reflects on global payment valuation and the 
appropriate methodology for determining appropriate values for global 
packages.
    We received some public comments on whether changes to health care 
delivery and payment for E/M services may impact the performance of E/M 
visits or overall relevance of E/M visits. The following is a summary 
of the comments we received and our responses.
    Comment: Several commenters noted that while patients in general 
seem in greater need of critical care, there is also (from various 
commenters' perspective) either increasing opportunity or mounting 
pressure on practitioners to discharge patients from hospitals and 
arrange at-home care after surgeries. Many commenters stated that 
postoperative care provided by the proceduralists should still be 
considered a best practice. However, a few commenters agreed with some 
of our hypotheses--namely that for clinical reasons patients may not 
need to return for in-person postoperative care within the global 
period, or that scheduling conflicts may make timely return difficult. 
A few commenters also agreed that patients may, for reasons of 
convenience, receive some postoperative care from community 
practitioners rather than returning to the hospital where the surgical 
procedure was performed. Some commenters also suggested that there may 
be clinical reasons why it is better for a patient to receive 
postoperative care from a practitioner or NPP other than the 
proceduralist, such as in circumstances when the patient needs long-
term or specialized postoperative care outside the expertise of the 
proceduralist. Overall, commenters expressed ambivalence about the 
impact the PHE and use of telehealth has had on postoperative care. A 
few commenters noted that some aspects of postoperative care--including 
sharing of test results or consultations--can be done via telehealth, 
while others described types of postoperative care that can only be 
done in-person. Commenters also expressed doubt about the impact of 
expanded payments for non-face-to-face services, noting that payments 
for care management or other non-face-to-face services do not include 
all post-surgical conditions and do not address in-person care.
    Regarding our questions about the overall relevance of global 
packages, some commenters stated that paying for postoperative care as 
standalone visits would ensure that Medicare was only paying for the 
care that was being delivered. A few commenters suggested that 
postoperative care should be not only paid for separately, but paid at 
a higher rate. Other commenters stated that global packages continue to 
be necessary because they reduce administrative burden on practitioners 
and ensure payment of care provided by NPPs and clinical staff.
    Response: While we did not receive a great deal of feedback on our 
specific request for information as to whether global packages are 
still relevant, we believe the information we received demonstrates 
that there may be variations in patients' individual postoperative care 
needs. While we agree with commenters that in-person visits with the 
proceduralist is the standard of care on which global packages were 
based, we will continue to examine whether this specific model of 
postoperative care is still necessary or relevant for all procedures.
    Comment: Many commenters provided input on the valuation of the E/M 
visits embedded in global packages as compared to standalone E/M 
visits. Although commenters did not provide feedback on whether the 
misalignment reflects on the relevance of surgical packages, many 
commenters suggested that we should increase the value of global 
packages to reflect the increase in standalone E/M visits (both the 
office/outpatient increases finalized in CY 2020 at 84 FR 62851 through 
84 FR 62854, and increases to certain hospital inpatient E/M visits 
proposed in CY 2023 at 87 FR 45993.) Some commenters suggested that the 
data collection requirement in the MACRA amendments to the statute does 
not preclude CMS from applying such increases to all global packages. 
Other commenters, however, agreed with our decision not to increase the 
global packages pending our inquiry into the performance of 
postoperative E/M visits.
    Response: We direct commenters to the CY 2020 PFS final rule (84 FR 
62851 through 84 FR 62854), where we discussed similar concerns. We 
continue to disagree with commenters' interpretation of the MACRA 
amendments. We note that section 1848(c)(8) of the Act, as amended by 
section 523(a) of the MACRA (Pub. L. 110-14), directs CMS to use the 
information collected to improve the accuracy of valuation of these 
services specifically requires that we use the data we obtain through 
data collection to revalue the global packages. Our data currently 
suggests that at least some global packages are inaccurately, revalued, 
and until we identify data that demonstrates otherwise, we do not 
believe it would be appropriate to apply

[[Page 69436]]

an across-the-board adjustment to the packages that is not supported by 
data. Additionally, we are also working to reconcile public 
recommendations that we revalue global packages on a holistic or case-
by-case basis (discussed in greater detail in section II.B.6.d. of this 
final rule) with recommendations that we apply across-the-board 
increases to all global packages.
d. Strategies To Address Global Package Valuation
    Consistent with the discussion above, we continue to believe that: 
(1) there is strong evidence suggesting that the current RVUs for 
global packages are inaccurate; (2) many interested parties agree that 
the current values for global packages should be reconsidered, whether 
they believe the values are too low or too high; and (3) it is 
necessary to take action to improve the valuation of the services 
currently valued and paid under the PFS as global surgical packages.
    We would like to re-engage with the public about whether the global 
packages are indeed misvalued, and if so, what would be an appropriate 
approach to valuation. We have previously sought assistance from the 
public on possible methods of revaluation, such as in the CY 2015 PFS 
final rule (79 FR 67586).
    As noted in the ``Data Collection, Analysis, and Findings'' section 
above (section II.B.6.b.), RAND has provided a comprehensive roadmap 
for a possible revaluation strategy. (See specifically the RAND report, 
``Using Claims-Based Estimates of Postoperative Visits to Revalue 
Procedures with 10- and 90-Day Global Periods,'' available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Global-Surgery-Data-Collection-. We solicited 
additional input on the RAND methodology, including advantages and 
drawbacks of applying the RAND methodology to revaluation (in addition 
to previous feedback that was provided by the public in the CY 2020 PFS 
final rule at 84 FR 62867). We also requested input on specific 
alternatives, including: (1) requesting the RUC to make recommendations 
on new values; or (2) another method proposed by the public.
    We solicited feedback from the public on possible strategies for a 
revaluation process for global services. We believe that the available 
information provided in the RAND reports (discussed in section 
II.B.6.b. of this final rule and available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Global-Surgery-Data-Collection-) indicates that there is a mismatch between 
the value of the global package and work being performed. In 
particular, it appears that for some services, the number of 
postoperative visits typically furnished by the billing physician is 
much lower than what was reflected in the global package value, and 
thus we believe it may be necessary to revalue those services. (As 
noted in section II.B.6.b. of this final rule, RAND's analysis found 
that the reported number of E/M visits matched the expected E/M visits 
for only 4 percent of reviewed 10-day global packages and 38 percent of 
reviewed 90-day global packages. We referred specifically to the RAND 
report, ``Claims-Based Reporting of Postoperative Visits for Procedures 
with 10- or 90-Day; Global Periods--Updated Results Using Calendar Year 
2019 Data'' available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Global-Surgery-Data-Collection-). 
Because there are a large number and volume of services paid as global 
packages, we must consider the resources needed to revalue even a 
subset of the global packages, as well as the impacts across the PFS 
and healthcare delivery system in general if we were to change the 
values of a significant number of services at one time. We considered 
various approaches we could pursue, such as: (1) revaluing all 10- and 
90-day global packages at one time (perhaps with staggered 
implementation dates); (2) revaluing only the 10-day global packages 
(because these appear to have the lowest rate of postoperative visit 
performance, per RAND's analysis of claims data); (3) revaluing 10-day 
global packages and some 90-day global packages (such as those with 
demonstrated low postoperative visit performance rates as identified in 
RAND's analysis of these services); or (4) relying on the Potentially 
Misvalued Code process to identify and revalue misvalued global 
packages over the course of many years. (We noted that regardless of 
whether we review particular global packages as part of a specific 
revaluation strategy, the public may always nominate any global 
packages to be reviewed through the Potentially Misvalued Code process; 
refer to the description of the Potentially Misvalued Code process in 
section II.C. of this final rule.) We solicited comment on any of the 
strategies identified in this paragraph, as well as any additional 
ideas members of the public may have that would address the concerns 
described above about valuation of global packages. We also solicited 
comment on ancillary considerations including timing considerations for 
implementation of any future strategy (such as whether to have 
staggered effective dates for new valuations and what criteria to use 
if assigning staggered effective dates.)
    We also solicited comment on additional considerations affecting 
valuation of global services that may not have been thoroughly explored 
in previous public comment opportunities. For instance, we are aware 
that some interested parties are concerned that not enough attention 
has been paid to the value of preservice work bundled into the global 
payment, which could affect accurate valuation of 10- and 90-day global 
packages, as well as the value of the service if it is transitioned to 
a 0-day global. We solicited additional information about this concern, 
as well as any other concerns about valuation not otherwise mentioned 
here.
    We received public comments on strategies to address global package 
valuation. The following is a summary of the comments we received and 
our responses.
    Comment: Some commenters agreed that global surgical packages are 
misvalued and encouraged CMS to revalue the packages in order to reduce 
the impacts of improper valuation on the relative value scale. A few 
commenters agreed that packages were misvalued, but suggested we 
continue to work with impacted parties to find a method for 
revaluation. Other commenters stated that they do not believe that 
global packages were misvalued or, if they are misvalued, they should 
be revalued on a holistic and case-by-case basis using the RUC process 
or the Potentially Misvalued Code process. A few commenters suggested 
that CMS and the RUC collaborate on a specific method to revalue global 
packages. Commenters also noted that revaluing through the RUC process 
could take a number of years and may present resource challenges.
    We received diverse comments on approaches for revaluing the codes, 
including revaluing all 10- and 90-day packages, revaluing some 10- and 
90-day packages, or focusing just on the 10-day packages. Commenters 
who recommended focusing on the 10-day packages suggested that this 
would address services with lower demonstrated postoperative E/M visit 
rates, and would provide us with insight about revaluation that could 
then be applied to the 90-day packages as needed. Other commenters made 
suggestions including phasing out global packages by not valuing new 
CPT codes as globals, or changing the length

[[Page 69437]]

of global periods. While one commenter was in favor of revaluing all 
packages at one time, many commenters suggested revaluing over a number 
of years to avoid too much disruption to the relative value scale. One 
commenter suggested we wait until after the conclusion of the PHE to 
revalue any packages.
    Response: We believe that the spectrum of comments demonstrates 
that there is not, at this time, clear public consensus on this issue 
or the preferred strategy for valuing globals. We will consider the 
specific strategies proposed by the commenters and the concerns 
regarding impact on the relative value scale and the resources that 
would be required to revalue these codes.
e. Other Payment Structure Changes, Unintended Consequences, and 
Missing Information
    We solicited public comment on any other aspects of the global 
payment structure (aside from the valuation of services) that 
commenters believe are noteworthy. Much of the discussion over the 
years has focused on whether global surgical packages are properly 
valued and whether they are needed at all. We encourage commenters to 
point out ways in which global surgical packages may continue to have a 
positive impact on health care delivery (such as their potential to 
support innovation). We also solicited suggestions on other ways that 
global surgical package payments could be modified (aside from changing 
their valuation) that could help improve accurate valuation or help 
address other concerns about the payments (such as the lack of 
transparency about what care is being provided as part of the package).
    We also requested comment on additional information that we may not 
have considered or discussed above about proper valuation of the global 
packages, as well as any unintended impacts (or positive outcomes) that 
could result from changes to how we value global services. We are 
especially interested in public comment on any concerns about 
beneficiaries' access to care, continuity of care, cost sharing, or 
program integrity.
    We received limited public comments on other payment structure 
changes, unintended consequences, and missing information. The 
following is a summary of the comments we received and our responses.
    Comment: A few commenters opined on the consequences of unbundling 
global payments. A few of these commenters raised concerns that 
unbundling the packages would reduce payments to physicians or NPPs. A 
few expressed concerns that beneficiaries might not want to pay the 
coinsurance for standalone E/M visits (should global packages be 
unbundled) and might decline postoperative care.
    Response: We agree that the payments to practitioners might change 
in circumstances where globals are revalued, although we do not believe 
there is yet enough information to determine the financial impact 
should proceduralists bill separately for postoperative care for some 
procedures. We will continue to consider the potential impact of 
coinsurance for globals and postoperative care for beneficiaries.
    After consideration of the comments, we wish to thank the 
commenters for their input. As outlined in the proposed rule, this 
discussion has spanned over a decade, with participation from specialty 
societies, advocacy groups, program integrity agencies, and Congress. 
We had hoped through this comment solicitation to nudge discussion into 
new or under-explored lanes of inquiry that would help us better 
understand how global packages fit into the current health care 
landscape. We appreciate the engagement we did receive with our 
requests for information regarding current health care practices. 
Additionally, numerous interested parties, those who have been engaged 
with the discussion for many years, as well as some new voices, 
provided comment that reinforced or reiterated concerns that have 
emerged in prior discussions.
    In this year's comment solicitation, we received a spectrum of 
perspectives on: whether the globals are misvalued; if misvalued, 
whether they are undervalued or overvalued; whether we should continue 
to value them through our current processes or develop a new 
methodology that better addresses the unique challenges posed by 
bundled payments; and whether globals should be revalued individually, 
in batches, or in their entirety. Looking at the totality of the 
comments and keeping in mind discussion from prior years, we have 
identified a few common themes on which many seem to agree. The matter 
of global valuation is complex. Global packages comprise a large number 
of codes, and their valuation has a significant impact on the PFS 
relative value scale. Accurately valuing the work and other inputs of 
the globals is critically important to ensure not only that the 
practitioners providing those services are paid accurately for the work 
performed, but that there is no inequitable impact on practitioners 
paid outside of 10- and 90-day global packages. The diversity of 
procedures paid under global packages may mean that blanket approaches 
to valuation or revaluation may not achieve the desired degree of 
accuracy. And, finally, while universally agreed-upon data strategies 
may prove elusive, good data analysis is a critical foundation on which 
to base any method for valuing these packages. We appreciate the 
public's engagement on this issue, and continue to welcome additional 
insights from interested parties as we consider appropriate next steps.

C. Potentially Misvalued Services Under the PFS

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 relative 
value units (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) of 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.E. of this final rule, Valuation of 
Specific Codes, each year we develop appropriate adjustments to the 
RVUs taking into account recommendations provided by the American 
Medical Association (AMA) Resource-Based Relative Value Scale (RVS) 
Update Committee (RUC), MedPAC, and other interested parties. 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 statute. 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 Merit-based 
Incentive Payment System (MIPS) data. In addition to considering the 
most recently available data, we assess the

[[Page 69438]]

results of physician surveys and specialty recommendations submitted to 
us by the RUC for our review. We also considered information provided 
by other interested parties. We conducted 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/docs/Fee-for-Service-Payment/Physiciandefault-source/reports/Mar06_Ch03.pdf?sfvrsn=0), MedPAC discussed the importance of 
appropriately valuing physicians' services, noting that misvalued 
services can distort the market for physicians' 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 costs decline. 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 costs rise.
    As MedPAC noted in its March 2009 Report to Congress (http://www.medpac.gov/docs/default-source/reports/march-2009-report-to-congress-medicare-payment-policy.pdf), 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 PE.
     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 
PFS.
     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 intraservice work per unit of time.
     Codes with high PE RVUs.
     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 PFS.
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 intend 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 (76 FR 73026, 73058 through 73059), 
other individuals and groups submit nominations for review of 
potentially misvalued codes as well. Individuals and groups may submit 
codes for review under the potentially misvalued codes initiative to 
CMS in one of two ways. Nominations may be submitted to CMS via email 
or through postal mail. Email submissions should be sent to the CMS 
emailbox at [email protected], with the phrase 
``Potentially Misvalued Codes'' and the referencing CPT code number(s) 
and/or the CPT descriptor(s) in the subject line. Physical letters for 
nominations should be sent via the U.S. Postal Service to the Centers 
for Medicare & Medicaid Services, Mail Stop: C4-01-26, 7500 Security 
Blvd., Baltimore, Maryland 21244. Envelopes containing the nomination 
letters must be labeled ``Attention: Division of Practitioner Services, 
Potentially Misvalued Codes.'' Nominations for consideration in our 
next annual rule cycle should be received by our February 10th 
deadline. Since CY 2009, as a part of the annual potentially misvalued 
code review and Five-Year Review process, we have reviewed over 1,700 
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

[[Page 69439]]

reviews of potentially misvalued codes is included in the CY 2012 PFS 
final rule with comment period (76 FR 73052 through 73055). In the same 
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, and 
established a process for the annual public nomination of potentially 
misvalued services.
    In the CY 2013 PFS final rule with comment period (77 FR 68892, 
68896 through 68897) 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 
the CY 2019 PFS proposed rule (73 FR 38589), 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. In the fourth Five-Year Review of Work RVUs 
proposed rule (76 FR 32410, 32419), we requested recommendations from 
the RUC to aid in our review of Harvard-valued codes with annual 
utilization of greater than 30,000 services. 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). We continue each year to consider and 
finalize a list of potentially misvalued codes that have or will be 
reviewed and revised as appropriate in future rulemaking.
3. CY 2023 Identification and Review of Potentially Misvalued Services
    In the CY 2012 PFS final rule with comment period (76 FR 73058), we 
finalized a process for the public to nominate potentially misvalued 
codes. In the CY 2015 PFS final rule with comment period (79 FR 67548, 
67606 through 67608), we modified this process whereby the public and 
interested parties may nominate potentially misvalued codes for review 
by submitting the code with supporting documentation by February 10th 
of each year. Supporting documentation for codes nominated for the 
annual review of potentially misvalued codes may include the following:
     Documentation in peer reviewed medical literature or other 
reliable data that demonstrate changes in physician work due to one or 
more of the following: technique, knowledge and technology, patient 
population, site-of-service, length of hospital stay, and work time.
     An anomalous relationship between the code being proposed 
for review and other codes.
     Evidence that technology has changed physician work.
     Analysis of other data on time and effort measures, such 
as operating room logs or national and other representative databases.
     Evidence that incorrect assumptions were made in the 
previous valuation of the service, such as a misleading vignette, 
survey, or flawed crosswalk assumptions in a previous evaluation.
     Prices for certain high cost supplies or other direct PE 
inputs that are used to determine PE RVUs are inaccurate and do not 
reflect current information.
     Analyses of work time, work RVU, or direct PE inputs using 
other data sources (for example, VA, NSQIP, the STS National Database, 
and the MIPS data).
     National surveys of work time and intensity from 
professional and management societies and organizations, such as 
hospital associations.
    We evaluate the supporting documentation submitted with the 
nominated codes and assess whether the nominated codes appear to be 
potentially misvalued codes appropriate for review under the annual 
process. In the following year's PFS proposed rule, we publish the list 
of nominated codes and indicate for each nominated code whether we 
agree with its inclusion as a potentially misvalued code. The public 
has the opportunity to comment on these and all other proposed 
potentially misvalued codes. In each year's final rule, we finalize our 
list of potentially misvalued codes.
a. Public Nominations
    In each proposed rule, we seek nominations from the public and from 
interested parties of codes that they believe we should consider as 
potentially misvalued. We receive public nominations for potentially 
misvalued codes by February 10th and we display these nominations on 
our public website, where we include the submitter's name and their 
associated organization for full transparency. We sometimes receive 
submissions for specific, PE-related inputs for codes, and discuss 
these PE-related submissions, as necessary under the Determination of 
PE RVUs section of the rule. We summarize below this year's submissions 
under the potentially misvalued code initiative.
    An interested party nominated the home-based physician visit codes: 
CPT code 99344 (Home visit for the evaluation and management of a new 
patient, which requires these 3 key components: A comprehensive 
history; A comprehensive examination; and Medical decision making of 
moderate 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 presenting problem(s) are of high 
severity. Typically, 60 minutes are spent face-to-face with the patient 
and/or family), CPT code 99345 (Home visit for the evaluation and 
management of a new patient, which requires these 3 key components: A 
comprehensive history; A comprehensive examination; and 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 new problem requiring immediate 
physician attention. Typically, 75 minutes are spent face-to-face with 
the patient and/or family), CPT code 99349 (Home visit for the 
evaluation and management of an established patient, which requires at 
least 2 of these 3 key components: A detailed interval history; A 
detailed examination; Medical decision making of moderate 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 presenting problem(s) are moderate to high 
severity. Typically, 40 minutes are spent face-to-face with the patient 
and/or family), and CPT code 99350 (Home visit for the evaluation and 
management of an established patient, which requires at least 2 of 
these 3 key components: A comprehensive interval history; A 
comprehensive examination; Medical decision making of moderate to 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 presenting

[[Page 69440]]

problem(s) are of moderate to high severity. The patient may be 
unstable or may have developed a significant new problem requiring 
immediate physician attention. Typically, 60 minutes are spent face-to-
face with the patient and/or family) as potentially misvalued.
    In their submission, the nominator expressed concern that there is 
no payment for transportation costs incurred when it is medically 
necessary for a physician to drive to the home of the patient for a 
face-to-face in-home E/M Visit, and that they are not compensated for 
opportunity loss they incur by seeing fewer patients because they spend 
time commuting to patients' homes, versus seeing more patients that 
come to their offices. The nominator also argued that Medicare does not 
compensate physicians for the work and time associated with assessing a 
patient's home environment, which provides insight into a patient's 
overall health and living conditions. The nominator collectively called 
these non-medical factors that can affect a patient's overall health 
the ``Social Determinants of Health'' (SDoH). The nominator requested 
that we increase the overall RVUs for CPT codes 99344, 99345, 99349, 
and 99350, by including the resources associated with: (1) the 
physician's transportation costs to patients' homes; (2) lost income 
opportunity for home versus in-office visits; and (3) in-home SDoH 
assessment work. The nominator estimated that the adjustments to RVUs 
to reflect transportation costs and opportunity costs would result in a 
Medicare payment that is 67 percent higher than the current Home-based 
E/M Visits payment rates, and that adjustments to account for the 
physician's SDoH assessment would add an additional 55 percent increase 
to the payment rates for Home-based E/M Visits. In total, the nominator 
suggests that if these resources were taken into account, the payment 
rates for Home-based E/M CPT codes would increase by what the nominator 
estimates as a 222 percent increase from their current amounts.
    The nominator included references as evidence to support their 
claim that the home-based E/M CPT codes are potentially misvalued, such 
as the CMS ``Medicaid Non-Emergency Medical Transportation Booklet for 
Providers'' (April 2016) 6 7 and a press release from the 
Better Medicare Alliance entitled, ``Report Shows Dramatic Increase in 
Medicare Advantage Activity to Address Social Determinants of Health, 
But Barriers Remain''.\8\
---------------------------------------------------------------------------

    \6\ https://www.cms.gov/Medicare-Medicaid-Coordination/Fraud-Prevention/Medicaid-Integrity-Education/Downloads/nemt-booklet.pdf.
    \7\ https://storage.aanp.org/www/documents/NP-Infographic.pdf.
    \8\ https://bettermedicarealliance.org/news/report-shows-
dramatic-increase-in-medicare-advantage-activity-to-address-social-
determinants-of-health-but-barriers-remain/
#:~:text=Social%20determinants%20of%20health%20are,to%20the%20World%2
0Health%20Organization.
---------------------------------------------------------------------------

    We noted that the nominator did not nominate the entire family of 
home-based E/M visit codes (please see Table 9 for a list of home-based 
E/M codes).
[GRAPHIC] [TIFF OMITTED] TR18NO22.011

    When we establish values for codes or consider whether codes are 
potentially misvalued under the PFS, we take into account the resources 
involved in furnishing the specific service as described by the CPT 
code. As such, historically, we do not take into account: (1) travel 
costs incurred by the physician or other practitioner; (2) potential 
opportunity costs to a physician or other practitioner when care is 
delivered in one setting versus another; or (3) the physician or other 
practitioner's work and time expended in performing activities that are 
outside the scope of the specific service as described by the CPT code. 
These are not considered to be resources involved in furnishing the 
service, and they are not included in establishing payment rates under 
the PFS in accordance with section 1848 of the Act, and, as such, do 
not provide justification for potential misvaluation of those payments. 
That said, in February 2021, the AMA CPT Editorial Panel deleted the 
family of domiciliary codes, CPT codes 99324 to 99340, and merged the 
services described by those codes into the existing family of home-
based E/M visits, CPT codes 99341 to 99350 (a range of codes that 
includes CPT codes 99344, 99345, 99349, and 99350). In addition, the 
AMA RUC made recommendations regarding the values for these home-based 
E/M codes as discussed in section II.F. of the CY 2023 PFS proposed 
rule (87 FR 45999) and in section II.F. of this final rule. Since CMS 
had already received AMA RUC recommendations for these home-based E/M 
visit codes, we considered those recommendations and solicited 
additional public comments, recommendations, and independent analysis 
as supporting evidence from all interested parties regarding the 
valuations for the home-based E/M visits, including CPT codes 99344, 
99345, 99349, and 99350. Because we discussed and solicited public 
comment on the valuation of these codes in the proposed rule, we stated 
that we were not considering these home-based E/M

[[Page 69441]]

visits as potentially misvalued for CY 2023.
    An interested party has nominated the following cataract surgery 
codes, CPT codes 65820 (Goniotomy--Incision to improve eye fluid flow), 
66174 (Transluminal dilation of aqueous outflow canal; without 
retention of device or stent), 66982 (Complex Extracapsular cataract 
removal with insertion of intraocular lens prosthesis (one stage 
procedure), manual or mechanical technique (e.g., irrigation and 
aspiration or phacoemulsification), 66984 (Extracapsular cataract 
removal with insertion of intraocular lens prosthesis (one stage 
procedure), manual or mechanical technique (e.g., irrigation and 
aspiration or phacoemulsification)), 66989 (Complex Extracapsular 
cataract removal w/IOL insertion, complex; with insertion of 
intraocular (e.g., trabecular meshwork, supraciliary, suprachoroidal) 
anterior segment aqueous drainage device, without extraocular 
reservoir, internal approach, one or more), and 66991 (Extracapsular 
cataract removal w/IOL insertion; with insertion of intraocular (e.g., 
trabecular meshwork, supraciliary, suprachoroidal) anterior segment 
aqueous drainage device, without extraocular reservoir, internal 
approach, one or more), as well as the following retinal procedure 
codes, CPT codes 67015 (Aspiration or release of vitreous, subretinal 
or choroidal fluid, pars plana approach (posterior sclerotomy)), 67036 
(Vitrectomy, mechanical, pars plana approach), 67039 (Vitrectomy, 
mechanical, pars plana approach; with focal endolaser 
photocoagulation), 67040 (Vitrectomy, mechanical, pars plana approach; 
with endolaser panretinal photocoagulation), 67041 (Vitrectomy, 
mechanical, pars plana approach; with removal of preretinal cellular 
membrane (e.g., macular pucker)), 67042 (Vitrectomy, mechanical, pars 
plana approach; with removal of internal limiting membrane of retina 
(e.g., for repair of macular hole, diabetic macular edema), includes, 
if performed, intraocular tamponade (i.e., air, gas or silicone oil)), 
67043 (Vitrectomy, mechanical, pars plana approach; with removal of 
subretinal membrane (e.g., choroidal neovascularization), includes, if 
performed, intraocular tamponade (i.e., air, gas or silicone oil) and 
laser photocoagulation), 67108 (Repair of retinal 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), and 67113 (Repair of complex 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), as potentially misvalued 
because there is currently no established non-facility payment rate for 
these global 090-day surgical procedures. These codes are complex 
surgical eye procedures, and they require dedicated spaces, similar to 
facility-based spaces that are not typically found in an 
ophthalmologist's office--such as a well-lighted and sterile surgical 
theater; specific eye surgery equipment; and, possibly, clinical staff 
and other medical personnel trained to assist in these surgeries and 
the patient's immediate post-surgery recovery, including anesthesia 
services. In the past, with concerns for patient safety and given the 
intricate and delicate nature of these surgeries, we understood that 
these procedures would only be performed in a well-equipped and fully 
staffed medical facility. For Medicare Part B, payment for these 
services is only made for procedures furnished in the facility 
settings, but this nominator suggests that these cataract and retinal 
procedures can be properly performed in the non-facility office, 
safely, effectively, and perhaps more conveniently for patients and 
physicians; and thus requests that we should establish non-facility 
RVUs under the PFS to recognize the additional resources that would be 
expended in the non-facility setting.
    The nominator has included a list of practice expense (PE) items 
involved in furnishing these services in the non-facility setting to 
help us to consider establishing non-facility values for these codes. 
They include the possible number and types of clinical staff and their 
work time in minutes as well as a list of various equipment and 
supplies typically needed to furnish the services described by the 
nominated codes.
    The nominator also noted that there is projected backlog for these 
cataract and retinal services that may have been building up due to the 
COVID-19 restrictions from the past 2 years. We solicited comment on 
the merits of continuing to value these codes only in the facility 
setting, as opposed to also establishing non-facility values for these 
cataract and retinal surgery codes. We also solicited comment on any 
appropriate safety considerations for these codes in the non-facility 
setting, and whether these codes are potentially misvalued. We noted 
that in last year's CY 2022 PFS final rule with comment (86 FR 65096 
through 65097), we did review CPT codes 66982, 66984, 66987, 66988, 
66989, 66991, and 0671T (Cataract Removal with Drainage Device 
Insertion) and did not establish non-facility values for those 
services, but we did note a potential rank order anomaly when 
considering minimally invasive glaucoma surgeries (MIGS) and cataract 
surgeries together, and suggested that the AMA RUC should consider re-
surveying all of the codes in this family.
    An interested party nominated add-on CPT code 20931 (Allograft, 
structural, for spine surgery only (List separately in addition to code 
for primary procedure)) as a potentially misvalued service with respect 
to the physician's labor for spinal surgeries involving the use of 
biomechanical synthetic cage devices versus the use of structural 
allograft bone as it relates to a set of CPT codes related to anterior 
cervical discectomy and fusion (ACDF). Ordinarily, interested parties 
nominate a primary service code as potentially misvalued, or a primary 
service code and its related add-on codes, but not an add-on code 
alone. The valuation of an add-on code is typically developed with 
reference to some portion of the work (or other resource inputs) 
involved in furnishing the primary service code. For example, the AMA 
CPT 2022 Professional Edition, page 147, states ``Use code 20931 in 
conjunction with codes 22319, 22532-22533, 22548-22558, 22590-22612, 
22630, 22633, 22634, 22800-22812''. The primary spinal surgery codes 
and the add-on CPT code 20931 have not been recently reconsidered or 
reviewed by the AMA RUC or CMS, and no new or additional information 
has been included with this nomination to persuade CMS that CPT code 
20931 is individually potentially misvalued. This nomination of an add-
on code as potentially misvalued is similar to the nomination we 
discussed in the CY 2022 PFS proposed rule (86 FR 65044) of CPT code 
22551 (Arthrodesis, anterior interbody, including disc space 
preparation, discectomy, osteophytectomy and decompression of spinal 
cord and/or nerve roots; cervical below C2) and the accompanying add-on 
codes.
    The nominator refers to two different methods of vertebral fusion: 
one using biomechanical synthetic cage devices, the other using 
structural allograft bone; and describes a typical vertebral fusion 
case that uses three units of one of these products. Both of these 
methods of vertebral fusion are described by CPT

[[Page 69442]]

code 22551 (includes a 90-day global period), which has a work RVU of 
25.00. Both methods of vertebral fusion also involve two units of CPT 
code 22552 (Arthrodesis, anterior interbody, including disc space 
preparation, discectomy, osteophytectomy and decompression of spinal 
cord and/or nerve roots; cervical below C2, each additional interspace 
(List separately in addition to code for primary procedure)), which 
have a total work RVU of 13.00 (6.50 x 2), and 1 unit of CPT code 22846 
(Anterior instrumentation; 4 to 7 vertebral segments (List separately 
in addition to code for primary procedure)), which has a work RVU of 
12.40. The vertebral fusion method employing three synthetic cage 
devices with plate would involve three units of CPT code 22853 
(Insertion of 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 (List 
separately in addition to code for primary procedure)) for a total work 
RVU of 12.75 (4.25 x 3), and one unit of CPT code 20930 (Allograft, 
morselized, or placement of osteopromotive material, for spine surgery 
only (List separately in addition to code for primary procedure)) with 
a work RVU of 0.00 (because Medicare considers this code to be bundled 
into codes for other services). The nominator states that the typical 
vertebral fusion employing three synthetic cage devices with plate 
would total to 63.15 work RVUs.
    In contrast, the nominator asserts that the vertebral fusion method 
employing structural allograft bones with plate involves the same set 
of services and codes (that is, one unit of CPT code 22551, two units 
of CPT code 22552, and one unit of CPT code 22846), but the structural 
allograft bone method includes CPT code 20931 (Allograft, structural, 
for spine surgery only (List separately in addition to code for primary 
procedure)), with a work RVU of 1.81, instead of CPT codes 22853 and 
20930, for a total work RVU of 52.21. The nominator suggests that this 
difference in total work RVUs for the two methods of vertebral fusion, 
63.15 versus 52.21, is evidence that add-on CPT code 20931 is 
potentially misvalued; however, we do not agree with this nominator's 
method of aggregating and comparing sums of work RVUs for groups of 
services that may be furnished together as being potentially misvalued, 
nor consider CPT code 20931 as the source of misvaluation within this 
grouping.
    We understand that the nominator believes there should be an 
equivalent total sum payment for all services involved in vertebral 
fusion surgeries using either method, and that there should not be a 
potential incentive for physicians to prefer the method that uses 
synthetic cage devices because of the higher available payment amount. 
The nominator asserts that the total sum payment for this kind of 
spinal surgery using the structural allograft bone method is 
undervalued as compared to the total sum payment for this kind of 
spinal surgery using the synthetic cage method.
    We note that CPT code 22853, which the commenter associates with 
the synthetic cage device method of vertebral fusion, is a 45-minute 
ZZZ-code (indicating an add-on code) with an IWPUT (intra-service work 
(RVU) per unit of time) of 0.0944, whereas CPT code 20931, which the 
commenter associates with the allograph method of vertebral fusion, is 
a 20-minute ZZZ-code with an IWPUT of 0.0905. Given the much longer 
intra-service time and greater IWPUT for CPT code 22853 than for CPT 
code 20931, the allograph method of vertebral fusion would be expected 
to have a lower total sum of work RVUs.
    The nominator's description of why and how each vertebral fusion 
method is potentially misvalued when compared to the other does not 
present a situation that fits within our process for identifying 
individual services that are potentially misvalued using certain 
criteria, as described in the beginning of this section. Our 
determination that one or more codes are potentially misvalued 
generally revolves around the specific RVUs assigned to individual 
codes, or with the inter-code relativity between the RVUs assigned to 
several individual codes found within a family of codes with 
hierarchical relationships. We generally do not examine the summed 
differences in total RVUs (as is the case presented here), based on 
billing patterns for a combination of codes representing differing 
physician work for different methods of performing a service, and then 
comparing the total RVUs of each method as evidence of the potential 
misvaluation of codes. We do not believe that the nominator has 
provided sufficient evidence to demonstrate that CPT code 20931 itself 
is misvalued, and therefore, we are not inclined to propose this code 
as potentially misvalued; however, we solicited additional comment and 
any independent analysis and studies (see the supporting documentation 
options listed above under ``CY 2023 Identification and Review of 
Potentially Misvalued Services,'' particularly in regard to any changes 
in the resources to providing a service) as supporting evidence from 
commenters in agreement or disagreement with this nomination.
    See Table 10 for the listing of nominated potentially misvalued 
codes.

[[Page 69443]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.012

    We received public comments on our discussion of public nominations 
for potentially misvalued codes and decision not to propose them as 
potentially misvalued. The following is a summary of the comments we 
received and our responses.
    We received a number of public comments on the nominated home-based 
E/M visit CPT codes 99344, 99345, 99349, and 99350.
    Comment: Commenters were disappointed, stating that CMS did not 
take into account the inclusion of the nominator's request for 
consideration for: (1) travel costs incurred by the physician or other 
practitioner; (2) potential opportunity costs to a physician or other 
practitioner when care is delivered in the patient's home versus in the 
office or at a facility; or (3) the physician or other practitioner's 
work and time expended assessing a patient's home environment and/or 
``Social Determinants of Health'' (SDoH) assessments. Commenters 
explained that the typical home-bound patient, who requires a physician 
home visit, is comparatively more frail, with multiple chronic 
conditions. Some commenters suggested add-on codes, similar to the 
codes for at-home COVID-19 Vaccinations, for physician transportation 
costs to the patient's home.
    Response: We appreciate the feedback from commenters and encourage 
further discussion as we gain more experience with the new codes. As 
discussed in our proposed rule, the costs identified by commenters are 
not considered to be specific work, practice expense, or malpractice 
expense resource inputs that are taken into account in valuation of 
individual services under the PFS, so they are not included in 
establishing payment rates under the PFS in accordance with section 
1848 of the Act. As such, these costs do not provide justification for 
potential misvaluation of the identified codes. We also noted in the CY 
2023 PFS proposed rule (87 FR 45883) that the AMA RUC made 
recommendations regarding the values for these home-based E/M visit 
codes. Since CMS had already received AMA RUC recommendations for these 
home-based E/M visit codes for this year's proposed rule, we referred 
readers to the discussion and solicitation of public comments on those 
recommendations in the proposed rule. We solicited additional public 
comments, recommendations, and independent analysis as supporting 
evidence from all interested parties regarding the valuations for the 
home-based E/M visits, including CPT codes 99344, 99345, 99349, and 
99350. We refer readers to section II.F. of this final rule for a 
summary and our responses to those comments. With regard to the 
comments requesting additional coding, we appreciate commenters' 
suggestions, and, as we gain information from utilization of the newly-
reviewed codes and receive additional feedback from interested parties, 
we may consider changes in future rulemaking.
    Comment: One commenter stated that his Home Visit PEs are not lower 
than those of an office practice, but did not offer any code-level 
details to support this statement.
    Response: We appreciate the perspective of interested parties, but 
we would need code-level PE details to evaluate potential code 
valuation issues.
    We received numerous comments on the Cataract and Retinal Surgery 
codes which were nominated as potentially misvalued with a request to 
establish nonfacility payment rates for these complicated 090-day 
global surgical procedures.
    Comment: Several commenters requested that CMS revise the current 
work RVU for CPT code 66174 (Transluminal dilation of aqueous outflow 
canal; without retention of device or stent) and instead use the

[[Page 69444]]

higher AMA RUC-recommended work RVU value or, short of that, transition 
the valuation we established in the CY 2022 PFS final rule over 3 
years.
    Response: We thank commenters for this comment. CPT code 66174 was 
reviewed and finalized in last year's rule (85 FR 65095), and we will 
not consider this code as potentially misvalued for CY 2023. We did not 
identify or propose CPT code 66174 as potentially misvalued in the 
proposed rule. As such, this comment is outside the scope of the 
proposed rule.
    Comment: Many commenters recounted the evolution of these Cataract 
and Retinal Surgery codes--once exclusively performed in hospital 
operating theaters, then performed in ASCs, and now perhaps maturing 
into the next phase of eye care and Office-Based Surgeries (OBS). 
Commenters were mainly in favor of establishing payment amounts for 
these services in the non-facility office setting, which would 
recognize the additional PE resources involved in furnishing the 
services in those settings. Commenters also stated that there are 
significant advantages to be gained when these cataract and retinal 
surgery services are furnished in non-facility office settings. OBS may 
offer faster scheduling and coordinating with the surgeon, patient, and 
patient's family caretaker, since they bypass additional schedule 
coordination, and avoid potential staffing or availability issues with 
the hospital or ASC operating room. These commenters suggested that 
scheduling activities may be more efficient and flexible in the OBS 
setting, leading to fewer and shorter delays in delivering these 
Cataract and Retinal Surgeries to alleviate the patient's urgent eye 
problem (especially during recent COVID-19-related restrictions). The 
commenters also suggested that office-based surgical staff are also 
more likely to be familiar to the patient than a hospital operating 
room or ASC staff. One commenter offered that organizations, such as 
the American Association for Accreditation of Ambulatory Surgery 
Facilities (AAAASF), may offer accreditation for practitioners 
interested in furnishing OBS for these services, to prove they can 
demonstrate they have adequate equipment, adequate sterility, adequate 
backup power and lights, adequate clinical surgery personnel, and 
adequate emergency personnel, should there be a need for them, compared 
to hospital operating rooms or ASCs, possibly maintaining 
certifications with periodic re-inspections.
    Some Hospital/ASC-based commenters noted that, after decades of 
ophthalmologist experience with these Cataract and Retinal Surgery 
codes, they had a number of concerns about these services shifting 
toward office-based surgeries compared with Hospital/ASC settings and 
whether OBS can adequately address these concerns, including: (1) 
Sterility controls equal or better than a hospital operating room or a 
dedicated ASC operating theater; (2) Anesthesia for the OBS that is 
different in the office where valium oral sedation may be used and the 
patient being monitored by the physician eye surgeon, rather than in an 
O.R. with general sedation via IV administered and monitored by an 
anesthesiologist; (3) Equipment quality and maintenance is a concern 
and in the smaller typical office setting, there may not be the backups 
and redundancies that may be found in the larger facility settings, 
with automatic emergency power switchovers that may not be installed 
for the OBS; (4) Patient complications being detected in the pre-
screening phase, possible complications occurring during the surgical 
procedure phase, and possible complications during the post-procedure 
phase, are concerns for the OBS, which may not have the full facility 
resources to address emergency situations arising from the office based 
surgery; (5) Staff for OBS are likely to be well familiar with eye 
surgeries and the patients themselves, but a general O.R. or ASC staff 
might be more experienced in responding to a wider range of surgical 
related complications; (6) The intricate, delicate, and complicated 
surgical procedures performed by varying experienced eye surgeons 
remains a concern when these procedures are performed outside of a full 
facility operating theater; (7) There is considered by some commenters 
to be a paucity of independent, high-quality, peer-reviewed clinical 
data supporting the safety or feasibility of retina surgery performed 
in an office setting, nor do they believe that there is any widespread 
demand by retina specialists or patients for this OBS option.
    Response: We appreciate commenters' perspectives regarding their 
experience and concerns for Cataract and Retinal Surgeries being 
furnished as OBS. As we continue to consider how and where these 
services are furnished, and whether they are typically furnished in 
different settings, information such as the comments provided by these 
and other commenters are helpful. Based upon commenters' feedback, we 
have concerns about these services being furnished in non-facility 
settings. It is also unclear whether these services are routinely being 
furnished outside of facility settings. CMS will continue to evaluate 
whether these services are being furnished in non-facility settings and 
will consider establishing non-facility values for these services at 
that time.
    Comment: The AMA RUC commented that it defers to the ophthalmology 
and retinal specialty societies to determine whether these services 
could be safely performed in the non-facility setting; the specialty 
societies recommend against CMS moving forward with making these 
services payable as OBS, citing many of the same commenters' concerns 
listed earlier in this section.
    Response: We appreciate the AMA RUC's response to this issue, 
explaining that they defer to the specialty societies' position on this 
issue.
    After consideration of public comments, we will continue to gather 
information concerning Cataract and Retinal Surgeries in the non-
facility office settings and their implications to Medicare payment for 
future rulemaking.
    We received a few public comments on the nominated CPT code 20931 
(Allograft, structural, for spine surgery only (add-on code)) and other 
codes related to anterior cervical discectomy and fusion (ACDF).
    Comment: One commenter agreed with the nominator that CPT code 
20931 is misvalued when compared to CPT code 22853 (Insertion of cage 
or mesh device to spine bone and disc space during spine fusion (add-on 
code)) and other codes related to anterior cervical discectomy and 
fusion (ACDF), where the higher payment for CPT code 22853 
inappropriately incentivizes surgeons to insert the synthetic cage 
spacer over the bone allograft. However, one commenter stated that 
there is no evidence that CPT code 20931 is misvalued, and that the 
valuation of CPT code 20931 should not be equivalent to CPT code 22853.
    Response: We thank these commenters for their feedback. As this 
nomination is almost identical to a grouping of related codes for ACDF 
that had been presented in the CY 2022 PFS proposed rule (86 FR 65044), 
under CPT code 22551 as misvalued, and as it was discussed at that time 
and reviewed again in this rule, we do not believe that the nominator 
has provided sufficient evidence to demonstrate that CPT code 20931 is 
misvalued nor that this code's payment should be made equivalent to CPT 
code 22853. As stated earlier, our determination that one or more codes 
are potentially misvalued generally revolves around the specific RVUs 
assigned to individual codes, or with the inter-code relativity between 
the

[[Page 69445]]

RVUs assigned to several individual codes found within a family of 
codes with hierarchical relationships. We generally do not examine the 
summed differences in total RVUs (as is the case presented here), based 
on billing patterns for a combination of codes representing differing 
physician work for different methods of performing a service, and then 
comparing the total RVUs of each method as evidence of the potential 
misvaluation of codes. We do not believe that the nominator or other 
interested parties have provided sufficient evidence to demonstrate 
that CPT code 20931 itself is misvalued, and therefore, we are not 
inclined to propose (or adopt) this code as potentially misvalued.
    After consideration of public comments, we are finalizing our 
proposal not to adopt any of the nominated codes as potentially 
misvalued codes. We encourage commenters who wish to nominate codes as 
potentially misvalued to consider the types of supporting documentation 
listed in the beginning of this section, as that information is 
important for us to consider in our process for reviewing nominations 
of potentially misvalued codes.

D. Payment for Medicare Telehealth Services Under Section 1834(m) of 
the Act

    As discussed in prior rulemaking, several conditions must be met 
for Medicare to make payment for telehealth services under the PFS. See 
further details and full discussion of the scope of Medicare telehealth 
services in the CY 2018 PFS final rule (82 FR 53006) and CY 2021 PFS 
final rule (85 FR 84502) and in 42 CFR 410.78 and 414.65.
1. Payment for Medicare Telehealth Services Under Section 1834(m) of 
the Act
a. Changes to the Medicare Telehealth Services List
    In the CY 2003 PFS final rule with comment period (67 FR 79988), we 
established a regulatory process for adding services to or deleting 
services from the Medicare Telehealth Services List in accordance with 
section 1834(m)(4)(F)(ii) of the Act (Sec.  410.78(f)). This process 
provides the public with an ongoing opportunity to submit requests for 
adding services, which are then reviewed by us and assigned to 
categories established through notice and comment rulemaking. 
Specifically, we assign any submitted request to add to the Medicare 
Telehealth Services List to one of the following two categories:
     Category 1: Services that are similar to professional 
consultations, office visits, and office psychiatry services that are 
currently on the Medicare Telehealth Services List. 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 
service; for example, the use of interactive audio and video equipment.
     Category 2: Services that are not similar to those on the 
current Medicare Telehealth Services List. 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 furnish 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 other clinical benefits that we consider 
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.
    In the CY 2021 PFS final rule (85 FR 84507), we created a third 
category of criteria for adding services to the Medicare Telehealth 
Services List on a temporary basis following the end of the PHE for the 
COVID-19 pandemic: Category 3. This new category describes services 
that were added to the Medicare Telehealth Services List during the PHE 
for which there is likely to be clinical benefit when furnished via 
telehealth, but there is not yet sufficient evidence available to 
consider the services for permanent addition under the Category 1 or 
Category 2 criteria. Services added on a temporary, Category 3 basis 
will ultimately need to meet the criteria under Category 1 or 2 in 
order to be permanently added to the Medicare Telehealth Services List. 
To add specific services on a Category 3 basis, we conducted a clinical 
assessment to identify those services for which we could foresee a 
reasonable potential likelihood of clinical benefit when furnished via 
telehealth. We considered the following factors:
    ++ Whether, outside of the circumstances of the PHE for COVID-19, 
there are concerns for patient safety if the service is furnished as a 
telehealth service.
    ++ Whether, outside of the circumstances of the PHE for COVID-19, 
there are concerns about whether the provision of the service via 
telehealth is likely to jeopardize quality of care.
    ++ Whether all elements of the service could fully and effectively 
be performed by a remotely located clinician using two-way, audio-video 
telecommunications technology.
    In the CY 2021 PFS final rule (85 FR 84507), we also temporarily 
added several services to the Medicare Telehealth Services List using 
the Category 3 criterion described above. We assessed codes that were 
temporarily available on the list for the duration of the PHE to 
determine their appropriateness for inclusion on the Medicare 
Telehealth Services List on a Category 3 basis. We have reassessed the 
services that are temporarily available via telehealth for the PHE, 
based on both information provided by interested parties and our own 
internal review. We have assessed whether or not these services can, 
outside of the circumstances of the PHE, be furnished using the full 
scope of service elements via two-way, audio-video communication 
technology, without jeopardizing patient safety or quality of care, and 
we now believe that there are additional services that would be 
appropriate for addition to the Medicare Telehealth Services List on a 
Category 3 basis that we did not identify in the CY 2021 rulemaking. In 
the proposed rule, we proposed to add these additional services to the 
Medicare Telehealth Services List on a Category 3 basis, as further 
discussed below.

[[Page 69446]]

    The Medicare Telehealth Services List, including the additions 
described later in this section, is available on the CMS website at 
https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/index.html.
    Beginning in CY 2019, we stated that for CY 2019 and onward, we 
intend to accept requests through February 10, consistent with the 
deadline for our receipt of code valuation recommendations from the RUC 
(83 FR 59491). For CY 2023, requests to add services to the Medicare 
Telehealth Services List must have been submitted and received by 
February 10, 2022. Each request to add a service to the Medicare 
Telehealth Services List must have included any supporting 
documentation the requester wishes us to consider as we review the 
request. Because we use the annual PFS rulemaking process as the 
vehicle to make changes to the Medicare Telehealth Services List, 
requesters are advised that any information submitted as part of a 
request is subject to public disclosure for this purpose. For more 
information on submitting a request in the future to add services to 
the Medicare Telehealth Services List, including where to submit these 
requests, see our website at https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/index.html.
b. Requests To Add Services to the Medicare Telehealth Services List 
for CY 2023
    Under our current policy, we add services to the Medicare 
Telehealth Services List on a Category 1 basis when we determine that 
they are similar to services on the existing Medicare Telehealth 
Services 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 PFS final 
rule with comment period (76 FR 73098), we believe that the Category 1 
criterion not only streamlines our review process for publicly 
requested services that fall into this category, but also expedites our 
ability to identify codes for the Medicare Telehealth Services List 
that resemble those services already on the Medicare Telehealth 
Services List. We add services on a Category 2 basis when the service 
does not fall within Category 1, and based upon our assessment of 
whether the services are accurately described by the corresponding code 
when delivered via telehealth and whether the use of a 
telecommunications system to deliver the service produces demonstrated 
clinical benefit to the patient. We add services on a temporary 
Category 3 basis when the services were temporarily included on the 
Medicare Telehealth Services List during the PHE, and we find that 
there is likely to be clinical benefit when furnished via telehealth, 
but there is not yet sufficient evidence available to consider the 
services for permanent addition under the Category 1 or Category 2 
criteria.
    We received several requests to permanently add various services to 
the Medicare Telehealth Services List effective for CY 2023. We found 
that none of the requests we received by the February 10th submission 
deadline met our Category 1 or Category 2 criteria for permanent 
addition to the Medicare Telehealth Services List. We also assessed the 
appropriateness of adding these services to the Medicare Telehealth 
Services List on a Category 3 basis instead.
    We did not propose changes to the length of time the services that 
we temporarily included on a Category 3 basis will remain on the 
Medicare Telehealth Services List; the services we temporarily included 
on the Medicare Telehealth Services List on a Category 3 basis will 
continue to be included through the end of CY 2023. In the CY 2023 PFS 
proposed rule, we noted that in the event that the PHE extends well 
into CY 2023, we may consider revising this policy.
    We proposed to add some services to the Medicare Telehealth 
Services List on a Category 3 basis through the end of 2023, some of 
which we had not previously added to the Medicare Telehealth List 
during the PHE, but have been added on a subregulatory basis as 
provided in Sec.  410.78(f) of our regulations. For some of these 
services, we received information from interested parties suggesting 
potential clinical benefit. For others, we continue to believe there is 
sufficient evidence of potential clinical benefit to warrant allowing 
additional time for interested parties to gather data to support their 
possible inclusion on the Medicare Telehealth Services List on a 
Category 1 or 2 basis. The Medicare Telehealth Services List requests 
for CY 2023 are listed in Table 11.
    Additionally, the Consolidated Appropriations Act, 2022 (CAA, 2022) 
(Pub. L. 117-103, March 15, 2022) amended section 1834(m) of the Act to 
extend a number of flexibilities that are in place during the PHE for 
COVID-19 for 151 days after the end of the PHE. To align the 
availability of these services with those flexibilities extended under 
the Act, we proposed to continue to allow certain telehealth services 
that would otherwise not be available via telehealth after the 
expiration of the PHE to remain on the Medicare Telehealth Services 
List for 151 days after the expiration of the PHE.
BILLING CODE 4150-28-P

[[Page 69447]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.013


[[Page 69448]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.014


[[Page 69449]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.015

BILLING CODE 4150-28-C
    We remind interested parties that the criterion for adding services 
to the Medicare Telehealth Services List under Category 1 is that the 
requested services are similar to professional consultations, office 
visits, and/or office psychiatry services that are currently on the 
Medicare Telehealth Services List, and that the criterion for adding 
services under Category 2 is that there is evidence of clinical benefit 
if provided as telehealth. As explained below, we find that none of the 
requested services listed in Table 11 met the Category 1 or 2 criteria.
    We received a request to permanently add CPT code S9443 (Lactation 
classes, non-physician provider, per session) to the Medicare 
Telehealth Services List. This service has a status code of ``I,'' 
which means that it is not valid for Medicare billing purposes. We 
understand that this is a temporary code established by a private payor 
for private payor use, and thus, it is not valid for nor payable by 
Medicare. As such, this code is not separately billable under the PFS. 
We generally do not add services to the Medicare Telehealth Services 
List unless they are separately billable under the PFS. Outside of the 
circumstances of the PHE, the Medicare Telehealth Services List only 
includes services that are covered if they are furnished without the 
use of telecommunication technology in-person. Because CPT code S9443 
is not billable under the PFS when furnished in-person, we do not 
believe it would be appropriate to allow the service to be billed 
separately when furnished as a Medicare telehealth service. As noted in 
the CY 2018 PFS final rule (82 FR 53011), if a service does not 
describe a service typically furnished in-person, it would not be 
considered a telehealth service under the applicable provisions of the 
statute. We did not propose to add CPT code S9443 to the Medicare 
Telehealth Services List.
    Comment: A commenter requested that this code (CPT code S9443) be 
added on a Category 3 basis, citing financial pressures and staff 
shortages, which are affecting labor and delivery units.
    Response: We thank the commenter for this comment, but as noted in 
the proposed rule, this code is not separately billable under the PFS 
when furnished in-person, so we do not believe that it should be 
considered a telehealth service within the meaning of the statute. We 
continue to believe it would be inappropriate to allow CPT code S9443 
to be billed separately when furnished as a Medicare telehealth 
service, and we are finalizing our proposal not to add CPT code S9443 
to the Medicare Telehealth Services List.
(1) Therapy Services
    We received requests to add Therapy Procedures: CPT codes 97110, 
97112, 97116, 97150, and 97530; Physical Therapy Evaluations: CPT codes 
97161-97164; Therapy Personal Care services: CPT codes 97535, 97537, 
and 97542; and Therapy Tests and Measurements services: CPT codes 
97750, 97755, and 97763, to the Medicare Telehealth Services List on a 
Category 1 basis.
    In the CY 2022 PFS final rule (86 FR 65051), we determined that 
these services did not meet the Category 1 criteria for addition to the 
Medicare Telehealth Services List because they involve direct 
observation and/or physical contact between the practitioner and the 
patient and, in many instances, are therapeutic in

[[Page 69450]]

nature, and that they did not meet Category 2 criteria, because we 
thought that the request did not provide sufficient detail to determine 
whether all of the necessary elements of the service could be furnished 
remotely. We continue to believe this is the case. We still do not have 
sufficient information to determine whether these services meet the 
Category 2 criteria. However, we noted that some of these codes, 
including codes 97110, 97112, 97116, 97150, 97530, 97161-97164, 97535, 
97542, 97750, and 97755 have been added to the list on a temporary 
basis for the duration of the PHE.
    In assessing the evidence that was supplied by interested parties 
in support of adding these services to the Medicare Telehealth Services 
List on a Category 2 basis, we concluded that there was not sufficient 
information to determine whether all of the necessary elements of these 
services could be furnished remotely. Information regarding safety, 
appropriateness, and that indicates that all elements of a given CPT 
code can be furnished via telehealth is still needed to assess whether 
these services meet the Category 2 criteria. However, we also believe 
that the therapy services that are currently on the Medicare Telehealth 
Services List on a temporary basis for the PHE (including CPT codes 
97150, 97530, and 97542), but are not currently included on a Category 
3 basis, may continue to be furnished safely via two-way, audio-video 
communication technology outside of the circumstances of the PHE.
    Therefore, we proposed that CPT codes 97150, 97530, and 97542 (the 
set of therapy services that are currently on the Medicare Telehealth 
Services List on a temporary basis for the PHE) be added to the 
Medicare Telehealth Services List through the end of CY 2023 on a 
temporary, Category 3 basis, to allow time to gather additional data 
that could support their possible inclusion on the list on a permanent 
basis. CPT codes 97110, 97112, 97116, 97161-97168, 97535, 97750, and 
97755 will continue to be available on the Medicare Telehealth Services 
List on a Category 3 basis. We anticipate that keeping these services 
on the Medicare Telehealth Services List on a Category 3 basis, as 
proposed, through the end of CY 2023 would preserve access to care and 
promote health equity, and based on information provided by interested 
parties and internal review, we believe that they may safely be 
furnished as telehealth outside of the circumstances of the PHE through 
the end of CY 2023. However, we remind readers that the practitioners 
who primarily furnish these services, physical therapists, are not, 
outside the circumstances of the PHE (and the 151-day period following 
the expiration of the PHE), authorized to furnish Medicare telehealth 
services. We noted that, if the PHE and the 151-day period following 
the expiration of the PHE both end in CY 2023, the pre-PHE rules will 
take effect, and these services could no longer be furnished by 
therapists as Medicare telehealth services.
    Certain other requested therapy services, namely CPT codes 97537, 
97763, 90901, and 98960-98962 were not on the Medicare Telehealth 
Services List prior to June 16, 2022; however, we added these services 
to the Medicare Telehealth Services List on a temporary basis during 
the PHE, in accordance with Sec.  410.78(f). As explained below in 
section II.D.1.d. of this final rule, services included on the Medicare 
Telehealth Services List on a temporary basis during the PHE that have 
not been added to the list on a Category 3 basis will remain on the 
list for 151 days following the end of the PHE. Furthermore, we 
proposed to add CPT codes 97537, 97763, 90901, and 98960-98962 to the 
Medicare Telehealth Services List on a Category 3 basis through the end 
of CY 2023. Our clinical analyses of these services indicate that they 
can be furnished in full using two-way, audio and video technology 
during the circumstances of the PHE, and information provided by 
requestors indicates that there may be clinical benefit; however, there 
is not yet sufficient evidence available to consider the services for 
permanent addition to the Medicare Telehealth Services List under the 
Category 1 or Category 2 criteria. Including these services on the 
Medicare Telehealth Services List during the PHE and through CY 2023 
will allow additional time for the development of evidence for CMS to 
consider when evaluating these services for potential permanent 
addition to the Medicare Telehealth Services List on a Category 1 or 2 
basis. We continue to encourage commenters to supply additional 
information in support of adding these services to the Medicare 
Telehealth Services List on a permanent basis, including information 
regarding the safety and appropriateness of furnishing these services 
via telehealth.
    Comment: Several commenters supported our addition of the listed 
therapy services to the Medicare Telehealth Services List on a Category 
3 basis. However, commenters stated that many of these codes should be 
added permanently; commenters specifically stated that therapy 
services, including CPT codes 97110, 97112, 97116, 97150, 97161-97164, 
97530, 97535, 97537, 97542, 97750, 97755, 97763, 90901, 98960, 98961, 
and 98962 should be added permanently, stating that these codes have 
been used successfully to provide telehealth services throughout the 
PHE and have shown that the same quality of care can be given with 
equal or higher levels of patient satisfaction as in-person visits. 
According to these commenters, the PHE has given ample data to support 
that, when used appropriately, telehealth can have a positive effect on 
outcomes for patients who are restricted from a full course of in-
person therapy visits, which they claim is at a lower cost of care, and 
the inclusion of these therapy service codes on the Medicare Telehealth 
Services List on a Category 1 or Category 2 basis would preserve access 
to these services beyond the temporary extension and ease 
administrative burden should Congress act in the future to make 
rehabilitation services delivered via telehealth permanent.
    Response: We note that all of the above-mentioned therapy services 
are either currently on the Medicare Telehealth Services List on a 
Category 3 basis, or we have proposed to add them on a Category 3 basis 
for CY 2023, to continue to gather data with regard to likely clinical 
benefit when furnished via telehealth outside of the circumstances of 
the PHE. We continue to believe that the process as discussed in the CY 
2021 PFS final rule (85 FR 84506 through 84509), whereby we created the 
Category 3 basis for adding to or deleting services from the Medicare 
Telehealth Services List is the appropriate means of potentially adding 
services permanently for those services that were temporarily added 
under the circumstances of the PHE, as this process allows for the 
collection and evaluation of data that could potentially support 
permanent inclusion following the 151-day period after the end of the 
PHE. We believe our proposal, consistent with the amendments made by 
provisions of the CAA, 2022, to extend the period that these services 
will be available on the Medicare Telehealth Services List temporarily 
for the PHE by 151 days following the end of the PHE will further 
enhance the opportunity for the collection of information on the 
experiences of clinicians who are furnishing telehealth services during 
the PHE for COVID-19. This will also help us to determine which 
services may ultimately be eligible for permanent addition under 
Category 1 or Category 2 criteria, and we encourage interested parties 
to use this

[[Page 69451]]

extended time period to gather data on use of services, that is more 
than statements of support and more than subjective attestations of 
clinical benefit, to support their potential addition in future 
rulemaking.
    Comment: Commenters requested clarification on whether CPT codes 
for Occupational Therapy (97165, 97166, 97167, and 97168) and Speech 
Therapy (92522 and 92523) were included in the list of Category 3 codes 
for CY 2023, and should be added on a Category 3 basis.
    Response: We clarify that these codes (CPT codes 97165-97168 and 
92521-92524) are currently included on the Medicare Telehealth Services 
List available on a Category 3 basis.
    After consideration of public comments, we are finalizing our 
proposed addition of CPT codes 90901, 97150, 97530, 97537, 97542, 
97763, and 98960-98962 to the Medicare Telehealth Services List on a 
Category 3 basis.
(2) Telephone E/M Services
    We have also received requests to temporarily add Telephone E/M 
visit codes, CPT codes 99441, 99442, and 99443 to the Medicare 
Telehealth Services List on a Category 3 basis. In the March 31, 2020 
interim final rule with comment period (IFC), we established separate 
payment for audio-only telephone E/M services (85 FR 19264 through 
19266) for the duration of the PHE for the COVID-19 pandemic. Although 
these services were previously considered non-covered under the PFS, in 
the context of the PHE for COVID-19 and with the goal of reducing 
exposure risks associated with COVID-19 (especially in situations when 
two-way, audio and video technology is not available to furnish a 
Medicare telehealth service), we believed there were circumstances 
where prolonged, audio-only communication between the practitioner and 
the patient could be clinically appropriate, yet not fully replace a 
face-to-face visit. In the May 8, 2020 COVID-19 IFC, we noted that 
interested parties had informed us that use of audio-only services was 
more prevalent than we had previously considered, especially because 
many beneficiaries were not using video-enabled communication 
technology from their homes. In other words, there were many cases 
where practitioners who would ordinarily furnish audio-video telehealth 
or in-person visits to evaluate and manage patients' medical concerns 
were instead using audio-only interactions to manage more complex care 
(85 FR 27589 through 27590). While we had previously acknowledged the 
likelihood that, under the circumstances of the PHE for COVID-19, more 
time would be spent interacting with the patient via audio-only 
technology, we stated that the intensity of furnishing an audio-only 
visit to a beneficiary during the unique circumstances of the PHE for 
COVID-19 was not accurately captured by the valuation of these services 
that we established in the March 31, 2020 IFC (85 FR 27590). This will 
be particularly true to the extent that these audio-only services are 
serving as a substitute for office/outpatient (O/O) Medicare telehealth 
visits for beneficiaries not using video-enabled telecommunications 
technology, which is contrary to the situation we anticipated when 
establishing separate payment for them in the March 31, 2020 IFC. In 
the May 8, 2020 COVID-19 IFC, we stated that, given our understanding 
that these audio-only services were being furnished primarily as a 
replacement for care that would otherwise be reported as an in-person 
or telehealth visit using the O/O E/M codes, we established new RVUs 
for the telephone E/M services based on crosswalks to the most 
analogous O/O E/M codes, based on the time requirements for the 
telephone codes and the times assumed for valuation for purposes of the 
O/O E/M codes. Specifically, we crosswalked the levels 2-4 O/O E/Ms for 
established patients, as described by CPT codes 99212, 99213, and 
99214, to CPT codes 99441, 99442, and 99443, respectively. 
Additionally, we stated that, given our understanding that these audio-
only services were being furnished as substitutes for O/O E/M services, 
we recognized that they should be considered as telehealth services, 
and added them to the Medicare Telehealth Services List for the 
duration of the PHE for COVID-19 (85 FR 27590).
    In the CY 2022 PFS final rule (86 FR 65055), in response to 
requests that these codes be added to the Medicare Telehealth Services 
List on a Category 3 basis, we stated that we were finalizing a change 
to the definition of ``telecommunications system'' to allow telehealth 
services for the diagnosis, evaluation, and treatment of mental health 
conditions to be furnished through audio-only technology in certain 
circumstances after the end of the PHE. For example, the O/O E/M codes 
are on the Medicare Telehealth Services List permanently and when used 
to describe care for mental health conditions, will be reportable when 
furnished via audio-only technology to patients in their homes. Since 
audio-only telecommunications technology can be used to furnish mental 
health telehealth services to patients in their homes, the addition of 
these codes to the Medicare Telehealth Services List is unnecessary for 
mental health telehealth services. For telehealth services other than 
mental health care, we stated that we believe that two-way, audio-video 
communications technology is the appropriate standard that will apply 
for telehealth services after the PHE ends. Further, we noted that 
section 1834(m)(2)(A) of the Act requires that payment to a distant 
site physician or practitioner that furnishes Medicare telehealth 
services to an eligible telehealth individual be equal to the amount 
that would have been paid under Medicare if such physician or 
practitioner had furnished the service without a telecommunications 
system. We believe that the statute requires that telehealth services 
be so analogous to in-person care such that the telehealth service is 
essentially a substitute for a face-to-face encounter. However, these 
audio-only telephone E/M services are inherently non-face-to-face 
services, since they are furnished exclusively through remote, audio-
only communications. Outside the circumstances of the PHE, the 
telephone E/M services would not be analogous to in-person care; nor 
would they be a substitute for a face-to-face encounter. Therefore, we 
do not believe it will be appropriate for these codes to remain on the 
Medicare Telehealth Services List after the end of the PHE and the 151-
day post-PHE extension period. Accordingly, we did not propose to keep 
these telephone E/M services on the Medicare Telehealth Services List 
after that period on a Category 3 basis, because the codes describe 
services that can only be furnished using audio-only telecommunications 
technology, and outside of the circumstances of the PHE, they do not 
describe services that are a substitute for an in-person visit. While 
we acknowledge that audio-only technology can be used to furnish mental 
health telehealth services to patients in their homes under certain 
circumstances after the PHE ends, two-way, audio-video communications 
technology continues to be the appropriate standard that will apply for 
Medicare telehealth services after the PHE and the 151-day extension 
period. As we noted in the CY 2021 PFS final rule (85 FR 84535), we 
will assign these Telephone E/M visit codes (CPT codes 99441, 99442, 
and 99443) a ``bundled'' status after the end of the PHE and the 151-
day extension period, and we will post the RUC-recommended RVUs for

[[Page 69452]]

these codes in accordance with our usual practice.
    We received public comments on Telephone E/M Services. The 
following is a summary of the comments we received and our responses.
    Comment: Many commenters urged us to continue to make payment for 
Telephone E/M visit codes following 151 days after the PHE. Some 
commenters stated that payment for these services should be made 
permanent while others request that they be added to the Medicare 
Telehealth Services List on a Category 3 basis. Commenters stated that 
experience during the PHE indicated that telehealth can provide a 
viable alternative to office visits. Commenters stated that, although 
patient-provider communication using both audio and visual modes is 
considered optimal for telehealth delivery, many patients are unable to 
use the video technology required due to lack of broadband or cellular 
data, technology that does not support video, or difficulty in using 
video technology. Commenters cited access concerns, particularly for 
patients who live in rural areas or who lack of broadband access, as 
well as disparities in access to technology and in digital literacy.
    A commenter noted that, in the CY 2023 PFS proposed rule, CMS 
further stated that telephone E/M services are neither analogous to an 
in-person E/M visit nor can the telephone E/M substitute for an in-
person E/M visit. However, as noted above, in the second IFC, CMS did 
believe telephone E/Ms were serving as a substitute for in-person E/M 
visits, and because of that, began to reimburse them the same rate as 
in-person E/M visits. Commenters noted that this would indicate they 
are analogous to an in-person service and would fit the criteria to be 
on the Medicare Telehealth Services List permanently.
    Response: We reiterate that we believe these audio-only telephone 
E/M services are inherently non-face-to-face services, since they are 
furnished exclusively through remote, audio-only communications. We 
continue to believe that, outside the circumstances of the PHE, these 
services will no longer serve as a substitute for in-person care that 
is ordinarily furnished in a face-to-face encounter. Section 1834(m)(1) 
of the Act requires that we make payment for telehealth services 
``notwithstanding that the individual physician or practitioner 
providing the telehealth service is not at the same location as the 
beneficiary.'' Section 1834(m)(2)(A) of the Act requires that we make 
payment to a physician or practitioner located at a distant site for a 
telehealth service at an amount equal to the amount that the physician 
or practitioner would have been paid if the service had instead been 
furnished without the use of a telecommunications system. Taken 
together, we believe that the statute requires that Medicare telehealth 
services be analogous to in-person care such that the telehealth 
service is essentially a substitute for a face-to-face encounter. We 
recognize that we added the telephone E/M services to the Medicare 
Telehealth Services List on a temporary basis during the PHE to address 
the associated extraordinary public health and safety, and healthcare 
access issues. However, outside of the circumstances of the PHE, we 
continue to believe that our longstanding regulatory interpretation of 
``telecommunications system'' generally precludes the use of audio-only 
technology for purposes of Medicare telehealth services, with the 
exception under certain circumstances of telehealth services to 
diagnose, evaluate, or treat a mental health disorder (including 
treatment of a diagnosed SUD or co-occurring mental health disorder). 
That rule and the exception are specified in our regulation at Sec.  
410.78(a)(3). At the conclusion of the PHE and the 151-day extension 
period provided by the CAA, 2022, the only Medicare telehealth services 
that will be permitted to be furnished using audio-only technology will 
be the mental health telehealth services. When a practitioner furnishes 
such an E/M service using audio-only technology, they would bill for 
the same service they would bill if the service had been furnished in 
person. As such, there is not a need to add the telephone-only E/M 
codes to the Medicare Telehealth Services List for this purpose.
    Comment: A commenter stated that, if CMS removes the telephone E/M 
CPT codes 99441-99443 from the Medicare Telehealth Services List on the 
152nd day after the PHE ends, CMS should then create and establish 
particular values for a third and higher level of virtual check-in 
service that would be similar to the telephone E/M services that have 
been available during the PHE. The commenter is requesting that this 
third virtual check-in code would crosswalk to CPT code 99443, and 
should assign RVUs to HCPCS codes G2012 (Brief communication 
technology-based service, e.g. virtual check-in, by a physician or 
other qualified health care professional who can report evaluation and 
management services, provided to an established patient, not 
originating from a related e/m service provided within the previous 7 
days nor leading to an e/m service or procedure within the next 24 
hours or soonest available appointment; 5-10 minutes of medical 
discussion), G2252 (Brief communication technology-based service, e.g. 
virtual check-in, by a physician or other qualified health care 
professional who can report evaluation and management services, 
provided to an established patient, not originating from a related e/m 
service provided within the previous 7 days nor leading to an e/m 
service or procedure within the next 24 hours or soonest available 
appointment; 11-20 minutes of medical discussion), and a third 
potential check-in code with crosswalks to CPT codes 99441-99443, 
respectively.
    Response: We appreciate the comment and may consider potential 
coding revisions for future rulemaking. However, we believe that, in 
light of the fact that the virtual check-in codes are intended for 
practitioners to have a non-face-to-face discussion with a patient to 
determine the need for care, the necessity for a longer virtual check-
in (for example, 21-30 minutes) is not clear. Moreover, if a patient 
requires evaluation and management (E/M) services that are sufficiently 
complicated to last longer than the 11-20 minutes considered in HCPCS 
code G2252, then there are many other E/M visit codes that are already 
available as Medicare telehealth.
    After consideration of public comments, we are finalizing our 
proposal not to add these CPT codes 99441-99443 to the Medicare 
Telehealth Services List on a Category 3 basis; rather, we will retain 
CPT codes 99441-99443 on the Medicare Telehealth Services List through 
expiration of the 151-day period following the end of the PHE, at which 
point they will revert to bundled status.
(3) GI Tract Imaging and Continuous Glucose Monitoring
    We received requests to add CPT codes describing GI Tract Imaging, 
CPT code 91110 (Gastrointestinal tract imaging, intraluminal (e.g., 
capsule endoscopy), esophagus through ileum, with interpretation and 
report) and Ambulatory Continuous Glucose Monitoring, CPT code 95251 
(Ambulatory continuous glucose monitoring of interstitial tissue fluid 
via a subcutaneous sensor for a minimum of 72 hours; analysis, 
interpretation and report), to the Medicare Telehealth Services List on 
a Category 3 basis. We believe these codes may describe services that 
are inherently non-face-to-face services, (the patient need not be

[[Page 69453]]

present in order for the service to be furnished in its entirety), and 
therefore, they do not describe services that are a substitute for an 
in-person visit. As stated earlier, we believe that the statute 
requires that telehealth services be so analogous to in-person care 
such that the telehealth service is essentially a substitute for a 
face-to-face encounter. For this and other reasons, we did not propose 
to add these services to the Medicare Telehealth Services List on a 
Category 3 basis; we do not believe these CPT codes describe services 
that are a substitute for an in-person visit, and we believe that 
services that are not inherently face-to-face services are not services 
that can be furnished as Medicare telehealth services. Even so, we are 
interested in information that would help us to understand whether 
these services would meet the criteria for inclusion on the Medicare 
Telehealth Services List either for the PHE, as Category 3 services, or 
permanently on a Category 1 or 2 basis, given our questions as to 
whether they are inherently non-face-to-face services, and therefore, 
may not fit within the scope of services that could be furnished as 
Medicare telehealth services. Therefore, we also solicited comment on 
whether these services would involve an in-person service when 
furnished without the use of a telecommunications system.
    We received public comments on GI Tract Imaging and Continuous 
Glucose Monitoring. The following is a summary of the comments we 
received and our responses.
    Comment: A commenter agreed that CPT code 91110 describes a service 
that is inherently a non-face-to-face service, as the patient is not 
present in order for the service to be furnished in its entirety. The 
commenter described the services as involving swallowing a capsule 
camera that captures images of the gastrointestinal tract, which are 
recorded on the capsule and subsequently reviewed by the clinician 
using special computer software. The commenter stated that the 
ingestion of the capsule is the only component of this service that 
requires direct observation by a health care provider. The commenter 
noted that less than 10 percent of the service time/work associated 
with CPT code 91110 involves any direct interaction with the patient, 
and the small amount of patient interaction can be done safely and 
effectively via a telehealth visit with video, per the FDA clearance.
    According to one commenter, since the capsule service should only 
be offered to an established patient, an in-person interaction to 
administer the capsule is unnecessary and the patient can safely do so 
in the home setting.
    Response: We appreciate this background information from the 
commenters. Given that this service describes collection, 
interpretation, and reporting, we believe this code describes services 
that are not inherently non-face-to-face, and therefore, they do not 
describe a service that is a substitute for an in-person visit. 
Additionally, the face-to-face portion of the service would require the 
patient to be physically present.
    Comment: Some commenters agreed with CMS' assessment that 
Ambulatory Continuous Glucose Monitoring, CPT code 95251, is an 
inherently non-face-to-face service, and therefore, does not describe a 
service that is a substitute for an in-person visit. CPT code 95251 
does not involve an in-person visit when furnished without the use of a 
telecommunications system.
    One commenter opposed our proposal not to add CPT code 95251 to the 
Medicare Telehealth Services List on a Category 3 basis, citing the 
importance of this service in treating gestational diabetes, saying CMS 
should add CPT code 95251 to the list on a Category 3 basis when it is 
billed with CPT codes 99213 (Established patient office or other 
outpatient visit, 20-29 minutes) or 99214 (Established patient office 
or other outpatient visit, 30-39 minutes) and the appropriate modifier. 
Another commenter cited 2020 claims data that shows CPT code 95251 is 
billed 8.2 percent and 62.6 percent of the time with CPT codes 99213 
and 99214, respectively, demonstrating that this service is typically 
performed face-to-face.
    Response: We appreciate the comments. We continue to believe, and 
commenters have confirmed, that CPT code 95251 is not a substitute for 
an in-person visit, as this code describes physician analysis, 
interpretation, and reporting, which does not inherently describe a 
face-to-face encounter. Accordingly, this code does not describe a 
service that, when conducted via telehealth, is a substitute for a 
face-to-face service. As noted in the CY 2018 PFS final rule (82 FR 
53011), if a service does not describe a service typically furnished 
in-person, it would not be considered a telehealth service under the 
applicable provisions of the statute.
    After consideration of public comments, we are finalizing our 
proposal not to add CPT code 91110 or CPT code 95251 to the Medicare 
Telehealth Services List on a Category 3 basis.
(4) Neurostimulator Pulse Generator/Transmitter
    We received requests to add codes describing the electronic 
analysis of an implanted neurostimulator pulse generator/transmitter to 
the Medicare Telehealth Services List. These included a request to add 
CPT codes 95976 (Electronic analysis of implanted neurostimulator pulse 
generator/transmitter (e.g., contact group[s], interleaving, amplitude, 
pulse width, frequency [Hz], on/off cycling, burst, magnet mode, dose 
lockout, patient selectable parameters, responsive neurostimulation, 
detection algorithms, closed loop parameters, and passive parameters) 
by physician or other qualified health care professional; with simple 
cranial nerve neurostimulator pulse generator/transmitter programming 
by physician or other qualified health care professional) and 95977 
(Electronic analysis of implanted neurostimulator pulse generator/
transmitter (e.g., contact group[s], interleaving, amplitude, pulse 
width, frequency [Hz], on/off cycling, burst, magnet mode, dose 
lockout, patient selectable parameters, responsive neurostimulation, 
detection algorithms, closed loop parameters, and passive parameters) 
by physician or other qualified health care professional; with complex 
cranial nerve neurostimulator pulse generator/transmitter programming 
by physician or other qualified health care professional) permanently 
on a Category 1 basis, as well as a request to add CPT codes 95970 
(Electronic analysis of implanted neurostimulator pulse generator/
transmitter (e.g., contact group[s], interleaving, amplitude, pulse 
width, frequency [Hz], on/off cycling, burst, magnet mode, dose 
lockout, patient selectable parameters, responsive neurostimulation, 
detection algorithms, closed loop parameters, and passive parameters) 
by physician or other qualified health care professional; with brain, 
cranial nerve, spinal cord, peripheral nerve, or sacral nerve, 
neurostimulator pulse generator/transmitter, without programming), 
95983 (Electronic analysis of implanted neurostimulator pulse 
generator/transmitter (e.g., contact group[s], interleaving, amplitude, 
pulse width, frequency [Hz], on/off cycling, burst, magnet mode, dose 
lockout, patient selectable parameters, responsive neurostimulation, 
detection algorithms, closed loop parameters, and passive parameters) 
by physician or other qualified health care professional; with brain 
neurostimulator pulse generator/transmitter programming, first 15

[[Page 69454]]

minutes face-to-face time with physician or other qualified health care 
professional), and 95984 (Electronic analysis of implanted 
neurostimulator pulse generator/transmitter (e.g., contact group[s], 
interleaving, amplitude, pulse width, frequency [Hz], on/off cycling, 
burst, magnet mode, dose lockout, patient selectable parameters, 
responsive neurostimulation, detection algorithms, closed loop 
parameters, and passive parameters) by physician or other qualified 
health care professional; with brain neurostimulator pulse generator/
transmitter programming, each additional 15 minutes face-to-face time 
with physician or other qualified health care professional (List 
separately in addition to code for primary procedure)) to the Medicare 
Telehealth Services List on a temporary Category 3 basis.
    The request to add CPT codes 95976 and 95977, which are codes that 
describe analysis of cranial nerve neurostimulation, indicated that the 
ability to fully furnish this service using two-way, audio-video 
communication technology was forthcoming, but is currently unavailable. 
Therefore, we did not propose to add CPT codes 95976 and 95977 to the 
Medicare Telehealth Services List, because the full scope of service 
elements described by these codes cannot currently be furnished via 
two-way, audio-video communication technology. However, we will 
consider additional evidence regarding the ability to furnish these 
services as telehealth services, such as information indicating that 
current technology has evolved, as it becomes available for future 
rulemaking. We also did not propose to add them on a Category 1 basis 
because they do not describe services that are similar to professional 
consultations, office visits, and office psychiatry services that are 
currently on the Medicare Telehealth Services List.
    With regard to CPT codes 95970, 95983, and 95984, which describe 
general brain nerve neurostimulation, we have some concerns about 
whether the full scope of service elements could be furnished via two-
way, audio-video communication technology, particularly since it is 
unclear whether the connection between the implanted device and the 
analysis/calibration equipment can be done remotely. Additionally, we 
are concerned about the immediate safety of the patient if the 
calibration of the neurostimulator were done incorrectly or if some 
other problem occurred. However, we did include these services on the 
Medicare Telehealth Services List on a temporary basis during the PHE, 
and Medicare claims data suggest that these services are being provided 
via telehealth. Based on this information, we believe there is some 
possible clinical benefit for these services when furnished via 
telehealth; however, there is not yet sufficient evidence available to 
consider the services for permanent addition to the Medicare Telehealth 
Services List under the Category 1 or Category 2 criteria. With that 
said, CPT codes 95970, 95983, and 95984 do meet the criteria for 
temporary inclusion on the Medicare Telehealth Services List on a 
Category 3 basis. Therefore, we proposed to add CPT codes 95970, 95983, 
and 95984 to the Medicare Telehealth Services List on a Category 3 
basis, while we solicited comment on our concerns regarding patient 
safety and whether these services are appropriate for inclusion on the 
Medicare Telehealth Services List outside the circumstances of the PHE.
    Comment: Commenters agreed with CMS that the full scope of service 
elements described by CPT codes 95976 and 95977 cannot currently be 
furnished via two-way, audio-video communication technology, and they 
state that the agency should reconsider these services for possible 
addition to the Medicare Telehealth Services List as evidence develops 
regarding the ability to furnish these services as telehealth services.
    Response: We appreciate commenters' support for this proposal and 
are finalizing our proposal to not add these services to the Medicare 
Telehealth Services List.
    Comment: Commenters supported our proposal to add CPT codes 95970, 
95983, and 95984 to the Medicare Telehealth Services List on a Category 
3 basis. Some commenters expressed disappointment that we did not 
propose to add them to the Medicate Telehealth Services List 
permanently. In response to our comment solicitation regarding patient 
safety concerns, a commenter noted that the technology includes safety 
features, including a prominent network status indicator that appears 
on both the clinician's programmer, as well as the patient's device, 
and the ``Protected Recovery Program'' (PRP) feature that ensures the 
patient is returned to a known state if a remote session is 
interrupted. According to one commenter, systems have been successfully 
in use for over a year and a half that allow for a stable, secure 2-way 
telehealth connection for brain stimulator pulse generator programming. 
Commenters stated that these systems route through a secure HIPAA-
compliant server and allow the managing physician qualified health care 
professional (QHP) to remotely control all essential functions of the 
patient device while providing real time audio and video to allow for 
patient assessment and feedback. The commenter noted that CMS' concerns 
regarding patient safety if the programming is incorrect or if another 
problem occurred have been addressed in the development and deployment 
of existing remote brain neurostimulator programming systems. The 
commenter stated that these systems ensure that the patient controller 
has a ``safe'' program (set of stimulation parameters). In the event of 
an interruption in the remote connection, they noted that the device 
automatically reverts to this ``safe'' program, so that the patient is 
not left with a potentially problematic set of programming parameters.
    The commenter also noted that all elements can be fully and 
effectively performed by a remotely located clinician using two-way, 
audio/video telecommunication technology including direct programming 
of implantable neurostimulator devices, and these services are critical 
to the successful therapy regimens and health outcomes of people with 
Parkinson's disease.
    Response: We continue to believe that these services are most 
appropriately added to the Medicare Telehealth Services on a Category 3 
basis. Adding them on a Category 3 basis will allow the continued 
collection of information through the experiences of clinicians who are 
furnishing these services via telehealth during the PHE for COVID-19, 
and help us to determine whether these services may ultimately be 
eligible for addition to the Medicare Telehealth Services List on a 
Category 1 or Category 2 basis. We encourage interested parties to use 
this extended time period to gather data on these services to support 
their potential addition to the Medicare Telehealth Services List on a 
Category 1 or Category 2 basis in the future.
    After consideration of public comments, we are finalizing our 
proposals not to add CPT codes 95976 and 95977 to the Medicare 
Telehealth Services List, and to add CPT codes 95970, 95983, and 95984 
to the Medicare Telehealth Services List on a Category 3 basis.
(5) Emotional/Behavior Assessment Services and Psychological or 
Neuropsychological Testing and Evaluation Services
    We received requests to add a number of emotional/behavior 
assessment services and psychological, or neuropsychological testing 
and evaluation services, described by CPT codes 97151 (Behavior 
identification assessment, administered by a

[[Page 69455]]

physician or other qualified health care professional, each 15 minutes 
of the physician's or other qualified health care professional's time 
face-to-face with patient and/or guardian(s)/caregiver(s) administering 
assessments and discussing findings and recommendations, and non-face-
to-face analyzing past data, scoring/interpreting the assessment, and 
preparing the report/treatment plan), 97152 (Behavior identification-
supporting assessment, administered by one technician under the 
direction of a physician or other qualified health care professional, 
face-to-face with the patient, each 15 minutes), 97153 (Adaptive 
behavior treatment by protocol, administered by technician under the 
direction of a physician or other qualified health care professional, 
face-to-face with one patient, each 15 minutes), 97154 (Group adaptive 
behavior treatment by protocol, administered by technician under the 
direction of a physician or other qualified health care professional, 
face-to-face with two or more patients, each 15 minutes), 97155 
(Adaptive behavior treatment with protocol modification, administered 
by physician or other qualified health care professional, which may 
include simultaneous direction of technician, face-to-face with one 
patient, each 15 minutes), 97156 (Family adaptive behavior treatment 
guidance, administered by physician or other qualified health care 
professional (with or without the patient present), face-to-face with 
guardian(s)/caregiver(s), each 15 minutes), 97157 (Multiple-family 
group adaptive behavior treatment guidance, administered by physician 
or other qualified health care professional (without the patient 
present), face-to-face with multiple sets of guardians/caregivers, each 
15 minutes), 97158 (Group adaptive behavior treatment with protocol 
modification, administered by physician or other qualified health care 
professional, face-to-face with multiple patients, each 15 minutes), 
0362T (Behavior identification supporting assessment, each 15 minutes 
of technicians' time face-to-face with a patient, requiring the 
following components: administration by the physician or other 
qualified health care professional who is on site; with the assistance 
of two or more technicians; for a patient who exhibits destructive 
behavior; completion in an environment that is customized to the 
patient's behavior.), and 0373T (Adaptive behavior treatment with 
protocol modification, each 15 minutes of technicians' time face-to-
face with a patient, requiring the following components: administration 
by the physician or other qualified health care professional who is on 
site; with the assistance of two or more technicians; for a patient who 
exhibits destructive behavior; completion in an environment that is 
customized to the patient's behavior.) to the Medicare Telehealth 
Services List permanently on a Category 2 basis. These services are 
currently on the Medicare Telehealth Services List temporarily for the 
duration of the PHE. We believe that, for these services, there is 
likely to be clinical benefit when furnished via telehealth, and 
therefore, they meet the criteria for temporary inclusion on a Category 
3 basis. We did not identify these services during our initial 
assessment of services that should be temporarily available on the 
Medicare Telehealth Services List on a Category 3 basis in CY 2021 
rulemaking; however, we proposed to include these services on the 
Medicare Telehealth Services List on a Category 3 basis, in light of 
information we received from the requestors describing the potential 
clinical benefit of these services when furnished via telehealth. 
However, we do have concerns regarding whether, outside the 
circumstances of the PHE, the full scope of service elements can occur 
in a manner that does not jeopardize quality of care, whether this 
patient population could be fully assessed via interactive audio-video 
technology, and whether these services could be conducted in a way that 
maintains the safety of the beneficiary. This patient population often 
includes patients with moderate to severe challenges in oral 
communication, and they may require close observation of their 
movements within all of their environmental cues, which include, for 
instance, smell, sound, and colors around the room. We are concerned 
that two-way, audio and video communications technology would not fully 
capture these behavioral nuances. We believe more time may be necessary 
to develop evidence that could support the decision to add these 
services to the Medicare Telehealth Services List permanently on a 
Category 1 or Category 2 basis. We solicited comment on our patient 
safety concerns.
    We received public comments on emotional/behavior assessment and 
psychological or neuropsychological testing and evaluation services. 
The following is a summary of the comments we received and our 
responses.
    Comment: Many commenters supported the addition of these services 
on a Category 3 basis. Some commenters suggested that the services 
should be added permanently, rather than temporarily on a Category 3 
basis.
    One commenter urged us to permanently add CPT codes 97151, 97152, 
97153, 97154, 97155, and 97156, but did not find sufficient evidence 
supporting safe, effective telehealth delivery of the services 
represented by codes 97157, 97158, 0362T, or 0373T; however, the 
commenter supported our proposal to add the latter four codes on a 
Category 3 basis.
    A few commenters responded to our concerns regarding patient 
safety, quality of care, and whether the full scope of service elements 
can be met via two-way audio-video communication technology. In 
response to our questions about regarding whether this patient 
population can be assessed fully and safely via interactive audio-video 
technology and our concerns that patients with moderate to severe 
communication difficulties often require close observation of their 
responses to cues in their environments (for example, odors, sounds, 
colors) that could not be accomplished remotely via technology, a 
commenter acknowledged our concerns, but noted that the services 
represented by this code set are not specific to any patient 
population; rather, they noted that they are for any patient for whom 
they may be medically necessary. The commenter included emerging 
evidence of the efficacy of telehealth delivery of the services, 
including research articles relevant to each service. The commenter 
noted that no reports of significant adverse events or negative side 
effects were noted in research; however, the commenter indicated that 
when the assessment or treatment services targeted behaviors in 
patients with developmental disabilities that carried risk of harm, the 
supervising behavior analysts (QHPs) had the behavior technicians or 
caregivers who delivered the services take precautions to protect 
patients.
    A commenter agreed there may be concern that some patients may not 
be able to be fully assessed via interactive audio-visual technology; 
however, they stated that the benefits of furnishing these services via 
telehealth outweigh the concerns. The commenter also noted that the 
decision as to the appropriateness of care should be determined by the 
provider, without financial disincentives between in-person and 
telehealth care. The commenter noted that there are significant 
benefits to being able to provide these services via telehealth. The 
commenter stated that patients with dementia or other cognitive or 
psychological impairments may require the assistance of additional 
parties

[[Page 69456]]

during a visit, and that providing these services remotely can allow 
for inclusion of other people, including family, significant others, 
and additional practitioners, who can provide substantial benefits. 
According to the commenter, this is not always the case for in-person 
visits, as caregivers and other family members may not be able to take 
time off from work or travel to the appointments, and virtual visits 
allow for the practitioner, the patient, and important family members 
to be in separate locations while still being able to participate in 
the visit. Additionally, the commenter noted that psychiatric patients 
often have social anxiety issues, leading to limitations on leaving 
safe places like their home, facility, or family, and remote visits are 
important ways to ensure these patients maintain access to care.
    A commenter did not support these services remaining on the 
Medicare Telehealth Services List, stating such additions may pose 
beneficiary safety and quality-of-care issues. The commenter urged us 
to exercise extreme caution when adding additional mental-health-
related services to the Medicare Telehealth Services List on a 
temporary basis, considering the unique challenges faced by persons 
living with mental health conditions, and the multiple, system-wide 
issues currently complicating the delivery of safe and effective mental 
health care.
    Response: We note that CPT codes 90853 and 96121 are already 
permanently on the Medicare Telehealth Services List. Regarding CPT 
codes 96130-96133, 97151-97158, 0362T, and 0373T, we continue to 
believe our proposal to add these services on a Category 3 basis is 
appropriate and preferable. Adding these CPT codes to the Medicare 
Telehealth Services List on a Category 3 basis will allow for the 
collection and evaluation of data that could potentially support 
permanent inclusion on the Medicare Telehealth Services List, and we 
look forward to evaluating such data in the future.
    After consideration of public comments, we are finalizing our 
proposal to retain CPT codes 97151-97158, 0362T, and 0373T on the 
Medicare Telehealth Services List on a Category 3 basis.
c. Other Services Proposed for Addition to the Medicare Telehealth 
Services List
    As discussed above, there are services that are included on the 
Medicare Telehealth Services List temporarily during the PHE for which 
there is likely to be clinical benefit when furnished via telehealth, 
but there is not yet sufficient evidence available to consider the 
services for permanent addition to the list under the Category 1 or 
Category 2 criteria. In addition to the services we proposed for 
addition to the Medicare Telehealth Services List on a Category 3 basis 
in response to requests, we also proposed to add a number of services 
to the Medicare Telehealth Services List on a Category 3 basis that are 
currently included on the Medicare Telehealth Services List temporarily 
during the PHE that were not specifically requested for permanent 
addition. These services would be included on the Medicare Telehealth 
Services List through 2023 to allow us time to evaluate data that may 
support their permanent addition to the list on a Category 1 or 
Category 2 basis.
    The services we proposed for addition to the Medicare Telehealth 
Services List temporarily on a Category 3 basis include CPT codes 90875 
(Individual psychophysiological therapy incorporating biofeedback 
training by any modality (face-to-face with the patient), with 
psychotherapy (e.g., insight oriented, behavior modifying or supportive 
psychotherapy); 30 minutes), 92012 (Ophthalmological services: medical 
examination and evaluation, with initiation or continuation of 
diagnostic and treatment program; intermediate, established patient), 
92014 (Ophthalmological services: medical examination and evaluation, 
with initiation or continuation of diagnostic and treatment program; 
comprehensive, established patient, 1 or more visits), 92507 (Treatment 
of speech, language, voice, communication, and/or auditory processing 
disorder; individual), 94005 (Home ventilator management care plan 
oversight of a patient (patient not present) in home, domiciliary or 
rest home (e.g., assisted living) requiring review of status, review of 
laboratories and other studies and revision of orders and respiratory 
care plan (as appropriate), within a calendar month, 30 minutes or 
more), 96105 (Assessment of aphasia (includes assessment of expressive 
and receptive speech and language function, language comprehension, 
speech production ability, reading, spelling, writing, e.g., by Boston 
Diagnostic Aphasia Examination) with interpretation and report, per 
hour), 96110 (Developmental screening (e.g., developmental milestone 
survey, speech and language delay screen), with scoring and 
documentation, per standardized instrument), 96112 (Developmental test 
administration (including assessment of fine and/or gross motor, 
language, cognitive level, social, memory and/or executive functions by 
standardized developmental instruments when performed), by physician or 
other qualified health care professional, with interpretation and 
report; first hour), 96113 (Developmental test administration 
(including assessment of fine and/or gross motor, language, cognitive 
level, social, memory and/or executive functions by standardized 
developmental instruments when performed), by physician or other 
qualified health care professional, with interpretation and report; 
each additional 30 minutes (List separately in addition to code for 
primary procedure)), 96127 (Brief emotional/behavioral assessment 
(e.g., depression inventory, attention-deficit/hyperactivity disorder 
[ADHD] scale), with scoring and documentation, per standardized 
instrument), 96170 (Health behavior intervention, family (without the 
patient present), face-to-face; initial 30 minutes), 96171 (Health 
behavior intervention, family (without the patient present), face-to-
face; each additional 15 minutes (List separately in addition to code 
for primary service)), 97129 (Therapeutic interventions that focus on 
cognitive function (e.g., attention, memory, reasoning, executive 
function, problem solving, and/or pragmatic functioning) and 
compensatory strategies to manage the performance of an activity (e.g., 
managing time or schedules, initiating, organizing, and sequencing 
tasks), direct (one-on-one) patient contact; initial 15 minutes), 97130 
(Therapeutic interventions that focus on cognitive function (e.g., 
attention, memory, reasoning, executive function, problem solving, and/
or pragmatic functioning) and compensatory strategies to manage the 
performance of an activity (e.g., managing time or schedules, 
initiating, organizing, and sequencing tasks), direct (one-on-one) 
patient contact; each additional 15 minutes (List separately in 
addition to code for primary procedure)), and 99473 (Self-measured 
blood pressure using a device validated for clinical accuracy; patient 
education/training and device calibration). Our analyses of these 
services indicate that there is some evidence of possible clinical 
benefit associated with these services when furnished via telehealth. 
We believe these services can safely be furnished via real-time, audio 
and visual interactive telecommunications under the circumstances of 
the PHE, but there is not yet sufficient evidence available to consider 
the services for permanent addition to the Medicare Telehealth Services 
List under the Category 1 or Category 2 criteria.

[[Page 69457]]

    Some audiology testing services are currently temporarily included 
on the Medicare Telehealth Services List for the duration of the PHE. 
These are CPT codes 92550 (Tympanometry and reflex threshold 
measurements), 92552 (Pure tone audiometry (threshold); air only), 
92553 (Pure tone audiometry (threshold); air and bone), 92555 (Speech 
audiometry threshold;), 92556 (Speech audiometry threshold; with speech 
recognition), 92557 (Comprehensive audiometry threshold evaluation and 
speech recognition (92553 and 92556 combined)), 92563 (Tone decay 
test), 92565 (Stenger test, pure tone), 92567 (Tympanometry (impedance 
testing)), 92568 (Acoustic reflex testing, threshold), 92570 (Acoustic 
immittance testing, includes tympanometry (impedance testing), acoustic 
reflex threshold testing, and acoustic reflex decay testing), 92587 
(Distortion product evoked otoacoustic emissions; limited evaluation 
(to confirm the presence or absence of hearing disorder, 3-6 
frequencies) or transient evoked otoacoustic emissions, with 
interpretation and report), 92588 (Distortion product evoked 
otoacoustic emissions; comprehensive diagnostic evaluation 
(quantitative analysis of outer hair cell function by cochlear mapping, 
minimum of 12 frequencies), with interpretation and report), 92601 
(Diagnostic analysis of cochlear implant, patient younger than 7 years 
of age; with programming), 92625 (Assessment of tinnitus (includes 
pitch, loudness matching, and masking)), 92626 (Evaluation of auditory 
function for surgically implanted device(s) candidacy or postoperative 
status of a surgically implanted device(s); first hour), 92627 
(Evaluation of auditory function for surgically implanted device(s) 
candidacy or postoperative status of a surgically implanted device(s); 
each additional 15 minutes (List separately in addition to code for 
primary procedure)). We have received information that, during the PHE, 
certain practitioners have developed the capacity to perform these 
services using remote technology including specialized equipment inside 
an audiometric soundproof booth. We believe that, in circumstances in 
which such equipment is available at the originating site, these 
services can be furnished in a way in which all of the elements of the 
services are met and that there is likely to be a clinical benefit when 
these services are furnished via telehealth. Therefore, we proposed to 
add these services to the Medicare Telehealth Services List on a 
Category 3 basis, which will allow these services to be available via 
telehealth through the end of CY 2023. We solicited comments regarding 
how widespread the availability of this remote technology is, and 
whether interested parties believe these services can be furnished in a 
way that does not jeopardize patient safety or quality of care when 
these services are furnished remotely.
    Additionally, as discussed in section II.F. of this final rule, we 
proposed to create HCPCS codes G0316 (listed as GXXX1 in our proposed 
rule)(Prolonged hospital inpatient or observation care evaluation and 
management service(s) beyond the total time for the primary service 
(when the primary service has been selected using time on the date of 
the primary service); each additional 15 minutes by the physician or 
qualified healthcare professional, with or without direct patient 
contact (list separately in addition to CPT codes 99223, 99233, and 
99236 for hospital inpatient or observation care evaluation and 
management services). (Do not report G0316 on the same date of service 
as other prolonged services for evaluation and management 99358, 99359, 
993X0). (Do not report G0316 for any time unit less than 15 minutes)), 
G0317 (listed as GXXX2 in our proposed rule) (Prolonged nursing 
facility evaluation and management service(s) beyond the total time for 
the primary service (when the primary service has been selected using 
time on the date of the primary service); each additional 15 minutes by 
the physician or qualified healthcare professional, with or without 
direct patient contact (list separately in addition to CPT codes 99306, 
99310 for nursing facility evaluation and management services). (Do not 
report G0317 on the same date of service as other prolonged services 
for evaluation and management 99358, 99359, 993X0,). (Do not report 
G0317 for any time unit less than 15 minutes)), and G0318 (listed as 
GXXX3 in our proposed rule) (Prolonged home or residence evaluation and 
management service(s) beyond the total time for the primary service 
(when the primary service has been selected using time on the date of 
the primary service); each additional 15 minutes by the physician or 
qualified healthcare professional, with or without direct patient 
contact (list separately in addition to CPT codes 99345, 99350 for home 
or residence evaluation and management services). (Do not report G0318 
on the same date of service as other prolonged services for evaluation 
and management 99358, 99359, 99417). (Do not report G0318 for any time 
unit less than 15 minutes)) to describe prolonged services associated 
with certain types of E/M services. These codes will be replacing 
existing codes that describe prolonged services, specifically inpatient 
prolonged services CPT codes 99356 (Prolonged service in the inpatient 
or observation setting, requiring unit/floor time beyond the usual 
service; first hour (List separately in addition to code for inpatient 
or observation Evaluation and Management service)) and 99357 (Prolonged 
service in the inpatient or observation setting, requiring unit/floor 
time beyond the usual service; each additional 30 minutes (List 
separately in addition to code for prolonged service)). These services 
are similar to services currently on the Medicare Telehealth Services 
List, such as CPT codes 99356 and 99357, which were added to the 
Medicare Telehealth Services List on a Category 1 basis in the CY 2016 
rule (80 FR 71060-71062), as well as O/O prolonged service HCPCS code 
G2212 (Prolonged service in the inpatient or observation setting, 
requiring unit/floor time beyond the usual service; each additional 30 
minutes (List separately in addition to code for prolonged service)), 
which was added to the Medicare Telehealth Services List on a Category 
1 basis in the CY 2021 rule (85 FR 84506). Similarly, we believe that 
these proposed HCPCS G codes will be sufficiently similar to 
psychiatric diagnostic procedures or O/O visits currently on the 
Medicare Telehealth Services List to qualify for inclusion on the list 
on a Category 1 basis. Therefore, we proposed to add proposed HCPCS 
codes G0316, G0317, and G0318 to the Medicare Telehealth Services List 
on a Category 1 basis.
    Table 12 lists the services that we are finalizing for addition to 
the Medicare Telehealth Services List on a Category 3 basis. Table 13 
lists the services we are finalizing for permanent addition to the 
Medicare Telehealth Services List on a Category 1 basis.
BILLING CODE 4150-28-P

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[GRAPHIC] [TIFF OMITTED] TR18NO22.016


[[Page 69459]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.017

BILLING CODE 4150-28-C
    We received public comments on these other services that we 
proposed for addition to the Medicare Telehealth Services List. The 
following is a summary of the comments we received and our responses.
    Comment: Many commenters supported the addition of many of these 
services on a Category 3 basis.
    Response: We appreciate the support for our proposals.
    Comment: One commenter stated that ophthalmologic services (92002, 
92004, 92012 and 92014) are generally covered via telehealth by other 
insurance plans, including Medicare Advantage plans and the Veterans 
Health Administration, and should also be available to Medicare 
beneficiaries. Commenters supported the addition of CPT codes 92012 and 
92014 on a Category 3 basis.
    Response: We thank commenters for their support of our proposal, 
and we are finalizing as proposed the addition of CPT codes 92012 and 
92014 to the Medicare Telehealth Services List on a Category 3 basis. 
We did not identify or propose CPT codes 92002 or 92004 as Medicare 
telehealth in the proposed rule. As such, discussion of these codes is 
outside the scope of this rule.
    Comment: Regarding our comment solicitation related to patient 
safety for audiology services, a commenter stated that there is now 
strong evidence confirming that patients who receive therapy services 
via telehealth have similar, or even better outcomes, compared to 
patients who received traditional in-person therapy services (including 
citations of studies). This commenter cited this evidence in urging us 
to add these services permanently. A commenter stated that the 
Veteran's Administration has shown, for many years, that audiology 
services can be safely provided, via telehealth, without sacrificing 
patient outcomes or quality of care, and that the technology required 
to perform these procedures via telehealth, in many cases with the 
assistance of an audiology assistant or technician at a remote 
location, is readily available. Commenters requested that many 
audiology services that are not currently available on the Medicare 
Telehealth Services List be added on a Category 3 basis.
    Response: We appreciate the information provided by commenters, and 
we may consider this information in future rulemaking. Given support of 
commenters, as well as information provided, we are finalizing the 
addition of audiology CPT codes 92550, 92552, 92553, 92555, 92556, 
92557, 92563, 92565, 92567, 92568, 92570, 92587, 92588, 92601, 92625, 
92626, and 92627 to the Medicare Telehealth Services List on a Category 
3 basis, as proposed.
    Comment: Commenters supported the addition of the proposed 
prolonged services HCPCS codes G0316-G0318 permanently on a Category 1 
basis, stating that doing so is essential to maintaining consistency 
with the new coding and payment structure for inpatient E/M services.
    Response: We appreciate commenters' support for this proposal. We 
are finalizing the addition of HCPCS codes G0316, G0317, and G0318 to 
the Medicare Telehealth Services List on a Category 1 basis, as 
proposed.
    Comment: Numerous commenters requested that we add many services 
that are temporarily available for the PHE to the Medicare Telehealth 
Services List that are currently on the list on a temporary basis, but 
that we did not propose to continue on the list to be available as 
Medicare telehealth services be added on a Category 3 basis
    Response: As discussed above, we identified the services we 
considered appropriate for addition to the Medicare Telehealth Services 
List on a Category 3 basis by conducting an internal review to assess 
those services that may, outside of the circumstances of the PHE, be 
furnished using the full scope of service elements for their respective 
service/code via two-way, audio-video communication technology, as 
though the service were provided in-person. The commenters did not 
present new information indicating that our analysis was incomplete. 
Furthermore, because we did not propose to add the services requested 
by these commenters to the Medicare Telehealth Services List on a 
Category 3 basis, we found these comments to be outside the scope of 
the proposed rule.
    As discussed in section II.E. of this final rule, we proposed to 
create two HCPCS G-codes to describe monthly Chronic Pain Management 
and Treatment services: HCPCS code G3002 (Chronic pain management and 
treatment, monthly bundle including, diagnosis; assessment and 
monitoring; administration of a validated pain rating scale or tool; 
the development, implementation, revision, and/or maintenance of a 
person-centered care plan that includes strengths, goals, clinical 
needs, and desired outcomes; overall treatment management; facilitation 
and coordination of any necessary behavioral health treatment; 
medication management; pain and health literacy counseling; any 
necessary chronic pain related crisis care; and ongoing communication 
and care coordination between relevant practitioners furnishing e.g. 
physical therapy and occupational therapy, complementary and 
integrative approaches, and community-based care, as appropriate. 
Required initial face-to-face visit at least 30 minutes provided by a 
physician or other qualified health professional; first 30 minutes 
personally provided by physician or other qualified health care 
professional, per calendar month. (When using G3002, 30 minutes must be 
met or exceeded.)) and HCPCS code G3003 (Each additional 15 minutes of 
chronic pain management and treatment by a physician or other qualified 
health care professional, per calendar month (List separately in 
addition to code for G3002). (When using G3003, 15 minutes must be met 
or exceeded.)).
    Comment: As discussed in section II.E.4.(33) in the CY 2023 PFS 
proposed rule, we solicited comment regarding how best the initial 
visit and subsequent visits should be conducted (for example, in-
person, via telehealth, or the use of a telecommunications system, and 
any implications for additional or different coding). We also 
considered whether to add the CPM codes to the Medicare

[[Page 69460]]

Telehealth Services List. Many commenters asked us to add CPM services 
to the Medicare Telehealth Services List. One commenter stated that the 
CPM code(s) would be appropriate to add on a Category 1 basis, since 
chronic pain limits patient mobility and a ``silver lining'' of the 
COVID-19 pandemic is that telehealth flexibilities improved access to 
pain care. This commenter continued that it can be very burdensome for 
patients, especially those with ``high impact'' chronic pain, to 
physically get to doctor appointments, undergo the hardship of driving, 
walking distances, standing in line, and sitting for long periods in 
waiting rooms, all of which may exacerbate pain that has been ongoing 
for days to weeks. The commenter emphasized how important access to 
telehealth is for this particular group of Medicare patients and urged 
us to add it to the Medicare Telehealth Services List. One commenter 
stated that telehealth should be an option, because of geographic 
factors (rural dwellers are underserved) and life circumstances (child 
care, transportation), which can make repeated in-person appointments 
inaccessible. This commenter continued that people with chronic pain 
can experience challenging issues traveling to see a clinician, and 
often inquire about the availability of receiving integrative care 
through telehealth. For these reasons, this commenter recommended that 
we add the CPM services to the Medicare Telehealth Services List. One 
commenter stated they believed that telehealth increases self-efficacy 
in people living with pain. As a middle pathway, another commenter 
requested that we allow providers to use their discretion when 
determining if telehealth is appropriate for their patient. Another 
commenter added that telehealth visits should always be with the 
agreement of the patient as some people are more comfortable with face-
to-face interactions. One commenter noted telehealth is appropriate 
once patients are established on their care plan, while another 
commenter suggested that at minimum, telehealth be allowed for all 
follow up visits.
    Response: As discussed earlier in this section, we agree with the 
commenter's suggestion to add CPM services to the Medicare Telehealth 
Services List on a Category 1 basis. We believe that the interactions 
between the furnishing practitioner and the beneficiary described by 
the required face-to-face visit component of the CPM services are 
sufficiently similar to professional consultations, office visits, and 
office psychiatry services currently on the Medicare Telehealth 
Services List for these services to be added on a Category 1 basis. By 
its nature, and because of the many treatment challenges described by 
these and other commenters in section II.E.4.(33), pain care is ideally 
suited to telehealth, and we believe appropriate to be furnished 
through interactive, real-time telecommunications technology. Like 
certain other non-face-to face PFS services, there are also components 
of HCPCS codes G3002 and G3003 describing care planning or care 
coordination with other health care professionals that are commonly 
furnished remotely using telecommunications technology, and do not 
require the patient to be present/in-person with the practitioner when 
they are furnished. As such, these components of HCPCS codes G3002 and 
G3003 are not considered telehealth services for purposes of Medicare, 
and we do not need to consider whether the non-face-to-face aspects of 
HCPCS codes G3002 and G3003 are similar to other telehealth services. 
We are finalizing in this rule that any of the CPM in-person components 
included in HCPCS codes G3002 and G3003 may be furnished via 
telehealth, as clinically appropriate, in order to increase access to 
care for beneficiaries. However, we reiterate as provided in the code 
descriptor that the initial CPM services visit billed under HCPCS code 
G3002 must be furnished in-person without the use of telecommunications 
technology. (For further clarification about the initial in person 
visit requirements, please see section II.E.4.(33).)
    Comment: One commenter asked that we enable the CPM codes, in 
addition to being rendered through telehealth, to be furnished through 
audio-only technology.
    Response: We appreciate the comment. In the CY 2022 PFS final rule, 
we finalized a policy to revise the definition of ``telecommunications 
system'' at Sec.  410.78(a)(3) to allow the use of audio-only 
technology for the diagnosis, evaluation, or treatment of mental health 
conditions under certain circumstances (described in detail at 86 FR 
64996, 65056 through 65060) that allow visits and other services 
furnished via audio-only technology to be reported as Medicare 
telehealth services, with the appropriate modifier. We acknowledge that 
certain scope of service aspects of CPM may pertain to the diagnosis, 
evaluation, or treatment of mental health conditions. We expect 
clinicians will bill for the HCPCS code that most accurately describes 
the services furnished, including in instances where the service being 
furnished might determine the technological modality used to deliver 
the service.
    After consideration of public comments, we are finalizing our 
proposal to add CPT codes 90875, 92012, 92014, 92507, 94005, 96105, 
96110, 96112, 96113, 96127, 96170, 96171, 97129, 97130, and 99473 to 
the Medicare Telehealth Services List on a Category 3 basis, and 
finalizing our proposal to add HCPCS codes G0316, G0317, and G0318, 
G3002, and G3003 to the Medicare Telehealth Services List on a Category 
1 basis.
d. Services Proposed for Removal From the Medicare Telehealth Services 
List After 151 Days Following the End of the PHE
    As we noted in the CY 2022 PFS final rule (86 FR 65054), at the 
conclusion of the PHE for COVID-19, the associated waivers and interim 
policies will expire, payment for Medicare telehealth services will 
once again be limited by the requirements of section 1834(m) of the 
Act, and we will return to the policies established through our regular 
notice-and-comment rulemaking process, through which we established and 
maintain the Medicare Telehealth Services List. Services that have been 
added to the Medicare Telehealth Services List on a Category 3 basis 
will remain on the list through the end of CY 2023. We have explained 
that under our current policy, all other services that were temporarily 
added to the Medicare Telehealth Services List on an interim basis 
during the PHE and have not been added to the Medicare Telehealth 
Services List on a Category 1, 2, or 3 basis will not remain on the 
list after the end of the PHE (85 FR 84506-84509). As explained in 
section II.D.1.e. of this final rule, Division P, Title III, Subsection 
A of the Consolidated Appropriations Act, 2022 (CAA, 2022), extends 
some of the flexibilities implemented during the PHE for COVID-19 for 
an additional 151 days after the end of the PHE, including section 
301(a) of Division P, Title III, Subtitle A of the CAA, 2022, which 
specifies that, for services on the Medicare Telehealth Services List 
as of the date of enactment (March 15, 2022) furnished during 151 days 
after the end of the PHE, the originating site for the telehealth 
service can be any site in the United States at which the beneficiary 
is located when the service is furnished, including the beneficiary's 
home. To give full effect to this provision, we believe it is necessary 
to continue to include the services on the Medicare Telehealth Services 
List through the 151-day period after the end of the PHE that were 
temporarily added to the list

[[Page 69461]]

during the PHE but have not since been added on a Category 3 or other 
basis, and which are currently set to be removed from the list at the 
end of the PHE. As such, we proposed to continue to include on the 
Medicare Telehealth Services List the services that are currently set 
to be removed from the list when the PHE ends (that is, those not 
currently added to the list on a Category 1, 2, or 3 basis) for an 
additional 151 days after the PHE ends. Table 14 lists those services 
that are temporarily included on the list available for the PHE, which 
we proposed to retain on the Medicare Telehealth Services List for an 
additional 151 days following the end of the PHE. The services listed 
in Table 14 will no longer be available on the Medicare Telehealth 
Services List on the 152nd day after the end of the PHE. As previously 
explained, on the 152nd day after the end of the PHE, payment for 
Medicare telehealth services will once again be limited by the 
requirements of section 1834(m) of the Act, as aforementioned, and 
telehealth claims for these services furnished on or after the codes 
are removed from the list will be denied. We proposed to align the 
temporary availability of services available as Medicare telehealth 
services until the end of the PHE with the 151-day extensions of 
flexibilities enacted in the CAA, 2022 in order to simplify the process 
of ending the PHE-related flexibilities and to minimize possible 
errors.
    Comment: A commenter noted that CPT code 94664 did not appear in 
Table 10 of the proposed rule despite being a code that was temporarily 
added for the PHE.
    Response: We agree that CPT code 94664 was inadvertently omitted 
from Table 10 of the proposed rule. As a code that was temporarily 
added to the Medicare Telehealth Services List for the duration of the 
PHE, it should have been included among codes that we proposed will 
remain on the Medicare Telehealth Services List for an additional 151 
days following the end of the PHE. We have corrected this error in 
Table 14, and we are finalizing that CPT code 94664 will remain on the 
Medicare Telehealth Services List for an additional 151 days following 
the end of the PHE.
    Comment: Many commenters supported our proposal to align the period 
of availability for services that are temporarily available for the 
duration of the PHE with the 151-day extension of certain telehealth 
flexibilities associated with the CAA, 2022. Some commenters stated 
that we should eliminate the temporary designation for all services on 
the Medicare Telehealth Services List, making permanent all services 
currently available.
    Response: We thank commenters for their support of our proposal to 
allow services that would be available for the duration of the PHE to 
remain on the Medicare Telehealth Services List through the 151-day 
period following the end of the PHE. We continue to believe that 
services, including those that we added on a temporary interim basis 
for the PHE for COVID-19, should be considered for permanent addition 
to the Medicare Telehealth Services List through the regular annual 
process we established as required by section 1834(m)(4)(F)(ii) of the 
Act. While we have included some services on the Medicare Telehealth 
Services List on a temporary Category 3 basis through the end of CY 
2023, this was to allow for the continued development of data to 
support their potential future consideration for permanent addition to 
the list on a Category 1 or Category 2 basis; we review all items on 
the Medicare Telehealth Services List each year as per our established 
process. Interested parties may continue to use the annual submission 
process to request the addition of any services to or deletion of 
services from the Medicare Telehealth Services List, regardless of 
whether the service was added on a temporary Category 3 basis. We note 
that the services that are included on the Medicare Telehealth Services 
list on a Category 3 basis will remain on the list for an additional 
period beyond 151 days after the end of the PHE, which is currently 
through the end of 2023. We understand that, if the PHE is in effect 
for most of the year next year, the 151-day period after the PHE may 
end on a date that is beyond December 31, 2023. We clarify that in this 
instance, the Category 3 services would remain on the Medicare 
Telehealth Services List through December 31, 2023 or 151 days after 
the PHE, if later. We will consider whether any additional extensions 
are needed in the future.

[[Page 69462]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.018

e. Implementation of Telehealth Provisions of the Consolidation 
Appropriations Acts, 2021 and 2022
    As discussed in the CY 2021 PFS final rule (85 FR 84506), 
legislation enacted to address the PHE for COVID-19 provided the 
Secretary with new authorities under section 1135(b)(8) of the Act, as 
added by section 102 of the Coronavirus Preparedness and Response 
Supplemental Appropriations Act, 2020 (Pub. L. 116-123, March 6, 2020) 
and subsequently amended by section 6010 of the Families First 
Coronavirus Response Act (Pub. L. 116-127, March 18, 2020) and section 
3703 of the Coronavirus Aid, Relief, and Economic Security Act (CARES 
Act) (Pub. L. 116-136, March 27, 2020), to waive or modify Medicare 
telehealth payment requirements during the PHE for COVID-19. We used 
these authorities to establish several flexibilities to accommodate 
changes in the delivery of care during the PHE. Through waiver 
authority under section 1135(b)(8) of the Act, in response to the PHE 
for COVID-19, we removed the geographic and site of service originating 
site restrictions in section 1834(m)(4)(C) of the Act, as well as 
restrictions in section 1834(m)(4)(E) of the Act on the types of 
practitioners who may furnish telehealth services, for the duration of 
the PHE for COVID-19. We also used waiver authority to allow certain 
telehealth services to be furnished via audio-only communication 
technology. At the end of the PHE for COVID-19, these waivers and 
interim policies will expire, and payment for Medicare telehealth 
services will once again be limited by the requirements of section 
1834(m) of the Act.
    Section 1834(m)(7) of the Act (as added by section 2001(a) of the 
SUPPORT for Patients and Communities Act (Pub. L. 115-271, October 24, 
2018)), removes the geographic restrictions under section 
1834(m)(4)(C)(i) of the Act and authorizes the patient's home as a 
permissible originating site, for telehealth services furnished for 
purposes of treatment of a substance use disorder (SUD) or a co-
occurring mental health disorder, furnished on or after July 1, 2019, 
to an individual with a SUD diagnosis. Section 123(a) of Division CC of 
the Consolidated Appropriations Act, 2021 (CAA, 2021) (Pub. L. 116-260, 
December 27, 2020) amended section 1834(m)(7)(A) of the

[[Page 69463]]

Act to broaden the scope of services for which the geographic 
restrictions under section 1834(m)(4)(C)(i) of the Act do not apply and 
for which the patient's home is a permissible originating site to 
include telehealth services furnished for the purpose of diagnosis, 
evaluation, or treatment of a mental health disorder, effective for 
services furnished on or after the end of the PHE for COVID-19. Section 
123(a) of the CAA, 2021 also added subparagraph (B) to section 
1834(m)(7) of the Act to prohibit payment for a telehealth service 
furnished in the patient's home under paragraph (7), unless the 
physician or practitioner furnishes an item or service in-person, 
without the use of telehealth, within 6 months prior to the first time 
the physician or practitioner furnishes a telehealth service to the 
beneficiary, and thereafter, at such times as the Secretary determines 
appropriate. For a full discussion of our implementation of section 
123(a) of the CAA, 2021, refer to our CY 2022 PFS final rule (86 FR 
64996).
    In the proposed rule, we proposed to implement provisions of 
section 1834(m) of the Act (including the amendments made by the CAA, 
2021) and provisions of the CAA, 2022 that extend certain Medicare 
telehealth flexibilities adopted during the PHE for 151 days after the 
end of the PHE.
    Sections 301, 302, 303, 304, and 305 of Division P, Title III, 
Subtitle A of the CAA, 2022 amended section 1834(m) of the Act to 
generally extend certain PHE-related telehealth policies for services 
that are on the Medicare Telehealth Services List as of the date of 
enactment (March 15, 2021). Specifically, section 301(a) of the CAA, 
2022 amended section 1834(m)(4)(C) of the Act to add a new clause 
(iii), which temporarily expands the scope of telehealth originating 
sites for those services to include any site in the United States where 
the beneficiary is located at the time of the telehealth service, 
including an individual's home, for a 151-day period beginning on the 
first day after the end of the PHE for COVID-19. Section 301(a) also 
amended section 1834(m)(7)(A) of the Act to apply the expanded scope of 
telehealth originating site policy to include any location in the 
United States in new clause (iii) of section 1834(m)(4)(C) of the Act 
during the 151-day period for telehealth services furnished for the 
purposes of diagnosis, evaluation, or treatment of a mental health 
disorder and to individuals with a SUD diagnosis for purposes of 
treatment of the SUD or a co-occurring mental health disorder for this 
151-day post-PHE extension period. In addition to this provision, 
section 301(b) of the CAA, 2022 amended section 1834(m)(2)(B) of the 
Act to add a new clause (iii) that allows payment of an originating 
site facility fee to an originating site with respect to those 
telehealth services furnished during the 151-day period only if the 
originating site is one that meets the geographic requirements in 
section 1834(m)(4)(C)(i) of the Act, and is a setting included on the 
enumerated list of originating sites under section 1834(m)(4)(C)(ii) of 
the Act (other than the patient's home).
    Section 302 of the CAA, 2022 amended section 1834(m)(4)(E) of the 
Act to temporarily expand the definition of eligible telehealth 
practitioners for the 151-day period beginning on the first day after 
the end of the PHE for COVID-19 to include qualified occupational 
therapists, qualified physical therapists, qualified speech-language 
pathologists, and qualified audiologists.
    Section 303 of the CAA, 2022 amended section 1834(m)(8) of the Act 
to temporarily continue payment for telehealth services furnished by 
FQHCs and RHCs for the 151-day period beginning on the first day after 
the end of the COVID-19 PHE using the methodology established for 
telehealth services furnished by FQHCs and RHCs during the PHE, which, 
in accordance with section 1834(m)(8)(B) of the Act, is based on 
payment rates that are similar to the national average payment rates 
for comparable telehealth services under the PFS.
    Section 304(a) of the CAA, 2022 amended section 1834(m)(7)(B)(i) of 
the Act to delay the requirement for an in-person visit with the 
physician or practitioner within 6 months prior to the initial mental 
health telehealth service, and again at subsequent intervals as the 
Secretary determines appropriate. In light of this amendment, the in-
person requirements for telehealth services furnished for purposes of 
diagnosis, evaluation, or treatment of a mental health disorder will 
again be effective on the 152nd day after the PHE ends. In addition, 
section 304(b) and (c) of the CAA, 2022 modified sections 1834(y) and 
1834(o)(4) of the Act, respectively, to similarly delay in-person visit 
requirements for mental health visits furnished by Rural Health Clinics 
and Federally Qualified Health Centers via telecommunications 
technology. Therefore, we proposed to revise the regulatory text at 
Sec.  410.78(b)(3)(xiv) to recognize the delay of the in-person 
requirements for mental health visits furnished by RHCs and FQHCs 
through telecommunication technology under Medicare until the 152nd day 
after the PHE for COVID-19, to conform with the statute. See section 
II.B.3. of this final rule for our proposal to implement similar 
changes for RHC and FQHC mental health visits.
    Finally, section 305 of the CAA, 2022 added a new paragraph (9) to 
section 1834(m) of the Act to require the Secretary to continue to 
provide for coverage and payment of telehealth services included on the 
Medicare Telehealth Services List as of the March 15, 2022, date of 
enactment that are furnished via an audio-only telecommunications 
system during the 151-day period beginning on the first day after the 
end of the PHE for COVID-19. The new paragraph applies only to 
telehealth services specified on the Medicare Telehealth Services List 
under section 1834(m)(4)(F)(i) of the Act that are designated to as 
eligible to be furnished via audio-only technology as of the date of 
enactment of the CAA, 2022 (that is, March 15, 2022). These are the 
services for which CMS waived the requirements of section 1834(m)(1) of 
the Act and the first sentence of Sec.  410.78(a)(3) for use of 
interactive telecommunications systems to furnish telehealth services, 
to the extent they require use of video technology, during the PHE. 
Under this waiver, CMS permitted the audio-only telephone E/M services 
and certain behavioral health counseling and educational services to be 
furnished via audio-only equipment during the PHE for COVID-19. We 
proposed to continue to make payment for services included on the 
Medicare Telehealth Services List as of March 15, 2022 that are 
furnished via an audio-only telecommunications system for the 151-day 
period beginning on the first day after the end of the PHE. We read 
section 305 of the CAA, 2022 to require that we continue to make 
payment for services furnished via audio-only telecommunications 
systems (each described by a HCPCS code, including their successor 
codes) for the 151-day period after the end of the PHE. These services 
include certain behavioral health, counseling, and educational 
services. (https://www.cms.gov/files/document/covid-19-emergency-declaration-waivers.pdf, n.d.). A list of the services that involve 
audio-only interaction but are included on the Medicare Telehealth 
Services List for the duration of the PHE is available at the CMS 
website, https://www.cms.gov/Medicare/Medicare-General-Information/Telehealth/Telehealth-Codes.
    Section 309 of Division P, Title III, Subtitle A of the CAA, 2022 
authorizes the Secretary to implement the amendments described above 
made by

[[Page 69464]]

sections 301 through 305 through program instruction or otherwise. 
Given that the end date of the PHE is not yet known and could occur 
before the rulemaking process for the CY 2023 PFS is complete, and that 
the changes made by these provisions are very specific and concise, we 
announced in the CY 2023 PFS proposed rule that we intended to issue 
program instructions or other subregulatory guidance to effectuate the 
changes described above, other than the proposed revisions to Sec.  
410.78. We intend to issue these instructions in the near future. We 
believe this approach will serve to ensure a smooth transition after 
the end of the PHE for COVID-19.
    We received public comments on our proposals to implement section 
304(a) of the CAA, 2022, which amended section 1834(m)(7)(B)(i) of the 
Act, regarding the requirement that an in-person visit with the 
physician or practitioner must occur within 6 months prior to the 
initial mental health telehealth service. The following is a summary of 
the comments we received and our responses.
In-Person Requirements
    Comment: Many commenters expressed general support for our 
proposals to implement and effectuate changes via program instructions, 
and subregulatory guidance, based on the fact that the last day of the 
PHE remains uncertain, but varied in their level of concern about 
whether the post-PHE transition period, of 151 days, would allow enough 
flexibility. Commenters expressed concerns that a sudden shift in the 
in-person visit requirements, beginning 152 days after the end of the 
PHE, could create beneficiary access issues, additional strain on the 
existing health care workforce shortage, and significant confusion 
among clinical and administrative staff about how to align resources 
and inform beneficiaries. Some commenters noted that the public will 
receive only 60 days' notice before the last day of the PHE, which they 
believe would not allow adequate time to coordinate in-person care 
across many different settings of care and varied individual 
beneficiary needs. A few commenters suggested that CMS should take the 
narrowest interpretation of the intent of Congress for in-person visit 
requirements prior to the initial mental health telehealth service, on 
the basis that the Secretary has the authority to specify the 
requirements associated with the required interval for similar follow-
up in-person visit requirements. Other commenters expressed confusion 
about how individual physicians or practitioners would ensure 
appropriate record keeping and overall compliance plans would be 
updated to provide a means of verifying that any individual service met 
the in-person visit requirements. Some commenters whose focus is on 
enabling and supporting telehealth care through various health IT 
solutions requested that CMS provide more specifics on timing and 
possible ways to standardize the means by which individual physicians 
or practitioners document compliance with in-person requirements.
    We also received comments that outlined concerns or possible risks 
to patient safety when patients with certain mental health conditions 
were treated remotely. These commenters provided examples of high-risk 
circumstances, such as possible risks associated with treating complex, 
or atypical patients, via telehealth. Commenters discussed that care of 
certain patients, who may have a severe or rare diagnosis, may also be 
under a course of treatment, where that plan of care includes a 
medication regimen that requires close monitoring. Alternatively, one 
commenter mentioned that certain beneficiaries with significant complex 
needs may demonstrate possible outcomes that may be superior when 
delivered via telehealth versus in-person. We also received a broad 
range of comments suggesting varied ways that CMS could implement the 
in-person visit requirements for mental health telehealth services.
    Response: We appreciate these commenters' feedback. We did not 
propose to modify our established policies to implement these in-person 
visit requirements (except as it pertains to the 151-day extension for 
the 6-month requirement for an in-person visit for mental health 
treatment). We recognize that the CAA, 2022 delays implementation of 
the in-person visit requirements for mental health telehealth services 
for a period of 151 days after the final day of the PHE. As explained 
above and in the proposed rule, we are implementing section 304(a) of 
the CAA, 2022. and further emphasize that the availability of 
furnishing these services via telehealth does not preclude 
practitioners from seeing patients in-person, when indicated. We will 
continue to gather information on these mental health telehealth 
services as they are utilized, and we will take this information into 
consideration in the future for possible rulemaking.
    Comment: Several commenters suggested that no in-person requirement 
should be enforced at all.
    Response: We appreciate commenters' feedback. The statute does 
require an in-person, non-telehealth visit within 6 months prior to the 
first mental health services furnished via Medicare telehealth. 
However, we clarify that we do not believe this requirement applies to 
beneficiaries who began receiving mental health telehealth services in 
their homes during the PHE. In other words, if a beneficiary began 
receiving mental health telehealth services during the PHE or during 
the 151-day period after the end of the PHE, then they would not be 
required to have an in-person visit within 6 months; rather, they will 
be considered established and will instead be required to have at least 
one in-person visit every 12 months (so long as any such subsequent 
telehealth service is furnished by the same individual physician or 
practitioner (or a practitioner of the same sub-specialty in the same 
practice) to the same beneficiary). This means that these services 
would be subject to the requirement that an in-person visit is 
furnished within 12 months of each mental health telehealth service for 
those services that are subject to in-person visit requirements (unless 
an exception is documented by their treating practitioner). For 
discussion of additional requirements for these services, please see 
the discussion in the CY 2022 PFS final rule.
f. Use of Modifiers for Medicare Telehealth Services Following the End 
of the PHE for COVID-19
    Prior to CY 2017, Medicare telehealth services furnished via 
interactive audio and video telecommunications systems were reported 
using the GT modifier. In the CY 2017 PFS Final Rule, CMS finalized 
creation of a new Place of Service (POS) code for Medicare telehealth, 
POS ``02'' (81 FR 80199-80201). When a physician or practitioner 
submits a claim for their services, including claims for telehealth 
services, they include a place of service (POS) code that is used to 
determine whether a service is paid using the facility or non-facility 
rate. Under the PFS, there are two payment rates for many physicians' 
services: the facility rate and the non-facility (or office) rate. The 
PFS non-facility rate is the single amount paid to a physician or other 
practitioner for services furnished in their office. The PFS facility 
rate is the amount generally paid to a professional when a service is 
furnished in a setting of care, like a hospital, where Medicare is 
making a separate payment to a facility entity in addition to the 
payment to the billing physician or practitioner. This separate 
payment, often referred to as a ``facility fee,'' reflects the 
facility's costs associated with the service (clinical staff, supplies,

[[Page 69465]]

and equipment) and is paid in addition to what is paid to the 
professional under the PFS. POS ``02'' indicates that the service was 
furnished via telehealth, and under the pre-PHE process, was then paid 
at the facility payment rate.
    As discussed in the March 31, 2020 IFC, (refer to 85 FR 19230), we 
stated that, as physician practices suddenly transitioned a potentially 
significant portion of their services from in-person to telehealth 
visits in the context of the PHE for the COVID-19 pandemic, the 
relative resource costs of furnishing these services via telehealth may 
not significantly differ from the resource costs involved when these 
services are furnished in-person. Therefore, we instructed physicians 
and practitioners who bill for Medicare telehealth services to report 
the POS code that would have been reported had the service been 
furnished in-person. This will allow our systems to make appropriate 
payment for services furnished via Medicare telehealth, which, if not 
for the PHE for the COVID-19 pandemic, would have been furnished in-
person, at the same rate they would have been paid if the services were 
furnished in-person. In order to effectuate this change, we finalized 
on an interim basis (85 FR 19233) the use of the CPT telehealth 
modifier, modifier ``95'', for the duration of the PHE for COVID-19, 
which should be applied to claim lines that describe services furnished 
via telehealth and that the practitioner should report the POS code 
where the service would have occurred had it not been furnished via 
telehealth.
    We further noted that we are maintaining the facility payment rate 
for services billed using the general telehealth POS code ``02'', 
should practitioners choose to maintain their current billing practices 
for Medicare telehealth during the PHE for the COVID-19 pandemic.
    We proposed that Medicare telehealth services furnished on or 
before the 151st day after the end of the PHE, in alignment with the 
extensions of telehealth-related flexibilities in the CAA, 2022, will 
continue to be processed for payment as Medicare telehealth claims when 
accompanied with the modifier ``95.'' We further proposed that 
physicians and practitioners can continue to report the place of 
service code that would have been reported had the service been 
furnished in-person during the 151-day period after the end of the PHE, 
as finalized on an interim basis in the March 31 IFC (85 FR 19233). We 
proposed that Medicare telehealth services performed with dates of 
service occurring on or after the 152nd day after the end of the PHE 
will revert to pre-PHE rules and will no longer require modifier ``95'' 
to be appended to the claim, but the appropriate place of service (POS) 
indicator will need to be included on the claim to be processed for 
payment as Medicare telehealth claims in order to properly identify the 
place where the service was furnished. We further proposed that, for 
Medicare telehealth services furnished on or after the 152nd day after 
the end of the PHE, the POS indicators for Medicare telehealth will be:
     POS ``02''--is redefined as Telehealth Provided Other than 
in Patient's Home (Descriptor: The location where health services and 
health related services are provided or received, through 
telecommunication technology. Patient is not located in their home when 
receiving health services or health related services through 
telecommunication technology.); and
     POS ``10''--Telehealth Provided in Patient's Home 
(Descriptor: The location where health services and health related 
services are provided or received through telecommunication technology. 
Patient is located in their home (which is a location other than a 
hospital or other facility where the patient receives care in a private 
residence) when receiving health services or health related services 
through telecommunication technology.).
    We remind readers that we defined ``home'' in our CY 2022 PFS final 
rule (86 FR 65059) to include, as: ``both in general and for this 
purpose, a beneficiary's home can include temporary lodging, such as 
hotels and homeless shelters. We also clarified that for circumstances 
where the patient, for privacy or other personal reasons, chooses to 
travel a short distance from the exact home location during a 
telehealth service, the service is still considered to be furnished `in 
the home of an individual' for purposes of section 1834(m)(4)(C)(ii)(X) 
of the Act.''
    In our proposed rule, we discussed that, once the flexibilities for 
the geographic restrictions and the site of service waivers for 
Medicare telehealth services expire (on the 152nd day after the end of 
the PHE, per the CAA, 2022), POS ``02'' would once again be required 
for all Medicare telehealth claims (with the exception of certain 
Medicare telehealth for mental health services). In the proposed rule, 
we noted that the exceptions include claims for Medicare telehealth 
mental health telehealth services, clinical assessments for patients 
with ESRD that are receiving home dialysis, and Medicare telehealth 
treatment of an SUD or mental health services that are co-occurring 
mental health disorder with substance use treatment that are furnished 
to with the patient in their home (that is, the originating site is in 
a private residence and not a hospital or other facility setting), in 
which case POS ``10'' could be used by the billing practitioner. In our 
proposed rule, we further discussed that, on or after the 152nd day 
after the PHE has expired, payment for Medicare telehealth services 
using either of the Medicare telehealth POS codes would be made at the 
PFS facility payment rate, in accordance with established PFS policy 
outside the circumstances of the PHE. We proposed to align payment for 
those telehealth services described as taking place in the 
beneficiary's home, using POS ``10'' for Medicare telehealth, and those 
services not provided in a patient's home, using POS ``02'' for 
Medicare telehealth, to be made at the same facility payment amount. We 
believe that the facility payment amount best reflects the practice 
expenses, both direct and indirect, involved in furnishing services via 
telehealth (please see section II.B. of this final rule for further 
discussion regarding practice expense).
    We further proposed that, beginning January 1, 2023, a physician or 
other qualified health care practitioner billing for telehealth 
services furnished using audio-only communications technology shall 
append CPT modifier ``93'' (Synchronous Telemedicine Service Rendered 
Via Telephone or Other Real-Time Interactive Audio-Only 
Telecommunications System: Synchronous telemedicine service is defined 
as a real-time interaction between a physician or other qualified 
health care professional and a patient who is located away at a distant 
site from the physician or other qualified health care professional. 
The totality of the communication of information exchanged between the 
physician or other qualified health care professional and the patient 
during the course of the synchronous telemedicine service must be of an 
amount and nature that is sufficient to meet the key components and/or 
requirements of the same service when rendered via a face-to-face 
interaction) to Medicare telehealth claims (for those services for 
which the use of audio-only technology is permitted under Sec.  
410.78(a)(3)), to identify them as having been furnished using audio-
only technology. We noted that we have also instructed all relevant 
providers, including RHCs, FQHCs, and OTPs to append Medicare modifier 
``FQ'' (Medicare telehealth service was furnished using audio-only

[[Page 69466]]

communication technology) for allowable audio-only services furnished 
in those settings; however, consistent with our proposal for audio-only 
services furnished under the PFS, we also proposed to require all 
relevant providers, including RHCs, FQHCs, and OTPs to use modifier 
``93'' when billing for eligible mental health services furnished via 
audio-only telecommunications technology. We believe that using 
modifier ``93'', which is a CPT modifier, will simplify billing, as 
this modifier is used by payers outside of Medicare. Currently, these 
modifiers can only be applied to Medicare telehealth mental health 
services and those telehealth services for the treatment of a SUD or a 
co-occurring mental health disorder when the originating site is the 
beneficiary's home.
    Supervising practitioners continue to be required to append the 
``FR'' modifier on any applicable telehealth claim when they provide 
direct supervision for a service using virtual presence through real-
time, audio and video telecommunications technology.
    Comment: Some commenters expressed concern regarding our proposed 
approach to the use of modifiers for billing of Medicare telehealth 
services. One commenter noted that we had inadvertently overlooked the 
fact that after the transition period, facility-based providers would 
not be able to bill using the POS code fields, as the CMS-1450 (UB-04) 
institutional claim form does not permit use of POS code fields. The 
commenter noted that this may have been an oversight.
    Response: We thank commenters for offering feedback on technical 
issues associated with our proposed policies for use of modifiers that 
allow claims processing and billing for professional services under 
Part B, which includes Medicare telehealth services. We reiterate that 
151 days after the end of the PHE, Medicare telehealth services will 
once again be subject to the statutory requirements in section 1834(m) 
of the Act. As such, only physicians and the practitioners specified in 
section 1834(m)(4)(E) of the Act will be able to serve as distant site 
practitioners to furnish and bill for Medicare telehealth services, and 
those services would be billed on the professional, not the 
institutional, claim form. Thus, beginning on the 152nd day after the 
PHE ends, only certain types of practitioners will be permitted to 
furnish and bill for Medicare telehealth services, and none of those 
practitioners would be ``facility-based providers.''
    Comment: Many commenters requested that we continue to allow for 
services that would have been furnished in a non-facility setting 
outside of the circumstances of the PHE to be billed at the non-
facility rate for telehealth services following the end of the PHE. 
Commenters stated that they were concerned that reverting to the 
facility rate for telehealth services will lead practitioners to offer 
telehealth less frequently and inhibit access. According to these 
commenters, many patients in rural and underserved areas are now able 
to access mental health services, often for the first time. Many 
commenters emphasized their concerns that mental health services would 
be particularly impacted, as there is already high demand for these 
services and relatively low numbers of available practitioners.
    One commenter requested that we maintain payment at the non-
facility-based rate for telehealth services furnished in office 
settings through the end of 2023, stating that changing payment to the 
facility rate would result in a nearly 30 percent cut for some 
services, which they believed will harm access to telehealth services.
    Some commenters, including MedPAC, expressed concern that payment 
at the facility rate will create the unintended effects of shifting 
beneficiaries toward both higher intensity and volume of virtual care 
modalities that would be inappropriate for beneficiaries. In MedPAC's 
comment, they offered their March 2022 MedPAC Report to Congress 
(https://www.medpac.gov/wp-content/uploads/2022/03/Mar22_MedPAC_ReportToCongress_v2_SEC.pdf), which noted that Medicare 
spending can be sensitive to shifts in the site of care, and that the 
negative impact of the pandemic on E/M services may have been more 
significant in 2020 were it not for Medicare telehealth.
    Some commenters, including MedPAC, provided examples and 
explanations that raised questions about uncertainty of clinical 
benefit and possible overpayment for Medicare telehealth and offered 
evidence that many patients who used telehealth during the PHE would 
prefer in-person visits, once it is safe to do so.
    Response: We acknowledge the commenters' concerns. We note that 
there are many nuances to this issue, and we seek to minimize confusion 
and practitioner burden during the period immediately following the 
PHE. We are concerned about issues raised by commenters related to 
payment stability in the post-PHE period, as care delivery will 
potentially be transitioning between virtual, hybrid, and in-person 
models. As such, we are finalizing that we will continue to allow for 
payment be made for Medicare telehealth services at the place of 
service for telehealth services that ordinarily would have been paid 
under the PFS, if the services were furnished in-person, through the 
latter of the end of the of CY 2023 or the end of the calendar year in 
which the PHE ends. For those services furnished in a facility as an 
originating site, POS 02 may be used, and the corresponding facility 
fee can be billed, per pre-PHE policy, beginning the 152nd day after 
the end of the PHE.
    Comment: Some commenters expressed concern that our proposals to 
transition to the use of new modifiers would create confusion and 
administrative burden, without sufficient time to allow for the 
sufficient training education of clinical and administrative staff to 
implement new billing practices. Others supported immediate 
implementation.
    Response: We appreciate commenters' feedback. We believe that the 
use of these modifiers following the end of the PHE, when implemented, 
will enable practitioners to better report (and allow CMS to better 
understand) how they practice and when certain services are furnished 
via telehealth. We do not agree that these modifiers/codes would cause 
confusion; rather, they will provide clarity. Moreover, education 
regarding these modifiers/codes will be made available, as necessary.
    After consideration of public comments, we are finalizing our 
proposals, with some modifications regarding the use of telehealth 
modifiers/codes and the payment rates. Practitioners will continue to 
bill with modifier 95 along with the POS code corresponding to where 
the service would have been furnished in-person through the later of 
the end of the year in which the PHE ends or CY 2023. As stated 
earlier, for those services furnished in a facility as an originating 
site, POS 02 may be used, and the corresponding facility fee can be 
billed, per pre-PHE policy, beginning the 152nd day after the end of 
the PHE.
    Additionally, effective on and after January 1, 2023, CPT modifier 
``93'' can be appended to claim lines, as appropriate, for services 
furnished using audio-only communications technology in accordance with 
our regulation at Sec.  410.78(a)(3). All providers, including RHCs, 
FQHCs, and OTPs must append Medicare modifier ``FQ'' (Medicare 
telehealth service was furnished using audio-only communication 
technology) for allowable audio-only services furnished in those 
settings. However,

[[Page 69467]]

consistent with our proposal for audio-only services furnished under 
the PFS, we are also finalizing to require all providers including 
RHCs, FQHCs, and OTPs to use modifier ``93'' when billing for eligible 
mental health services furnished via audio-only telecommunications 
technology. Providers have the option to use the ``FQ'' or the 93'' 
modifiers or both where appropriate and true, since they are identical 
in meaning.
    Supervising practitioners continue to be required to append the 
``FR'' modifier on any applicable telehealth claim when they provide 
direct supervision for a service using virtual presence through real-
time, audio and video telecommunications technology.
    In response to the issues raised by commenters related to payment 
stability in the post-PHE period, we are reiterating that we are 
finalizing that, for Medicare telehealth services, we will continue to 
maintain payment at the POS had the service been furnished in-person, 
and this will allow payments to continue to be made at the non-
facility-based rate for Medicare telehealth services through the latter 
of the end of CY 2023 or the end of the calendar year in which the PHE 
ends.
2. Other Non-Face-to-Face Services Involving Communications Technology 
Under the PFS
a. Expiration of PHE Flexibilities for Direct Supervision Requirements
    Under Medicare Part B, certain types of services, including 
diagnostic tests, services incident to physicians' or practitioners' 
professional services, and other services, are required to be furnished 
under specific minimum levels of supervision by a physician or 
practitioner.
    For professional services furnished incident to the services of the 
billing physician or practitioner (see Sec.  410.26) and many 
diagnostic tests (see Sec.  410.32), direct supervision is required. 
Additionally, for pulmonary rehabilitation services (see Sec.  410.47) 
and for cardiac rehabilitation and intensive cardiac rehabilitation 
services (see Sec.  410.49), direct supervision of a physician is 
required (see also Sec.  410.27(a)(1)(iv)(D) for hospital outpatient 
services).Outside the circumstances of the PHE, direct supervision 
requires the immediate availability of the supervising physician or 
other practitioner, but the professional need not be present in the 
same room during the service. We have established this ``immediate 
availability'' requirement to mean in-person, physical, not virtual, 
availability (please see the April 6, 2020 IFC (85 FR 19245) and the CY 
2022 PFS final rule (86 FR 65062)).
    Through the March 31, 2020 COVID-19 IFC, we changed the definition 
of ``direct supervision'' during the PHE for COVID-19 (85 FR 19245 
through 19246) as it pertains to supervision of diagnostic tests, 
physicians' services, and some hospital outpatient services, to allow 
the supervising professional to be immediately available through 
virtual presence using real-time audio/video technology, instead of 
requiring their physical presence. In the CY 2021 PFS final rule (85 FR 
84538 through 84540), we finalized continuation of this policy through 
the later of the end of the calendar year in which the PHE for COVID-19 
ends or December 31, 2021. In the March 31, 2020 IFC (85 FR 19246) and 
in our CY 2022 PFS final rule (see 85 FR 65063), we also noted that the 
temporary exception to allow immediate availability for direct 
supervision through virtual presence facilitates the provision of 
telehealth services by clinical staff of physicians and other 
practitioners' incident to their own professional services. This is 
especially relevant for services such as physical therapy, occupational 
therapy, and speech language pathology services, since those 
practitioners can only bill Medicare for telehealth services under 
Medicare telehealth waivers that are effective only during the PHE for 
COVID-19 (based on the emergency waiver authority established in 
section 1135(b)(8) of the Act), and for 151 days after the final day of 
the PHE for COVID-19, as specified by provisions of the CAA, 2022. We 
noted that sections 1834(m)(4)(D) and (E) of the Act specify the types 
of clinicians who may furnish and bill for Medicare telehealth 
services. Outside of the PHE and the 151-day period after the PHE ends, 
such clinicians include only physicians as defined in section 1861(r) 
of the Act and practitioners described in section 1842(b)(18)(C) of the 
Act. We remind readers that after December 31 of the year in which the 
PHE ends, the pre-PHE rules for direct supervision at Sec.  
410.32(b)(3)(ii) would apply. As noted in the CY 2022 PFS final rule 
(86 FR 65062), this means the temporary exception to allow immediate 
availability for direct supervision through virtual presence, which 
facilitates the provision of telehealth services by clinical staff of 
physicians and other practitioners incident to their professional 
services, will no longer apply. As such, after the end of the calendar 
year in which the PHE ends, Medicare telehealth services can no longer 
be performed by clinical staff incident to the professional services of 
the billing physician or practitioner who directly supervises the 
service through their virtual presence.
    While we did not propose to make the temporary exception to allow 
immediate availability for direct supervision through virtual presence 
permanent, as with last year's rulemaking (86 FR 39149 through 50), we 
continue to solicit information on whether the flexibility to meet the 
immediate availability requirement for direct supervision through the 
use of real-time, audio/video technology should potentially be made 
permanent. We also solicited comment regarding the possibility of 
permanently allowing immediate availability for direct supervision 
through virtual presence using real-time, audio/video technology for 
only a subset of services, as we recognize that it may be inappropriate 
to allow direct supervision without physical presence for some services 
due to potential concerns over patient safety. As discussed in last 
year's final rule (86 FR 65063), and based on gaps in the currently 
available evidence, we are in need of more information as we consider 
whether to make permanent a temporary exception to our direct 
supervision policy.
    We received public comments on expiration of PHE flexibilities for 
direct supervision requirements. The following is a summary of the 
comments we received and our responses.
    Comment: Commenters offered a variety of perspectives and 
suggestions for possible ways that CMS could modify the direct 
supervision requirements. Many commenters that recommended a permanent 
change to direct supervision rules supported their feedback by raising 
issues such as health care workforce shortages and concern with 
clinician burnout that would possibly occur from implementing the pre-
PHE direct supervision requirements. Others noted that certain NPPs, 
such as PAs, and advanced practice nurse practitioners are authorized 
under state law statutory requirements in many states to practice 
independently under virtual supervision of a physician. Still others 
based their recommendations that we establish a permanent virtual 
direct supervision on a specialty-level or service-level analysis. For 
example, commenters identified a certain specialty or family of codes 
that would be typically low-risk for patient safety issues, and 
indicated that those specialties or services would be appropriate 
candidates for a permanent virtual direct supervision policy. Some

[[Page 69468]]

commenters mentioned that virtual direct supervision may also reduce 
the burden and overhead costs associated with enrolling their 
practitioners through multiple MAC jurisdictions.
    Response: We continue to gather information on this topic, and we 
appreciate the information provided by commenters. We remind readers 
that, as described earlier in this section, our current temporary 
policy to permit immediate availability for purposes of direct 
supervision through the virtual presence of the billing clinician was 
adopted to address the circumstances of the PHE for COVID-19. We 
believe allowing additional time to collect information and evidence 
for direct supervision through virtual presence will help us to better 
understand the potential circumstances in which this flexibility could 
be appropriate permanently, outside of the PHE for COVID-19. We realize 
that direct supervision through virtual presence is probably not 
something that we would have contemplated without our experience in 
implementing this policy during the PHE, and we hope to learn more 
about this in the near future. We also note that the Secretary renewed 
the PHE for the COVID-19 pandemic for a 90-day period beginning on 
October 13, 2022,\9\ which means that the PHE would expire on January 
11, 2023, absent any further action by the Secretary regarding the PHE 
for COVID-19. As such, we expect to continue to permit direct 
supervision through virtual presence through at least the end of CY 
2023 under our previously finalized policy which, as specified in Sec.  
410.32(a)(3)(ii), continues through the end of the calendar year in 
which the PHE ends. With that said, CMS will consider the comments 
received from the proposed rule for potential future PFS rulemaking.
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    \9\ https://aspr.hhs.gov/legal/PHE/Pages/covid19-13Oct2022.aspx.
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3. Telehealth Originating Site Facility Fee Update
    Section 1834(m)(2)(B) of the Act established the initial Medicare 
telehealth originating site facility fee for telehealth services 
furnished from October 1, 2001 through December 31, 2002, at $20.00, 
and specifies that for telehealth services furnished on or after 
January 1 of each subsequent calendar year, the telehealth originating 
site facility fee is increased by the percentage increase in the 
Medicare Economic Index (MEI) as defined in section 1842(i)(3) of the 
Act. The final MEI increase for CY 2023 is 3.8 percent and is based on 
the most recent historical percentage increase of the 2017-based MEI 
for the second quarter of 2022.
    Therefore, for CY 2023, the final payment amount for HCPCS code 
Q3014 (Telehealth originating site facility fee) is $28.64. The 
Medicare telehealth originating site facility fee and the MEI increase 
by the applicable time period are shown in Table 15.
[GRAPHIC] [TIFF OMITTED] TR18NO22.019


[[Page 69469]]



E. 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 the 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, and revised MP RVUs in CY 2010, CY 2015, and CY 2020. 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 identified a number of potentially misvalued 
codes each year using various identification screens, as discussed in 
section II.C. of this final rule, Potentially Misvalued Services under 
the PFS. 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 solicit 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. In the final rule 
with comment period for the subsequent year, we consider and responded 
to public comments received on the interim final values, and typically 
make any appropriate adjustments and finalize those values.
    In the CY 2015 PFS final rule with comment period (79 FR 67547), 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 the CY 2017 PFS proposed rule (81 FR 46162), the 
new process was applicable to all codes, except for new codes that 
describe truly new services. For CY 2017, we proposed new values in the 
CY 2017 PFS 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 for which we established interim final 
values in the CY 2016 PFS final rule with comment period (81 FR 80170), 
we reviewed the comments received during the 60-day public comment 
period following release of the CY 2016 PFS final rule with comment 
period (80 FR 70886), and re-proposed values for those codes in the CY 
2017 PFS proposed rule.
    We considered public comments received during the 60-day public 
comment period for the proposed rule before establishing final values 
in the CY 2017 PFS final rule. As part of our established process, we 
will 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.
    As part of our obligation to establish RVUs for the PFS, we 
thoroughly review and consider available information including 
recommendations and supporting information from the RUC, the Health 
Care Professionals Advisory Committee (HCPAC), public commenters, 
medical literature, Medicare claims data, comparative databases, 
comparison with other codes within the PFS, as well as consultation 
with other physicians and healthcare professionals within CMS and the 
Federal Government as part of our process for establishing valuations. 
Where we concur that the RUC's recommendations, or recommendations from 
other commenters, are reasonable and appropriate and are consistent 
with the time and intensity paradigm of physician work, we proposed 
those values as recommended. Additionally, we continually engage with 
interested parties, including the RUC, with regard to our approach for 
accurately valuing codes, and as we prioritize our obligation to value 
new, revised, and potentially misvalued codes. We continue to welcome 
feedback from all interested parties regarding valuation of services 
for consideration through our rulemaking process.
2. Methodology for Establishing Work RVUs
    For each code identified in this section, we conduct a review that 
includes 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 reviews of recommended work RVUs and time 
inputs generally include, but have not been limited to, a review of 
information provided by the RUC, the HCPAC, 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 
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 (75 FR 
73328 through 73329) 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.
    Components that we use 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 include the CPT codes that make up the bundled code 
and the inputs associated with those codes. We use the building block 
methodology to construct, or deconstruct, the work RVU for a CPT code 
based on component pieces of the code. 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 frequently utilize an incremental methodology in 
which we value a code based upon its incremental difference between 
another code and another family of codes. Section 1848(c)(1)(A) of the 
Act specifically defines the work component as the resources that 
reflect time and intensity 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

[[Page 69470]]

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 preservice time packages for 
services typically furnished in the facility setting (for example, 
preservice time packages reflecting the different combinations of 
straightforward or difficult procedure, and straightforward or 
difficult patient). Currently, there are three preservice time packages 
for services typically furnished in the nonfacility setting.
    We 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 had 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.
    The following paragraphs contain a general discussion of our 
approach to reviewing RUC recommendations and developing proposed 
values for specific codes. We also include a summary of interested 
party reactions to our approach when available. We noted in past 
rulemaking that many commenters and interested parties have expressed 
concerns over the years with our reviews of and updates to work RVUs 
based on changes in the best available information regarding the time 
resources involved in furnishing individual services. We have been 
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 use to update the RVUs is derived from their survey 
process. We are obligated under the statute to consider both time and 
intensity in establishing work RVUs for PFS services. As explained in 
the CY 2016 PFS final rule with comment period (80 FR 70933), we 
recognize that adjusting work RVUs for changes in time is not always a 
straightforward process, so we have applied various methodologies to 
identify several potential work values for individual codes.
    We have observed that for many codes reviewed by the RUC, 
recommended work RVUs have appeared to be incongruous with recommended 
assumptions regarding the resource costs in time. This has been the 
case for a significant portion of codes for which we 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 have started 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 have employed 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 block, 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 
have used the recommended values as a starting reference and then 
applied one of these several methodologies to account for the 
reductions in time that we believe were not otherwise reflected in the 
RUC-recommended value. If we believe that such changes in time are 
already accounted for in the RUC's 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 do not imply that the decrease in time as reflected in survey 
values should always 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, absent an obvious or explicitly stated 
rationale for why the relative intensity of a given procedure has 
increased, significant decreases in time should be reflected in 
decreases to work RVUs. If the RUC's 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 have generally used one of the 
aforementioned methodologies to identify potential work RVUs, including 
the methodologies intended to account for the changes in the resources 
involved in furnishing the procedure.
    Several interested parties, including the RUC, have expressed 
general objections to our use of these methodologies to adjust for 
reductions in time, suggesting that our adjustments to the RUC-
recommended work RVUs are inappropriate. Other interested parties have 
expressed general concerns with our refinements to RUC-recommended 
values. In the CY 2017 PFS proposed rule (81 FR 46162), we requested 
comments regarding potential alternatives to making adjustments that 
would recognize overall estimates of work in the context of changes in 
the resource of time for particular services; however, we did not 
receive any specific potential alternatives. In the CY 2017 PFS final 
rule (81 FR 80272 through 80277), we responded in detail to several 
comments that we received regarding our approach to RUC-recommended 
work times and RVUs. As described earlier in this section, crosswalks 
to key reference or similar codes are one of the many methodological 
approaches we have employed to identify potential values that reconcile 
the RUC-recommend work RVUs with the recommended time values when the 
RUC-recommended

[[Page 69471]]

work RVUs did not appear to account for significant changes in time.
    We received several comments regarding our methodologies for work 
valuation in response to the CY 2023 PFS proposed rule and those 
comments are summarized below.
    Comment: Several commenters disagreed with our reference to older 
work time sources, and stated that their use led to the proposal of 
work RVUs based on flawed assumptions. Commenters stated that codes 
with ``CMS/Other'' or ``Harvard'' work time sources, used in the 
original valuation of certain older services, were not surveyed, and 
therefore, were not resource-based. Commenters also stated that it was 
invalid to draw comparisons between the current work times and work 
RVUs of these services to the newly surveyed work time and work RVUs as 
recommended by the RUC.
    Response: We agree that it is important to use the recent data 
available regarding work times, and we note that when many years have 
passed since work time has been measured, significant discrepancies can 
occur. However, we also believe that our operating assumption regarding 
the validity of the existing values as a point of comparison is 
critical to the integrity of the relative value system as currently 
constructed. The work times currently associated with codes play a very 
important role in PFS ratesetting, both as points of comparison in 
establishing work RVUs and in the allocation of indirect PE RVUs by 
specialty. If we were to operate under the assumption that previously 
recommended work times had been routinely overestimated, this would 
undermine the relativity of the work RVUs on the PFS in general, in 
light of the fact that codes are often valued based on comparisons to 
other codes with similar work times. Such an assumption would also 
undermine the validity of the allocation of indirect PE RVUs to 
physician specialties across the PFS.
    Instead, we believe that it is crucial that the code valuation 
process take place with the understanding that the existing work times 
that have been used in PFS ratesetting are accurate. We recognize that 
adjusting work RVUs for changes in time is not always a straightforward 
process and that the intensity associated with changes in time is not 
necessarily always linear, which is why we apply various methodologies 
to identify several potential work values for individual codes. 
However, we reiterate that we believe it would be irresponsible to 
ignore changes in time based on the best data available, and that we 
are statutorily obligated to consider both time and intensity in 
establishing work RVUs for PFS services. For additional information 
regarding the use of old work time values that were established many 
years ago and have not since been reviewed in our methodology, we refer 
readers to our discussion of the subject in the CY 2017 PFS final rule 
(81 FR 80273 through 80274).
    Comment: Several commenters disagreed with the use of time ratio 
methodologies for work valuation. Commenters stated that this use of 
time ratios is not a valid methodology for valuation of physician 
services. Commenters stated that treating all components of physician 
time (preservice, intraservice, postservice and post-operative visits) 
as having identical intensity is incorrect, and inconsistently applying 
it to only certain services under review creates inherent payment 
disparities in a payment system, which is based on relative valuation. 
Commenters stated that in many scenarios, CMS selects an arbitrary 
combination of inputs to apply rather than seeking a valid clinically 
relevant relationship that would preserve relativity. Commenters 
suggested that CMS determine the work valuation for each code based not 
only on surveyed work times, but also the intensity and complexity of 
the service and relativity to other similar services, rather than 
basing the work value entirely on time. Commenters recommended that CMS 
embrace the clinical input from practicing physicians when valid 
surveys were conducted and provide a clinical rationale when proposing 
crosswalks for valuation of services.
    Response: We disagree and continue to believe that the use of time 
ratios is one of several appropriate methods for identifying potential 
work RVUs for particular PFS services, particularly when the 
alternative values recommended by the RUC and other commenters do not 
account for survey 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. In accordance with the 
statute, we believe that changes in time and intensity must be 
accounted for when developing work RVUs. When our review of recommended 
values reveals that changes in time are not accounted for in a RUC-
recommended work RVU, the obligation to account for that change when 
establishing proposed and final work RVUs remains.
    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. We 
clarify again that we do not treat all components of physician time as 
having identical intensity. If we were to disregard intensity 
altogether, the work RVUs for all services would be developed based 
solely on time values and that is not the case, as indicated by the 
many services that share the same time values but have different work 
RVUs. For example, among the codes reviewed in this CY 2023 PFS final 
rule, CPT codes 22632 (Arthrodesis, posterior interbody technique, 
including laminectomy and/or discectomy to prepare interspace (other 
than for decompression), single interspace; each additional 
interspace), 63035 (Laminotomy (hemilaminectomy), with decompression of 
nerve root(s), including partial facetectomy, foraminotomy and/or 
excision of herniated intervertebral disc; each additional interspace, 
cervical or lumbar), 93655 (Intracardiac catheter ablation of a 
discrete mechanism of arrhythmia which is distinct from the primary 
ablated mechanism, including repeat diagnostic maneuvers, to treat a 
spontaneous or induced arrhythmia), and 99285 (Emergency department 
visit for the evaluation and management of a patient, which requires a 
medically appropriate history and/or examination and high level of 
medical decision making) all share the same intraservice and total work 
time of 60 minutes. However, these codes had very different proposed 
work RVUs of 5.22 and 3.86 and 5.50 and 4.00, respectively. These 
examples demonstrate that we do not value services purely based on work 
time; instead, we incorporate time as one of multiple different factors 
in our review process. Furthermore, we reiterate that we use time 
ratios to identify potentially appropriate 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. For more details on our methodology for developing work RVUs, we 
direct readers to the discussion CY 2017 PFS final rule (81 FR 80272 
through 80277).
    We also clarify for the commenters that our review process is not 
arbitrary in nature. Our reviews of recommended work RVUs and time 
inputs generally include, but have not been limited to, a review of 
information provided by the

[[Page 69472]]

RUC, the HCPAC, 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 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 (75 FR 73328 through 73329) for more 
information).
    With regard to the commenter's concerns regarding clinically 
relevant relationships, we emphasize that we continue to believe that 
the nature of the PFS relative value system is such that all services 
are appropriately subject to comparisons to one another. Although codes 
that describe clinically similar services are sometimes stronger 
comparator codes, we do not agree that codes must share the same site 
of service, patient population, or utilization level to serve as an 
appropriate crosswalk.
    Comment: Several commenters did not agree with CMS valuing codes 
based on work RVU increments. Commenters stated that this methodology 
for valuing codes inaccurately treats all components of the physician 
time as having identical intensity and would lead to incorrect work 
valuations. Commenters stated that CMS should carefully consider the 
clinical information justifying the changes in physician work intensity 
provided by the RUC and other interested parties.
    Response: We believe that using the incremental difference between 
the work RVUs of codes is a valid methodology for setting values, 
especially when valuing services within a family of revised codes where 
it is important to maintain appropriate intra-family relativity. 
Historically, we have frequently used an incremental methodology in 
which we value a code based upon the incremental work RVU difference 
between the code and another code or another family of codes. We note 
that the RUC has also used the same incremental methodology on occasion 
when it was unable to produce valid survey data for a service. We have 
no evidence to suggest that the use of an incremental difference 
between the work RVUs of codes conflicts with the statute's definition 
of the work component as the resources in time and intensity required 
in furnishing the service. We do consider clinical information 
associated with physician work intensity provided by the RUC and other 
interested parties as part of our review process, although we remind 
readers again that we do not believe that it is necessary for codes to 
share the same site of service, patient population, or utilization 
level in order to serve as an appropriate crosswalk.
    Comment: Several commenters stated that they were concerned about 
CMS' lack of consideration for compelling evidence that services have 
changed. Commenters stated that CMS appeared to dismiss the fact that 
services may change due to technological advances, changes in the 
patient population, shifts in the specialty of physicians providing 
services or changes in the physician work or intensity required to 
perform services. Commenters stated that CMS' failure to discuss 
compelling evidence does not reflect the long history of reviewing 
potentially misvalued codes, first through the statutorily mandated 5-
year review processes and more recently from continuous annual reviews. 
Commenters stated that CMS has discussed compelling evidence in 
rulemaking since the inception of the RBRVS and has informed public 
commenters to consider compelling evidence to identify potentially 
misvalued codes. Commenters requested that CMS address the compelling 
evidence submitted with the RUC recommendations when the agency does 
not accept the RUC's recommended work RVUs.
    Response: The concept of compelling evidence was developed by the 
RUC as part of its work RVU review process for individual codes. The 
RUC determines whether there is compelling evidence to justify an 
increase in valuation. The RUC's compelling evidence criteria include 
documented changes in physician work, an anomalous relationship between 
the code and multiple key reference services, evidence that technology 
has changed physician work, analysis of other data on time and effort 
measures, and evidence that incorrect assumptions were made in the 
previous valuation of the service. While we appreciate the submission 
of this additional information for review, we emphasize that the RUC 
developed the concept of compelling evidence for its own review 
process; an evaluation of ``compelling evidence,'' at least as 
conceptualized by the RUC, is not part of our review process, as our 
focus is the time and intensity of services, in accordance with the 
statute. With that said, we do consider changes in technology, patient 
population, and other compelling evidence criteria, as such evidence 
may affect the time and intensity of a service under review. For 
example, new technology may cause a service to become easier or more 
difficult to perform, with corresponding effects on the time and 
intensity of the service. However, we are under no obligation to adopt 
the same review process or compelling evidence criteria as the RUC. We 
instead focus on evaluating and addressing the time and intensity of 
services when reviewing potentially misvalued codes because section 
1848(c)(1)(A) of the Act specifically defines the work component as the 
resources that reflect time and intensity in furnishing the service.
    Comment: Several commenters raised the issue of the refinement 
panel which was last reformed in CY 2016. Commenters stated that the 
refinement panel was not obsolete and was not mutually exclusive with 
the change to include all proposed valuations in each year's proposed 
rule. Commenters stated that for 2 decades, the refinement panel 
process was considered by interested parties to be an appeals process 
and its elimination discontinued CMS' reliance on outside interested 
parties to provide accountability through a transparent appeals 
process. Commenters requested that CMS consider these issues and create 
an objective, transparent and consistently applied formal appeals 
process that would be open to any commenting organization.
    Response: We did not propose any changes to the refinement panel 
for CY 2023. As we stated in the CY 2016 PFS final rule (80 FR 70917 
and 70918), the refinement panel was established to assist us in 
reviewing the public comments on CPT codes with interim final work RVUs 
and in balancing the interests of the specialty societies who commented 
on the work RVUs with the budgetary and redistributive effects that 
could occur if we accepted extensive increases in work RVUs across a 
broad range of services. When developing the CY 2016 proposed rule, and 
continuing to the present, we did not believe that the refinement panel 
had generally served as the kind of ``appeals'' or reconsideration 
process that some interested parties envisioned in their comments. We 
also believe that the refinement panel was not achieving its intended 
purpose. Rather than providing us with additional information, balanced 
across specialty interests, to assist us in establishing work RVUs, the 
refinement panel

[[Page 69473]]

process generally served to rehash the issues raised and information 
already discussed at the RUC meetings and considered by CMS. In 
contrast to the prior process of establishing interim final values and 
using a refinement panel process that generally was not observed by 
members of the public, we continue to believe that the current process 
of proposing the majority of code values in a proposed rule, giving the 
public the opportunity to comment on those proposed values, and then 
finalizing those values in a final rule offers greater transparency and 
accountability.
    We also note that we did not finalize our proposal to eliminate the 
refinement panel completely in CY 2016. We retain the ability to 
convene refinement panels for codes with interim final values under 
circumstances where additional input provided by the panel is likely to 
add value as a supplement to notice and comment rulemaking. We also 
remind interested parties that we have established an annual process 
for the public nomination of potentially misvalued codes. This process, 
described in the CY 2012 PFS final rule (76 FR 73058), provides an 
annual means for those who believe that values for individual services 
are inaccurate and should be readdressed through notice and comment 
rulemaking to bring those codes to our attention.
    In response to comments, in the CY 2019 PFS final rule (83 FR 
59515), we clarified that terms ``reference services'', ``key reference 
services'', and ``crosswalks'' as described by the commenters are part 
of the RUC's process for code valuation. These are not terms that we 
created, and we do not agree that we necessarily must employ them in 
the identical fashion for the purposes of discussing our valuation of 
individual services that come up for review. However, in the interest 
of minimizing confusion and providing clear language to facilitate 
feedback from interested parties, we will seek to limit the use of the 
term, ``crosswalk,'' to those cases where we are making a comparison to 
a CPT code with the identical work RVU. We also occasionally make use 
of a ``bracket'' for code valuation. A ``bracket'' refers to when a 
work RVU falls between the values of two CPT codes, one at a higher 
work RVU and one at a lower work RVU.
    We look forward to continuing to engage with interested parties and 
commenters, including the RUC, as we prioritize our obligation to value 
new, revised, and potentially misvalued codes; and will continue to 
welcome feedback from all interested parties regarding valuation of 
services for consideration through our rulemaking process. We refer 
readers to the detailed discussion in this section of the valuation 
considered for specific codes. Table 16 contains a list of codes and 
descriptors for which we proposed work RVUs; this includes all codes 
for which we received RUC recommendations by February 10, 2022. The 
finalized work RVUs, work time and other payment information for all CY 
2023 payable codes are available on the CMS website under downloads for 
the CY 2023 PFS final rule at (https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html).
3. Methodology for 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, and 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's recommendations appropriately estimate the 
direct PE inputs (clinical labor, disposable supplies, and medical 
equipment) required for the typical service, are 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 the RUC-recommended direct PE inputs 
includes many refinements that are common across codes, as well as 
refinements that are specific to particular services. Table 18 details 
our refinements of the RUC's direct PE recommendations at the code-
specific level. In section II.B. of this final rule, Determination of 
PE RVUs, we address certain proposed refinements that would be common 
across codes. We also address the refinements to particular codes that 
we are finalizing in section II.B. of this rule. We note that for each 
refinement of the RUC-recommended direct PE inputs that we are 
finalizing, we indicate the potential impact on direct costs for that 
service. We also note that, on average, in any case where the impact on 
the direct cost for a particular refinement is $0.35 or less, the 
refinement has no impact on the PE RVUs. This calculation considers 
both the impact on the direct portion of the PE RVU, as well as the 
impact on the indirect allocator for the average service. We also noted 
that many of the refinements listed in Table 17 result in changes under 
the $0.35 threshold and would be unlikely to result in a change to the 
RVUs.
    We note that the final direct PE inputs for CY 2023 are displayed 
in the CY 2023 direct PE input files, available on the CMS website 
under the downloads for the CY 2023 PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. The inputs 
displayed there have been used in developing the final CY 2023 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

[[Page 69474]]

guidelines regarding appropriate equipment time inputs. We 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 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 
postoperative visits included in the global period for a service, the 
equipment time will 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 noted that we believe these same assumptions will 
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 will be available if the 
room is not being occupied by a particular patient. For additional 
information, we referred 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 is 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.
    We refer readers to section II.B. of this final rule, Determination 
of PE RVUs, for more information regarding the collaborative work of 
CMS and the RUC in improvements in standardizing clinical labor tasks.
(4) Recommended Items That Are Not Direct PE Inputs
    In some cases, the PE worksheets included with the RUC's 
recommendations include items that are not clinical labor, disposable 
supplies, or medical equipment or that cannot be allocated to 
individual services or patients. We 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. However, some recommendations include 
supply or equipment items that are not currently in the direct PE input 
database. In these cases, the RUC has historically recommended that a 
new item be created and has facilitated our pricing of that item by 
working with the specialty societies to provide us copies of sales 
invoices. For CY 2023, we received invoices for several new supply and 
equipment items. Tables 19 and 20 detail the invoices received for new 
and existing items in the direct PE database. As discussed in section 
II.B. of this final rule, Determination of Practice Expense Relative 
Value Units, we encourage interested parties 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 interested parties to submit invoices or other information to 
improve the accuracy of pricing for these items in the direct PE 
database by February 10th of the following year for consideration in 
future rulemaking, similar to our process for consideration of RUC 
recommendations.
    We remind interested parties 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 19 and 20 also include the number of 
invoices received and the number of nonfacility allowed services for 
procedures that use these equipment items. We provide the nonfacility 
allowed services so that interested parties 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 interested 
parties 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 interested parties 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 include 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 
final PE RVU for particular services, it facilitates our ability to 
incorporate a price once we obtain information and are able to do so.

[[Page 69475]]

(6) Service Period Clinical Labor Time in the Facility Setting
    Generally speaking, our direct PE inputs do not include clinical 
labor minutes assigned to the service period 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 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 list 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 1848(b)(4)(B) of the Act, 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 
2023 are available on the CMS website under downloads for the CY 2023 
PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. For more 
information regarding the history of the MPPR policy, we refer readers 
to the CY 2014 PFS final rule with comment period (78 FR 74261 through 
74263).
    Effective January 1, 2007, section 5102(b)(1) of the Deficit 
Reduction Act of 2005 (Pub. L. 109-171) (DRA) amended section 
1848(b)(4) of the Act to require that, for imaging services, if--(i) 
The technical component (TC) (including the TC portion of a global fee) 
of the service established for a year under the fee schedule without 
application of the geographic adjustment factor, exceeds (ii) The 
Medicare OPD fee schedule amount established under the prospective 
payment system (PPS) for hospital outpatient (HOPD) services under 
section 1833(t)(3)(D) of the Act for such service for such year, 
determined without regard to geographic adjustment under paragraph 
(t)(2)(D) of such section, the Secretary shall substitute the amount 
described in clause (ii), adjusted by the geographic adjustment factor 
[under the PFS], for the fee schedule amount for such TC for such year. 
As required by the section 1848(b)(4)(A) of the Act, for imaging 
services furnished on or after January 1, 2007, we cap the TC of the 
PFS payment amount for the year (prior to geographic adjustment) by the 
Outpatient Prospective Payment System (OPPS) payment amount for the 
service (prior to geographic adjustment). We then apply the PFS 
geographic adjustment to the capped payment amount. Section 
1848(b)(4)(B) of the Act defines imaging services as imaging and 
computer-assisted imaging services, including X-ray, ultrasound 
(including echocardiography), nuclear medicine (including PET), 
magnetic resonance imaging (MRI), computed tomography (CT), and 
fluoroscopy, but excluding diagnostic and screening mammography. For 
more information regarding the history of the cap on the TC of the PFS 
payment amount under the DRA (the ``OPPS cap''), we refer readers to 
the CY 2007 PFS final rule with comment period (71 FR 69659 through 
69662).
    For CY 2023, we identified new and revised codes to determine which 
services meet the definition of ``imaging services'' as defined above 
for purposes of this cap. Beginning for CY 2023, we proposed to include 
the following services on the list of codes to which the OPPS cap 
applies: CPT codes 0493T (Contact near-infrared spectroscopy studies of 
lower extremity wounds (e.g., for oxyhemoglobin measurement)), 0640T 
(Noncontact near-infrared spectroscopy studies of flap or wound (e.g., 
for measurement of deoxyhemoglobin, oxyhemoglobin, and ratio of tissue 
oxygenation [StO2]); image acquisition, interpretation and report, each 
flap or wound), 0641T (Noncontact near-infrared spectroscopy studies of 
flap or wound (e.g., for measurement of deoxyhemoglobin, oxyhemoglobin, 
and ratio of tissue oxygenation [StO2]); image acquisition only, each 
flap or wound), 0642T (Noncontact near-infrared spectroscopy studies of 
flap or wound (e.g., for measurement of deoxyhemoglobin, oxyhemoglobin, 
and ratio of tissue oxygenation [StO2]); interpretation and report 
only, each flap or wound), 0651T (Magnetically controlled capsule 
endoscopy, esophagus through stomach, including intraprocedural 
positioning of capsule, with interpretation and report), 0658T 
(Electrical impedance spectroscopy of 1 or more skin lesions for 
automated melanoma risk score), 0689T (Quantitative ultrasound tissue 
characterization (non-elastographic), including interpretation and 
report, obtained without diagnostic ultrasound examination of the same 
anatomy (e.g., organ, gland, tissue, target structure)), 0690T 
(Quantitative ultrasound tissue characterization (non-elastographic), 
including interpretation and report, obtained with diagnostic 
ultrasound examination of the same anatomy (e.g., organ, gland, tissue, 
target structure) (List separately in addition to code for primary 
procedure)), 0694T (3-dimensional volumetric imaging and reconstruction 
of breast or axillary lymph node tissue, each excised specimen, 3-
dimensional automatic specimen reorientation, interpretation and 
report, real-time intraoperative), 0700T (Molecular fluorescent imaging 
of suspicious nevus; first lesion), 0701T (Molecular fluorescent 
imaging of suspicious nevus; each additional lesion (List separately in 
addition to code for primary procedure)), and 76883 (Ultrasound, 
nerve(s) and accompanying structures throughout their entire anatomic 
course in one extremity, comprehensive, including real-time cine 
imaging with image documentation, per extremity). As CPT codes 0493T, 
0642T, 0651T, 0658T, and 76883 are not within the statutory scope of 
services to which the OPPS cap applies, as they cannot be split into 
professional and technical components, or they only describe the 
professional component (PC), we thus proposed to add these codes to the 
OPPS DRA caps list in error. Therefore, we are not finalizing our 
proposal to add them to the list of services to which the OPPS cap 
applies. We believe that the remaining codes, CPT codes 0640T, 0641T, 
0689T, 0690T, 0694T, 0700T, and 0701T, meet the definition of imaging 
services under section 1848(b)(4)(B of the Act, and thus, should be 
subject to the OPPS cap. Therefore, we are finalizing our proposal to 
add CPT codes 0640T, 0641T, 0689T, 0690T, 0694T, 0700T, and 0701T to 
the list of services to which the OPPS cap applies, and we are not 
finalizing our proposal to add CPT codes 0493T, 0642T, 0651T, 0658T, 
and 76883 to the OPPS cap list.
4. Valuation of Specific Codes for CY 2023
(1) Anterior Abdominal Hernia Repair (CPT Codes 15778, 49591, 49592, 
49593, 49594, 49595, 49596, 49613, 49614, 49615, 49616, 49617, 49618, 
49621, 49622, and 49623)
    In April 2021, the RUC reviewed an existing code that describes 
hernia repair, CPT code 49565 (Repair recurrent incisional or ventral 
hernia; reducible). CPT code 49565 was identified as being performed 
less than 50 percent of the time in the inpatient setting and being 
primarily performed in the outpatient setting. Interested

[[Page 69476]]

parties requested referral to CPT to update the code's descriptor. In 
response to the disparate site of service and request to update the 
code's descriptor, CPT created new codes with 000-day global periods to 
describe this type of service. The codes within this family are 
differentiated by 3 characteristics: whether the hernia is initial or 
recurrent, whether it is reducible or strangulated, and the total 
length of the hernia. CPT also created two new codes that describe 
parastomal hernia repair and an add-on code for removal of mesh.
    The RUC recommendations differentiate the post-operative periods 
for the codes within this family by whether there is a same-day 
discharge, overnight stay with a visit on the same date, or whether the 
patient is admitted to the hospital. We disagree with many of the RUC-
recommended work RVUs for the codes within this family that have a 
post-operative overnight stay built into their valuation. More 
specifically, we disagree with the RUC-recommended work RVUs for such 
codes because the RUC did not completely apply the 23-hour policy 
calculation (finalized in the CY 2011 PFS final rule (75 FR 73226)) in 
formulating its recommendations. Additionally, we disagree with the 
RUC-recommended work RVUs for the CPT codes in this family for which 
the RUC considered the patient to be admitted during the post-operative 
period because the RUC did not apply the 23-hour policy when 
formulating its recommendations.
    As we noted in the CY 2011 PFS final rule (75 FR 73226), the work 
RVUs for services that are typically performed in the outpatient 
setting and require a hospital stay of less than 24 hours may in some 
cases involve multiple overnight stays while the patient is still 
considered to be an outpatient for purposes of Medicare payment. 
Because such services are typically furnished in the outpatient 
setting, they should not be valued to include inpatient post-operative 
E/M visits. The level of discharge day management services included in 
the valuation of such services should similarly not reflect an 
inpatient discharge and should therefore be reduced. And finally, as 
discussed in CY 2011 rulemaking, the intraservice time from the 
inpatient level E/M postoperative visit should be reallocated to the 
immediate postservice time of the service. The 23-hour policy 
calculation, when fully applied to the calculation of a work RVU, is 
used to reduce the value of discharge day management services, remove 
the inpatient E/M visits, and reallocate the intraservice time to the 
immediate post-service period. See the CY 2011 PFS final rule (75 FR 
73226) for additional in-depth explanation of the 23-hour policy.
    For the codes with an overnight stay and an E/M visit on the same 
date built into their valuation, we believe the RUC only partially 
applied the 23-hour policy when it applied the policy to the immediate 
post service times, but not to the calculation of the work RVUs. 
Instead, we believe the 23-hour policy should be fully applied to the 
codes in this family that describe outpatient services for which there 
is an overnight stay during the post-operative period, regardless of 
the number of nights that a patient stays in the hospital. The services 
to which the 23-hour policy is usually applied would typically involve 
a patient stay in a hospital for less than 24 hours, which often means 
the patient may stay overnight in the hospital. On occasion, the 
patient may stay in the hospital longer than a single night; however, 
in both cases (one night or more than one night), the patient is 
considered to be a hospital outpatient, not an inpatient, for Medicare 
purposes. In short, we do not believe that the work that is typically 
associated with an inpatient service should be included in the work 
RVUs for the outpatient services to which the 23-hour policy applies.
    The RUC recommended a work RVU of 8.0 for CPT code 15778 
(Implantation of absorbable mesh or other prosthesis for delayed 
closure of defect(s) (ie, external genitalia, perineum, abdominal wall) 
due to soft tissue infection or trauma). CPT code 15778 was surveyed 
with having one subsequent hospital visit, CPT code 99232 (subsequent 
hospital care/day 25 minutes) and 25 minutes of immediate post service 
time. For purposes of calculating the recommended work RVU of 8.0, the 
RUC considered CPT code 15778 to describe an inpatient service, while 
we consider CPT code 15778 to describe an outpatient service for 
purposes of Medicare billing. As noted above, we do not believe that 
work that is typically associated with an inpatient service should be 
included in the work RVUs for the outpatient services to which the 23-
hour policy applies. Therefore, the valuation for this code should not 
include inpatient work in the post-operative period. See the CY 2022 
PFS final rule (86 FR 65090) for further discussion on the 23-hour 
policy as it relates to outpatient billing. We believe the 23-hour 
policy should be fully applied to CPT code 15778, and we disagree with 
the RUC-recommended work RVU of 8.0.
    In accordance with the 23-hour policy valuation methodology we 
established in the CY 2011 PFS final rule, we instead proposed a work 
RVU of 7.05 for CPT code 15778 and a reallocation of the time 
associated with the intra-service portion of the inpatient hospital 
visit to the immediate postservice time of CPT code 15778.
    The steps for the 23-hour policy calculation are as follows:
     Step (1): CPT code 15778 does not have a hospital 
discharge day management service; therefore, we will skip this step*.
     Step (2): 8.0-1.39** = 6.61.
     Step (3): 6.61 + (20 minutes x 0.0224)*** = 7.05 RVUs.
    *Value associated with \1/2\ hospital discharge day management 
service
    **Value associated with an inpatient hospital visit, CPT code 
99232.
    ***Value associated with the reallocated intraservice time 
multiplied by the postservice intensity of the 23-hour stay code.
    The following CPT codes have a post-operative period that is 
considered an overnight stay with a visit on the same date: CPT codes 
49592 (Repair of anterior abdominal hernia(s) (ie, epigastric, 
incisional, ventral, umbilical, spigelian), any approach (ie, open, 
laparoscopic, robotic), initial, including placement of mesh or other 
prosthesis, when performed, total length of defect(s); less than 3 cm, 
incarcerated or strangulated), 49593 (Repair of anterior abdominal 
hernia(s) (ie, epigastric, incisional, ventral, umbilical, spigelian), 
any approach (ie, open, laparoscopic, robotic), initial, including 
placement of mesh or other prosthesis, when performed, total length of 
defect(s); 3 cm to 10 cm, reducible), 49594 (Repair of anterior 
abdominal hernia(s) (ie, epigastric, incisional, ventral, umbilical, 
spigelian), any approach (ie, open, laparoscopic, robotic), initial, 
including placement of mesh or other prosthesis, when performed, total 
length of defect(s); 3 cm to 10 cm, incarcerated or strangulated), 
49595 (Repair of anterior abdominal hernia(s) (ie, epigastric, 
incisional, ventral, umbilical, spigelian), any approach (ie, open, 
laparoscopic, robotic), initial, including placement of mesh or other 
prosthesis, when performed, total length of defect(s); greater than 10 
cm, reducible), 49614 (Repair of anterior abdominal hernia(s) (ie, 
epigastric, incisional, ventral, umbilical, spigelian), any approach 
(ie, open, laparoscopic, robotic), recurrent, including placement of 
mesh or other prosthesis, when performed, total length of defect(s); 
less than 3 cm, incarcerated or strangulated), and 49615 (Repair of 
anterior abdominal hernia(s) (ie,

[[Page 69477]]

epigastric, incisional, ventral, umbilical, spigelian), any approach 
(ie, open, laparoscopic, robotic), recurrent, including placement of 
mesh or other prosthesis, when performed, total length of defect(s); 3 
cm to 10 cm, reducible). The RUC recommended a work RVU of 9.0 for CPT 
code 49592, 10.80 for CPT code 49593, 14.0 for CPT code 495944, 14.88 
for CPT code 49595, 10.79 for CPT code 49614, and 12.0 for CPT code 
496159. CPT codes 49592, 495933, 49614, and 49615 were surveyed with 
one subsequent inpatient hospital visit at a level of CPT code 99231 
(subsequent hospital care/day 15 minutes). The RUC applied the 10 
minutes of intraservice time from CPT code 99231 to the immediate 
postservice time of these codes, resulting in a total immediate 
postservice time of 30 minutes for these codes. CPT codes 49594 and 
49595 were surveyed with a subsequent inpatient hospital visit at a 
level of CPT code 99232. The RUC applied the 20 minutes of intraservice 
time from CPT code 99232 to the immediate postservice time of both 
codes, resulting in a total immediate postservice time of 40 minutes.
    Much like our concerns regarding the RUC-recommended work RVU for 
CPT code 15778, we do not believe that the RUC fully applied the 23-
hour policy calculation when calculating the work RVUs for these codes 
and we disagree with the RUC-recommended RVUs. While the RUC removed 
the 99231 and 99232 inpatient visits included in the post-operative 
period for these codes, the RUC did not subtract the values of these 
visits from the work RVUs before making their work RVU recommendations. 
In the CY 2011 PFS final rule (75 FR 73226), we stated that we do not 
believe that the post-procedure hospital visits for outpatient services 
should be at the inpatient level since the typical case is an 
outpatient who would be ready to be discharged from the hospital in 23 
hours or less. However, we agree with the RUC that the intra-service 
time of the inpatient hospital visit may be included in the valuation 
for 23-hour stay codes. Therefore, we believe that step 2 of the 23-
hour hour policy calculation, which involves deducting the RVUs of the 
inpatient hospital visits from the starting work RVU value and 
subsequently reallocating the time associated with the intra-service 
portion of the inpatient hospital visits to the immediate postservice 
time of the 23-hour stay code, should be fully applied when calculating 
the work RVUs for CPT codes 49592, 49593, 49594, 49595, 49614, and 
49615.
    Using the 23-hour policy calculation described above and in the CY 
2011 PFS final rule, we proposed work RVUs of 8.46 for CPT code 49592, 
10.26 for CPT code 49593, 13.46 for CPT code 49594, 13.94 for CPT code 
49595, 10.25 for CPT code 49614, and 11.46 for CPT code 49615.
    The following CPT codes have a post-operative period that the RUC 
considers to be admitted to a hospital: CPT code 49596 (Repair of 
anterior abdominal hernia(s) (ie, epigastric, incisional, ventral, 
umbilical, spigelian), any approach (ie, open, laparoscopic, robotic), 
initial, including placement of mesh or other prosthesis, when 
performed, total length of defect(s); greater than 10 cm, incarcerated 
or strangulated), 49616 (Repair of anterior abdominal hernia(s) (ie, 
epigastric, incisional, ventral, umbilical, spigelian), any approach 
(ie, open, laparoscopic, robotic), recurrent, including placement of 
mesh or other prosthesis, when performed, total length of defect(s); 3 
cm to 10 cm, incarcerated or strangulated), 49617(Repair of anterior 
abdominal hernia(s) (ie, epigastric, incisional, ventral, umbilical, 
spigelian), any approach (ie, open, laparoscopic, robotic), recurrent, 
including placement of mesh or other prosthesis, when performed, total 
length of defect(s); greater than 10 cm, reducible), 49618 (Repair of 
anterior abdominal hernia(s) (ie, epigastric, incisional, ventral, 
umbilical, spigelian), any approach (ie, open, laparoscopic, robotic), 
recurrent, including placement of mesh or other prosthesis, when 
performed, total length of defect(s); greater than 10 cm, incarcerated 
or strangulated), 49621 (Repair of parastomal hernia, any approach (ie, 
open, laparoscopic, robotic), initial or recurrent, including placement 
of mesh or other prosthesis, when performed; reducible), and 49622 
(Repair of parastomal hernia, any approach (ie, open, laparoscopic, 
robotic), initial or recurrent, including placement of mesh or other 
prosthesis, when performed; incarcerated or strangulated). The RUC 
recommended a work RVU of 18.67 for CPT code 49596, 15.55 RVUs for CPT 
code 49616, 16.03 RVUs for CPT code 49617, 22.67 RVUs for CPT code 
49618, 13.70 RVUs for CPT code 49621, and 17.06 RVUs for CPT code 
49622. CPT codes 49596 and 496182 were surveyed and recommended with 
one subsequent inpatient hospital visit at a level of CPT code 99233 
(subsequent hospital care/day 35 minutes). The RUC recommendations 
include an immediate postservice time of 25 minutes for CPT code 49596 
and 30 minutes for CPT code 49618. CPT codes 49616, 49617, and 49622 
were surveyed and recommended with one subsequent inpatient hospital 
visit at a level of CPT code 99232. The RUC recommendations include an 
immediate postservice time of 25 minutes for 49616, 28 minutes for CPT 
code 49617, and 25 minutes for CPT code 49622. CPT code 49621 was 
surveyed and recommended with one subsequent inpatient hospital visit 
at a level of CPT code 99231 and an immediate postservice time of 25 
minutes.
    For purposes of calculating the recommended work RVUs, the RUC 
considered these CPT codes to describe an admitted inpatient service, 
while we consider the CPT codes to describe outpatient services for 
purposes of billing. Therefore, we believe that inpatient work in the 
post-operative period should not be included in the valuation. We 
believe the 23-hour policy should be applied to these codes. Using the 
23-hour policy calculation described above and in the CY 2011 PFS final 
rule, we proposed a work RVU of 18.67 for CPT code 49596, 15.55 RVUs 
for CPT code 49616, 16.03 RVUs for CPT code 49617, 22.67 RVUs for CPT 
code 49618, 13.70 RVUs for CPT code 49621, and 17.06 RVUs for CPT code 
49622. We are also proposing revised immediate postservice times for 
the reallocation of the time associated with the intraservice portion 
of the inpatient hospital visit. We proposed immediate post service 
times of 40 minutes for CPT code 49596, 35 minutes for CPT code 49616, 
38 minutes for CPT code 49617, 45 minutes for CPT code 49618, 30 
minutes for CPT code 49621, and 35 minutes for CPT code 49622.
    The following CPT codes have a post-operative period that the RUC 
considers to be a same day discharge: CPT code 49591 (Repair of 
anterior abdominal hernia(s) (ie, epigastric, incisional, ventral, 
umbilical, spigelian), any approach (ie, open, laparoscopic, robotic), 
initial, including placement of mesh or other prosthesis, when 
performed, total length of defect(s); less than 3 cm, reducible) and 
49613 (Repair of anterior abdominal hernia(s) (ie, epigastric, 
incisional, ventral, umbilical, spigelian), any approach (ie, open, 
laparoscopic, robotic), recurrent, including placement of mesh or other 
prosthesis, when performed, total length of defect(s); less than 3 cm, 
reducible). The RUC-recommended a work RVU of 6.27 for CPT code 49591 
and 7.75 for CPT code 49613. We disagree with the RUC-recommended RVU 
for CPT code 495911 because it falls above the median value for codes 
with similar

[[Page 69478]]

times. We proposed a work RVU of 5.96 RVUs based on the intraservice 
time ratio, which is the ratio of 90 minutes of intraservice time of a 
current hernia repair code--CPT code 49560 (Repair initial incisional 
or ventral hernia; reducible) and the 45 minutes of intraservice time 
for CPT code 49591. The proposed work RVU of 5.96 is also supported by 
reference CPT code 93453 (Combined right and left heart catheterization 
including intraprocedural injection(s) for left ventriculography, 
imaging supervision and interpretation, when performed). CPT code 93453 
has a work RVU of 5.99, the same intraservice time as CPT code 49591(45 
minutes), and a slightly higher total time of 113 minutes.
    For CPT code 49613, we disagree with the RUC- recommended work RVU 
of 7.75, as it is above the median range compared to codes with similar 
times. We proposed a work RVU of 7.42 RVUs for CPT code 49613 based off 
of the intraservice time ratio of 100 minutes of intraservice time for 
a current hernia repair code--CPT code 49565 (Repair recurrent 
incisional or ventral hernia; reducible), compared to the 60 minutes of 
intraservice time for CPT code 49613. The proposed work RVU of 7.42 is 
also supported by reference CPT code 52353 (Cystourethroscopy, with 
ureteroscopy and/or pyeloscopy; with lithotripsy (ureteral 
catheterization is included)). CPT code 52353 has a work RVU of 7.50 
with the same intraservice time of 60 minutes and a very similar total 
time of 133 minutes.
    CPT code 49623 (Removal of total or near-total non-infected mesh or 
other prosthesis at the time of initial or recurrent anterior abdominal 
hernia repair or parastomal hernia repair, any approach (ie, open, 
laparoscopic, robotic)) is an add-on code. The RUC recommended a work 
RVU of 5.0 for CPT code 49623. The RUC recommendation is higher than 
the work RVUs for many other CPT add-on codes with similar times. We 
proposed a work RVU of 2.61 RVUs for CPT code 49623, based on the 
reverse building block methodology. The proposed work RVU of 2.61 is 
also supported by reference CPT code 15774 (Grafting of autologous fat 
harvested by liposuction technique to face, eyelids, mouth, neck, ears, 
orbits, genitalia, hands, and/or feet; each additional 25 cc injectate, 
or part thereof (List separately in addition to code for primary 
procedure)), which has a work RVU of 2.50 and the same total time of 45 
minutes.
    We reviewed the RUC-recommended direct PE inputs for all of the 
codes within this family. We disagree with the RUC's recommendations of 
66 total minutes of clinical staff time for CPT codes 49591 and 49613, 
60 total minutes of clinical staff time for CPT codes 49592, 49593, 
49594, 49595, 49596, 49614, 49615, 49616, 49617, 49618, 49621, and 
49622, and 20 total minutes of clinical staff time for CPT code 15778. 
In the CY 2023 PFS proposed rule, we noted that the RUC recommended 
090-day pre-service times for all of these codes despite surveying all 
of the services as 000-day services. In the CY 2022 PFS final rule (86 
FR 65090), we stated we continue to believe that setting and 
maintaining clinical labor time and valuation standards provides 
greater consistency among codes that share clinical labor tasks and 
could improve relativity of values among codes. Therefore, we believe 
that the standard clinical labor packages that are in accordance with 
the surveyed global period continue to be the most appropriate for 
purposes of clinical labor valuation.
    The RUC recommendations for CPT codes 49591 and 49613, and CPT 
codes 49592, 49593, 49594, 49595, 49596, 49614, 49615, 49616, 49617, 
49618, 49621, and 49622, include the standard for 090-day preservice 
times for clinical labor activities, which is 60 minutes. For 49591 and 
49613 in particular, the RUC also recommended an additional 6 minutes 
in the post service period to conduct patient communications. We 
disagree with the RUC-recommended 090-day times as these CPT codes were 
surveyed by the RUC as 000-day services and should have times 
consistent with 000- day services. Therefore, we proposed the standard 
clinical labor times for a 000-day extensive package for a total pre-
service clinical staff time of 30 minutes for CPT codes 49591 through 
49622 with an additional standard 3 minutes of post-service patient 
communications for 49591 and 49613. CPT code 49623 is an add-on code 
and does not have RUC-recommended direct PE inputs.
    For CPT code 15778, the RUC recommendation is 20 minutes of 
clinical staff activities, which is standard for an emergent procedure 
package. We do not agree that the service described by CPT code 15778 
should be considered an emergent procedure. Therefore, we proposed the 
minimal clinical staff package minus pre-service education for CPT code 
15778, for a total of 12 clinical staff time minutes.
    Comment: We received public comments for this code family that did 
not support our proposed RVUs. Commenters stated that they do not agree 
with our ``systemic and formulaic'' reduction in work RVUs by the use 
of the Reverse Building Block (RBB) methodology. The commenters also 
stated that our use of the RBB in the context of the 23-hour policy is 
duplicative and results in inappropriately low valuations, in contrast 
to their preferred method of magnitude estimation.
    Response: We believe that there are multiple appropriate 
methodologies for calculating work RVUs, including the RBB method, time 
ratios, increments, and survey data. We finalized in the CY 2011 PFS 
final rule (75 FR 73328 through 73329), the RBB formula for applying 
the 23-hour policy to the work RVUs and the times of the outpatient 
service and the same-day E/M codes. We do not believe that it is 
duplicative to apply the full 23-hour policy to CPT codes when the RUC 
recommendations do not account for the appropriate reduction in work 
RVUs; this is relevant for some of the codes in this family as well as 
the Intracranial Laser Interstitial Thermal Therapy (LITT) family (CPT 
Codes 61736 and 61737) discussed in the CY 2022 PFS final rule (86 FR 
65090). We continue to believe the entire 23-hour policy calculation, 
as finalized in the CY 2011 PFS final rule, should be completely and 
consistently applied where applicable.
    Comment: Commenters noted several concerns regarding the 
application of the 23-hour policy to this code family. Commenters 
stated that they disagree with the additional application of the 23-
hour policy to the CPT codes that the RUC has considered as overnight 
with a visit on the same date because they believe that this has 
already been accounted for during the survey process magnitude 
estimation. Commenters noted that they do not believe that the 23-hour 
policy should be applied to the codes that the RUC has considered as 
admitted because the patient will likely become an inpatient. 
Additionally, the commenters expressed concern that we have added CPT 
codes 49596, 49616, 49617, 49618, 49621, and 49622 to the Hospital 
Outpatient Prospective Payment System's Inpatient Only List and the 
volume being reallocated to the new CPT codes are from inpatient 
predecessor codes, CPT codes 49561 and 49566, which is contradictory. 
One commenter noted that the post-operative care will be occurring on 
the same day as the service and they believe that we did not account 
for this. Commenters also noted concern about contradictory policies 
regarding the newly revised E/M CPT codes, 99232, 99233, 99238, and 
99239, which they noted now represents the same physician work whether 
inpatient or outpatient. Commenters opined that the revision to the E/M

[[Page 69479]]

codes renders the 23-hour policy invalid. One commenter also expressed 
concern about our assertion that the 23-hour policy can encompass 
scenarios where the patient stays multiple overnights in the hospital, 
as this is contradictory to our ``Two-Midnight rule'' regarding 
inpatient versus outpatient status.
    Response: As stated previously, we believe that it is not 
duplicative to apply the full 23-hour policy calculation to the CPT 
codes that the RUC has considered as overnight with a visit on the same 
date. It is not evident from the RUC recommendations provided to us 
that the final work RVU was appropriately reduced (per the CY 2011 PFS 
final rule formula) consistent with the second step of the 23-hour 
calculation. Therefore, we believe the entire calculation should be 
applied to the CPT codes that the RUC has considered as overnight with 
a visit on the same date. We acknowledge that we proposed to add the 
CPT codes that the RUC has considered as admitted to the Hospital 
Outpatient Prospective Payment System's Inpatient Only List for 2023. 
However, we believe that doing so is not inconsistent with our 
proposals for this family. The RUC recommendations include a request to 
treat these CPT codes as 000-day global services. As such, regardless 
of the inpatient status of the patients, we continue to believe that 
000-day global service code families allow for separately billable 
post-operative E/M visits. Therefore, we believe it is still 
appropriate to subtract the value of the post-operative E/M visit that 
the RUC recommended as bundled into the valuations of the codes from 
the valuation of the codes. We also acknowledge that the RUC 
recommendations include the post-operative work occurring on the same 
day of the service. In light of that, we intend to reallocate the 
intraservice time from the removed post-operative E/M visit to the 
immediate post-service time of the service, as proposed. We believe 
that the proposed revisions for CPT codes 99221-99223 and 99231-99233 
are not inconsistent with our 23-hour policy as it applies to this code 
family; the RUC recommendations referenced in this rule (from April 
2021) explicitly identify many of the codes in this family as being 
subject to our 23-hour policy. Consistent with discussions in the CY 
2011 and CY 2022 PFS final rules cited above, we agree with the RUC 
that these codes are subject to the 23-hour policy, and we believe it 
is appropriate to fully apply the 23-hour policy to several of the 
codes within this family. We again note that the RUC recommendations 
request this family be 000-day global services, as such, this allows 
for separately billable E/M visits regardless of the patient's 
admission status.
    We note that we also discussed 000-day global services and 
separately billable E/M visits in the CY 2022 PFS final rule relative 
to CPT codes 21315 and 21320 (86 FR 65074). We note that we acknowledge 
commenter's concerns regarding policy implications as a result of 
adopting the E/M inpatient/observation revisions and will take that 
into consideration for future rulemaking. Also consistent with the CY 
2011 and CY 2022 final rules, we disagree with the commenter's concerns 
regarding multiple overnights and the application of the 23-hour 
policy. We stated in the CY 2022 final rule cited above that the 23-
hour policy can encompass several scenarios, including multiple 
overnight stays (87 FR 45860). We did not propose any changes to the 
previously finalized 23-hour policy nor a policy regarding ``Two-
Midnights''. Therefore, we believe it is still consistent to fully 
apply the 23-hour policy to the codes within this family that the RUC 
considers overnight with a visit on the same date and admitted.
    Comment: One commenter stated that they have concerns with our CY 
2011 PFS final rule policy (75 FR 73226) to reallocate the intraservice 
time of the inpatient level E/M postoperative visit to the immediate 
postservice time of the service. The commenter noted that the E/M 
services furnished post operatively are separate and distinct from the 
main surgical procedure and there is no difference in work to provide a 
separate E/M service furnished to a postoperative patient by the 
surgeon compared to another provider. Additionally, the commenter 
stated that we have not provided a rationale or evidence for this 
policy and the components of it, such as the intraservice vs. total 
time and the chosen intensity. The commenter also noted that this 
policy of reallocating the intraservice time from the inpatient level 
E/M postoperative visit to the immediate postservice time of the 
service is discriminatory to surgeons and the 23-hour policy overall is 
flawed and not in line with statute.
    Response: We acknowledge that some commenters had concerns 
regarding various aspects of our 23-hour policy and CMS's full 
application of the policy to the CPT codes in this family. We refer 
readers to our discussion regarding the policy and its application in 
the CY 2011 and CY 2022 PFS final rules, cited above. Since we did not 
propose any changes to our 23-hour policy, its application or 
calculation, we are not finalizing any changes to the policy for CY 
2023.
    Comment: Commenters disagreed with our proposed valuation 
methodologies for several specific codes within the family. For CPT 
codes 49591 and 49613, commenters disagreed with our use of the 
intraservice time ratio as a valuation methodology. Commenters noted 
that using ratios treats all components of physician time as having 
identical intensities. Commenters also noted that we did not adequately 
account for the bundled work of the placement of mesh, that previously 
was reported separately. Commenters also disagreed with our chosen 
supporting reference codes, as they noted their clinical nature and 
intensity is not appropriate for purposes of comparison. For CPT code 
49623, commenters disagreed with our use of the RBB methodology as the 
service is currently not described by an existing CPT code and is 
instead reported using an unlisted code or with modifier -22.
    Response: We continue to believe that intraservice time ratios are 
a valid and appropriate tool for determining work RVUs. 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. In accordance with the statute, we 
believe that changes in time and intensity must be accounted for when 
developing work RVUs. When our review of recommended values reveals 
that changes in the resource of time are not accounted for in a RUC-
recommended RVU, the obligation to account for that change when 
establishing the proposed and final work RVUs remains. For more details 
on our methodology for developing work RVUs, we direct readers to the 
discussion on time ratios as discussed above in this Valuation of 
Specific Codes section.
    For CPT codes 49591 and 49613, we believe that the RUC recommended 
work RVUs are overvalued compared to similar codes with similar 
intraservice times. We also do not believe that our supporting 
reference codes must have similar clinical characteristics for purposes 
of comparison due to the inherent relativity of the PFS. Also, for CPT 
code 49591, we found multiple other supporting reference codes that 
have similar and even lower intraservice and total times, but RVUs much 
lower than the RUC recommended value for this code. For example, CPT 
code 33289 (Transcatheter implantation of wireless pulmonary artery 
pressure sensor for long-term hemodynamic monitoring, including 
deployment and calibration of

[[Page 69480]]

the sensor, right heart catheterization, selective pulmonary 
catheterization, radiological supervision and interpretation, and 
pulmonary artery angiography, when performed) was reviewed by the RUC 
in 2018. This CPT code has 40 minutes of intraservice time, 111 minutes 
of total time, a work RVU of 6.0 and a nearly identical intensity of 
0.115 as compared to the RUC derived intensity of 0.113 for their 
recommended work RVU value for this code. Therefore, we believe a work 
RVU of 5.96 for CPT code 49591 is an appropriate valuation based on CPT 
codes with similar times and intensities. For CPT code 49613, we 
disagree that our supporting reference code (CPT code 52353) is 
inappropriate for purposes of comparison. In addition to the similar 
times, it also has an intensity of 0.101 that is very close to the RUC 
derived intensity of 0.105 for their recommendation for this code. 
Therefore, we believe a work RVU of 7.42 for CPT code 49613 is an 
appropriate valuation based on CPT codes with similar times and 
intensities.
    For CPT code 49623, we disagree that it is inappropriate to use the 
RBB to reach a work RVU valuation. We believe that there are multiple 
valuation methodologies that we can use to calculate work RVUs for CPT 
codes, all of which align with the statutory requirement to value work 
RVUs based on the relative resources involved in furnishing the 
service, which include time and intensity. However, we agree with 
commenters that there are other more appropriate CPT codes that could 
be used in the RBB calculation for purposes of comparison. For example, 
CPT code 11008 (Removal of prosthetic material or mesh, abdominal wall 
for infection (e.g., for chronic or recurrent mesh infection or 
necrotizing soft tissue infection) (List separately in addition to code 
for primary procedure)) has a total time of 60 minutes and an RVU of 
5.0. Using CPT code 11008 in the RBB calculation yields a work RVU of 
3.75 for CPT code 49623. We believe that CPT code 11008 is a more 
appropriate code to use within the RBB calculation for CPT code 49623. 
We also support a work RVU of 3.75 with a reference code, CPT code 
63048 (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; each additional segment, cervical, thoracic, or lumbar (List 
separately in addition to code for primary procedure)), which has the 
same total time of 45 minutes and work RVU of 3.47. Therefore, we are 
finalizing a work RVU of 3.75 for CPT code 49623.
    Comment: Commenters did not support our proposed practice expense 
(PE) clinical staff time packages for this code family. Commenters 
disagreed with using a 000/010-day extensive package and believe that 
the 090-day clinical staff time package is still appropriate because 
the change to a 000-day global period from a 090-day global period was 
requested by the RUC to account for the variable post-operative care 
and not the procedural clinical staff work that is associated with it. 
One commenter also noted that in April 2022, the RUC created a new 
clinical staff time package for 000/010-day global period codes that 
had previously been 090-day global period codes. Commenters also 
requested that we accept the RUC's recommendation to use the standard 
emergent procedure package, with 20 minutes of clinical staff 
activities e for CPT code 15778.
    Response: As stated in the CY 2023 PFS proposed rule (87 FR 45909), 
we continue to believe that maintaining clinical labor standards 
provides greater consistency among codes that share the same clinical 
labor tasks and could improve relativity of values among codes. We 
reviewed the individual codes in question and concluded that the use of 
000-day or 010-day global period standards for ``Extensive use of 
Clinical Staff'' would be most typical and consistent in these cases. 
Upon further clinical review, we also continue to believe that the most 
appropriate clinical staff package for CPT code 15778 is the minimal 
staff package minus pre-service education. We are pleased to learn that 
the RUC has developed a new clinical staff package for CPT codes that 
are transitioning from a 90-day global period. This clinical staff 
package was not included in the recommendations submitted for this code 
family.
    After consideration of the public comments, we are finalizing the 
work RVU values for this code family as proposed, with the exception of 
CPT code 49623, as indicated above. We are also finalizing all PE 
inputs as proposed.
(2) Removal of Sutures or Staples (CPT Codes 15851, 15853, and 15854)
    In October 2021, the CPT Editorial Panel approved the deletion of 
CPT code 15850 and revised CPT code 15851 (Removal of sutures or 
staples requiring anesthesia (ie, general anesthesia, moderate 
sedation)), and created two new related CPT add-on codes, 15853 and 
15854, to describe Removal of sutures or staples requiring anesthesia 
(i.e., general anesthesia, moderate sedation). The RUC reviewed the 
three codes: 15851, 15853 and 15854 at the January 2022 RUC meeting.
    After reviewing CPT code 15851, we proposed the RUC-recommended 
work RVU of 1.10 for CPT code 15851. CPT codes 15853 (Removal of 
sutures OR staples not requiring anesthesia (List separately in 
addition to E/M code)), and 15854 (Removal of sutures OR staples not 
requiring anesthesia (List separately in addition to E/M code) are 
valued by the RUC as PE-only codes. The RUC did not recommend any work 
inputs for these two add-on codes and we did not propose any work RVU 
refinements.
    We also proposed the RUC-recommended direct PE inputs for CPT codes 
15851, 15853, and 15854 without refinement.
    Comment: One commenter expressed support for our proposed 
valuations for the family of codes that describe the removal of sutures 
or staples.
    Response: We appreciate the commenter's support, and we are 
finalizing our proposal of the RUC-recommended direct PE inputs for CPT 
codes 15851, 15853, and 15854 without refinement.
(3) Arthrodesis Decompression (CPT Codes 22630, 22632, 22633, 22634, 
63052, and 63053)
    In October 2020, the CPT Editorial Panel approved the revision of 
four codes describing arthrodesis and the addition of two new add-on 
codes, CPT codes 63052 (Laminectomy, facetectomy, or foraminotomy 
(unilateral or bilateral with decompression of spinal cord, cauda 
equina and/or nerve root[s] [e.g., spinal or lateral recess stenosis]), 
during posterior interbody arthrodesis, lumbar; single vertebral 
segment (List separately in addition to code for primary procedure)) 
and 63053 (Laminectomy, facetectomy, or foraminotomy (unilateral or 
bilateral with decompression of spinal cord, cauda equina and/or nerve 
root[s] [e.g., spinal or lateral recess stenosis]), during posterior 
interbody arthrodesis, lumbar; each additional segment (List separately 
in addition to code for primary procedure)), to report laminectomy, 
facetectomy, or foraminotomy during posterior interbody arthrodesis, 
lumbar to more appropriately identify the decompression that may be 
separately reported. In January 2021, the RUC reviewed the survey 
results for the two new codes and expressed concern that the four base 
codes had not been surveyed along with the two new add-

[[Page 69481]]

on codes. The RUC recommended that the entire family be resurveyed and 
presented for review at its April 2021 meeting. The RUC suggested that 
until new values could be established, interim values be established 
for CPT codes 63052 and 63053, which CMS revised for CY 2022 based on 
the survey data and RUC review available to us at the time of the 
development of the CY 2022 PFS proposed rule. We have noted in similar 
circumstances, such as the minimally invasive glaucoma surgery (MIGS) 
procedures with cataract surgery discussed in the CY 2022 PFS final 
rule (86 FR 65097), that it is best for entire code families to be 
surveyed at the same time. We also noted that we finalized a policy in 
the CY 2015 PFS final rule (79 FR 67602 through 67609) to make all 
changes in the work and MP RVUs and the direct PE inputs for new, 
revised, and potentially misvalued services under the PFS by proposing 
and then finalizing such changes through notice and comment rulemaking, 
as opposed to initially finalizing changes on an interim final basis.
    For CPT codes 22630 (Arthrodesis, posterior interbody technique, 
including laminectomy and/or discectomy to prepare interspace (other 
than for decompression), single interspace; lumbar), 22633 
(Arthrodesis, combined posterior or posterolateral technique with 
posterior interbody technique including laminectomy and/or discectomy 
sufficient to prepare interspace (other than for decompression), single 
interspace; lumbar), 22634 (Arthrodesis, combined posterior or 
posterolateral technique with posterior interbody technique including 
laminectomy and/or discectomy sufficient to prepare interspace (other 
than for decompression), single interspace; each additional interspace 
and segment (List separately in addition to code for primary 
procedure)), 63052, and 63053, we disagreed with the RUC-recommended 
work RVUs of 22.09, 26.80, 7.96, 5.70, and 5.00, respectively, because 
these values do not account for the surveyed changes in time, and we 
proposed a work RVU of 20.42 for CPT code 22630, a work RVU of 24.83 
for CPT code 22633, a work RVU of 7.30 for CPT code 22634, the current 
work RVU of 4.25 for CPT code 63052 and a work RVU of 3.78 for CPT code 
63053. For CPT code 22632 (Arthrodesis, posterior interbody technique, 
including laminectomy and/or discectomy to prepare interspace (other 
than for decompression), single interspace; each additional interspace 
(List separately in addition to code for primary procedure)), we agreed 
with the RUC-recommended maintenance of the current work RVU of 5.22, 
as there were no surveyed changes in time.
    We proposed a work RVU of 20.42 for CPT code 22630 based on the 
reverse building block methodology to account for the surveyed 8-minute 
decrease in total time, 10-minute decrease in pre-service time, 30-
minute decrease in intraservice time, and 2-minute decrease in 
immediate post-service time. We believe that since the two components 
of work are time and intensity, absent an obvious or explicitly stated 
rationale for why the relative intensity of a given procedure has 
increased, it would be inappropriate to maintain the current work RVU 
given the significant decrease in intraservice time without adequate 
justification of increased intensity. There are currently three CPT 
code 99231 (Subsequent hospital care/day 15 minutes) and four CPT code 
99213 (Office or other outpatient visit for the evaluation and 
management of an established patient, which requires a medically 
appropriate history and/or examination and low level of medical 
decision making. When using time for code selection, 20-29 minutes of 
total time is spent on the date of the encounter.) visits bundled in 
CPT code 22630's 090-day global period and valuation. The RUC 
recommended that the post-operative period for CPT code 22630 change to 
include two CPT code 99232 (subsequent hospital care/day 25 minutes), 
one CPT code 99231, one CPT code 99214 (Office or other outpatient 
visit for the evaluation and management of an established patient, 
which requires a medically appropriate history and/or examination and 
moderate level of medical decision making. When using time for code 
selection, 30-39 minutes of total time is spent on the date of the 
encounter.), and two CPT code 99213 visits. The currently bundled post-
operative visits total to 6.16 work RVUs, whereas the RUC-recommended 
changes to the post-operative visits total 6.98 work RVUs, resulting in 
a 0.82 work RVU increase (if no other changes occurred to CPT code 
22630). The proposed work RVU of 20.42 for CPT code 22630 maintains the 
same IWPUT of 0.067 and maintains the 0.82 work RVU difference between 
the current and RUC-recommended post-operative period. We believe this 
proposed work RVU is more accurate than the RUC-recommended work RVU 
because there was no obvious or explicitly stated rationale in the 
RUC's recommendations for the change in intensity of intraservice time, 
and there was a 30-minute decrease in intraservice time for CPT code 
22630. We believe that since the two components of work are time and 
intensity, absent an obvious or explicitly stated rationale for why the 
relative intensity of a given procedure has increased, it would have 
been inappropriate to propose the RUC-recommended work RVU for CPT code 
22630.
    Similarly, we proposed a work RVU of 24.83 for CPT code 22633, 
based on the reverse building block methodology, to account for the 
surveyed 56-minute decrease in total time, 20-minute decrease in 
intraservice time, and 33-minute decrease in post-operative time. The 
reverse building block methodology accounts for the time and intensity 
of post-operative work through long-established and agreed-upon times 
and intensities for bundled post-operative visits, and accurately 
adjusts for the changes occurring in the post-operative period. There 
is currently one post-operative CPT code 99232, two CPT code 99233 
(Subsequent hospital care/day 35 minutes), and three CPT code 99213 
visits bundled in CPT code 22633's valuation. The RUC recommended that 
the post-operative period for CPT code 22633 change to include two CPT 
code 99232, one CPT code 99231, one CPT code 99214 (Office or other 
outpatient visit for the evaluation and management of an established 
patient, which requires a medically appropriate history and/or 
examination and moderate level of medical decision making. When using 
time for code selection, 30-39 minutes of total time is spent on the 
date of the encounter.), and two CPT code 99213 visits. The currently 
bundled post-operative visits total to 8.30 work RVUs, whereas the RUC-
recommended changes to the post-operative visits total 6.98 work RVUs, 
resulting in a 1.32 work RVU decrease (if no other changes occurred to 
CPT code 22633). Using the reverse building block methodology, the 
proposed work RVU of 24.83 maintains the same IWPUT of 0.080 and the 
1.32 work RVU difference between the current and RUC-recommended post-
operative period. We believe this proposed work RVU is more accurate 
than the RUC-recommended work RVU because there was no obvious or 
explicitly stated rationale in the RUC's recommendations for the change 
in intensity of intraservice time, and there was a 20-minute decrease 
in intraservice time for CPT code 22633. We believe that since the two 
components of work are time and intensity, absent an obvious or 
explicitly stated rationale for why the relative intensity of a given 
procedure has increased, it would have

[[Page 69482]]

been inappropriate to propose the RUC-recommended work RVU decrease of 
0.95, which is only about three-quarters of the established decrease in 
work RVU of 1.32 and intensity from the changes in the post-operative 
period alone. We also considered the apparent decrease in intraservice 
time and the lack of an adequate justification for increased intensity 
to arrive at our proposed work RVU of 24.83 for CPT code 22633.
    We proposed a work RVU of 7.30 for CPT code 22634 based on a 
comparison to its base code, CPT code 22633. We used the proposed work 
RVU of 24.83 for the parent CPT code (22633) as the numerator and the 
current work RVU for CPT code 22633 of 27.75 as the denominator, and 
multiplied that fraction by the current work RVU of 8.16 for CPT code 
22634 to arrive at a proportionate proposed work RVU of 7.30 for CPT 
code 22634 ((24.83/27.75) * 8.16) = 7.30). The proposed work RVU 
accounts for the decrease in intraservice time and is well bracketed by 
CPT code 34820 (Open iliac artery exposure for delivery of endovascular 
prosthesis or iliac occlusion during endovascular therapy, by abdominal 
or retroperitoneal incision, unilateral (List separately in addition to 
code for primary procedure)), valued at 7.00 work RVUs with an 
intraservice time of 60 minutes, and CPT code 34833 (Open iliac artery 
exposure with creation of conduit for delivery of endovascular 
prosthesis or for establishment of cardiopulmonary bypass, by abdominal 
or retroperitoneal incision, unilateral (List separately in addition to 
code for primary procedure)), valued at 8.16 work RVUs with an 
intraservice time of 72 minutes.
    CPT codes 63052 and 63053 were new add-on codes to report 
decompression when performed in conjunction with posterior interbody 
arthrodesis at the same interspace for CY 2022. The proposed work RVU 
for CPT code 63052 would maintain the current work RVU, despite a 
surveyed change in time. In the CY 2022 PFS final rule, we finalized a 
work RVU of 4.25 for CPT code 63052 for CY 2022 based on a crosswalk to 
CPT code 22853 (Insertion of 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 
(List separately in addition to code for primary procedure)), which has 
a work RVU of 4.25 and an intraservice time of 45 minutes. Despite a 
surveyed 5-minute intraservice time increase for CPT code 63052, we 
believe the crosswalk to CPT code 22853 is still valid, given that only 
3 months passed between the two surveys, as it now has the same 
intraservice time as CPT code 63052, is a spinal procedure, and is an 
add-on code to the same base codes as CPT code 63052. Commenters on the 
CY 2022 PFS proposed rule supported the bracket of key reference 
service CPT code 22552 (Arthrodesis, anterior interbody, including disc 
space preparation, discectomy, osteophytectomy and decompression of 
spinal cord and/or nerve roots; cervical below C2, each additional 
interspace (List separately in addition to code for primary procedure)) 
and MPC CPT code 34812 (Open femoral artery exposure for delivery of 
endovascular prosthesis, by groin incision, unilateral (List separately 
in addition to code for primary procedure)), and therefore, we noted 
that the final work RVU of 4.25 for CY 2022 was supported by the 
commenters (86 FR 65092). CPT code 22552 has a work RVU of 6.50 and an 
intraservice time of 45 minutes, and commenters noted that CPT code 
22552 has a higher intensity as anticipated for a surgical procedure in 
comparison with a lumbar procedure. CPT code 34812 has a work RVU of 
4.13 and 40 minutes of intraservice time, and commenters noted that 
this code involves open femoral artery exposure by groin incision and 
closure of the wound, typically for separately reported delivery of an 
endovascular prosthesis for an asymptomatic infrarenal abdominal aortic 
aneurysm. In comparison, exposure and closure for CPT code 63052 are 
performed as part of the primary arthrodesis code and the intraservice 
time includes higher intensity bony and soft tissue resection, and 
therefore, although both codes require the same time, the physician 
work and intensity of CPT code 63052 is greater than CPT code 34812.
    In the CY 2022 PFS final rule, we finalized a work RVU of 3.19 for 
CPT code 63053 for CY 2022 based on an intraservice time ratio between 
CPT codes 63052 and 63053 ((30 minutes/40 minutes) * 4.25 = 3.19). We 
believe this intraservice time ratio between the two CPT codes is still 
valid, given that only 3 months passed between the two surveys, and 
therefore, we proposed a work RVU of 3.78 based on the surveyed time 
changes for CPT codes 63052 and 63053 ((40 minutes/45 minutes) * 4.25 = 
3.78) in order to maintain consistency with previous analysis of time 
and intensity of these two add-on codes. Due to the lack of an obvious 
or explicitly stated rationale in the RUC's April recommendations for 
the change in intensity between the January 2021 and April 2021 
surveys, we relied on the changes in surveyed time to calculate the 
proposed work RVUs for CPT codes 63052 and 63053.
    We proposed the RUC-recommended PE inputs for CPT codes 22630 and 
22633.
    Comment: Some commenters disagreed with our proposed work RVUs for 
CPT codes 22630 and 22633, stating that the changes in time for these 
CPT codes are attributed to changes in technology that reduced operator 
time but increased the intensity of the services provided within that 
time. The commenters stated that routine use of fluoroscopy to obtain 
intraoperative films may decrease the time required for these 
procedures, but the surgeon is using that data in real-time to 
determine the positioning and safety of hardware placement. The 
commenters also stated that using high-speed electric drills eliminates 
the routine need to change out air pressure tanks required for 
pneumatic drills, but the differences in torque and handling change the 
``feel'' of a procedure involving a high-speed drill close to the 
spinal nerves. The commenters stated that the decreases in 
intraoperative time is due to reduction in time devoted to low-risk and 
less intense portions of the procedures (for example, waiting on a 
radiology technician to obtain an intraoperative cross-table lateral 
film; waiting for X-ray films to be developed after a flat plate film 
was taken and waiting for air tanks to be changed out for a pneumatic 
drill). The commenters contended that the decrease in intraservice time 
is matched by a related increase in the intensity of the procedure 
itself, as the lower intensity aspects of the procedure have been 
eliminated, leaving the high-risk elements of the procedures to be 
provided in less time with greater intensity.
    Response: We note that we proposed a work RVU of 20.42 for CPT code 
22630 based on the reverse building block methodology to account for 
the surveyed 8-minute decrease in total time, 10-minute decrease in 
pre-service time, 30-minute decrease in intraservice time, and 2-minute 
decrease in immediate post-service time. We believed it would be 
inappropriate to maintain the current work RVU for CPT code 22630 given 
the significant decrease in intraservice time and the absence of an 
adequate justification of increased intensity. However, after 
consideration of the commenters' rationale for decreased time and 
increased intensity, we are finalizing the RUC recommended work RVUs of 
22.09 and 26.80 for CPT codes 22630 and

[[Page 69483]]

22633, respectively, as we believe the RUC recommended work RVUs 
adequately account for the changes in resources. We appreciate the 
commenters additional input regarding intensity, but remind interested 
parties that both time and intensity changes must be addressed in the 
summary of recommendations. We remind interested parties that, since 
the two components of work are time and intensity, absent an obvious or 
explicitly stated rationale for why the relative intensity of a given 
procedure has increased, significant decreases in time should be 
reflected in decreases to work RVUs. If the RUC's recommendations 
appear 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 
methodologies discussed above to identify potential work RVUs, 
including the methodologies intended to account for the changes in the 
resources involved in furnishing the procedure.
    We note that we proposed a work RVU of 7.30 for CPT code 22634 
based on a comparison to our proposed work RVU for its base code, CPT 
code 22633, which we are not finalizing. Given that we have decided to 
finalize the RUC recommended work RVU of 26.80 for CPT code 22633, in 
order to maintain for relativity within the family, we are also 
finalizing the RUC recommended work RVU of 7.96 for CPT code 22634.
    Comment: A few commenters urged CMS to finalize the RUC recommended 
work RVUs for CPT codes 63052 and 63053, stating that the intraservice 
time for CPT code 63035 increased by five minutes to a total of 45 
minutes and that the time spent performing this procedure is 
essentially all high-risk. The commenters asserted that the lower 
intensity surgical exposure activities were already completed with the 
base code, so the physician work of CPT code 63052 involves only the 
high intensity, dangerous aspects of neural element and spinal cord 
decompression. Similarly, some commenters disagreed with our use of an 
intraservice time ratio to value CPT code 63053. Commenters stated that 
this approach ignores magnitude estimation and stated that the second 
survey included more respondents who routinely perform this procedure. 
Commenters stated that the new survey from April 2021, which included 
all six codes in the family, generated an intraservice time of 40 
minutes, a difference of five minutes between CPT codes 63052 and 
63053, which is believed to be a more accurate reflection of the 
difference in work between laminectomy/facetectomy/foraminotomy with 
decompression of the first segment and an additional segment versus the 
January 2021 survey, which generated an intraservice time difference of 
ten minutes between CPT codes 63052 and 63053.
    Response: We agree with the commenters that an intraservice time 
difference of 5 minutes between CPT codes 63052 and 63053 is a 
reflection of the difference in work between laminectomy/facetectomy/
foraminotomy with decompression of the first segment and an additional 
segment, and therefore, we proposed the RUC recommended physician time 
values for CPT codes 63052 and 63053. However, we continue to believe 
that, despite a surveyed 5-minute intraservice time increase for CPT 
code 63052, the crosswalk to CPT code 22853 is still valid to support a 
work RVU of 4.25 for CPT code 63052, given that only 3 months passed 
between the two surveys, that it now has the same intraservice time as 
CPT code 22853, are both spinal procedures, and are both add-on codes 
to the same base codes. We reiterate that commenters on the CY 2022 PFS 
proposed rule supported the bracket of key reference service CPT code 
22552 (Arthrodesis, anterior interbody, including disc space 
preparation, discectomy, osteophytectomy and decompression of spinal 
cord and/or nerve roots; cervical below C2, each additional interspace 
(List separately in addition to code for primary procedure)) and MPC 
CPT code 34812 (Open femoral artery exposure for delivery of 
endovascular prosthesis, by groin incision, unilateral (List separately 
in addition to code for primary procedure)), and therefore, we noted 
that the final work RVU of 4.25 for CY 2022 was supported by the 
commenters (86 FR 65092). CPT code 22552 has a work RVU of 6.50 and an 
intraservice time of 45 minutes, and commenters noted that CPT code 
22552 has a higher intensity as anticipated for a surgical procedure 
and in comparison with a lumbar procedure. CPT code 34812 has a work 
RVU of 4.13 and 40 minutes of intraservice time, and commenters noted 
that this code involves open femoral artery exposure by groin incision 
and closure of the wound, typically for separately reported delivery of 
an endovascular prosthesis for an asymptomatic infrarenal abdominal 
aortic aneurysm. In comparison, exposure and closure for CPT code 63052 
are performed as part of the primary arthrodesis code and the 
intraservice time includes higher intensity bony and soft tissue 
resection, and therefore, although both codes require the same time, 
the physician work and intensity of CPT code 63052 is greater than CPT 
code 34812. Therefore, we are finalizing a work RVU of 4.25 for CPT 
code 63052.
    We remind commenters that in the CY 2022 PFS final rule, we 
finalized a work RVU of 3.19 for CPT code 63053 for CY 2022 based on an 
intraservice time ratio between CPT codes 63052 and 63053 ((30 minutes/
40 minutes) * 4.25 = 3.19). We continue to believe this intraservice 
time ratio between the two CPT codes is still valid, given that only 3 
months passed between the two surveys, and therefore, we are finalizing 
a work RVU of 3.78 based on the surveyed time changes for CPT codes 
63052 and 63053 ((40 minutes/45 minutes) * 4.25 = 3.78) in order to 
maintain consistency with previous analysis of time and intensity of 
these two add-on codes. We reiterate that, due to the lack of an 
obvious or explicitly stated rationale in the RUC's April 
recommendations for the change in intensity between the January 2021 
and April 2021 surveys, we relied on the changes in surveyed time to 
calculate the work RVU for CPT code 63053.
    We are finalizing the RUC-recommended PE inputs for CPT codes 22630 
and 22633, as proposed.
(4) Total Disc Arthroplasty (CPT Codes 22857 and 22860)
    In September 2021, the CPT Editorial Panel created CPT Category I 
code 22860 to describe Total disc arthroplasty (artificial disc), 
anterior approach, including discectomy to prepare interspace (other 
than for decompression); second interspace, lumbar (List separately in 
addition to code for primary procedure) and replace CPT Category III 
code 0163T (Total disc arthroplasty (artificial disc), anterior 
approach, including discectomy to prepare interspace (other than for 
decompression), each additional interspace, lumbar (List separately in 
addition to code for primary procedure)), which prompted CPT codes 
22860 and 22857 (Total disc arthroplasty (artificial disc), anterior 
approach, including discectomy to prepare interspace (other than for 
decompression); single interspace, lumbar) to be surveyed for the 
January 2022 RUC meeting. At the January 2022 RUC meeting, the 
specialty societies indicated, and the RUC agreed, that the survey 
results for both CPT codes 22857 and 22860 were erroneous and that the 
codes should be resurveyed for the April 2022 RUC meeting. Therefore, 
we proposed to maintain the RUC-recommended work RVU of 27.13 for

[[Page 69484]]

CPT code 22857 and contractor pricing for CPT code 22860 for CY 2023. 
We will revisit the valuations of CPT codes 22857 and 22860 in future 
rulemaking when we review the April 2022 RUC recommendations, based on 
our annual review process discussed in the background section of this 
final rule.
    We did not receive comments on our proposals for this code family 
and we are finalizing the values as proposed.
(5) Insertion of Spinal Stability Distractive Device (CPT Codes 22869 
and 22870)
    For CPT codes 22869 (Insertion of interlaminar/interspinous process 
stabilization/distraction device, without open decompression or fusion, 
including image guidance when performed, lumbar; single level) and 
22870 (Insertion of interlaminar/interspinous process stabilization/
distraction device, without open decompression or fusion, including 
image guidance when performed, lumbar; second level (List separately in 
addition to code for primary procedure)), we proposed to maintain the 
current work RVUs of 7.03 and 2.34, respectively. We proposed the RUC-
recommended direct PE inputs for CPT code 22869 without refinement.
    We did not receive comments on our proposals for this code family 
and we are finalizing the values as proposed.
(6) Knee Arthroplasty (CPT Codes 27446 and 27447)
    CPT codes 27446 (Arthroplasty, knee, condyle and plateau; medial OR 
lateral compartment) and 27447 (Arthroplasty, knee, condyle and 
plateau; medial AND lateral compartments with or without patella 
resurfacing (total knee arthroplasty)) were reviewed by the RUC in 
April 2021. We previously reviewed CPT code 27447 in the CY 2021 PFS 
final rule; (see 85 FR 84609 and 84610 for our previous discussion). 
The RUC proposed a revised survey instrument to ask about additional 
pre-operative time and resources spent on pre-optimization patient 
work. The RUC agreed that the pre-service planning activities are being 
performed routinely for the typical patient but the inclusion of this 
work is not reflected in the 090-day global period structure. The RUC 
indicated that separate planning codes may be developed, or current 
codes such as the prolonged service codes may be reported for these 
activities.
    We proposed the RUC-recommended work RVU of 17.13 for CPT code 
27446. The survey 25th percentile actually showed an increase in work 
RVU even though there was a decrease in total time. One post facility 
visit, CPT code 99232 (Subsequent hospital care/day 25 minutes), was 
removed and replaced with CPT code 99214 (Office or other outpatient 
visit for the evaluation and management of an established patient, 
which requires a medically appropriate history and/or examination and 
moderate level of medical decision making. When using time for code 
selection, 30-39 minutes of total time is spent on the date of the 
encounter) a post-operative visit in the office. Given a decrease in 
the total time spent and a lower level post-operative visit, it is 
reasonable that the work RVU went down. There was no change in the 
global period.
    For CPT code 27447, the RUC reaffirmed the same valuation that it 
recommended for the CY 2021 PFS rulemaking cycle. Since we did not 
receive any new information regarding this code, we did not propose to 
change our previously finalized values (see 85 FR 84609 and 84610 for 
our previous discussion of this code in the CY 2021 PFS final rule). We 
proposed to maintain a work RVU of 19.60 for CPT code 27447, the value 
that we previously finalized through rulemaking. We proposed the RUC-
recommended direct PE inputs for CPT code 27446 and we proposed to 
maintain the direct PE inputs for CPT code 27447.
    Comment: One commenter, representing interested parties who furnish 
these services, agreed with the RUC recommendation, but noted that CPT 
code 27447 has been undervalued since its reduction in 2021 and noted 
the current work RVU is based on the AMA RUC's recommendations 
following the 2019 survey. This commenter and other interested parties 
previously argued to maintain the then current work RVU of 20.72, which 
was lower than the survey median. The commenter claimed that CPT codes 
27447 and 27130 are undervalued due to the RUC and CMS utilizing 
different percentiles from surveys to assign the work RVUs and 
recommended that CMS adopt a policy to base work RVUs uniformly on the 
same percentile of physician survey results as the RUC. We did not make 
any proposals for CPT code 27130.
    The commenter appreciated CMS discussing the concept of pre-
optimization time for these services in the proposed rule and provided 
further clarification with regard to the RUC survey. The commenter 
noted that the RUC specifically rejected a proposal for a revised 
survey instrument to ask about additional pre-operative time and 
resources spent on pre-optimization patient work. Additionally, the use 
of current prolonged services, CPT codes 99358 and 99359 was suggested; 
however, it was noted that these codes could not be used in conjunction 
with CPT codes 27446 and 27447, given the standard of practice includes 
preservice time over several days and not one single day, as stated in 
the code descriptor for CPT codes 27446 and 27447. The commenter noted 
it continues to work with the AMA and CPT to clarify if there are 
existing codes to bill for pre-optimization time.
    The commenter was in support of the proposed RVUs for PE and 
malpractice for CPT code 27447. The commenter generally supported 
increased payment rates to facilities for arthroplasty due to the 
extreme complexity of the procedure, innovations in the standard of 
care and outcomes, and to recognize increased costs through the COVID-
19 public health emergency (PHE). Nevertheless, the ongoing annual 
increases in Medicare facility payments for arthroplasty present a 
stark contrast with severely decreasing Medicare physician payments for 
arthroplasty.
    Response: We thank the commenter for their support of our proposal 
and appreciate the commenters continued engagement with the AMA and the 
CPT to clarify if there are existing codes to bill for pre-optimization 
time. We are finalizing the values as proposed for CPT codes 27446 and 
27447.
(7) Endovascular Pulmonary Arterial Revascularization (CPT Codes 33900, 
33901, 33902, 33903, and 33904)
    At the February 2021 meeting of the CPT Editorial Panel, CPT 
approved a new family of Category I CPT codes to describe percutaneous 
endovascular repair of pulmonary artery stenosis (PAS) by stent 
replacement. CPT codes 33900 through 33904 were surveyed by the RUC at 
the October 2021 RUC meeting.
    We disagree with the RUC-recommended work RVU of 14.0 for CPT code 
33900 (Percutaneous pulmonary artery revascularization by stent 
placement, initial; normal native connections, unilateral). The RUC 
recommendation is the survey median and appears to be high compared to 
codes with similar times. We proposed the survey 25th percentile work 
RVU of 11.03 for CPT code 33900. A work RVU of 11.03 is supported by a 
bracket of reference CPT codes, including CPT code 61650 and CPT code 
61640. CPT code 61650 (Endovascular intracranial prolonged 
administration of pharmacologic agent(s) other than for thrombolysis, 
arterial, including catheter placement, diagnostic angiography, and 
imaging guidance;

[[Page 69485]]

initial vascular territory) has a work RVU of 10.0 and the same 
intraservice time of 90 minutes and the same total time of 206 minutes. 
CPT code 61640 (Balloon dilatation of intracranial vasospasm, 
percutaneous; initial vessel) has a work RVU of 12.32 and an 
intraservice time of 90 minutes and a higher total time of 233 minutes.
    There are no direct PE inputs for CPT Code 33900.
    We disagree with the RUC-recommended work RVU of 18.0 for CPT code 
33901 (Percutaneous pulmonary artery revascularization by stent 
placement, initial; normal native connections, bilateral). The RUC 
recommendation is the survey median and appears to be high compared to 
codes with similar times. We proposed the survey 25th percentile work 
RVU of 14.50. A work RVU of 14.50 is supported by a reference CPT 
code--CPT code 11005. CPT code 11005 (Debridement of skin, subcutaneous 
tissue, muscle and fascia for necrotizing soft tissue infection; 
abdominal wall, with or without fascial closure) has a work RVU of 
14.24 and the same intraservice time of 120 minutes and nearly the same 
total time of 235 minutes.
    There are no direct PE inputs for CPT Code 33901.
    We disagree with the RUC-recommended work RVU of 17.33 for CPT code 
33902 (Percutaneous pulmonary artery revascularization by stent 
placement, initial; abnormal connections, unilateral). The RUC 
recommendation is the survey median and appears to be high compared to 
codes with similar times. We proposed the survey 25th percentile work 
RVU of 14.0. A work RVU of 14.0 is supported by a reference CPT code--
CPT code 61640. CPT code 61640 (Balloon dilatation of intracranial 
vasospasm, percutaneous; initial vessel) has a work RVU of 12.32 and 
the same intraservice time of 90 minutes and a higher total time of 233 
minutes.
    There are no direct PE inputs for CPT Code 33902.
    We disagree with the RUC-recommended work RVU 20.0 for CPT code 
33903 (percutaneous pulmonary artery revascularization by stent 
placement, initial; abnormal connections, bilateral). The RUC 
recommendation is the survey median and appears to be high compared to 
codes with similar times. Although we disagree with the RUC-recommended 
work RVU, we concur that the relative difference in work between CPT 
codes 33901 and 33903 is equivalent to the RUC-recommended interval of 
2.0 RVUs. Therefore, we proposed a work RVU of 16.50 for CPT code 
33903, based on the recommended interval of 2.0 additional RVUs above 
our proposed work RVU of 14.50 for CPT code 33901. A work RVU of 16.50 
is also supported by a reference code--CPT code 11005. CPT code 11005 
(Debridement of skin, subcutaneous tissue, muscle and fascia for 
necrotizing soft tissue infection; abdominal wall, with or without 
fascial closure) has a work RVU of 14.24 and the same intraservice time 
of 120 minutes and a higher total time of 265 minutes.
    There are no direct PE inputs for CPT Code 33903.
    We disagree with the RUC-recommended RVU of 7.27 for CPT code 33904 
(Percutaneous pulmonary artery revascularization by stent placement, 
each additional vessel or separate lesion, normal or abnormal 
connections (list separately in addition to code for primary procedure) 
(use 33904 in conjunction with 33900, 33901, 33902, 33903)). The RUC 
recommendation is the survey median and appears to be high compared to 
codes with similar times. We proposed the survey 25th percentile work 
RVU of 5.53. A work RVU of 5.53 is supported by a reference code--CPT 
code 57267. CPT code 57267 (Insertion of mesh or other prosthesis for 
repair of pelvic floor defect, each site (anterior, posterior 
compartment), vaginal approach (List separately in addition to code for 
primary procedure) has a work RVU of 4.88 and the same time of 45 
minutes.
    There are no direct PE inputs for CPT code 33904.
    Comment: Commenters disagree with our proposed valuations for all 
of the codes within this family. Commenters asserted that we failed to 
properly justify the decrease for each CPT code because we did not 
provide a clinical rationale. One commenter stated that the RUC 
intentionally did not use the survey 25th percentile value because the 
RUC believes the clinical nature is vastly different than currently 
described by similar coding and more intense. Therefore, commenters 
noted that we should accept the RUC-recommended survey median values. 
For CPT codes 33900, 33901, 33902, and 33904, commenters disagreed with 
our chosen supporting reference codes. They noted that the CPT codes 
are not clinically similar and the CPT codes that the RUC recommended 
are more appropriate for purposes of comparison. Commenters also noted 
that we did not maintain the RUC recommended relativity within the code 
family that accounts for the change from unilateral to bilateral 
anatomically. For CPT code 33903, a commenter disagreed with our use of 
the incremental methodology. The commenter noted that using increments 
forms a linear relationship between RVUs, which is not appropriate.
    Response: We disagree with commenters that supporting reference 
codes must have similar clinical characteristics to be appropriate for 
purposes of reaching valuations. We believe that the inherent 
relativity of the PFS is such that all codes can be used for purposes 
of comparison, while considering time and intensity. We maintain that 
the RUC recommended work RVU values for CPT codes 33900-33904 are 
overvalued relative to codes with similar times and intensities. For 
example, CPT code 11004 (Debridement of skin, subcutaneous tissue, 
muscle and fascia for necrotizing soft tissue infection; external 
genitalia and perineum), has a work RVU of 10.80, an intraservice time 
of 90 minutes and a total time of 280 minutes. This is the same 
intraservice time and a significantly higher total time than CPT code 
33900 and is almost 3 RVUs less than the RUC recommended value of 14.0 
for this CPT code. We also disagree that we did not maintain relativity 
within the family. We believe that our proposed RVUs account for the 
recommended changes in time within the family as the procedure changes 
from unilateral to bilateral and is further supported by our reference 
codes with similar times. For example, for CPT code 33903, we used the 
incremental difference between the RUC recommended values for CPT codes 
33901 and 33903 (2 RVUs) to reach our proposed value of 16.50 RVUs for 
CPT code 33903. This value is higher than the 25th percentile and 
accounts for the change in intensity from unilateral to bilateral. We 
also believe the use of an incremental difference between codes is a 
valid methodology for setting values, especially in valuing services 
within a family where it is important to maintain appropriate intra-
family relativity. Historically, 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. 
We note that the RUC has also used the same incremental methodology on 
occasion when it was unable to produce valid survey data for a service.
    We are finalizing our work RVUs for this family as proposed.
(8) Percutaneous Arteriovenous Fistula Creation (CPT Codes 36836 and 
36837)
    In October 2021, the CPT Editorial Panel created CPT codes 36836 
(Percutaneous arteriovenous fistula creation, upper extremity, single 
access

[[Page 69486]]

of both the peripheral artery and peripheral vein, including fistula 
maturation procedures (e.g., transluminal balloon angioplasty, coil 
embolization) when performed, including all vascular access, imaging 
guidance and radiologic supervision and interpretation) and 36837 
(Percutaneous arteriovenous fistula creation, upper extremity, separate 
access sites of the peripheral artery and peripheral vein, including 
fistula maturation procedures (e.g., transluminal balloon angioplasty, 
coil embolization) when performed, including all vascular access, 
imaging guidance and radiologic supervision and interpretation) to 
describe the creation of an arteriovenous fistula in an upper extremity 
via a percutaneous approach. Previously, CPT coding did not account for 
percutaneous arteriovenous access creation, as current the CPT codes 
only describe an open surgical approach. Given that new technologies 
have been developed that allow for less invasive approaches that 
utilize percutaneous image-guided methods to approximate a target 
artery and vein using magnets or mechanical capture, we created HCPCS 
codes G2170 (Percutaneous arteriovenous fistula creation (avf), direct, 
any site, by tissue approximation using thermal resistance energy, and 
secondary procedures to redirect blood flow (e.g., transluminal balloon 
angioplasty, coil embolization) when performed, and includes all 
imaging and radiologic guidance, supervision and interpretation, when 
performed) and G2171 (Percutaneous arteriovenous fistula creation 
(avf), direct, any site, using magnetic-guided arterial and venous 
catheters and radiofrequency energy, including flow-directing 
procedures (e.g., vascular coil embolization with radiologic 
supervision and interpretation, when performed) and fistulogram(s), 
angiography, venography, and/or ultrasound, with radiologic supervision 
and interpretation, when performed) in July 2020 that describe two 
approaches to percutaneous arteriovenous access creation. The RUC 
intends for CPT codes 36836 and 36837, which represent two percutaneous 
approaches to creating arteriovenous access for End-Stage Renal Disease 
(ERSD) patients during hemodialysis, to replace HCPCS codes G2170 and 
G2171, and has requested both G2170 and G2171 be deleted. For CY 2023, 
the RUC recommended a work RVU of 7.50 for CPT code 36836, and a work 
RVU of 9.60 for CPT code 36837.
    We disagreed with the RUC-recommended RVUs for CPT codes 36836 and 
36837. We found that the recommended work RVUs were high when compared 
to other codes with similar time values. The RUC-recommended RVU of 
7.50 for 36836 is the second highest RVU for codes with 55 to 65 
minutes of intraservice time and 94 to 114 minutes of total time, with 
RVUs ranging from 2.45 to 8.84. Similarly, the RUC-recommended RVU of 
9.60 for 36837 is the third highest RVU for codes with 65 to 85 minutes 
of intraservice time and 109 to 129 minutes of total time, with RVUs 
ranging from 4.69 to 10.95. Therefore, we proposed a work RVU of 7.20 
for CPT code 36836, and a work RVU of 9.30 for CPT code 36837.
    We disagreed with the RUC-recommended work RVU of 7.50 for CPT code 
36836 and proposed an RVU of 7.20 that is based on the intra-service 
time ratio calculation using the second reference code from the RUC 
survey, CPT code 36905 (Percutaneous 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). The proposed 
RVU of 7.20 is based on the intra-service time ratio using the RUC-
recommended 60 minutes intra-service time for CPT code 36836 divided by 
75 minutes of intra-service time for CPT code 36905, then multiplying 
by the RVU of 9.00 for CPT code 36905 ((60/75) x 9.00 = 7.20). We chose 
to use the second reference code from the RUC survey, CPT code 36905, 
in this calculation because its intra-service time and total time 
values were closer to the time values proposed by the RUC for CPT code 
36836. We noted that the RUC-recommended RVU of 7.50 is one of the 
highest values within the range of reference codes we reviewed with the 
same intra-service time and similar total time. The proposed work RVU 
of 7.20 is supported by the reference CPT codes we compared to CPT code 
36836 with the same 60 minutes of intra-service time and similar total 
time as CPT code 36836; reference CPT code 47541 (Placement of access 
through the biliary tree and into small bowel to assist with an 
endoscopic biliary procedure (e.g., rendezvous procedure), 
percutaneous, including diagnostic cholangiography when performed, 
imaging guidance (e.g., ultrasound and/or fluoroscopy), and all 
associated radiological supervision and interpretation, new access) has 
a work RVU of 6.75, and reference CPT code 33991 (Insertion of 
ventricular assist device, percutaneous, including radiological 
supervision and interpretation; left heart, both arterial and venous 
access, with transseptal puncture) has a work RVU of 8.84. Again, we 
believe 7.20 is a more appropriate value overall than 7.50 when 
compared to the range of codes with the same intra-service time and 
similar total time.
    Although we disagreed with the RUC-recommended work RVU of 9.60 for 
CPT code 36837, we concur that the relative difference in work between 
CPT codes 36836 and 36837 is equivalent to the RUC-recommended interval 
of 2.10 RVUs. We believe the use of an incremental difference between 
these CPT codes is a valid methodology for setting values, especially 
in valuing services within a family of codes where it is important to 
maintain an appropriate intra-family relativity. Therefore, we proposed 
a work RVU of 9.30 for CPT code 36837, based on the RUC-recommended 
interval of 2.10 RVUs above our proposed work RVU of 7.20 for CPT code 
36836.
    For the direct PE inputs, we solicited additional information on 
two equipment items and four supply items. For two of those four supply 
items, we requested a justification for their inclusion as direct PE 
inputs. The RUC submitted invoices for two new equipment inputs; one 
for a Wavelinq EndoAVF generator (EQ403) used for CPT code 36837, and 
the other for an Ellipsys EndoAVF generator (EQ404) used for CPT code 
36836. We solicited comments and requested information that may inform 
us why the Wavelinq generator (EQ403) is so much more expensive on its 
invoice as compared with the Ellipsys generator (EQ404) since the 
former costs $18,580 and the latter costs $3,000.
    In addition, the RUC included supply items SD149 (catheter, balloon 
inflation device) and SD152 (catheter, balloon, PTA) as direct PE 
inputs for CPT codes 36836 and 36837. We solicited comments and 
requested information that may inform us if supply items SD149 and 
SD152 are typical, and how often they are used, for CPT codes 36836 and 
36837. Also, the RUC included supply items SF056 (detachable coil) and 
SF057 (non-detachable embolization coil) as direct PE inputs for CPT 
code 36837 (one each for SF056 and two each for SF057). We solicited 
comments and requested

[[Page 69487]]

information that may provide us with a justification for keeping supply 
items SF056 and SF057 as direct PE inputs for CPT code 36837. We need 
to know if both of these supply items are typical and how often they 
are used for CPT code 36837. If these supply inputs are not typical for 
these procedures, we believe that they should be removed from the 
direct PE inputs.
    We proposed to delete HCPCS codes G2170 and G2171 and replace them 
with CPT codes 36836 and 36837 as recommended by the RUC.
    The following is a summary of the comments we received and our 
responses.
    Comment: Many commenters agreed with our proposal to delete HCPCS 
codes G2170 and G2171, and replace them with CPT codes 36836 and 36837. 
One of the commenters also stated that they preferred CMS setting the 
rates for percutaneous creation of an arteriovenous fistula through 
rulemaking, rather than relying on contractor pricing. Other commenters 
stated that the contractor-priced payments for HCPCS codes G2170 and 
G2171 varied widely among the different Medicare Administrative 
Contractors (MACs), ranging approximately from $6,100 to $12,000 
(rounded).
    Response: We thank the commenters for their support. We are 
finalizing our proposal to delete HCPCS codes G2170 and G2171, and 
replacing them with CPT codes 36836 and 36837. We are establishing the 
RVUs for CPT codes 36836 and 36837 in this final rule, so the payments 
for these codes will not be contractor-priced, in contrast to the 
payments for HCPCS codes G2170 and G2171.
    Comment: Several commenters disagreed with our proposed RVU of 7.20 
for CPT code 36836 and RVU of 9.30 for CPT code 36837. Several 
commenters also disagreed with our methodologies for the valuation of 
the proposed RVUs and stated they do not appropriately reflect the 
complexity and intensity of physician work associated with these 
services. Therefore, they post that the statutorily-required intensity 
component of the work RVU and its role in the valuation of these 
procedures was overlooked. The commenters preferred that we accept the 
RUC-recommended RVU of 7.50 for CPT code 36836 and RVU of 9.60 for CPT 
code 36837 instead. The commenters stated that the proposed RVU is 
unworkable given the time it takes to perform these procedures and PE 
involved and that CMS's proposed RVU will cause barriers to patient 
access to these procedures, and will have a disproportionate impact on 
patients from underrepresented minority groups. However, there was one 
commenter that stated even the RUC-recommended RVU of 9.60 for CPT code 
36837 was too low. Many commenters stated that CMS is using flawed 
methodologies for the valuation of codes for 2023, such as the building 
block methodology, incremental methodology, code comparisons, and time 
ratio methodology. This includes the intra-service time ratio 
calculation that informs the proposed work RVU of 7.20 for CPT code 
36836 and the incremental methodology used for the proposed RVU of 9.30 
for CPT code 36837. Also, the commenters stated that CMS did not 
provide any rationale or transparency as to how they arrived at the 
reductions applied to CPT codes 36836 and 36837. The commenters stated 
that CMS proposes an inconstant combination of inputs to apply, and 
that this selection process has the appearance of seeking an arbitrary 
value from the vast array of possible mathematical calculations, rather 
than seeking a valid, clinically relevant relationship that would 
preserve relativity between codes.
    Response: We continue to believe that the RVU of 7.20 for CPT code 
36836, and the RVU of 9.30 for CPT code 36837, are appropriate RVUs for 
these procedures. We found that the RUC-recommended work RVUs were high 
for these codes when compared to other codes with similar time values. 
The RUC-recommended RVU of 7.50 for 36836 is the second highest RVU for 
codes with 55 to 65 minutes of intraservice time and 94 to 114 minutes 
of total time, with RVUs ranging from 2.45 to 8.84. Similarly, the RUC-
recommended RVU of 9.60 for 36837 is the third highest RVU for codes 
with 65 to 85 minutes of intraservice time and 109 to 129 minutes of 
total time, with RVUs ranging from 4.69 to 10.95.
    We disagreed with the RUC-recommended work RVU of 7.50 for CPT code 
36836 and proposed an RVU of 7.20 that is based on the intra-service 
time ratio calculation using the second reference code from the RUC 
survey, CPT code 36905. In our effort to remain transparent, we 
provided the following rationale: The proposed RVU of 7.20 is based on 
the intra-service time ratio using the RUC-recommended 60 minutes 
intra-service time for CPT code 36836 divided by 75 minutes of intra-
service time for CPT code 36905, then multiplying by the RVU of 9.00 
for CPT code 36905 ((60/75) x 9.00 = 7.20). We chose to use the second 
reference code from the RUC survey, CPT code 36905, in this calculation 
because its intra-service time and total time values were closer to the 
time values proposed by the RUC for CPT code 36836. We noted that the 
RUC-recommended RVU of 7.50 is one of the highest values within the 
range of reference codes we reviewed with the same intra-service time 
and similar total time. The proposed work RVU of 7.20 is supported by 
the reference CPT codes we compared to CPT code 36836 with the same 60 
minutes of intra-service time and similar total time as CPT code 36836; 
reference CPT code 47541 has a work RVU of 6.75, and reference CPT code 
33991 has a work RVU of 8.84. We continue to believe that the use of 
time ratios is one of several appropriate methods for identifying 
potential work RVUs for particular PFS services, particularly when the 
alternative values recommended by the RUC and other commenters do not 
account for information provided by surveys 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. In accordance with the 
statute, we believe that changes in time and intensity must be 
accounted for when developing work RVUs. When our review of recommended 
values reveals that changes in the resource of time are not accounted 
for in a RUC-recommended RVU, the obligation to account for that change 
when establishing proposed and final work RVUs remains. 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, as 
indicated by the many services that share the same time values but have 
different work RVUs. Furthermore, we reiterate that we use time ratios 
to identify potentially appropriate 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. 
For more details on our methodology for developing work RVUs, we direct 
readers to the discussion CY 2017 PFS final rule (81 FR 80272 through 
80277). Again, for CPT code 36836, we believe 7.20 is a more 
appropriate value overall than 7.50 when compared to the range

[[Page 69488]]

of codes with the same intra-service time and similar total time.
    For CPT code 36837, although we disagreed with the RUC-recommended 
work RVU of 9.60, we did concur that the relative difference in work 
between CPT codes 36836 and 36837 is equivalent to the recommended 
interval of 2.10 RVUs. Therefore, we proposed a work RVU of 9.30 for 
CPT code 36837, based on the recommended interval of 2.10 RVUs above 
our proposed work RVU of 7.20 for CPT code 36836. We continue to 
believe the use of an incremental difference between these CPT codes is 
a valid methodology for setting values, especially in valuing services 
within a family of codes where it is important to maintain an 
appropriate intra-family relativity. Historically, 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. We note that the RUC has also used the same incremental 
methodology on occasion when it was unable to produce valid survey data 
for a service. Again, for CPT code 36837, we believe a work RVU of 9.30 
based on an incremental increase of 2.10 RVUs above CPT code 36836 is a 
more appropriate value than 9.60.
    Comment: A few commenters stated that the proposed RVU of 7.20 for 
CPT code 36836 and RVU of 9.30 for CPT code 36837 fall below the RUC 
survey 25th percentile values of 7.50 and 9.60 respectively. Commenters 
also stated that we need to provide a significant justification when we 
propose an RVU that is below the 25th percentile.
    Response: We remind the commenters that we used an intraservice 
time ratio, described above, to develop the proposed RVU of 7.20 for 
CPT code 36836, and that we used a 2.10 incremental increase from the 
proposed RVU of 7.20 for CPT code 36836 for CPT code 36837, resulting 
in an RVU of 9.30. The time ratio methodology and the incremental 
methodology are both valid methodologies for developing the RVUs that 
we propose, and there is no rule stating that the RVU cannot go below 
the survey 25th percentile. In addition to the time ratio and 
incremental methodologies, we also use other methods for developing 
RVUs, such as the building block methodology and code comparisons. For 
more details on our methodology for developing work RVUs, we direct 
readers to the discussion CY 2017 PFS final rule (81 FR 80272 through 
80277).
    Comment: Several commenters responded to our request for additional 
information for four direct PE supply items (SD149 (catheter, balloon 
inflation device), SD152 (catheter, balloon, PTA), SF056 (detachable 
coil), and SF057 (non-detachable embolization coil)) and two new direct 
PE equipment items (EQ403 (Wavelinq EndoAVF generator) and EQ404 
(Ellipsys EndoAVF generator)). Supply items SD149 and SD152 are direct 
PE inputs for CPT codes 36836 and 36837, and supply items SF056 and 
SF057 are direct PE inputs for CPT code 36837. Equipment item EQ403 is 
a direct PE input for CPT code 36837, and equipment item EQ404 is a 
direct PE input for CPT code 36836. For the four supply items, we had 
requested a justification for their inclusion as direct PE inputs and 
asked if these supply items are typical and how often they are used. 
For the two new equipment items, we had requested information that may 
inform us why the EQ403 is so much more expensive on its invoice as 
compared with the EQ404, since the former costs $18,580 and the latter 
costs $3,000.
    Response: We thank the commenters for responding to our request for 
information. The majority of commenters that responded to our request 
for information stated that all four of these supply items are typical 
and should be included as direct PE inputs for CPT codes 36836 and 
36837 as recommended by the RUC. One commenter stated they believe the 
typical direct PE input for CPT code 36837 is for one SF056 and that 
SF057 is not a typical use, and also stated that they could not find 
evidence of typical use (50 percent or greater) for supplies SD149 and 
SD152 during CPT procedure code 36837.
    A few commenters responded to our request for more information on 
the costs for EQ403 and EQ404. The commenters stated that the specialty 
societies submitted invoice pricing for supplies and equipment to the 
RUC, and that they do not have any influence on the prices that vendors 
set for their products. Some commenters described how each of these 
equipment items are used. Another commenter stated that typically, the 
WavelinQTM EndoAVF generator (E0403) can be acquired through 
direct purchase or financed through an agreement where the provider 
agrees to purchase a predetermined number of WavelinQTM 
catheters (SD350). The price of the generator (EQ403) can change 
depending on how many catheters the provider agrees to purchase and/or 
the type of purchase agreement the provider chooses.
    Again, we thank the commenters for responding to our request for 
information. The majority of the commenters stated that PE supply items 
SD149 and SD152 are typical direct PE inputs for CPT codes 36836 and 
36837; and supply items SF056 and SF057 are typical direct PE inputs 
for CPT code 36837. After reviewing the information provided by the 
commenters, we are finalizing the direct PE supply items SD149, SD152, 
SF056, and SF057 for CPT codes 36836 and 36837 as recommended by the 
RUC without refinement. We are finalizing direct PE equipment items 
EQ403 and EQ404 for CPT codes 36836 and 36837 as recommended by the RUC 
without refinement.
    Comment: One commenter was concerned that the proposed work RVU for 
CPT code 36837 did not include the reimbursement for the coil 
embolization supply items. The commenter stated that coil embolization 
at the time of WavelinQ procedure is critical to the success of the 
arteriovenous fistula. The commenter stated that embolization is a very 
important step in the success of the procedure and should be taken into 
account in the fee schedule.
    Response: The work RVU is only for the activity of the physician 
for a procedure code. Supply items SF056 (detachable coil) and SF057 
(non-detachable embolization coil) are direct PE inputs for CPT code 
36837, and the payment for these supply items is included in the PE 
RVU. Therefore, the coil embolization supply items are reimbursed and 
are taken into account in the physician fee schedule, though not in the 
work RVU.
    Comment: A few commenters requested that CMS separately identify 
and pay for high-cost disposable supplies priced at more than $500 
using appropriate HCPCS codes, instead of including these high-cost 
supplies as direct PE inputs for CPT codes 36836 and 36837. These 
supply items should then be reviewed annually and updated.
    Response: We have received a number of prior requests from 
interested parties, including the RUC, to implement separately billable 
alpha-numeric Level II HCPCS codes to allow practitioners to be paid 
the cost of high cost disposable supplies per patient encounter instead 
of per CPT code. We stated at the time, and we continue to believe, 
that this option presents a series of potential problems that we have 
addressed previously in the context of the broader challenges regarding 
our ability to price high cost disposable supply items. For a 
discussion of this issue, we direct the reader to our discussion in the 
CY 2011 PFS final rule with comment period (75 FR 73251).
    Comment: One commenter submitted an additional invoice associated 
with

[[Page 69489]]

the pricing of the EllipsysTM Vascular Access Catheter, 
(SD351) supply. The commenter stated that Medtronic recently has been 
compelled by rising costs to implement price increases across their 
portfolio world-wide. Among the many contributing factors, 
manufacturing labor costs have increased by nine percent, and key 
materials that are used in making our products are exhibiting double-
digit cost increases. One commenter stated that starting in July of 
2022, they revised their standard pricing for the EllipsysTM 
catheter sold to physicians' offices to reflect rising costs and to 
achieve parity with prices for catheters in other sites of service 
(that is, hospital outpatient departments and ASCs). The commenter 
stated that the price to physician office customers the 
EllipsysTM catheter is now $8,950, and submitted an invoice 
to support this assertion.
    Response: We appreciate the submission of additional pricing 
information this commenter for the SD351 supply. We note that the RUC 
submitted invoices for this supply item with their recommendations 
based on information gathered from the specialties that perform this 
service. While we acknowledge that pricing for the item in question may 
have changed, we are interested in additional review by other 
interested parties before finalizing an increase in the price. The 
submitted invoice would represent an increase from $6000 to $8950 for 
the SD351 supply, an extraordinary increase in the span of 6 months 
since the service was reviewed at the January 2022 RUC meeting. We will 
review the valuations for this service when they are revised by the RUC 
to reflect the additional costs described by this commenter, including 
any increases in the price of the SD351 supply, and consider for future 
updates to this service.
    Comment: One commenter expressed concern that CMS is using only a 
single invoice of $6,000 for SD351 (EllipsysTM Vascular 
Access Catheter) and noted this pricing is unrepresentative for this 
device. The commenter urged CMS to work with the manufacturers to 
collect additional invoices to arrive at more appropriate pricing for 
SD351.
    Response: We often request that practitioners send us additional 
invoices for supplies and equipment, which we then use to establish the 
PE inputs and PE RVUs for specific services. We did receive an 
additional invoice for SD351 but as noted above, the RUC submitted 
invoices for this supply item with their recommendations based on 
information gathered from the specialties that perform this service. We 
will consider the additional invoice and this new information in future 
rulemaking.
    Comment: A few commenters stated that the direct PE inputs for 
equipment for CPT code 36836 should reflect the use of EL011 (room, 
angiography) rather than EL016 (room, ultrasound, vascular). One of 
these commenters noted that although CPT code 36836 is done under 
ultrasound, the typical location for this procedure is in an 
angiography room given the angioplasty performed after the fistula 
creation more than 90 percent of the time. Another commenter stated 
that CMS' proposal to use an ultrasound room rather than an angiography 
room in the development of the PE values for CPT code 36836 is 
incorrect in their view, as CPT code 36836 typically infers inclusion 
of a balloon angioplasty among the performed procedures, and in their 
experience the appropriate venue when a balloon angioplasty is 
performed is always an angiography room.
    Response: We disagree with the commenters and believe that EL016 
(room, ultrasound, vascular) is the appropriate direct PE equipment 
input for CPT code 36836. We reviewed the equipment inputs on the 
Practice Expense Summary of Recommendation for the non-facility 
setting, and the PE spreadsheet, provided by the RUC for CPT codes 
36836 and 36837. The RUC-recommended EL016 for CPT code 36836, and we 
agree with the RUC recommendation. Please consider presenting any 
direct PE equipment input changes for CPT code 36836 to the AMA RUC for 
review.
    After consideration of the public comments, we are finalizing the 
work RVU values for the Percutaneous Arteriovenous Fistula Creation 
code family (CPT codes 36836 and 36837) as proposed. We are finalizing 
the direct PE inputs for CPT codes 36836 and 36837 without refinement. 
Also, we are deleting HCPCS codes G2170 and G2171 as proposed.
(9) Energy Based Repair of Nasal Valve Collapse (CPT Codes 30468 and 
30469)
    In September 2021, the CPT Editorial Panel created CPT code 30469 
(Repair of nasal valve collapse with low energy, temperature-controlled 
(i.e., radiofrequency) subcutaneous/submucosal remodeling) which is 
currently reported with an unlisted code. For the January 2022 RUC 
meeting, both CPT code 30468 (Repair of nasal valve collapse with 
subcutaneous/submucosal lateral wall implant(s)) and CPT code 30469 
were reviewed. For CY 2023, the RUC recommended no change to the 
current work RVU of 2.80 for CPT code 30468, and a work RVU of 2.70 for 
CPT code 30469.
    The RUC reviewed the specialty society request to affirm the recent 
RUC valuations for CPT code 30468, which was surveyed and valued by the 
RUC in January 2020 for CY 2021. The RUC agreed, so for CY 2023, the 
RUC is not recommending any change to the current work RVU of 2.80 for 
CPT code 30468. In addition, the PE Subcommittee reviewed the direct PE 
inputs and made modifications to the pre-service clinical staff time to 
CPT code 30468 in accordance with current standards. There was a 
previous oversight in valuing the direct PE inputs for CPT code 30468. 
Therefore, 3 minutes of clinical staff time has been added to CPT code 
30468 for clinical activity CA005 (complete pre-procedure phone calls 
and prescription).
    We proposed to maintain the current work RVU of 2.80 for CPT code 
30468 as recommended by the RUC. We also proposed the RUC-recommended 
direct PE inputs for CPT code 30468, which now includes clinical 
activity code CA005, without refinement.
    For CPT code 30469, the RUC recommended a work RVU of 2.70 based on 
a direct work RVU crosswalk from CPT code 31295 (Nasal/sinus endoscopy, 
surgical, with dilation (e.g., balloon dilation); maxillary sinus 
ostium, transnasal or via canine fossa). We disagreed with the RUC-
recommended work RVU of 2.70. Therefore, we proposed a work RVU of 2.44 
for CPT code 30469, which is the same RVU as CPT code 31297 (Nasal/
sinus endoscopy, surgical, with dilation (e.g., balloon dilation); 
sphenoid sinus ostium) and has the same 20 minutes of intra-service 
time and similar total time. We noted that CPT code 31295, which the 
RUC used as a direct crosswalk for the work RVU for CPT code 30469, has 
the same 20 minutes of intra-service time and 56 minutes of total time 
as CPT code 31297. We believe the RUC should have used CPT code 31297 
as the crosswalk for CPT code 30469. Both CPT codes 31295 and 31297 
were reviewed in 2017 and are in the same code family. The proposed 
work RVU of 2.44 is supported by the reference CPT codes we compared to 
CPT code 30469 with the same 20 minutes of intra-service time and 
similar total time as CPT code 30469; reference CPT code 31233 (Nasal/
sinus endoscopy, diagnostic; with maxillary sinusoscopy (via inferior 
meatus or canine fossa puncture)) with an RVU of 2.18, and CPT code 
31295 with an RVU of 2.70. Again, we believe 2.44 is a more appropriate 
value overall than 2.70

[[Page 69490]]

when compared to the range of codes with the same intra-service time 
and similar total time.
    We proposed the RUC-recommended direct PE inputs for CPT code 30469 
without refinement.
    The following is a summary of the comments we received and our 
responses.
    Comment: A few comments supported our proposal to maintain the 
current work RVU of 2.80 for CPT code 30468.
    Response: We thank the commenters for their support, and we are 
finalizing the RUC-recommended RVU of 2.80 for CPT code 30468 as 
proposed.
    Comment: A few comments disagreed with our proposed work RVU of 
2.44 for CPT code 30469. The commenters stated that we did not consider 
the intensity for CPT code 30469, and that the intensity was a closer 
match to the RUC-recommended crosswalk CPT code 31295, instead of our 
proposed comparator code of CPT code 31297. One commenter stated that 
CPT code 30469 has greater intensity because it involves multiple 
applications in anatomic locations subject to damage which would worsen 
the patient's condition. Also, commenters were concerned with 
maintaining relativity between CPT codes 30468 and 30469, and also 
stated that the proposed RVU of 2.44 for CPT code 30469 falls below the 
survey 25th percentile for CPT code 30469.
    Response: We continue to believe that the nature of the PFS 
relative value system is such that all services are appropriately 
subject to comparisons to one another, and we still believe that CPT 
code 31297 is a valid comparator to CPT code 30469, which has the same 
20 minutes of intra-service time and similar total time as CPT code 
30469. We also noted that CPT code 31295, which the RUC used as a 
direct crosswalk for the work RVU for CPT code 30469, has the same 20 
minutes of intra-service time and 56 minutes of total time as CPT code 
31297. We do not agree with the commenter that we did not consider the 
intensity for CPT code 30469, and would like to note that the intensity 
represented by the IWPUT of 0.0853 for CPT code 32197 is similar to the 
IWPUT of 0.0874 for the 2nd reference code used in the RUC survey, 
which is CPT code 31238 (Nasal/sinus endoscopy, surgical; with control 
of nasal hemorrhage). For relativity purposes, we note that there were 
different codes with similar time values the RUC could have used 
besides CPT code 31295. We continue to believe that the proposed work 
RVU of 2.44 is supported by the reference CPT codes we compared to CPT 
code 30469 with the same 20 minutes of intra-service time and similar 
total time as CPT code 30469; reference CPT code 31233 with an RVU of 
2.18, and CPT code 31295 with an RVU of 2.70. Also, we point out that 
the RUC-recommended RVU of 2.70 was below the 25th percentile on two of 
the three survey entries provided on the RUC Summary Report for CPT 
code 30469, and that the lowest 25th percentile value for these three 
entries was 2.25, which is below our proposed value of 2.44. Therefore, 
we are finalizing the work RVU of 2.44 as proposed for CPT code 30469.
    After consideration of the public comments, we are finalizing the 
work RVUs for the Energy Based Repair of Nasal Valve Collapse code 
family (CPT codes 30468 and 30469) as proposed. We are also finalizing 
the direct PE inputs for codes 30468 and 30469 as proposed, without 
refinement.
(10) Drug Induced Sleep Endoscopy (DISE) (CPT Code 42975)
    In October 2020, the CPT Editorial Panel created CPT code 42975 
(Drug-induced sleep endoscopy, with dynamic evaluation of velum, 
pharynx, tongue base, and larynx for evaluation of sleep-disordered 
breathing, flexible, diagnostic) to report drug induced sleep endoscopy 
(DISE) flexible, diagnostic. At the January 2021 RUC Meeting, the RUC 
requested that this service be resurveyed for the April 2021 RUC 
Meeting using a standard 000-day survey template. For CY 2023, the RUC 
recommended a work RVU of 1.95 for CPT code 42975.
    We disagreed with the RUC-recommended work RVU of 1.95 for CPT code 
42975 and proposed a work RVU of 1.58. We believe the RVU should be 
lower than the RUC recommendation of 1.95 to reflect the decrease in 
total time from 68 minutes to 50 minutes. The proposed RVU of 1.58 is 
based on the total time ratio calculation using the RUC-recommended 50 
minutes total time for CPT code 42975 divided by the 48 minutes of 
total time for CPT code 43197 (Esophagoscopy, flexible, transnasal; 
diagnostic, including collection of specimen(s) by brushing or washing, 
when performed (separate procedure)), then multiplying by the RVU of 
1.52 for CPT code 43197 ((50/48) x 1.52 = 1.58). We found that CPT code 
43197 has the same intra-service time and similar total time as CPT 
code 42975. Also, CPT code 43197 is a similar endoscopic procedure as 
CPT codes 42975 and 31579 (Laryngoscopy, flexible or rigid telescopic, 
with stroboscopy). We noted that CPT code 31579 is the first key 
reference code in the RUC survey. The proposed work RVU of 1.58 is 
supported by the reference CPT codes we compared to CPT code 42975 with 
the same 15 minutes of intra-service time and similar total time as CPT 
code 42975; reference CPT code 43200 (Esophagoscopy, flexible, 
transoral; diagnostic, including collection of specimen(s) by brushing 
or washing, when performed (separate procedure)) with an RVU of 1.42, 
and CPT code 62272 (Spinal puncture, therapeutic, for drainage of 
cerebrospinal fluid (by needle or catheter)) with an RVU of 1.58. 
Again, we believe the proposed RVU of 1.58 is a more appropriate value 
overall than 1.95 when compared to the range of codes with the same 
intra-service time and similar total time.
    We proposed the RUC-recommended direct PE inputs for CPT code 42975 
without refinement.
    The following is a summary of the comments we received and our 
responses.
    Comment: A few commenters disagreed with our proposed RVU of 1.58 
for CPT code 42975, and want us to accept the RUC-recommended RVU of 
1.95 instead. The commenters stated that they did not understand our 
rationale that the RVU should be reduced due to the decrease in total 
time between the two surveys for the January 2021 and April 2021 RUC 
meetings, especially since an interim RVU of 1.90 was previously 
accepted by CMS for the 2022 PFS. The commenters stated it is important 
to note that the interim value accepted by CMS for the 2022 PFS was 
based on inaccurate survey data, as the immediate post-service time was 
not captured appropriately in the initial survey of CPT code 42975. 
Upon resurvey, respondents gave identical intra time and post procedure 
time. The only difference was the removal of 18 minutes of post time 
(for the half day discharge management visit) that was included in 
total time approved on an interim basis in January 2021, which 
represents the reduction of total time from the January 2021 (68 
minutes) to the April 2021 (50 minutes) total time for CPT code 42975. 
Based on this, the commenters did not understand CMS' rationale that 
the work RVU should be reduced due to the decrease in total time 
between the two surveys, and argued that the first survey was 
invalidated due to the use of the incorrect tool. Respondents therefore 
were asked about post procedure visits/time, and indicated that a 
discharge management visit occurs. The standard time for a half day 
discharge management was then recommended by

[[Page 69491]]

one of the specialty societies. The only change in data for the April 
survey was that respondents were not asked about a discharge management 
visit, and therefore, they did not indicate that one occurred. Their 
pre, intra, and immediate post times were almost identical. Therefore, 
the commenters believe that the RUC-recommended RVU of 1.95 is 
justified and is appropriate as compared to the key reference services 
selected and the broader fee schedule of codes with similar times and 
intensity.
    Response: We appreciate the RUC resurveying CPT code 42975. This 
allowed us to review CPT code 42975 again and revalue it for 2023. We 
note that when CPT code 42975 was initially valued in January 2021, an 
incorrect survey instrument was used, thus requiring CPT code 42975 to 
be resurveyed in April 2021. In January 2021, the RUC questioned the 18 
minutes for the \1/2\ discharge day management used by the specialty 
society to value CPT code 42975, and determined that it was not 
necessary for this code. When CPT code 42975 was resurveyed for the 
April 2021 RUC meeting, the total time showed the decrease of 18 
minutes due to the removal of the \1/2\ discharge day management. Thus, 
the total time for CPT code 42975 dropped from 68 minutes to 50 
minutes. Therefore, we continue to believe the RVU should be lower than 
the RUC recommendation of 1.95 to reflect the decrease in total time 
from 68 minutes to 50 minutes. The proposed RVU of 1.58 is based on the 
total time ratio calculation using the RUC-recommended 50 minutes total 
time for CPT code 42975 divided by the 48 minutes of total time for CPT 
code 43197, then multiplying by the RVU of 1.52 for CPT code 43197 
((50/48) x 1.52 = 1.58). We found that CPT code 43197 has the same 
intra-service time and similar total time as CPT code 42975. Also, CPT 
code 43197 is a similar endoscopic procedure as CPT codes 42975 and 
31579. We noted that CPT code 31579 is the first key reference code in 
the RUC survey. The proposed work RVU of 1.58 is supported by the 
reference CPT codes we compared to CPT code 42975 with the same 15 
minutes of intra-service time and similar total time as CPT code 42975; 
reference CPT code 43200 with an RVU of 1.42, and CPT code 62272 with 
an RVU of 1.58. Again, we continue to believe the proposed RVU of 1.58 
is a more appropriate value overall than 1.95 when compared to the 
range of codes with the same intra-service time and similar total time. 
Therefore, we are finalizing the work RVU of 1.58 for code 42975 as 
proposed.
    Comment: One commenter disagreed with our use of a total time ratio 
to develop the proposed RVU of 1.58 for CPT code 42975, and stated that 
it neglects to capture the level of intensity. The commenter stated 
that the methodologies CMS used for the valuation of specific codes for 
2023 is flawed, including the total time ratio calculation that informs 
the proposed work RVU of 1.58 for CPT code 42975.
    Response: We disagree with the commenter and continue to believe 
that the use of time ratios is one of several appropriate methods for 
identifying potential work RVUs for particular PFS services, 
particularly when the alternative values recommended by the RUC and 
other commenters do not account for information provided by surveys 
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. 
In accordance with the statute, we believe that changes in time and 
intensity must be accounted for when developing work RVUs. When our 
review of recommended values reveals that changes in the resource of 
time are not accounted for in a RUC-recommended RVU, the obligation to 
account for that change when establishing the proposed and final work 
RVUs remains. 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, as indicated by the many services 
that share the same time values but have different work RVUs. 
Furthermore, we reiterate that we use time ratios to identify 
potentially appropriate 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. For more 
details on our methodology for developing work RVUs, we direct readers 
to the discussion in the CY 2017 PFS final rule (81 FR 80272 through 
80277).
    Comment: One commenter stated that the proposed RVU of 1.58 for CPT 
code 42975 falls below the RUC survey 25th percentile of 1.95, and that 
we need to provide a significant justification when we propose an RVU 
that is below the 25th percentile.
    Response: We disagree with the commenter and would like to remind 
the commenter that we used a total time ratio, described above, to 
develop the proposed RVU of 1.58 for CPT code 42975. A total time ratio 
is one of several valid methodologies we use for developing the RVUs 
that we propose, and there is no rule stating that the work RVU cannot 
go below the survey 25th percentile. We believe that changes in work 
time should be reflected in changes to the work RVU, and note that the 
total time decreased for CPT code 42975 when it was resurveyed in April 
2021.
    After consideration of the public comments, we are finalizing the 
work RVU for the Drug Induced Sleep Endoscopy (DISE) code family (CPT 
code 42975) as proposed. We are finalizing the direct PE inputs for 
code 42975 as proposed, without refinement.
(11) Endoscopic Bariatric Device Procedures (CPT Codes 43235, 43290, 
and 43291)
    In February 2021, the CPT Editorial Panel created CPT codes 43290 
(Esophagogastroduodenoscopy, flexible, transoral; with deployment of 
intragastric bariatric balloon) and 43291 (Esophagogastroduodenoscopy, 
flexible, transoral; with removal of intragastric bariatric balloon(s)) 
for endoscopic bariatric device procedures to the 
esophagogastroduodenoscopy (EGD) code family. CPT code 43235 
(Esophagogastroduodenoscopy, flexible, transoral; diagnostic, including 
collection of specimen(s) by brushing or washing, when performed 
(separate procedure)) is the base code for the EGD family and was 
surveyed with the new endoscopic bariatric device procedures, 43290 and 
43291. All three of these CPT codes were reviewed at the April 2021 RUC 
meeting. For CY 2023, the RUC recommended an RVU of 3.11 for CPT code 
43290, an RVU of 2.80 for CPT code 43291, and maintaining the current 
work RVU of 2.09 for CPT code 43235.
    We proposed the RUC-recommended work RVU of 3.11 for CPT code 
43290, the RUC-recommended work RVU of 2.80 for CPT code 43291, and 
maintaining the current work RVU of 2.09 for CPT code 43235 for this 
code family.
    We proposed the direct PE inputs for CPT code 43235 without 
refinement. However, we proposed refinements to the direct PE inputs 
for CPT codes 43290 and 43291.
    For CPT code 43290, we proposed refinements to the direct PE inputs 
for

[[Page 69492]]

clinical labor activity codes CA001 (complete pre-service diagnostic 
and referral forms) and CA011 (provide education/obtain consent). We 
proposed to refine CA001 from 5 minutes to the standard 3 minutes since 
no explanation was provided to support 5 minutes for this clinical 
labor activity. We proposed to refine CA011 from 15 minutes to 10 
minutes since it was not clear why this much time for education is 
needed, and we do not believe that the recommended 15 minutes would be 
typical for the procedure. Also, when we looked at other procedures 
with clinical labor activity code CA011 we did not find many procedures 
with more than 12 minutes for this activity. Therefore, we proposed to 
refine the clinical labor activity times for CA001 and CA011 for CPT 
code 43290 as described above, and to accept the remaining RUC-
recommended direct PE inputs without refinement.
    For CPT code 43291, we proposed a refinement to the direct PE input 
for clinical labor activity code CA016 (prepare, set-up and start IV, 
initial positioning and monitoring of patient) from 10 minutes to the 
standard 2 minutes. In the PE Summary of Recommendations for non-
facility direct PE inputs provided by the RUC, the RUC recommended 8 
minutes above the standard 2 minutes for CA016 and stated this clinical 
labor activity was identical to the 10 minutes for positioning the 
patient as CPT code 43260 (Endoscopic retrograde 
cholangiopancreatography (ERCP); diagnostic, including collection of 
specimen(s) by brushing or washing, when performed (separate 
procedure)). However, our study of this code family could not find 10 
minutes of non-facility direct PE inputs for clinical labor activity 
CA016. Also, CPT code 43260 is only performed in a facility and does 
not have any non-facility clinical labor times. Therefore, we proposed 
to refine the clinical labor activity time for CA016 for CPT code 43291 
as described above, and to accept the remaining RUC-recommended direct 
PE inputs without refinement. This proposed reduction of 8 minutes to 
the CA016 clinical labor activity also carried over to the equipment 
times for the suction machine (Gomco) (EQ235), the scope video system 
(monitor, processor, digital capture, cart, printer, LED light) 
(ES031), and the multi-channeled flexible digital scope, esophagoscopy 
gastroscopy duodenoscopy (EGD) (ES087) which we proposed to reduce by 
the same 8 minutes.
    The following is a summary of the comments we received and our 
responses.
    We did not receive comments on the proposed work RVUs for CPT codes 
43235, 43290, and 43291. Therefore, we are finalizing the work RVU of 
2.09 for CPT code 43235, the RVU of 3.11 for code 43290, and the RVU of 
2.80 for code 43291 as proposed. We did receive comments on the direct 
PE inputs for CPT codes 43290 and 43291, and those comments and 
responses are below.
    Comment: We received a few comments regarding the PE inputs for CPT 
code 43290 in the non-facility setting. The commenters requested that 
we accept the RUC-recommended clinical labor times for CA001 and CA011 
in the non-facility setting. The commenters stated that the RUC agreed 
that the ``Extensive Use of Clinical Staff'' package should be used for 
CA001 to allow 5 minutes for CPT code 43290. Also, the commenters 
stated that additional minutes above the standard for CA011 were needed 
for CPT code 43290 due to the extent of the patient instruction 
required, and stated 15 minutes should be allowed.
    Response: We continue to disagree with the RUC-recommended direct 
PE inputs for clinical labor activity codes CA001 and CA011 for CPT 
code 43290. We reviewed the Practice Expense Summary of Recommendation 
for the facility and non-facility settings. We continue to believe that 
3 minutes for CA001, and 10 minutes for CA011, in the non-facility 
setting is appropriate. Although the RUC recommended 5 minutes for 
CA001 in the non-facility setting, we note that that the RUC 
recommended only 3 minutes for CA001 in the facility setting, and not 
the 5 minutes that would be the standard for the ``Extensive Use of 
Clinical Staff'' in the facility and non-facility settings. After 
reviewing the comments, we are still not convinced that the information 
provided would support the need for 5 minutes for CA001 in the non-
facility setting. Also, for clinical labor activity CA011, we continue 
to believe that 10 minutes is appropriate and that the recommended 15 
minutes would not be typical for the procedure. When we looked at other 
procedures with clinical labor activity code CA011, we did not find 
many procedures with more than 12 minutes for this activity. After 
reviewing the comments, we remain unconvinced that the information 
provided would support the need for 15 minutes for CA011 in the non-
facility setting. Therefore, we are finalizing the clinical labor 
activity times for CA001 and CA011 for CPT code 43290 as proposed.
    Comment: The commenters stated that 10 minutes was needed for CA016 
for CPT code 43291, instead of the standard 2 minutes, for positioning 
the patient because no other procedure in this code family is performed 
in this position, which is why extra time is required. The commenters 
stated that clinical labor time needed to position the patient is 
identical to that of CPT code 43260 and described the process as 
follows: patient is placed face up with their head resting on a pad 
positioner or pillow and their neck in a neutral position, patient's 
arms are positioned to maintain a neutral thumb-up or supinated 
position and may be tucked at their sides or abducted to less than 90 
degrees on arm boards, then the patient is intubated while supine and 
staff must then move the patient into left lateral position.
    Response: After reviewing the comments, we are still not convinced 
that the information provided would support the need for 10 minutes for 
CA016 for CPT code 43291. We continue to believe that the standard 2 
minutes for CA016 is appropriate. We remind the commenters that in our 
study of CPT code 43260, we could not find 10 minutes of non-facility 
direct PE inputs for clinical labor activity CA016 as suggested. Also, 
we remind the commenters that CPT code 43260 is only performed in the 
facility setting and does not have any non-facility clinical labor 
times. Therefore, we are finalizing the clinical labor activity time 
for CA016 for CPT code 43291 as proposed.
    After consideration of the public comments, we are finalizing the 
work RVU values for the Endoscopic Bariatric Device Procedures code 
family (CPT codes 43235, 43290, and 43291) as proposed. We are 
finalizing the direct PE inputs for CPT code 43235 as proposed, without 
refinement. We are finalizing the direct PE inputs for CPT codes 43290 
and 43291 as proposed.
(12) Delayed Creation Exit Site From Embedded Catheter (CPT Code 49436)
    CPT code 49436 (Delayed creation of exit site from embedded 
subcutaneous segment of intraperitoneal cannula or catheter) was 
finalized as potentially misvalued in the CY 2022 PFS final rule (86 FR 
64996) and the code was found to be appropriate to value for the non-
facility/office setting. The RUC only reviewed the PE inputs for this 
service at the January 2022 meeting. The RUC recommended 5 minutes for 
Clinical Activity Code CA013, line 34 in the non-facility/office 
setting on the RUC-recommended PE spreadsheet. We disagreed with the 
RUC-recommended

[[Page 69493]]

time, and proposed the standard time of 2 minutes, as an adequate 
rationale was not provided for the additional time in the global space. 
The proposed reduction of 3 minutes to the CA013 clinical labor 
activity also carries over to the equipment times, which we proposed to 
reduce by the same 3 minutes. Otherwise, we agreed with the RUC-
recommended clinical labor times for activity codes CA011 and CA018, 
and we proposed the remaining refinements as recommended.
    The RUC did not recommend any work inputs for this code and we did 
not propose any work RVU refinements.
    We received three comments regarding our proposed direct PE input 
refinements for CPT code 49436 in response to the CY 2023 PFS proposed 
rule and those comments are summarized below.
    Comment: Two commenters stated that the rationale for the 
additional 3 minutes under the CA013 clinical labor activity was 
included in the PE Summary of Recommendations (SOR), which lists the 
supply items needed to set up the procedure room. The commenters stated 
that the 36 supply items are mostly sterile and will take at least 3 
more minutes to set up than the standard 2 minutes allocated for an E/M 
service. Another commenter requested that we reevaluate and finalize 
the RUC-recommended 5 minutes.
    Response: We continue to disagree with the RUC-recommended 5 
minutes for Clinical Activity Code CA013. The PE SOR did not provide a 
sufficient rationale for the additional time, and commenters did not 
provide new data to justify the additional time. This procedure is 
performed during an office visit, and we believe that the standard 2 
minutes adequately accounts for the preparation of supplies, when 
compared to similar codes in the global space and non-facility/office 
setting.
    After consideration of the public comments, we are finalizing 2 
minutes for CA013 as proposed. The proposed reduction of 3 minutes to 
the CA013 clinical labor activity also carries over to the formula used 
to calculate equipment times, which we are finalizing to reduce by the 
same 3 minutes. We agreed with the RUC-recommended clinical labor times 
for activity codes CA011 and CA018, and we are finalizing the remaining 
refinements as proposed and recommended.
(13) Percutaneous Nephrolithotomy (CPT Codes 50080 and 50081)
    In September 2021, the CPT Editorial Panel revised the descriptors 
to CPT codes 50080 (Percutaneous nephrolithotomy or pyelolithotomy, 
lithotripsy stone extraction, antegrade ureteroscopy, antegrade stent 
placement and nephrostomy tube placement, when performed, including 
imaging guidance; simple (e.g., stone[s] up to 2 cm in a single 
location of kidney or renal pelvis, nonbranching stones)) and 50081 
(Percutaneous nephrolithotomy or pyelolithotomy, lithotripsy stone 
extraction, antegrade ureteroscopy, antegrade stent placement and 
nephrostomy tube placement, when performed, including imaging guidance; 
complex (e.g., stone[s]  2 cm, branching stones, stones in 
multiple locations, ureter stones, complicated anatomy)), that in 
recent claims data were identified via the site of service anomaly 
screen, to be performed less than 50 percent of the time in the 
inpatient setting, but both codes have 090 day global periods, which 
include post-op inpatient hospital E/M services as a component of their 
value, typical of major surgery codes. The revised code descriptors 
also include image guidance and nephrostomy tube placement, which were 
not present in the old descriptors, and were reported as procedures 
that were separate from CPT codes 50081 and 50082. These codes have not 
been reviewed for nearly 30 years.
    CPT code 50080 currently has a work RVU of 15.74 with 117 minutes 
of intra-service time and 359.5 minutes of total time. The RUC 
recommended a work RVU of 13.50, 90 minutes of intra-service time, and 
244 minutes of total time for CPT code 50080, which represents a 
reduction from the current values. However, the recommended intra-
service times dropped by 76.9 percent from the current intra-service 
time and the RUC recommended work RVU is reduced only by 85.9 percent. 
Therefore, we disagree with the RUC recommended work RVU and we 
proposed a work RVU of 12.11 for CPT code 50080 with the RUC 
recommended 90 minutes of intra-service time and 244 minutes of total 
time. We noted that our proposed work RVU for CPT code 50080 falls 
between CPT code 36830 (Creation of arteriovenous fistula by other than 
direct arteriovenous anastomosis (separate procedure); nonautogenous 
graft (e.g., biological collagen, thermoplastic graft)), with a work 
RVU of 12.03 and the same intra-service time of 90 minutes, and CPT 
code 36818 (Arteriovenous anastomosis, open; by upper arm cephalic vein 
transposition), with a work RVU of 12.39 and the same intra-service 
time of 90 minutes (and both with similar total times to CPT code 
50080).
    CPT code 50081 currently has a work RVU of 23.50 with 42 minutes of 
pre-service evaluation time, 0 minutes of pre-service positioning time, 
25 minutes of pre-service scrub/dress/wait time, 195 minutes of intra-
service time, 27 minutes of immediate post-service time, and 507.5 
minutes of total time. The RUC recommended 22.00 work RVUs with 40 
minutes of pre-service evaluation time, 3 minutes positioning time, 10 
minutes scrub/dress/wait time, 140 minutes of intra-service time, 44 
minutes of immediate post-service time, for a sum of 302 minutes of 
total time. The RUC-recommended intra-service time and total time for 
CPT code 50081 are less than the current times for this code and we 
expect the work RVUs to also be less than the current work RVUs. Though 
the RUC recommended a work RVU of 22.00 that is less than the current 
23.50 work RVU, a substantial reduction in time should be better 
reflected in the work RVU.
    The RUC recommended 13.50 work RVUs for CPT code 50800 and 22.00 
for CPT code 50081, with an incremental difference between the two 
codes of 8.50 work RVUs (22.00 - 13.50 = 8.50). We proposed a work RVU 
of 20.61 for CPT code 50081, based on the proposed CPT code 50080's 
work RVU of 12.11 plus the RUC-recommended incremental difference 8.50 
work RVUs between CPT code 50080 and CPT code 50081(12.11 + 8.50 = 
20.61).
    We proposed the direct PE inputs as recommended by the RUC for both 
codes in the family.
    Comment: We received several comments concerning CPT codes 50080 
and 50081, all opposing our proposed work RVUs for these services. 
Commenters pointed out that CPT codes 50080 and 50081 are not the same 
services that they were when they were last reviewed. They noted that 
both codes have retained their current work RVUs since CY 2010 and that 
they now encompass several other procedures that previously could have 
been separately billable, which has increased their intensity and 
complexity. These additions include imaging supervision and 
interpretation, antegrade stent placement, nephrostomy tube placement 
and antegrade ureteroscopy as have been included in their new 
descriptors.
    Response: We acknowledge that it has been many years since these 
two CPT codes were last reviewed and percutaneous nephrolithotomy's 
technologies and methodologies have changed, which may have added 
complexities to the service, but at the same time, there have been 
improvements in methods and

[[Page 69494]]

efficiencies through research and evaluations of better and best 
practices. We see evidence of this just in the change in the physician 
intra-services times for CPT code 50080 with what was 117 minutes, but 
is now 90 minutes, even with the addition of those services now added 
to the new descriptor (compared to the previous descriptor for CPT code 
50080; Percutaneous nephrostolithotomy or pyelostolithotomy, with or 
without dilation, endoscopy, lithotripsy, stenting, or basket 
extraction; up to 2 cm.). Similarly, with the change in the physician 
intra-services times for CPT code 50081 with what was 195 minutes, but 
is now 140 minutes, even with the addition of those services now added 
to the new descriptor (compared to the previous descriptor for CPT code 
50081; Percutaneous nephrostolithotomy or pyelostolithotomy, with or 
without dilation, endoscopy, lithotripsy, stenting, or basket 
extraction; over 2 cm). The skills and trainings of the physicians have 
certainly become more efficient in performing the main task and the 
additional tasks now bundled into CPT codes 50080 and 50081 using less 
intra-service time and total time for these procedures.
    Comment: Commenters suggested that CMS should consider CPT codes 
50080 and 50081 as entirely new codes with their new descriptors 
describing their bundling and that the old codes are not really 
comparable to all of the tasks performed in the new code and thus CMS 
should place more weight in the most recent results from these codes' 
surveyed work RVUs and their surveyed times, specifically the 25th 
percentile results.
    Response: We do agree that the new descriptors for CPT codes 50080 
and 50081 are more detailed and more specific about what is now bundled 
in with the entirety of the service but the fundamental core of these 
services are still the same and they are not completely new and 
different enough to make them incomparable. We still believe that the 
reductions in physician work times should generally result in 
reductions in of the work RVUs, as we have proposed. If those 
additional tasks of imaging supervision and interpretation, antegrade 
stent placement, nephrostomy tube placement and antegrade ureteroscopy 
were separately paid from CPT codes 50080 and 50081, those separate 
claim codes and their typical units of service were not included in the 
AMA RUC recommendations for consideration to value the bundled service. 
Having those CPT codes, their work RVUs, and their intra-service 
minutes would have been useful when we were valuing these services. 
Commenters reiterated that these services, these additional tasks, are 
now part of the bundled codes, which lead us to re-review the AMA RUC 
recommendations. From our re-review of the AMA RUC recommendations, we 
do note that in the text material accompanying the RUC recommendation 
for CPT code 76000 (Fluoroscopy (separate procedure), up to 1 hour 
physician or other qualified health care professional time) codes or 
language was struck from the text material. It is unclear if the 
reference to CPT code 76000 was intentionally deleted, but we note that 
CPT code 76000 has a work RVU value of 0.30 and an intra-service time 
of 10.0 minutes and a total time of 20.0 minutes.
    Comment: Commenters objected to CMS' selection of comparator codes. 
Commenters stated that the comparator codes chosen by CMS (for CPT code 
50080 which falls between CPT codes 36830 and 36818) do not have 
similar clinical anatomical basis to CPT codes 50080 and 50081, and 
that our comparator codes have not taken into account similar levels of 
work intensities.
    Response: We believe our selected comparator codes are relevant in 
the PFS relative value system and that all services are appropriately 
subject for comparison to each other. By statute, we are required to 
consider times and intensities as they are related to work when 
reviewing and valuating all CPT and HCPCS services.
    After review and consideration of all comments on our proposals for 
CPT codes 50080 and 50081, we believe that the value of CPT code 76000 
is not entirely accounted for in our original proposed valuations and 
we are adding Fluoroscopy's 0.30 work RVUs to both CPT codes 50080 and 
50081, since this work was omitted from our proposed valuations. We are 
finalizing 12.41 work RVUs (12.11 + 0.30) for CPT code 50080 and 20.91 
work RVUs (12.11 + 8.50 + 0.30) for CPT code 50081 for CY 2023. We are 
also finalizing the direct PE inputs as proposed and as recommended by 
the RUC for both of these codes.
(14) Laparoscopic Simple Prostatectomy (CPT Codes 55821, 55831, 55866, 
and 55867)
    In October 2021, the CPT Editorial Panel added CPT placeholder code 
55867 (Laparoscopy, surgical prostatectomy, simple subtotal (including 
control of postoperative bleeding, vasectomy, meatotomy, urethral 
calibration and/or dilation, and internal urethrotomy), includes 
robotic assistance, when performed) and prompted this family of 
Laparoscopic Simple Prostatectomy codes for survey and review for the 
January 2022 RUC meeting.
    The RUC recommended a work RVU of 15.18 for CPT code 55821 
(Prostatectomy (including control of postoperative bleeding, vasectomy, 
meatotomy, urethral calibration and/or dilation, and internal 
urethrotomy); suprapubic, subtotal, 1 or 2 stages) with 33 minutes of 
pre-service evaluation time, 3 minutes positioning time, 10 minutes 
scrub/dress/wait time, 120 minutes of intra-service time, and 25 
minutes of immediate post-service time, for a sum of 329 minutes of 
total time. CPT code 55821 currently has a work RVU value of 15.76 with 
102.0 minutes of intra-service time and 399.5 minutes of total time. 
After reviewing this code and relative similar codes in the PFS, we 
proposed the RUC-recommended work RVU of 15.18 with 315 minutes of 
total time.
    The RUC recommended a work RVU of 15.60 for CPT code 55831 
(Prostatectomy (including control of postoperative bleeding, vasectomy, 
meatotomy, urethral calibration and/or dilation, and internal 
urethrotomy); retropubic, subtotal), with 40 minutes of pre-service 
evaluation time, 3 minutes positioning time, 10 minutes scrub/dress/
wait time, 120 minutes of intra-service time, 25 minutes of immediate 
post-service time, for a sum of 329 minutes of total time. CPT code 
55831 currently has a work RVU value of 17.19 with 114.0 minutes of 
intra-service time and 422.5 minutes of total time. The RUC notes an 
additional degree of difficulty with this retropubic incision approach 
(behind the pubis) compared to the suprapubic approach. After reviewing 
this code and relative similar codes in the PFS, we proposed the RUC 
recommended work RVU of 15.60 with 322 minutes of total time.
    The RUC recommended a work RVU of 22.46 for CPT code 55866 
(Laparoscopy, surgical prostatectomy, retropubic radical, including 
nerve sparing, includes robotic assistance, when performed) with 40 
minutes of pre-service evaluation time, 15 minutes positioning time, 12 
minutes scrub/dress/wait time, 180 minutes of intra-service time, 50 
minutes of immediate post-service time, for a sum of 362 minutes of 
total time. CPT code 55866 currently has a work RVU value of 26.80 with 
180 minutes of intra-service time and 422 minutes of total time. The 
RUC notes that this procedure removes the entire prostate with robotic 
assistance, and the complexity of nerve sparing when operating with a 
cancerous

[[Page 69495]]

prostate, increases the medical complexity and intensity of this 
procedure. After reviewing this code and relative similar codes in the 
PFS, we proposed the RUC recommended work RVU of 22.46 with 362 minutes 
of total time to CPT code 55866.
    The RUC recommended a work RVU of 19.53 for CPT code 55867 
(Laparoscopy, surgical prostatectomy, simple subtotal (including 
control of postoperative bleeding, vasectomy, meatotomy, urethral 
calibration and/or dilation, and internal urethrotomy), includes 
robotic assistance, when performed) with 40 minutes of pre-service 
evaluation time, 8 minutes positioning time, 11 minutes scrub/dress/
wait time, 180 minutes of intra-service time, 50 minutes of immediate 
post-service time, for a sum of 354 minutes of total time. The RUC 
offers CPT code 42420 (Excision of parotid tumor or parotid gland; 
total, with dissection and preservation of facial nerve) with a work 
RVU of 19.53, 180 minutes of intra-service time and 383 minutes of 
total time)) as a crosswalk to CPT code 55867. After reviewing this 
code and relative similar codes in the PFS, we proposed the RUC-
recommended work RVU of 19.53 with 354 minutes of total time to CPT 
code 55867.
    We proposed the RUC-recommended direct PE inputs for CPT codes 
55821, 55831, 55866, and 55867 without refinement.
    CMS received two comments for CPT codes 55821, 55831, 55866, and 
55867.
    Comment: Both comments for these Laparoscopic Simple Prostatectomy 
codes indicated support for CMS to accept the RUC-recommended work RVUs 
and the direct PE inputs adjustments.
    Response: We thank commenters for taking time to submit comments 
expressing support for our proposals to accept the RUC-recommendations 
for CPT codes 55821, 55831, 55866, and 55867.
    We are finalizing the RUC-recommended work RVUs and direct PE 
inputs for these Laparoscopic Simple Prostatectomy codes.
(15) Lumbar Laminotomy With Decompression (CPT Codes 63020, 63030, and 
63035)
    In October 2018, CPT code 63030 (Laminotomy (hemilaminectomy), with 
decompression of nerve root(s), including partial facetectomy, 
foraminotomy and/or excision of herniated intervertebral disc; 1 
interspace, lumbar) was identified by the AMA as having an anomalous 
site of service when compared to Medicare utilization data. The 
Medicare data from 2014 through 2017 indicated that CPT code 63030 was 
performed less than 50 percent of the time in the inpatient setting, 
yet included inpatient hospital evaluation and management (E/M) 
services within its global period. In January 2019, the RUC recommended 
that this code be reviewed in 2 years (January 2021) to determine if 
previous changes to differentiate percutaneous, endoscopic, and open 
spine procedures were effective to correct reporting of this service. 
In December 2020, the Relativity Assessment Workgroup noted that CPT 
code 63030 continues to be primarily reported in the outpatient 
setting, but still includes inpatient hospital visits in its valuation. 
The specialty society indicated that there is still confusion about 
this code, and therefore, the RUC recommended that CPT code 63030 be 
referred to the CPT Editorial Panel to revise the descriptor to 
mitigate the incorrect reporting in the outpatient setting, but the CPT 
Editorial Panel did not accept the code change application to 
differentiate inpatient (63030) versus outpatient (630X0) at the 
September 2021 CPT meeting. Since this is a site of service issue, CPT 
code 63030 was surveyed with the code family for the January 2022 RUC 
meeting.
    For CPT codes 63020 (Laminotomy (hemilaminectomy), with 
decompression of nerve root(s), including partial facetectomy, 
foraminotomy and/or excision of herniated intervertebral disc; 1 
interspace, cervical), 63030, and 63035 (Laminotomy (hemilaminectomy), 
with decompression of nerve root(s), including partial facetectomy, 
foraminotomy and/or excision of herniated intervertebral disc; each 
additional interspace, cervical or lumbar (List separately in addition 
to code for primary procedure)), we disagree with the RUC's recommended 
work RVUs of 15.95, 13.18, and 4.00, respectively, because they do not 
account for the surveyed changes in time for CPT codes 63020, 63030, 
and 63035, and the full application of the 23-hour policy to CPT code 
63030. We proposed a work RVU of 14.91 for CPT code 63020, a work RVU 
of 12.00 for CPT code 63030, and a work RVU of 3.86 for CPT code 63035.
    The RUC recommended 40 minutes pre-service evaluation, 20 minutes 
pre-service positioning, 15 minutes pre-service scrub/dress/wait time, 
90 minutes intraservice time, 30 minutes immediate post-service time, 
and one CPT code 99232 (subsequent hospital care/day 25 minutes), one 
CPT code 99231 (Subsequent hospital care/day 15 minutes), one CPT code 
99238 (Hospital discharge day management; 30 minutes or less), one CPT 
code 99214 (Office or other outpatient visit for the evaluation and 
management of an established patient, which requires a medically 
appropriate history and/or examination and moderate level of medical 
decision making. When using time for code selection, 30-39 minutes of 
total time is spent on the date of the encounter.), and two CPT code 
99213 (Office or other outpatient visit for the evaluation and 
management of an established patient, which requires a medically 
appropriate history and/or examination and low level of medical 
decision making. When using time for code selection, 20-29 minutes of 
total time is spent on the date of the encounter.) visits in the post-
operative period. This results in a 15-minute decrease in the pre-
service period, a 30-minute decrease in intraservice time, a 5-minute 
decrease in immediate post-service time, and a 17-minute increase in 
the post-operative period. The proposed work RVU of 14.91 is based on 
the total time ratio calculation using the RUC-recommended 379 minutes 
of total time divided by the current total time of 412 minutes for CPT 
code 63020, then multiplying by the current work RVU of 16.20 for CPT 
code 63020 ((379 minutes/412 minutes) * 16.20 = 14.90). We noted that 
this is a direct crosswalk to CPT code 27057 (Decompression 
fasciotomy(ies), pelvic (buttock) compartment(s) (e.g., gluteus medius-
minimus, gluteus maximus, iliopsoas, and/or tensor fascia lata muscle) 
with debridement of nonviable muscle, unilateral), which has a work RVU 
of 14.91, identical intraservice and immediate post-service time of 90 
minutes and 30 minutes, respectively, and only 10 more minutes of total 
time. We believe this work RVU more adequately accounts for the 
decrease in total and intraservice time than the RUC recommended work 
RVU, and we noted that we considered the reverse building block 
methodology, which would result in a work RVU of 14.30, but we believed 
that it decreased the valuation of CPT code 63020 too much, considering 
the shift in post-operative work to include a longer, more intense 
office/outpatient visit (CPT code 99214).
    We disagree with the RUC-recommended work RVU for CPT code 63030. 
More specifically, we disagree with the RUC recommended work RVU for 
CPT code 63030 because the RUC did not completely apply the 23-hour 
policy calculation (finalized in the CY 2011 PFS final rule (75 FR 
73226)) in formulating its recommendations.

[[Page 69496]]

Additionally, we disagree with the RUC recommended work RVU for this 
code for which the RUC considered the patient to be admitted during the 
post-operative period because the RUC did not fully apply the 23-hour 
policy when formulating their recommendations. As we noted in the CY 
2011 PFS final rule (75 FR 73226), and as we discuss earlier in this 
section of this final rule (``(1) Anterior Abdominal Hernia Repair (CPT 
codes 15778, 49591, 49592, 49593, 49594, 49595, 49596, 49613, 49614, 
49615, 49616, 49617, 49618, 49621, 49622, and 49623''), the work RVUs 
for services that are typically performed in the outpatient setting and 
require a hospital stay of less than 24 hours may in some cases involve 
multiple overnight stays while the patient is still considered to be an 
outpatient for purposes of Medicare payment. Because such services are 
typically furnished in the outpatient setting, they should not be 
valued to include inpatient post-operative E/M visits. The level of 
discharge day management services included in the valuation of such 
services should similarly not reflect an inpatient discharge and should 
therefore be reduced. And finally, as discussed in CY 2011 rulemaking, 
the intraservice time from the inpatient level E/M postoperative visit 
should be reallocated to the immediate postservice time of the service. 
The 23-hour policy calculation, when fully applied to the calculation 
of a work RVU, is used to reduce the value of discharge day management 
services, remove the inpatient E/M visits, and reallocate the 
intraservice time to the immediate post-service period. We refer 
readers to the 2011 PFS final rule (75 FR 73226) for an in-depth 
explanation of the 23-hour policy.
    For CPT code 63030, we believe the RUC only partially applied the 
23-hour policy when it applied the policy to the immediate post service 
time, but not to the calculation of the work RVU. Instead, we believe 
the 23-hour policy should be fully applied to this code that describes 
outpatient services for which there is an overnight stay during the 
post-operative period, regardless of the number of nights that a 
patient stays in the hospital. The services to which the 23-hour policy 
is usually applied would typically involve a patient stay in a hospital 
for less than 24 hours, which often means the patient may stay 
overnight in the hospital. On occasion, the patient may stay in the 
hospital longer than a single night; however, in both cases (one night 
or more than one night), the patient is considered to be a hospital 
outpatient, not an inpatient, for Medicare purposes. In short, we do 
not believe that the work that is typically associated with an 
inpatient service should be included in the work RVUs for the 
outpatient services to which the 23-hour policy applies, especially 
considering the previously discussed site of service anomaly for CPT 
code 63030.
    In accordance with the 23-hour policy valuation methodology we 
established in the CY 2011 PFS final rule, we are instead proposing a 
work RVU of 12.00 for CPT code 63030.The steps are as follows:
     Step (1): 13.18 - 0.64 * = 12.54.
     Step (2): 12.54 - 0.76 ** = 11.78.
     Step (3): 11.78 + (10 minutes x 0.0224) *** = 12.00 RVUs.
    * Value associated with \1/2\ hospital discharge day management 
service.
    ** Value associated with an inpatient hospital visit, CPT code 
99231.
    *** Value associated with the reallocated intraservice time 
multiplied by the post-service intensity of the 23-hour stay code.
    The RUC recommended the maintenance of the current work RVU of 
13.18 because there was no change in intraservice time and the 37-
minute decrease in total time is largely due to the change in immediate 
post-service time and post-operative period from the application of the 
23-hour policy. We noted that the proposed work RVU of 12.00 is higher 
than the other valuations that we considered, including the total time 
ratio work RVU of 11.75 ((305 minutes/342 minutes) * 13.18 = 11.75) and 
the reverse building block work RVU of 11.45. We noted that the 
proposed work RVU of 12.00 is well-bracketed by two 90-minute 
intraservice timed 090-day CPT codes 28725 (Arthrodesis; subtalar), 
with a work RVU of 11.22, and 58720 (Salpingo-oophorectomy, complete or 
partial, unilateral or bilateral (separate procedure)), with a work RVU 
of 12.16.
    We noted that, in the summary of recommendations (SOR) submitted to 
CMS by the RUC, the specialty societies assert that the surveyed total 
time would be the same as the current total time if the 23-hour policy 
was not fully applied to the immediate post-service time and post-
operative period, with only a shift of work from facility to office, 
but we noted that this is not true. The surveyed total time is 339 
minutes, but the RUC recommended 40 minutes for the pre-service 
evaluation time rather than the specialty societies' surveyed 45 
minutes. If the RUC had recommended the survey times, with the pre-
service evaluation refinement, the reverse building block work RVU 
would be 12.62, still less than the RUC-recommended work RVU of 13.18, 
effectively accounting for the shift from facility to office post-
operative visits.
    For CPT code 63035, we proposed a work RVU of 3.86 based on the 
reverse building block methodology to account for the 11-minute 
increase in intraservice time. We noted that this proposed value is 
between the surveyed 25th percentile value of 3.50 and the RUC-
recommended work RVU of 4.00. We noted that the proposed work RVU is 
well-bracketed by two 60-minute add-on CPT codes--CPT code 50706 and 
63231. CPT code 50706 (Balloon dilation, ureteral stricture, including 
imaging guidance (e.g., ultrasound and/or fluoroscopy) and all 
associated radiological supervision and interpretation (List separately 
in addition to code for primary procedure)), has a work RVU of 3.80, 
and CPT code 63621 (Stereotactic radiosurgery (particle beam, gamma 
ray, or linear accelerator); each additional spinal lesion (List 
separately in addition to code for primary procedure)), has a work RVU 
of 4.00.
    For the direct PE inputs, we proposed to remove the 125 minutes of 
equipment time for EQ168 (light, exam) for CPT codes 63020 and 63030 
because the RUC contested the typicality of its use to assess the wound 
and remove staples. Because it is a standard piece of equipment in a 
neurosurgeon and orthopedic exam room, and the RUC questioned its 
typicality, we proposed 0 minutes for EQ168 for CPT codes 63020 and 
63030.
    We received several comments regarding our proposed work RVUs and 
two comments regarding our proposed refinement to direct PE input EQ168 
(light, exam) for CPT codes 63020, 63030, and 63035 in response to the 
CY 2023 PFS proposed rule and those comments are summarized below.
    Comment: Commenters urged CMS to use valid survey data to establish 
work RVUs when possible, instead of a calculated value supported by 
another code with no clinical relevancy. The commenters disagreed with 
our proposed work RVU of 14.91 for CPT code 63020, stating that the RUC 
recommended the survey 25th percentile work RVU using magnitude 
estimation from a valid survey of physicians who perform this service 
and that it appropriately accounts for the decrease in intraservice 
time, and therefore, it did not need to be decreased further. 
Commenters also disagreed with the work RVU crosswalk from CPT code 
27057 to CPT code 63020, stating that CPT code 27057 is a rarely 
performed procedure for a significantly different patient population, 
thus making it an

[[Page 69497]]

inappropriate comparison that discounts the time, work, and intensity 
required to perform CPT code 63020. Commenters stated that CPT code 
63020 requires removal of bone, along with dissection around nerve 
roots and the spinal cord, whereas CPT code 27057 only requires the 
soft tissue work of a fasciotomy. Commenters also stated that the 
physician work described by CPT code 27057 does not entail the same 
intensity of work required by CPT code 63020, does not include 
significant risk of paralysis, and does not require routine use of 
fluoroscopy and image guidance to perform the procedure. Commenters 
stated that positioning for CPT code 63020 requires use of the Mayfield 
headrest and is more complex than a routine prone positioning for CPT 
code 27057. Commenters stated that CPT code 27057 includes gluteal 
muscle debridement, which is tedious and time consuming, but not as 
complex as work involving the resection of bone and retraction of 
spinal nerves.
    Response: We continue to believe that the nature of the PFS 
relative value system is such that all services are appropriately 
subject to comparisons to one another. Although codes that describe 
clinically similar services are sometimes stronger comparator codes, we 
do not agree that codes must share the same site of service, patient 
population, or utilization level to serve as an appropriate code 
comparison or an appropriate crosswalk. As noted above, we proposed a 
crosswalk to CPT code 27057 with the support of the total time ratio. 
We believe that time ratios are a valid and appropriate tool for 
determining work RVUs. 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. 
In accordance with the statute, we believe that changes in time and 
intensity must be accounted for when developing work RVUs. When our 
review of recommended values reveals that changes in the resource of 
time are not accounted for in a RUC-recommended RVU, the obligation to 
account for that change when establishing proposed and final work RVUs 
remains. For more details on our methodology for developing work RVUs, 
we direct readers to the discussion on time ratios as discussed above 
in this Valuation of Specific Codes section.
    Regarding the commenters' assertion that the RUC-recommended work 
RVU, which is only a decrease of 0.25 work RVUs from the current 
valuation of CPT code 63020, accounts for the 15-minute decrease in the 
pre-service period, a 30-minute decrease in intraservice time, a 5-
minute decrease in immediate post-service time, and a 17-minute 
increase in the post-operative period, and did not need to be further 
decreased, we reiterate that, although we do not imply that the 
decrease in time as reflected in survey values must always equate to a 
one-to-one or linear decrease in the valuation of work RVUs, we believe 
that since the two components of work are time and intensity, absent an 
obvious or explicitly stated rationale for why the relative intensity 
of a given procedure has increased, it would be inappropriate to use 
the RUC-recommended work RVU to value CPT code 63020 given the 
significant decrease in intraservice time and the absence of an 
adequate justification of increased intensity. The RUC-recommended work 
RVU yields an IWPUT of 0.077, whereas the current IWPUT is 0.059. The 
RUC-recommended work RVU would yield an IWPUT increase of 0.018 with no 
obvious or explicitly stated rational for an increased intensity. If 
the RUC's recommendations appear 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 methodologies discussed above to identify potential work 
RVUs, including the methodologies intended to account for the changes 
in the resources involved in furnishing the procedure such as a total 
time ratio.
    We continue to believe our proposed work RVU of 14.91 for CPT code 
63020 based on the total time ratio calculation and a direct crosswalk 
to CPT code 27057, which has a work RVU of 14.91, identical 
intraservice and immediate post-service time of 90 minutes and 30 
minutes, respectively, and only 10 more minutes of total time, more 
adequately accounts for the decrease in total and intraservice time 
than the RUC recommended work RVU.
    We note that while CPT code 63020 requires removal of bone, along 
with dissection around nerve roots and the spinal cord whereas CPT code 
27057 requires the soft tissue work of a fasciotomy, does not include 
significant risk of paralysis, and does not require routine use of 
fluoroscopy and image guidance to perform the procedure, CPT code 
27057's vignette and service description describes a 75-year old female 
who is febrile with leukocytosis who is taken to the operating room 
emergently for fasciotomy(ies) and debridement of necrotic muscle. We 
note that the typical patient is at risk of acute renal failure and 
life-threatening rhabdomyolysis. We note that, while we understand that 
the positioning for CPT code 63020 requires use of the Mayfield 
headrest and is more complex than a routine prone positioning for CPT 
code 27057, that difference is accounted for in the difference in pre-
service positioning time of 8 minutes, which has longstanding, well-
established standardized WPUT of 0.0224 which factors into the reverse 
building block work RVU of 14.30. Therefore, we continue to believe a 
direct crosswalk to CPT code 27057 is appropriate to value CPT code 
63020 and are finalizing a work RVU of 14.91 for CPT code 63020.
    Comment: The commenters disagreed with our proposed work RVU of 
12.00 for CPT code 63030, stating that there is concern about 
contradictory policies regarding the newly revised E/M CPT codes that 
combined inpatient and observation (outpatient) services. They believe 
this renders the 23-hour policy invalid.
    Response: We believe that adopting the revisions for CPT codes 
99221-99223 and 99231-99233 is not inconsistent with our 23-hour policy 
as it applies to this code family. In this instance, we are reviewing 
RUC-recommendations that explicitly identify CPT code 63030 as being 
subject to our 23-hour policy. Consistent with discussions in the CY 
2011 and CY 2022 PFS final rules cited above, we agree with the RUC 
that this code is subject to the 23-hour policy, and we believe it is 
appropriate to fully apply the 23-hour policy to CPT code 63030. We 
note that we acknowledge commenters' concerns regarding policy 
implications as a result of adopting the E/M inpatient/observation 
revisions and will take that into consideration for future rulemaking. 
Additionally, we note that we did not propose any changes to the 
previously finalized 23-hour policy in the proposed rule, and we 
believe it is still consistent to apply the 23-hour policy, as was 
recommended by the RUC, for CPT code 63030. We also remind commenters 
that the 23-hour policy calculation, when fully applied to the 
calculation of a work RVU, is used to reduce the value of discharge day 
management services, remove the inpatient E/M visits, and reallocate 
the intraservice time to the immediate post-service period. We refer 
readers to the 2011 PFS final rule (75 FR 73226) for an in-depth 
explanation of the 23-hour policy. For CPT code 63030, we believe the 
RUC only partially applied the 23-hour policy when it applied the 
policy to the immediate post service time, but not to the calculation 
of the work RVU. Instead, we continue to believe the 23-hour policy 
should be fully applied to this code that describes

[[Page 69498]]

outpatient services for which there is an overnight stay during the 
post-operative period, regardless of the number of nights that a 
patient stays in the hospital. In short, we continue to believe that 
the work that is typically associated with an inpatient service should 
not be included in the work RVUs for the outpatient services to which 
the 23-hour policy applies, especially considering the previously 
discussed site of service anomaly for CPT code 63030. Therefore, we are 
finalizing our proposed work RVU of 12.00 for CPT code 63030.
    Comment: Commenters disagreed with our proposed work RVU of 3.86 
for CPT code 63035, stating that it was a Harvard valued code with time 
and work values that were generated from the base code, CPT code 63030. 
Commenters expressed that the Harvard survey did not include all the 
surgical specialties that now perform the service, with only 17 
responses from neurosurgeons. Therefore, the commenters stated that the 
previous intraservice time should not be used to arrive at a calculated 
value. The commenters also expressed concern that CMS did not address 
the compelling evidence provided by the RUC, and urged CMS to address 
this rationale.
    Response: We believe that it is important to use the recent data 
available regarding work times, and we note that when many years have 
passed since work time has been measured, significant discrepancies can 
occur. However, we also believe that our operating assumption regarding 
the validity of the existing values as a point of comparison is 
critical to the integrity of the relative value system as currently 
constructed. The work times currently associated with codes play a very 
important role in PFS ratesetting, both as points of comparison in 
establishing work RVUs and in the allocation of indirect PE RVUs by 
specialty. If we were to operate under the assumption that previously 
recommended work times had been routinely overestimated, this would 
undermine the relativity of the work RVUs on the PFS in general, in 
light of the fact that codes are often valued based on comparisons to 
other codes with similar work times. Such an assumption would also 
undermine the validity of the allocation of indirect PE RVUs to 
physician specialties across the PFS.
    Instead, we believe that it is crucial that the code valuation 
process take place with the understanding that the existing work times 
that have been used in PFS ratesetting are accurate. We recognize that 
adjusting work RVUs for changes in time is not always a straightforward 
process and that the intensity associated with changes in time is not 
necessarily always linear, which is why we apply various methodologies 
to identify several potential work values for individual codes. 
However, we reiterate that we believe it would be irresponsible to 
ignore changes in time based on the best data available, and that we 
are statutorily obligated to consider both time and intensity in 
establishing work RVUs for PFS services. For additional information 
regarding the use of old work time values that were established many 
years ago and have not since been reviewed in our methodology, we refer 
readers to our discussion of the subject in the CY 2017 PFS final rule 
(81 FR 80273 through 80274).
    We remind commenters that the concept of compelling evidence was 
developed by the RUC as part of its work RVU review process for 
individual codes. The RUC determines whether there is compelling 
evidence to justify an increase in valuation. The RUC's compelling 
evidence criteria include documented changes in physician work, an 
anomalous relationship between the code and multiple key reference 
services, evidence that technology has changed physician work, analysis 
of other data on time and effort measures, and evidence that incorrect 
assumptions were made in the previous valuation of the service. While 
we appreciate the submission of this additional information for review, 
we emphasize that the RUC developed the concept of compelling evidence 
for its own review process; an evaluation of ``compelling evidence,'' 
at least as conceptualized by the RUC, is not part of our review 
process, as our focus is the time and intensity of services, in 
accordance with the statute. With that stated, we do consider changes 
in technology, patient population, and other compelling evidence 
criteria, as such evidence may affect the time and intensity of a 
service under review. For example, new technology may cause a service 
to become easier or more difficult to perform, with corresponding 
effects on the time and intensity of the service. However, we are under 
no obligation to adopt the same review process or compelling evidence 
criteria as the RUC. We instead focus on evaluating and addressing the 
time and intensity of services when valuing codes because section 
1848(c)(1)(A) of the Act specifically defines the work component as the 
resources that reflect time and intensity in furnishing the service. 
Therefore, we are finalizing a work RVU of 3.86 for CPT code 63035 as 
proposed.
    Comment: Two commenters disagreed with our proposal to remove 125 
minutes of equipment time for EQ168 (light, exam) for CPT codes 63020 
and 63030, stating that they believe the exam light is needed to check 
for possible seroma and to examine and take out stitches. The 
commenters urged CMS not to remove the exam light expense from these 
code values.
    Response: We proposed to remove the 125 minutes of equipment time 
for EQ168 (light, exam) for CPT codes 63020 and 63030 because the RUC 
contested the typicality of its use to assess the wound and remove 
staples. Because it is a standard piece of equipment in a neurosurgeon 
and orthopedic exam room, and the RUC questioned its typicality, we 
proposed 0 minutes for EQ168 for CPT codes 63020 and 63030. We note 
that we found five other 090-day codes in the CPT code 630XX series, 
CPT codes 63045 (Laminectomy, facetectomy and foraminotomy (unilateral 
or bilateral with decompression of spinal cord, cauda equina and/or 
nerve root[s], [eg, spinal or lateral recess stenosis]), single 
vertebral segment; cervical), 63046 (Laminectomy, facetectomy and 
foraminotomy (unilateral or bilateral with decompression of spinal 
cord, cauda equina and/or nerve root[s], [eg, spinal or lateral recess 
stenosis]), single vertebral segment; thoracic), 63047 (Laminectomy, 
facetectomy and foraminotomy (unilateral or bilateral with 
decompression of spinal cord, cauda equina and/or nerve root[s], [eg, 
spinal or lateral recess stenosis]), single vertebral segment; lumbar), 
63050 (Laminoplasty, cervical, with decompression of the spinal cord, 2 
or more vertebral segments), and 63051 (Laminoplasty, cervical, with 
decompression of the spinal cord, 2 or more vertebral segments; with 
reconstruction of the posterior bony elements (including the 
application of bridging bone graft and non-segmental fixation devices 
[eg, wire, suture, mini-plates], when performed)) that do not have time 
allotted to EQ168, despite their inclusion of ``Monitor wounds and 
remove sutures/staples'' in their post-service descriptions, therefore 
we do not believe this is a typical equipment input. Since we have not 
received new information that contradicts the findings in the RUC 
Database to indicate that the use of this equipment is typical, we are 
finalizing 0 minutes for EQ168 for CPT codes 63020 and 63030 as 
proposed.

[[Page 69499]]

(16) Somatic Nerve Injections (CPT Codes 64415, 64416, 64417, 64445, 
64446, 64447, 64448, 76942, 77002, and 77003)
    In May 2021, the CPT Editorial Panel revised the descriptors and 
billing instructions for CPT codes 64415 (Injection(s), anesthetic 
agent(s) and/or steroid; brachial plexus, including imaging guidance, 
when performed), 64416 (Injection(s), anesthetic agent(s) and/or 
steroid; brachial plexus, continuous infusion by catheter (including 
catheter placement), including imaging guidance, when performed), 64417 
(Injection(s), anesthetic agent(s) and/or steroid; axillary nerve, 
including imaging guidance, when performed), 64445 (Injection(s), 
anesthetic agent(s) and/or steroid; sciatic nerve, including imaging 
guidance, when performed), 64446 (Injection(s), anesthetic agent(s) 
and/or steroid; sciatic nerve, continuous infusion by catheter 
(including catheter placement), including imaging guidance, when 
performed), 64447 (Injection(s), anesthetic agent(s); femoral nerve, 
including imaging guidance, when performed), 64448 (Injection(s), 
anesthetic agent(s) and/or steroid; femoral nerve, continuous infusion 
by catheter (including catheter placement), including imaging guidance, 
when performed), 77002 (Fluoroscopic guidance for needle placement), 
77003 (Fluoroscopic guidance and localization of needle or catheter tip 
for spine or paraspinous diagnostic or therapeutic injection procedures 
(epidural or subarachnoid)) and 76942 (Ultrasonic guidance for needle 
placement, imaging supervision and interpretation). These codes were 
then surveyed by the RUC in October 2021.
    We last finalized values for CPT codes 64415, 64416, 64417, 64445, 
64446, 64447, and 64448 in the CY 2020 PFS final rule (84 FR 62744 
through 62745). In May 2018, the CPT Editorial Panel approved the 
revision of descriptors and guidelines for codes in the somatic nerve 
injection family. At its October 2018 meeting, the RUC recommended work 
RVU and PE inputs for a number of somatic nerve injection codes, 
including CPT codes 64415, 64416, 64417, 64445, 64446, 64447, and 
64448. (Note that in 2018, the codes did not include ``including 
imaging guidance, when performed'' in their descriptors.) During the 
October 2018 RUC presentation for this family of services, the 
specialty societies stated that CPT codes 64415, 64416, 64417, 64446, 
66447, and 64448 were reported with the imaging code CPT code 76942 
more than 50 percent of the time. In reviewing this family of services 
in the CY 2020 PFS final rule, our finalized work and PE values for the 
codes did not consider the simultaneous performance of injection and 
imaging (84 FR 62744). In May 2021, the CPT Editorial Panel revised the 
codes to include ``with imaging, when performed'' in the descriptors.
    When presenting its CY 2023 valuation recommendations, the RUC 
pointed out that the current values and times for CPT codes 64415, 
64416, 64417, 64445, 64446, 64447, and 64448 reflect only the work and 
time of the injection. The revised codes, however, include both 
injection and imaging. In order to make an equitable comparison between 
the RUC recommendations and the current values, the RUC suggested we 
compare the RUC recommendations to values that combined the current 
work and estimated time of the injection codes and the imaging code 
with which they are being bundled, CPT code 76942. We agreed with this 
approach and thank the RUC for providing combined work RVUs and 
estimated combined times, which we considered as part of the RUC's 
recommendations.
    As part of its recommendations, the RUC reaffirmed its prior 
recommendations for a number of codes that were previously reviewed or 
reaffirmed in the CY 2020 PFS final rule, including: CPT codes 64400 
(Injection(s), anesthetic agent(s); trigeminal nerve, each branch 
(i.e., ophthalmic, maxillary, mandibular)), 64408 (Injection(s), 
anesthetic agent(s), and/or steroid; vagus nerve), 64420 (Injection(s), 
anesthetic agent(s) and/or steroid; intercostal nerve, single level), 
64421 (Injection(s), anesthetic agent(s) and/or steroid; intercostal 
nerves, each additional level (List separately in addition to code for 
primary procedure)), 64425 (Injection(s), anesthetic agent(s) and/or 
steroid; ilioinguinal, iliohypogastric nerves), 64430 (Injection(s), 
anesthetic agent(s) and/or steroid; pudendal nerve), 64435 
(Injection(s), anesthetic agent(s) and/or steroid; paracervical 
(uterine) nerve), 64449 (Injection(s), anesthetic agent(s) and/or 
steroid; lumbar plexus, posterior approach, continuous infusion by 
catheter (including catheter placement)), and 64450 (Injection(s), 
anesthetic agent(s); other peripheral nerve or branch) (84 FR 62744 
through 62745); CPT code 64451 (Injection(s), anesthetic agent(s) and/
or steroid; nerves innervating the sacroiliac joint, with image 
guidance (ie, fluoroscopy or computed tomography) (84 FR 62740); and 
CPT code 64454 (Injection(s), anesthetic agent(s) and/or steroid; 
genicular nerve branches including imaging guidance, when performed) 
(84 FR 62749). The RUC also reaffirmed its recommendation for CPT code 
64455 (Injection(s), anesthetic agent(s) and/or steroid; plantar common 
digital nerve(s) (e.g., Morton's neuroma)), which was reviewed and 
valued in the CY 2019 PFS final rule (83 FR 58542). The codes the RUC 
wishes to reaffirm for CY 2023 have not been revised by the CPT 
Editorial Panel and were not resurveyed by the RUC since their prior 
valuation. Since we did not receive new information regarding these 
codes, we acknowledged the RUC's reaffirmation but we did not review 
the values of these codes in the proposed rule. In the proposed rule, 
we also noted that the RUC-reaffirmed values for CPT codes 64435 (work 
RVU of 0.75), 64450 (work RVU of 0.75), 64451 (work RVU of 1.52), and 
64454 (work RVU of 1.52) are the same as the current work RVUs that we 
finalized in the CY 2020 PFS final rule. The RUC reaffirmed work RVU of 
0.94 for CPT code 64405 is the current work RVU, which was finalized in 
the CY 2019 PFS final rule (83 FR 59542) and reaffirmed in the CY 2020 
final rule, and the RUC-reaffirmed work RVU of 1.10 for CPT code 64418 
is the current work RVU value finalized in the CY 2018 PFS final rule 
(82 FR 53054) and reaffirmed in the CY 2020 PFS final rule. The RUC 
reaffirmed a work RVU of 0.75 for CPT code 64455 which is the current 
work RVU we finalized in the CY 2019 PFS final rule (83 FR 58542).
    For CY 2023, we proposed the RUC-recommended work RVUs for CPT 
codes 64417 (work RVU of 1.31), 64447 (work RVU of 1.34), 64448 (work 
RVU of 1.68), 77002 (work RVU of 0.54), 77003 (work RVU of 0.60), and 
76942 (work RVU of 0.67).
    For CPT code 64415, we disagreed with the RUC-recommended work RVU 
of 1.50 and proposed a work RVU of 1.35, based on the intraservice time 
ratio calculated using the ``combined'' values for CPT code 64415 and 
the imaging CPT code 76942 provided by the RUC. (The combined work RVU 
the RUC offered for comparison was 2.02 (the sum of the work RVUs for 
both codes: CPT code 64415 is 1.35 and CPT code 76942 is 0.67), and an 
estimated intraservice time of 15 minutes and total time of 43 
minutes.) This proposed work RVU of 1.35 for CPT code 64415 is 
supported by a crosswalk to CPT code 11982 (Removal, non-biodegradable 
drug delivery implant), which has a work RVU of 1.34, an identical 
service time, and a total time that is two minutes lower than CPT code 
64415. This value is further supported by a bracket of CPT codes: CPT 
code 64486

[[Page 69500]]

and CPT code 33285. CPT code 64486 (Transversus abdominis plane (TAP) 
block (abdominal plane block, rectus sheath block) unilateral; by 
injection(s) (includes imaging guidance, when performed)) has a work 
RVU of 1.27 and identical intraservice and total time values to CPT 
code 64415, and CPT code 33285 (insertion, subcutaneous cardiac rhythm 
monitor, including programming) has a work RVU of 1.53, an intraservice 
time of 10 minutes and a total time of 40 minutes.
    We noted that when compared to the current time file information 
for CPT code 64415, the RUC-recommended intraservice time decreased 
from 12 to 10 minutes (16.7 percent reduction) and RUC-recommended 
total time decreased from 40 to 35 minutes (12.5 percent reduction). 
However, the RUC-recommended work RVU increased by 0.15 which is an 
11.1 percent increase. Although we do not imply that the decrease in 
time as reflected in survey values must always equate to a one-to-one 
or linear decrease in the valuation of work RVUs, we believe that since 
the two components of work are time and intensity, absent an obvious or 
explicitly stated rationale for why the relative intensity of a given 
procedure has increased, significant decreases in time should not be 
met with significant increases to work RVUs without adequate 
justification. Additionally, while we do acknowledge that adding 
imaging does bundle some additional work into the code, we do not 
believe that the recoding of the services in this family has resulted 
in a significant increase in their intensity, only a change in the way 
in which they will be reported, and through the bundling of some of 
these frequently reported services, it is reasonable to expect that the 
new coding system will achieve efficiencies via elimination of 
duplicative assumptions of the resources involved in furnishing 
particular services. We believe the new coding assigns more accurate 
work times, and thus, reflects efficiencies in resource costs that 
existed but were not reflected in the services as they were previously 
reported. If the addition of imaging guidance had made the new CPT 
codes significantly more intense to perform, we believe that this would 
have been reflected in the surveyed work times, which in the case of 
CPT code 64415 actually decreased from the predecessor code. Thus, we 
are disinclined to ignore the impact of decreased times on the work 
RVU. We believe our proposed value of 1.35 appropriately reflects both 
the additional work and the decrease of time.
    We considered proposing a work RVU of 1.27 for CPT code 64415, 
using CPT code 64486 as a comparison code, since it has the same 
intraservice and total times as the revised CPT code 64415. However, 
CPT code 64486, with a work RVU of 1.27, has a lower work RVU than the 
current work RVU of 64415 (1.35.) We are in general agreement with the 
RUC that it is important to acknowledge that there is some additional 
work that comes with adding imaging to this procedure.
    For CPT code 64416, we disagreed with the RUC-recommended work RVU 
of 1.80 and instead proposed a work RVU of 1.65. While we disagreed 
with the RUC's recommended work RVU, we did agree with the RUC's 
proposed increment of +0.30 between CPT codes 64415 and 64416. (The RUC 
recommendation for CPT code 64415 was 1.50, and the recommendation for 
CPT code 64416 was 1.80.) We found persuasive the RUC's observation 
that the current increment between CPT codes 64415 and 64416 is 
unusually small when compared to other sets of related codes in the 
family. Typically, the codes that add catheter placement in addition to 
the injection are 0.30-0.36 work RVUs higher than the codes for an 
injection in the same nerve group or region. Retaining such a narrow 
interval of 0.15 between CPT codes 64415 and 64416 would create a rank 
order anomaly within the family in light of adjustments to some of the 
other codes' work RVUs. Our proposed work RVU of 1.65 for CPT code 
64416 is supported by a bracket of CPT codes: CPT code 64448 and CPT 
code 36573. CPT code 64448 (Transversus abdominis plane (TAP) block 
(abdominal plane block, rectus sheath block) bilateral; by injections 
(includes imaging guidance, when performed)) has a work RVU of 1.60, 15 
minutes intraservice time and 40 minutes total time, and CPT code 36573 
(Insertion of peripherally inserted central venous catheter (PICC), 
without subcutaneous port or pump, including all imaging guidance, 
image documentation, and all associated radiological supervision and 
interpretation required to perform the insertion; age 5 years or older) 
has a work RVU of 1.70, 15 minutes intraservice time and 40 minutes 
total time.
    We noted that, when compared to the current time file, the RUC-
recommended intraservice time for CPT code 64416 decreased from 20 to 
15 minutes (25 percent reduction) and the RUC-recommended total time 
decreased from 49 to 44 minutes (10.2 percent reduction). However, the 
RUC recommended a 0.32 increase in the work RVU, which is a 21.6 
percent increase. We noted that the RUC-recommended work RVU of 1.80 
would give CPT code 64416 the highest work RVU of the surveyed codes, 
and would make it among the highest valued codes in the family. We do 
not believe the RUC-recommended work RVU appropriately accounts for the 
reductions in the surveyed total time for the procedure, and did not 
receive specific information explaining why, despite the decrease in 
time, the value should receive such a significant increase relative to 
the other surveyed codes. As stated previously, absent an obvious or 
explicitly stated rationale for why the relative intensity of a given 
procedure has increased significantly, decreases in time should be 
reflected in the revised work RVUs. As noted in our discussion of CPT 
code 64415 above, if the addition of imaging guidance had made the new 
CPT codes significantly more intense to perform, we believe that this 
would have been reflected in the surveyed work times, which in the case 
of CPT code 64416, are now actually lower. We believe our proposed work 
RVU of 1.65 corrects the increment between CPT code 64415 and 64416, 
while also acknowledging that, the addition of imaging notwithstanding, 
the times for CPT code 64416 have noticeably decreased.
    For CPT code 64445, we disagreed with the RUC-recommended work RVU 
of 1.39 and instead proposed a work RVU of 1.28, based on the 
intraservice time ratio calculated using the ``combined'' values for 
CPT code 64445 and the imaging CPT code 76942 provided by the RUC. (The 
combined work RVU the RUC offered for comparison was 1.67 (the sum of 
the work RVUs for both codes: CPT code 64445 is 1.00 and CPT code 76942 
is 0.67), and an estimated intraservice time of 13 minutes and total 
time of 27 minutes.) This proposed value of 1.28 is supported by a 
comparison to CPT code 64486 (Transversus abdominis plane (TAP) block 
(abdominal plane block, rectus sheath block) unilateral; by 
injection(s) (includes imaging guidance, when performed)), which has a 
work RVU of 1.27 and intraservice time of 10 minutes and total time of 
35 minutes. The value is also supported by a low bracket of CPT code 
58100 (Endometrial sampling (biopsy) with or without endocervical 
sampling (biopsy), without cervical dilation, any method (separate 
procedure)), with a work RVU of 1.21, identical intraservice time and 
almost identical total time, and a high bracket

[[Page 69501]]

of CPT code 11982 (Removal, non-biodegradable drug delivery implant), 
with a work RVU of 1.34, identical intraservice time and a higher total 
time of 33 minutes.
    We noted that the RUC-recommended intraservice time and total time 
for CPT code 64445 are identical to the current intraservice and total 
times in the time file for CPT code 64445. However, the RUC recommended 
a 0.39 increase to the work RVU. We do not imply that the lack of 
change to the intraservice and total times means that the work RVU 
cannot be increased. We believe that since the two components of work 
are time and intensity, absent an obvious or explicitly stated 
rationale for why the relative intensity of a given procedure has 
increased, the RUC-proposed increase in the work RVU does not seem 
justified. As noted in our discussion of CPT code 64415 above, if the 
addition of imaging guidance had made the new CPT codes significantly 
more intense to perform, we believe that this would have been reflected 
in the surveyed work times, which in the case of CPT code 64445, are 
the same as the predecessor code.
    We considered proposing a work RVU of 1.10 for CPT code 64445, 
using CPT code 30901 (Control nasal hemorrhage, anterior, simple 
(limited cautery and/or packing) any method) as a comparison code, with 
a work RVU of 1.10 and identical intraservice and total times as CPT 
code 64445. However, we believed this would cause a rank order anomaly 
within the family. For example, CPT code 64418 (Injection(s), 
anesthetic agent(s) and/or steroid; suprascapular nerve) also has a 
work RVU of 1.10, but does not include imaging. Again, we generally 
agree with the RUC that it is important to acknowledge the additional 
work that comes with adding imaging to this procedure, and to ensure 
that this additional work is reflected within the relative values of 
the family, but we still proposed a work RVU of 1.28 for CPT code 
64445.
    For CPT code 64446, we disagreed with the RUC-recommended work RVU 
of 1.75 and instead proposed a work RVU of 1.64. This recommended work 
RVU is 0.36 higher than the proposed work RVU for CPT code 64445 
(1.28). We noted that the current increment between the current values 
of 64445 and 64446 (1.00 and 1.36, respectively) is 0.36. The RUC 
recommendations for these codes (1.39 and 1.75) preserved this 
increment. Since the same imaging activity is being added to both 
codes, we agree with preserving the relationship between the values of 
CPT codes 64445 and 64446. Our proposed work RVU of 1.64 for CPT code 
64446 is supported by a bracket of CPT codes: CPT code 64448 and 36573. 
CPT code 64448 (Transversus abdominis plane (TAP) block (abdominal 
plane block, rectus sheath block) bilateral; by injections (includes 
imaging guidance, when performed)) has a work RVU of 1.60, 15 minutes 
intraservice time and 40 minutes total time, and CPT code 36573 
(Insertion of peripherally inserted central venous catheter (PICC), 
without subcutaneous port or pump, including all imaging guidance, 
image documentation, and all associated radiological supervision and 
interpretation required to perform the insertion; age 5 years or older) 
has a work RVU of 1.70, 15 minutes intraservice time and 40 minutes 
total time. (We noted that this is the same bracket we suggested to 
support the proposed value for CPT code 64416. As revised, the 
intraservice and total times for CPT codes 64416 and 64446 are the 
same.)
    We noted that, compared to the time file for CPT code 64446, the 
RUC-recommended intraservice time stayed the same (15 minutes) and the 
total time increased from 40 to 44 minutes (10 percent increase). The 
RUC-recommended work RVU for CPT code 64446, is 0.39 higher than the 
current RVU, a 28.7 percent increase. We believe the RUC-recommended 
work RVU increase is disproportionate to the change in time. 
Additionally, we noted that the RUC-recommended times result in CPT 
code 64416 and CPT code 64446 having identical intraservice and total 
times. We believe it best preserves rank order within the family to 
assign CPT code 64416 and CPT code 64446 similar work RVUs.
    We proposed the direct PE inputs as recommended by the RUC for all 
of the codes in the Somatic Nerve Injections family.
    We would like to correct a typographical error. We note that in 
several places in the CY 2023 proposed rule at 87 FR 45919, the number 
``64488'' in CPT code 64488 (Transversus abdominis plane (TAP) block 
(abdominal plane block, rectus sheath block) bilateral; by injections 
(includes imaging guidance, when performed) was misidentified as 
``64448.''
    Comment: A number of commenters expressed support of our proposed 
work RVUs for CPT codes 64417, 64447, 64448, 77002 77003, and 76942.
    Response: We thank the commenters for their support.
    Comment: Several commenters expressed concerns about all of our 
proposed values (including those that aligned with the RUC-recommended 
valuations), which they did not believe reflected the combined work of 
both the injection and the imaging. Commenters indicated that the 
addition of imaging makes the injection procedure more efficient and 
improves success rates for patients. They also noted that somatic nerve 
injections are important treatments for pain management and can be an 
alternative to opioid prescription.
    Response: We agree with commenters that somatic nerve injections 
are a valuable pain management service. However, under allowing the 
codes (which were frequently being performed simultaneously) meant that 
there was duplication in payments for components of the practitioner's 
time, effort, and PE when performing; what was essentially a combined 
procedure was being billed as though it was two standalone procedures. 
We agreed with, and appreciated the CPT and RUC's decision to revise 
and revalue the codes to reflect a bundling of the somatic nerve 
injection and imaging procedures.
    Comment: Commenters disagreed with our proposed work RVUs for CPT 
codes 64415, 64416, 64445 and 64446 and urged us to accept the RUC 
recommendations. Commenters disagreed with some of the codes we 
selected to use as brackets or crosswalks to support our proposed 
valuations on the basis that the codes we selected did not include 
imaging.
    Response: We disagree that some of the codes used as brackets or 
crosswalks were inappropriate simply because they did not include 
imaging. We continue to believe that the nature of the PFS relative 
value system is such that all services are appropriately subject to 
comparisons to one another. Although codes that describe clinically 
similar services are sometimes stronger comparator codes, we do not 
agree that codes must share the same site of service, patient 
population, or utilization level to serve as an appropriate code 
comparison or an appropriate crosswalk.
    Comment: Some commenters disagree with our use of time ratios to 
calculate proposed RVUs for CPT codes 64415 and 64445, stating that 
they believed the intraservice time ratio did not consider the combined 
work of both the injections and the imaging described by the revised 
code descriptors.
    Response: We disagree that our use of time ratio calculations was 
inappropriate. As stated in the proposed rule, we specifically used the 
RUC's projected ``combined'' RVU and intraservice time for CPT codes 
64415 and 64445 when performing our intraservice time ratio 
calculations. It

[[Page 69502]]

was our understanding that the RUC provided this information to 
demonstrate values reflecting the combined work of the revised codes.
    Comment: Some commenters disagree with our use of increments to 
support our proposed values for CPT codes 64416 and 64446.
    Response: We believe the use of an incremental difference between 
codes is a valid methodology for setting values, especially in valuing 
services within a family of revised codes where it is important to 
maintain appropriate intra-family relativity. Historically, 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.
    Comment: Commenters reiterated that CPT codes 64415, 64416, 64445, 
and 64446 (revised to add imaging) now describe work that is more 
intense than the previous codes (which described injections without the 
imaging). Commenters stated that the RUC recommendations better 
reflected the intensity of this new work.
    Additionally, several commenters provided detailed clinical 
information explaining that injections to the sciatic nerve (which are 
described in CPT codes 64445 and 64446) are more intense than 
injections to the femoral artery (CPT codes 64447 and 64448.) Several 
commenters also provided clinical information demonstrating that 
injections to the brachial plexus (which are described by CPT codes 
64415 and 64416) are more intense than injections to the sciatic nerve 
(which are described by CPT codes 64445 and 64446.)
    Response: As explained in the proposed rule, we believed that our 
proposed RVUs for CPT codes 64415, 64416, 64445, and 64446 acknowledged 
the increased work of the codes while also reflecting their respective 
changes in time. However, we consider clinical information associated 
with physician work intensity provided by the RUC and other interested 
parties as part of our review process, and we found the additional 
clinical information helpful by providing greater insight into relative 
intensity within this code family. We note that to determine work RVUs, 
we must look at both time and intensity. We must also consider 
relativity: if two codes have the same work time, but one code has a 
higher intensity, relativity dictates that the higher-intensity code 
gets more RVUs.
    For CPT code 64445 (injection of sciatic nerve, with imaging, if 
performed), we proposed a work RVU of 1.28; the code had a surveyed 
intraservice time of 10 minutes. For CPT code 64447 (injection of 
femoral artery, with imaging, if performed), we had proposed a work RVU 
of 1.34; the code has an intraservice time of 8 minutes. In light of 
the additional information that injections to the sciatic nerve are 
more intense than injections to the femoral nerve (coupled with the 
fact that CPT code 64445 has a longer intraservice time than CPT code 
64447), we now agree that the RUC recommendation of 1.39 for CPT code 
64445 better supports relativity.
    For CPT code 64446 (injection of sciatic nerve with catheter 
placement, with imaging, if performed), we had proposed a work RVU of 
1.64; the code has 15 minutes of intraservice time. We proposed a work 
RVU of 1.68 for CPT code 64448 (injection of femoral nerve with 
catheter placement, with imaging, if performed); the code has an 
intraservice time of 15 minutes. In light of the additional information 
that sciatic nerve injections are more intense than femoral injections 
(coupled with the fact that CPT codes 64446 and 64448 have the same 
intraservice time), we now agree that the RUC recommendation of 1.75 
for CPT code 64446 better supports relativity.
    For CPT code 64415 (injection to the brachial plexus, with imaging, 
if performed), we proposed a work RVU of 1.35; the code has an 
intraservice time of 10 minutes. As noted above, we now agree with a 
work RVU of 1.39 for CPT code 64445 (injection of sciatic nerve, with 
imaging, if performed); the code also has 10 minutes of intraservice 
time. In light of the additional information that brachial nerve 
injections are more intense than sciatic nerve injections (coupled with 
the fact that CPT codes 64415 and 64445 have the same intraservice 
time), we now agree that the RUC recommendation of 1.50 for CPT code 
64415 better supports relativity.
    For CPT code 64416 (injection to the brachial plexus with catheter 
placement, with imaging, if performed), we proposed a work RVU of 1.65; 
the code has an intraservice time of 15 minutes. As noted above, we now 
agree with a work RVU of 1.75 for CPT code 64446 (injection of sciatic 
nerve with catheter placement, with imaging, if performed); the also 
code has 15 minutes of intraservice time. In light of the additional 
information that brachial nerve injections are more intense than 
sciatic nerve injections (coupled with the fact that CPT codes 64416 
and 64446 have the same intraservice time), we now agree that the RUC 
recommendation of 1.80 for CPT code 64416 better supports relativity.
    Based on the comments, we are finalizing the work RVUs for CPT 
codes 64417, 64447, 64448, 77002, 77003, and 76942. and the PE inputs 
for all codes, as proposed. We are finalizing the RUC recommended work 
RVU of 1.50 for CPT code 64415; 1.80 for CPT code 64416; 1.39 for CPT 
code 64445; and 1.75 for CPT code 64446.
(17) Transcutaneous Passive Implant-Temporal Bone (CPT Codes 69714, 
69716, 69717, 69719, 69726, 69727, 69729, 69730, and 69728)
    In October 2020, the CPT Editorial Panel deleted two codes used for 
mastoidectomy and replaced them with four new codes for magnetic 
transcutaneous attachment to external speech processor. The CPT 
Editorial Panel made additional revisions to differentiate 
implantation, removal, and replacement of the implants. The RUC 
submitted interim recommendations to CMS for six codes in this family 
following the January 2021 RUC meeting, and we proposed and finalized 
the recommended work RVU for all six of these codes in the CY 2022 PFS 
final rule (86 FR 65099 through 65100). For CY 2023, the CPT Editorial 
Panel established three additional new codes and the coding structure 
of the family was changed to describe the different techniques more 
appropriately for transcutaneous passive implant procedures that vary 
in time and intensity depending on the indication for the procedure, 
device chosen, and patient anatomy. The nine codes in the family were 
surveyed again for the January 2022 RUC meeting and new recommendations 
were submitted to CMS.
    We proposed the RUC-recommended work RVU for six of the nine codes 
in the Transcutaneous Passive Implant-Temporal Bone family. We proposed 
a work RVU of 9.03 for CPT code 69716 (Implantation, osseointegrated 
implant, skull; with magnetic transcutaneous attachment to external 
speech processor within the mastoid and/or resulting in removal of less 
than 100 mm2 surface area of bone deep to the outer cranial cortex), a 
work RVU of 9.97 for CPT code 69729 (Implantation, osseointegrated 
implant, skull; with magnetic transcutaneous attachment to external 
speech processor, outside of the mastoid and resulting in removal of 
greater than or equal to 100 mm2 surface area of bone deep to the outer 
cranial cortex), a work RVU of 9.46 for CPT code 69719 (Revision/
replacement (including removal of existing device), osseointegrated 
implant, skull; with magnetic transcutaneous attachment to external 
speech processor, within the mastoid and/or involving a bony defect 
less than 100 mm2 surface area of bone

[[Page 69503]]

deep to the outer cranial cortex), a work RVU of 10.25 for CPT code 
69730 (Revision/replacement (including removal of existing device), 
osseointegrated implant, skull; with magnetic transcutaneous attachment 
to external speech processor, outside the mastoid and involving a bony 
defect greater than or equal to 100 mm2 surface area of bone deep to 
the outer cranial cortex), a work RVU of 7.38 for CPT code 69727 
(Removal, entire osseointegrated implant, skull; with magnetic 
transcutaneous attachment to external speech processor, within the 
mastoid and/or involving a bony defect less than 100 mm2 surface area 
of bone deep to the outer cranial cortex), and a work RVU of 8.50 for 
CPT code 69728 (Removal, entire osseointegrated implant, skull; with 
magnetic transcutaneous attachment to external speech processor, 
outside the mastoid and involving a bony defect greater than or equal 
to 100 mm2 surface area of bone deep to the outer cranial cortex).
    We disagreed with the RUC's recommended work RVU for the other 
three codes in the family for the procedures describing percutaneous 
attachment to external speech processor. We disagreed with the RUC's 
recommended work RVU of 8.00 for CPT code 69714 (Implantation, 
osseointegrated implant, skull; with percutaneous attachment to 
external speech processor) and we instead proposed a work RVU of 6.68 
based on a crosswalk to CPT code 38305 (Drainage of lymph node abscess 
or lymphadenitis; extensive). In reviewing CPT code 69714, we noted 
that the recommended intraservice time is decreasing from 40 minutes to 
30 minutes (25 percent reduction), and the recommended total time is 
decreasing from 182 minutes to 146 minutes (20 percent reduction); 
however, the RUC-recommended work RVU is only decreasing from 8.69 to 
8.00, which is a reduction of just over 8 percent. Although we did not 
imply that the decrease in time as reflected in survey values must 
equate to a one-to-one or linear decrease in the valuation of work 
RVUs, we believe that since the two components of work are time and 
intensity, significant decreases in time should be appropriately 
reflected in decreases to work RVUs. In the case of CPT code 69714, we 
believed that it was more accurate to propose a work RVU of 6.68 based 
on a crosswalk to CPT code 38305 to account for these decreases in the 
surveyed work time.
    We also disagreed with the recommended work RVU of 8.00 because it 
results in an intensity which is anomalously high in relationship to 
the rest of the code family. At the recommended work RVU of 8.00, the 
intensity of CPT code 69714 is increasing by nearly 50 percent as 
compared with the survey conducted last year, and the resulting 
intensity of the service would be significantly higher than any of the 
other codes in the family. We did not agree that this intensity would 
be typical given that the percutaneous form of implant described by CPT 
code 69714 should have the lowest intensity of the three types 
described in this code family. The implantation procedure described by 
this code should also typically have lower intensity than the revision/
replacement procedures elsewhere in the family. We believed that the 
intensity of CPT code 69714 is more accurately described at our 
proposed work RVU of 6.68 based on a crosswalk to CPT code 38305. This 
code shares the same intraservice time of 30 minutes as CPT code 69714 
and has a higher total time of 186 minutes; we agreed that CPT code 
69714 is more intense than CPT code 38305 which was offset by our 
crosswalk code having an additional office visit in its global period.
    We disagreed with the RUC's recommended work RVU of 8.48 for CPT 
code 69717 (Revision/replacement (including removal of existing 
device), osseointegrated implant, skull; with percutaneous attachment 
to external speech processor) and we instead proposed a work RVU of 
7.91 based on a crosswalk to CPT code 46262 (Hemorrhoidectomy, internal 
and external, 2 or more columns/groups; with fistulectomy, including 
fissurectomy, when performed). In reviewing CPT code 69717, we noted 
that although the intraservice time remains essentially unchanged 
(decreasing from 45 minutes to 44 minutes), the recommended total time 
is decreasing from 187 minutes to 159 minutes (15 percent reduction). 
However, the RUC-recommended work RVU was only decreasing from 8.80 to 
8.48, which is a reduction of less than 4 percent. Although we did not 
imply that the decrease in time as reflected in survey values must 
equate to a one-to-one or linear decrease in the valuation of work 
RVUs, we believe that since the two components of work are time and 
intensity, significant decreases in time should be appropriately 
reflected in decreases to work RVUs. In the case of CPT code 69717, we 
believed that it was more accurate to propose a work RVU of 7.91 based 
on a crosswalk to CPT code 46262 to account for these decreases in the 
surveyed work time.
    We also disagreed with the recommended work RVU of 8.48 because it 
resulted in a higher intensity than the other two revision/replacement 
codes (CPT codes 69719 and 69730) in this family. CPT code 69717 
describes the percutaneous form of implant which should have the lowest 
intensity of the three revision/replacement codes in this family, 
however at the recommended work RVU of 8.48 it would have the highest 
intensity of this group. While the intensity at the recommended work 
RVU for CPT code 69717 is nowhere near the anomalous nature of the 
intensity at the recommended work RVU for CPT code 69714, we still 
believed that the intensity would be more typical at the proposed work 
RVU of 7.91. This proposed valuation restores the relationship between 
the three revision/replacement codes by placing the intensity of CPT 
code 69717 slightly lower than CPT codes 69719 and 69730. Therefore, we 
believed that the intensity of CPT code 69717 was more accurately 
described at our proposed work RVU of 7.91 based on a crosswalk to CPT 
code 46262. This code has nearly the same intraservice time of 45 
minutes as CPT code 69717 and has a higher total time of 179 minutes; 
we agreed that CPT code 69717 is more intense than CPT code 46262 which 
was offset by our crosswalk code having an additional office visit in 
its global period.
    We disagreed with the RUC's recommended work RVU of 7.50 for CPT 
code 69726 (Removal, entire osseointegrated implant, skull; with 
percutaneous attachment to external speech processor) and we instead 
proposed a work RVU of 6.36 based on a crosswalk to CPT code 67912 
(Correction of lagophthalmos, with implantation of upper eyelid lid 
load (e.g., gold weight)). In reviewing CPT code 69726, we noted that 
the recommended intraservice time was increasing from 30 minutes to 35 
minutes (17 percent increase), and the recommended total time was 
increasing from 148 minutes to 150 minutes (1 percent increase); 
however, the RUC-recommended work RVU was increasing from 5.93 to 7.50, 
which was an increase of just over 26 percent. Although we did not 
imply that the increase in time as reflected in survey values must 
equate to a one-to-one or linear increase in the valuation of work 
RVUs, we believed that since the two components of work are time and 
intensity, modest increases in time should be appropriately reflected 
in modest increases to work RVUs. In the case of CPT code 69726, we 
believed that it was more accurate to propose a work RVU of 6.36 based 
on a crosswalk

[[Page 69504]]

to CPT code 67912 to account for these increases in the surveyed work 
time.
    We also disagree with the recommended work RVU of 7.50 because it 
resulted in an intensity which is anomalously high in relationship to 
the rest of the code family and created a rank order anomaly within the 
work RVUs. CPT code 69726 describes the percutaneous form of the 
removal procedure which should have the lowest intensity of all nine 
codes in this family. However, the intensity of CPT code 69726 at the 
recommended work RVU of 7.50 would be the second-highest in the family, 
even higher than CPT code 69730 which describes the revision/
replacement procedure with magnetic transcutaneous attachment resulting 
in removal of greater than or equal to 100 square mm surface area of 
bone. We did not agree that this would be typical and we believed that 
the intensity would be more accurate at our proposed work RVU of 6.36. 
We also noted that the recommended work RVU of 7.50 for CPT code 69726 
creates a rank order anomaly within the family as it would be higher 
than the recommended work RVU of 7.38 for CPT code 69727 which 
describes a more complex procedure and has higher surveyed work times. 
Therefore, we believed that the work and intensity of CPT code 69726 
were more accurately described at our proposed work RVU of 6.36 based 
on a crosswalk to CPT code 67912. This code has nearly the same 
intraservice time of 40 minutes as CPT code 69726 and has a higher 
total time of 166 minutes; we agreed that CPT code 69726 is more 
intense than CPT code 69726 which was offset by our crosswalk code 
having an additional office visit in its global period.
    We proposed the direct PE inputs as recommended by the RUC for all 
nine codes in the Transcutaneous Passive Implant-Temporal Bone family.
    Comment: Several commenters disagreed with CMS' use of the current 
work RVUs and work times when reviewing the codes in the Transcutaneous 
Passive Implant-Temporal Bone family. Commenters stated that CMS was 
comparing work RVUs and work times to an interim recommendation that 
was made interim due to a flawed survey process. Commenters stated that 
the RUC reviewed this family of services and determined that they 
needed to be resurveyed with a revised Reference Service List (RSL) to 
encompass a larger range of relative values, specifically to include 
the lower end of the RVU spectrum. Commenters stated that CMS should 
not use the interim recommendations as a base to arrive at new work 
RVUs for the codes in this family.
    Response: We disagree with the commenters that it was inappropriate 
to use the current work RVUs and work times that were active for CY 
2022 when evaluating the codes in the Transcutaneous Passive Implant-
Temporal Bone family. As we stated earlier in the Methodology for 
Establishing Work RVUs portion of this section, we believe that our 
operating assumption regarding the validity of the existing values as a 
point of comparison is critical to the integrity of the relative value 
system as currently constructed. The work times currently associated 
with codes play a very important role in PFS ratesetting, both as 
points of comparison in establishing work RVUs and in the allocation of 
indirect PE RVUs by specialty. If we were to operate under the 
assumption that previously recommended work times had been routinely 
overestimated, this would undermine the relativity of the work RVUs on 
the PFS in general, in light of the fact that codes are often valued 
based on comparisons to other codes with similar work times. Instead, 
we believe that it is crucial that the code valuation process take 
place with the understanding that the existing work times that have 
been used in PFS ratesetting are accurate. Even if the work RVUs and 
work RVUs for the codes in the Transcutaneous Passive Implant-Temporal 
Bone family were recommended to CMS on an interim basis, they were used 
for payment throughout CY 2022 and are appropriately subject to 
comparisons when evaluating the updated recommendations for CY 2023. We 
also note that we proposed and finalized those interim work RVUs and 
work times as recommended by the RUC without refinement.
    Furthermore, the use of older work RVUs and older work times that 
predate the interim recommendations from CY 2022 would not have changed 
the analysis that we performed indicating that several of the codes in 
the Transcutaneous Passive Implant-Temporal Bone family were overvalued 
as recommended by the RUC. For example, CPT code 69714 previously had a 
work RVU of 14.45 and an intraservice work time of 90 minutes before 
its CY 2022 interim review. If we were to use these values as the basis 
for our review, the recommended intraservice time would decrease from 
90 minutes to 30 minutes (67 percent reduction) however, the RUC-
recommended work RVU would only decrease from 14.45 to 8.00, which is a 
reduction of just under 45 percent. Regardless of whether the starting 
point of comparison is the interim CY 2022 values or the historic CY 
2007 values, we continue to believe that several of the codes in this 
family are more accurately described using our proposed work RVUs.
    Comment: Several commenters disagreed with the CMS proposed work 
RVU of 6.68 for CPT code 69714 and stated that CMS should instead 
finalize the RUC-recommended work RVU of 8.00. Commenters disagreed 
that the recommended intensity for CPT code 69714 was too high and 
stated that the code describes an intense and complex surgery on a 
highly sensitive sensory organ, operating in a small space where 
millimeters of difference lead to cerebrospinal fluid leak and 
intracranial vascular injury. Commenters disagreed with the CMS 
crosswalk to CPT code 38305 and stated that CPT code 69714 requires 
more physician work as it is a more intense service than CPT code 
38305, which instead describes the less intense work of draining a 
lymph node abscess. Commenters also stated that CPT code 38305 was last 
reviewed 22 years ago and is not widely performed, and therefore, 
should not be used as a crosswalk code.
    Response: We disagree with the commenters and continue to believe 
that the proposed work RVU of 6.68 is a more accurate choice for CPT 
code 69714. As we stated in the proposed rule, since the two components 
of work are time and intensity, decreases in time should typically be 
reflected in decreases to work RVUs. The survey for CPT code 69714 
found that the typical intraservice time required to perform the 
procedure had significantly decreased (from both the historic and 
interim work time values) and we believe that this decrease in work 
time should be reflected in a corresponding decrease in the work RVU. 
Even if the decrease in work time was due to greater efficiencies in 
delivering the service, this decrease in work time should be reflected 
in the work RVU for the service in question.
    We also disagree with the commenters and continue to believe that 
CPT code 38305 is an appropriate choice as a crosswalk for CPT code 
69714. CPT code 38305 describes the extensive drainage of a lymph node 
abscess or lymphadenitis procedure; we stated in the proposed rule that 
we agreed that CPT code 69714 is more intense than CPT code 38305 which 
is offset by our crosswalk code having an additional office visit in 
its global period. We also emphasize that we continue to believe that 
the nature of the PFS relative value system is such that all services 
are

[[Page 69505]]

appropriately subject to comparisons to one another. Although codes 
that describe clinically similar services are sometimes stronger 
comparator codes, we do not agree that codes must share the same site 
of service, patient population, or utilization level to serve as an 
appropriate crosswalk.
    We also disagreed with the recommended work RVU of 8.00 because it 
results in an intensity which is anomalously high in relationship to 
the rest of the code family. At the recommended work RVU of 8.00, the 
intensity of CPT code 69714 is increasing by nearly 50 percent as 
compared with the survey conducted last year (and by more than 60 
percent as compared with the historic pre-interim survey intensity), 
and the resulting intensity of the service would be significantly 
higher than any of the other codes in the family. We do not agree that 
this intensity would be typical given that the percutaneous form of 
implant described by CPT code 69714 should have the lowest intensity of 
the three types described in this code family. The implantation 
procedure described by this code should also typically have lower 
intensity than the revision/replacement procedures elsewhere in the 
family. Aside from stating that CPT code 69714 describes an intense 
surgery and pointing out that it had a higher intensity than CPT code 
69717 at the proposed work RVU, commenters did not respond to our 
analysis that the recommended work RVU of 8.00 resulted an anomalously 
high intensity. As such, we continue to believe that the proposed work 
RVU of 6.68 for CPT code 69714 is a more accurate choice than the RUC-
recommended work RVU of 8.00.
    Comment: Several commenters disagreed with the CMS proposed work 
RVU of 7.91 for CPT code 69717 and stated that CMS should instead 
finalize the RUC-recommended work RVU of 8.48. Commenters stated that 
for the procedures described by CPT code 69717, the practitioner must 
work with a variety of delicate structures in a very small space just 
behind the ear which makes these procedures very intense and complex to 
perform. Commenters stated that the work per unit time as recommended 
by the RUC for CPT code 69717 was already lower than CPT codes 69719 
and 69730. Commenters disagreed with the CMS crosswalk to CPT code 
46262 and stated that CPT code 69717 requires more physician work than 
CPT code 46262. Commenters also stated that CPT code 46262 was last 
reviewed 22 years ago and is not widely performed, and therefore, 
should not be used as a crosswalk code.
    Response: We disagree with the commenters and continue to believe 
that the proposed work RVU of 7.91 is a more accurate choice for CPT 
code 69717. As we stated in the proposed rule, since the two components 
of work are time and intensity, decreases in time should typically be 
reflected in decreases to work RVUs. The survey for CPT code 69717 
found that the typical intraservice time required to perform the 
procedure had significantly decreased (from both the historic and 
interim work time values) and we believe that this decrease in work 
time should be reflected in a corresponding decrease in the work RVU. 
Even if the decrease in work time was due to greater efficiencies in 
delivering the service, this decrease in work time should be reflected 
in the work RVU for the service in question.
    We also disagree with the commenters and continue to believe that 
CPT code 46262 is an appropriate choice as a crosswalk for CPT code 
69717. CPT code 46262 describes a hemorrhoidectomy with fistulectomy 
which requires a similar level of risk and complexity to the patient; 
we stated in the proposed rule that we agreed that CPT code 69717 is 
more intense than CPT code 46262 which is offset by our crosswalk code 
having an additional office visit in its global period. We also 
emphasize that we continue to believe that the nature of the PFS 
relative value system is such that all services are appropriately 
subject to comparisons to one another. Although codes that describe 
clinically similar services are sometimes stronger comparator codes, we 
do not agree that codes must share the same site of service, patient 
population, or utilization level to serve as an appropriate crosswalk.
    We also disagreed with the recommended work RVU of 8.48 because it 
results in a higher intensity than the other two revision/replacement 
codes (CPT codes 69719 and 69730) in this family. CPT code 69717 
describes the percutaneous form of implant which should have the lowest 
intensity of the three revision/replacement codes in this family, 
however at the recommended work RVU of 8.48 it would have the highest 
intensity of this group. While the intensity at the recommended work 
RVU for CPT code 69717 is nowhere near the anomalous nature of the 
intensity at the recommended work RVU for CPT code 69714, we still 
believe that the intensity would be more typical at the proposed work 
RVU of 7.91. Commenters stated that the work per unit time as 
recommended by the RUC for CPT code 69717 was already lower than CPT 
codes 69719 and 69730 but otherwise did not respond to our discussion 
of the intensity of the code and how it related to the other revision/
replacement codes in this family. As such, we continue to believe that 
the proposed work RVU of 7.91 for CPT code 69717 is a more accurate 
choice than the RUC-recommended work RVU of 8.48.
    Comment: Several commenters disagreed with the CMS proposed work 
RVU of 6.36 for CPT code 69726 and stated that CMS should instead 
finalize the RUC-recommended work RVU of 7.50. Commenters stated that 
for CPT code 69726, the practitioner must work with a variety of 
delicate structures in a very small space just behind the ear which 
makes these procedures very intense and complex to perform. Commenters 
disagreed with the CMS crosswalk to CPT code 67912 and stated that CMS 
should not apply this crosswalk because CPT code 67912 is an 
infrequently performed service that has not been reviewed by the RUC or 
CMS in 20 years, has disparate times from the survey code, and 
typically involves less physician work.
    Response: We disagree with the commenters and continue to believe 
that the proposed work RVU of 6.36 is a more accurate choice for CPT 
code 69726. As we stated in the proposed rule, since the two components 
of work are time and intensity, decreases in time should typically be 
reflected in decreases to work RVUs. The survey for CPT code 69726 
found that the typical intraservice time required to perform the 
procedure had significantly decreased and we believe that this decrease 
in work time should be reflected in a corresponding decrease in the 
work RVU. Even if the decrease in work time was due to greater 
efficiencies in delivering the service, this decrease in work time 
should be reflected in the work RVU for the service in question.
    We also disagree with the commenters and continue to believe that 
CPT code 67912 is an appropriate choice as a crosswalk for CPT code 
69726. CPT code 67912 describes a correction of lagophthalmos, with 
implantation of upper eyelid lid load; we acknowledged in the proposed 
rule that the work times were not an exact match with CPT code 69726 
but closely matched the intraservice and total times. We also stated in 
the proposed rule that we agreed that CPT code 69726 is more intense 
than CPT code 69726 which is offset by our crosswalk code having an 
additional office visit in its global period. We also emphasize that we

[[Page 69506]]

continue to believe that the nature of the PFS relative value system is 
such that all services are appropriately subject to comparisons to one 
another. Although codes that describe clinically similar services are 
sometimes stronger comparator codes, we do not agree that codes must 
share the same site of service, patient population, or utilization 
level to serve as an appropriate crosswalk.
    We also disagreed with the recommended work RVU of 7.50 because it 
results in an intensity which is anomalously high in relationship to 
the rest of the code family and creates a rank order anomaly within the 
work RVUs. CPT code 69726 describes the percutaneous form of the 
removal procedure which should have the lowest intensity of all nine 
codes in this family. However, the intensity of CPT code 69726 at the 
recommended work RVU of 7.50 would be the second-highest in the family, 
even higher than CPT code 69730 which describes the revision/
replacement procedure with magnetic transcutaneous attachment resulting 
in removal of greater than or equal to 100 square mm surface area of 
bone. We did not agree that this would be typical and we believe that 
the intensity would be more accurate at our proposed work RVU of 6.36. 
We also noted in the proposed rule that the recommended work RVU of 
7.50 for CPT code 69726 created a rank order anomaly within the family 
as it would be higher than the recommended work RVU of 7.38 for CPT 
code 69727 which describes a more complex procedure and has higher 
surveyed work times. Commenters did not respond to our discussion of 
the anomalously high intensity of CPT code 69727 at the recommended 
work RVU or explain why it should create a rank order anomaly within 
the family. As such, we continue to believe that the proposed work RVU 
of 6.36 for CPT code 69726 is a more accurate choice than the RUC-
recommended work RVU of 7.50.
    After consideration of the comments, we are finalizing the work 
RVUs for all nine codes in the Transcutaneous Passive Implant-Temporal 
Bone family as proposed. We did not receive any comments on the direct 
PE inputs and we are also finalizing them as proposed.
(18) Contrast X-Ray of Knee Joint (CPT Code 73580)
    CPT code 73580 (Radiologic examination, knee, arthrography, 
radiological supervision and interpretation) was first identified via 
the high-volume growth screen in 2008. In 2021, the Relativity 
Assessment Workgroup (RAW) noted that code 73580 was never surveyed and 
remains CMS/Other sourced, and recommended that it be surveyed. CPT 
code 73580 was then surveyed. We proposed the RUC-recommended work RVU 
of 0.59. We also proposed the RUC-recommended direct PE inputs without 
refinement.
    We did not receive public comments on this proposal, and therefore, 
we are finalizing as proposed the RUC-recommended work RVU of 0.59 for 
CPT code 73580. We are finalizing as proposed the RUC-recommended 
direct PE inputs without refinement.
(19) 3D Rendering With Interpretation and Report (CPT Code 76377)
    We nominated this code in the CY 2020 PFS final rule as potentially 
misvalued, stating that we believe it is of the same family as CPT code 
76376 (3D rendering with interpretation and reporting of computed 
tomography, magnetic resonance imaging, ultrasound, or other 
tomographic modality with image postprocessing under concurrent 
supervision; not requiring image postprocessing on an independent 
workstation), which was reviewed at the April 2018 RUC meeting. CMS 
requested that CPT code 76377 also be reviewed to maintain relativity 
within the code family (84 FR 62625). The specialty societies maintain 
that these services are more accurately viewed as separate code 
families. Furthermore, the RUC cites changes in technique and patient 
population as compelling evidence to maintain a physician work RVU of 
0.79 despite a 5-minute recommended reduction in physician total time 
compared to the current physician time.
    We proposed the RUC recommended work RVU of 0.79 for CPT code 
76377; however, we reiterate that we continue to believe that CPT code 
76376 and 76377 would be more appropriately viewed as belonging to the 
same code family and we request that they be surveyed together.
    We proposed the RUC-recommended direct PE inputs without 
refinement.
    We did not receive public comments on this proposal, and therefore, 
we are finalizing as proposed the RUC-recommended work RVU of 0.79 for 
CPT code 76377. We are finalizing as proposed the RUC-recommended 
direct PE inputs without refinement.
(20) Neuromuscular Ultrasound (CPT Codes 76881, 76882, and 76883)
    Since their creation in 2011, CPT codes 76881 (Ultrasound, complete 
joint (i.e., joint space and peri-articular soft-tissue structures), 
real-time with image documentation) and 76882 (Ultrasound, limited, 
joint or other nonvascular extremity structure(s) (e.g., joint space, 
peri-articular tendon[s], muscle[s], nerve[s], other soft-tissue 
structure[s], or soft-tissue mass[es]), real-time with image 
documentation) have been reviewed numerous times as New Technology/New 
Services by the Relativity Assessment Workgroup (RAW). In October 2016, 
the RAW reviewed these codes and agreed with the specialty societies 
that the dominant specialties providing the complete (CPT code 76881) 
versus the limited (CPT code 76882) ultrasound of extremity services 
were different than originally thought, causing variation in the 
typical PE inputs. The RAW recommended referral to the Practice Expense 
Subcommittee for review of the direct PE inputs and the CPT Editorial 
Panel to clarify the introductory language regarding the reference to 
one joint in the complete ultrasound. The PE Subcommittee reviewed the 
direct PE inputs for CPT codes 76881 and 76882 and adjusted the 
clinical staff time at the January 2017 RUC meeting, and the CPT 
Editorial Panel editorially revised CPT codes 76881 and 76882 to 
clarify the distinction between complete and limited studies and 
revised the introductory guidelines to clarify reference to one joint 
in the complete ultrasound procedure in June 2017. In October 2021, the 
CPT Editorial Panel approved the addition of CPT code 76883 for 
reporting real-time, complete neuromuscular ultrasound of nerves and 
accompanying structures throughout their anatomic course, per 
extremity, and the revision of CPT code 76882 to add focal evaluation. 
CPT codes 76881 and 76882 were identified as part of the neuromuscular 
ultrasound code family with CPT code 76883 and surveyed for the January 
2022 RUC meeting.
    For CPT codes 76881, 76882, and 76883, we disagreed with the RUC-
recommended work RVUs of 0.90, 0.69, and 1.21, respectively, as we 
believed they did not account for the surveyed time changes or 
appropriate comparisons for the new add-on code, CPT code 76883, and 
proposed a work RVU of 0.54 for CPT code 76881, a work RVU of 0.59 for 
CPT code 76882, and a work RVU of 0.99 for CPT code 76883.
    CPT code 76881 represents a complete evaluation of a specific joint 
in an extremity. This service requires ultrasound examination of all 
the following joint elements: joint space (for example, effusion), 
peri-articular soft-tissue structures that surround the joint (that is, 
muscles, tendons, other soft-tissue structures), and any identifiable 
abnormality. In some circumstances, additional evaluations such as 
dynamic imaging or stress maneuvers may be

[[Page 69507]]

performed as part of the complete evaluation. The RUC recommended 5 
minutes of pre-service time, 20 minutes of intraservice time, and 5 
minutes of post-service time, based on the survey. The RUC discussed 
the 5-minute increase in intraservice time and determined that the 
increase relates to the change in the dominant specialty provider since 
the creation of the code, as previously there was 15 minutes of 
intraservice time for the radiologist to scan and/or review the 
sonographer-obtained images. Now, the rheumatologist is performing the 
scanning and it takes 20 minutes for the typical patient. For 
rheumatology, physicians typically scan the patients with portable 
ultrasound devices rather than utilizing sonographers as originally 
described in the 2010 survey. The RUC noted that this code is reported 
with an office E/M visit 58.9 percent and a non-facility office E/M 
visit 66.3 percent of the time; the RUC stated that CPT code 76881 is 
imaging-specific so the physician work described would not overlap with 
the E/M service, but we disagreed, as the descriptions of pre-service 
and post-service work directly overlap. The description of pre-service 
work for CPT code 76881 states ``Review pertinent clinical information. 
Review any prior applicable imaging studies.'' Pre-service work for CPT 
code 99214 (Office or other outpatient visit for the evaluation and 
management of an established patient, which requires a medically 
appropriate history and/or examination and moderate level of medical 
decision making. When using time for code selection, 30-39 minutes of 
total time is spent on the date of the encounter.), the most common E/M 
code reported with CPT code 76811, includes ``Review interval 
correspondence, referral notes, medical records, and diagnostic data 
generated since the last visit.'' Post-service work of CPT code 76881 
is described as ``Discuss significant findings with the referring 
physician. Review and sign final report,'' whereas the post-service 
work for CPT code 99214 includes ``Arrange diagnostic testing and 
referral if necessary. Document the encounter in the medical record, 
spending time to further refine the differential diagnosis, workup, or 
treatment plan as necessary. Coordinate care by discussing the case 
with other physicians and members of the health care team and write 
letters of referral if necessary. Perform electronic data capture and 
reporting to comply with quality payment program and other electronic 
mandates. Review and analyze interval testing results and refine the 
differential diagnosis, workup, and treatment plan based on these 
results. Order additional testing based on these results. Communicate 
results and plan modifications with patient and/or family.'' We 
believed there was overlap in pre-service and post-service work between 
the E/M visit and CPT code 76881, and therefore, we proposed 0 minutes 
for the pre-service and post-service time rather than the RUC-
recommended 5 minutes of pre-service and post-service time. The 
proposed work RVU of 0.54 was the reverse building block valuation 
based on the removal of the 5 minutes of pre-service and post-service 
time, with a long-standing intensity of 0.0224 (10 minutes * 0.0224 
work/minute = 0.224 work RVUs). The proposed work RVU accounted for the 
0.224 work RVU decrease as a result of the removal of pre-service and 
post-service time, and the increase of 5 minutes of intraservice time, 
while maintaining the same IWPUT of 0.027, as there was no discussed 
change in intensity. The specialty societies and the RUC asserted that 
there was an increase of 5 minutes as a result of the intraservice work 
changing due to a change in dominant specialty providing the service 
(from radiology to rheumatology), but did not present a change in 
intensity. We noted that the specialty societies used CPT code 76700 
(Ultrasound, abdominal, real time with image documentation; complete) 
with a work RVU = 0.81, 11 minutes of intra-service time, and 21 
minutes total time, as a reference code because it has identical pre- 
and post-service time but less intra-service time than the surveyed 
code and is a clinically similar ultrasound code. We noted that this is 
not an appropriate reference code as it is billed alone 72.8 percent of 
the time, and therefore, the valuation of CPT code 76700 accounts for 
pre- and post-service work that would not overlap with an E/M visit 
like we believed the pre- and post-service work did for CPT code 76881.
    CPT code 76882 represents a limited evaluation of a joint or focal 
evaluation of a structure(s) in an extremity other than a joint (for 
example, soft-tissue mass, fluid collection, or nerve[s]). This 
evaluation includes assessment of a specific anatomic structure(s) (for 
example, joint space only [effusion] or tendon, muscle, and/or other 
soft-tissue structure[s] that surround the joint) that does not assess 
all the elements included in CPT code 76881, although it does include 
all surrounding anatomy and any associated pathology or contralateral 
comparison as indicated. The RUC discussed the four-minute increase in 
intraservice time and determined that the increase relates to the 
change in dominant supplier of this service since the creation of the 
code, as there is currently 11 minutes of intraservice time that 
included scanning performed only by the podiatrist, and now the 
radiologist works with the sonographer to obtain and interpret the 
images in addition to the physician performing additional scanning as 
needed. Because radiologists no longer use portable ultrasound devices 
as originally described in the 2010 survey or in the 2017 PE update, 
the RUC and specialty societies assert that the physician work (time) 
has changed due to supervision of the sonographer in addition to the 
radiologist performing the scanning. The specialty societies and RUC 
also noted that ultrasound technology has evolved immensely since 2010, 
including proliferation of high-frequency ultrasound probes dedicated 
to musculoskeletal imaging, as well as producing images with higher 
fidelity and more detail, whereby the number and quality of images that 
can be reviewed and the pathology to evaluate have greatly increased 
since 2010. Therefore, the typical patient requires 15 minutes of 
intraservice time. While we agreed with the RUC that 15 minutes of 
intraservice time is warranted for CPT code 76882, we noted that there 
was no information indicating a change in intensity, and therefore, for 
CPT code 76882, we proposed the reverse building block work RVU of 0.59 
to account for the 4-minute increase in intraservice time and the 
maintenance of the current IWPUT of 0.024.
    We noted that commenters may raise concern about a potential rank 
order anomaly with the proposed work RVUs of 0.54 and 0.59 for CPT 
codes 76881 and 76882, respectively, but we noted that the IWPUT of 
each code adequately reflects the increased intensity of intraservice 
work for the complete ultrasound (CPT code 76881; IWPUT = 0.027) versus 
the limited/focal ultrasound (CPT code 76882; IWPUT = 0.024), and the 
lesser work RVU of 0.54 for CPT code 76881 stemmed from the removal of 
the presumed overlapping pre- and post-service time with the E/M visits 
that are typically performed. The RUC noted that consistency of 
intensity measures is demonstrated across the range of codes ascending 
from the limited code (CPT code 76881) to the new, most complex code 
(CPT code 76883). By proposing work RVUs that maintain the current 
IWPUTs, we maintained relativity both among the neuromuscular 
ultrasound family, as well as the larger family of ultrasound

[[Page 69508]]

imaging codes. We also noted that the difference between the RUC-
recommend IWPUTs and our proposed IWPUTs for CPT codes 76881 and 76882 
was the same, where CPT code 76882 had an IWPUT that is 0.003 less than 
the IWPUT of CPT code 76881.
    CPT code 76883 will be available for CY 2023 to report real-time, 
complete neuromuscular ultrasound of nerves and accompanying structures 
throughout their anatomic course, per extremity. This code will entail 
examination of a nerve throughout its length, within one extremity, 
including evaluation of multiple areas for potential nerve compression, 
measurement of cross-sectional areas, evaluation of echogenicity, 
vascularity, mobility including dynamic maneuvers when indicated, 
evaluation for any associated muscular denervation, with comparison to 
unaffected muscles or nerves within that extremity as needed. CPT code 
76883 also requires permanently recorded images and cine loop and a 
written report containing a description of each of the elements 
evaluated. The RUC recommended 7 minutes of pre-service time, 25 
minutes of intra-service time and 7 minutes of post-service time as 
supported by the survey. The RUC clarified that this service would not 
typically be reported with an office E/M visit. The RUC arrived at a 
recommended work RVU of 1.21 by comparing the pre-, intra-, and post-
service times to those of CPT code 76881, which we proposed to modify 
due to presumed overlapping work in the pre- and post-service time with 
E/M visits. When we compared the proposed times of 0 minutes of pre-
service time, 20 minutes of intraservice time, and 0 minutes of post-
service time, and a work RVU of 0.54 for CPT code 76881, and the 
proposed times of 7 minutes of pre-service time, 25 minutes of 
intraservice time, and 7 minutes of post-service time for CPT code 
76883, we arrived at a reverse building block work RVU of 0.99.
    For the direct PE inputs, we proposed to remove the 2 minutes of 
clinical labor time for CA006 (Confirm availability of prior images/
studies), the 1 minute of clinical labor time for the CA007 (Review 
patient clinical extant information and questionnaire), and the 2 
minutes for CA011 (Provide education/obtain consent) for CPT code 76881 
because these RUC recommendations describe clinical labor activities 
that presumably overlapped with the E/M visit that is typically billed 
with CPT code 76881. We proposed the direct PE inputs as recommended by 
the RUC for CPT codes 76882 and 76883.
    We received several comments regarding our proposed work RVUs, pre- 
and post-service time, and direct PE input refinements for CPT codes 
76881, 76882, and 76883 in response to the CY 2023 PFS proposed rule 
and those comments are summarized below.
    Comment: Some commenters stated that the pre- and post-service work 
of CPT code 76881 should not be removed simply because it may be billed 
in conjunction with an E/M code. One commenter stated that if a 
rheumatologist decides to order the more expensive MRI instead of 
performing an ultrasound, the pre- and post- ordering time is quick, 
whereas, for musculoskeletal ultrasound (MSKU), the pre-service time 
includes detailed review of other studies and discussion with the 
patient that are not normally included as part of the E/M visit. The 
post-service work includes labelling, storing, documenting the results. 
The commenter stated that none of this would be part of the normal E/M 
coding for a visit. Another commenter stated that the physician work 
associated with an E/M visit is separate and distinct from the 
physician work associated with the imaging services reported by CPT 
code 76882. Furthermore, the commenter asserted that the E/M visit and 
ultrasound require different cognitive and technical skills by the 
rendering physician. When these services are performed in the same 
encounter, the physician work is neither overlapping nor duplicative, 
and should be separately accounted for.
    Response: After review of the commenters' statements, CPT code 
76881's pre- and post-service descriptions, and similar imaging codes 
that are typically reported with an E/M visit which allow for pre- and 
post-service time, we agree with the commenters' assertion that the 5 
minutes of pre- and post-service time is appropriate for CPT code 
76881. We also agree that, while the service descriptions of the E/M 
visit and CPT code 76881 may match, CPT code 76881's activities likely 
reflect image-specific activities that do not overlap with the E/M 
visit's activities; therefore, we are finalizing physician work time as 
the RUC recommended, with 5 minutes of pre-service evaluation time and 
5 minutes of immediate post-service time.
    Comment: Some commenters stated that these CPT codes are typically 
furnished by rheumatologists with the following direct PE inputs: (1) 
expensive, high quality, high frequency ultrasound machines with power 
Doppler capability rather than an inexpensive, handheld/portable device 
as included in the direct PE inputs; (2) a sonographer specially 
trained in MSKU rather than a physician or a standard x-ray technician 
as included in the direct PE inputs; and (3) a dedicated exam/imaging 
room in which to perform this service. One commenter submitted 
responses and synthesized conclusions from a limited survey of direct 
PE inputs typical of rheumatologists. More commenters noted that the 
RUC decided to reduce the PE portion of the technical component of CPT 
code 76881 by over 90 percent, phased in over time. The commenters 
continued by stating that there is another proposed decrease to 0.27 PE 
RVUs for CY 2023 based on a flawed assumption regarding the type of 
ultrasound services provided in the non-facility setting. The 
commenters stated that many clinics maintain and use a dedicated 
ultrasound room, a non-portable ultrasound room and a PACS system, as 
well as two dedicated sonographers. The commenters stated that even 
practices that use portable ultrasound units will utilize a dedicated 
ultrasound room and PACS system, and employ, or contract the services 
of, a sonographer or other highly trained, typically highly 
credentialed, clinical staff. One commenter stated that the January 
2022 RUC recommendations indicate rheumatology as the dominant 
specialty in the non-facility setting, but they incorrectly assumed 
that portable ultrasound is the typical equipment used by 
rheumatologists. This commenter stated that, of the 88 providers who 
submitted surveys for CPT code 76881 or the 100 providers that 
submitted surveys for CPT code 76882, no information was provided 
regarding the level of rheumatologists' input, and therefore, the 
commenter asserted that there is no way of knowing if rheumatologists 
were appropriately queried, despite the acknowledgement that they are 
the dominant specialty for CPT code 76881. This commenter submitted an 
attachment that claims that the dedicated medical sonographer's labor 
cost per hour is $47.50 and that they spent $80,017.24 on ultrasound 
technology and $3,003.00 in maintenance of the ultrasound technology 
per year. Another commenter stated that rheumatology was not part of 
the PE survey in 2017 and none of the RUC members who sat on the PE 
subcommittee in 2017 performed MSKU in their offices at the time of the 
survey. The commenter stated that we stated that the ``transition 
period [to phase in the cuts year over year as finalized for CY 2018] 
would allow us to obtain more stakeholder input on the appropriate PE 
inputs and specialty assumptions for these

[[Page 69509]]

services,'' and that we expected to consider this for future 
rulemaking. The commenter noted that their comments on the CY 2019 PFS 
proposed rule were deemed out of scope and that no further action was 
taken to obtain PE values.
    Response: We appreciate the commenters' survey collection efforts 
to reflect rheumatologists' costs in performing CPT codes 76881, 76882, 
and 76883, and the concern regarding the accounting of rheumatologists' 
typical clinal labor and equipment in the January 2022 RUC 
recommendations. We share the commenters concerns that the recommended 
PE inputs may not fit within the family of services as currently valued 
given concerns raised by commenters. In consideration of commenters' 
concerns and survey data, including early feedback on how the PE inputs 
for these services may not be reflective of what will be considered 
typical in how these services may be furnished, we encourage the RUC 
and other interested parties to reconsider the PE inputs of the 
neuromuscular ultrasound family, including the new code, in the near 
term.
    We note that we did not make any proposals related to CPT codes 
76881 or 76882 in the CY 2019 PFS proposed rule, therefore the comments 
were appropriately deemed out of scope at that time, and at that time, 
rheumatology was not the dominant specialty, therefore, we would have 
considered PE inputs of the dominant specialty to be typical when 
performing these CPT codes at that time. We encourage the commenters to 
coordinate with the RUC to provide the survey data to facilitate a 
reconsideration of PE inputs given the shift in dominant specialty and 
recent changes that were made by the RUC PE Subcommittee.
    Because the RUC has standardized procedures for PE and physician 
surveys, and the fact that the surveyors' results differ so drastically 
from the RUC recommendations, we encourage the RUC and other interested 
parties to reconsider the PE inputs of the neuromuscular ultrasound 
family, which we would consider in future rulemaking if submitted. 
While the submission of the survey data is appreciated, we note that no 
invoices were submitted, and therefore, we encourage collaboration with 
the RUC PE subcommittee and the submission of specific invoices to 
support the surveys' results and robust data to show the typicality of 
these PE inputs.
    Comment: One commenter asserted that they utilize a dedicated 
diagnostic medical sonographer with specific musculoskeletal training, 
high quality machines that cost around $40 thousand each (based on a 
recent purchase of a GE LOGIQTM E ultrasound machine for a 
Veteran Affairs Hospital that cost $44,110 after a government 
discount), and a dedicated ultrasound scanning room due to patient 
draping requirements and machine optimization.
    Response: We appreciate the commenters' input regarding CPT codes 
76881, 76882, and 76883. We encourage the RUC and other interested 
parties to reconsider the PE inputs of the neuromuscular ultrasound 
family, as they differ significantly from the RUC recommended direct PE 
inputs as submitted for the CY 2023 PFS proposed rule. After a 
reconsideration by the RUC and interested parties regarding the PE 
inputs, we would be interested in engaging with interested parties to 
obtain invoices to support accurate pricing for PE inputs that may be 
altered for this family of codes.
    Comment: Many commenters urged CMS to pause all proposed reductions 
to CPT codes 76881 and 76882 to allow collaboration between the RUC and 
interested parties' on how rheumatologists currently utilize or plan to 
utilize MSKU since the rheumatology community has never been surveyed 
by the RUC on their typical PE investments in their ultrasound 
programs. Commenters stated that rheumatologists were not included in 
the 2017 survey when PE cuts were recommended by the RUC and finalized 
for CY 2018.
    Response: We believe it is imperative that the RUC and interested 
parties reconsider the PE inputs for CPT codes 76881, 76882, and 76883 
in the near term, as commenters have submitted survey responses that 
differ significantly from the RUC recommended direct PE inputs. There 
are also significant discrepancies between the RUC assumption that 
rheumatologists typically scan patients themselves, versus varying 
commenters agreeing with this assumption, and some arguing that 
rheumatologists utilize a highly trained sonographer to scan patients. 
There are also significant commenter and RUC discrepancies regarding 
typical equipment used for these CPT codes. We note that in the CY 2018 
PFS final rule (82 FR 53058 through 53059), we sought comment on 
whether a portable ultrasound unit would be a more accurate PE input 
for CPT codes 76881 and 76882, given that the dominant specialty for 
both of these services was podiatry based on available 2016 Medicare 
claims data. At that time, we did not finalize our proposal to include 
an ultrasound room, and instead finalized the RUC recommended 
equipment, with the exception of the ultrasound room, which we replaced 
with a portable ultrasound unit based on the RUC's determination, as 
expressed through its recommendations for CY 2018, that a portable unit 
is the equipment type that is typical for podiatry, which was the 
dominant specialty furnishing CPT code 76882 at the time. Commenters 
disagreed with our proposals and RUC recommendations, stating that the 
shift of PE from CPT code 76881 to CPT code 76882 was based on 
inaccurate assumptions regarding the typical equipment used in 
furnishing these services. These commenters noted that the equipment 
used to furnish the two procedures is identical and that the RUC-
recommended direct PE inputs for CPT code 76881, which were developed 
based on the assumption that the dominant specialty furnishing the 
service is podiatry, do not reflect the equipment inputs utilized by 
rheumatologists such as an ultrasound room and PACS workstation. Given 
the changes in dominant specialty for these CPT codes from 2010 to 
2017, and again from 2017 to 2022, we recommend that the RUC and 
interested parties reconsider the PE inputs for each code based on the 
dominant specialty for each CPT code, based on the most recent year's 
Medicare claims data, and consideration of survey responses submitted 
to CMS in response to the CY 2023 PFS proposed rule.
    Comment: Many commenters expressed the importance of MSKU in 
controlling the prescribing of expensive biologic medications, 
streamlining patient care, reducing delays in patient care that result 
from scheduling alternative imaging tests (not on the initial 
encounter) and subsequent follow up visits to act on the tests results, 
and obtaining sensitive, safe non-traumatic images for pediatric 
patients. Commenters stated that MSKU benefits patients and families by 
allowing them to see their anatomy in real time, which aids the 
patients' confidence in their physician and diagnosis. Commenters also 
stated that MSKU aids minorities and underserved areas where access to 
MSKU extends the ability to care for patients who may otherwise not be 
able to travel for MRI or CT services due to cost or additional time 
required to schedule and attend subsequent visits for the imaging and 
follow up, which can extend the time to initiate treatment by months.
    Response: We appreciate the commenters' input on the value of CPT 
codes 76881, 76882, and 76883, and agree with the commenters that these 
services play an integral part in high

[[Page 69510]]

quality, cost effective, expedient imaging, diagnosis, and care for a 
variety of patient populations. For this reason, we believe it is 
imperative that the RUC and interested parties reconsider the PE inputs 
for CPT codes 76881, 76882, and 76883 in the near term.
    In order to maintain relativity among this family of codes after 
being compelled by the commenters' assertion that the pre- and post-
service time for CPT code 76881 does not overlap with an E/M visit, and 
finalizing the RUC-recommended work RVU and PE inputs for CPT code 
76881, we are also finalizing the RUC recommended work RVUs and PE 
inputs for CPT codes 76882 and 76883. Therefore, for CPT codes 76881, 
76882, and 76883, we are finalizing work RVUs of 0.90, 0.69, and 1.21, 
respectively. As mentioned above, we are finalizing 5 minutes of pre-
service evaluation time and 5 minutes of immediate post-service time 
for CPT code 76881. Similarly, we are finalizing the inclusion of 2 
minutes of clinical labor time for CA006 (Confirm availability of prior 
images/studies), 1 minute of clinical labor time for the CA007 (Review 
patient clinical extant information and questionnaire), and 2 minutes 
for CA011 (Provide education/obtain consent) for CPT code 76881 for the 
direct PE inputs, as recommended by the RUC, because we are compelled 
by the commenters' assertion that these activities are imaging-specific 
and do not overlap with an E/M visit. We are finalizing the direct PE 
inputs as recommended by the RUC for CPT codes 76882 and 76883, as 
proposed. We reiterate our recommendation that the RUC and interested 
parties reconsider the PE inputs in the near term. We also remind 
interested parties that we have established an annual process for the 
public nomination of potentially misvalued codes. This process provides 
an annual means for those who believe that values for individual 
services are inaccurate and should be readdressed through notice and 
comment rulemaking to bring those codes to our attention, as detailed 
in section II.C. of this final rule. 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. While this process is 
available to interested parties, we encourage the RUC and other 
interested parties to reconsider the PE inputs of the neuromuscular 
ultrasound family as a whole, including the new code, in the near term, 
as we have already reviewed comments for this final rule and survey 
data that may indicate that the PE inputs for these services may not be 
reflective of what will be considered typical in how these services may 
be furnished.
(21) Immunization Administration (CPT Codes 90460, 90461, 90471, 90472, 
90473, and 90474)
    Especially in the context of the current PHE for COVID-19, it is 
evident that consistent beneficiary access to vaccinations is vital to 
public health. As discussed in the CY 2021 PFS proposed rule (85 CFR 
50162), many interested parties raised concerns about the reductions in 
payment rates for the preventive vaccine administration services that 
had occurred over the past several years. The codes for immunization 
administration services include CPT codes 90460, 90471, and 90473, as 
well as the three Healthcare Common Procedural Coding System (HCPCS) 
codes that describe the services to administer the Part B preventive 
vaccinations other than the COVID-19 vaccine: G0008 (influenza), G0009 
(pneumococcal), and G0010 (HBV). Until CY 2019, we generally had 
established payment rates for these immunization administration 
services based on a direct crosswalk to the PFS payment rate for CPT 
code 96372 (Therapeutic, prophylactic, or diagnostic injection (specify 
substance or drug); subcutaneous or intramuscular). Because we proposed 
and finalized reductions in valuation for the crosswalk code for CY 
2018, and because the reductions in overall valuation for that code 
have been subject to the multi-year phase-in of significant reductions 
in RVUs, the payment rate for these vaccine administration codes has 
been concurrently reduced. Further, because the reduction in RVUs for 
the crosswalk code, CPT code 96372, was significant enough to be 
required to be phased in over several years under section 1848(c)(7) of 
the Act, the reductions in overall valuation for the vaccine 
administration codes were likewise subject to reductions over several 
years. As we noted in Table 21 of the CY 2022 PFS proposed rule (86 FR 
39222), the national payment rate for administering these preventive 
vaccines has declined more than 30 percent since 2015.
    We have attempted to address the reduction in payment rates for the 
Part B preventive vaccine administration HCPCS G-codes in the last 
three PFS rulemaking cycles. In the CY 2020 PFS final rule, we 
acknowledged that it is in the public interest to ensure appropriate 
resource costs are reflected in the valuation of the immunization 
administration services that are used to deliver these vaccines, and 
noted that we planned to review the valuations for these services in 
future rulemaking. For CY 2020, we maintained the CY 2019 national 
payment amount for immunization administration services described by 
HCPCS codes G0008, G0009 and G0010 (84 FR 62798).
    In the CY 2021 PFS proposed rule, we proposed to crosswalk CPT 
codes 90460, 90471, and 90473, as well as HCPCS codes G0008, G0009 and 
G0010 to CPT code 36000 (Introduction of needle or intracatheter, vein) 
(85 FR 50163). In the proposed rule, we noted that CPT code 36000 is a 
service with a similar clinical vignette, and that the additional 
clinical labor, supply, and equipment resources associated with 
furnishing CPT code 36000 were similar to costs associated with these 
vaccine administration codes. We also noted that this crosswalk would 
have resulted in a payment rate for vaccine administration services 
that is approximately the same as the CY 2017 rate that was in place 
prior to the revaluation of CPT code 96372 (the original crosswalk 
code). In the CY 2021 PFS final rule, we did not finalize the proposed 
policy, and instead finalized a policy to maintain the CY 2019 payment 
amount for CPT codes 90460-90474, as well as HCPCS codes G0008, G0009 
and G0010 (85 FR 84628). In the final rule, we also noted that we 
continued to seek additional information that specifically identifies 
the resource costs and inputs that should be considered to establish 
payment for vaccine administration services on a long-term basis.
    For the CY 2022 rulemaking cycle, we requested feedback from 
interested parties that would support the development of an accurate 
and stable payment rate for administration of the preventive vaccines 
described in section 1861(s)(10) of the Act (influenza, pneumococcal, 
HBV, and COVID-19) for physicians, NPPs, mass immunizers and certain 
other providers and suppliers. We invited commenters to submit their 
detailed feedback to a series of questions and requests that we 
believed would assist us in establishing payment rates for these 
services that could be appropriate for use on a long-term basis; we 
direct readers to the full discussion of this topic in the CY 2022 PFS 
final rule (86 FR 65179 through 65193). For CY 2022, we finalized a 
uniform payment rate of $30 for the administration of an influenza, 
pneumococcal or HBV vaccine covered under the Medicare Part B 
preventive vaccine benefit at section 1861(s)(10) of the Act. We 
explained that since the

[[Page 69511]]

administration of the preventive vaccines described under section 
1861(s)(10) of the Act is not included within the statutory definition 
of physicians' services, the payment rates we established for these 
services in the CY 2022 PFS final rule are independent of the PFS, and 
will be updated as necessary independently of the valuation of any 
specific codes under the PFS (86 FR 65186). We discuss the current 
payment policy for administration of preventive vaccines and our 
proposals for CY 2023 in section II.H. of this final rule.
    We note that as we considered payment policies to ensure adequate 
access to the Part B preventive vaccines, including consideration of 
resource costs, the RUC surveyed and reviewed CPT codes 90460-90474 at 
the April 2021 meeting and submitted recommendations to CMS for our 
consideration in the CY 2023 rulemaking cycle.
    We proposed the RUC-recommended work RVU for all six codes in the 
Immunization Administration family. We proposed a work RVU of 0.24 for 
CPT code 90460 (Immunization administration through 18 years of age via 
any route of administration, with counseling by physician or other 
qualified health care professional; first or only component of each 
vaccine or toxoid administered), a work RVU of 0.18 for CPT code 90461 
(Immunization administration through 18 years of age via any route of 
administration, with counseling by physician or other qualified health 
care professional; each additional vaccine or toxoid component 
administered), a work RVU of 0.17 for CPT code 90471 (Immunization 
administration (includes percutaneous, intradermal, subcutaneous, or 
intramuscular injections); 1 vaccine (single or combination vaccine/
toxoid)), a work RVU of 0.15 for CPT code 90472 (Immunization 
administration (includes percutaneous, intradermal, subcutaneous, or 
intramuscular injections); each additional vaccine (single or 
combination vaccine/toxoid)), a work RVU of 0.17 for CPT code 90473 
(Immunization administration by intranasal or oral route; 1 vaccine 
(single or combination vaccine/toxoid)), and a work RVU of 0.15 for CPT 
code 90474 (Immunization administration by intranasal or oral route; 
each additional vaccine (single or combination vaccine/toxoid)).
    For the direct PE inputs, we proposed to remove 1 minute of 
clinical labor time for the CA008 (Perform regulatory mandated quality 
assurance activity (pre-service)) activity for CPT codes 90460 and 
90471-90474. The RUC recommendations describe these activities as 
``Checking historical and current temperatures for vaccine 
refrigerator; recording temperatures; reporting temperatures; vaccine 
inventorying; ordering vaccines; completing required Vaccines for 
Children (VFC) paperwork; receiving vaccines; inspecting/logging 
vaccines and putting them in the vaccine refrigerator; creating lot 
numbers in EHR.'' Checking refrigerator temperatures, vaccine 
inventorying, and filling out vaccine paperwork are administrative 
tasks which are not individually allocable to a particular patient for 
a particular service. We removed this 1 minute of clinical labor time 
as these administrative tasks are forms of indirect PE. We also refined 
the equipment times for CPT codes 90460 and 90471-90474 to conform to 
our established policies for non-highly technical equipment.
    In consideration of the information provided in the recommendation 
for these services, we proposed the RUC's recommended work RVUs and 
direct PE inputs (with minor refinements) for these vaccine 
administration services. However, we continue to seek additional 
information from commenters that specifically identifies the resource 
costs and inputs that should be considered to establish payment for 
these vaccine administration services on a long-term basis, consistent 
with our policy objectives for ensuring maximum access to immunization 
services.
    Comment: Many commenters stated that they supported the proposal of 
the RUC-recommended work RVUs for all six codes in the Immunization 
Administration family.
    Response: We appreciate the support for our proposed work RVUs from 
the commenters.
    Comment: A commenter stated that they supported the proposal of the 
RUC-recommended work RVUs and thanked CMS for its emphasis on the 
importance and value of vaccines. The commenter also stated that CMS 
should adopt a site-neutral approach for all Part B vaccines and apply 
the OPPS payment rate in all sites of service. The commenter stated 
that the vaccine administration service is remarkably similar across 
all of the intramuscular injected Part B vaccines; the commenter stated 
that it is essentially the same service regardless of the type of 
vaccine, across all of the various sites of service and that the 
infrastructure and necessary supplies and staff are fundamentally the 
same regardless of where a vaccine is administered. The commenter 
stated that annual updates to the vaccine administration payment rates 
based on OPPS claims data is a reliable and data-based method for 
updating the payment rate which would prevent the issues that have 
occurred in the past with the crosswalk to CPT code 96372.
    Response: We appreciate the support for our proposed work RVUs from 
the commenter. We did not propose and we are not finalizing the OPPS 
payment rates for the Immunization Administration codes as we do not 
have data at the moment that indicates these services are identical 
regardless of the site of service and type of provider. We note for the 
commenter that we proposed work RVUs and direct PE inputs for the 
Immunization Administration codes to ensure that they would be 
resource-based and not dependent on crosswalks to other CPT codes for 
valuation.
    Comment: One commenter disagreed with the proposed valuation of the 
Immunization Administration codes and stated that the proposed payment 
rates were insufficient to cover the resource costs associated with 
providing these services. The commenter stated that the RUC methodology 
does not result in adequate payment rates for these vaccine 
administration services and requested that CMS assign the $30 Part B 
vaccine administration payment rate to the Part D vaccine 
administration services as well. The commenter stated that there was no 
policy rationale for a large difference in payment rates between the 
proposed Part B vaccine administration payment rate and the proposed 
payments rates for the Part D vaccine administration services and 
requested that CMS finalize a payment of $30 for CPT codes 90460, 
90461, 90471, 90472, 90473, and 90474.
    Response: We disagree with the commenter that the RUC methodology 
used to value the Immunization Administration codes does not result in 
adequate payment rates for these services. We remind the commenter that 
under Medicare Part B, the statute requires CMS to value physician 
services using a resource-based system based on the time and intensity 
of the services involved. (See section 1848(c)(1)(A) of the Act.) We 
believe that the RUC recommended values for these codes, with minor 
refinements to the direct PE inputs to conform with our standard 
equipment time methodology, are reasonable and will establish resource-
based payments for these services as required by the statute.
    Comment: Several commenters disagreed with the proposal to remove 1 
minute of clinical labor time for the CA008 (Perform regulatory 
mandated

[[Page 69512]]

quality assurance activity (pre-service)) activity for CPT codes 90460 
and 90471-90474 as a form of indirect PE. Commenters stated that 
clinical staff immunization confirmation protocols have changed since 
the Immunization Administration codes were last valued due to the 
explosion in the number of new vaccines introduced since 2009. 
Commenters stated that practitioners typically give orders for the 
antigen but not the particular brand and presentation, and determining 
which of these vaccine products to use is a clinical staff decision 
based on the patient's age and vaccination history and potentially 
complicated by restrictions. Commenters stated that some vaccines have 
different dosing requirements based on age, and that while in some 
cases it is acceptable to use the alternative brand in stock if the 
original brand is not known, in other cases using only the brand from 
the original dose is acceptable. Commenters stated that each time a 
vaccine is administered clinical staff must follow these immunization 
confirmation protocols, and therefore, the commenters believe that 
these clinical staff activities are appropriately attributed to direct 
PE.
    Response: We appreciate the additional information provided by the 
commenters describing the decisions that the clinical staff must make 
when carrying out these regulatory mandated quality assurance 
activities. Based on this additional information, we agree that these 
quality assurance activities constitute a form of clinical judgment 
that is individually allocable to the Immunization Administrative 
services as a form of direct PE. We are therefore not finalizing our 
proposal and will restore the 1 minute of clinical labor time for the 
CA008 activity for CPT codes 90460 and 90471-90474.
    Comment: Several commenters disagreed with the proposal to refine 
the equipment times for CPT codes 90460 and 90471-90474 to conform to 
the established CMS policies for non-highly technical equipment. 
Commenters stated that in February 2008, the RUC recommended and CMS 
finalized the use of total clinical staff time as the time of medical 
equipment use for the service of vaccine administration. Commenters 
stated that this established an exemption specific to the service of 
vaccine administration and that CMS should finalize the RUC's equipment 
time recommendations for each piece of medical equipment as established 
by this 2008 exemption.
    Response: We disagree with the commenters and continue to believe 
that the equipment times for CPT codes 90460 and 90471-90474 should 
conform to the established policies for non-highly technical equipment. 
While the commenters are correct that we finalized the RUC-recommended 
direct PE inputs for these codes in the CY 2009 PFS final rule (73 FR 
69736), we did not establish an exemption to the standard equipment 
times for the Immunization Administration codes. We did not apply the 
established policies for non-highly technical equipment during our CY 
2009 review of these codes solely because those established policies 
had not been developed yet; the higher equipment times for CPT codes 
90460 and 90471-90474 are an artifact of the age of their last review 
date, not an exemption to our standard policies. As we have noted with 
regards to the standardization of clinical labor tasks, we believe that 
setting and maintaining standard equipment time formulas helps provide 
greater consistency among codes and improves relativity across the 
wider fee schedule. Updating older equipment times and bringing them 
into accordance with the established equipment time formulas is a 
standard part of our review process and the Immunization Administration 
codes are no exception to that rule. We continue to believe that the 
equipment times for CPT codes 90460 and 90471-90474 should conform to 
the established policies for non-highly technical equipment in order to 
maintain relativity between codes.
    After consideration of the comments, we are finalizing the work 
RVUs inputs for all six codes in the Immunization Administration family 
as proposed. We are finalizing the direct PE inputs as proposed aside 
from restoring 1 minute of clinical labor time for the CA008 activity 
for CPT codes 90460 and 90471-90474 as described above.
(22) Orthoptic Training (CPT Codes 92065 and 92066)
    In October 2019, the RUC identified CPT code 92065 (Orthoptic and/
or pleoptic training, with continuing medical direction and evaluation; 
performed by a physician or other qualified health care professional) 
as needing review because it was Harvard Valued (that is, the value of 
the code had not been reviewed since the implementation of the 
Resource-Based Relative Value Scale (RBRVS)) and its utilization 
surpassed 30,000 in each of several recent years. At its January 2020 
meeting, during review of CPT code 92065, the RUC noted that the use of 
``and/or'' in the descriptor defined different patient populations and 
treatment techniques and recommended that the code be reviewed by the 
CPT Editorial Panel (CPT) in order to create two separate codes. 
Additionally, based upon review and analysis of survey data, specialty 
societies decided to submit a new code change application for the 
February 2021 CPT meeting.
    During the February 2021 meeting, CPT noted that the services of 
CPT code 92065 are delivered in two different ways: directly by the 
practitioner and by a technician under the supervision of the 
practitioner. In response to this observation, CPT suggested that two 
codes be created to identify who furnishes the orthoptic service. 
Identifying in the code descriptor who furnishes the services would 
ensure more accurate valuation of both the work and the PE associated 
with the service. The CPT formally revised code 92065 and created new 
CPT code 92066 to describe orthoptic services furnished under the 
supervision of a physician or qualified health care professional.
    During its April 2021 meeting, the RUC revalued the work associated 
with the services of CPT code 92065 (Orthoptic training; performed by a 
physician or other qualified health care professional) and valued the 
PE inputs for new CPT code 92066 (Orthoptic training; performed by a 
physician or other qualified health care professional under supervision 
of a physician or other qualified health care professional). CPT code 
92066 is valued as a PE-only code.
    After reviewing CPT code 92065, we proposed to accept the RUC-
recommended work RVU of 0.71. We also proposed to accept the RUC-
recommended direct PE inputs for CPT code 92065. We proposed to accept 
the RUC-recommended direct PE inputs for CPT code 92066 as well.
    Comment: We received a few comments in response to our proposals 
for CPT codes 92065 and 92066. Commenters expressed support of our 
proposal to accept the RUC-recommended work RVUs and the direct PE 
inputs adjustments.
    Response: We thank commenters for taking time to submit their 
support of the RUC-recommendations for CPT codes 92065 and 92066.
    We are finalizing the RUC-recommended work RVU of 0.71 for CPT 
codes 92065 and the RUC-recommended direct PE inputs for both CPT codes 
92065 and 92066.
(23) Dark Adaptation Eye Exam (CPT Code 92284)
    CPT code 92284 (Dark adaptation examination with interpretation and 
report) was identified in July 2020 as Harvard Valued with a 
utilization of over 30,000 claims. In January 2021, the

[[Page 69513]]

RUC recommended that the code be surveyed for the April 2021 RUC 
meeting. The RUC reviewed the survey results for the procedure and 
noted that the 25th percentile work value of 0.45 was greater than the 
code's current value. The RUC recommended a work RVU of 0.14, based on 
a direct work RVU crosswalk from CPT code 76514 (Ophthalmic ultrasound, 
diagnostic; corneal pachymetry, unilateral or bilateral (determination 
of corneal thickness)). We disagreed with the RUC-recommended work RVU 
of 0.14 for CPT code 92284. We found that the recommended work RVU did 
not adequately reflect reductions in physician time, since this 
diagnostic screening is usually completed during an E/M visit and 
largely consists of interpreting machine generated results. Instead, we 
proposed a work RVU of 0.00 for CPT code 92284, which is comparable to 
other ophthalmic screening tests; such as 99172 (Visual function 
screening, automated or semi-automated bilateral quantitative 
determination of visual acuity, ocular alignment, color vision by 
pseudoisochromatic plates, and field of vision (may include all or some 
screening of the determination[s] for contrast sensitivity, vision 
under glare)) and 99173 (Screening test of visual acuity, quantitative, 
bilateral). Alternatively, we considered using a total-time methodology 
with a work RVU of 0.03 and a reverse building block methodology with a 
work RVU of 0.06. We solicited comments and requested information that 
may inform why CPT code 92284 should include additional valuation as 
this procedure is included in an E/M visit.
    For the direct PE inputs, we proposed to refine the equipment time 
for the lens set (EQ165) from 24 minutes to 15 minutes and motorized 
table (EF030) from 24 minutes to 15 minutes. The reduction in time for 
both equipment types is proposed to match the RUC-recommended 15 
minutes in Clinical Activity Code CA021. We solicited public comment to 
provide further rationale for the additional 9 minutes recommended.
    We received a few comments regarding our proposed work RVUs and 
direct PE inputs for CPT code 92284 in response to the CY 2023 PFS 
proposed rule and those comments are summarized below.
    Comment: Commenters disagreed with the comparison to CPT codes 
99172 and 99173, stating that these reference codes assume there is no 
physician work involved with the service, and therefore, do not serve 
as appropriate clinical comparisons to the surveyed CPT code 92284. 
Instead, these commenters agree with the RUC-recommended crosswalk to 
CPT code 76514 as a closer clinical comparison, based on work RVU, 
intra-service time, and intensity of physician/optometrist work 
involved with this service.
    Commenters did not support the proposed alternative methodologies, 
stating that the total-time and reverse building block methodologies do 
not appropriately value the physician work and total time required in 
CPT code 92284. In addition, the commenters stated that use of these 
alternative methodologies would mean that we are choosing an 
inconsistent combination of inputs to apply, and that this selection 
process has the appearance of seeking an arbitrary value from the vast 
array of possible mathematical calculations, rather than seeking a 
valid, clinically relevant relationship that would preserve relativity.
    One commenter acknowledged that we noted the physician work largely 
consists of interpreting machine-generated results, stating that they 
agreed with the RUC-recommended intraservice time of 3 minutes, which 
was a reduction from the surveyed intraservice time of 15 minutes. The 
commenter noted that this represents a change in technology which 
allows technicians to administer the test, a change with which most 
survey respondents were not familiar. Another commenter asked that we 
consider upholding the RUC recommendations for all CPT codes covered in 
this rule, especially CPT code 92284.
    Response: We disagree with commenters and continue to believe that 
CPT codes 99172 and 99173 are appropriate comparator codes for CPT code 
92284. These reference codes also account for the screening nature of 
CPT code 92284, which is usually performed in conjunction with an E/M 
visit that accounts for the physician work. We continue to believe that 
the nature of the PFS relative value system is such that all services 
are appropriately subject to comparisons to one another. Although codes 
that describe clinically similar services are sometimes stronger 
comparator codes, we do not agree that codes must share the same site 
of service, patient population, or utilization level to serve as an 
appropriate crosswalk.
    We also clarify for the commenters that our review process is not 
arbitrary in nature and includes a variety of methodologies and 
approaches used to develop work RVUs, including the use of building 
block and total-time methodologies. Our reviews of recommended work 
RVUs and time inputs generally include, but have not been limited to, a 
review of information provided by the RUC, the HCPAC, 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.
    When considering the intraservice time, we do not agree with the 
commenter, and continue to believe that complex work is not performed 
to analyze the machine generated results. In our review, we focus on 
evaluating and addressing the time and intensity of services, but we 
are under no obligation to adopt the same review process or compelling 
evidence criteria as the RUC. While the incorporation of new technology 
can sometimes make services more complex and difficult to perform, it 
can also have the opposite effect by making services less reliant on 
manual skill and technique. We also have reason to believe that the new 
technology has led to greater efficiencies in the service which, under 
the resource-based nature of the RVU system, lends further support for 
a reduction in the work RVU.
    Comment: Commenters urged CMS to accept the RUC-recommended direct 
PE inputs for CPT code 92284 and provided additional rationale to 
explain the additional 9 minutes of equipment time for the lens set 
(EQ165) and motorized table (EF030). Commenters stated that in addition 
to the 15 minutes that the equipment is in use during performance of 
the test, there is an additional 9 minutes of clinical activities where 
the equipment is unavailable for use with another patient. These 
activities all occur in the room with the testing equipment, lens set, 
and table.
    Response: We appreciate the additional information provided by the 
commenters to clarify the equipment time. We are persuaded by the 
comments that explained the standard default equipment formula was used 
and RUC PE direct input benchmarks for clinical staff time were used 
for CA011, CA013, CA014, and CA024, which results in 24 minutes when 
combined with the 15 minutes of CA021. Therefore, we are not finalizing 
our proposed refinement to the equipment time for the lens set (EQ165) 
and motorized table (EF030), and will finalize the RUC-recommended time 
of 24 minutes.
    After careful consideration of the public comments, we are 
finalizing a work RVU of 0.00 for CPT code 92284 as proposed. For the 
direct PE inputs,

[[Page 69514]]

we are not finalizing our proposed refinements to the equipment time 
and are instead finalizing the RUC-recommended direct PE inputs for CPT 
code 92284.
(24) Anterior Segment Imaging (CPT Code 92287)
    For CPT code 99287 (Anterior segment imaging with interpretation 
and report; with fluorescein angiography), we proposed the RUC-
recommended work RVU of 0.40.
    We proposed the RUC-recommended direct PE inputs for CPT code 92287 
without refinement.
    Comment: Commenters supported our proposed valuation for CPT code 
92287.
    Response: We acknowledge and appreciate the support.
    After consideration of the public comments, we are finalizing the 
RUC-recommended work RVU of 0.40 and the RUC-recommended direct PE 
inputs for CPT code 92287 as proposed.
(25) External Extended ECG Monitoring (CPT Codes 93241, 93242, 93243, 
93244, 93245, 93246, 93247, and 93248)
    In the CY 2021 PFS proposed rule (85 FR 50164), we proposed to 
adopt the RUC's work RVU recommendations for CPT codes 93241 (External 
electrocardiographic recording for more than 48 hours up to 7 days by 
continuous rhythm recording and storage; includes recording, scanning 
analysis with report, review and interpretation), 93242 (External 
electrocardiographic recording for more than 48 hours up to 7 days by 
continuous rhythm recording and storage; recording (includes connection 
and initial recording)), 93243 (External electrocardiographic recording 
for more than 48 hours up to 7 days by continuous rhythm recording and 
storage; scanning analysis with report), 93244 (External 
electrocardiographic recording for more than 48 hours up to 7 days by 
continuous rhythm recording and storage; review and interpretation), 
93245 (External electrocardiographic recording for more than 7 days up 
to 15 days by continuous rhythm recording and storage; includes 
recording, scanning analysis with report, review and interpretation), 
93246 (External electrocardiographic recording for more than 7 days up 
to 15 days by continuous rhythm recording and storage; recording 
(includes connection and initial recording)), 93247 (External 
electrocardiographic recording for more than 7 days up to 15 days by 
continuous rhythm recording and storage; scanning analysis with 
report), and 93248 (External electrocardiographic recording for more 
than 7 days up to 15 days by continuous rhythm recording and storage; 
review and interpretation).
    We noted that the recommendations for this family of codes 
contained one new supply item, the ``extended external ECG patch, 
medical magnetic tape recorder'' (SD339). We did not receive a 
traditional invoice to establish a price for this supply item. Instead, 
we received pricing information from two sources: a weighted median of 
claims data with the cost of the other direct PE inputs removed, and a 
top-down approach calculating the cost of the supply per service based 
on summing the total costs of the health care provider and dividing by 
the total number of tests furnished. The former methodology yielded a 
supply price of approximately $440 while the latter methodology 
produced an estimated supply price of $416.85. Interested parties also 
submitted a series of invoices from the clinical study marketplace with 
a price of $595, which we rejected as we typically require an invoice 
representative of commercial market pricing to establish a national 
price for a new supply or equipment item.
    After consideration of the information, we proposed to employ a 
crosswalk to an existing supply for use as a proxy price until we 
received pricing information to use for the ``extended external ECG 
patch, medical magnetic tape recorder'' item. We proposed to use the 
``kit, percutaneous neuro test stimulation'' (SA022) supply as our 
proxy item at a price of $413.24. We believed the kit to be the closest 
match from a pricing perspective to employ as a proxy until we would be 
able to arrive at an invoice that is representative of commercial 
market pricing. We welcomed the submission of invoices or other 
additional information for use in pricing the ``extended external ECG 
patch, medical magnetic tape recorder'' supply. In response to our 
proposal, we received conflicting information from commenters and in 
the CY 2021 PFS final rule (85 FR 84631), we ultimately finalized 
contractor pricing for CY 2021 for the four codes that included this 
supply input (CPT codes 93241, 93243, 93245, and 93247) to allow 
additional time to receive more pricing information.
    We noted that interested parties have continued to engage with CMS 
and the MACs on payment for this service. We remained concerned that we 
continued to hear that the supply costs as initially considered in our 
CY 2021 PFS proposal were much higher than they should be. At the same 
time, we also heard that the resource costs, as reflected in the 
contractor-based payments, do not adequately cover the incurred cost 
for the SD339 supply that is used to furnish these services. In 
consideration of continued access to these services for Medicare 
beneficiaries, we once again solicited public comments and information 
in the CY 2022 PFS proposed rule (86 FR 39179) to support CMS' future 
rulemaking to establish a uniform national payment that appropriately 
reflects the PE inputs that are used to furnish these services. During 
the comment period, we received invoices and additional information for 
use in pricing the SD339 supply from the commenters.
    Based on this information, we finalized an updated price of $200.15 
for the ``extended external ECG patch, medical magnetic tape recorder'' 
(SD339) supply in the CY 2022 PFS final rule based on the average of 
the ten invoices we received (86 FR 65125). We believed that the 
invoice data for this supply item, which ranged from a minimum price of 
$179.80 to a maximum price of $241.99, suggested that our updated price 
of $200.15 was more accurate than the suggested crosswalk to the SD214 
supply at a price of $325.98. We believed that considering a potential 
impact to payment for other services under the PFS, a proposal to 
establish national payment for these services based on this new pricing 
information should take into account broader feedback from interested 
parties. Therefore, we did not finalize national pricing at this time 
and finalized our proposal to maintain contractor pricing for CPT codes 
93241, 93243, 93245, and 93247 for CY 2022.
    For CY 2023, we received a series of additional invoices for the 
SD339 supply from two impacted parties. Each of the invoices priced the 
supply item at either $265.00 or $226.38; we therefore proposed to 
average together these prices and establish a proposed price of $245.69 
for the SD339 supply. We noted that we believe that this represents the 
most typical price for the supply based on the invoice data that has 
been provided over the past 2 years. We also proposed national pricing 
for CPT codes 93241, 93243, 93245, and 93247 for CY 2023 now that the 
SD339 supply has an established price. The proposed CY 2023 RVUs for 
these CPT codes are displayed in Addendum B on the CMS website under 
downloads for the CY 2023 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
    Comment: Many commenters stated their support for the proposal of 
national pricing for CPT codes 93241,

[[Page 69515]]

93243, 93245, and 93247. Commenters detailed the clinical benefits of 
external extended ECG monitoring, such as offering easy access to 
patients by having inventory readily available at the point of care, 
being able to return the device in a postage paid box thus preventing a 
return trip to the hospital or doctor's office, and having the option 
for a monitor that provides greater than 24-48 hours of data that 
providers need access to for clinical decision making. Commenters 
stated that the proposal of national pricing would help to provide 
greater stability in payment for these services and ensure continued 
access to care for beneficiaries.
    Response: We appreciate the support for our proposal from the 
commenters.
    Comment: Several commenters submitted additional invoices 
associated with the pricing of the ``extended external ECG patch, 
medical magnetic tape recorder'' (SD339) supply. Commenters stated that 
they believe these additional invoices would help better capture the 
market-based costs associated with the SD339 supply.
    Response: We appreciate the submission of invoices with additional 
pricing information from the commenters in helping to determine the 
most accurate price for the SD339 supply. We averaged together the 
price of the new invoices with the invoices that we had previously 
received prior to the publication of the CY 2023 PFS proposed rule. 
After averaging together these 21 invoices, we are finalizing an 
updated price of $260.35 for the SD339 supply.
    Comment: Several commenters stated that they supported the proposal 
of national pricing and the proposed price of $245.69 for the SD339 
supply; however they noted that the result does not adequately reflect 
the cost of delivering these services by independent diagnostic testing 
facilities (IDTFs). Commenters stated that KPMG, in conjunction with 
AdvaMed, performed and presented a detailed cost analysis to CMS and 
individual MACs requesting a reevaluation of the PE inputs. Commenters 
stated that this analysis segregated costs into three categories: (1) 
cost of goods sold including costs directly related to the devices, 
supplies, production overhead and shipping; (2) direct labor, including 
manufacturing a product or provision of a service and clinical 
services; and (3) other indirect costs (IT support, finance, rent), and 
stated that all three categories were necessary to fully account for 
and understand the resources expended by an IDTF to provide LT-ECG 
services. Commenters also stated that these three categories did not 
consider the consumption of non-device assets used in the delivery of 
LT-ECG (for example, software and processing) or the costs associated 
with the purchase of capital equipment, regulatory, and research and 
development expenses. This cost analysis summed to $300.68 for the 
total cost of providing LT-ECG services, including capital expenditures 
and research and development costs; a separate commenter submitted a 
related cost analysis that summed to $283.89. Commenters requested that 
the Extended External ECG Monitoring services be priced in accordance 
with the updated costs from the AdvaMed/KPMG analysis as the CMS 
proposed pricing does not adequately account for all the costs 
associated with manufacturing and delivery of the associated monitoring 
services (for example, software and processing) that are necessary for 
efficient and effective delivery of services.
    Response: We appreciate the presentation of these additional cost 
analyses from the commenters for use in pricing the Extended External 
ECG Monitoring codes. However, we did not propose to use these external 
cost analyses in valuing these codes and they do not fit easily within 
the framework of how our PE methodology operates. As the commenters 
noted, these cost analyses include delivery, software, and processing 
expenses which are typically considered to be forms of indirect PE 
under our methodology. These indirect expenses would not be included in 
the invoice pricing of the SD339 supply which we sought comment upon in 
the proposed rule. The commenters also explicitly stated that their 
cost analyses for providing Extended External ECG Monitoring services 
included costs associated with research and development, which are not 
costs that we include when determining the price of a service under our 
PE methodology, as they are not connected to the furnishing of the 
service itself.
    More broadly, our PE allocation currently makes use of a ``bottom 
up'' methodology that sums the typical and medically necessary 
resources associated with each service and uses them to calculate the 
PE RVU. The cost analyses submitted by the commenters are forms of a 
``top down'' analysis which have not been used as the basis of our PE 
methodology since we finalized the changes to the current system in CY 
2007. (For a detailed explanation of the direct PE methodology, 
including examples, we refer readers to the 5-year review of work RVUs 
under the PFS and proposed changes to the PE methodology CY 2007 PFS 
proposed notice (71 FR 37242) and the CY 2007 PFS final rule with 
comment period (71 FR 69629).) This is not to say that the cost 
analyses submitted by the commenters are irrelevant to the process of 
valuing the Extended External ECG Monitoring services, as they can be a 
useful tool in determining accurate market-based pricing. However, they 
cannot be directly utilized to determine the most accurate price for 
the SD339 supply, especially given that these cost analyses include 
additional expenses such as delivery, processing, and research/
development costs which would not typically be considered direct 
expenses under our PE methodology.
    We also note that the AdvaMed/KPMG cost analysis submitted by the 
commenters with a total cost of $300.68 for the Extended External ECG 
Monitoring services includes research and development costs of $38.50 
in its total expenses. As stated above, our PE methodology does not 
recognize research and development costs when determining the prices of 
services, only those resources individually allocable to the service 
which are both typical and medically necessary. When these are removed, 
the resulting total cost of $262.18 closely matches our proposed 
pricing for the External ECG Monitoring services. We believe that these 
cost analyses ultimately reinforce the accuracy of our proposals after 
excluding the costs which would not be included under our PE 
methodology.
    Comment: A commenter had a series of questions regarding the 
invoices used to establish the pricing for the SD339 supply. The 
commenter outlined six different scenarios asking whether these 
invoices constituted health insurance claims, entire technical services 
billed by IDTFs, individual single-use patches, and several related 
scenarios. The commenter requested additional information about the 
invoices used for pricing the SD339 supply based on these different 
scenarios.
    Response: As detailed above, we received 21 invoices which we 
averaged together under our typical pricing methodology which resulted 
in a price of $260.35 for the SD339 supply. We reviewed each invoice 
and determined that the price was associated with an individual 
extended external ECG patch, not health insurance claims or entire 
technical services. We did separately receive ``top down'' cost 
analyses from several commenters, as discussed above, but these were 
not invoices for the SD339 supply, and therefore, we did not include 
them as part of the averaged invoice price.
    Comment: A commenter asked CMS to explain why the CY 2023 proposed

[[Page 69516]]

rule used a new batch of invoices to price the SD339 supply which 
superseded rather than added to the CY 2022 final rule's batch of 
invoices for the same supply. The commenter stated that CMS did not 
explain what about the new invoices was superior and more likely to be 
representative and valid of national costs for the SD339 supply. The 
commenter requested that CMS provides more detail about what the 
invoice data they have received are, and why CMS has included or 
excluded when specifying the input.
    Response: When we use invoices to update supply and equipment 
pricing, we find ourselves typically working with a small amount of 
submitted invoice data. It is not uncommon to use a single invoice to 
update supply and equipment pricing for lack of additional invoices 
associated with the item in question. The limited amount of invoice 
data sometimes results in making use of invoices across different 
calendar years in order to get a more representative sample of market-
based pricing. However, our preference is always to use more recent 
pricing information whenever possible since it will be more reflective 
of current market-based pricing for the item in question.
    In the case of the SD339 supply, we received a large quantity of 
invoices (21 in total) from multiple different interested parties. 
Because we had an abundance of invoice data associated with this 
supply, we averaged together the invoices from the CY 2023 cycle and 
did not need to include the older invoices from the CY 2022 cycle. We 
did not include them for the simple reason that they constituted older 
pricing which was less reflective of current market pricing. We 
typically do not exclude any invoices in making supply and equipment 
pricing determinations, however we do not believe that it would be 
accurate to use older, outdated data when we have readily available 
invoices which are more current.
    Comment: A commenter stated that an underlying problem for 
establishing appropriate payment rates for External Extended ECG 
Monitoring is the IDTF model itself, which does not easily fit into the 
CMS methodology for paying for physician services. The commenter stated 
that the current PE methodology is based on outdated data from the 2006 
PPI Survey performed by the American Medical Association and mostly 
focuses on expenses related to the traditional physician office which 
the commenter stated that they did not believe to be comprehensive or 
accurate. The commenter urged CMS to develop a survey appropriate for 
IDTFs, especially IDTFs that perform remote monitoring, which would 
capture unique components of the IDTF cost structure such as expenses 
related to research and development and unique challenges and 
regulatory requirements related to AI and software as a service (SaaS).
    Response: We agree with the commenter on the need for comprehensive 
and accurate data for use in our PE methodology. We continue to be 
interested in potential approaches that can be used to update aspects 
of the PE methodology, which is why we solicited comments on Strategies 
for Updates to Practice Expense Data Collection and Methodology in the 
PE section of the rule. We direct readers to section II.B.5. of this 
final rule for the full discussion of this topic along with additional 
comments that we received.
    After consideration of the comments, we are finalizing national 
pricing for CPT codes 93241, 93243, 93245, and 93247 along with an 
updated price of $260.35 for the SD339 supply.
(26) Cardiac Ablation (CPT Codes 93653, 93654, 93655, 93656, and 93657)
    The technologies and clinical practices associated with Cardiac 
Ablation Services have changed enough over the past decade (since 2011 
when they were first developed) that the specialty societies 
recommended referring theses codes to the CPT Editorial Panel to have 
the code descriptors for Cardiac Ablation Services updated to create 
new and more complete descriptors reflecting the fact that many of 
these services are commonly performed together and should be 
incorporated and bundled. From the survey results presented to CMS last 
year, the RUC advisory committee believes that many of the survey 
respondents may not have realized that the code descriptors had been 
substantially revised and that they may not have read the updated code 
descriptors thoroughly enough to understand that services that are 
separately billed, were now combined into the existing codes (since CPT 
did not issue new codes for the revised descriptors). Since then, the 
RUC has re-surveyed these Cardiac Ablation codes in April 2021 for re-
review. In the interim, the work RVUs for the newly bundled CPT codes 
were maintained at their current values until the new recommendations 
were presented for CY 2023.
    The RUC re-surveyed and reviewed CPT code 93653 (Comprehensive 
electrophysiologic evaluation with insertion and repositioning of 
multiple electrode catheters, induction or attempted induction of an 
arrhythmia with right atrial pacing and recording, and catheter 
ablation of arrhythmogenic focus, including intracardiac 
electrophysiologic 3-dimensional mapping, right ventricular pacing and 
recording, left atrial pacing and recording from coronary sinus or left 
atrium, and His bundle recording, when performed; treatment of 
supraventricular tachycardia by ablation of fast or slow 
atrioventricular pathway, accessory atrioventricular connection, cavo-
tricuspid isthmus or other single atrial focus or source of atrial re-
entry), and recommends a work RVU of 15.00 with 31 minutes of pre-
service evaluation time, 3 minutes positioning time, 15 minutes scrub/
dress/wait time, 120 minutes of intra-service time, 30 minutes of 
immediate post-service time, for a sum of 199 minutes of total time. 
CPT code 93653 currently has a work RVU value of 14.75 with 23 minutes 
of pre-service evaluation time, 1 minutes positioning time, 5 minutes 
scrub/dress/wait time, 180 minutes of intra-service time, 30 minutes of 
immediate post-service time, for a sum of 239 minutes of total time. 
The time and the physician's work of CPT add-on code 93613 
(Intracardiac electrophysiologic 3-dimensional mapping (List separately 
in addition to code for primary procedure) with a work RVU of 5.23 and 
90 minutes of total time, and CPT add-on code 93621 (Comprehensive 
electrophysiologic evaluation including insertion and repositioning of 
multiple electrode catheters with induction or attempted induction of 
arrhythmia; with left atrial pacing and recording from coronary sinus 
or left atrium (List separately in addition to code for primary 
procedure)) with a work RVU of 1.50 and 20 minutes of total time are 
bundled within CPT code 93653. When all three codes are separately 
considered, they currently sum up to 21.48 work RVUs, much greater than 
the 15.00 work RVUs that the RUC has recommended. These codes also add 
up to much more physician total time than the RUC-recommended 199 
minutes.
    After reviewing this code and relative similar codes in the PFS, we 
proposed a comparator CPT code 37229 (Revascularization, endovascular, 
open or percutaneous, tibial, peroneal artery, unilateral, initial 
vessel; with atherectomy, includes angioplasty within the same vessel, 
when performed) with a work RVU of 13.80 and a similar intra-service 
time of 120 minutes and similar pre-service evaluation, pre-service 
positioning, pre-service scrub/dress/wait times, and

[[Page 69517]]

immediate post-service times, for a sum of 188 minutes of total time 
for a 000 day global period, compared to the RUC-recommended 199 
minutes of total time for CPT code 93653. We proposed a work RVU of 
13.80 for the bundled CPT code 93653.
    The RUC re-surveyed and reviewed CPT code 93654 (Comprehensive 
electrophysiologic evaluation with insertion and repositioning of 
multiple electrode catheters, induction or attempted induction of an 
arrhythmia with right atrial pacing and recording, and catheter 
ablation of arrhythmogenic focus, including intracardiac 
electrophysiologic 3-dimensional mapping, right ventricular pacing and 
recording, left atrial pacing and recording from coronary sinus or left 
atrium, and His bundle recording, when performed; with treatment of 
ventricular tachycardia or focus of ventricular ectopy including left 
ventricular pacing and recording, when performed), and recommends a 
work RVU of 18.10 with 40 minutes of pre-service evaluation time, 3 
minutes positioning time, 15 minutes scrub/dress/wait time, 200 minutes 
of intra-service time, 33 minutes of immediate post-service time, for a 
sum of 291 minutes of total time. CPT code 93654 currently has a work 
RVU value of 19.75 with 23 minutes of pre-service evaluation time, 1 
minutes positioning time, 5 minutes scrub/dress/wait time, 240 minutes 
of intra-service time, 40 minutes of immediate post-service time, for a 
sum of 309 minutes of total time. CPT code 93654 is currently and 
continues to be a bundled code. The RUC recommended intra-service times 
and total times for CPT code 93654 are less than the current times for 
this code, and the RUC-recommended work RVUs are also less than the 
current work RVUs. Though the RUC recommended a work RVU of 18.10, it 
is still a relatively high value compared to the existing 19.75 value. 
The RUC recommended a work RVU of 15.00 for CPT code 93653, and 18.10 
for CPT code 93654, with a relative increment between them of 3.10 work 
RVUs. We proposed to maintain the relative increment RVU difference of 
3.10 between CPT code 93653 and CPT code 93654, so because we proposed 
a work RVU of 13.80 for CPT code 93653, we proposed a work RVU of 16.90 
(13.80 plus 3.10) for CPT code 93654, with 200 minutes of intra-service 
time and 291 minutes of total time.
    CPT add-on code 93655 (Intracardiac catheter ablation of a discrete 
mechanism of arrhythmia which is distinct from the primary ablated 
mechanism, including repeat diagnostic maneuvers, to treat a 
spontaneous or induced arrhythmia (List separately in addition to code 
for primary procedure)) has a current work RVU of 5.50 with a physician 
intra-service time of 60 minutes as finalized last year, from a 
previous value of 7.50 work RVUs with 90 minutes of physician intra-
service time. The RUC recommended the re-surveyed intraservice time of 
60 minutes and 7.00 work RVUs. The primary change to CPT code 93655 is 
the reduction of the intraservice time of about 67 percent, which we 
use as a guide to determine a work RVU. We compared CPT add-on code 
22854 (Insertion of 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 (List 
separately in addition to code for primary procedure)), also with 60 
minutes of intraservice and total time and a work RVU of 5.50 to CPT 
add-on code 93655 and we believed that it is a more accurate valuation 
than the RUC's work RVU comparison to CPT add-on code 93592 
(Percutaneous transcatheter closure of paravalvular leak; each 
additional occlusion device (List separately in addition to code for 
primary procedure)) with a work RVU of 8.00 and an intra-service and 
total time of 60 minutes, and to CPT add-on code 34820 (Open iliac 
artery exposure for delivery of endovascular prosthesis or iliac 
occlusion during endovascular therapy, by abdominal or retroperitoneal 
incision, unilateral (List separately in addition to code for primary 
procedure)) with a work RVU of 7.00 and an intra-service and total time 
of 60 minutes. After reviewing this code and relative similar codes in 
the PFS, we proposed to maintain the current work RVU for CPT code 
93655 of 5.50 with a physician intra-service time of 60 minutes, as 
finalized last year (86 FR 65108).
    The RUC re-surveyed and reviewed CPT code 93656 (Comprehensive 
electrophysiologic evaluation including transseptal catheterizations, 
insertion and repositioning of multiple electrode catheters with 
intracardiac catheter ablation of atrial fibrillation by pulmonary vein 
isolation, including intracardiac electrophysiologic 3-dimensional 
mapping, intracardiac echocardiography including imaging supervision 
and interpretation, induction or attempted induction of an arrhythmia 
including left or right atrial pacing/recording, right ventricular 
pacing/recording, and His bundle recording, when performed), and 
recommends a work RVU of 17.00 with 35 minutes of pre-service 
evaluation time, 3 minutes positioning time, 15 minutes scrub/dress/
wait time, 180 minutes of intra-service time, 30 minutes of immediate 
post-service time, for a sum of 263 minutes of total time. CPT code 
93656 currently has a work RVU of 19.77 with 23 minutes of pre-service 
evaluation time, 1 minute positioning time, 5 minutes scrub/dress/wait 
time, 240 minutes of intra-service time, 40 minutes of immediate post-
service time, for a sum of 309 minutes of total time. CPT code 93656 
has bundled within it, the time and the physician's work of CPT add-on 
code 93613 (Intracardiac electrophysiologic 3-dimensional mapping (List 
separately in addition to code for primary procedure) with a work RVU 
of 5.23 and 90 minutes of total time and CPT add-on code 93662 
(Intracardiac echocardiography during therapeutic/diagnostic 
intervention, including imaging supervision and interpretation (List 
separately in addition to code for primary procedure)) with a work RVU 
of 1.44 and 25 minutes of total time. When all three codes are 
separately considered, they sum up to 26.44 work RVUs, which is much 
greater than the 17.00 work RVUs that is recommended and has much more 
physician total time than the RUC recommended 263 total time minutes.
    The RUC recommended intra-service times and total times for CPT 
code 93656 that are less than the current times for this code and we 
expect the work RVUs to also be less than the current work RVUs. Though 
the RUC recommended a work RVU of 17.00, it is still a high value 
compared to the existing 19.77. The RUC recommended the work RVU for 
CPT code 93653 as 15.00, and for CPT code 93656 as 17.00, with a 
relative increment between them of 2.00 work RVUs. As a better 
valuation for CPT code 93656, we proposed a work RVU of 13.80 for CPT 
code 93653 plus the relative increment RVU difference of 2.00 that the 
RUC is maintaining between CPT code 93653 and CPT code 93656 (15.00 
subtracted from 17.00 equals 2.00). This would value CPT code 93656 at 
15.80 (13.80 plus 2.00) work RVUs for 180 minutes of intra-service time 
and 263 minutes of total time, which we propose for CY 2023.
    CPT add-on code 93657 (Additional linear or focal intracardiac 
catheter ablation of the left or right atrium for treatment of atrial 
fibrillation remaining after completion of pulmonary vein isolation 
(List separately in addition to

[[Page 69518]]

code for primary procedure)) has a current work RVU of 5.50 with a 
physician intra-service time of 60 minutes as finalized last year (86 
FR 65108). The previous work RVU was 7.50 with 90 minutes of physician 
intraservice time. The RUC recommended the re-surveyed intra-service 
time of 60 minutes and 7.00 work RVUs. The primary change to CPT add-on 
code 93657 is the reduction of the intra-service time from before the 
re-survey and the current RUC-recommended time, from 90 minutes to 60 
minutes, which is a reduction of about 67 percent, and which we used as 
a guide to determine an appropriate work RVU. We compare CPT add-on 
code 22854 (Insertion of 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 (List 
separately in addition to code for primary procedure)), also with 60 
minutes of intra-service and total time, and a work RVU of 5.50, to CPT 
add-on code 93657, and believe that this is a more accurate comparison 
for valuation than the RUC's work RVU comparison to CPT add-on code 
93592 (Percutaneous transcatheter closure of paravalvular leak; each 
additional occlusion device (List separately in addition to code for 
primary procedure)) with a work RVU of 8.00 and an intra-service and 
total time of 60 minutes, and to CPT add-on code 34820 (Open iliac 
artery exposure for delivery of endovascular prosthesis or iliac 
occlusion during endovascular therapy, by abdominal or retroperitoneal 
incision, unilateral (List separately in addition to code for primary 
procedure)) with a work RVU of 7.00 and an intra-service and total time 
of 60 minutes. After reviewing this code and relative similar codes in 
the PFS, we proposed to re-affirm the current work RVU of 5.50 with a 
physician intraservice time of 60 minutes for CPT add-on code 93657, as 
finalized last year (86 FR 65108).
    The RUC did not recommend, and we did not propose, direct PE inputs 
for CPT codes 93653-93657.
    We received many comments concerning CMS' proposed work RVUs for 
these Cardiac Ablation CPT codes 93653, 93654, 93655, 93656, and 93657.
    Comment: Commenters were uniformly against the CMS proposed work 
RVUs for these codes and urged CMS to accept the AMA RUC-recommended 
values supported by a robust survey. Commenters argued that the CMS 
proposed work RVUs for these services are inappropriately low for the 
long lengths of time required to perform these services, and also 
neglect to account for the higher intensity of the physician's work 
with a live beating heart.
    Response: Since CY 2011, when these codes were first developed and 
valued, there is no doubt that cardiac ablation technologies and 
clinical practices have changed and matured, and thus, these codes were 
brought to our attention by the AMA RUC for an overdue review. Over the 
last decade, there have been improvements in the related technologies, 
new informative results from ongoing research in cardiac ablation, and 
physicians who have improved their skills and experience and training, 
all contributing to better methodologies that are refined, to an 
improved new standard for cardia ablation. They are now performing 
these services faster, more efficiently, more safely, and more 
effectively, with better outcomes. This also includes the elimination 
of duplications of effort, procedure overlaps, and ineffective past 
practices. Of course, on the other hand, some new techniques and 
methodologies may require performing concurrent procedures making the 
better service more complex and more demanding. With all this said, we 
do agree that cardiac ablation is a complicated and comparatively 
intensive set of procedures that does take a good amount of time to 
complete, and that the subsequent changes over the last 10 years have 
recognized the need to now bundle these services to reflect current 
typical practices.
    At present, the cardiac ablation base CPT codes and their 
accompanying CPT codes that are paying separately, sum to a total work 
RVU of 21.48. CPT code 93653 paying 14.75 work RVUs; with CPT code 
93613 paying 5.23 work RVUs; and CPT code 93621 paying 1.50 work RVUs. 
Since the AMA CPT Panel and the RUC are recommending the bundling of 
these three service codes into CPT code 93653, their recommended work 
RVUs for CPT code 93653 is 15.00, and is 69.8 percent of the original 
summed value of 21.48. We further refined the newly bundled work to 
13.80 work RVUs and that is 64.2 percent of the original summed value, 
reflecting what we perceived as improvements and efficiencies gained in 
how these procedures are now furnished.
    Comment: Commenters disagreed with the CMS proposed work RVUs for 
the cardiac ablation add-on codes and urged CMS to accept the AMA RUC-
recommended values.
    Response: We remind commenters that those work RVU values were 
accepted and finalized in last year's rule (86 FR 65108). We accepted 
the RUC-recommended reductions in physician time from 90 minutes to 60 
minutes of intra-service and total time, with a final work RVU of 5.50 
for CPT code 93655. We accepted the RUC-recommended reductions in 
physician time from 90 minutes to 60 minutes of intra-service and total 
time, with a final work RVU of 5.50 for CPT code 93657, and we see no 
reason change those final values.
    We note that it is challenging to make definitive conclusions about 
comparisons of relative intensity of work for the same unit of time, 
especially without seeing objective or competing viewpoints for some or 
most of the procedures that currently have similar valuations. In 
developing the PFS, CMS works to mitigate any perceived or explicit 
bias against or for any organ system or type of services, which may 
distort actual importance to beneficiaries' health and safety. We also 
note that levels of intensity can be mathematically different with the 
shifting of pre-service minutes or immediate post service minutes, to 
or from intra-service minutes, where intensity values are derived.
    After review and consideration of all comments on our proposals for 
CPT codes 93653, 93654, and 93656, we are persuaded by these comments, 
and we are finalizing RUC-recommended values of 15.00, 18.10, and 
17.00, respectively. CPT add-on codes 93655 and 93657 both remain 
finalized at 5.50 work RVUs from last year.
(27) Pulmonary Angiography (CPT Codes 93569, 93573, 93574, 93575, 
93563, 93564, 93565, 93566, 93567, and 93568)
    In May 2021, the CPT Editorial Panel revised CPT code 93568 
(Injection procedure during cardiac catheterization including imaging 
supervision, interpretation, and report; for nonselective pulmonary 
arterial angiography (List separately in addition to code for primary 
procedure) which resulted in the creation of four new related CPT add-
on codes. CPT add-on codes 93563 to 93567 were surveyed with the four 
new codes, as part of the same code family.
    The RUC surveyed and reviewed CPT code 93563 (Injection procedure 
during cardiac catheterization including imaging supervision, 
interpretation, and report; for selective coronary angiography during 
congenital heart catheterization (List separately in

[[Page 69519]]

addition to code for primary procedure)), and recommends a work RVU of 
1.11 for 15 minutes of intra-service and total time for this add-on 
service. The current work RVU is 1.11 for 25 minutes of intra-service 
and total time, so there is a reduction of 10 minutes in physician 
time. With the reduction of physician time, it is typical that there 
would be some reduction in the work RVUs. After reviewing this code and 
relative similar codes in the PFS, we believe a better comparator add-
on code would be CPT code 64494 (Injection(s), diagnostic or 
therapeutic agent, paravertebral facet (zygapophyseal) joint (or nerves 
innervating that joint) with image guidance (fluoroscopy or CT), lumbar 
or sacral; second level (List separately in addition to code for 
primary procedure)), with a work RVU of 1.00 for 15 minutes of intra-
service and total time. CPT code 64494 is a good comparator in terms of 
both the new physician time and due to the proportional work RVU, as 
compared to CPT code 93563. Therefore, we proposed a work RVU of 1.00 
and 15 minutes of intra-service and total time for add-on CPT code 
93563.
    The RUC surveyed and reviewed CPT code 93564 (Injection procedure 
during cardiac catheterization including imaging supervision, 
interpretation, and report; for selective opacification of 
aortocoronary venous or arterial bypass graft(s) (e.g., aortocoronary 
saphenous vein, free radial artery, or free mammary artery graft) to 
one or more coronary arteries and in situ arterial conduits (e.g., 
internal mammary), whether native or used for bypass to one or more 
coronary arteries during congenital heart catheterization (List 
separately in addition to code for primary procedure)), and recommends 
a work RVU of 1.13 for 18 minutes of intra-service and total time for 
this add-on service. The current work RVU is 1.13 for 25 minutes of 
intra-service and total time, so there is a reduction of 7 minutes in 
physician time. With the reduction of physician time, it is typical 
that there would be some reduction in the work RVUs. After reviewing 
this code and relative similar codes in the PFS, we believe a better 
comparator add-on code would be CPT code 31632 (Bronchoscopy, rigid or 
flexible, including fluoroscopic guidance, when performed; with 
transbronchial lung biopsy(s), each additional lobe (List separately in 
addition to code for primary procedure)) with a work RVU of 1.03 for 18 
minutes of intra-service and total time. CPT code 31632 is a good 
comparator in terms of both the new physician time and due to the 
proportional work RVU, as compared to CPT code 93564. Therefore, we 
proposed a work RVU of 1.03 and 18 minutes of intra-service and total 
time for add-on CPT code 93564.
    The RUC surveyed and reviewed CPT code 93565 (Injection procedure 
during cardiac catheterization including imaging supervision, 
interpretation, and report; for selective left ventricular or left 
atrial angiography (List separately in addition to code for primary 
procedure)), and recommends a work RVU of 0.86 for 10 minutes of intra-
service and total time for this add-on service. The current work RVU is 
0.86 for 20 minutes of intra-service and total time, so there is a 
reduction of 10 minutes in physician time. With the reduction of 
physician time, it is typical that there would be some reduction in the 
work RVUs. After reviewing this code and relative similar codes in the 
PFS, we believe a better comparator add-on code would be CPT code 64421 
(Injection(s), anesthetic agent(s) and/or steroid; intercostal nerve, 
each additional level (List separately in addition to code for primary 
procedure)) with a work RVU of 0.50 for 10 minutes of intra-service and 
total time. CPT code 64421 is a good comparator code in terms of both 
the new physician time and due to the proportional work RVU as compared 
to CPT code 93565. Therefore, we proposed a work RVU of 0.50 and 10 
minutes of intra-service and total time for add-on CPT code 93565.
    The RUC surveyed and reviewed CPT code 93566 (Injection procedure 
during cardiac catheterization including imaging supervision, 
interpretation, and report; for selective right ventricular or right 
atrial angiography (List separately in addition to code for primary 
procedure)) and recommends a work RVU of 0.86 for 10 minutes of intra-
service and total time for this add-on service. The current work RVU is 
0.86 for 20 minutes of intra-service and total time, so there is a 
reduction of 10 minutes in physician time. With the reduction of 
physician time, it is typical that there would be some reduction in the 
work RVUs. After reviewing this code and relative similar codes in the 
PFS, we believe a better comparator add-on code would be CPT code 64421 
(Injection(s), anesthetic agent(s) and/or steroid; intercostal nerve, 
each additional level (List separately in addition to code for primary 
procedure)) with a work RVU of 0.50 for 10 minutes of intra-service and 
total time. CPT code 64421 is a good comparator code in terms of both 
the new physician time and due to the proportional work RVU, as 
compared to CPT code 93566. Therefore, we proposed a work RVU of 0.50 
and 10 minutes of intra-service and total time.
    The RUC surveyed and reviewed CPT code 93567 (Injection procedure 
during cardiac catheterization including imaging supervision, 
interpretation, and report; for supravalvular aortography (List 
separately in addition to code for primary procedure)), and recommends 
a work RVU of 0.97 for 10 minutes of intra-service and total time for 
this add-on service. The current work RVU is 0.97 for 15 minutes of 
intra-service and total time, so there is a reduction of 5 minutes in 
physician time. With the reduction of physician time, it is typical 
that there would be some reduction in the work RVUs. After reviewing 
this code and relative similar codes in the PFS, we believe a better 
comparator add-on code would be CPT code 74248 (Radiologic small 
intestine follow-through study, including multiple serial images (List 
separately in addition to code for primary procedure for upper GI 
radiologic examination)) with a work RVU of 0.70 for 10 minutes of 
intra-service and total time. CPT code 74248 is a good comparator code 
in terms of both the new physician time and due to the proportional 
work RVU, as compared to CPT code 93567. Therefore, we proposed a work 
RVU of 0.70 and 10 minutes of intra-service and total time.
    The RUC surveyed and reviewed CPT code 93568 (Injection procedure 
during cardiac catheterization including imaging supervision, 
interpretation, and report; for nonselective pulmonary arterial 
angiography (List separately in addition to code for primary 
procedure)), and recommends a work RVU of 0.88 for 13 minutes of intra-
service and total time for this add-on service. The current work RVU is 
0.88 for 20 minutes of intra-service and total time, so there is a 
reduction of 7 minutes in physician time. With the reduction of 
physician time, it is typical that there would be some reduction in the 
work RVUs. After reviewing this code and relative similar codes in the 
PFS, we agree with the RUC recommendation and proposed a work RVU of 
0.88 with 13 minutes of intra-service and total time for add-on CPT 
code 93568.
    For the first of the related four new add-on codes to this family, 
CPT code 93569 (Injection procedure during cardiac catheterization 
including imaging supervision, interpretation, and report; for 
selective pulmonary arterial angiography, unilateral (List separately 
in addition to code for primary procedure)), the RUC recommended a work 
RVU of 1.05 for 11 minutes of

[[Page 69520]]

intra-service and total time for this add-on service. The RUC noted 
that the typical patient for this service is pediatric. After reviewing 
this code and relative similar codes in the PFS, we believe a better 
comparator add-on code would be CPT code 78434 (Absolute quantitation 
of myocardial blood flow (AQMBF), positron emission tomography (PET), 
rest and pharmacologic stress (List separately in addition to code for 
primary procedure)) with a work RVU of 0.63 for 11 minutes of intra-
service and total time. CPT code 78434 is a good comparator code in 
terms of both the physician time, and due to the proportional work RVU, 
as compared to CPT code 93569. Therefore, we proposed a work RVU of 
0.63 and 11 minutes of intra-service and total time for add-on CPT code 
93569.
    For the second of the related four new add-on codes to this family, 
CPT code 93573 (Injection procedure during cardiac catheterization 
including imaging supervision, interpretation, and report; for 
selective pulmonary arterial angiography, bilateral (List separately in 
addition to code for primary procedure)), the RUC recommended a work 
RVU of 1.75 for 18 minutes of intra-service and total time for this 
add-on service. The RUC noted that the typical patient for this service 
is pediatric and that this service is bilateral. After reviewing this 
code and relative similar codes in the PFS, we believe a better 
comparator add-on code would be HCPCS code G0289 (Arthroscopy, knee, 
surgical, for removal of loose body, foreign body, debridement/shaving 
of articular cartilage (chondroplasty) at the time of other surgical 
knee arthroscopy in a different compartment of the same knee (List 
separately in addition to code for primary procedure)) with a work RVU 
of 1.48 for 20.5 minutes of intra-service and total time and that this 
service is bilateral. G0289 has 2.5 minutes of additional physician 
intra-service time, so we adjusted the comparator work RVU from 1.48 to 
1.30. Therefore, we proposed 1.30 work RVUs for 18 minutes of intra-
service and total time for add-on CPT code 93573.
    For the third of the related four new add-on codes to this family, 
CPT code 93574 (Injection procedure during cardiac catheterization 
including imaging supervision, interpretation, and report; for 
selective pulmonary venous angiography of each distinct pulmonary vein 
during cardiac catheterization. (List separately in addition to code 
for primary procedure)), the RUC recommended a work RVU of 1.84 for 20 
minutes of intra-service and total time for this add-on service. The 
RUC noted that the typical patient for this service is pediatric. After 
reviewing this code and relative similar codes in the PFS, we believe a 
better comparator add-on code would be CPT code 93598 (Measurement of 
output of blood from heart, performed during cardiac catheterization 
for evaluation of congenital heart defects (List separately in addition 
to code for primary procedure)) with a work RVU of 1.44 for 20 minutes 
of intra-service and total time. CPT code 93598 is a good comparator 
code in terms of both the physician time, and due to the proportional 
work RVU, as compared to CPT code 93574. Therefore, we proposed 1.44 
work RVUs for 20 minutes of intra-service and total time for add-on CPT 
code 93574.
    For the last of the related four new add-on codes to this family, 
CPT code 93575 (Injection procedure during cardiac catheterization 
including imaging supervision, interpretation, and report; for 
selective pulmonary angiography of major aortopulmonary collateral 
arteries (MAPCAs) arising off the aorta or its systemic branches, each 
distinct vessel)), the RUC recommended a work RVU of 1.92 for 20 
minutes of intra-service and total time for this add-on service. The 
RUC describes this service and the physician's work as very time-
intensive and complicated, and the typical patient for this service is 
pediatric. We agree with the RUC recommendations and proposed a work 
RVU of 1.92 with 20 minutes of intra-service and total time for add-on 
CPT code 93575.
    The RUC did not recommend, and we did not propose, direct PE inputs 
for CPT codes 93563-93575.
    Numerous comments were submitted concerning this family of 
pulmonary angiography codes all against the CMS-proposed RVU values.
    Comment: Commenters noted that CMS is equating reductions in 
physician times with reductions in work RVUs, with this family of 
codes, without regard to the intensity or complexity of these pulmonary 
procedures, or that some of these codes are primarily typical with 
pediatrics and congenital heart disease. Commenters recommended that 
CMS reconsider their proposed values as being too low and to accept the 
AMA RUC recommended values.
    Response: As commenters know, we are obligated to take into account 
changes in physician times and intensity with changes in work RVUs. We 
appreciate all of the time and efforts commenters place into their 
extensive comments in responding to our proposals and we do review 
these comments in detail to improve our proposals where warranted. When 
we observe reductions in physician times and no significant change to 
the procedure's description of work and no change in the procedure's 
work RVU, or we see recommendations of increases in the procedure's 
work RVU, we wonder how the intensity of the procedure has changed. 
Improvements in these procedure's technologies and physicians' training 
in new skills and methods do contribute to faster, and more efficient 
outcomes and would result in the reduction of a procedure's work time. 
At the same time, where duplicate and overlapping efforts are 
eliminated, new techniques can also introduce complexities that would 
contribute to the work's intensity without the addition of work time. 
However, these add-on codes reduce physician work times, and the nature 
of the PFS relative value system is such that all services are subject 
to comparisons to one another.
    However, we do agree with the commenters' point regarding CPT code 
93569 and our proposed work RVU value of 0.63. Our proposed work RVU 
creates a rank order anomaly within this family of codes whose patients 
are pediatrics. The AMA RUC-recommended work RVUs between CPT code 
93569 and CPT code 93573 reflect about a 67 percent difference between 
the two codes. Our proposed work RVU for CPT code 93569 of 0.63 is 
about a 106 percent higher than our proposed work RVU of 1.30 for CPT 
code 93573, which created a large difference. To correct this error and 
to maintain that RUC-recommended interval difference between these two 
codes, we are finalizing a corrected work RVU of 0.78 for CPT code 
93569, by applying that RUC-recommended interval difference between CPT 
codes 93569 and 93573 (1.30 divided by 1.67 = 0.78). This aligns with 
the intra-service minutes difference between CPT codes 93569 (11 
minutes) and 93573 (18 minutes) and the comparator CPT code 58110 
(Endometrial sampling (biopsy) performed in conjunction with colposcopy 
(List separately in addition to code for primary procedure)), with 
similar physician intra-service minutes and a similar work RVU of 0.77. 
After review and consideration of all comments on our proposals for 
these Pulmonary Angiography codes, we are finalizing all work RVUs as 
proposed except for CPT code 93569, whose work RVU we are adjusting 
from 0.63 to 0.78 for CY 2023.

[[Page 69521]]

(28) Quantitative Pupillometry Services (CPT Code 95919)
    The CPT Editorial Panel approved a new Category I CPT code to 
replace the sunset Category III (CPT code 0341T Quantitative 
pupillometry with interpretation and report, unilateral or bilateral) 
and 92499 (Unlisted ophthalmological service or procedure for reporting 
this service).
    We did not propose the RUC-recommended work RVU of 0.25 for CPT 
code 95919, as we believe this is an overestimation based on a 
comparison to other codes with similar time values, particularly the 
key reference code CPT code 92081 (Visual field examination, unilateral 
or bilateral, with interpretation and report; limited examination 
(e.g., tangent screen, Autoplot, arc perimeter, or single stimulus 
level automated test, such as Octopus 3 or 7 equivalent). In the 
interest of maintaining relativity with similarly timed codes, we are 
instead proposing a work RVU of 0.18 with a crosswalk to CPT code 92504 
(Binocular microscopy (separate diagnostic procedure)). We noted that 
this value falls between the work RVUs of 0.17 for CPT code 94010 
(Spirometry, including graphic record, total and timed vital capacity, 
expiratory flow rate measurement(s), with or without maximal voluntary 
ventilation) and 0.20 for CPT code 77081 (Dual-energy X-ray 
absorptiometry (DXA), bone density study, 1 or more sites; appendicular 
skeleton (peripheral) (e.g., radius, wrist, heel)); both codes have 
identical intraservice times and similar total times.
    We proposed the RUC-recommended direct PE inputs without 
refinement.
    Comment: Commenters did not support our proposed work RVU of 0.18 
rather than the RUC-recommended 0.25. A commenter asserted that the RUC 
survey results are robust and that CMS did not furnish evidence that 
this service is appropriately valued below the 25th survey percentile. 
Another commenter stated that CPT code 92504 is a less appropriate 
crosswalk than the RUC's crosswalk of CPT code 72190 as it does not 
match the pre/intra/post times and because it was last revalued in 
2010.
    Response: The RUC-recommended RVU of 0.25 was high in comparison to 
the range of RVUs for the comparison CPT codes with the same intra-
service time and similar total times, and therefore, we believe that 
CPT code 92504 is a valid crosswalk. We continue to believe that, 
particularly given that this service is likely to be performed multiple 
times in a single day, the RUC-recommended value represents a slight 
overestimation of intensity. We acknowledge that the work times were 
not an exact match with CPT code 92504 but closely matched the 
intraservice and total times, and we continue to believe that this is 
an appropriate crosswalk.
    We are finalizing as proposed a work RVU of 0.18 for CPT code 95919 
and the RUC-recommended direct PE inputs without refinement.
(29) Caregiver Behavior Management Training (CPT Codes 96202 and 96203)
    CPT code 96202 (Multiple-family group behavior management/
modification training for guardians/caregivers of patients with a 
mental or physical health diagnosis, administered by physician or other 
qualified health care professional (without the patient present), face-
to-face with multiple sets of guardians/caregivers; initial 60 minutes) 
and its add-on code, CPT code 96203 (Multiple-family group behavior 
management/modification training for guardians/caregivers of patients 
with a mental or physical health diagnosis, administered by physician 
or other qualified health care professional (without the patient 
present), face-to-face with multiple sets of guardians/caregivers; each 
additional 15 minutes (List separately in addition to code for primary 
service)), are new codes created by the CPT Editorial Panel during its 
February 2021 meeting. The two codes are to be used to report the total 
duration of face-to-face time spent by the physician or other qualified 
health professional providing group training to guardians or caregivers 
of patients. Although the patient does not attend the group trainings, 
the goals and outcomes of the sessions focus on interventions aimed at 
improving the patient's daily life. According to the CPT Summary of 
Recommendations, during the face-to-face service time, caregivers are 
taught how to structure the patient's environment to support and 
reinforce desired patient behaviors, to reduce the negative impacts of 
the patient's diagnosis on the patient's daily life, and to develop 
highly structured technical skills to manage patient behavior. As a 
means of identifying work values for CPT codes 96202 and 96203, three 
specialty societies sent surveys to a random sample of a subset of 
their members. Based upon survey results and after discussion, the RUC 
recommended a work RVU of 0.43 per identified patient service for CPT 
code 96202. The RUC noted that this recommendation is based upon a 
median group size of six caregivers and includes 10 minutes pre-time, 
60 minutes intra-time, and 20 minutes post-time for a total time of 90 
minutes. For CPT code 96203, the 15-minute add-on code, the RUC 
recommended a work RVU of 0.12, which is also based upon a median group 
size of six. After reviewing the caregiver training codes, we stated in 
the proposed rule that CPT codes 96202 and 96203 are not payable under 
the PFS. We noted that in past rulemaking, we have explained that we 
read section 1862(a)(1)(A) of the Act to limit Medicare coverage and 
payment to items and services that are reasonable and necessary for the 
diagnosis and treatment of an individual Medicare beneficiary's illness 
or injury or that improve the functioning of an individual Medicare 
beneficiary's malformed body member. For example, in the CY 2013 PFS 
final rule (77 FR 68979), when discussing payment for the non-face-to-
face care management services that are part of E/M services, we stated 
that Medicare does not pay for services that are furnished to parties 
other than the beneficiary. We listed as an example, communication with 
caregivers. Because the codes for caregiver behavior management 
training describe services furnished exclusively to caregivers rather 
than to the individual Medicare beneficiary, we did not review the RUC-
recommended valuation of these codes or propose to establish RVUs for 
these codes for purposes of PFS payment. However, recognizing our focus 
on ensuring equitable access to reasonable and necessary medical 
services, we requested public comment about the services described by 
these two codes. First, we sought comment on the ways in which a 
patient may benefit when a caregiver learns strategies to modify the 
patient's behavior. We also sought comment on how current Medicare 
policies regarding these caregiver training services may impact 
Medicare beneficiary health. Finally, we sought comment about how the 
services described by these codes might be bundled into Medicare 
covered services as incident to services or as practitioner work that 
is part of some care management codes.
    Below is a summary of the comments received.
    Comment: Most commenters recommended that CMS pay for caregiver 
behavioral management training services and to use the RUC-recommended 
values for purposes of payment. Several appreciated CMS displaying the 
RUC-recommended values. Several commenters asked CMS to reconsider its 
position on the caregiver behavior management training codes, noting 
that there is extensive

[[Page 69522]]

empirical support for caregiver behavior management training, and that 
these services are a component of the standard of care for treatment of 
several health behavior issues. Many commenters asserted that although 
the patient is not present when this training is provided, these codes 
have many specific, direct benefits for the patient. The RUC commented 
that these codes allow for reporting the physician/QHP work and/or time 
associated with the evidence-based behavioral management/modification 
training of parent/caregivers, which is performed in tandem with the 
diagnostic and intervention services furnished directly to the 
``identified patient'' that support the patient's optimal level of 
function.
    Some commenters asserted that CMS' proposed application of section 
1862(a)(1)(A) of the Act was not appropriate given the well-established 
evidence of the direct effect the provision of these services on the 
health outcomes associated with specific chronic conditions, including 
a reduction in disruptive and problematic behaviors for children with 
ADHD, improved weight management for individuals with obesity, and 
better management of patients with dementia.
    One commenter noted that if the patient's presence is a requirement 
for these services, it becomes a barrier to this care for patients with 
particular health conditions. One commenter indicated that these 
services are specifically intended to prepare caregivers to implement 
necessary elements of care plans. This commenter also suggested that 
not paying for these services would contribute to health inequities 
issue because in many cases the patients at issue have dementia and 
other disorders that place them at great social and economic 
disadvantage.
    Commenters also noted that there are other CPT codes, several paid 
separately under the PFS, that describe services that do not include 
direct contact with the patient but are still considered integral to 
the patient's care, including care management services and 
interprofessional consultations.
    Commenters also expressed broad support for the role of caregivers 
in the health of individuals, indicating that the caregiver's play a 
critical role in supporting patient care and that caregiver engagement 
is an important part of the individual patient's plan of care. Other 
commenters noted that these services when delivered in groups without 
the patient present have clear advantages over services delivered 
individually. The commenters suggested that caregiver engagement will 
help reduce costs and improve access to care. Other commenters stated 
these services enable caregivers to better address the patient's needs 
and provide assistance to perform activities of daily living and family 
caregivers who play a huge role in the patient's long-term care; and 
many family caregivers are supporting patients with complex care, and 
expressed fear of making a mistake, with concern being the greatest for 
managing medications, using meters and monitors, and performing wound 
care. Several commenters noted that caregiver behavior training is 
evidence-based and providing training will promote improved outcomes.
    A few commenters suggested that CMS might consider adding a 
caregiver training element to the appropriate chronic care management 
code and would be pleased to explore with CMS how to implement this 
service.
    Response: We appreciate the response from commenters. We 
acknowledge the important role that caregivers can have in overall 
care, especially for Medicare beneficiaries. We also acknowledge the 
idea that broadly increasing the resources provided to caregivers could 
have beneficial results on general well-being in addition to reductions 
in the need for medical or institutional interventions.
    However, under section 1862(a)(1)(A) of the Act, Medicare payment 
is generally limited to those items and services that are reasonable 
and necessary for the diagnosis or treatment of illness or injury or 
that improve the functioning of a malformed body member. We sought 
feedback on the ways in which a patient may benefit when a caregiver 
learns strategies to modify the patient's behavior. We also sought 
comment regarding how Medicare policies regarding these caregiver 
training services may impact Medicare beneficiary health.
    Commenters responded by explaining how the training services 
provided directly to the caregiver treat beneficiary's health 
conditions. Commenters also explained how the lack of access to these 
standard treatments would have a disproportionately negative effect on 
beneficiaries with particular conditions and the practitioners who 
treat them. Commenters have highlighted that behavioral management/
modification training of parents/caregivers, when furnished in tandem 
with other diagnostic and intervention services related to specific 
treatment, can be integral to the treatment of a beneficiary's specific 
condition. Commenters have also pointed out that to the extent that 
this service is integral to evolving standards of care for people with 
certain conditions, lack of payment for this service under the PFS 
would likely result in an inappropriate payment disparity that would 
have a detrimental impact on access to care for particular 
beneficiaries and the physicians and other qualified health care 
professionals that treat them.
    We note that in the proposed rule we reiterated that Medicare does 
not pay for services that are furnished to parties other than the 
beneficiary. Over the past decade or more, in specific circumstances, 
we have made payment for some care furnished to beneficiaries through 
direct involvement of parents, guardians, or caregivers, as well as 
through interactions with other medical professionals or clinical staff 
rather than the beneficiary in-person. These circumstances include when 
the lack of coding and payment for services historically not paid for 
separately give rise to inappropriate payment disparities that do not 
reflect the relative resources involved in furnishing treatment, given 
the changes in medical practice that have led to more care 
coordination/team-based care, and the idea that the resources involved 
in those aspects of care are not adequately reflected in current 
coding/payment. In these cases, we have created coding and separate 
payment for services such as transitional care management (77 FR 
68978), chronic care management (79 FR 67715), behavioral health 
integration services (81 FR 80226), and virtual check-in services (83 
FR 59483). In some cases, we have also specifically made payment for 
services provided directly to caregivers when, in current practice and 
in specific circumstances, they are an integral part of ongoing 
treatment for some patients (81 FR 80331). In the CY 2017 PFS final 
rule, we noted that we believe that CPT codes 96160 and 96161, Patient, 
Caregiver-focused Health Risk Assessment codes, describe services that, 
in particular cases, can be necessary components of services furnished 
to Medicare beneficiaries. We recognized that in current medical 
practice, practitioner interaction with caregivers is an integral part 
of treatment for some patients. Accordingly, the descriptions for 
several payable codes under the PFS include direct interactions between 
practitioners and caregivers. We agreed with commenters, that there are 
circumstances where this service is an essential part of a service to a 
Medicare beneficiary. Therefore, we assigned active payment status to 
both codes for CY 2017.
    Based on public comments, we believe there could be circumstances, 
captured in the medical record, where

[[Page 69523]]

separate payment for these services may be appropriate. We will 
continue to consider and contemplate which circumstances or services 
and for which beneficiaries it would be appropriate to furnish and 
receive payment for these types of services in future notice and 
comment rulemaking.
    We appreciate the thoughtful feedback submitted by the public on 
this matter. We intend to address these codes more thoroughly during 
the CY 2024 rulemaking process as we review other coding and valuation 
changes.
(30) Cognitive Behavioral Therapy Monitoring (CPT code 98978).
    See the Remote Therapeutic Monitoring (RTM) section II.I. of this 
final rule for a review of new device code, CPT code 98978.
(31) Code Descriptor Changes for Annual Alcohol Misuse and Annual 
Depression Screenings (HCPCS Codes G0442 and G0444)
    Interested parties have raised concerns with the portion of the 
code descriptors that require a certain number of minutes to bill for 
the HCPCS codes G0442 (Annual alcohol misuse screening, 15 minutes) and 
G0444 (Annual depression screening, 15 minutes). Over the past several 
years, AAFP and the ACP have requested that CMS revise the code 
descriptors to state ``up to 15 minutes'' instead of the current ``15 
minutes,'' allowing practitioners to efficiently furnish the service. 
As currently described, claims for the service are said to be denied by 
MACs in instances where records suggest that a full 15 minutes was not 
reached by the practitioner when furnishing the service. Both codes 
were high in volume for 2019 and 2020, with over 700,000 reported 
services in our Medicare claims data.
    Medicare Part B coverage for such screenings originated from a 
national coverage determination (NCD) from 2011 and 2012. We believe 
that these screenings may not require a full 15 minutes to perform for 
the typical patient, so we believed that it would be appropriate to 
propose to revise the descriptors to specify that screening times of 5 
to 15 minutes would be the typical range to furnish these services. 
This will establish a lower time limit for both HCPCS codes G0442 and 
G0444. Therefore, we proposed to modify the descriptor for HCPCS code 
G0442 to read ``Annual alcohol misuse screening, 5 to 15 minutes'' and 
for HCPCS code G0444 to read ``Annual depression screening, 5 to 15 
minutes.''
    We received a number of comments concerning the adjustments to the 
descriptors of HCPCS codes G0442 and G0444.
    Comment: Commenters were all in favor of the descriptor changes 
made for these codes and for the clarification of these services. The 
commenters universally expressed their support and a few recommended 
that CMS should re-review the valuations for these services to ensure 
proper payment.
    Response: We thank commenters for their supporting comments on the 
descriptor adjustments to HCPCS codes G0442 and G0444. When substantial 
descriptor changes are made to some CPT codes, that does signal to CMS 
to re-review all aspects of a service and to possibly align for proper 
payment. These descriptor changes were to HCPCS codes and they do not 
change the currently established payments for them. They are just a 
clarification for the claims process to smooth out any possible 
misunderstanding of conditions of payment and our original intent in 
allowing payments for these services.
    After review and consideration of all comments regarding our 
proposals for HCPCS codes G0442 and G0444, we are finalizing our 
descriptor changes as proposed, to ``Annual alcohol misuse screening, 5 
to 15 minutes'' for HCPCS code G0442 and to ``Annual depression 
screening, 5 to 15 minutes.'' for HCPCS code G0444.
(32) Insertion, and Removal and Insertion of New 180-Day Implantable 
Interstitial Glucose Sensor System (HCPCS Codes G0308 and G0309)
    For the CY 2021 PFS final rule (85 FR 84645), we established 
national pricing for 3 Category III CPT codes that describe continuous 
glucose monitoring. Category III CPT codes 0446T (Creation of 
subcutaneous pocket with insertion of implantable interstitial glucose 
sensor, including system activation and patient training), 0447T 
(removal of implantable interstitial glucose sensor from subcutaneous 
pocket via incision), and 0448T (removal of implantable interstitial 
glucose sensor with creation of subcutaneous pocket at different 
anatomic site and insertion of new implantable sensor, including system 
activation) describe the services related to the insertion, removal, 
and removal and insertion of an implantable interstitial glucose sensor 
from a subcutaneous pocket. The implantable interstitial glucose 
sensors are part of systems that can allow real-time glucose 
monitoring, provide glucose trend information, and signal alerts for 
detection and prediction of episodes of low blood glucose 
(hypoglycemia) and high blood glucose (hyperglycemia). The direct PE 
inputs for CPT code 0446T include a 90-day supply item, SD334 
(implantable interstitial glucose sensor), and a 90-day smart 
transmitter proxy equipment item, EQ392 (heart failure patient 
physiologic monitoring equipment package). The direct PE inputs for CPT 
code 0448T include only the 90-day SD334 interstitial glucose sensor.
    For CY 2022, based on requests from interested parties for CMS to 
allow beneficiaries critical access to a newly approved 180-day 
continuous glucose monitoring system, CMS established two new HCPCS 
codes to describe the new 180-day monitoring service. Specifically, CMS 
established HCPCS code G0308 (Creation of subcutaneous pocket with 
insertion of 180-day implantable interstitial glucose sensor, including 
system activation and patient training) and G0309 (removal of 
implantable interstitial glucose sensor with creation of subcutaneous 
pocket at different anatomic site and insertion of new 180-day 
implantable sensor, including system activation). The newly approved 
180-day continuous glucose monitoring system extends the monitoring 
period from the previous 90 days to allow for a longer monitoring 
period between replacement of the sensor. We believe it is important 
for beneficiaries to have continued access to this service during the 
transition from a 90- to 180-day monitoring period where the 90-day 
sensor may become obsolete. Therefore, effective July 1, 2022, HCPCS 
codes G0308 and G0309 are contractor priced. We solicited information 
and invoices from interested parties on the costs of the 180-day 
interstitial glucose supply and 180-day smart transmitter equipment 
direct PE inputs for HCPCS codes G0308 and G0309 to ensure proper 
payment for these physician's services, for consideration of national 
payment amounts for CY 2023. We noted that the 90-day supply item, 
SD334, is currently priced at $1,500 based on information we received 
from interested parties. The 90-day smart transmitter, EQ392, is 
currently priced at $1,000 and assigned a time value of 25,290 minutes 
derived from 60 minutes per hour times 24 hours per day times 90 days 
per billing quarter divided by 1 minute of equipment use of every 5 
minutes of time. HCPCS code G0308 includes the smart transmitter and 
interstitial glucose sensor and HCPCS code G0309 includes the 
interstitial glucose sensor only.
    Comment: Commenters supported our creation of G codes G0308 and 
G0309 to describe the new 180-day interstitial continuous glucose 
monitor. Commenters also requested that we

[[Page 69524]]

delete the G codes effective January 1, 2023 and revalue CPT codes 
0446T and 0448T to include direct PE costs for the new sensor and 
transmitter, since the current 90-day sensor and transmitter has become 
obsolete. We also received invoices and pricing information from a 
commenter to support their requested PE revaluation.
    Response: We agree with commenters that we should delete G codes, 
G0308 and G0309, effective January 1, 2023 to ensure accurate payment 
for the new 180-day Continuous Glucose Monitoring device. We also agree 
to revalue the PE inputs for the existing CPT codes, 0446T and 0448T. 
The invoices that we received from a commenter list a supply increase 
(SD334) from $1,500 to $3,000, which would be a supply input for both 
0446T and 0448T. The invoices also list the equipment (EQ392) as having 
an increase in equipment minutes, but not a change in the cost of the 
transmitter itself. The increase in equipment minutes applies only to 
CPT code 0446T. The physician work remains the same for both codes, 
therefore there is no change to work RVUs.
    In consideration of the comments and invoices received, we are 
finalizing changes to codes G0308, G0309, 0446T, and 0448T. G codes 
G0308 and G0309 will be deleted effective January 1, 2023. CPT codes 
0446T and 0448T will have supply input SD334 valued at $3,000. CPT code 
0446T equipment EQ392 will have equipment minutes equal to 60 minutes * 
24 hours * 30 days * 6 months/1 out of every 5 minutes = 51,840 
minutes.
(33) Chronic Pain Management and Treatment (CPM) Bundles (HCPCS G3002 
and G3003, Formerly GYYY1 and GYYY2, Respectively)
(a) Background and Proposal
    In the CY 2022 PFS proposed rule (86 FR 39104, 39179 through 
39181), we solicited comments on and explored refinements to the PFS 
that would appropriately value chronic pain management and treatment 
(CPM) for the purpose of future rulemaking. In our solicitation, we 
described Federal efforts for more than a decade to effectively address 
pain management as a response to the nation's overdose crisis,\10\ such 
as the National Pain Strategy \11\ and the HHS Pain Management Best 
Practices Inter-Agency Task Force (PMTF) Report.\12\ As we noted in our 
CY 2022 comment solicitation, several sections of the Support for 
Patients and Communities Act of 2018 \13\ (SUPPORT Act) describe 
actions the Department of Health and Human Services has been directed 
to take to improve pain care, such as section 2003, which amended 
Medicare's Annual Wellness Visit \14\ to include a review of factors 
for evaluation related to pain for patients using opioid medications; 
section 6086, the Dr. Todd Graham Pain Management Study; \15\ and 
section 6032, which required CMS to furnish a Report to Congress and 
develop a related Action Plan to review coverage and payment policies 
in Medicare and Medicaid related to the treatment of opioid use 
disorder and for non-opioid therapies to help manage acute and chronic 
pain.\16\ In the section 6032 Report and the Action Plan, CMS included 
a recommendation to explore the possibility of establishing a new 
bundled payment under the Medicare Physician Fee Schedule for 
integrated multimodal pain care that could include certain elements 
such as diagnosis, a person-centered plan of care, care coordination, 
medication management, and other aspects of pain care.
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    \10\ https://www.hhs.gov/overdose-prevention/.
    \11\ https://www.iprcc.nih.gov/sites/default/files/documents/NationalPainStrategy_508C.pdf.
    \12\ https://www.hhs.gov/sites/default/files/pmtf-final-report-2019-05-23.pdf.
    \13\ https://www.congress.gov/115/plaws/publ271/PLAW-115publ271.pdf.
    \14\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/preventive-services/medicare-wellness-visits.html.
    \15\ https://effectivehealthcare.ahrq.gov/products/improving-pain-management/rapid-evidence.
    \16\ https://www.cms.gov/sites/default/files/2022-4/SUPPORT%206032%20Action%20Plan_Final_061521_Clean.pdf.
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    As described in Goal 3 of CMS' 2022 Behavioral Health Strategy \17\ 
(Strategy), CMS intends to improve the care experience for individuals 
with acute and/or chronic pain, expand access to evidence-based 
treatments for acute and chronic pain, and increase coordination 
between primary and specialty care through payment episodes, 
incentives, and payment models. In late 2019, the CMS Office of Burden 
Reduction & Health Informatics launched the ``Chronic Pain Stakeholder 
Engagement,'' which focused on understanding access to covered 
treatment and services for people living with pain. \18\ CMS recently 
released information gathered from interested parties through this 
Engagement using qualitative research methods and the human-centered 
design process, to uncover provider burden, and identify opportunities 
to improve access to covered services by illustrating the experiences 
of people living with, and treating, chronic pain. The intent of this 
project was to highlight the most prominent barriers people with pain 
face in accessing care, and the factors influencing clinicians that can 
affect people with chronic pain, the quality of their care, and their 
quality of life.
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    \17\ https://www.cms.gov/cms-behavioral-health-strategy.
    \18\ https://www.cms.gov/About-CMS/OBRHI.
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    In the context of the Biden-Harris' Administration's commitment to 
equity,\19\ and the inclusion of equity as a pillar of CMS' Strategic 
Vision,\20\ disparities exist in pain treatment due to bias in 
treatment, language barriers, cultural norms, and socioeconomic status. 
We are also aware that pain is a factor in suicidality and suicide, 
prioritized in the Surgeon General's Call to Action to Implement the 
National Strategy for Suicide Prevention \21\ and in HHS' work to 
implement ``988'',\22\ the new national dialing code for suicide and 
crisis assistance that was implemented nationally this year.
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    \19\ https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/.
    \20\ https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
    \21\ https://www.hhs.gov/sites/default/files/sprc-call-to-action.pdf.
    \22\ https://www.samhsa.gov/find-help/988.
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    In coordination with all of these initiatives, we also have 
continued to explore refinements to the PFS that would appropriately 
value CPM. In the CY 2022 PFS proposed rule, we sought comment on 
whether we should approach CPM through a standalone code or E/M add-on 
coding, and about the specific activities that are involved in CPM, how 
we might value such a code or service, the settings where this care is 
provided, the types of practitioners that furnish this care, and 
whether the service or any components of it could or should be 
furnished as ``incident to'' \23\ services under the direction of the 
billing practitioner by other members of the care team (86 FR 39182). 
We received just under 2,000 comments on this comment solicitation, 
including comments from provider associations, federations, and 
societies that represent health care professionals; organizations that 
educate, connect, and advocate for people with pain; State-based health 
care organizations, medical societies and associations; cancer care 
centers; health care companies; device manufacturers; pain care 
providers; and people living with pain. Almost all commenters were 
supportive of our efforts to carefully consider an approach to coding 
and payment for care for CPM. Many commenters supported the creation of 
separate coding and payment for CPM under the PFS. We summarized

[[Page 69525]]

these comments, expressed appreciation for the commenters' attention to 
informing our approach to payment and coding for comprehensive CPM 
services, and thanked the commenters for their comments in the CY 2022 
PFS final rule (86 FR 65129).
---------------------------------------------------------------------------

    \23\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/downloads/se0441.pdf.
---------------------------------------------------------------------------

    Generally, commenters agreed that efforts are needed to effectively 
support the complex needs of beneficiaries with chronic pain. 
Commenters emphasized that there are numerous conditions giving rise to 
chronic pain and that people presenting with chronic pain respond 
variably to various treatment modalities, and often require longer 
office visit times, and longer follow-up coordinating care with social 
workers and case managers, mental and behavioral health support, 
communications with emergency department physicians and nurses, and 
numerous medication adjustments. One commenter stated that 
beneficiaries with complex chronic pain conditions may require a lot of 
time for correct dosing of medications and counseling, and that such 
time is not captured effectively using existing E/M codes. This 
commenter also believed that separate coding and payment for chronic 
pain management could help with better understanding of the treatment 
of chronic pain than when the service is reported with existing visit 
codes and would allow for valuation based on the resources involved in 
furnishing these specific services to people with chronic pain, 
enhancing the likelihood of appropriate payment, especially for non-
face-to-face time involved with the service.
    A few commenters expressed preference for using existing E/M codes 
and the creation of codes to be used in conjunction with E/M codes. One 
commenter suggested that CMS either clarify or modify existing codes so 
they can support services for patients with chronic pain or significant 
acute pain, as well as beneficiaries with a chronic disease and a 
behavioral health condition, stating that using the existing codes 
would avoid any concerns about overpayment for patients with both a 
chronic disease and pain, while also making it more feasible for small 
practices to employ care management staff and provide customized care 
management services for all the patients who need them.
    One commenter who was agreeable with various approaches to payment 
suggested that the guidelines for Cognitive Assessment and Care Plan 
Services code 99483 include ``chronic pain syndromes'' in the 
``assessment of factors that could be contributing to cognitive 
impairment'' and that these codes could be reported by physicians who 
consult with a pain specialist about their patient's pain. This 
commenter also suggested that Transitional Care Management could also 
potentially include pain management following inpatient care to help 
prevent acute pain from progressing to chronic pain. Other commenters 
also likened CPM services to chronic care management services. We 
believe that chronic care management codes, which, except for Principal 
Care Management, specify that the chronic condition being managed is 
expected to last at least one year or until death, would not properly 
describe the condition of many beneficiaries with chronic pain, which 
could potentially improve with treatment and intervention, or recur 
after improvement. For example, the 11th revision of the World Health 
Organization's International Classification of Diseases and Related 
Health Problems define chronic pain as persistent or recurring pain 
lasting longer than 3 months.\24\
---------------------------------------------------------------------------

    \24\ https://icd.who.int/en.
---------------------------------------------------------------------------

    Commenters included feedback about other specific activities 
involved in the management of patients with chronic pain in addition to 
those we specified in the comment solicitation. Commenters also 
identified codes that CMS might examine as models for payment, either 
as stand-alone timed codes or monthly bundles. Commenters suggested 
which practitioners should be able to bill such CPM codes, which 
practitioners should be able to furnish CPM services incident to the 
services of a physician or other practitioner, and expressed views on 
adding CPM services to the Medicare Telehealth Services List and 
obtaining beneficiary consent for CPM services.
    We agree with commenters who believe that E/M codes may not reflect 
all the services and resources required to furnish comprehensive, 
chronic pain management to beneficiaries living with pain. While we 
agree in principle that it might be appropriate to establish bundled 
all-inclusive coding with monthly payment for a broader set of CPM 
services, we do not have data at the present time on the full scope of 
services and resource inputs involved in care for patients with chronic 
pain to support development of a proposed monthly bundled all-inclusive 
rate. We do believe that E/M codes do not appropriately reflect the 
time and other potential resources involved in furnishing comprehensive 
CPM for beneficiaries with chronic pain. Beginning in the CY 2014 PFS 
final rule (78 FR 74414 through 74427), we recognized that the 
resources involved in furnishing comprehensive care to patients with 
multiple chronic conditions are greater than those required to support 
care in a typical E/M service. In response, we finalized a separately 
payable HCPCS code G0316 (Chronic Care Management (CCM) services 
furnished to patients with multiple (2 or more) chronic conditions 
expected to last at least 12 months, or until the death of the patient; 
20 minutes or more per in 30 days of chronic care management services 
provided by clinical staff and directed by a physician or other 
qualified health care practitioner). The following year, in the CY 2015 
PFS final rule (79 FR 67715 through 67730), we refined aspects of the 
existing CCM policies and adopted separate payment for CCM services 
under CPT code 99490 (Chronic care management services (CCM), 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). In the CY 2017 
PFS final rule (81 FR 80244), we adopted CPT codes 99487 (Complex 
chronic care management (CCCM) 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, comprehensive care plan 
established, implemented, revised, or monitored, moderate or high 
complexity medical decision making; first 60 minutes of clinical staff 
time directed by a physician or other qualified health care 
professional, per calendar month) and 99489 (CCCM 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, comprehensive 
care plan established, implemented, revised, or monitored, moderate or 
high complexity medical decision making; each additional 30 minutes of 
clinical staff time directed by a physician or other qualified health 
care professional,

[[Page 69526]]

per calendar month (List separately in addition to code for primary 
procedure)). Then, in the CY 2019 PFS final rule (83 FR 59577), we 
adopted a new CPT code, 99491 (CCM services, provided personally by a 
physician or other qualified health care professional, at least 30 
minutes of physician or other qualified health care professional time, 
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), to describe at least 30 minutes of CCM services 
performed personally by a physician or NPP. In the CY 2020 PFS final 
rule (84 FR 62690), we established payment for an add-on code to CPT 
code 99490 by creating HCPCS code G2058 (CCM services, each additional 
20 minutes of clinical staff time directed by a physician or other 
qualified healthcare professional, per calendar month). We also created 
two new HCPCS G codes, G2064 and G2065 (84 FR 62692 through 62694), 
representing comprehensive services for a single high-risk disease 
(that is, principal care management). In the CY 2021 PFS final rule (85 
FR 84639), we finalized a RUC-recommended replacement code for HCPCS 
code G2058 with the identical descriptor, CPT code 99439, and assigned 
the same valuation as for G2058. For CY 2022, the RUC resurveyed the 
CCM code family, including CCCM and Principal Care Management (PCM), 
and added five new CPT codes: 99437 (CCM services each additional 30 
minutes by a physician or other qualified health care professional, per 
calendar month (List separately in addition to code for primary 
procedure)), 99424 (PCM services for a single high-risk disease first 
30 minutes provided personally by a physician or other qualified health 
care professional, per calendar month), 99425 (PCM services for a 
single high risk disease each additional 30 minutes provided personally 
by a physician or other qualified health care professional, per 
calendar month (List separately in addition to code for primary 
procedure), 99426 (PCM, for a single high-risk disease first 30 minutes 
of clinical staff time directed by physician or other qualified health 
care professional, per calendar month), and 99427 (PCM services, for a 
single high-risk disease 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)).
    The CCM/CCCM/PCM code family now includes five sets of codes, each 
set with a base code and an add-on code. The sets vary by the degree of 
complexity of care (that is, CCM, CCCM, or PCM), who directly performs 
the services (that is, clinical staff, or the physician or NPP), and 
the time spent furnishing the services. The RUC-recommended values for 
work RVUs and direct PE inputs for these codes in CY 2022 were derived 
from a recent RUC specialty society survey. We proposed to accept the 
RUC-recommended values, considered public comments, and finalized the 
proposed values for the 10 CCM/CCCM/PCM codes.
    In consideration of the supportive comments we received last year 
in response to our comment solicitation, clinical expertise within CMS, 
and internal input from CMS staff and from our HHS operating division 
partners, we proposed to create separate coding and payment for CPM 
services beginning January 1, 2023. We recognize that there is 
currently no existing CPT code that specifically describes the work of 
the clinician who performs comprehensive, holistic CPM. We also believe 
the resources involved in furnishing CPM services to beneficiaries with 
chronic pain are not appropriately recognized under current coding and 
payment mechanisms. As noted above, we do not believe that E/M codes 
and values appropriately reflect time involved in furnishing CPM for 
beneficiaries with chronic pain. CMS has authority under section 1848 
of the Act to establish codes that describe services furnished by 
clinicians and suppliers that bill for physicians' services, and to 
establish payment amounts for those services that reflect the relative 
value of the resources involved in furnishing them. We also expect that 
creating separate coding and payment for CPM will help facilitate the 
development of data regarding the prevalence and impact of chronic pain 
in the Medicare population, where conditions including osteoarthritis, 
cancer, and other similar conditions that cause pain over extended 
periods of time are common.\25\ Such information can assist us in 
identifying potential coding and valuation refinements to ensure 
appropriate payment for these services. We also believe that the 
comprehensive care management involved in CPM services may potentially 
prevent or reduce the need for acute services, such as those due to 
falls \26\ and emergency department care \27\ associated with chronic 
pain--for example, sickle cell disease or migraine pain--and also have 
the potential to reduce the need for treatment for concurrent 
behavioral health disorders, including substance use disorders. There 
is some evidence that addressing chronic pain early in its course may 
result in averting the development of ``high-impact'' chronic pain \28\ 
in some individuals; these people report more severe pain, more 
difficulty with self-care, and higher health care use than others with 
chronic pain.
---------------------------------------------------------------------------

    \25\ https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Chronic-Conditions/CC_Main.
    \26\ https://www.cdc.gov/falls/facts.html.
    \27\ https://effectivehealthcare.ahrq.gov/products/improving-pain-management/rapid-evidence.
    \28\ https://www.sciencedirect.com/science/article/pii/S1526590018303584?via%3Dihub.
---------------------------------------------------------------------------

    There are various definitions for chronic pain from, for example, 
the Centers for Disease Control and Prevention \29\ and the National 
Institutes of Health,\30\ and in the Institute of Medicine's (IOM) 
``Relieving Pain in America: A Blueprint for Transforming Prevention, 
Care, Education, and Research'',\31\ and in the World Health 
Organization International Classification of Disease Edition 11,--most 
define chronic pain consistently, with some variation, as pain that 
persists longer than 3 months. The CDC, for example, has defined 
chronic pain within its 2016 opioid prescribing Guideline as ``pain 
that typically lasts >3 months or past the time of normal tissue 
healing, and can be the result of an underlying medical disease or 
condition, injury, medical treatment, inflammation, or an unknown 
cause.'' For clarity and operational use, we proposed to define chronic 
pain as ``persistent or recurrent pain lasting longer than 3 months.'' 
We welcomed comments from the public regarding whether this was an 
appropriate definition of chronic pain, or whether we should consider 
some other interval or description to define chronic pain. We were also 
interested in hearing from commenters about how the chronic nature of 
the person's pain should be documented in the medical record.
---------------------------------------------------------------------------

    \29\ https://www.cdc.gov/mmwr/volumes/65/rr/pdfs/rr6501e1.pdf.
    \30\ https://www.nccih.nih.gov/research/research-results/prevalence-and-profile-of-high-impact-chronic-pain.
    \31\ https://www.ncbi.nlm.nih.gov/books/NBK92525/#ch1.s3.
---------------------------------------------------------------------------

    We posited a monthly payment approach may also be more financially 
straightforward from the standpoint of

[[Page 69527]]

beneficiaries receiving treatment for chronic pain, particularly with 
respect to applicable coinsurance, which is generally 20 percent of the 
payment amount, after the annual Part B deductible amount is met.\32\
---------------------------------------------------------------------------

    \32\ https://www.medicare.gov/what-medicare-covers/what-part-b-covers.
---------------------------------------------------------------------------

    Beginning for CY 2023, we proposed to create two HCPCS G-codes to 
describe monthly CPM services. The codes and descriptors for the 
proposed G-codes are:
     HCPCS code G3002: Chronic pain management and treatment, 
monthly bundle including, diagnosis; assessment and monitoring; 
administration of a validated pain rating scale or tool; the 
development, implementation, revision, and/or maintenance of a person-
centered care plan that includes strengths, goals, clinical needs, and 
desired outcomes; overall treatment management; facilitation and 
coordination of any necessary behavioral health treatment; medication 
management; pain and health literacy counseling; any necessary chronic 
pain related crisis care; and ongoing communication and care 
coordination between relevant practitioners furnishing care, e.g. 
physical therapy and occupational therapy, and community-based care, as 
appropriate. Required initial face-to-face visit at least 30 minutes 
provided by a physician or other qualified health professional; first 
30 minutes personally provided by physician or other qualified health 
care professional, per calendar month. (When using G3002, 30 minutes 
must be met or exceeded.)
     HCPCS code G3003: Each additional 15 minutes of 
chronic pain management and treatment by a physician or other qualified 
health care professional, per calendar month. (List separately in 
addition to code for G3002. When using G3003, 15 minutes must be met or 
exceeded.)
    We were interested in hearing from commenters regarding our 
proposed inclusion of ``administration of a validated pain assessment 
rating scale or tool,'' as an element of the proposed CPM services, and 
including it within the descriptor of the proposed HCPCS code G3002. We 
also solicited comment on whether a repository or list of such tools 
would be helpful to practitioners delivering CPM services.
    We proposed to include, as an element of the CPM codes, the 
development of and/or revisions to a person-centered care plan that 
included goals, clinical needs, and desired outcomes, as outlined above 
and maintained by the practitioner furnishing CPM services.
    We proposed to include health literacy counseling as an element of 
the CPM codes, because we believe it will enable beneficiaries with 
chronic pain to make well-informed decisions about their care, 
increases pain knowledge, and strengthens self-management skills. 
Health literacy is the degree to which individuals have the ability to 
find, understand, and use information and services to inform health-
related decisions and actions for themselves and others.\33\ Adequate 
health literacy may improve the person's capability to take 
responsibility for their health, including pain-related health issues 
such as adherence to treatment regimens and medication administration, 
and have a positive influence on health outcomes, and health 
disparities. CMS' Network of Quality Improvement and Innovation 
Contractors have used health literacy counseling to improve health 
counseling,\34\ and health literacy counseling has been used to treat 
arthritis.\35\ We noted in the proposed rule that we were interested in 
hearing from commenters about how pain and health literacy counseling 
is or may be effectively used as a service element to help 
beneficiaries with chronic pain make well-informed decisions about 
their own care, weigh risks and benefits, make decisions, and take 
actions that are best for them and their health.
---------------------------------------------------------------------------

    \33\ https://health.gov/healthypeople/priority-areas/health-
literacy-healthy-people-
2030#:~:text=Health%20literacy%20is%20a%20central,well-
being%20of%20all.%E2%80%9D.
    \34\ https://qi.ipro.org/health-equity/health-literacy/.
    \35\ https://www.ahrq.gov/health-literacy/improve/precautions/1stedition/tool3.html.
---------------------------------------------------------------------------

    For HCPCS code G3002, we proposed to include an initial face-to-
face visit of at least 30 minutes, provided by a physician or other 
qualified health professional, to a beneficiary who has chronic pain, 
as defined above, or is being diagnosed with chronic pain that has 
lasted more than 3 months at the time of the initial visit. After 
consultation with our medical officers, we believe the management of a 
new patient with chronic pain would involve an initial face-to-face 
visit of at least 30 minutes due to the complexity involved with the 
initial assessment. We believe follow-up or subsequent visits could be 
non-face to face. HCPCS code G3003 describes an additional 15 minutes 
of CPM and treatment by a physician or other qualified health care 
professional, per calendar month (listed separately in addition to 
G3002). We solicited comment on the appropriateness of the proposed 30-
minute duration per calendar month for G3002, and also on the proposed 
duration and frequency for G3003. We also solicited comment on whether 
we should consider specifying a longer duration of time for G3002 (for 
example, one hour--or 45 minutes). Similarly, we solicited comment on 
whether we should consider specifying a longer duration of time for 
G3003 (for example, 20-minute increments). We also welcomed comment on 
our proposal to permit billing of CPM services for beneficiaries who 
have already been diagnosed with chronic pain, and for people who are 
being diagnosed with chronic pain during the visit.
    We welcomed comments regarding how best the initial visit and 
subsequent visits should be conducted (for example, in-person, via 
telehealth, or the use of a telecommunications system, and any 
implications for additional or different coding). We also considered 
whether to add the CPM codes to the Medicare Telehealth Services List, 
based on our review of any information provided through the public 
comments and our analysis of how these new services may be 
appropriately furnished to Medicare beneficiaries. We also requested 
comment regarding whether there are components of the proposed CPM 
services that do not necessarily require face-to-face interaction with 
the billing practitioner, such as care that could be provided by 
auxiliary staff incident to the billing practitioner's services. For 
any components that could be furnished incident to the services of the 
billing practitioner, we requested comment on whether these could be 
appropriately furnished under the general supervision of the billing 
physician or non-physician practitioner (NPP), for example, 
administration of a pain rating scale or tool, or elements of care 
coordination, as we have provided for certain care management services.
    We believe that most CPM services would be billed by primary care 
practitioners who are focused on long-term management of their patients 
with chronic pain. As calls for improved pain management have increased 
in recent years, this has resulted in better education and training of 
primary care practitioners and heightened awareness of the need for 
pain care nationally. We believe the codes we proposed for CPM services 
will create appropriate payment for physicians and other practitioners 
(beyond primary care practitioners) that reflects the time and 
resources involved in attending comprehensively to the needs of 
beneficiaries with chronic pain. As the IOM ``Blueprint'' report noted, 
even people who need consultation with a pain specialist

[[Page 69528]]

should benefit from the sustained involvement of a primary care 
practitioner who is able to help coordinate care across the full 
spectrum of health care providers, as such coordination ``helps prevent 
people from seeking relief from multiple providers and treatment 
approaches that may leave them frustrated and angry and worse off both 
physically and mentally, and from falling into a downward spiral of 
disability, withdrawal, and hopelessness.'' \36\ The Blueprint stated 
that this type of fragmentation hinders the development of a strong, 
mutually trusting relationship with a single health professional who 
takes responsibility, and that this established relationship is one of 
the keys to successful pain treatment. We anticipated that if these 
proposed codes are finalized, primary care practitioners will employ a 
variety of person-centered pain management strategies, such as those 
suggested in the PMTF Report and illustrated in CMS' CPM graphic \37\ 
including medications, therapies, exercise, behavioral health 
approaches, complementary and integrative health, and community-based 
care based on the complexity, goals, and characteristics of each person 
they serve with chronic pain and according to the person-centered plan 
of care. It is also important to note that, in many parts of the 
country, people have access only to their primary care practitioner for 
chronic pain care.\38\ We understand, however, the need or desire that 
some individuals with chronic pain have to be seen on an ongoing basis 
for CPM by a pain specialist who has received special training and/or 
certification to meet the needs of the most complex and challenging 
patients with chronic pain.
---------------------------------------------------------------------------

    \36\ https://www.ncbi.nlm.nih.gov/books/NBK91497/.
    \37\ https://www.cms.gov/files/document/cms-chronic-pain-journey-map.pdf.
    \38\ https://www.hhs.gov/sites/default/files/pmtf-final-report-2019-05-23.pdf.
---------------------------------------------------------------------------

    Therefore, we proposed to permit billing by another practitioner 
after HCPCS code G3002 has already been billed in the same calendar 
month by a different practitioner. In these situations, we anticipate 
that there could be occasional instances where care of an individual 
with chronic pain is transferred to a pain specialist or other 
specialist during the same month they received the CPM services from a 
primary care practitioner, for ongoing care. In these or other 
situations (such as when the beneficiary elects to choose a different 
physician or practitioner to furnish CPM services), we would anticipate 
G3002 and potentially G3003 could be billed by another practitioner 
during the same month, for the same beneficiary. We believe that it 
would be unlikely for G3002 to be billed more than twice per month 
under such circumstances and proposed placing a limit on the number of 
times the code could be billed per beneficiary per calendar month, at a 
maximum of twice per calendar month. We solicited comment on our 
proposal to permit billing by another practitioner after the G3002 has 
already been billed in the same month by a different practitioner, and 
on the number of times the code could be appropriately billed per 
month, per beneficiary.
    We proposed to require that the beneficiary's verbal consent to 
receive CPM services at the initiating visit be documented in the 
beneficiary's medical record, as not all Medicare beneficiaries with 
chronic pain eligible to receive these separately billable CPM services 
may understand or want to receive these services, and the beneficiary 
should be aware that they are receiving them. At the initial visit, the 
beneficiary with chronic pain should be educated regarding what the CPM 
services are, how often they may generally expect to receive the 
services, and have an explanation of any cost sharing that may apply in 
their particular situation. Practitioners have informed us that 
beneficiary cost sharing is a significant barrier to provision of 
similar care management services, such as CCM services, and we 
solicited comment on how best to effectively educate both practitioners 
and beneficiaries with chronic pain about the existence of, and the 
benefits and value of, the proposed CPM services. We solicited comment 
regarding whether the initiating visit is the appropriate time for 
billing practitioners to obtain beneficiary verbal consent, if consent 
should be given at each visit, and also if beneficiary consent should 
be sought by the practitioners with whom CPM billing practitioners 
coordinate other Medicare services under the CPM plan of care, or even 
more broadly.
    We believe there might be some potential for duplicative payment 
for services allocated to the same patient concurrent with certain 
other Medicare care management services, such as CCM or behavioral 
health integration (BHI) services; however, we believe the proposed CPM 
codes have features that would mitigate such circumstances, such as the 
elements of the service that specifically address the beneficiary's 
pain--for example, the administration of a validated pain rating scale 
or tool. We welcomed comments regarding what, if any, Medicare services 
we should consider that could not be billed by the same practitioner 
for the same patient concurrent with any other Medicare services, to 
avoid duplication of payment, and help limit financial burden to the 
Medicare beneficiary with chronic pain. We noted that we would expect 
to refine these codes as needed through future rulemaking as we receive 
more information how the codes are being used, and how they are 
implemented in practice.
    To the extent that components of the proposed CPM codes are also 
components of other care management services, we reiterate our policy 
against double-counting time and require that the time used in 
reporting CPM services may not represent time spent in any other 
reported service. We proposed that the CPM codes could be billed in the 
same month as a care management service, such as CCM, or BHI. We 
believe there are circumstances in which it is reasonable and necessary 
to provide both services in a given month, based on the needs of the 
Medicare beneficiary with chronic pain, for example, when the 
beneficiary has both chronic pain, and a mental disorder(s), or 
multiple chronic conditions. We also proposed that the CPM codes would 
be able to be billed for the same Medicare patient in the same month as 
another bundled service such as HCPCS Codes G2086-G2088, which describe 
bundled payments under the PFS for opioid use disorders. We noted that 
patient consent would need to be obtained for both of the bundled 
services such as, for example, CPM and BHI, and all other requirements 
to report CPM and to report the other service or services would need to 
be met. We invite comments on these billing proposals and their 
appropriateness in the context of CPM.
    Finally, we questioned commenters whether we should consider 
creating additional coding and payment to address acute pain. We are 
interested in information regarding a definition for acute pain, 
standalone or E/M coding, the specific activities that could be 
furnished, how we might value and price such a code or service, the 
settings where care should be provided, the types of practitioners that 
should furnish acute pain care, if the service or any components should 
be furnished as ``incident to'' services under the direction of the 
billing practitioner or by other members of the care team, and other 
information that might help us in proposing such a code or codes.

[[Page 69529]]

(b) Valuation of Chronic Pain Management Services
    Consistent with the valuation methodology for other services under 
the PFS, proposed HCPCS codes G3002 and G3003 would be valued based on 
what we believe to be a typical case, and we understand that, based on 
variability in patient needs, some patients will require more 
resources, and some fewer. The proposed CPM codes would separately pay 
for a specified set of CPM elements furnished during a month, including 
the administration of validated rating scales, establishment and review 
of a person-centered care plan that includes goals, clinical needs, and 
desired outcomes, and other elements as described in the proposed code 
descriptors. To value CPM, we compared the proposed services to codes 
that involve care management. In doing so, we concluded that the CPM 
services were similar in work (time and intensity) to that of PCM in 
that both the PCM codes and proposed CPM codes reflect services that 
have similar complexities, possible comorbidities, require cognitive 
time on the part of the practitioner, and may involve coordination of 
care across multiple practitioners.
    For HCPCS code G3002, we developed proposed inputs using a 
crosswalk to CPT code 99424 (Principal care management services, for a 
single high-risk disease, with the following required elements: One 
complex chronic condition expected to last at least 3 months, and that 
places the patient at significant risk of hospitalization, acute 
exacerbation/decompensation, functional decline, or death; the 
condition requires development, monitoring, or revision of disease-
specific care plan; the condition requires frequent adjustments in the 
medication regimen and/or the management of the condition is unusually 
complex due to comorbidities; ongoing communication and care 
coordination between relevant practitioners furnishing care; first 30 
minutes provided personally by a physician or other qualified health 
care professional, per calendar month.), which is assigned a work RVU 
of 1.45. Additionally, for G3002 we proposed to use a crosswalk to the 
direct PE inputs associated with CPT code 99424. We believe that the 
work and PE described by this crosswalk code is analogous to the 
services described in G3002, because G3002 includes similar care plan, 
medication management, unusually complex clinical management; care 
coordination between relevant practitioners furnishing care; and time 
for care provided personally by a physician or other qualified health 
care professional, as described in CPT code 99424.
    We proposed to value G3003 at a work RVU of 0.50, using a crosswalk 
to CPT code 99425 (each additional 30 minutes provided personally by a 
physician or other qualified health care professional, per calendar 
month) (List separately in addition to code for G3002), which is 
assigned a work RVU of 1.00. However, the required minimum number of 
minutes described in G3003 is half of the number of minutes in CPT code 
99425. For HCPCS code G3003, we proposed to use a crosswalk to half of 
the direct PE inputs associated with CPT code 99425. We believe that 
the work and PE described by this crosswalk code is analogous to the 
services described in G3003, because G3003 includes similar activities 
as described in CPT code 99425.
    We proposed that G3002 can only be billed when the full 30 minutes 
of service time has been met or exceeded. Additionally, we proposed 
that the add-on code (G3003) can only be billed when the full 15 
minutes of service time is met or exceeded.
    Our proposed valuation of CPM services includes services that are 
personally performed by a physician (or other appropriate billing 
practitioner, such as a nurse practitioner (NP) or physician assistant 
(PA)) described by certain E/M visit codes that apply to a new patient 
in various settings. Accordingly, we proposed that G3002/G3003 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 99202- 
99215 (Office/outpatient visits new), since these codes reflect face-
to-face services furnished by the physician or other billing 
practitioner for related, separately billable services that are being 
furnished to a patient the practitioner has not previously seen. We 
believe it would be unlikely the practitioner is prepared to address 
the complex pain needs of a new patient on the same day he or she is 
seen for a general visit, or a visit where the person is being seen for 
some other illness or condition. We do not believe that the services 
included in G3002/G3003 would significantly overlap with CCM services; 
Transitional Care Management (TCM) services; or BHI services, which 
have various clinical purposes separate from CPM. We do believe there 
is likely overlap in the Medicare beneficiary population eligible to 
receive CCM, TCM, BHI, and the proposed CPM services, but we believe 
there are distinctions in the nature and extent of the assessments, 
care coordination, medication management, and care planning for CPM to 
allow concurrent billing for services that are medically reasonable and 
necessary, and that it is particularly important to allow for the 
provision of needed services, including behavioral health services, to 
beneficiaries with chronic pain. We solicited comment on whether we 
have appropriately identified the codes Medicare should not pay if 
furnished during the same day as the proposed CPM codes, and if there 
are circumstances where multiple care planning codes could be furnished 
without overlap or other situations, such as where the practitioner is 
seeing a new patient.
    We noted that the proposed CPM codes would be limited to 
beneficiaries in office or other outpatient or domiciliary settings. We 
will consider for future rulemaking separately identifying and paying 
for CPM services furnished to beneficiaries in any appropriate setting 
of care, in recognition of the prevalence and burden of pain across all 
settings of care, and the associated time and service complexity to 
provide care for chronic pain. We appreciate comments on other settings 
where CPM services could be provided.
(c) Request for Comment
    We believe there could be circumstances in which a beneficiary 
receiving CPM services needs referrals or recommendations, based on a 
clinician's assessment, for services or interventions that are not 
included as elements of the CPM services, such as for community-based 
care or physical and occupational therapy. We welcomed comments on the 
care coordination that may occur between relevant practitioners 
furnishing services, such as complementary and integrative care, and on 
the community-based care element included in the descriptors for 
proposed G3002 and G3003.
    We also asked commenters to weigh in on how documentation of the 
performance of the elements of CPM services might best be addressed in 
medical recordkeeping. We solicited general comment on whether there 
are any elements of CPM services outlined in this proposal that the 
public and interested parties believe are not typically furnished in 
connection with comprehensive chronic pain management, or any proposed 
elements of the CPM services that should be removed or altered. We 
solicited comment on whether there are elements

[[Page 69530]]

of CPM services that we have not identified and should be added to the 
code descriptors.
    Additionally, we solicited comment on which, if any, CPM elements 
could be furnished as ``incident to'' services, and whether to add 
G3002 and G3003 to the list of services for which we allow general 
supervision as described in our regulation at Sec.  410.26(b)(5). We 
welcomed comments from the public for future rulemaking regarding what 
elements of the CPM services could be furnished under general 
supervision, or direct supervision. For example, facilitation and 
coordination of any necessary behavioral health treatment, chronic pain 
related crisis care, and ongoing communication and care coordination 
between relevant practitioners furnishing care might be appropriate 
activities to be considered under general supervision.
    The proposed CPM codes may involve arrangements where the physician 
or other health professional might work in collaboration with other 
health care providers or members of a care team, such as a 
psychologist, dental practitioner, or social worker, where these 
individuals might furnish certain elements of the service bundle under 
the direction of the physician or qualified health practitioner, such 
as assessments, person-centered care planning, referrals to community-
based care, and other activities, as appropriate. We requested comments 
on if, and how, we should structure the proposed CPM code and payment 
for these services to account for these types of arrangements that 
could include team-based care.
    We received over 150 unique comments on our proposal from national 
health care organizations including provider associations, federations, 
and societies that represent health care professionals; organizations 
that educate, connect, and advocate for people with pain; State-based 
health care organizations, medical societies and associations; cancer 
care centers; health care companies; hospice and palliative care 
organizations; device manufacturers; pain care providers; and people 
living with pain and their caregivers. Almost all commenters were 
supportive of our proposal. We also received several comments mainly 
from psychologists or psychology associations, requesting we adopt 
additional coding without medication management in the code descriptor, 
as medication management in most states is outside the scope of a 
psychologist's license. The following is a summary of the comments we 
received and our responses.
    Comment: Commenters living with chronic pain and their caregivers 
shared poignant stories about the importance of the proposed codes. One 
person observed that in recent years, since the release of the Centers 
for Disease Control and Prevention's (CDC) Guideline for Prescribing 
Opioids, for people taking opioid medications or for those who were 
forced to stop taking medications, the relationship between providers 
and patients has become fraught, tense, and stigmatizing, even risky 
for physicians and for all these reasons, many clinicians have refused 
to treat chronic pain patients or have terminated chronic pain patients 
from their practices, with growing numbers of pain patients unable to 
find anyone to treat them, even if they do not use opioid medications. 
The spouse of a person living with chronic pain told of repeated trips 
to a local hospital seeking emergency treatment that worsened, instead 
of improved, her care, in part because the couple believed clinicians 
at the hospital were fearful of prescribing opioids and did not have 
access to, or ignored, the recommendations of the patient's longtime 
clinicians, who included several pain specialists. A beneficiary who 
lives with chronic pain stated that she hoped the change in codes would 
motivate clinicians to focus more attention on people with pain, as 
after many years of seeing provider inexperience first-hand, along with 
the accompanying administrative demands and paperwork pain care 
demands, she believed having a special billing code will be a ``giant 
step'' forward for people with pain, potentially allowing more people 
like her with painful conditions to continue to contribute to society, 
including through employment. A person living with chronic pain stated 
he liked what he saw in the code proposal because he hoped it would 
open the doors to more doctors who would provide pain care, including 
appropriate medication management, because he thinks doctors are still 
fearful of Federal and State prescribing guidelines. Another person 
living with pain stated the CPM services are ``so needed by people like 
me.''
    One commenter noted that they would expect that the amount of pain 
care required and the cost to Medicare to be large and increasing, 
especially given the aging American population and the prevalence of 
age-associated chronic pain conditions in Medicare like arthritis, 
cancer, and diabetic neuropathy; the same commenter stated that pain 
management is complex, and there are no existing codes that account for 
all the tasks required to care for a patient with chronic pain, and 
that a standalone code will signal to physicians that, when patients 
have complaints of pain, it is critical to take them seriously. 
Conversely, another commenter was not supportive of the new codes as 
they believe that physicians will continue to bill evaluation and 
management (E/M) codes to avoid adding to their administrative burden.
    One commenter requested that we ``pause'' implementation of the 
codes, further engage with interested parties, and make additional 
clarifications within the code to address valuation, descriptors, and 
guidance. Another commenter noted that they do not support including 
the CPM codes in the applicable list used for accountable care 
organizations beneficiary assignment, citing that managing chronic pain 
does not routinely follow the overall health of the patient, and is 
typically managed by clinicians with specific skills beyond primary 
care. One commenter questioned if a single bundled code was adequate to 
address the breadth of conditions that patients may experience, as well 
as the variety of treatment and management approaches. One commenter 
urged us to consider that for some people, a visit with a practitioner 
might focus not just on pain management, but also whole-person care. 
The same commenter noted that, although they appreciated our efforts to 
simplify billing requirements for the CCM codes, uptake appears to be 
low in part due to administrative burden, and they expressed concerns 
that similar challenges would apply to the CPM codes, which could 
entail documentation of services rendered in an E/M service. The 
commenter asked us if we could determine a pathway to make billing more 
streamlined, perhaps through billing using the G89.xx ICD-10 series. A 
commenter thanked us for improving access to pain care, including 
through prevention and treatment for substance use disorders (SUD). A 
different commentator congratulated us on, through creation of the 
codes, helping to prevent some individuals from developing SUD. One 
commenter noted the codes would prompt more practitioners to welcome 
Medicare beneficiaries with chronic pain into their practices, and 
encourage practitioners already treating Medicare beneficiaries who 
have pain to spend the time to help them manage their condition within 
a trusting, supportive, and ongoing care partnership.
    Response: We thank all the commenters who expressed enthusiastic 
support of the proposed new HCPCS

[[Page 69531]]

codes for CPM services, and we appreciate the attention to informing 
our approach in shaping this policy that we believe will provide 
improved access to holistic and comprehensive pain management for 
people with Medicare. A few commenters disagreed with our proposal. One 
commenter stated that our proposal is not substantially different than 
existing codes, while another questioned whether one code was 
sufficient to address the breadth of conditions patients experiencing 
chronic pain face. We do not agree that there is an existing code that 
specifically describes the work of the clinician in performing the 
specific tasks described in the code descriptor for HCPCS code G3002. 
We anticipate that the CPM codes will be used to address the full range 
of chronic pain conditions that impact Medicare patients. We look 
forward to gaining more knowledge through data, and clinician and 
beneficiary experience as use of the CPM codes becomes more frequent.
    Comment: We received a few comments regarding our proposal to 
define chronic pain as ``persistent or recurrent pain lasting longer 
than 3 months.'' Most commenters agreed with our proposed definition. 
We received several suggestions related to the specification of 3 
months duration, including one month, 90 days, and the addition of 
``expected to last longer'' to our definition. A few others suggested 
we broaden the definition generally, to ensure that patients with 
cancer, neuropathic pain, psychogenic pain, and headaches would also 
benefit from this proposal to create HCPCS codes that describe CPM 
services, while another commenter congratulated us on using language 
that it noted was inclusive of all types of pain treatment. One 
commenter asked us to integrate acute pain and biopsychosocial factors 
into our definition, and stated that risk indicators of pain are 
apparent early, potentially limiting robust interventions for the 
prevention of chronic pain. One commenter opined that our definition of 
chronic pain was overly broad and did not address the many types of 
conditions that pain patients may experience. A commenter who agreed 
with our definition noted that in the International Classification of 
Disease, 11th edition (ICD-11),\39\ chronic pain has its own diagnosis, 
independent of an underlying disease or condition. Still, another 
commenter, who also agreed with our definition, noted there are ICD-10 
diagnostic codes for chronic pain, the G89.xx series. Another commenter 
agreed that the proposed definition is largely in line with their 
understanding, adding more context to include, ``persistent or 
recurrent pain without a serious progression or exacerbation of an 
underlying pathologic condition and without tolerability over time.'' 
Another commenter stated that at a high level, they believe the metric 
of ``time'' is not the dispositive component to define a chronic pain 
diagnosis, but the definition should instead take into account a 
complex series of associated factors like amount of suffering or 
hindrance of function, and that not all recurrent pain should be 
considered chronic pain; instead chronic pain as a diagnosis should be 
utilized for an individual who does not understand how to manage or 
live their life with their current, recurring, episodic symptoms.
---------------------------------------------------------------------------

    \39\ https://icd.who.int/en.
---------------------------------------------------------------------------

    Response: We appreciate all the commenters' suggestions and 
observations. As we described in the proposed rule, we reviewed 
definitions from the Centers for Disease Control and Prevention, the 
National Institutes of Health, the World Health Organization,\40\ and 
in the Institute of Medicine's ``Relieving Pain in America: A Blueprint 
for Transforming Prevention, Care, Education, and Research.'' For 
operational ease and consistency with the proposed rule and various 
sources, we are finalizing as proposed the definition of chronic pain 
as ``persistent or recurrent pain lasting longer than 3 months.''
---------------------------------------------------------------------------

    \40\ https://painconcern.org.uk/new-classification-for-chronic-
pain/
#:~:text=Chronic%20primary%20pain%20is%20defined,explained%20by%20ano
ther%20chronic%20condition.
---------------------------------------------------------------------------

    Comment: One commenter recommended we focus on improving care for 
all pain, such as acute pain, as well as pain related to cancer, sickle 
cell disease, and for people in palliative care, with another commenter 
also agreeing that additional codes could focus on people with 
palliative and cancer pain. This commenter noted that increased support 
for comprehensive acute pain management could also reduce the number of 
patients who progress from acute to chronic pain. This sentiment was 
echoed by other commenters, who suggested an additional pain code for 
acute care that would incorporate massage therapy and other 
complementary and integrative services for both in-patient and 
outpatient visits, as is seen in some large health systems. Several 
other commenters generally supported the inclusion or addition of acute 
pain management in this or other codes. One commenter suggested that 
after we gain experience with the use of the codes for chronic pain, we 
consider their application to acute pain management. A few commenters 
did not support additional coding and payment for acute pain 
management, as they believed these circumstances are adequately handled 
via existing E/M coding and payment.
    Response: As we mentioned in the proposed rule, we understand there 
is some evidence that addressing chronic pain early in its course, such 
as when the person is experiencing acute pain, may result in averting 
the development of ``high-impact'' chronic pain in some individuals and 
that these people report more severe pain, more difficulty with self-
care, and higher health care use than others with chronic pain. We 
considered, in the development of this code, whether or not to include 
acute pain, and elected not to include it in the CPM services 
descriptor. We will continue to consider how best to approach 
management of acute pain through coding and payment.
    In our proposal, we required an initial face-to-face visit of at 
least 30 minutes provided by a physician or other qualified health 
professional with the first 30 minutes personally provided by the 
physician or other qualified health professional, per calendar month 
for HCPCS code G3002. We noted that HCPCS codes GYYY1 and GYYY2 were 
placeholder codes and that the final code number will be HCPCS code 
G3002 and G3003, respectively. We proposed, for HCPCS code G3003, an 
additional fifteen minutes of CPM services by a physician or other 
qualified health professional, per calendar month, and we proposed 
limiting the application of HCPCS code G3003 to up to three units of an 
additional 15 minutes of CPM services, per calendar month (listed 
separately in addition to proposed HCPCS code G3002). We sought comment 
on both the proposed duration of 30 minutes for HCPCS code G3002, and 
the duration and the limit on HCPCS code G3003.
    Comment: Most commenters agreed that our proposal for 30 minutes 
for HCPCS code G3002 was reasonable and adequate for the treatment and 
management of the first visit for a person with chronic pain and that 
fifteen-minute intervals for subsequent time-based intervals is 
adequate.
    One commenter expressed a concern that neither code allowed for 
adequate time, and that the codes should allow for at least an hour for 
the first visit and 45 minutes for subsequent visits, especially to 
allow for the intensity of clinical time that would be likely

[[Page 69532]]

needed to diagnose and treat a new patient. The same commenter urged 
us, because the myriad of situations that could apply based on the 
complexity of treating pain overall in the Medicare population, to 
consider additional flexibilities in the duration of time for the codes 
based on each person with pain's situation. Another commenter noted 
that the time required to coordinate with other specialists, referrals, 
therapies, and trial different treatments is ``considerable'' to create 
and modify an individual treatment plan for each patient. Another 
commenter suggested that twice a month billing for proposed HCPCS code 
G3002 is insufficient for completion of the list of requirements, and 
recommended that four visits per month be allowed to ensure that the 
element list is completed. A separate commenter echoed this sentiment, 
suggesting there be no limitation on the number of times per month this 
code can be billed, citing the multitude of providers seen by some 
patients. Another commenter recommended we consider extending the 
length of visits from 45 minutes (30 minutes for proposed HCPCS code 
G3002, 15 minutes for proposed G3003) to 60 minutes to account for the 
complexity of pain care. A commenter noted that 30 minutes was too high 
a threshold for appointments beyond the initial visit, and recommended 
that subsequent visits only have a limit of 15 minutes after which 
billing is allowed. One commenter stated that we should not put any 
limits on the number of times proposed HCPCS code G3003 can be billed 
each month. A commenter requested that the frequency and duration of 
permitted CPM visits be flexible enough to account for the variety of 
practice types--from primary care to specialized clinics offering 
intensive and integrated chronic pain management services, and this 
commenter also noted that patients have different intensities of need, 
with some requiring longer appointments, or at greater frequency, while 
some have lower needs, stating that 30 minute and 15 minute durations 
of HCPCS codes G3002 and G3003 respectively, as well as the frequency, 
may be too limited to adequately account for the challenging demands of 
chronic pain management. Another commenter stated that 30 minutes seems 
reasonable but flexibility is important as chronic pain conditions vary 
and sometimes more than 30 minutes may be needed, especially for a 
first visit. Another commenter requested clarification related to the 
frequency of allowed billing for CPM codes, as some services such as 
comprehensive palliative care require a wide range of care.
    Response: We appreciate the commenters' overall support of our 
proposal to set the duration of HCPCS code G3002 at 30 minutes, to 
accommodate both the specified elements of the monthly bundle, and the 
complex needs of the person with chronic pain, and we are finalizing 
HCPCS code G3002 for 30 minutes duration. We agree with the commenters 
who observed that additional flexibilities are needed to account for 
the numerous situations that could apply to each person with pain's 
clinical situation, and the factors that might go into the clinician's 
determination regarding how much time is appropriate to spend treating 
a person with chronic pain, and also how many and what type of 
clinicians might need to also furnish care during a particular month. 
Although we expect that in most instances the person with chronic pain 
would see one clinician on a regular basis who is performing a lead 
role in managing that individual's pain, we can also foresee limited 
circumstances where a beneficiary may need to have their care 
transferred to a pain specialist, or other specialist in the same 
month, and the pain specialist or other specialist may also bill HCPCS 
code G3002 for the same beneficiary, in the same month. There may also 
be situations where the person with chronic pain needs to see two 
different clinicians managing their pain on a regular basis, for 
example, a cancer specialist and a rheumatologist, with both billing 
the CPM code(s). We would not expect many beneficiaries living with 
chronic pain would typically be seeing more than one or two physicians 
or qualified health professionals in a month who might be performing 
HCPCS code G3002; in part, because of the burden of care described by 
chronic pain patients and their caregivers, and also because 
beneficiaries incur cost-sharing expenses for these services and other 
care they receive--typically 20 percent of the Medicare payment amount 
after the annual Medicare Part B deductible amount is met.
    Based on the comments, especially those that encouraged us to 
increase billing flexibilities to account for the unique needs of each 
person with chronic pain, we have reconsidered the proposed limit on 
billing G3003 to three times per month, and are finalizing in this rule 
flexibility to bill the second code, for each additional 15 minutes of 
care, an unlimited number of times, as medically necessary, per month, 
after HCPCS code G3002 has been billed. We will be monitoring use of 
the codes going forward to understand more about how they are being 
used.
    Comment: One commenter asked if our proposal required the physician 
to meet with the patient each month or only once in the initial month 
of the service, as the commenter noted that monthly visits with the 
physician are not likely to be necessary for some people receiving 
ongoing chronic pain management. Another commenter stated that a 
monthly visit may be onerous for cancer patients who are already 
receiving time-intensive care. A commenter pointed out that it could 
take year or more of regular visits to develop, coordinate, and revise 
a treatment plan optimal in managing the patient's chronic pain; the 
same commenter stated that a patient might drop back to bi-monthly, 
quarterly, bi-annually, and annual visits so long as pain is being 
effectively managed. Another commenter requested clarification 
regarding if all the elements in the descriptor would be required each 
month.
    Response: We agree with the commenters who noted that each person 
with chronic pain may not need to receive the monthly bundle every 
month; rather, using a person-centered approach, one which optimizes 
care according to individual circumstances and preferences, requires 
variability in how often services are appropriately rendered. 
Therefore, the CPM services for the HCPCS code G3002 may not be 
rendered more than once per month by each individual practitioner 
billing the code for each beneficiary, but could be rendered less than 
twelve times per year, depending on the specific needs of the person 
with chronic pain.
    Comment: Some commenters requested clarification on our proposal 
that the first time HCPCS code G3002 is billed that initial visit must 
be in person, or if subsequent monthly visits must be ``face-to-face,'' 
or in person. Several commenters recommended that we not make in-person 
first time visits an absolute requirement, so as to accommodate for 
mobility difficulties for people living a long-distance from the 
physician's office. Other commenters recommended that ``face-to-face'' 
components be available via both video and telecommunication technology 
to support access. Several commenters stated that we needed to clarify 
that the code required that only the very first visit be in-person, and 
that follow-up visits could be delivered in-person, or by telehealth. A 
different commenter's concern was that HCPCS code G3002 seemingly 
requires an ``initial'' face-to-face visit of at least 30 minutes, and 
while the commenter did

[[Page 69533]]

not object to one required initial face-to-face visit at the onset of 
CPM treatment, they thought that CMS potentially requiring an in-person 
visit monthly is unnecessary, overburdensome, and would exacerbate 
health care disparities. One commenter noted an initial visit with the 
patient could be supported by telehealth. Another commenter noted that 
patients should be seen in the office for the initial visit, at least 
until they are regulated on their pain medicines. An additional 
commenter requested clarification as to whether a practitioner could 
bill these codes both for patients that have an established history of 
chronic pain, and those that are being diagnosed as having chronic pain 
for the first time.
    Response: We thank the commenters for their comments, but we are 
finalizing the requirement that the first time HCPCS code G3002 is 
billed, the physician or qualified health practitioner must see the 
beneficiary in-person, where both individuals are in a clinical setting 
such as a primary care practitioner's office or other applicable 
setting. We believe that an in-person visit at the onset of care will 
benefit both the clinician's accuracy in administering the elements of 
the HCPCS code G3002 bundle of services, and help at the beginning of 
care to foster a successful therapeutic relationship between the 
clinician and the person with chronic pain. One commenter told us 
doctor-patient relationships in pain management have become so 
``fraught, mistrustful, and corrosive'' that they have led to a crisis, 
as illustrated by CMS' own Journey Map of the Chronic Pain 
Experience,\41\ which, in their view, accurately demonstrates the 
current ``dysfunctional and damaging state'' of pain care. These 
reports support our decision to require that the physician or other 
qualified health professional meet with the beneficiary in person for 
the first time. We acknowledge that for some people living with chronic 
pain who may live far from the clinician's office, or who have issues 
with transportation, or whose pain is exacerbated by activity, even 
getting to a clinician in-person for a first visit may be challenging. 
We are not requiring that each subsequent visit, whether these be 
monthly or at some other periodicity be held in-person, but rather 
leaving that determination to the discretion and preference of the 
clinician and the beneficiary as they are best positioned to together 
determine how to develop and maintain the care partnership to 
effectively manage pain.
---------------------------------------------------------------------------

    \41\ https://www.cms.gov/files/document/cms-chronic-pain-journey-map.pdf.
---------------------------------------------------------------------------

    Comment: A commenter stated that while patients earlier in their 
journey managing chronic pain may have care primarily coordinated by a 
primary care practitioner, others progressing to high-impact chronic 
pain may have their care mainly coordinated via a pain management 
specialist; this commenter suggested we allow the codes to be billed at 
a maximum twice per month to account for the difference in specialty 
primarily managing a patient's care. This commenter also suggested we 
add pain management specialists to the list of examples of care that a 
patient might need (for example, physical and occupational therapy, 
etc.).
    Response: We agree with the commenter that it is possible that a 
beneficiary living with chronic pain might need to see more than one 
clinician type who is enabled to bill for the CPM services--as the 
commenter noted, one likely scenario might be a person who sees a 
primary care practitioner, and a pain specialist (for the purposes of 
this rule, we are not defining ``pain specialist''). As described in 
the proposed rule, we believe it is unlikely that most beneficiaries 
with pain would want, or need to, see more than a few physicians or 
other qualified health professionals in the same month to manage their 
pain, and administer the elements of the CPM services for various 
reasons, including the reasons commenters who urged us to add the CPM 
services to the telehealth list have flagged. We also believe that the 
beneficiary would likely object to, or could even by confused by, 
having large numbers of clinicians managing their chronic pain. 
Although we are not restricting the numbers of clinicians who can bill 
HCPCS code G3002, we will be monitoring its use going forward to better 
understand more about the types of practitioners and patients using the 
CPM codes and services.
    Comment: A few commenters requested clarification as to whether the 
person being seen for the first time with proposed HCPCS code G3002 had 
to have already been diagnosed with a chronic pain diagnosis, or a 
condition that causes chronic pain. One commenter stated we should 
include both people who both meet the definition of chronic pain on the 
first visit, and also people who have adequate medication documentation 
or concerns that would likely attest they have met the definition of 
chronic pain, to create an equitable care environment.
    Response: We are clarifying that the beneficiary, at the first 
visit, need not have an established history or diagnosis of chronic 
pain, or be diagnosed with a condition that causes or involves chronic 
pain; rather, it is the clinician's responsibility to establish, 
confirm, or reject a chronic pain and/or pain-related diagnosis when 
the beneficiary first presents for care and the clinician is using 
HCPCS code G3002.
    Comment: Several commenters questioned if clinicians are required 
to furnish all appropriate elements of the code bundle in each 
encounter for HCPCS code G3002, including medication management. One 
commenter stated that we should allow clinicians flexibility for any of 
the services listed, in any order and over any time period to best 
manage the person's pain condition(s) and that should allow for 
omission of certain ones when they are not appropriate or not desired 
by the patient (for example, medication management, behavioral 
counseling). Another commenter stated that its stakeholders were 
concerned that HCPCS code G3002 seems to indicate that all listed 
services must be completed to bill for the code.
    Response: We are clarifying that clinicians will be required to 
furnish all appropriate elements of the code bundle, but also 
clarifying that we do not expect that all elements of the code bundle 
will be appropriate for every patient. Therefore, we can confirm that 
if medication management is appropriate for a specific patient, then a 
clinician who bills HCPCS code G3002 will be required to furnish 
medication management to that patient. As described later in this 
preamble, we will be finalizing the descriptor of HCPCS code G3002 as 
follows, with the two modifications shown in italics: Chronic pain 
management and treatment, monthly bundle including, diagnosis; 
assessment and monitoring; administration of a validated pain rating 
scale or tool; the development, implementation, revision, and/or 
maintenance of a person-centered care plan that includes strengths, 
goals, clinical needs, and desired outcomes; overall treatment 
management; facilitation and coordination of any necessary behavioral 
health treatment; medication management; pain and health literacy 
counseling; any necessary chronic pain related crisis care; and ongoing 
communication and care coordination between relevant practitioners 
furnishing care, for example, physical therapy and occupational 
therapy, complementary and integrative approaches, and community-based 
care, as appropriate. We believe that the services enumerated as 
examples accurately summarize the

[[Page 69534]]

components of some elements of key care for people with Medicare living 
with pain.
    Comment: Many commenters requested that we remove medication 
management from the code descriptors. One commenter stated it 
appreciated medication management being included in the code descriptor 
and that careful evaluation of all medications, including use of 
American Geriatrics Society Beers Criteria[supreg], should be included 
as part of the CPM service, urging us to keep the element of medication 
management in the descriptor finalized for this code.
    Response: We continue to believe that medication management is an 
essential element of pain care, and we are not removing it from the 
code descriptors for HCPCS codes G3002 and G3003. A 2022 Congressional 
Budget Office publication \42\ indicated nationwide per capita use of 
prescription drugs has increased in recent years, as has Medicare Part 
D enrollee use, from an average of 48 prescriptions per year in 2009 to 
54 prescriptions per year in 2018. In addition, between 2017-2018, 
nearly 58 percent of U.S. adults used a dietary supplement \43\ in the 
past 30 days, and the percentage of adults using these supplements 
increases with age; \44\ nutritional supplements are used by some 
people for the treatment of pain.\45\ Although we are not explicitly 
defining medication management for the purposes of HCPCS codes G3002 
and G3003, we believe that medication management would customarily 
include, as part of this element, a review of prescription drugs, over-
the-counter medications, supplements, natural treatments, and/or any 
other substances the person with chronic pain might be using for any 
purpose. Medicare's Annual Wellness Visit requires the clinician to 
collect and document use or exposure to ``medications and supplements, 
including calcium and vitamins \46\.'' Common prescription medications 
used for pain include acetaminophen, non-steroidal anti-inflammatory 
drugs, anticonvulsants, antidepressants, musculoskeletal agents, 
antianxiety medications, and opioids. Americans also use dietary 
supplements for a range of purposes, including the treatment of 
pain.\47\ \48\ Some individuals with pain may also be using substances 
such as cannabis and other plant-based treatments for 
pain.49 50 Bearing this information in mind, we believe 
medication management by the eligible physician or qualified health 
professional would be an applicable element of the HCPCS code G3002 for 
most beneficiaries with chronic pain.
---------------------------------------------------------------------------

    \42\ https://www.cbo.gov/publication/
57772#:~:text=Use%20of%20prescription%20drugs%20among,year%E2%80%94a%
2013%20percent%20increase.
    \43\ https://ods.od.nih.gov/factsheets/list-all/.
    \44\ https://www.cdc.gov/nchs/products/databriefs/db399.htm#section_3.
    \45\ https://www.nccih.nih.gov/health/providers/digest/nutritional-approaches-for-musculoskeletal-pain-and-inflammation.
    \46\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/preventive-services/medicare-wellness-visits.html.
    \47\ https://ods.od.nih.gov/.
    \48\ https://www.fda.gov/food/dietary-supplements.
    \49\ https://www.cdc.gov/marijuana/health-effects/chronic-pain.html.
    \50\ https://effectivehealthcare.ahrq.gov/products/plant-based-chronic-pain-treatment/living-review.
---------------------------------------------------------------------------

    Comment: One commenter stated that massage therapy, therapeutic 
exercise programs, and complementary and integrative services (like 
acupuncture, tai chi, yoga, and mindfulness meditation) should be 
referenced in the code, even if currently not covered by Medicare, and 
that clinicians should be allowed to bill for the range of treatments 
listed in the HHS PMTF Report, even though the Medicare program may not 
pay for those services. One commenter noted that care coordination 
could include not just complementary and integrative care, but also 
prescribing of durable medical equipment. One commenter stated we 
should try to remove barriers to more ``alternative'' therapies.
    Response: The PMTF Report recommends a range of treatments and 
therapies that could be used for successful pain management including 
medications, restorative therapies (for example, therapeutic exercise, 
massage therapy), interventional procedures (for example, nerve blocks, 
joint injections), behavioral health approaches (for example, cognitive 
behavioral therapy), and complementary and integrative health 
approaches. The latter include, as described in the Report, 
acupuncture, massage and manipulative therapies, mindfulness-based 
stress reduction, yoga, tai chi, and spirituality. HHS's 2010 National 
Pain Strategy \51\ (NPS) also mentions complementary and integrative 
care, focusing mostly on access difficulties for patients with chronic 
pain, including insurance coverage. Since the NPS was published, 
Medicare has finalized a coverage decision to cover acupuncture for 
chronic low back pain.\52\ NIH's National Center for Complementary and 
Integrative Health continues to evaluate various approaches,\53\ as is 
the cross-cutting NIH HEAL Initiative[supreg] \54\. The HHS Agency for 
Healthcare Research and Quality has also performed some work in this 
area.\55\
---------------------------------------------------------------------------

    \51\ https://www.iprcc.nih.gov/sites/default/files/documents/NationalPainStrategy_508C.pdf.
    \52\ https://www.cms.gov/medicare-coverage-database/view/ncacal-decision-memo.aspx?proposed=N&NCAId=295.
    \53\ https://www.nccih.nih.gov/health/providers/digest/mind-and-body-approaches-for-chronic-pain-science.
    \54\ https://heal.nih.gov/funding/awarded.
    \55\ https://www.ahrq.gov/topics/complementary-and-alternative-medicine.html.
---------------------------------------------------------------------------

    First, we are clarifying that we are not requiring in the code 
descriptor that a clinician refer a beneficiary to services; that 
determination should be made between the clinician and the beneficiary. 
We understand that clinicians customarily refer beneficiaries, 
including those who have chronic pain, to a range of treatments based 
on their individual circumstances, and according to the person-centered 
plan of care.
    Second, based on the commenter's suggestion and on our proposal 
within the CY 2023 PFS proposed rule, where we solicited comment 
regarding interest in chronic pain management services and specifically 
mentioned specialty care coordination such as complementary and 
integrative pain care; recent coverage in Medicare for acupuncture for 
chronic low back pain; \56\ and evidence that may point to efficacy for 
some individuals with chronic pain using complementary and integrative 
approaches, we have elected to revise the code descriptor for HCPCS 
code G3003 by adding ``complementary and integrative approaches'' to 
the code descriptor as examples of approaches that a clinician could 
take in coordinating pain care across a range of treatments and 
therapies for a beneficiary. However, we are not requiring that a 
clinician make a referral to such care, nor are we requiring that the 
clinician only refer Medicare beneficiaries to services currently 
covered by Medicare. We are finalizing the addition of ``complementary 
and integrative approaches'' to the descriptor for HCPCS code G3003. In 
context, the addition will read as follows: ``. . . any necessary 
chronic pain related crisis care; and ongoing communication and care 
coordination between relevant practitioners furnishing care, e.g., 
physical therapy and occupational therapy, complementary and 
integrative approaches, and community-based care, as appropriate.''
---------------------------------------------------------------------------

    \56\ https://www.medicare.gov/coverage/acupuncture.
---------------------------------------------------------------------------

    Comment: Several commenters supported the requirement for the 
development, implementation, revision, and maintenance of a person-
centered

[[Page 69535]]

care plan that includes strengths, goals, clinical needs, and desired 
outcomes by the practitioner furnishing CPM services. A commenter asked 
that we recognize the role nurses play in person-centered planning. One 
commenter supported this element of the CPM services, and stated that 
person-centered care planning is not only key for people living with 
chronic pain, but also for others living with serious illness, and that 
the person-centered care plan and specifically these elements in the 
CPM service should become required for people with serious illness. One 
commenter expressed concern that current billing codes compensate 
providers the same regardless of the severity of the beneficiary's 
condition or time spent with the provider.
    Response: We are correcting the code descriptor to more clearly 
indicate that we do not expect the clinician to develop, implement, 
revise, and maintain the person-centered care plan, that is, performing 
each of these activities each time HCPCS codes G3002 or G3003 is 
billed; rather, the status of the person-centered plan may vary based 
upon the individual circumstances of the beneficiary with chronic pain. 
Thus, we are finalizing a revision to the HCPCS code G3002 descriptor 
to clarify this element as ``the development, implementation, revision, 
and/or maintenance of a person-centered care plan that includes 
strengths, goals, clinical needs, and desired outcomes''. We do not 
agree, based on the revisions to proposed concurrent billing policies 
and revisions in the descriptors that we are finalizing for HCPCS codes 
G3002 and G3003, as described above and below, that there will be 
insufficient flexibility to address the severity or breadth of needs 
that a Medicare beneficiary living with chronic pain might have. We 
believe that both the ``and/or'' edit that we are finalizing as part of 
the code descriptor, and the additional flexibilities for payment, 
discussed below, are sufficient to address the unique needs of each 
beneficiary with chronic pain.
    Comment: Several commenters opined on the inclusion of pain and 
health literacy counseling, which we included as a proposed element of 
the HCPCS code G3002 descriptor, to help beneficiaries with chronic 
pain make well-informed decisions about their own care, weigh risks and 
benefits, make decisions, and take actions that are best for them.\57\ 
One commenter recommended we instead use the term ``self-care 
management,'' and noted that this term is more broadly inclusive of 
health literacy counseling. Another commenter stressed the important 
role nurses have in ensuring patients are fully informed by educating 
and advocating on behalf of patients as they navigate the care 
continuum. Another commenter stressed that the receipt of integrative 
pain care would involve the practitioner taking into account the 
``whole person'' in managing pain, especially important in light of the 
importance of care coordination coupled with the goals of health 
literacy. (We note that we recently emphasized the importance of health 
literacy in our 2022-2032 CMS Framework for Health Equity.\58\) The 
Framework's fourth priority is to ``advance language access, health 
literacy, and the provision of culturally-tailored services,'' and 
states that ``Medicare-enrolled individuals with low health literacy 
experience increased hospital admissions and visits to emergency 
departments, as well as higher medical costs and lower access to 
care.'' Another commenter stated that in their experience, health 
literacy counseling is most efficiently done through networks of 
chronic pain support groups led by specially trained individuals who 
have received training and education by pain leaders, and that it is a 
fundamental and essential component in learning to cope with chronic 
pain, which is devastating and challenging. The commenter further 
observed that we could improve health outcomes by providing funding to 
non-profit groups that specialize in chronic pain management to help 
grow these type of educational and skill-based support groups. Another 
commenter supported this requirement, adding that this should be able 
to be provided via telehealth to reduce barriers to entry. A commenter 
noted that health literacy, especially with medication adherence, is 
valuable to people with chronic pain using multiple medications, as 
often these patients lack a comprehensive understanding of all their 
medications, which can deter adherence; if they had better resources to 
help them understand them, adherence would increase.
---------------------------------------------------------------------------

    \57\ https://www.nih.gov/institutes-nih/nih-office-director/office-communications-public-liaison/clear-communication/health-literacy.
    \58\ https://www.cms.gov/files/document/cms-framework-health-equity.pdf.
---------------------------------------------------------------------------

    Response: We agree that pain and health literacy counseling is an 
important element of care for people with chronic pain and appreciate 
the commenters' suggestions about how it can contribute to improved 
health outcomes. We thank the commenters, and we are finalizing pain 
and health literacy counseling as an element of the HCPCS code G3002 
descriptor, as proposed. As we gain experience with the CPM codes we 
may consider additional options to increase the availability of pain 
and health literacy counseling for Medicare beneficiaries.
    Comment: Many commenters opined on our proposal to include 
administration of a validated pain assessment rating scale or tool as 
an element of code descriptor of HCPCS code G3002. Several commenters 
noted that pain subjectivity can make pain management a difficult task, 
and that the use of validated pain assessment tools can illuminate and 
inform a fuller picture of the person's condition, as well as the 
person's care plan. One commenter stated that pain scales can be 
beneficial, but they need to be tailored to each person, and that 
function and quality of life are also important elements to monitor. 
The same commenter recommended the use of the National Quality Forum's 
patient-reported measure, Patients' Experience of Receiving Desired 
Help for Pain to achieve this. Another commenter stated something 
similar, indicating that we should explore ways to address the 
inconsistencies in pain measurement due to influences like geography 
and cultural norms. Among the many comments related to bias in pain 
assessment, one commenter urged us to consider the biases of assessment 
tools when proposing a validated pain scale. One commenter vehemently 
opposed the inclusion of a validated pain assessment scale citing 
concerns with pain bias, proprietary systems, and established outcomes 
beyond such scales, which they noted together create a case to avoid 
requirements for providers to use scales that have not received 
widespread support. The commenter also expressed concerns with pain 
bias that has developed over time in pain scales, especially for women, 
older adults, and ethnic groups, where the scales were not removed from 
use even after bias was documented, potentially worsening health equity 
issues. This commenter continued, stating that there is disagreement 
over the use of pain scales and that no single scale has been adopted 
as a common scale, in part because of proprietary issues. A different 
commenter agreed with the assessments of bias in traditionally 
marginalized populations, offering that objective pain scales and 
objective benchmarked pain data be used. This commenter defined 
benchmarked objective pain data including a pain database on adults, a 
database on women and pain, an

[[Page 69536]]

orthopedic pain database, or an older adult pain database.
    Additionally, we received comments related to the ``well-documented 
bias against historically-disadvantaged groups'' in pain assessment, 
and suggestions that the best tools for chronic pain also focus on pain 
interference, impact on function, activities of daily living, emotional 
and psychological health, and the patient's perception of their own 
quality of life. Regarding specific tools, one commenter agreed with 
administration of a validated pain assessment rating scale or tool, and 
stated that we should not limit the acceptable tools; rather we should 
enable practitioners to select the most appropriate tool for staff to 
administer as part of the person-centered CPM care plan, and that a 
reference repository or list of potential tools would be helpful. The 
same commenter asked that we not be prescriptive in requiring a 
particular scale or tool. Another commenter recommended the 
consideration of the use of outcome and quality-of-life measures as 
opposed to reductionistic tools that only measure one aspect of pain. A 
different commenter supported our proposal to use a validated tool, 
suggesting the PROMIS-8A, but urging us to make a list of validated 
tools available, and also avoid requiring use of a specific tool. 
Another commenter expressed concern about unintended consequences of 
using a pain rating scale or tool for validation and suggested the 
addition of a measurement that uses objective measures. A commenter 
noted that a pain scale is a reliable and valid way to understand the 
extent of how pain is impacting the person, but should not be the sole 
measure to show improvement. Further, a commenter recommended we 
undertake more inquiry before mandating the use of any specific tool or 
registry and assemble a stakeholder group, issue a Request for 
Information, or use some other means to conduct a landscape analysis of 
validated tools. One commenter noted that the use of a validated pain 
assessment tool should be excluded and be available as a separate add-
on code. This commenter also noted that such a step would incentivize a 
multidimensional assessment of physical, social, and emotional 
functioning.
    Response: We recognize that periodic assessment of the experience 
of pain is an essential element of pain care in the immediate sense and 
over time, as chronic pain may be enduring as a symptom of disease or a 
long-term disease in and of itself. We also note that no prescribed set 
nor single pain assessment measure will be required in the 
administration of HCPCS code G3002 or G3003, because no particular tool 
or tool set can assess the complex nature of the experience of pain 
across all individuals, nor appropriately guide its treatment. We 
regularly collaborate with other HHS operating divisions including 
working with the National Institutes of Health (NIH) on the NIH 
HEAL[supreg] Initiative (Helping to End Addiction Long-term), which 
includes more than 30 large scale pain and substance use disorder 
programs. The NIH HEAL Initiative and the NIH Pain Consortium pain 
research agendas engage nearly all NIH Institutes, Centers, and 
Offices. The ambitious and crosscutting nature of the NIH HEAL 
Initiative[supreg] and trans-agency interactions of the NIH Pain 
Consortium require engagement from experts across disciplines and 
sectors and with other HHS operating divisions including CMS. Much of 
this NIH research effort focuses on preclinical, translational and 
clinical research aimed to improve pain management.\59\ We have been 
working with NIH to create and disseminate an accessible, curated, and 
dynamic set of Pain Assessment resources for clinicians seeking 
instruments to assess their patients' pain and pain-related symptoms 
(such as sleep disruption, loss of function, and behavioral health). 
The resources are carefully selected as validated and meaningful tools 
to inform clinicians and patients in shared decision making as to the 
most effective pain management plan for each person. Recognizing that 
while many tools are validated in certain populations, they may need 
refinement to address cultural sensitivities in populations with health 
disparities. We will leverage efforts of the NIH HEAL Initiative to 
continue to include appropriately updated tools for these populations 
as they evolve. We are finalizing the inclusion of administration of a 
validated pain rating scale or tool in the HCPCS code G3002 descriptor. 
We will continue to consider opinions and feedback from clinicians and 
people with pain as to the use of The Pain Assessment Resource and more 
generally, validated screening tools, and collaborate with our NIH 
operating division partners to leverage their work in this area and 
ensure that the Pain Assessment Resource is comprehensive, inclusive 
across disciplines, and up to date over time. A link to the resource is 
available at https://www.painconsortium.nih.gov/resource-library/resources-pain-assessment.
---------------------------------------------------------------------------

    \59\ https://heal.nih.gov/about.
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    Comment: We received numerous comments on components of the 
proposed CPM services that do not necessarily require a ``face-to-
face'' or in-person visit with the practitioner, such as care that 
could be provided by auxiliary staff ``incident to'' the services of 
the physician or other qualified health care practitioner. A few 
commenters requested clarification on which specific aspects of the 
code could be furnished without face-to-face care. We also received 
many comments requesting a general supervision requirement, rather than 
a direct supervision requirement, with commenters citing provider 
shortages as barriers to care. Another commenter suggested that the 
initial visit would not have to be face-to-face so long as an in-person 
visit occurred shortly after the CPM initiation, and prior to the 
prescribing of controlled substance medications for pain. One commenter 
stated that other clinical staff in the practice should be able to 
follow up and interact with patients. Another commenter stated that 
relevant components that could be non-face-to-face could include 
questions about medication and improvements related to medication, 
social determinants of health, or history of substance use disorders, 
or crime, as well as coordination of any necessary behavioral health 
treatment, and pain and health literacy counseling. A commenter stated 
that most components of the proposed CPM services do not require face-
to-face interaction with the billing practitioner such as overall 
treatment management, medication management, pain and health literacy 
counseling, and care management which can provided by clinical staff 
incident-to a billing practitioner under general supervision, and that 
these providers' ability to furnish care has proved to increase access 
to medically necessary care, and helped relieve some of the burden for 
billing practitioners while still ensuring patients are receiving high-
quality care. A commenter noted that registered nurse care managers 
could provide CPM services as incident to services, under the general 
supervision of a physician or other qualified health professional. 
Another commenter stated that the definition provided of ``provided by 
a physician or other qualified health care professional'' was limiting, 
and suggested that we use, ``clinical staff time directed by a 
physician or other qualified health care professional.'' Another 
commenter requested that CMS consider creating separate billing codes 
to reflect time spent by physicians and

[[Page 69537]]

clinical staff as is done in the chronic care management (CCM) code.
    Response: We agree with the commenters and believe that certain 
elements of the proposed bundle, such as care planning or care 
coordination with other health care professionals, would not likely 
require face-to-face care. These might include activities such as 
telephone calls, medical records review, and coordination and 
information exchange with other health care providers. We are also not 
requiring that subsequent visits for which a physician or other 
qualified health professional bills HCPCS code G3002 or G3003 be for 
services that were provided to a beneficiary face-to-face. However, the 
initial visit for HCPCS code G3002 must be a face-to-face visit.
    Comment: A few commenters applauded our efforts to support team-
based care for Medicare beneficiaries with chronic pain. One commenter 
stated that chronic pain management may involve arrangements with 
psychologists as part of team-based care. Another commenter stated that 
since there is no disease-modifying or curative therapy for chronic 
pain, best managing chronic pain requires multi-modal interventions and 
coordination across a patient's care team, and coordinating care with 
other practitioners and providers such as integrative medicine, 
physical therapists, psychiatry, and hospital programs.
    Response: We agree with the commenters about team-based care, which 
leads to better outcomes for beneficiaries, and better experience for 
staff, and improves all aspects of care delivery. Team-based care 
positively effects the person's care experience, such as office visit 
cycle time, care access, preventive screening, self-management, goal 
setting and action planning, and medication management. Team-based care 
also improves process and workflows, helping to ensure staff are 
working at the top of their capabilities, and sharing in 
accountability.\60\
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    \60\ https://innovation.cms.gov/files/x/tcpi-changepkgmod-nextsteps.pdf.
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    Comment: A few commenters requested that the structure of the CPM 
codes include payment for the time interdisciplinary providers spend in 
consultation with one another. Additionally, this commenter noted 
concern that requesting coordination with ``relevant providers'' was 
not specific enough, and would not require inclusion of the range of 
services available to treat chronic pain. One commenter stated that we 
should ensure that reimbursement is revenue neutral, to continue to 
encourage practitioners to treat chronic pain.
    Response: We are not requiring in the code elements that the 
clinician billing CPM codes coordinate and communicate with other 
relevant practitioners, as these actions would vary based on the 
beneficiary with chronic pain's circumstances. Nor is the list of 
services we have used as examples meant to be inclusive of every type 
of care a person with chronic pain could require in the course of 
individualized treatment for chronic pain. We do expect that 
communication and care coordination between providers of all types 
would be of benefit to the beneficiary with pain and we leave the 
extent of that communication and coordination to the discretion of the 
physician or qualified health professional billing the CPM codes, as 
appropriate.
    Comment: Several commenters requested that we recognize CPM 
services for all practitioners who may bill E/M visits, including 
oncologists. One commenter noted we had stated the new codes can be 
billed by a ``physician or other qualified health care professional'' 
and agreed that physicians, including primary care physicians, board 
certified pain management specialists, neurologists, anesthesiologists, 
board-certified headache specialists, rheumatologists, osteopaths, and 
other physician specialists that focus on pain conditions should be 
able to bill the new CPM codes; the commenter asked us to clarify what 
types of practitioners can bill for proposed HCPCS code G3002 and 
G3003. A commenter noted that we stated our anticipation that the CPM 
codes would most frequently be billed by primary care providers. This 
commenter specified that cancer specialists also spend considerable 
time managing acute and chronic pain, with this sentiment being echoed 
by providers of palliative and hospice care, as well as nurse 
anesthetists, all concerned and asking for clarification regarding 
whether they ``counted'' as approved providers. A commenter requested 
more support and increased access for innovative alternative treatment 
to opioids (ALTO) programs, which have been shown in a few states to 
reduce opioid prescriptions in emergency department settings. One 
commenter stated that, if we identify specialties expected to furnish 
the CPM services, geriatrics should be included. Two commenters 
recommended that Rural Health Centers and Federally Qualified Health 
Centers be allowed separate payment for these codes. One commenter 
requested that the code be inclusive of the broad range of providers 
that treat pain, as each patient should be able to access the provider 
best suited to primarily manage their pain. A commenter stated that, 
while we stated we believe primary care providers might most often use 
the codes, cancer specialists spend considerable time managing both 
acute and chronic pain associated with cancer, and we should explicitly 
state that CPM services can be billed by any clinician with E/M 
services in their scope, including oncologists and pain management 
specialists. Two commenters stated we should make rehabilitation 
therapists eligible to bill the code, and, if they are part of the care 
team, they should share in the reimbursement proportionally among 
practitioners rendering care. One commenter asked that we include 
marriage and family therapists as providers who can render CPM 
services. A commenter recommended HCPCS code G3002 be billable by other 
Medicare providers like doctors of chiropractic. Another commenter 
encouraged us to include massage therapists under Medicare Part C in 
coding and billing changes to capture services that are provided as 
part of complementary and integrative pain care.
    Response: We appreciate the commenters' thoughts about the broad 
range of provider types that might furnish care that effectively 
addresses the many aspects of chronic pain, and note that we are not 
limiting the types of physician specialties, or the types of qualified 
health professionals, who can furnish CPM services, as long as they can 
furnish all of the service elements of HCPCS code G3002, including 
prescribing medication as needed, within their scope of practice in the 
State in which the services are furnished.
    Comment: Several commenters urged us to consider the contributions 
of interdisciplinary teams including physical and occupational 
therapists, social workers, massage therapists, pharmacists, and 
athletic trainers when creating rules for incident to billing. Two 
commenters requested that CMS use the term, ``clinical staff'' as is 
used in other codes to ensure inclusion of different provider types. 
One commenter noted that members of the interdisciplinary team are 
needed to provide person-centered, holistic pain management and that 
incident to billing will support team-based care, and that we should 
consider separate billing for physician time versus other clinical 
staff time; another commenter also made this request. A different 
commenter noted

[[Page 69538]]

that limitations on ``incident to'' billing has been limiting for the 
creation of collaborative, interdisciplinary teams. A commenter asked 
us to address ``incident to'' with greater clarity, to explain if the 
CPM services could be provided in a domiciliary or home setting, which 
is not the same as a provider's office or clinic, including under 
general supervision. One commenter noted that component activities of 
CPM services can be appropriately provided as ``incident to'' physician 
services, as well as by hospital staff under the Medicare Part B 
outpatient benefits. The commenter further stated that since staff who 
implement CPM care plan services are either office or facility-based, 
payment for the services should be recognized under both the PFS and 
the Outpatient Hospital Prospective Payment System. One commenter 
stated that clinicians such as social workers, pharmacists, and 
chaplains could be very helpful to address aspects of chronic pain 
through incident to billing. Another commenter recommended CMS focus on 
a simpler way to capture and reimburse for CPM services. For example, 
CMS might explore whether E/M codes billed with an ICD-10 diagnosis 
code for chronic pain from the G89.xx series, in which a person-
centered plan of care for pain is documented, could be eligible for 
monthly billing of a G3003-type code (for example, each 15 minutes of 
CPM care plan services implementing an individualized CPM plan 
inclusive of staff monitoring patient's adherence and response to the 
plan, coordinating services and communicating with other practitioners 
and providers). This G3003-type code would acknowledge and pay for the 
component activities of CPM care plan services that are appropriately 
provided ``incident to'' physician services by practitioner-employed 
office staff or by hospital staff under the outpatient hospital 
benefits.
    Response: We note that this rule generally addresses payment for 
physicians' services under the PFS. Comments regarding other payment 
systems not addressed in the proposed rule are outside the scope of 
this rulemaking. The billing practitioner should report the place of 
service for the location where they would ordinarily provide face-to-
face chronic pain management services to the beneficiary. We thank 
commenters for their feedback and may consider further development of 
the CPM codes to recognize components that could be furnished by 
auxiliary personnel incident to the services of the billing 
practitioner, and components that could be primarily performed by 
clinical staff, in the future. We note that auxiliary personnel is 
defined at Sec.  410.26(a)(1) as any individual who is acting under the 
supervision of a physician (or other practitioner), regardless of 
whether the individual is an employee, leased employee, or independent 
contractor of the physician (or other practitioner) or of the same 
entity that employs or contracts with the physician (or other 
practitioner), has not been excluded from the Medicare, Medicaid, and 
all other Federally funded health care programs by the Office of 
Inspector General or had his or her Medicare enrollment revoked, and 
meets any applicable requirements to provide incident to services, 
including licensure, imposed by the State in which the services are 
being furnished. We did not propose to change this definition of 
auxiliary personnel in the proposed rule, and therefore, the comments 
asking CMS to modify the definition of auxiliary services are outside 
the scope of this rulemaking. Additionally, we note that all 
requirements for services furnished incident to a physician's (or 
practitioner's) professional services listed at Sec.  410.26 continue 
to apply. We will keep the commenters' concerns in mind when 
considering any further development of the CPM codes in the future.
    Comment: Many commenters asked us to clarify if the proposed CPM 
services would be available for billing/reporting in conjunction with 
remote patient monitoring (CPT code 99091), remote physiologic 
monitoring (CPT codes 99453, 99454, 9457, 99458), or remote therapeutic 
monitoring (CPT codes 98975, 98976, 98977, 98980, 98981 and as proposed 
GRTM1/2/3/4 codes. One commenter also requested clarification 
surrounding what virtual presence/remote supervision is permitted, who 
can order these services, what documentation is required, and whether 
billing is permitted for individual services in addition to the 
management components of CPM. A commenter noted that patients with 
chronic pain may also benefit from remote therapy monitoring to monitor 
their pain levels, medication adherence, and response to prescribed 
therapy regimens.
    Response: HCPCS codes G3002 and G3003, and the services describing 
remote patient monitoring, remote physiologic monitoring, and remote 
therapeutic monitoring, are distinct types of services, although there 
may be some overlap in eligible patient populations. There may be some 
circumstances where it is reasonable and necessary to provide both 
services in a given month. Thus, HCPCS codes G3002 and G3003, could be 
billed for the same patient in the same month as the Remote Physiologic 
Monitoring (RPM) or Remote Therapeutic Monitoring (RTM) services. All 
applicable requirements for the individual codes must be met, per the 
elements of each individual code, for both types of remote monitoring 
and CPM services. Additionally, the time and effort cannot be counted 
more than once when billing CPM codes concurrently with RPM or RTM. 
Billing practitioners should remember that cost sharing applies to each 
service independently. If all requirements to report each service are 
met, without time or effort being counted more than once, then CPM and 
RPM or RTM may be billed.
    Comment: Several commenters stated they were concerned about low 
payment, and other payment issues related to the proposed CPM codes, 
which we had valued in our proposal based on our conclusion that the 
CPM services were similar in work (time and intensity) to that of 
Principal Care Management (PCM) service. One commenter observed that in 
order for physicians to be willing to treat chronic pain patients, 
especially primary care physicians, we need to make physician payments 
for the new CPM codes higher than primary care and PCM visits to avoid 
lower payment for CPM than for a standard follow-up clinical visit for 
primary care (CPT code 99214 for 30 min clinical visit). The commenter 
was very concerned that unless we considered raising these rates before 
the new CPM codes go into effect, physicians will not use them to 
accomplish the intended improvements in pain care that Medicare 
patients so desperately need, and that the use of other codes not 
specific to pain will impair our ability to accurately track data 
regarding chronic pain, and care outcomes, in the Medicare program. 
Another commenter had similar concerns, recommending that the valuation 
of the new codes be on par with current office and outpatient E/M 
codes. A different commenter noted that it had significant concerns 
with our proposal to disallow use of the codes on the same day as a 
``general'' visit like an E/M visit where the person is being seen for 
a separate illness or condition, and that this would be a grave mistake 
that would hamper the delivery of truly integrative pain care. This 
commenter also added that this move would exacerbate disparities at a 
time when CMS is working to promote health

[[Page 69539]]

equity, urging us to allow same day E/M billing. Another commenter 
requested clarification regarding the interaction with other service 
codes to ensure that this code enhances rather than inhibits physician 
encounters. A different commenter stated that people living with 
chronic pain are likely to have at least one or more comorbidities that 
are being treated along with their pain, and often these health 
concerns are, in fact, addressed by one singular practitioner on the 
same day. The same commenter noted that requiring people to be seen on 
different days that they come for other health care services will 
significantly reduce numbers of people with pain who are willing, or 
able, to receive CPM services, including people who are older adults, 
disabled, homeless, lack reliable/affordable transportation, cannot 
take time off work, and/or are unable to secure child care--among other 
issues. The commenter stated mandating repeated in-person visits would 
be arduous for disabled people already poorly served by public 
transportation, a problem that characterizes many smaller cities, 
suburbs, and rural communities. Another commenter stated that our 
proposed code valuation will prohibit use of the codes or make them go 
unused, as they pay less than CPT code 99214, or result in less 
payment, causing providers to reconsider the number of pain patients 
they care for. Additionally, the commenter expressed fears that for 
providers already wary of rendering care to people with chronic pain, 
the valuation of the codes would further disincentivize them from 
treating these patients, not only paying less, but requiring more work. 
The commenter described a ``worst case'' scenario where if the codes 
became ``required'' for people receiving CPM services (for example, use 
of a 99xxx code was deemed fraudulent) it anticipated that many 
clinicians would cease seeing patients with chronic pain because of the 
low valuation, and required services that appear ``extraordinarily 
laborious.'' This commenter included several real life scenarios from 
clinicians working at the front lines of pain; stating that if we 
really wish to support the use of CPM, the valuation should be at least 
(emphasis added) comparable to CPT code 99213 or 99214, but to truly 
incentivize (emphasis added) adoption and utilization of CPM services, 
we should consider significantly increased reimbursement to allow CPM 
services to grow sufficiently to meet anticipated demand. A different 
commenter noted primary care providers will be disinclined to prescribe 
opioids due to this payment rule. The commenter expressed concern that 
these patients will then have to find pain management clinics, which 
are not present in all communities. A commenter stated a similar 
opinion, discussing that primary care providers are afraid of 
prescribing opioids and that patients are suffering as a result. 
Another commenter noted that they would like the code to differentiate 
between a patient who is now meeting the threshold for chronic pain 
from those patients with a previous diagnosis of chronic pain, who is 
simply seeing a new provider. This commenter noted that a person is an 
expert in their own condition, and sharing all of that information with 
a new provider is often very time-consuming, whereas someone with new 
chronic pain may not have as much information to share. This commenter 
recommended ``substantial'' time for both scenarios. One commenter 
requested clarity on the interaction between the E/M and CPM codes to 
avoid any inadvertent misuse by providers, and recommended that CMS 
consider creating a modifier to attach to the CPM codes to prevent 
double payments. Another commenter was concerned that the proposed CPM 
codes could lead to an underutilization of important non-opioid pain 
management options because providers are not clear on the rules around 
the use of these codes. One commenter opined that there should not be 
any concurrent billing restrictions imposed on CPM services, which 
would force patients to pick between certain services and care. Another 
commenter noted that the current valuation and payment are 
disproportionate to the work required of HCPCS code G3002, and noted 
that this code more closely aligns with what is included in a level 4 
or 5 E/M service. A different commenter echoed previous statements 
regarding concern that the valuation of HCPCS codes G3002 (formerly 
GYYY1) and G3003 (formerly GYYY2) and RVUs will create disincentives to 
care for patients with chronic pain. The commenter suggested separating 
HCPCS code G3002 into two codes: one code for face-to-face that is 
valued higher than a standard E/M visit, and a second for coordination 
undertaken by the physician or other qualified healthcare professional 
outside of face-to-face care (similar to CCM and PCM codes). Another 
commenter suggested two add-on codes for HCPCS code G3003 because these 
patients can be complex, and may require intense coordination. An 
additional commenter suggested adding a GYYY3 and GYYY4 code. HCPCS 
code G3002 (formerly GYYY1) would remain and HCPCS code G3003 (formerly 
GYYY2) would be half the resource inputs of G3002. GYYY3 would be a new 
code for subsequent visits after the initial visit with a 15-minute 
threshold instead of a 30-minute threshold, and GYYY4 would be another 
new code for administration of the validated pain measurement as an 
add-on for HCPCS codes G3002 or G3003. One commenter stated that the 
code should be treated as an E/M and fall into the category as a visit, 
billed in FFS clinics and related to RHCs and FQHCs paid for as per the 
current methodology. The commentator suggested using a payment 
``crosswalk'' of 99213 and 99214 tied to proposed HCPCS codes G3002 and 
G3003, including a modifier of 30-40 percent to compensate providers 
adequately for the labor involved in CPM services. One commenter stated 
that it believed clinicians billing for CPM services would face 
substantial decreases in work RVUs generated relative to current 
reimbursement compared to outpatient E/M codes and is unclear on how 
both codes could be billed. Another commenter stated that they believed 
the reimbursement proposed is inappropriately low, and urged us to 
adjust the proposed RVUs of 1.45 for HCPCS code G3002 and 0.5 for HCPCS 
code G3003 in the final rule. This commenter noted the work intended in 
this code will require significant time investment by physicians, 
qualified health professionals, and clinical staff. The same commenter 
noted HCPCS code G3002 should be crosswalked with CPT code 99414 at 
1.92 work RVUs and HCPCS code G3003 be crosswalked with CPT code 99212 
at 0.7 work RVUs. Another commenter stated we are undervaluing HCPCS 
code G3002 by crosswalking it to CPT code 99424, which has 1.45 RVUs. A 
similar 30-minute new patient office visit (CPT code 99203) is valued 
at 1.6 RVUs. This commenter also stated that an established patient 
visit (CPT code 99214) is valued at 1.92 RVUs. This commenter 
recommended CPT codes 99495 and 99496 for better crosswalks. Another 
commenter requested clarification on whether it is permissible for the 
same practitioner to bill a service like interventional pain management 
during the same month the clinician bills for the CPM services. Another 
commenter noted that E/M codes 99214 and 99213 already allow for time-
based, face to face encounters with providers, have similar or greater 
work RVUs, and less limitations and requirements as compared to those 
specified in the code

[[Page 69540]]

descriptors for G3002 and G3003. This commenter recommends increasing 
the time allotment to 45 and 20 minutes for HCPCS codes G3002 and 
G3003, respectfully. The same commenter also expressed concern that 
providers would be less likely to utilize the CPM codes in favor of 
those they are already using and allowing for an increase in time 
allotment would correct this issue, according to this commenter.
    Response: It is not our intent to either underpay, or create 
incentives for clinicians to use other codes that would constrain the 
use of the new codes. However, in the absence of experience with these 
new codes, we must base our projections reasonably on our experience 
with existing codes that we believe bear some relationship to the new 
proposed codes, such as the PCM code. Therefore, in light of the 
crosswalk to CPT codes 99424 and 99425, we are finalizing as proposed 
the work RVUs of 1.45 for HCPCS code G3002 and 0.5 for HCPCS code 
G3003. We will monitor use of the CPM codes to better determine if the 
payment rates and billing flexibilities are appropriate. In the 
proposed rule, we outlined our concerns about duplicate, or overlap 
billing in situations where the eligible clinician might bill certain 
E/M codes on the same day the CPM service(s) are rendered. Based on the 
commenters' concerns, we have reconsidered our approach to billing CPM 
services. We believe that, due to the complexities of pain treatment, 
there could be beneficiaries seeing a clinician for the first time, or 
in a subsequent visit, who could also need to be seen by the clinician 
for the CPM service(s) on the same day, or for a subsequent visit. The 
code sets for E/M services are organized into various categories and 
levels; the more complex the visit, the higher level of the code the 
clinician would bill within the appropriate category. Clinicians must 
make certain that the codes selected are appropriate for the services 
furnished, and that they fulfill the requirements to bill an E/M 
service.\61\ Many Medicare beneficiaries have multiple chronic 
conditions,\62\ and many of these conditions could involve chronic 
pain. We believe it is reasonable to assume that in many instances, the 
clinician could be spending time with the Medicare patient discussing 
health and wellness related to a variety of conditions that person may 
be experiencing, or expect to experience, and that interaction might 
not have a focus on the chronic pain aspects of the person's care. 
Additionally, if the person with pain has made the effort--which could 
be considerable, as commenters have noted, to get to an appointment 
with a clinician, it makes sense from a burden standpoint--allowing for 
the burden on both the clinician, and the person with Medicare, to 
permit billing for both the E/M service, and the CPM service(s) on the 
same day. Therefore, if all requirements to report each service are 
met, without time or effort being counted more than once, then both E/M 
and CPM may be billed on the same day.
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    \61\ https://www.cms.gov/outreach-and-education/medicare-learning-network-mln/mlnproducts/downloads/eval-mgmt-serv-guide-icn006764.pdf.
    \62\ https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/Chronic-Conditions/Chartbook_Charts.
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    Comment: Two commenters requested that we revisit existing guidance 
and regulations to allow pharmacies to bill Medicare for opioid-based 
compounded drugs. Another commenter urged CMS to reconsider the issue 
of reimbursement for medication used in intrathecal pumps. One of these 
commenters also requested that the compounded medications delivered to 
the physician's office for insertion into an implanted pump be 
reimbursed as an incident-to drug or Durable Medical Equipment, 
depending on the billing entity.
    Response: We appreciate the commenters' thoughts about compounded 
drugs and reimbursement for medication used in intrathecal pumps; 
however, these comments are out of the scope of our proposals for CPM 
services.
    Comment: Many commenters asked us to add CPM services to the 
Medicare Telehealth Services List. One commenter asked that we enable 
the CPM codes, in addition to being rendered through telehealth, to be 
furnished through audio-only technology. We address these comments in 
section II.D.1.c. of this final rule, Other Services Proposed for 
Addition to the Medicare Telehealth Services List.
    Comment: One commenter suggested we include screening services in 
the CPM bundle to identify, reduce, and prevent hazardous or harmful 
alcohol and drug use, which the commenter characterized as common in 
people with SUD in residential treatment settings living with chronic 
pain. An additional commenter echoed the request for screening to 
identify, reduce, and prevent hazardous or harmful alcohol and drug use 
generally. This commenter also encouraged the inclusion of ordering of 
tests and Durable Medical Equipment, as well as consultations with 
other providers and communication with pharmacies be included. One 
commenter suggested the inclusion of nutrition screening and nutrition 
therapy in the code descriptions, as people with chronic pain often 
have complex dietetic and nutritional needs. Another provider group 
recommended that the term ``prognosis'' be added to the ``diagnosis'' 
in the bundle description as an option.
    Response: As outlined in the proposed rule and in the CPM code 
descriptors, we expect clinicians to facilitate and coordinate any 
necessary behavioral health treatment, and other relevant care 
associated with HCPCS codes G3002 and G3003, such as complementary and 
integrative approaches and/or community-based care. This includes, as 
described in the CMS Behavioral Health Strategy,\63\ multiple elements 
including access to prevention and treatment services for SUD, mental 
health services, crisis intervention and pain care to enable care that 
is well-coordinated and effectively integrated. Under the Strategy, we 
have defined behavioral health as ``encompassing a beneficiary's whole 
emotional and mental well-being, which includes, but is not limited to, 
the prevention and treatment of mental disorders and substance use 
disorders.'' ``Whole-person care'' is defined as ``the whole of a 
beneficiary's needs including physical health, behavioral health, long-
term services and supports (home and community-based services, and 
institutional care), and health-related social needs.''
---------------------------------------------------------------------------

    \63\ cms.gov/cms-behavioral-health-strategy.
---------------------------------------------------------------------------

    Comment: One commenter suggested we ensure that the proposed CPM 
codes are reimbursable in the beneficiary's home, and all other 
settings where primary care, mental health care, and SUD care can 
occur. Another commenter recommended inclusion of residential treatment 
facilities, long term care facilities, and homes as settings in which 
billing can occur.
    Response: We appreciate the commenter's suggestion that we ensure 
that the proposed CPM codes are payable for services delivered in the 
beneficiary's home, and all other settings where primary care, mental 
health care, and SUD care can occur. We note that CPM is priced in both 
facility and non-facility settings, and we are not limiting the place 
of service for CPM, other than as discussed above (the initial visit 
must be in-person). The billing practitioner should report the place of 
service for the location where they would ordinarily provide face-to-
face chronic pain management services to the beneficiary
    Comment: Several commenters stated that the elements of the 
proposed CPM codes favor prescriptions by medical

[[Page 69541]]

providers, instead of prioritizing non-pharmacological strategies for 
pain management, including those developed by psychologists, that may 
be safe and effective for many patients. One commenter further stated 
that the creation of additional bundled codes that do not include 
medication management will allow for greater flexibility in treatment 
and allow psychologists to provide pain management services and 
practice to the top of their license when participating in team-based 
comprehensive chronic pain treatment. Another commenter suggested that 
physical and occupational therapists should be able to bill the codes, 
stating that these practitioners' practice integrates an understanding 
of a patient's or client's prescription and non-prescription regimen 
with consideration of its impact on health, function, movement, and 
disability, and that it is within the physical therapist's professional 
scope of practice to administer and store medication to facilitate 
outcomes of physical therapist patient and client management. The same 
commenter asked that we require, in the code descriptor, that 
physicians and other non-physician practitioners must refer appropriate 
chronic pain patients to physical and/or occupational therapy prior to 
being reimbursed for the codes. A few commenters requested that CMS 
create a code for providers who do not bill for E/M codes. One 
commenter stated that physical therapists and psychologists are not 
qualified to perform all the necessary services we have outlined, such 
as thorough pain assessments and diagnoses, medication management, 
crisis care, etc. and suggested we establish a path whereby non-
physician professionals can bill a chronic pain code for services that 
are part of an overall treatment plan. Two commenters suggested that 
education be provided to physician providers to increase the 
consultation of physical and occupational therapists, also stating that 
physical therapists are significantly underutilized in community and 
rural settings.
    Response: We acknowledge and support the important work of 
psychologists and occupational and physical therapists in the care of 
people with Medicare, including beneficiaries with chronic pain. We 
believe that this code describes a distinct PFS service that is 
reasonable and necessary in the diagnosis and treatment of the person 
with chronic pain, and that medication management, as described in the 
preamble text above, is a key element of such care and of the proposed 
HCPCS code G3002; therefore, we are including it as a code element.
    We understand that cognitive behavior therapy (CBT), as one 
example, is a common treatment provided by psychologists, including to 
people with chronic pain.64 65 66 Medicare covers 
psychotherapy, as well as other services that support mental health and 
wellness.\67\ Chronic pain can be linked, in some people, to mental 
health conditions, such as anxiety and depression.\68\ Psychotherapy is 
billed with Current Procedural Terminology (CPT) codes \69\ that 
reflect the amount of time spent with the patient, and family may or 
may not be present during these therapy sessions. To bill these CPT 
codes, the psychotherapist must provide a mental health diagnosis using 
an International Classification of Diseases (ICD) code and/or 
Diagnostic and Statistical Manual (DSM) code.
---------------------------------------------------------------------------

    \64\ https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm.
    \65\ https://www.va.gov/painmanagement/docs/cbt-cp_therapist_manual.pdf.
    \66\ https://www.nih.gov/news-events/nih-research-matters/meditation-cognitive-behavioral-therapy-ease-low-back-pain.
    \67\ https://www.cms.gov/files/document/mln1986542-medicare-mental-health.pdf.
    \68\ https://health.gov/healthypeople/objectives-and-data/browse-objectives/chronic-pain.
    \69\ https://www.ama-assn.org/practice-management/cpt.
---------------------------------------------------------------------------

    While clinical psychologists (CPs) do not have prescription 
authority in all States and are therefore, not authorized to bill the 
Medicare program for any of the CPT codes that include medication 
management components, there are CPT codes that CPs can bill for 
treating Medicare patients who are diagnosed with chronic pain. Hence, 
the Health and Behavior Assessment and Intervention (HBAI) range of CPT 
codes are intended to be used for psychological assessment and 
treatment, when the primary diagnosis is a medical condition, such as 
chronic pain.
    This family of codes was revised in 2020, when a new set of codes 
to describe these HBAI treatment services went into effect.\70\ Health 
behavior assessment under these HBAI services is conducted through 
health-focused clinical interviews, behavioral observation and clinical 
decision-making and includes evaluation of the person's responses to 
disease, illness or injury, outlook, coping strategies, motivation and 
adherence to medical treatment. Health behavior interventions under 
these HBAI services are provided individually, to a group (two or more 
patients), and/or to the family, with or without the patient present, 
and include promotion of functional improvement, minimization of 
psychological and/or psychosocial barriers to recovery, and management 
of and improved coping with medical conditions. The HBAI codes apply to 
services that address psychological, behavioral, emotional, cognitive, 
and interpersonal factors in the treatment/management of people 
diagnosed with physical health issues. Use of HBAI codes requires a 
physical health diagnosis (ICD-10) to be the primary diagnosis. The 
HBAI codes capture services related to physical health, such as 
adherence to medical treatment, symptom management, health-promoting 
behaviors, health-related risky behaviors, and adjustment to physical 
illness. The HBAI codes and the Psychotherapy codes cannot be billed 
contemporaneously. We believe HBAI codes are well-suited to the 
provision of CBT, as appropriate, to people with chronic pain when the 
person does not have a concurrent mental disorder.
---------------------------------------------------------------------------

    \70\ https://www.apaservices.org/practice/reimbursement/health-codes/health-behavior.
---------------------------------------------------------------------------

    For HCPCS codes G3002 and G3003, we are finalizing the codes for 
use by physicians and other qualified health professionals. However, we 
will consider if there is a benefit to modifying these codes and/or 
creating new codes that can potentially support broader chronic pain 
management by other practitioner types, including those who may not be 
prescribers in the scope of practice in the State in which they 
practice and are an important part of the care team for beneficiaries 
with chronic pain, in future rulemaking, such as clinical 
psychologists, or doctors of chiropractic. We do not agree that 
clinicians should be required to make referrals to occupational and 
physical therapists; although, as we stated in the proposed rule, and 
in the code descriptor, we do expect that there will be ``ongoing 
communication and care coordination between relevant practitioners 
furnishing care, for example physical therapy and occupational therapy 
. . . as appropriate.''
    Comment: Several commenters opined on our proposal to require 
verbal consent at the initiating visit, or at the initiating visit and 
subsequent visits, to help make sure that people with Medicare living 
with chronic pain want the services, are aware they may need them, and 
that they also receive an explanation of any cost sharing that may 
apply in their particular situation. All commenters were supportive of 
our proposal. One commenter stated that, although it supported 
requiring consent, it noted that consent should be obtained at the 
third visit, so patients could be given an opportunity to work with the

[[Page 69542]]

physician a few times, but at the first visit the physician should 
still be required to educate patients regarding CPM services, explain 
their frequency/purpose/value, and any cost-sharing that may apply, so 
patients can better understand the model which is different according 
to the commenter from the disjointed, fragmented, solitary struggle for 
effective pain care that the vast majority of pain patients presently 
experience, and that in this manner, patients would have an opportunity 
to understand CPM services better. The commenter also stated consent 
should be discussed, including any costs with family/unpaid caregivers. 
The same commenter stated we need not require consent at each visit, 
and suggested that we should support practitioners referred by the CPM 
billing practitioner to also seek the patient's consent, to emphasize 
in part that they are working as a team. A different commenter stated 
that in implementing the new codes, we should establish requirements 
similar to CCM services, for example, requiring that providers document 
that all components of the service are met and that informed consent, 
inclusive of cost-sharing, has been obtained. Another commenter urged 
us to allow consent to be obtained and documented by members of the 
care team in addition to the physician/qualified health profession. One 
commenter believes that verbal consent should be obtained upon 
enrollment (at the first visit) and not at every visit, which would 
create inefficiencies. The spouse of a person living with longtime 
chronic pain observed that ``patient consent, consultation should 
always be a part of primary care as patients are typically ignored, 
especially in pain management.'' A commenter stated that consent, for 
some people with dementia or other cognitive health issues, might have 
to be obtained through a legal representative outside of the face to 
face initiating visit.
    Response: We are appreciative of the comments regarding consent, as 
we believe the person with chronic pain should be educated regarding 
what the CPM services are, how often they may be generally expected to 
receive the services at this initial visit, and receive an explanation 
of any cost sharing that may apply in their particular situation; this 
is an important element of person-centered care and self-determination. 
We disagree with the commenter who suggested we obtain verbal consent 
after the first visit. Similar to how the Medicare Chronic Care 
Management service is administered, we believe the physician or 
qualified health care practitioner should get the person's consent for 
services before the practitioner bills for them. This helps to ensure 
that beneficiaries are engaged and are aware of their treatment and 
cost sharing responsibilities, and helps prevent duplicate billing. If 
the beneficiary does not provide consent or if other conditions for 
payment are not met, the practitioner cannot bill Medicare. As outlined 
in this preamble, referrals may be made to providers who are not 
rendering a Medicare covered service(s), or who may not be enrolled in 
Medicare, such as acupuncturists, massage therapists, psychiatrists, 
dieticians, dentists, and providers of community-based services, which 
could include companies that make environmental modifications, adult 
day health programs, direct support workers, and others, and we do not 
believe that requiring consent from providers who are not billing for 
the CPM codes is necessary or practicable. We agree that providers 
should document in the record that the beneficiary has given consent 
for the services, although we are not requiring that the clinician 
document that ``each element'' of the code has been delivered, since 
that would vary based upon the person's needs. We are thankful for the 
commenter who noted that consent, for some beneficiaries, may have to 
be obtained from a legally responsible person, such as for people with 
chronic pain who have dementia, an intellectual or developmental 
disability, or any other type of cognitive disorder; those arrangements 
vary under State law.
    Comment: One commenter recommended that we focus and support 
continued communication and care coordination for the CPM services, 
which it stated has been a long-time struggle for chronic pain care, 
but an essential element, especially in underserved communities.
    Response: We agree that care coordination and communication between 
all clinicians and other providers furnishing care to beneficiaries 
living with chronic pain is an essential element, including for people 
with pain living in underserved communities.
    Comment: A few commenters stated that payers and providers should 
look at quality care and meaningful improvements in function and 
quality of life (beyond use of a validated pain rating scale or tool). 
One commenter stressed the importance of utilization and outcome 
measures that can assess efficacy and cost-effectiveness such as 
hospitalizations, emergency department and urgent care visits, 
specialist utilization and procedures, number of prescription 
medications, and other health care data. Another appreciated our 
interest in growing the available data related to the prevalence and 
impact of chronic pain in the Medicare population, and requested that 
once we collect data, this data be deidentified and made available to 
the public to assist interested parties in the development and 
refinement of programs. Another commenter requested that we provide a 
mechanism for quality outcomes measurement based on the provided 
service to shed light on pain experienced by the Medicare population, 
what works best, and what provides improved health outcomes, in part to 
reduce the need for specialty care and hospitalization. One commenter 
noted the importance of medication adherence, and data regarding 
medication adherence specific to chronic pain, including to avoid 
unnecessary hospitalizations, adverse events, and deaths.
    Response: We agree with the commenters that quality and data 
collection are foundational components to delivering value as part of 
the overall care journey, and help ensure optimal care and best 
outcomes for people of all ages and backgrounds, and across service 
delivery systems/settings, and payer types, as described in our CMS 
National Quality Strategy.\71\ We are aware that there are scant 
measures that examine chronic pain and medication adherence for chronic 
pain, and trust that government and interested parties will continue to 
explore options in measure development, testing, and endorsement to 
improve measurement in chronic pain care. However, because we did not 
make any proposals regarding the link between quality and CPM codes, 
these comments are out of the scope of our proposed rule.
---------------------------------------------------------------------------

    \71\ https://www.cms.gov/blog/cms-national-quality-strategy-person-centered-approach-improving-quality.
---------------------------------------------------------------------------

    Comment: Several commenters wanted to ensure that use of the CPM 
codes would not limit or interfere with the beneficiary's access to 
other medical or pharmacy benefits.
    Response: We appreciate the comment and can confirm that its use 
will not interfere with other medically necessary Medicare benefits.
    Comment: Many commenters requested more specifics related to the 
administrative requirements and potential burdens the use of the CPM 
codes would place on providers. Commenters urged CMS to work to ensure 
the documentation requirements not be overly burdensome. This was 
echoed by a commenter with chronic

[[Page 69543]]

pain who noted that physicians seem ``overwhelmed with today's 
paperwork and administrative demands.''
    Response: In 2020, we established our Office of Burden Reduction 
and Health Informatics,\72\ to unify our efforts to reduce regulatory 
and administrative burden, and advance interoperability and national 
standards. We are continuing to engage beneficiaries and the clinical 
community to better understand their experiences, form solutions, and 
infuse CMS with a customer-focused mindset. We will be interested to 
get feedback from clinicians about burden, once the CPM codes are 
implemented in practice.
---------------------------------------------------------------------------

    \72\ https://www.cms.gov/About-CMS/OBRHI.
---------------------------------------------------------------------------

    Comment: A few commenters recommended CMS reduce potentially 
prohibitive payment methods, including prior authorization and cost 
sharing to improve access to chronic pain management. These commenters 
also suggested increasing access for non-opioid methods of pain 
management, such as physical therapy and behavioral health care. 
Another commenter also requested further clarification of cost sharing 
requirements, as many people with chronic pain have disabilities, with 
concern about limited access to pain management.
    Response: The various interventions described in the PMTF Report's 
pain management ``Toolbox'' attest that individualized care consists of 
diagnostic evaluation that results in an integrative, person-centered 
care plan that includes all necessary treatment options, that we hope 
clinicians will consider when they treat Medicare beneficiaries with 
chronic pain. Regarding cost-sharing, as described above, standard Part 
B cost-sharing will apply to the CPM services. In some instances, 
people who are low income or disabled and are dually eligible Medicare 
and Medicaid beneficiaries, for example, will have different cost-
sharing from beneficiaries who are enrolled in Medicare, only. We 
emphasize that the CPM codes do not require prior authorization.
    Comment: One commenter expressed concern and confusion over our use 
of the word ``bundle'' in the proposed rule, which they interpreted as 
payment that contemplated paying other involved providers in an episode 
of care environment. The commenter further stated that payment-based 
``bundling'' is already a fast-growing and promising form of pain care 
that should be correctly labeled.
    Response: We apologize for any confusion by our use of the word 
``bundle.'' The proposed CPM codes are not bundles as the commenter 
contemplates, but rather codes similar to the CCM codes, or the code 
for Cognitive Assessment and Care Planning Services, 99483, that denote 
the elements of the code itself. By ``bundle,'' we were just referring 
to all of the elements contained within the CPM code descriptors.
    Comment: One commenter stated that caregivers and trusted family 
members are also part of the team providing support to people with 
chronic pain, and recommended including these individuals in the CPM 
services, which it noted is especially important for people who have 
communication or cognitive issues. Another commenter stated that 
caregiver participation for these individuals is especially important 
as they are often directly affected by the person's pain and can help 
in making its perception better, or worse.
    Response: We agree that the role of caregivers is of critical 
importance across Medicare as caregivers provide a broad range of 
mostly unpaid assistance with diverse health-related activities 
provided by a friend, family member, partner, or neighbor to a care 
recipient. The caregiver has a significant personal relationship with 
the care recipient, and care may be episodic, daily, occasional, or of 
short or long duration. Caregivers assist in basic personal care 
activities such as eating and bathing; household management activities, 
such as shopping and meal preparation; and other activities, such as 
managing medications, attending medical encounters, and coordinating 
financial and other activities, such as handling insurance and paying 
bills. Caregivers may also be involved in managing complex health care 
and assistive technology activities at home and in navigating care 
transitions between settings of care. We are pointing out that Medicare 
makes payment for CPT code 96161 (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). However, as noted in the descriptors for 
HCPCS codes G3002 and G3003, CPM services must be furnished by a 
physician or other qualified health practitioner.
    Comment: One commenter stated that in implementing the CPM 
services, it is important for CMS to take a balanced approach between 
administrative burden and program integrity, and that use of the codes 
should be considered along with potential risk of ``bad actors'' to 
inappropriately use them. The same commenter indicated that we should 
prevent multiple group practices from concurrently billing for this 
service for the same patient during the same time period as this would 
eliminate duplicative services and payment. A different commenter 
echoed that sentiment, concerned with ``doctor shopping,'' leading to 
billing denials and driving up provider costs. Another commenter viewed 
this problem differently, discussing that some patients will travel for 
answers, or based on the availability of chronic pain providers in 
their areas, may need to see their primary care provider first, then 
may see other providers. This commenter was concerned that providers 
would not specifically know when this code was billed by previous 
providers, risking rejection even after services were provided. This 
commenter recommended eliminating the limits on monthly billing.
    Response: As with implementation of any new billing code, we will 
be monitoring its use going forward, not just for data and other 
purposes, but also for program integrity reasons. For HCPCS code G3002 
and G3003, we would not generally expect multiple group practices to be 
concurrently billing for a service that is to be rendered once per 
month, per practitioner, per beneficiary. As noted previously, we will 
be gathering data on the clinicians billing for and patients receiving 
the services described by these CPM codes, and we may consider making 
changes to these codes in future rulemaking, if necessary.
    Comment: One commenter asked us to consider whether or not our 
proposal to create new codes for CPM is the best course, or if we 
should reconsider and expand the CCM codes. Another commenter 
elaborated on issues with the CCM codes, stating these are confusing to 
clinicians, involve administrative and documentation burden, which 
discourages uptake, and that it hopes this scenario will not develop 
with the CPM codes.
    Response: We appreciate the comments about CCM vs. CPM; we did 
consider differences in the CCM codes, which we explained in the 
proposed rule, and believe the best course is to finalize the CPM codes 
and monitor their use in practice.
    Comment: One commenter stated that evidence shows that many people 
with chronic pain, especially people from communities of color, have 
low trust in the health care system, based on previous discrimination 
and follow up. Another commenter stated that it is very important we 
improve pain management for members of racial and ethnic minorities, 
given both the rising

[[Page 69544]]

rates of drug overdose deaths among these populations and disparities 
in the identification and effective management of pain.
    Response: As we outlined in the proposed rule, we are aware of 
disparities in chronic pain care and seek to address these disparities 
in part through finalization of the CPM codes.
    Comment: A commenter asked that we consider a ``MedLearn'' article 
or Educational Transmittal to help providers understand more about the 
CPM services including who can bill, documentation, potential 
restrictions with other codes, etc. Several other commenters suggested 
provider communication such as a Medicare Learning Network article or 
similar blog post to summarize comments and the final rule. Another 
commenter suggested that we convene all essential stakeholders in 
public meetings, organized by the Agency, to hear stakeholder input 
about the best way to move forward to encourage rather than limit non-
opioid pain management.
    Response: We appreciate these suggestions from the commenters and 
are considering how best we can educate providers about use of the new 
codes, working with our HHS operating division partners.
    Comment: A few commenters stated that CPM services should be able 
to be billed concurrently with CCM, Behavioral Health Integration, or 
Primary Care Management. Another commenter noted that CPM services 
might disincentivize the provision of CPM services to the most complex 
patients in part because neurologists routinely bill certain codes for 
safety purposes, and the CPM proposal, which prohibited same day 
billing of certain other codes, would impair care.
    Response: We thank the commenters for sharing their feedback. As 
noted in the CY 2023 PFS proposed rule, we believe there are 
distinctions in the nature and extent of the assessments, care 
coordination, medication management, and care planning for CPM to allow 
concurrent billing for services that are medically reasonable and 
necessary, and that it is particularly important to allow for the 
provision of needed services, including behavioral health services to 
beneficiaries with chronic pain. Therefore, if all requirements to 
report each service are met then CPM may be billed in the same month as 
CCM, TCM, and BHI services. We reiterate that the time spent in 
providing CPM services may not represent time spent in providing any 
other reported service.
    Comment: A commenter questioned how the CPM codes relate to the 
proposal in the CY 2023 OPPS proposed rule that would add the Facet 
Joint Interventions service category to the prior authorization list. 
This commenter noted that it seems incongruous for CMS to be 
encouraging chronic pain management with this CPM code while 
discouraging it in another.
    Response: We thank the commenter for the comment; however, the 
discussion of the new prior authorization proposal in the CY 2023 OPPS 
proposed rule is beyond the scope of this CY 2023 PFS rule.
    To further assist clinicians and interested parties in 
understanding more about how we anticipate the CPM services might be 
used, members of our clinical team have prepared the following 
scenarios to illustrate how the codes might be used in practice.
     Scenario 1: An individual clinician sees a new patient who 
is seeking to establish care (for example, a general internist sees a 
patient who is new to her practice and has a history of chronic pain). 
The internist/clinician would need to review the patient's history, 
including current and prior medications and treatments tried, and 
perform an examination to ascertain the source of the patient's 
symptoms as well as an initial functional assessment and develop a care 
management plan as part of the visit).
    ++ This scenario would also likely involve some aspect of 
medication management, may include referrals to behavioral health 
clinicians, substance use disorder, and/or pain management specialists, 
and would most certainly involve scheduling a follow-up appointment 
with the internist, which could occur in 1-2 weeks or in several months 
(or somewhere in between) depending on the needs of the patient.
    ++ While other clinicians are involved either through referrals or 
to support other elements of the CPM services, it is expected that 
generally only one or two clinicians would bill HCPCS code G3002/G3003, 
asserting that they are providing the CPM services.
     Scenario 2: An individual clinician sees an established 
patient who is well known and has a stable care plan and on maintenance 
medications (that is, a family physician sees a patient for routine 
care to update the care management plan and perform a functional 
assessment to ensure that the treatment plan is still supporting the 
patient's goals of care).
    ++ As we stated above, it would be unusual for no medications or 
supplements to be involved in the majority of cases of the management 
of chronic pain. This may or may not mean the patient is on a chronic 
opioid or other medication, and medication management is an almost 
universal component of chronic pain management care--even for very 
stable patients.
    ++ Medication management does not only involve management of 
medications that the patient is currently taking, but the ability to 
recognize when a new medication or over the counter treatment should be 
considered as an adjunct to other treatment, to discuss that 
recommendation in the context of shared decision-making and to initiate 
the pharmacotherapeutic plan of care.
    ++ Coordination of care (be it the person's behavioral health 
treatment or pain management care in general) is critical, and we 
mention in the proposed rule language that coordination is expected 
``as an element of the CPM codes, the development of and/or revisions 
to a person-centered care plan that includes goals, clinical needs, and 
desired outcomes, as outlined above and maintained by the practitioner 
furnishing CPM services.'' However, not all psychologists are trained 
or authorized to coordinate such care as a primary care clinician is 
trained, as we have explained.
     Scenario 3: An individual clinician provides care to a 
patient with multiple chronic conditions (for example, a family 
physician sees a patient with a history of chronic low back pain, 
obesity, diabetes, and chronic renal insufficiency and routinely must 
manage multiple concerns at the same visit).
    ++ This clinician would likely perform routine functional 
assessments of this patient, medication management, ongoing clinical 
assessments of their diabetes and kidney function, and discussion of 
what their options are when it comes to managing their pain in the 
context of these other conditions. As such, without knowing the history 
of this patient's conditions, their current medications, past 
treatments that have been successful or failures, the clinician cannot 
properly manage this patient's chronic pain (for example. changes in 
medication must be made in the context of this patients' kidney 
function). Additionally, the clinician may wish to offer the patient 
non-pharmacologic options for the treatment of their chronic low back 
pain, which may include referrals to chiropractic, acupuncture, 
physical therapy, massage, cognitive behavioral therapy or other 
integrative or complementary/integrative treatments, all of which would 
be reasonable discussions to take place in the context of billing HCPCS 
codes G3002 and G3003, as appropriate.

[[Page 69545]]

     Scenario 4: One individual clinician transfers care of a 
patient to another individual clinician in the course of the month (for 
example, a family physician refers to a pain management specialist who 
then takes over the pain care aspects of a patient with chronic pain).
    ++ This situation could necessitate two different practitioners 
billing HCPCS code G3002 during that first month; the lead clinician 
could change to someone else on an infrequent and limited basis,
    In summary, we are finalizing code descriptors for HCPCS codes 
G3002 and G3003, with two modifications to HCPCS code G3002 shown in 
italics, below.
    HCPCS code G3002 (Chronic pain management and treatment, monthly 
bundle including, diagnosis; assessment and monitoring; administration 
of a validated pain rating scale or tool; the development, 
implementation, revision, and/or maintenance of a person-centered care 
plan that includes strengths, goals, clinical needs, and desired 
outcomes; overall treatment management; facilitation and coordination 
of any necessary behavioral health treatment; medication management; 
pain and health literacy counseling; any necessary chronic pain related 
crisis care; and ongoing communication and care coordination between 
relevant practitioners furnishing care, e.g. physical therapy and 
occupational therapy, complementary and integrative approaches, and 
community-based care, as appropriate. Required initial face-to-face 
visit at least 30 minutes provided by a physician or other qualified 
health professional; first 30 minutes personally provided by physician 
or other qualified health care professional, per calendar month. (When 
using G3002, 30 minutes must be met or exceeded.))
    HCPCS code G3003 (Each additional 15 minutes of chronic pain 
management and treatment by a physician or other qualified health care 
professional, per calendar month. (List separately in addition to code 
for G3002. When using G3003, 15 minutes must be met or exceeded.))
    In response to public comments, we are finalizing our proposed 
policies pertaining to HCPCS codes G3002 and G3003, with a few 
modifications, as follows:
     We are defining chronic pain as persistent or recurrent 
pain lasting longer than 3 months, as proposed;
     We are requiring that the first time HCPCS code G3002 is 
billed, the physician or qualified health practitioner must see the 
beneficiary in-person. Both individuals must be in a clinical setting 
such as a primary care practitioner's office or other applicable 
setting, as proposed;
     A physician or other qualified health practitioner may 
bill HCPCS code G3003, for each additional 15 minutes of care, an 
unlimited number of times, as medically necessary, per month, after 
HCPCS code G3002 has been billed, as revised;
     A work RVU of 1.45 for HCPCS code G3002 and a work RVU of 
0.5 for HCPCS code G3003, as proposed;
     That any of the CPM in-person components included in HCPCS 
codes G3002 and G3003 may be furnished via telehealth, as clinically 
appropriate, in order to increase access to care for beneficiaries, as 
revised;
     That HCPCS codes G3002 and G3003 may be furnished and 
billed by physicians and other qualified health professionals, as 
proposed; and
     That both E/M and CPM may be billed on the same day if all 
requirements to report each service are met, and time spent providing 
CPM services does not represent time spent for providing any other 
reported service, as proposed.
    In response to comments expressing lack of clarity about certain 
proposed policies pertaining to HCPCS codes G3002 and G3003, we are 
clarifying in this final rule that:
     The beneficiary, at the first visit, need not have an 
established history or diagnosis of chronic pain, or be diagnosed with 
a condition that causes or involves chronic pain; but that rather, it 
is the clinician's responsibility to establish, confirm, or reject a 
chronic pain and/or pain-related diagnosis when the beneficiary first 
presents for care and the clinician first reports HCPCS code G3002;
     That clinicians will be required to furnish all 
appropriate elements of the code bundle, but that we do not expect that 
all elements of the code bundle will be appropriate for every patient;
     That we are not requiring in the code descriptor that a 
clinician refer a beneficiary to other services; that determination 
should be made between the clinician and the beneficiary; and finally
     That CPM services would be available for billing/reporting 
in conjunction with remote patient monitoring, remote physiologic 
monitoring, or remote therapeutic monitoring if all requirements to 
report each service are met, and time spent providing CPM services does 
not represent time spent for any other furnished and billed service.
(34) Revisions to the ``Incident to'' Physicians' Services Regulation 
for Behavioral Health Services
    In the CY 2014 PFS final rule with comment period (78 FR 74425 
through 74427), we created an exception to our ``incident to'' 
regulation at Sec.  410.26(b)(5) under which ``incident to'' services 
generally must be furnished under direct supervision. Specifically, we 
finalized a policy to require general, rather than direct, supervision 
when chronic care management services are furnished incident to the 
billing physician's or NPP's services outside of the practice's normal 
business hours by clinical staff. In the CY 2017 PFS final rule (81 FR 
80255), we finalized a revision to our regulation under Sec.  
410.26(b)(5) to require a general, rather than direct, level of 
supervision for designated care management services, and established 
that we would designate care management services through notice and 
comment rulemaking.
    We understand that circumstances related to the PHE for COVID-19 
have likely contributed to an increase in the demand for behavioral 
health services while also exacerbating existing barriers to 
beneficiaries' access to needed behavioral health services. For 
example, the American Psychological Association (APA) conducted a 
survey in 2020 and a follow-up survey in 2021 to better understand the 
impact of the COVID-19 pandemic on mental health treatment and the work 
of practicing psychologists. In the 2021 follow-up survey, many 
psychologists reported increases in the demand for treatment of anxiety 
and depression. They reported the greatest increases in treating 
anxiety disorders (84 percent, up from 74 percent), depressive 
disorders (72 percent, up from 60 percent), and trauma- and stress-
related disorders (62 percent, up from 50 percent). Other diagnoses 
with large increases included sleep-wake disorders, obsessive-
compulsive and related disorders, and substance-related and addictive 
disorders.\73\
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    \73\ https://www.apa.org/pubs/reports/practitioner/covid-19-2021.
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    Additionally, according to HRSA's National Center for Health 
Workforce Analysis, by 2025, shortages are projected nationally for a 
variety of behavioral health practitioners, including psychiatrists; 
clinical, counseling, and school psychologists; mental health and 
substance use social workers; school counselors; and

[[Page 69546]]

marriage and family therapists.\74\ Currently, there is no separate 
benefit category under the statute that recognizes the professional 
services of licensed professional counselors (LPCs) and Licensed 
Marriage and Family Therapists (LMFTs). Therefore, payment for the 
services of LPCs and LMFTs can only be made under the PFS indirectly 
when an LPC or LMFT performs services as auxiliary personnel incident 
to, the services, and under the direct supervision, of the billing 
physician or other practitioner. According to the American Counseling 
Association, there are more than 140,000 licensed professional 
counselors (LPCs) in the U.S., and the Medicare program's reimbursement 
for mental health treatment services delivered by this professional 
group could address provider shortages.\75\ Additionally, according to 
the U.S. Bureau of Labor Statistics, there were approximately 54,800 
Marriage and Family Therapists (MFTs) as of May 2021.\76\
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    \74\ https://bhw.hrsa.gov/sites/default/files/bureau-health-workforce/data-research/behavioral-health-2013-2025.pdf.
    \75\ https://www.counseling.org/government-affairs/federal-issues/medicare-reimbursement.
    \76\ https://www.bls.gov/oes/current/oes211013.htm.
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    In the 2022 CMS Behavioral Health Strategy,\77\ CMS included a goal 
to improve access to and quality of mental health care services. In 
light of the current needs among Medicare beneficiaries for improved 
access to behavioral health services, and the existing workforce 
shortages impeding access to needed treatment for behavioral health, we 
have considered regulatory revisions that may help to reduce existing 
barriers and make greater use of the services of LPCs and LMFTs. We 
noted that CMS does not have authority to create a statutory benefit 
category for practitioner types. Therefore, we proposed to amend the 
direct supervision requirement under our ``incident to'' regulation at 
Sec.  410.26 to allow behavioral health services to be furnished under 
the general supervision of a physician or NPP when these services or 
supplies are provided by auxiliary personnel incident to the services 
of a physician or NPP. We are limiting the scope of this proposal to 
behavioral health services at this time due to increased needs for 
behavioral health treatment and workforce shortages in this field. We 
believe that this proposed change will facilitate utilization and 
extend the reach of behavioral health services. We believe that any 
risk associated with this proposed change would be minimal, since the 
auxiliary personnel providing the services would need to meet all of 
the applicable requirements to provide incident to services, including 
any applicable licensure requirements imposed by the State in which the 
services are being furnished, as described in Sec.  410.26(a)(1).
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    \77\ https://www.cms.gov/cms-behavioral-health-strategy.
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    We received a high volume of public comments on these proposals. 
The following is a summary of the comments we received and our 
responses.
    Comment: Many commenters stated that they applaud CMS' proposed 
revisions to the ``Incident to'' Physicians' Services regulation for 
behavioral health services. Commenters stated that this proposal will 
help expand access to, and coordination of mental health services in 
rural and underserved areas where masters' level practitioners 
represent a substantial segment of the mental health providers in the 
area and doctoral-level clinicians such as psychologists are few, and 
for some patients a long distance away. Further, allowing the 
supervision of auxiliary staff such as licensed professional counselors 
(LPCs) and marriage and family therapists (MFTs) without requiring a 
continuous, direct physical presence would enable more patients to 
receive services. Commenters also described that these provisions will 
better engage the full panoply of behavioral health care providers in 
meeting the needs of Medicare beneficiaries, while further promoting 
beneficiary choice to select the type of behavioral health provider 
that best suits their mental health needs. Many commenters also noted 
that these proposed revisions are essential in light of the fact that 
the COVID-19 pandemic has exacerbated rates of depression, loneliness, 
and suicide among the elderly population.
    Several commenters did not fully support changing the supervisory 
requirements from ``direct'' to ``general'' because they noted that 
most LPCs and LMFTs possess enough professional knowledge and training 
on mental health and addiction to not be under any level of supervision 
by a physician or NPP and requested that CMS add a separate benefit 
category for LPCs and LMFTs, whom the commenters state comprise 40 
percent of the behavioral health workforce, in order to increase access 
to behavioral health services for Medicare beneficiaries. However, many 
commenters noted that they recognize that without Congressional action, 
CMS's ability to expand Medicare beneficiaries' access to LPCs and 
LMFTs is limited and stated they support all steps CMS can take to 
increase beneficiary access to these practitioners within its 
regulatory authority.
    A few commenters noted that many mental health counselors practice 
in settings where they are not employed by or working directly with 
physicians or NPPs and would not be able to take advantage of this 
flexibility. Other commenters noted that the proposal to allow LPCs and 
LMFTs to furnish behavioral health services under general supervision 
is an important step to more effectively deploy behavioral health 
professionals to practice at the top of their license, stating that 
LPCs could be well positioned to treat patients for conditions 
including depression and anxiety, thereby creating greater capacity for 
clinical psychologists and other providers with more advanced training 
to treat patients with conditions that require more complex care. 
Commenters also described that with this new flexibility, primary care 
practices may be able to leverage a broader range of behavioral health 
professionals in the delivery of team-based integrated primary care, 
and therefore, design their workflows in ways to better address the 
needs of their patients.
    Response: We thank the commenters for their support and feedback. 
After consideration of the comments received, we are finalizing our 
proposal to amend the direct supervision requirement under our 
``incident to'' regulation at Sec.  410.26 to allow behavioral health 
services to be furnished under the general supervision of a physician 
or NPP when these services or supplies are provided by auxiliary 
personnel incident to the services of a physician or NPP.
    Comment: Many commenters requested that CMS specify which services 
are considered ``behavioral health services,'' and would be eligible to 
be furnished under general supervision under our proposal. A few 
commenters urged CMS to define ``behavioral health services'' under the 
broadest terms possible for the purposes of this provision.
    Response: We do not define behavioral health services by HCPCS 
codes; we did not propose to do so, and we believe individual 
practitioners are in the best position to determine whether particular 
treatments or diagnostic services are behavioral health services. 
However, we generally understand a behavioral health service to be any 
service furnished for the diagnosis, evaluation, or treatment of a 
mental health disorder, including substance use disorders (SUD). We 
note that in the CY 2022 PFS final rule (86 FR 65061), we stated that 
SUD services

[[Page 69547]]

are considered mental health services for the purposes of the expanded 
definition of ``interactive telecommunications system.'' Additionally, 
in the CY 2010 PFS final rule (74 FR 61787), we referenced that the 
outpatient mental health treatment limitation, which was phased out as 
of 2014, applied to outpatient treatment of a mental, psychoneurotic, 
or personality disorders, identified under the International 
Classification of Diseases (ICD) diagnosis code range 290-319. These 
are the types of behavioral health services that would be eligible to 
be furnished by auxiliary personnel under the general supervision of a 
physician or certain other nonphysician practitioners who are 
authorized under their statutory benefit category to have integral, 
although incidental, services provided incident to their own 
professional services. Services could include, but are not limited to 
services such as psychotherapy, Screening, Brief Intervention, and 
Referral to Treatment (SBIRT) services, psychiatric diagnostic 
evaluations, and other services furnished primarily for the treatment 
or diagnosis of mental health or SUD disorders.
    Comment: Many commenters sought clarification regarding which types 
of clinicians may serve as auxiliary personnel under this policy. A few 
commenters pointed out that terminology for clinicians who furnish 
behavioral health care varies across states and requested that CMS 
include all independently licensed providers in each state. One 
commenter noted an example, that Washington State does not have an LPC 
credential, but the equivalent independent license in Washington is a 
Licensed Mental Health Counselor, or LMHC, and noted that states that 
have alternative titles for comparable credentials would benefit 
greatly by being able to use these clinicians to furnish services under 
general supervision for Medicare beneficiaries and requested that CMS 
consider expanding this proposal to include all those providers with 
comparable state-issued licenses. Some commenters encouraged inclusion 
of other mid-level clinicians who provide behavioral health treatment 
services, such as certified addictions counselors. Other commenters 
pointed out a range of clinicians that participate in furnishing 
behavioral health treatment, including occupational therapists, 
psychiatric pharmacists, and peer support specialists. Another 
commenter pointed out that physician assistants are qualified to help 
address workforce shortages and access to behavioral health treatment. 
Many commenters also highlighted the importance of peer support 
services, which commenters stated are designed to value lived 
experience and to empower an individual to direct their own recovery 
with dignity, noting that integrating peer support services in clinical 
settings increases engagement in care and improves both physical and 
mental outcomes, and requested clarification as to whether peer support 
specialists could be considered auxiliary personnel. A few commenters 
noted that under Medicare's partial hospitalization program, CMS 
defaults to State licensure laws on which providers are eligible to 
provide care, and therefore, encouraged CMS to adopt, for the purposes 
of this provision, deference to State licensure laws where the care is 
taking place.
    Response: We note that the definition of auxiliary personnel at 
Sec.  410.26(a)(1) defines auxiliary personnel as any individual who is 
acting under the supervision of a physician (or other practitioner), 
regardless of whether the individual is an employee, leased employee, 
or independent contractor of the physician (or other practitioner) or 
of the same entity that employs or contracts with the physician (or 
other practitioner), has not been excluded from the Medicare, Medicaid 
and all other Federally funded health care programs by the Office of 
Inspector General or had his or her Medicare enrollment revoked, and 
meets any applicable requirements to provide incident to services, 
including licensure, imposed by the State in which the services are 
being furnished. We note that we did not propose any changes to the 
existing regulatory definition of auxiliary personnel in Sec.  410.26, 
and therefore, we are not making any changes to this definition in this 
rule. All requirements for services furnished incident to a physician's 
or NPP's professional services listed at Sec.  410.26 continue to 
apply. Many of the clinician types mentioned by commenters could 
satisfy this definition.
    Comment: Several commenters requested that CMS create a mechanism 
for licensed psychologists to bill Medicare for the services furnished 
by advanced psychology trainees under a licensed psychologist's 
supervision, noting this is allowed by many State Medicaid programs. 
The commenters stated that clinical psychology interns have 1,000 to 
2,000 hours of clinical experience prior to beginning their internship, 
but under current Medicare rules, they are not able to independently 
bill Medicare, which leaves psychology training programs without a 
steady source of funding and prevents trainees from gaining valuable 
experience working with older patients and patients with disabilities. 
Additionally, several commenters requested that CMS include behavioral 
health providers who are in the process of seeking full licensure, such 
as associate marriage and family therapists and State licensed 
associate counselors, as auxiliary personnel. The commenters noted that 
these are individuals who have met their state's graduate education and 
exam requirements but have not yet met the supervised experience 
requirement.
    Response: We thank the commenters for their feedback; however, we 
note that these comments are outside of the scope of our proposed 
change to the required level of supervision for behavioral health 
services furnished incident to a physician, NPP, or CP, because we did 
not propose any changes to Medicare payment rules regarding interns or 
postdoctoral students.
    Comment: A few commenters stated they opposed the expansion of NPPs 
scope of practice beyond their State license, education, and training. 
One commenter stated that while they recognize the important services 
these practitioners provide on the care team, Medicare patients--most 
of whom have multiple chronic conditions, in addition to complex 
behavioral health issues--should have access to primary care and 
specialty physician services. They stated they believe that NPPs should 
be under the direct supervision of a licensed physician and work within 
the care team. Several commenters urged CMS to defer to State laws and 
leave the scope of practice to the State legislatures and State 
licensing boards. Another commenter noted that scope of practice is 
determined by one's licensure in the State and supervision can ensure 
safe delivery of that care. One commenter encouraged CMS to conduct 
data collection and research on the care provided by LPCs and LMFTs 
prior to expanding the policy to other providers to ensure patients are 
receiving the best quality care to meet their needs. A few commenters 
stated they oppose any supervisory changes that undermine the oversight 
of physician-led health care teams. One commenter expressed concern 
that under general supervision, the supervising clinician usually 
provides oversight to a larger number of non-medical behavioral health 
clinicians, which creates an obstacle to providing immediate feedback 
when needed and suggested that guardrails are needed to ensure that 
appropriate psychiatric consultation is available.

[[Page 69548]]

    Response: The change to the level of supervision for ``incident 
to'' behavioral health services from direct to general does not alter 
the longstanding regulatory definition of auxiliary personnel. 
Accordingly, any individual who qualifies as auxiliary personnel under 
the ``incident to'' regulations at Sec.  410.26, which requires 
services to be furnished in accordance with applicable State law, will 
continue to qualify as such, regardless of the required level of 
supervision assigned to the services. The definition of general 
supervision requires the services to be furnished under the physician's 
(or other practitioner's) overall direction and control. These 
requirements must be met for the physician or practitioner to bill for 
the behavioral health service. In the case where State law and scope of 
practice are silent about whether an individual serving in the capacity 
of auxiliary personnel is licensed/authorized to provide a given 
behavioral health service, the supervision level for the provision of 
the behavioral health service will default to the standard direct 
supervision requirement for ``incident to'' services. Additionally, in 
order for payment to be made under Medicare Part B for the services and 
supplies incident to the services of a physician or other practitioner, 
the service must be an integral, though incidental, part of the service 
of the physician or practitioner in the course of diagnosis or 
treatment of an injury or illness, in accordance with Sec.  410.26(b). 
For this to be met, we would expect there to be a course of treatment 
established by the physician or practitioner and in which the physician 
or practitioner is actively participating and managing.
    Comment: Several commenters expressed support for CMS allowing 
behavioral health services to be furnished under general supervision in 
the RHC and FQHC settings as well, and a few commenters encouraged CMS 
to utilize its regulatory authority to amend the FQHC ``incident to'' 
regulations and FQHC mental health visit to include an encounter 
performed by an LPC and LMFT to generate a billable visit in Medicare 
to better align with Medicaid.
    Response: We appreciate these suggestions from the commenters. We 
note that for CY 2023, the proposed change to the level of supervision 
for ``incident to'' behavioral health services from direct to general 
was applicable only to services payable under the PFS, which means 
services furnished in the RHC and FQHC settings were not addressed in 
the relevant proposal in the CY 2023 PFS proposed rule (87 FR 46062 
through 46068). We may consider changes to the regulations regarding 
services furnished at RHCs and FQHCs in the future. Additionally, we 
note that the types of practitioners' services that can be considered 
RHC and FQHC services are specified in section 1861(aa)(1) and (3) of 
the Act, respectively, and do not include the services of LPCs and 
LMFTs.
    Comment: One commenter suggested that CMS require a claims modifier 
when services are billed ``incident to'' which could indicate the type 
of personnel who performed the service (for example, LPC, LMFT, 
clinical psychologist, clinical social worker). The commenter stated 
that because this proposal would relax the supervision policy for 
behavioral health services billed as ``incident to'' services, 
transparency is necessary to understand the impacts of this change, 
evaluate the quality of behavioral health care provided, monitor the 
use of services, and inform future improvements.
    Response: We thank the commenter for this suggestion. We may 
consider a claims modifier for billing ``incident to'' services broadly 
for future rulemaking.
    Comment: Several commenters raised potential impacts for 
beneficiaries who are dually eligible for Medicare and Medicaid. A few 
commenters urged CMS to clarify that LPCs may be reimbursed by the 
Medicaid program for services they provide to dually-eligible Medicare 
beneficiaries, without documentation of a Medicare claim denial or, 
alternatively, create a protocol to provide such a denial so that the 
Medicaid program will process the claim.
    Response: We thank commenters for this information and feedback, 
but we note that this rule focuses on supervision, not which party will 
be reimbursed for furnishing behavioral health services. We note that 
this policy is limited to the change in the required level of 
supervision for behavioral health services furnished by auxiliary 
personnel incident to the services of a physician or NPP, and 
therefore, we do not anticipate that this policy would have an effect 
on the processing of crossover claims for beneficiaries who are dually 
eligible for Medicare and Medicaid.
(35) New Coding and Payment for General Behavioral Health Integration 
(BHI) Billed by Clinical Psychologists (CPs) and Clinical Social 
Workers (CSWs)
    In the CY 2017 PFS final rule (81 FR 80230), we established G-codes 
to describe monthly services furnished using the Psychiatric 
Collaborative Care Model (CoCM), an evidence-based approach to 
behavioral health integration that enhances ``usual'' primary care by 
adding care management support and regular psychiatric inter-specialty 
consultation. These G-codes were replaced by CPT codes 99492-99494, 
which we established for payment under the PFS in the CY 2018 PFS final 
rule (82 FR 53077 and 53078). Additionally, we created a fourth G-code 
to describe services furnished using other models of BHI in the primary 
care setting, which was replaced by CPT code 99484 in the CY 2018 PFS 
final rule (82 FR 53077 and 53078).
    We stated in the CY 2017 PFS final rule (81 FR 80236) that we 
recognized 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. We finalized a code set to pay 
accurately for care furnished using this specific model of care, given 
its widespread adoption and recognized effectiveness. However, we 
stated we recognized that there are primary care practices that are 
incurring, or may incur, resource costs inherent to treatment of 
patients with similar conditions based on BHI models of care other than 
the psychiatric CoCM that may benefit beneficiaries with behavioral 
health conditions, and therefore, finalized a General BHI code which 
may be used to report a range of models of BHI services, and that we 
expected this code to be refined over time as we receive more 
information about other BHI models in use.
    In the CY 2018 PFS final rule (82 FR 53078), we stated that we had 
received inquiries from interested parties about whether professionals 
who were not eligible to report the approved initiating visit codes for 
BHI services to Medicare might nonetheless serve as a primary hub for 
BHI services. For example, interested parties have suggested that a CP 
might serve as the primary practitioner that integrates medical care 
and psychiatric expertise. For purposes of future rulemaking, we sought 
comment on the circumstances under which this model of care is 
happening and whether additional coding would be needed to accurately 
describe and value other models of care. A few commenters suggested 
that CMS create separate codes to describe behavioral health care 
management services that could be billed by CPs and NPPs who are not 
authorized to bill Medicare for E/M services. One commenter suggested 
that CMS include psychiatric diagnostic evaluation services that can be 
furnished and billed by CPs as eligible initiating visits. Commenters 
also

[[Page 69549]]

described other models of care that are in use, including the STAR-VA 
model and a model used in outpatient health care settings where a 
clinical social worker (CSW) not only furnishes psychiatric care but 
also assists with psychosocial aspects of medical care.
    In the CY 2017 PFS final rule (81 FR 80239), we stated that we had 
received a few comments suggesting that in addition to the qualifying 
E/M services (or an AWV or IPPE), the initiating visit services for BHI 
should include in-depth psychological evaluations delivered by a CP 
including CPT codes 90791, 96116 or 96118, which include care plan 
development. In this final rule, we established that the same services 
that qualify as the initiating visit for CCM would also qualify as 
initiating services for BHI, which do not include in-depth 
psychological evaluation by a CP and which were not, in their entirety, 
within the scope of CPs' practice, and therefore, CPs would not be able 
to report the General BHI code directly (although a psychiatrist may be 
able to do so) (81 FR 80239).
    In the 2022 CMS Behavioral Health Strategy,\78\ we included a goal 
to improve access to and quality of mental health care services, and 
included an objective to ``increase detection, effective management 
and/or recovery of mental health conditions through coordination and 
integration between primary and specialty care providers.'' As 
previously noted in this proposed rule, we understand that 
circumstances related to the COVID-19 PHE have likely contributed to an 
increase in the demand for behavioral health services while also 
exacerbating existing barriers in beneficiaries' access to needed 
behavioral health services. In light of the feedback we have received 
and considering the increased needs for mental health services, we 
proposed to create a new G code describing General BHI performed by CPs 
or CSWs to account for monthly care integration where the mental health 
services furnished by a CP or CSW are serving as the focal point of 
care integration. Specifically, we proposed to create HCPCS code GBHI1 
(Care management services for behavioral health conditions, at least 20 
minutes of clinical psychologist or clinical social worker time, per 
calendar month, with the following required elements: initial 
assessment or follow-up monitoring, including the use of applicable 
validated rating scales; behavioral health care planning in relation to 
behavioral/psychiatric health problems, including revision for patients 
who are not progressing or whose status changes; facilitating and 
coordinating treatment such as psychotherapy, coordination with and/or 
referral to physicians and practitioners who are authorized by Medicare 
law to prescribe medications and furnish E/M services, counseling and/
or psychiatric consultation; and continuity of care with a designated 
member of the care team.) We proposed to value this service under the 
proposed HCPCS code GBHI1 based on a direct crosswalk to the work 
values and direct PE inputs for CPT code 99484 (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, per calendar month, with the following required 
elements: initial assessment or follow-up monitoring, including the use 
of applicable validated rating scales; behavioral health care planning 
in relation to behavioral/psychiatric health problems, including 
revision for patients who are not progressing or whose status changes; 
facilitating and coordinating treatment such as psychotherapy, 
pharmacotherapy, counseling and/or psychiatric consultation; and 
continuity of care with a designated member of the care team), because 
the services described by GBHI1 closely mirror those described by CPT 
code 99484. Therefore, we believe that this crosswalk is an appropriate 
valuation of the level, time, and intensity of the proposed service 
described by HCPCS code GBHI1. CPs are authorized under their statutory 
benefit category at section 1861(ii) of the Act to furnish ``qualified 
psychologist services'' to include ``such services and such services 
and supplies furnished as an incident to his service furnished by a 
clinical psychologist (as defined by the Secretary) which the 
psychologist is legally authorized to perform under State law (or the 
State regulatory mechanism provided by State law) as would otherwise be 
covered if furnished by a physician or as an incident to a physician's 
service.'' Additionally, the statutory benefit category for CSWs at 
Section 1861(hh)(2) of the Act defines ``clinical social worker 
services'' as ``services performed by a clinical social worker (as 
defined in paragraph (1)) for the diagnosis and treatment of mental 
illnesses (other than services furnished to an inpatient of a hospital 
and other than services furnished to an inpatient of a skilled nursing 
facility which the facility is required to provide as a requirement for 
participation) which the clinical social worker is legally authorized 
to perform under State law (or the State regulatory mechanism provided 
by State law) of the State in which such services are performed as 
would otherwise be covered if furnished by a physician or as an 
incident to a physician's professional service.'' Based on the 
authorizations under the CP and CSW statutory benefit categories, CPs 
are authorized to furnish and bill for services that are provided by 
clinical staff incident to their professional services when the 
``incident to'' requirements specified in Sec.  410.26 of our 
regulations are met, and would be authorized to do the same when 
furnishing services described by proposed HCPCS code GBHI1, whereas 
CSWs would only be able to bill Medicare for services they furnish 
directly and personally. The proposed work value for HCPCS code GBHI1 
is 0.61 (based on a direct crosswalk to CPT code 99484). We solicited 
comment on whether this proposed value accurately reflects the resource 
costs involved in furnishing these models of care, or whether 
additional coding may be needed, for example, separate coding for CPs 
and CSWs. We also solicited comment on the proposed requirements for 
billing GBHI1, including any applicable ``incident to'' requirements, 
and the role and responsibilities of CSWs and CPs.
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    \78\ https://www.cms.gov/cms-behavioral-health-strategy.
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    In the CY 2017 PFS final rule (81 FR 80239), we finalized the 
requirement of an initiating visit for the BHI codes for new patients 
or beneficiaries not seen within a year of commencement of BHI 
services. We stated that 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 practitioner 
assesses the beneficiary prior to initiating care management processes, 
and provide an opportunity to obtain beneficiary consent. We noted that 
the existing eligible initiating visit codes are not, in their 
entirety, within the scope of the CP's practice. Given that, we 
proposed to allow a psychiatric diagnostic evaluation (CPT code 90791) 
to serve as the initiating visit for GBHI1. We welcome comment on 
whether we should consider additional codes to qualify as the 
initiating visit.
    In the CY 2017 PFS final rule (81 FR 80235), we established that 
CCM and BHI services could be billed during the same month for the same 
beneficiary if all the requirements to bill each service are separately 
met. We are also proposing that HCPCS code GBHI1 could be billed during 
the same month as CCM and TCM services, provided

[[Page 69550]]

that all requirements to report each service are met and time and 
effort are not counted more than once. The patient consent requirements 
would apply to each service independently.
    In the CY 2017 PFS final rule (81 FR 80235), we established that 
the BHI services may be furnished incident to the billing 
professional's services under general supervision because we do not 
believe it is clinically necessary that the professionals on the team 
who provide services other than the treating practitioner (namely, the 
behavioral health care manager and the psychiatric consultant) to have 
the billing practitioner immediately available to them at all times, as 
would be required under a higher level of supervision. We believe this 
is also the case for the service described by GBHI1. Therefore, 
consistent with other care management codes paid under the PFS, we 
proposed to add HCPCS code GBHI1 to the list of designated care 
management services for which we allow general supervision.
    We received public comments on new coding and payment for general 
behavioral health integration (BHI) billed by Clinical Psychologists 
(CPs) and Clinical Social Workers (CSWs). The following is a summary of 
the comments we received and our responses.
    Comment: Many commenters supported our proposed coding and payment 
for BHI that would recognize psychologists' role in integrated care. 
The commenters expressed support for recognizing multiple evidence-
based models of integrated care, stating this allows psychologists the 
flexibility required to support the behavioral health needs of the 
broader community. Other commenters noted that by providing access to 
behavioral health and health behavior services within primary care 
settings, BHI services can be particularly helpful in addressing 
treatment disparities affecting members of racial and ethnic 
minorities, and those living in underserved and vulnerable communities 
with inadequate access to mental and behavioral health specialists. A 
few commenters stated this proposal will provide additional flexibility 
to primary care practices to design their workflows to best suit the 
needs of beneficiaries and the care team's capacities. Commenters noted 
that the establishment of this code will also help to recognize 
psychologists' role in integrated care and allow psychologists the 
flexibility required to support the behavioral health needs of the 
broader community. Other commenters pointed out that a potential 
advantage of the proposed service code is that HCPCS code GBHI1 
appropriately adds additional autonomy to CP and CSW clinical practice, 
which has the potential to improve job satisfaction and retention. 
Additionally, commenters stated that allowing for reimbursement of 
measurement-based care, interprofessional coordination, and care 
management services may incentivize more CPs and CSWs to participate in 
the Medicare behavioral health clinician network, which would in turn 
increase patient access to care management services and behavioral 
health treatment driven by validated outcome measurements. Commenters 
also expressed support for allowing these services to be furnished 
under general supervision.
    Response: We thank the commenters for their support and feedback. 
After consideration of the comments received, we are finalizing this 
code as proposed. We note that the code GBHI1 was a placeholder code 
and that the final code number will be HCPCS code G0323 (Care 
management services for behavioral health conditions, at least 20 
minutes of clinical psychologist or clinical social worker time, per 
calendar month. (These services include the following required 
elements: Initial assessment or follow-up monitoring, including the use 
of applicable validated rating scales; behavioral health care planning 
in relation to behavioral/psychiatric health problems, including 
revision for patients who are not progressing or whose status changes; 
facilitating and coordinating treatment such as psychotherapy, 
coordination with and/or referral to physicians and practitioners who 
are authorized by Medicare to prescribe medications and furnish E/M 
services, counseling and/or psychiatric consultation; and continuity of 
care with a designated member of the care team.))
    Additionally, we are finalizing our proposal to add HCPCS code 
G0323 to the list of designated care management services for which we 
allow general supervision.
    Comment: Several commenters stated they agreed with CMS that CPT 
code 90791 (psychiatric diagnostic evaluation) could appropriately 
serve as the initiating visit, noting that psychologists and social 
workers are not able to bill E/M services. A few commenters also 
requested that CPT code 96156, health behavior assessment and 
reassessment, also serve as an allowable initiating visit for the newly 
proposed BHI code. Another commenter urged CMS to broaden the types of 
visits that can serve as an initiating visit for HCPCS code GBHI1, 
stating that a visit with a primary care provider or social worker 
would also be appropriate initial visit types and that limiting the 
initiating visit to a psychiatric diagnostic evaluation undermines CMS' 
intent to expand access to wraparound services for individuals 
receiving mental health services.
    Response: We appreciate the commenters suggestion about considering 
other CPT codes such as 96156 (health behavior assessment, or 
reassessment), as well as E/M visit codes in addition to CPT code 90791 
(psychiatric diagnostic evaluation) to serve as the initiating visit 
for GBHI1. However, when considering that CPs and CSWs cannot bill the 
program for E/M visits because they are not licensed by the States to 
furnish such services and, that the range of health behavior assessment 
and intervention codes are for billing primarily for physical illnesses 
rather than psychiatric illnesses, we believe that 90791 is the best 
option that aligns with the services that CPs and CSWs are authorized 
to furnish under State law and scope of practice. Accordingly, 
recognizing a code for which CPs and CSWs can bill as an initiating 
visit for HCPCS code G0323 offers them greater access and opportunity 
to furnish integrated care management services.
    Comment: A few commenters expressed concern about the medical 
management of patients in models of care without psychiatric 
involvement and suggested that the ability to receive immediate advice 
on prescribing from a psychiatrist or child psychiatrist, as is the 
case in the existing evidence-based psychiatric CoCM model, should be a 
mandatory element in all other collaborative care models to ensure 
patient safety and high-quality patient care. A commenter also pointed 
to the existing interprofessional consultation codes (CPT codes 99446-
99449, 99451-99452) and urged CMS to emphasize the importance of 
consultative relationships between psychiatrists, primary care 
physicians, clinical psychologists, and clinical social workers in 
order to ensure high-quality care.
    Response: We thank the commenters for this feedback. In the CY 2017 
PFS final rule (81 FR 80236 through 80238), we noted that we created 
the General BHI code in order to allow payment for models of integrated 
care other than the psychiatric collaborative care (CoCM) code. We 
agree with the comment regarding the importance of consultative 
relationships between various members of the care team, including 
psychiatrists, primary care physicians, clinical psychologists, and 
clinical social workers.

[[Page 69551]]

    Comment: Many commenters supported the proposed valuation based on 
a crosswalk to CPT code 99484. A few commenters opposed the proposed 
valuation, stating that CPT code 99484 describes clinical staff time 
and is valued assuming the service is performed by a behavioral health 
care manager and that those assumptions do not accurately reflect the 
cost when the service is performed by a clinical psychologist or 
clinical social worker. Another commenter stated they do not believe 
this proposed value accurately reflects the resource costs involved in 
furnishing these models of care as the amount of time needed to 
complete the required elements will take far longer than 20 minutes per 
month and there is a substantial amount of work that occurs outside of 
the office. The commenter urged CMS to consider a code that permits 
multiple billable units of 20 minutes per unit per month capped at 10 
units per month to better acknowledge the amount of time it takes to 
adequately perform the required elements, as well as the critical 
effort that occurs outside the office visit.
    Response: We thank the commenters for this feedback. After 
consideration of the comments, for CY 2023, we are finalizing the value 
of HCPCS code G0323 as proposed, however we may consider changes in how 
this code is valued for future rulemaking. We note that the commenter's 
suggestion regarding codes that permit multiple billable units of 20 
minutes per unit per month is outside of the scope of the proposal.
    Comment: A few commenters requested that CMS clarify whether HCPCS 
code GBHI1 may be billed in conjunction with codes describing remote 
monitoring services. The commenter stated they support the new code but 
sought clarification on whether HCPCS code GBHI1 could be billed in 
conjunction with the following services: remote patient monitoring (CPT 
code 99091), remote physiologic monitoring (CPT codes 99453, 99454, 
99457, 99458), or remote therapeutic monitoring (CPT codes 98975, 
98976, 98977, 98980, 98981 and as proposed GRTM1/2/3/4) codes.
    Response: HCPCS code G0323, and the services describing remote 
patient monitoring, remote physiologic monitoring, and remote 
therapeutic monitoring, are distinct types of services, although there 
may be some overlap in eligible patient populations. There may be some 
circumstances where it is reasonable and necessary to provide both 
services in a given month. The BHI codes, including HCPCS code G0323, 
could be billed for the same patient in the same month as the RPM or 
RTM services. All applicable requirements for the individual codes must 
be met, including obtaining informed consent from the beneficiary, for 
both the remote monitoring and BHI. In this circumstance, appropriate 
billing in a given month means that time and effort cannot be counted 
more than once when using BHI codes with RPM or RTM. Billing 
practitioners should remember that cost sharing applies to each service 
independently. If all requirements to report each service are met, 
without time or effort being counted more than once, both may be 
billed.
    Comment: Several commenters requested that CMS clarify that 
providers of peer support services (also known as peer support 
specialists and peer recovery specialists) may bill as part of 
behavioral health integration codes including the new GBHI1 code and 
collaborative care codes.
    Response: While there is no statutory benefit category under 
Medicare law that authorizes direct billing and payment to peer support 
specialists for their professional services under the Medicare Part B 
program, it may be possible for peer support specialists to provide 
their services in an ``incident to'' capacity. That is, if a peer 
support specialist meets the definition of auxiliary personnel as 
defined under the ``incident to'' regulations at Sec.  410.26, then 
they could be eligible to provide behavioral health services within 
their scope of practice in accordance with State law under the 
supervision of a physician or certain nonphysician practitioners.
    Comment: One commenter suggested that CMS should consider use of 
telehealth visits to meet the initiating visit criteria as this would 
serve to increase access in alignment with CMS' stated goal. Another 
commenter encouraged CMS to monitor utilization of the code if 
finalized and noted that the type of work described is resource 
intensive and needs to be valued accordingly. Another commenter stated 
they supported the proposed crosswalk, but it was unclear to them 
whether the current valuation is accurate, stating that CPT code 99484 
will be reviewed by the RUC at their September 2022 meeting.
    Response: We may consider these commenters' suggestions for future 
rulemaking. Additionally, we intend to monitor utilization of this code 
and any subsequent changes to the valuation of CPT code 99484 in order 
to determine whether we may need to re-visit the valuation through 
future rulemaking.
    Comment: One commenter encouraged CMS to consider broadening the 
scope of services in this code to include coordination of social care. 
The commenter stated that the behavioral health care manager will be 
more successful in getting individuals successfully engaged in 
treatment if they are able to attend to basic resources and social 
needs by referring to relevant social services and programs and that 
counting minutes spent coordinating mental health treatment but not 
minutes spent helping address other concerns is burdensome for 
clinicians and does not make sense clinically when it is all part of a 
typical evidence-based clinical social work interventions that result 
from a comprehensive psychosocial assessment and collaborative planning 
process to work toward the overarching goal (in this case, improved 
behavioral health).
    Response: We appreciate the commenters suggested consideration of 
making payment for coordination of social services. We did not propose 
to include coordination of social care in HCPCS code G0323, so for this 
reason we will not be finalizing such a change. As we continue to 
consider ways to expand access to behavioral health services, we may 
consider this for future rulemaking.
    Comment: A few commenters stated they support additional coding to 
promote integration and recommended that CMS develop a bundled payment 
for behavioral health services that would include wraparound services 
and could be used in value-based payment arrangements.
    Response: We appreciate these suggestions. While they are out of 
scope for this proposed rule, we may consider additional coding to 
promote integration and payment through future rulemaking.
(36) Request for Information: Medicare Part B Payment for Services 
Involving Community Health Workers (CHWs)
    The American Public Health Association (APHA) defines a community 
health worker as a ``frontline public health worker who is a trusted 
member of and/or has an unusually close understanding of the community 
served. This trusting relationship enables the worker to serve as a 
liaison/link/intermediary between health/social services and the 
community to facilitate access to services and improve the quality and 
cultural competence of service delivery.'' Community Health Workers are 
classified as a workforce category by the Department of Labor. The 
Community Health Worker Core

[[Page 69552]]

Consensus Project (C3) lists the following ten roles of CHWs: \79\
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    \79\ St John, J.A., Mayfield-Johnson, S.L., & Hern[aacute]ndez-
Gordon, W.D. (2021). Introduction: Why Community Health Workers 
(CHWs)? In Promoting the Health of the Community (pp. 3-10). 
Springer, Cham.
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     Cultural mediation among individuals, communities, and 
health and social service systems.
     Providing culturally appropriate health education and 
information.
     Care coordination, case management, and system navigation.
     Providing coaching and social support.
     Advocating for individuals and communities.
     Building individual and community capacity.
     Providing direct service.
     Implementing individual and community assessments.
     Conducting outreach.
     Participating in evaluation and research.
    Findings from randomized controlled trials indicate that particular 
CHW interventions reduce chronic disease disparities in low income, 
racial and ethnic minority communities, such as type 2 diabetes, 
hypertension, HIV/AIDS, and obesity.\80\ \81\ \82\ \83\ \84\ We are 
also interested in better addressing the social needs of beneficiaries; 
for example, in the FY 2023 IPPS/LTCH proposed rule, we proposed new 
measures under the Hospital Inpatient Quality Reporting Program 
pertaining to assessing social determinants of health. The CHW skillset 
may position this workforce to address these social needs. In light of 
the significant benefits that services involving CHWs can potentially 
offer the health of Medicare beneficiaries, including a reduction in 
health disparities, we are interested in learning more about how 
services involving CHWs are furnished in association with the specific 
Medicare benefits established by the statute.
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    \80\ Kangovi S, Mitra N, Grande D, Huo H, Smith RA, Long JA. 
Community Health Worker Support for Disadvantaged Patients With 
Multiple Chronic Diseases: A Randomized Clinical Trial. Am J Public 
Health. 2017;107(10):1660-1667. doi:10.2105/AJPH.2017.303985.
    \81\ Cooper L.A., Roter D. L., Carson K. A., et al. A randomized 
trial to improve patient-centered care and hypertension control in 
underserved primary care patients. J Gen Intern Med. 
2011;26(11):1297-1304.
    \82\ Spencer MS, Rosland AM, Kieffer EC, Sinco BR, Valerio M, 
Palmisano G, et al. Effectiveness of a community health worker 
intervention among African American and Latino adults with type 2 
diabetes: a randomized controlled trial. Am J Public Health. 2011 
Dec;101(12):2253-60.
    \83\ Brown LD, Vasquez D, Lopez DI, Portillo EM. Addressing 
Hispanic Obesity Disparities Using a Community Health Worker Model 
Grounded in Motivational Interviewing. Am J Health Promot. 
2022;36(2):259-268.
    \84\ Kenya, S., Jones, J., Arheart, K. et al. Using Community 
Health Workers to Improve Clinical Outcomes Among People Living with 
HIV: A Randomized Controlled Trial. AIDS Behav 17, 2927-2934 (2013).
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    Over the past several years, we have worked to develop payment 
mechanisms under the PFS to improve the accuracy of valuation and 
payment for the services furnished by physicians and other health care 
professionals, especially in the context of evolving models of care. 
For example, physicians and other eligible practitioners are able to 
report care management services and behavioral health integration 
services based on tasks personally provided by clinical staff under 
their supervision. Some of the elements of the comprehensive care plans 
referenced in the description of care management services include 
medication management, community/social services ordered, and 
coordination with other agencies, which are also some of the services 
personally provided by CHWs.
    Section 1862(a)(1)(A) of the Act generally excludes from coverage 
services that are not reasonable and necessary for the diagnosis or 
treatment of illness or injury or to improve the functioning of a 
malformed body member. We are interested in learning whether and how 
CHWs, as auxiliary personnel of physicians and hospitals, may provide 
reasonable and necessary services to Medicare beneficiaries under the 
appropriate supervision of health care professionals that are 
responsible more broadly for medical care, including behavioral health 
care. We are also looking to understand whether and how services 
involving CHWs are accounted for under the existing CCM codes or other 
care management or behavioral health integration services, including 
whether the employment and supervision arrangements ordinarily adopted 
within the industry would meet the requirements that allow for billing 
by supervising professionals or providers, including RHCs and FQHCs. 
For example, do CHWs tend to be employees of physicians or of the same 
entities that employ physicians? Are physicians or other medical 
professionals supervising their interaction with patients in a manner 
consistent with direct supervision--for example, immediate availability 
in the same location?
    We noted that CHWs are employed in a number of sectors, including 
local government, community-based organizations, and social services 
sectors. Therefore, the health care providers working with CHWs may 
have established nontraditional relationships with these organizations 
outside of the health sector. We are interested in learning how 
payments between health care provider organizations, and community-
based organizations, local governments, and social service 
organizations, account for the costs of services provided by CHWs, and 
how health care provider organizations ensure that the funding amount 
is sufficient to cover the costs of the full range of CHW services. We 
also solicited comment on whether and to what extent CHW services are 
provided in association with preventive services, including those 
covered by Medicare.
    Physicians and certain other health care practitioners are 
authorized to bill Medicare for services furnished incident to their 
professional services by auxiliary personnel. Our regulation at Sec.  
410.26 requires that auxiliary personnel who perform services incident 
to the services of the billing physician or other practitioner must be 
acting under the supervision of the billing practitioner, and must meet 
any applicable requirements, including licensure, imposed by the State 
in which the services are furnished. We understand that there is wide 
variation in State standards for CHWs. In addition, the training that 
CHWs receive is typically provided by employers but varies widely in 
terms of its breadth and scope.\85\ We are trying to understand how 
CHWs might also be recognized as auxiliary personnel in the Medicare 
context, and are therefore interested in learning how States may have 
determined whether and under what circumstances CHWs have the necessary 
qualifications to perform services that would improve the health of 
Medicare beneficiaries and others being treated by supervising 
professionals or providers.
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    \85\ Fasting, D., Mayfield-Johnson, S.L., St. John, J.A., & 
Hern[aacute]ndez-Gordon, W.D. (2021). In Promoting the Health of the 
Community (pp. 43-52). Springer, Cham.
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    We received several public comments in response to our request for 
information about Medicare Part B Payment for Services Involving 
Community Health Workers (CHWs). We appreciate the thoughtful feedback 
submitted by the public on this matter and may consider these comments 
in future rulemaking.
(37) Recognition of the Nurse Portfolio Credentialing Commission (NPCC)
    The Medicare program established qualifications under regulations 
at Sec.  410.75 for NPs and, under Sec.  410.76 for clinical nurse 
specialists (CNS). Both the NP and CNS qualification regulations 
require that NPs and CNSs be certified as a NP or a CNS by a

[[Page 69553]]

recognized national certifying body that has established standards for 
NPs and/or CNSs, and that a listed certifying body must be approved by 
the Secretary. An identical list of Medicare recognized and approved 
national certifying bodies for NPs and CNSs is included under Chapter 
15, section 200 and 210 of the Medicare Benefit Policy Manual, pub. 
100-02.
    The organizations listed under program manual instructions as 
recognized national certifying bodies for NPs and CNSs are as follows:
     American Academy of Nurse Practitioners;
     American Nurses Credentialing Center;
     National Certification Corporation for Obstetric, 
Gynecologic and Neonatal Nursing Specialties;
     Pediatric Nursing Certification Board (previously named 
the National Certification Board of Pediatric Nurse Practitioners and 
Nurses);
     Oncology Nurses Certification Corporation;
     AACN Certification Corporation; and
     National Board on Certification of Hospice and Palliative 
Nurses.
    The Nurse Portfolio Credentialing Commission (NPCC) has requested 
to have its organization added to the lists of recognized national 
certifying bodies for NPs and CNSs who specialize in clinical genetics/
genomics and are awarded the Advanced Clinical Genomics Nurse (ACGN) 
credential. The NPCC's request to CMS describes the NPCC as a non-
profit organization, established in 2018 by genetics/genomics nurse 
leaders as the only organization that now offers new credentials to 
advanced practice registered nurses (APRNs) who specialize in genetics/
genomics, a nursing specialty recognized by the American Nurses 
Association.
    Additionally, the NPCC's letter states that its organization 
evolved directly from the American Nurses Credentialing Center (a 
listed, CMS-recognized national certifying body) and the Genetic 
Nursing Credentialing Commission, which are the organizations that 
awarded new genetics/genomics nursing credentials from 2001 to 2018. 
However, as of 2019, the American Nurses Credentialing Center (ANCC) 
stopped offering new credentialing to genetics nurses and instead 
offers only renewal credentialing to nurses who specialize in genetics. 
Since 2019, the NPCC has awarded the ACGN credential to 32 APRNs from 
17 States.
    Now, with the NPCC being the only organization that offers new 
credentialing to nurses in genetics, the NPCC is concerned that the 
absence of its organization from the current list of recognized 
national certifying bodies appropriate for NPs and CNSs presents a 
barrier and a disadvantage for newly credentialed APRNs. Specifically, 
the NPCC is concerned that newly NPCC credentialed NPs and CNSs seeking 
enrollment under Medicare would be denied on the basis that they do not 
meet Medicare's certification requirement unless the NPCC is listed as 
a recognized national certifying body appropriate for NPs and CNSs who 
specialize in genetics/genomics. The website for the NPCC is available 
at https://www.nurseportfolio.org.
    When considering previous requests to add other organizations to 
the list of recognized national certifying bodies for NPs and CNSs, we 
stated that it is not our intention to be overly restrictive in our 
program requirements and consequently prevent qualified NPs and CNSs 
who specialize in areas of medicine other than those certified by the 
ANCC from participating in the Medicare program as NPs or CNSs and from 
rendering care to patients in need of specialized services (see 71 FR 
69707). Accordingly, we proposed to add the NPCC organization to the 
list of recognized national certifying bodies in manual instructions 
for NPs at section 200 and CNSs at section 210 of the Medicare Benefit 
Policy Manual, pub. 100-02. We requested public comments on this 
proposal.
    The following is a summary of the public comments received on our 
proposal concerning the NPCC, along with our response to these 
comments.
    Comment: One commenter stated that its organization is concerned 
that the addition of the NPCC to the list of recognized national 
certifying bodies for NPs and CNSs would create confusion between the 
national certifying bodies for NPs and CNSs that are already listed 
under program manual instructions and, the NPCC. The commenter 
described the NPCC as a type of credentialing organization that 
provides an additional credential in advanced clinical genomics to 
demonstrate expertise in a specific specialty area to already certified 
and licensed NPs and CNSs. Therefore, the commenter asserted that since 
the list of recognized national certifying bodies in program manual 
instructions lists the organizations that provide the certification 
necessary to practice under Medicare as a NP or a CNS in accordance 
with Medicare regulations, it does not support adding the NPCC, which 
offers a specialty credential that goes beyond the requisite 
qualification requirements for NPs and CNSs.
    Response: We appreciate the commenters concern about creating 
confusion by adding the NPCC to the list of recognized national 
certifying bodies for NPs and CNSs. When establishing this list of 
recognized national certifying bodies for NPs and CNSs, we were 
cautious about being overly restrictive in our program requirements and 
consequently preventing qualified NPs and CNSs who specialize in areas 
of medicine other than those certified by the American Nurses 
Credentialing Corporation (ANCC) from participating in the Medicare 
program as NPs or CNSs and from rendering care to patients in need of 
specialized services. Accordingly, the current list recognizes 
organizations that certify NPs and CNSs with specialties in obstetrics, 
gynecology, neonatal nursing, pediatrics, oncology, hospice and 
palliative care. It is our intent to exercise this same caution when 
considering additional prospects given the current severe shortage of 
health care professionals such as NPs and CNSs available to render care 
to patients, particularly those who are certified and furnish 
specialized services. Since the ANCC no longer offers new credentialing 
to genetics nurses, the NPCC is the only organization that offers new 
credentialing for this nurse specialty. Therefore, our consideration to 
recognize and list the NPCC is to prevent the potential for such 
genetics nurses from being denied enrollment in the Medicare program.
    Comment: Another commenter stated that CMS should recognize the 
NPCC as a national certifying body for NPs and CNSs.
    Response: We appreciate the support of our proposal. After 
considering the public comments on the NPCC proposal, we are finalizing 
our proposal to recognize and add the NPCC to the list of national 
certifying bodies that is housed in our program manual instructions in 
the Medicare Benefit Policy Manual, pub. 100-02, at Chapter 15, section 
200 for NPs and, 210 for CNSs.
(38) Request for Information: Medicare Potentially Underutilized 
Services
    Medicare provides payment for many kinds of services that support 
beneficiaries in promoting health and well-being and that may also, in 
some cases, reduce unnecessary spending within the health care system 
by decreasing the need for more expensive kinds of care. Some examples 
of these services may include patient

[[Page 69554]]

educational services, like Diabetes Self-Management Training or 
preventive services, like the Annual Wellness Visit.
    We solicited comments on ways to identify specific services and to 
recognize possible barriers to improved access to these kinds of high 
value, potentially underutilized services by Medicare beneficiaries. We 
also solicited regarding how we might best mitigate some of these 
obstacles, including for example, through examining conditions of 
payment or payment rates for these services or by prioritizing 
beneficiary and provider education investments.
    We discussed that ``high value'' health services have been 
described as those ``services that provide the best possible health 
outcomes at the lowest possible cost.'' \86\ The American College of 
Physicians states that high value services seek ``to improve health, 
avoid harms, and eliminate wasteful practices.'' \87\ However, we 
described that we believe that some high value Medicare services may be 
potentially underutilized by beneficiaries. In some cases, limited use 
of these kinds of services occurs disproportionately in underserved 
communities.
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    \86\ ``Michigan Program on Value Enhancement.'' Institute for 
Healthcare Policy & Innovation (28 Apr. 2022). https://ihpi.umich.edu/featured-work/michigan-program-value-enhancement.
    \87\ High value care. ACP. (n.d.). (May 9, 2022). https://www.acponline.org/clinical-information/high-value-care.
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    Disparities in health and healthcare persist despite decades of 
research and widespread efforts to improve health outcomes in the 
United States.\88\ Certain populations, including groups experiencing 
racial disparity, people with disabilities, individuals dually eligible 
for Medicare and Medicaid, and those living in rural and underserved 
areas are more likely to experience challenges accessing healthcare 
services, lower quality of care, and below average health outcomes when 
compared to the general population.89 90 91 Many known 
factors impede efficient and equitable healthcare, including workforce 
challenges, transportation issues, healthcare costs, language barriers, 
a lack of health literacy, and confusion about health insurance 
coverage and processes.\92\ Additional factors include social 
determinants of health and community-level burdens that contribute to 
the exacerbation of health disparities. For example, disparities in 
cancer screening and treatment across racial and ethnic groups have 
been well documented. Research demonstrates that minority populations 
are less likely to receive cancer screening tests than their white 
counterparts and, consequently, are more likely to be diagnosed with 
late-stage cancer.\93\ Additionally, racial and ethnic minorities with 
positive test results are more likely to experience delays in receiving 
the diagnostic tests that would serve to confirm cancer diagnoses.\94\ 
We are committed to building solutions that will help close gaps in 
healthcare quality, access, and outcomes.\95\
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    \88\ Office of Minority Health. (2021, January, page 3). Paving 
the Way to Equity: A Progress Report. Centers for Medicaid and 
Medicare Services. https://www.cms.gov/files/document/paving-way-equity-cms-omh-progress-report.pdf.
    \89\ Agency for Health Care Research and Quality (AHRQ). (2021, 
June). 2019 National Healthcare Quality and Disparities Report. 
AHRQ. https://www.ahrq.gov/research/findings/nhqrdr/nhqdr19/index.html.
    \90\ Executive Order No. 13985, 86 FR 7009 (2021, January 20). 
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/. For the 
purposes of this RFI, we are using the definitions of equity and 
underserved communities established in Executive Order 13985, ``The 
term `equity' means the consistent and systematic fair, just, and 
impartial treatment of all individuals, including individuals who 
belong to underserved communities that have been denied such 
treatment, such as Black, Latino, and Indigenous and Native American 
persons, Asian Americans and Pacific Islanders and other persons of 
color; members of religious minorities; lesbian, gay, bisexual, 
transgender, and queer (LGBTQ+) persons; persons with disabilities; 
persons who live in rural areas; and persons otherwise adversely 
affected by persistent poverty or inequality.'' The term 
``underserved communities'' refers to populations sharing a 
particular characteristic, as well as geographic communities, that 
have been systematically denied a full opportunity to participate in 
aspects of economic, social, and civic life.
    \91\ Office of the Assistant Secretary for Planning and 
Evaluation, U.S. Department of Health & Human. Services. Second 
Report to Congress on Social Risk Factors and Performance in 
Medicare's Value-Based. Purchasing Program. 2020. https://aspe.hhs.gov/reports/second-report-congress-social-risk-medicares-value-based-purchasing-programs.
    \92\ Lahr, M., Henning-Smith, C., Rahman, A., Hernandez, A. 
(2021, January). Barriers to Health Care Access for Rural Medicare 
Beneficiaries: Recommendations from Rural Health Clinics. University 
of Minnesota Rural Health Research Center. https://rhrc.umn.edu/wp-content/uploads/2021/01/UMN-RHC-Access-to-Care-PB_1.20.pdf.
    \93\ Agency for Healthcare Research and Quality [AHRQ], 2004; 
National Institutes of Health/National Cancer Institute [NIH/NCI], 
2001). Racial and ethnic minorities with positive test results are 
more likely to experience delays in receiving the diagnostic tests 
needed to confirm cancer diagnoses (Battaglia et al., 2007; Ries et 
al., 2003.
    \94\ Battaglia et al., 2007; Ries et al., 2003.
    \95\ Office of Minority Health. (2021, January). Paving the Way 
to Equity: A Progress Report. Centers for Medicaid and Medicare 
Services. https://www.cms.gov/files/document/paving-way-equity-cms-omh-progress-report.pdf.
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    We noted that we are working to advance health equity by designing, 
implementing, and operationalizing policies and programs that support 
health for all the people served by our programs, eliminating avoidable 
differences in health outcomes experienced by people who are 
disadvantaged or underserved, and providing the care and support that 
our beneficiaries need to thrive.\96\ Health equity as defined by CMS 
\97\ means the attainment of the highest level of health for all 
people, where everyone has a fair and just opportunity to attain their 
optimal health regardless of race, ethnicity, disability, sexual 
orientation, gender identity, socioeconomic status, geography, 
preferred language, or other factors that affect access to care and 
health outcomes. More information regarding CMS's Strategic Plan for 
health equity is available in the CMS Strategic Plan Pillar: Health 
Equity Fact Sheet: https://www.cms.gov/sites/default/files/2022-04/Health%20Equity%20Pillar%20Fact%20Sheet_1.pdf.
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    \96\ https://www.cms.gov/pillar/health-equity.
    \97\ https://www.cms.gov/sites/default/files/2022-04/Health%20Equity%20Pillar%20Fact%20Sheet_1.pdf.
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    In light of the concerns regarding the potential underutilization 
of high value health services, particularly among potentially 
underserved communities, we are committed to promoting these high value 
services within the Medicare program. In concert with the CMS strategy 
to advance health equity in addressing health disparities that underlie 
our health system, we stated that we seek to engage with interested 
parties and solicit comment regarding ways to identify and improve 
access to high value, potentially underutilized services by Medicare 
beneficiaries.
    We solicited comment on how to best define and identify high value, 
potentially underutilized health services. We also stated that we are 
also looking to understand what existing services within current 
Medicare benefits may represent high value, potentially underutilized 
services, such as:
     Preventive Services;
     Annual Wellness Visits;
     Diabetes Management Training;
     Screening for Diabetes;
     Referral to appropriate education/prevention/training 
services
     Immunizations/vaccinations
     Cancer screenings
     Cardiac rehabilitation services
     Intensive Behavioral Therapy for obesity
     Opioid treatment programs
     Complex/Chronic Care Management
     Cognitive Assessment & Care
     Behavioral Health Integration Services

[[Page 69555]]

    Other examples of Medicare preventive services are available at the 
following website: https://www.cms.gov/Medicare/Prevention/PrevntionGenInfo/medicare-preventive-services/MPS-QuickReferenceChart-1.html.
    We invited the public to submit information about specific 
obstacles to accessing these services and how specific potential 
policy, payment or procedural changes could reduce potential obstacles 
and facilitate better access to high value health services. 
Specifically, we solicited new and innovative ideas that may help 
broaden perspectives about potential solutions. Ideas may include, but 
are not limited to:
     Educational or marketing strategies (informed by 
beneficiary input) to promote awareness of available programs and 
resources that advance the utilization of ``high value'' services;
     Aligning of Medicare and other payer coding, payment and 
documentation requirements, and processes related to ``high value'' 
services;
     Recommendations from States and other interested parties 
regarding how to best raise awareness of underutilized services, with 
special consideration for the dual-eligible population;
     Enabling of operational flexibility, feedback mechanisms, 
and data sharing that would enhance the utilization of ``high value'' 
services; and
     New recommendations regarding when and how CMS issues 
regulations and policies related to ``high value'' services and how CMS 
can advance rules and policies for beneficiaries, clinicians, and 
providers.
    We stated that we are interested in learning about how CMS might 
best promote high value care and health equity, address concerns 
regarding health disparities, and increase access to high value 
services, which could improve the health of Medicare beneficiaries. We 
also noted that comments received in response to this RFI may be used 
to identify potential opportunities for improvement to and refinement 
of existing Medicare FFS and MA programs.
    We received numerous comments on our request for information about 
Medicare Potentially Underutilized Services. We appreciate the 
thoughtful feedback submitted by the public on this important issue and 
plan to consider these suggestions for possible future rulemaking and 
program refinement.
(39) Change in Procedure Status for Family Psychotherapy
    The CPT codes that describe family psychotherapy are payable under 
Medicare, but are currently assigned a restricted status indicator in 
the Medicare Physician Fee Schedule payment files. The codes describing 
family psychotherapy with the patient present are CPT code 90847 
(Family psychotherapy (conjoint psychotherapy) (with patient present), 
50 minutes) and CPT code 90849 (Multiple-family group psychotherapy). 
We noted that CPT code 90846 (Family psychotherapy (without the patient 
present), 50 minutes) describes family psychotherapy without the 
patient present. In past rulemaking, we have discussed that Medicare 
has generally taken the stance that coverage is limited to items and 
services that are for the diagnosis and treatment of the individual 
beneficiary.
    During the COVID-19 pandemic, the number of adults reporting 
adverse behavioral health conditions has increased sharply, with higher 
rates of depression, substance use, and self-reported suicidal thoughts 
observed in racial and ethnic minority groups.\98\ We are seeking to 
ensure that appropriate care is furnished to Medicare beneficiaries and 
noted that CPT codes 90847 and 90849 are payable under Medicare. 
Accordingly, we proposed to update our payment files to remove the 
restricted (``R'') procedure status indicator for CPT codes 90847 and 
90849 and assigning these codes an active (``A'') procedure status 
indicator.
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    \98\ https://www.cdc.gov/mmwr/volumes/69/wr/mm6932a1.htm.
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    We noted that there are national coverage determinations (NCDs) 
addressing family psychotherapy described by CPT codes 90847 and 90849 
describing the settings of care in which these services are covered, 
documentation requirements and other guidelines.\99\ The Medicare 
National Coverage Determinations (NCD) Manual, Pub. 100-03, section 
70.1, titled ``Consultations with a Beneficiary's Family and 
Associates'' states that ``family counseling services are covered only 
where the primary purpose of such counseling is the treatment of the 
patient's condition.'' \100\ The change to the ``A'' status indicator 
for these subject CPT codes does not alter the policy under the 
applicable coverage determinations for these codes.
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    \99\ https://www.cms.gov/medicare-coverage-database/view/article.aspx?articleid=57065&ver=10&keyword=&keywordType=starts&areaId=all&docType=6,3,5,1,F,P&contractOption=all&hcpcsOption=code&hcpcsStartCode=90847&hcpcsEndCode=90847&sortBy=title&bc=1.
    \100\ https://www.cms.gov/medicare-coverage-database/view/ncd.aspx?NCDId=16&ncdver=1.
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    We received public comments on the change in procedure status for 
family psychotherapy. The following is a summary of the comments we 
received and our responses.
    Comment: Several commenters expressed support for our proposal to 
change the procedure status indicator for the family therapy codes 
(90847, 90849) from R (restricted) status to A (active) status. A few 
commenters stated that this change will remove a barrier to care, while 
some noted that there remain national coverage determinations carrying 
documentation requirements and guidelines that the MACs can consider 
and ultimately use to restrict coverage. One commenter stated they 
believed that CPT code 90846 should also not be restricted, as this is 
an important service particularly for adolescents, families of 
substance use disorder patients, and families attempting to manage 
behavioral manifestations of dementia.
    Response: In response to the comment requesting that the procedure 
status for CPT code 90846, which describes psychotherapy without the 
patient present, be updated to an active status, we thank the commenter 
for this feedback and may consider changes to the procedure status for 
CPT code 90846 in the future. After consideration of the comments, we 
are finalizing our updates to the procedure status indicators for CPT 
codes 90847 and 90849--both will be assigned an A for active status, 
effective January 1, 2023.
(40) Comment Solicitation on Intensive Outpatient Mental Health 
Treatment, including Substance Use Disorder (SUD) Treatment, Furnished 
by Intensive Outpatient Programs (IOPs)
    There are a range of services described by existing coding under 
the PFS that can be billed for treatment of mental health conditions, 
including SUDs, such as individual, group, and family psychotherapy. 
Over the past several years, in collaboration with interested parties 
and the public, we have increased the coding and payment mechanisms for 
substance use treatment services paid under the PFS. For example, in 
the CY 2020 PFS final rule (84 FR 62673), we finalized the creation of 
new coding and payment describing a bundled episode of care for the 
treatment of Opioid Use Disorder (OUD) (HCPCS codes G2086-G2088). In 
the CY 2021 PFS final rule, we finalized expanding the bundled payments 
described by HCPCS codes G2086-

[[Page 69556]]

G2088 to be inclusive of all SUDs (85 FR 84642 and 84643).
    Additionally, in the CY 2020 PFS final rule (84 FR 62630 through 
62677), we implemented coverage requirements and established new codes 
describing bundled payments for episodes of care for the treatment of 
OUD furnished by Opioid Treatment Programs (OTPs). Medicare also covers 
services furnished by inpatient psychiatric facilities and partial 
hospitalization programs (PHP). PHP services can be furnished by a 
hospital outpatient department or a Medicare-certified Community Mental 
Health Center (CMHC). PHPs are structured to provide intensive 
psychiatric care through active treatment that utilizes a combination 
of the clinically recognized items and services described in Sec.  
1861(ff) of the Social Security Act (the Act). According to the 
Medicare Benefit Policy Manual, Chapter 6, Section 70.3, the treatment 
program of a PHP closely resembles that of a highly structured, short-
term hospital inpatient program and is at a level more intense than 
outpatient day treatment or psychosocial rehabilitation. PHPs work best 
as part of a community continuum of mental health services which range 
from the most restrictive inpatient hospital setting to less 
restrictive outpatient care and support.
    We understand that in some cases, people that do not require a 
level of care for mental health needs that meets the standards for PHP 
services, nonetheless require intensive services on an outpatient 
basis. We are interested in whether or not the current coding and 
payment mechanisms under the PFS adequately account for intensive 
outpatient services that are part of a continuum of care in the 
treatment. For example, according to SAMHSA's Advisory on Clinical 
Issues in Intensive Outpatient Treatment for Substance Use Disorders, 
IOP programs for substance use disorders (SUDs) offer services to 
clients seeking primary treatment; step-down care from inpatient, 
residential, and withdrawal management settings; or step-up treatment 
from individual or group outpatient treatment. IOP treatment includes a 
prearranged schedule of core services for example, individual 
counseling, group therapy, family psychoeducation, and case management) 
for a minimum of 9 hours per week for adults or 6 hours per week for 
adolescents. The 2019 National Survey of Substance Abuse Treatment 
Services reports that 46 percent of SUD treatment facilities offer IOP 
treatment.\101\
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    \101\ https://store.samhsa.gov/sites/default/files/SAMHSA_Digital_Download/pep20-02-01-021.pdf.
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    We solicited comment on whether there is a gap in coding under the 
PFS or other Medicare payment systems that may be limiting access to 
needed levels of care for treatment of mental health or substance use 
disorder treatment, including and especially SUDs, for Medicare 
beneficiaries. We are particularly interested in the extent to which 
any potential gaps would best be addressed by the creation of new 
codes, revision of particular billing rules for some kinds of care in 
specific settings, or whether the valuation of particular codes 
(existing or new) needs to be addressed in order to better reflect the 
relative resource costs involved in furnishing intensive outpatient 
mental health services. We are also interested in additional, detailed 
information about IOP services, such as the settings of care in which 
these programs typically furnish services, the range of services 
typically offered, the range of practitioner types that typically 
furnish those services, and any other relevant information, especially 
to the extent it would inform our ability to ensure that Medicare 
beneficiaries have access to this care.
    We received several public comments in response to our comment 
solicitation on intensive outpatient mental health treatment, including 
SUD treatment, furnished by IOPs. We appreciate the feedback submitted 
by the public on this matter, including support for providing care 
along the full continuum of behavioral health services, the settings of 
care in which IOP services are typically furnished, the service 
elements that are typically included in IOP treatment, and potential 
options for valuation of such services, and may consider these comments 
in future rulemaking.
(41) Comment Solicitation on Payment for Behavioral Health Services 
Under the PFS
    As discussed throughout this final rule, we are committed to 
ensuring that beneficiaries have access to needed services for mental 
and behavioral health. Through the CMS Behavioral Health Strategy, CMS 
seeks to remove barriers to care and services, and to adopt a data-
informed approach to evaluate our behavioral health programs and 
policies. We strive to support a person's whole emotional and mental 
well-being and promote person-centered behavioral health care.\102\
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    \102\ https://www.cms.gov/cms-behavioral-health-strategy.
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    As part of our review of our payment policies and systems, we 
understand that the PFS ratesetting methodology and application of 
budget neutrality may impact certain services more significantly than 
others based on factors such as how frequently codes are revalued and 
the ratio of physician work to PE. In the CY 2018 PFS final rule (82 FR 
52999), we discussed that some interested parties had suggested that 
for codes in which direct PE inputs for a service are very low, the 
methodology for allocating indirect PE does not allow for a site of 
service differential that accurately reflects the relative indirect 
costs involved in furnishing services in non-facility settings. We 
stated that primary therapy and counseling services available to 
Medicare beneficiaries for treatment of behavioral health conditions, 
including substance use disorders, are among the services most affected 
by our methodology.
    We solicited comment on how we can best ensure beneficiary access 
to behavioral health services, including any potential adjustments to 
the PFS ratesetting methodology, for example, any adjustments to 
systematically address the impact on behavioral health services paid 
under the PFS.
    We received several public comments in response to our comment 
solicitation on payment for behavioral health services under the PFS. 
We appreciate the feedback submitted by the public on this matter and 
may consider these comments in future rulemaking.
(42) Payment for Interstitial Device Remote Monitoring (HCPCS Code 
G2066)
    We received comments regarding payment changes for cardiovascular 
remote monitoring services described by HCPCS code G2066. We note that 
we did not make any proposal to change the payment rate of HCPCS code 
G2066, we are not finalizing any changes to the payment rate for HCPCS 
code G2066, and that these comments are out of the scope of our 
proposed rule. However, after considering the comments, we acknowledge 
the concerns raised by interested parties regarding price transparency 
and payment stability for certain contractor priced services.
    We believe it is important for interested parties to continue to 
engage with their local MAC to address these concerns about price 
transparency and payment stability for contractor priced services. 
Ideally, these interactions would support dialogue that address the 
specific concern about lack of transparency, through the sharing of 
applicable and requested information, which in turn supports the MACs 
payment decision process. We believe that to the extent such requested 
information is shared, MACs would be

[[Page 69557]]

willing to engage in a discussion about the information, including how 
their review of the information relates to their payment decisions. 
This ongoing dialogue would also allow the MACs to make determinations 
about how to effectuate their payments decision to address the concerns 
about payment stability, that is, the requested information and 
engagements would provide a better understanding of the impact of 
payment changes on interested parties, and inform MAC consideration for 
allowing interested party adjustment to any payment changes through 
advance communication, or use of transition periods.
(43) Radiation Oncology Model
    On August 29, 2022, CMS finalized delaying the current start date 
of the Radiation Oncology Model (ROM) to a date to be determined 
through future rulemaking. In the CY 2020 PFS final rule (84 FR 62797), 
we finalized that, in the interest of payment stability, we would 
continue to maintain current coding for radiation treatment services, 
including HCPCS G-codes with their current work RVUs and direct PE 
inputs, given the introduction of the RO Model, and to prevent 
disruption in beneficiary access to radiation treatment services. While 
we did not make any proposals for payment for these radiation treatment 
services under the PFS for CY 2023, we note that we are reviewing our 
current coding and payment policies for the radiation therapy services, 
including whether we should adopt the revised CPT coding that was 
established in CY 2015 to allow for coding and payment consistency, 
considering the fact that CMS finalized delaying the current start date 
of the ROM earlier this year. Any such changes would be addressed in 
future rulemaking.
BILLING CODE 4150-28-P

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BILLING CODE 4150-28-C

F. Evaluation and Management (E/M) Visits

1. Background
    Over the past several years, we have engaged in a multi-year effort 
with the American Medical Association (AMA) and other interested 
parties to update coding and payment for evaluation and management (E/
M) visits, so that they better reflect the current practice of 
medicine, are less administratively complex, and are paid more 
accurately under the PFS. This work is critical to help reduce 
practitioner burnout in general, especially in light of the COVID-19 
pandemic. In a step-wise approach, the AMA CPT Editorial Panel revised 
the office/outpatient (O/O) E/M visit code family first. Effective 
January 1, 2021, the CPT Editorial Panel redefined the O/O E/M visits, 
such that visit level is selected based on the amount of practitioner 
time spent performing the visit or the level of medical decision-making 
(MDM) as redefined in the CPT E/M Guidelines. Additionally, effective 
January 1, 2021, history of present illness (History) and a physical 
exam are no longer used to select the O/O E/M visit level. (See 85 FR 
84549). Also, effective January 1, 2021, the CPT Editorial Panel 
revised the O/O E/M visit descriptor times and the CPT E/M Guidelines.
    We generally adopted these revised codes and changes in CPT code 
selection and documentation guidance for payment purposes under the PFS 
effective January 1, 2021 (84 FR 62844 through 62859). While we 
accepted the revised CPT codes and approach for the O/O E/M visits, we 
did not accept the revisions for prolonged O/O services, because we 
were concerned that they could have resulted in overpayment, were 
administratively complex, and would have impacted our ability to tell 
how much total time was spent with the patient (see 84 FR 62849 through 
62850,

[[Page 69587]]

and 85 FR 84572 through 84575). We created G2212 for reporting of 
prolonged O/O E/M services. Finally, the AMA RUC resurveyed the O/O E/M 
visits, and we generally accepted the RUC recommendations, which 
reflected increased service times (84 FR 62851 through 62854). This 
resulted in increased values for the O/O E/M codes beginning in CY 
2021. Also, we created add-on code G2211 (office/outpatient E/M visit 
complexity) that can be reported in conjunction with O/O E/M visits to 
better account for resources associated with primary care or care 
services that are part of ongoing care related to a patient's single, 
serious, or complex chronic condition(s). (84 FR 62854 through 62856). 
The Consolidated Appropriations Act, 2021 imposed a moratorium on 
Medicare payment for these services by prohibiting CMS from making 
payment under the physician fee schedule for HCPCS code G2211 before 
January 1, 2024. See our fact sheet available at Physician Fee Schedule 
(PFS) Payment for Office/Outpatient Evaluation and Management (E/M) 
Visits--Fact Sheet \103\ (cms.gov).
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    \103\ https://www.cms.gov/files/document/physician-fee-schedule-pfs-payment-officeoutpatient-evaluation-and-management-em-visits-fact-sheet.pdf.
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    For CY 2023, the AMA CPT Editorial Panel has revised the rest of 
the E/M visit code families (except critical care services) to match 
the general framework of the O/O E/M visits, including inpatient and 
observation visits, emergency department (ED) visits, nursing facility 
visits, domiciliary or rest home visits, home visits, and cognitive 
impairment assessment. Hereafter in this final rule, we refer to these 
other E/M visit code families as ``Other E/M'' visits or CPT codes, as 
relevant. Effective January 1, 2023, the CPT Editorial Panel has 
redefined the Other E/M visits so that they parallel the O/O E/M 
visits, where visit level will be selected based on the amount of 
practitioner time spent with the patient or the level of MDM as 
redefined in the CPT E/M Guidelines. As for the O/O E/M visits, a 
medically appropriate history and/or physical exam will be a required 
element of the services, but will no longer impact the Other E/M visit 
level. The CPT Editorial Panel also revised the service times within 
the descriptors, the associated prolonged service codes, and the CPT E/
M Guidelines for the Other E/M CPT codes. The CPT Editorial Panel also 
consolidated a considerable number of the Other E/M CPT codes, with 
inpatient and observation visits being combined into a single code set, 
and home and domiciliary visits being combined into a single code set. 
Currently there are approximately 75 Other E/M CPT codes, and in 2023 
there will be approximately 50 Other E/M CPT codes. The CPT Editorial 
Panel created one new CPT code for prolonged inpatient services by 
physicians and other qualified healthcare professionals on the date of 
the E/M visit. Finally, the RUC has resurveyed the Other E/M visits and 
associated prolonged service codes, and provided revaluation 
recommendations to CMS.
    In total, E/M visits comprise approximately 40 percent of all 
allowed charges under the PFS. The subset of Other E/M visits comprises 
approximately 20 percent of all allowed charges. Accordingly, our final 
policies for the Other E/M visits will have a significant impact on 
relative resource valuation under the PFS, which could potentially 
impact patient care more broadly. In this section of our final rule, we 
provide our final policies addressing coding and revaluation of Other 
E/M visits for CY 2023. We also finalize a technical correction to the 
placement of our regulation text for split (or shared) visits, and, as 
we further consider feedback from interested parties, we delay 
implementation of our policy to define the substantive portion of a 
split (or shared) visit at Sec.  415.140 based on the amount of time 
spent by the billing practitioner until January 1, 2024. Finally, we 
provide clarification and finalize a technical correction regarding how 
time is reported for split (or shared) critical care visits.
2. Overview of Policy Proposals
    In our proposed rule, we proposed to generally adopt the revised 
CPT E/M Guidelines for Other E/M visits, which are available online at 
www.ama-assn.org/cpt-evaluation-management. We proposed to adopt the 
general CPT framework for Other E/M visits, such that practitioner time 
or MDM would be used to select the E/M visit level. This includes the 
listing of qualifying activities by the physician or NPP that count 
toward the time spent when time is used required to select the visit 
level. A medically appropriate history and/or examination would be 
required, but history and physical exam would no longer be used to 
select visit level. We would not adopt the general CPT rule \104\ where 
a billable unit of time is considered to have been attained when the 
midpoint is passed (for example, we would not consider a service with a 
time descriptor of 30 minutes to have been satisfied if only 15 minutes 
of time had been spent furnishing that service). We similarly 
interpreted this rule for O/O E/M visits, when time is used to select 
visit level. For example, we required the full time within the CPT code 
descriptors to be met in order to select an O/O E/M visit level using 
time, rather than half of the descriptor time (84 FR 62848 through 
62851). Also, we do not interpret the CPT E/M Guidelines as adopting 
this general CPT rule regarding the midpoint of time.
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    \104\ Introduction to 2022 CPT Codebook, p.xviii.
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    We proposed to adopt the revised CPT codes and descriptors for 
Other E/M visits, except where specified otherwise. Under our proposed 
policies, we would adopt the new CPT codes and descriptors for Other E/
M visits except for prolonged services, for which we proposed Medicare-
specific coding. For administrative simplicity and payment accuracy 
purposes, and to enable us to determine how much time was spent with 
the patient using claims data, prolonged Other E/M services would be 
reported under one of three proposed G codes (one for each family for 
which prolonged services apply, namely inpatient/observation visits, 
nursing facility visits, and home or residence visits). This would be 
consistent with our previously finalized approach to prolonged O/O E/M 
services.
    We proposed to adopt the CPT E/M Guidelines regarding MDM for E/M 
services. The CPT Editorial Panel revised the CPT E/M guidelines for 
levels of MDM, and we proposed to adopt them as revised.
    In addition, as we noted in the Medicare Claims Processing Manual 
((pub 100-04) chapter 26, section 10.8), our longstanding taxonomy for 
PFS services will continue to apply, where, for payment purposes, 
physicians and NPPs are not classified as having the same specialty, 
and the PFS does not recognize subspecialties. However, we are 
continuing to consider whether we could better align this payment 
taxonomy with clinical practice, where we might consider NPPs as 
working in the same specialty as the physicians with whom they work, 
and/or recognize subspecialties.
    Regarding valuation of the Other E/M CPT codes, the RUC recommended 
direct work RVU comparisons for many Other E/M CPT codes to those 
currently assigned to O/O E/M CPT codes. In some cases, there were 
assumptions that patient needs were inherently more complex or work was 
more intense for E/M visits furnished in non-office settings (for 
example, inpatient, ED, and home settings) when compared to the office 
settings. This direct comparison to the O/O visit codes may not be 
appropriate or accurate, given that practitioners furnishing visits in 
the

[[Page 69588]]

office setting face particular uncertainties in their estimates of 
illness and treatment courses, and the office settings have fewer 
resources close at hand. For example, compared to fully-staffed 
institutional settings, office settings generally have smaller, 
ancillary staff complements (such as pharmacists, registered nurses, 
social workers, and other paraprofessionals) who provide specialized 
advice and services, spend time coordinating with other practitioners 
for review and evaluation of medical records and test results, educate 
patients, manage medications, and assess and help address social 
determinants of health. Additionally, those practicing in institutional 
settings generally have ready availability of diagnostic equipment (for 
example, imaging and other advanced services), allowing for more 
immediate access to clinical information and reducing the amount of 
time needed to manage a given case. This access is critical for 
positive health outcomes, to treat or prevent acute exacerbations of 
chronic conditions and timely manage patients to prevent deterioration 
and improve outcomes. The challenge of coordinating and gathering these 
types of care and information in the office setting may add additional 
time and complexity to the case management. Further, some of the Other 
E/M CPT code families are being merged into lower complexity settings, 
such as CPT codes for observation services migrating into the inpatient 
visit CPT codes.
    The values we established for the revised O/O E/M CPT codes in the 
CY 2021 PFS final rule were finalized in concert with a policy that 
would have provided separate payment for the new add-on code G2211. 
This add-on code describes the complexity inherent to E/M visits 
associated with primary care and other similar types of care 
(specifically, E/M visits associated with medical care services that 
serve as the continuing focal point for all needed health care services 
and/or with medical care services that are part of ongoing care related 
to a patient's single, serious condition or a complex condition, 
regardless of the specialty of the billing professional) (see 85 FR 
84569 through 84572). Section 113 of the Consolidated Appropriations 
Act, 2021 delayed Medicare payment for G2211 until at least January 1, 
2024 (see the following Fact Sheet available on our website at 
Physician Fee Schedule \105\ (PFS) Payment for Office/Outpatient 
Evaluation and Management (E/M) Visits--Fact Sheet (cms.gov). To the 
extent we proposed to adopt the RUC-recommended values for Other E/M 
visits beginning for CY 2023, we do not agree with the RUC that the 
current visit payment structure among and between care settings fully 
accounts for the complexity of certain kinds of visits, especially for 
those in the office setting, nor do they fully reflect appropriate 
relative values, since separate payment is not yet made for G2211.
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    \105\ https://www.cms.gov/files/document/physician-fee-schedule-pfs-payment-officeoutpatient-evaluation-and-management-em-visits-fact-sheet.pdf.
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    We note that we received a few comments that mentioned the 
commenters believe the CPT rule for midpoint of time applies to the CPT 
E/M Guidelines and other CPT reporting instructions, and recommended we 
do the same. We reiterate that we have not interpreted the CPT 
reporting instructions this way, and they will not apply for PFS 
reporting of E/M visits. To avoid payment variation and standardize 
reporting, it would be helpful if CPT would explicitly clarify in the 
CPT E/M Guidelines that the midpoint rule for reporting of timed 
services does not apply.
    We also received a few comments questioning whether we were 
formally proposing a change in taxonomy for NPPs to recognize clinical 
categories for them or subspecialties for E/M visit reporting, and are 
recommending such. We are continuing to consider these issues, and 
wanted to call attention to the differences between the CPT reporting 
instructions and the PFS reporting rules. We would need more time and 
rulemaking to develop taxonomy changes and systems changes, and are not 
finalizing any changes in our policies at this time.
3. Hospital Inpatient or Observation Care (CPT Codes 99218-99236)
a. Coding Changes and Visit Selection for Hospital Inpatient or 
Observation Care Services
    The CPT Editorial Panel deleted seven observation care codes and 
revised nine codes effective January 1, 2023, to create a single set of 
codes for inpatient and observation care. (Note that the CPT Editorial 
Panel also made changes to codes for inpatient and observation 
discharge, which will be discussed in section II.F.4. of this final 
rule.) The CPT Editorial Panel also changed the code descriptors to 
allow level of service to be based on total time or MDM, as well as 
updating associated reporting instructions and CPT E/M Guidelines.
    The CPT Editorial Panel deleted the six codes that were used to 
report observation care visits: three initial observation care codes, 
CPT codes 99218 (Initial observation care, per day, for the evaluation 
and management of a patient which requires these 3 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/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 problem(s) requiring admission to 
outpatient hospital ``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 3 key 
components: A comprehensive history; a comprehensive examination; and 
medical decision making of moderate 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 
problem(s) requiring admission to outpatient hospital ``observation 
status'' are of moderate severity. Typically, 50 minutes are spent at 
the bedside and on the patient's hospital floor or unit), and 99220 
(Initial observation care, per day, for the evaluation and management 
of a patient, which requires these 3 key components: A comprehensive 
history; a comprehensive examination; and 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 problem(s) requiring admission to 
outpatient hospital ``observation status'' are of high severity. 
Typically, 70 minutes are spent at the bedside and on the patient's 
hospital floor or unit); and three subsequent observation care codes, 
CPT codes 99224 (Subsequent observation care, per day, for the 
evaluation and management of a patient, which requires at least 2 of 
these 3 key components: Problem focused interval history; problem 
focused examination; medical decision making that is straightforward or 
of low complexity. Counseling and/or coordination of care with other 
physicians, other qualified

[[Page 69589]]

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 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 2 of these 3 key 
components: An expanded problem focused interval history; an expanded 
problem focused examination; medical decision making of moderate 
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 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), 
and 99226 (Subsequent observation 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).
    The CPT Editorial Panel also revised the six hospital inpatient 
care codes. The revisions allow these codes to be reported for hospital 
inpatient or observation care services and allow the codes to be 
selected by the billing practitioner based on either MDM or time. In 
addition, the CPT Editorial Panel changed the name of the ``Hospital 
Inpatient Care'' code family to ``Hospital and Observation Care,'' and 
the new code family includes three initial hospital or observation care 
codes: CPT codes 99221 (Initial hospital inpatient or observation care, 
per day, for the evaluation and management of a patient, which requires 
a medically appropriate history and/or examination and straightforward 
or low-level medical decision-making. When using total time on the date 
of the encounter for code selection, 40 minutes must be met or 
exceeded), 99222 (Initial hospital inpatient or observation care, per 
day, for the evaluation and management of a patient, which requires a 
medically appropriate history and/or examination and moderate level of 
medical decision making. When using total time on the date of the 
encounter for code selection, 55 minutes must be met or exceeded), and 
99223 (Initial hospital inpatient or observation care, per day, for the 
evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and high level of medical 
decision making When using total time on the date of the encounter for 
code selection, 75 minutes must be met or exceeded); and three 
subsequent inpatient or observation care codes, CPT codes 99231 
(Subsequent hospital inpatient or observation care, per day, for the 
evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and straightforward or low level 
of medical decision making. When using total time on the date of the 
encounter for code selection, 25 minutes must be met or exceeded), 
99232 (Subsequent hospital inpatient or observation care, per day, for 
the evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and moderate level of medical 
decision making. When using total time on the date of the encounter for 
code selection, 35 minutes must be met or exceeded), and 99233 
(Subsequent hospital inpatient or observation care, per day, for the 
evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and high level of medical 
decision making. When using total time on the date of the encounter for 
code selection, 50 minutes must be met or exceeded).
    The CPT Editorial Panel also revised the three codes under 
``Observation or Inpatient Care Services (including Admission and 
Discharge)'' (frequently referred to as ``same-day discharge'' codes). 
Billing practitioners could already use these codes to bill for 
patients in inpatient or observation status, but the CPT Editorial 
Panel revised the codes to allow the billing practitioner to select the 
code level based either on MDM or time. The same-day discharge codes 
were renamed as ``Hospital Inpatient or Observation Care (Admission and 
Discharge)'': CPT codes 99234 (Hospital inpatient or observation care, 
for the evaluation and management of a patient including admission and 
discharge on the same date, which requires a medically appropriate 
history and/or examination and straightforward or low level of medical 
decision making. When using total time on the date of the encounter for 
code selection, 45 minutes must be met or exceeded), 99235 (Hospital 
inpatient or observation care, for the evaluation and management of a 
patient including admission and discharge on the same date, which 
requires a medically appropriate history and/or examination and 
moderate level of medical decision making. When using total time on the 
date of the encounter for code selection, 70 minutes must be met or 
exceeded), and 99236 (Hospital inpatient or observation care, for the 
evaluation and management of a patient including admission and 
discharge on the same date, which requires a medically appropriate 
history and/or examination and high level of medical decision making. 
When using total time on the date of the encounter for code selection, 
85 minutes must be met or exceeded).
    We proposed to adopt the revised CPT codes 99221 through 99223 and 
99231 through 99236. We highlighted that the CPT code descriptors 
specify that, when selecting the code level based on time, the 
indicated increment of time must be ``met or exceeded.'' We proposed 
that, when a practitioner selects CPT codes 99221 through 99223 and 
99231 through 99236 based on time, the number of minutes specified in 
the descriptor for the relevant CPT code must be ``met or exceeded.'' 
We noted that we did not propose to adopt the 2023 CPT Codebook 
instructions regarding the application of prolonged codes to CPT codes 
99223, 99233, and 99236. (2023 CPT Codebook, p. 15-17). Please refer to 
the additional discussion of prolonged codes in section II.F.3.f. 
below.
    We also noted that the descriptors for CPT codes 99221 through 
99223 and 99231 through 99236 specify that the time counted toward the 
code is ``per day.'' We proposed to adopt the 2023 CPT Codebook 
instruction that ``per day,'' also referred to as ``date of 
encounter,'' means the ``calendar date.'' (2023 CPT Codebook, p. 15.) 
We also proposed to adopt the 2023 CPT Codebook instruction that when 
using MDM or time for code selection, a continuous service that spans 
the transition of 2 calendar dates is a single service and is reported 
on one date, which is the date the encounter begins. If the service is 
continuous before and through midnight, all the time may be applied to 
the reported date of the service, that is, the calendar date the 
encounter began. (2023 CPT Codebook, p.15.) We noted that nothing in 
this proposal was intended to conflict with our proposed retention of 
the ``8 to 24-

[[Page 69590]]

hour rule,'' discussed in the next section.
    Finally, we proposed to retain our policy that a billing 
practitioner shall bill only one of the hospital inpatient or 
observation care codes for an initial visit, a subsequent visit, or 
inpatient or observation care (including admission and discharge), as 
appropriate, once per calendar date. We proposed that the practitioner 
would select a code that reflects all of the practitioner's services 
provided during the date of the service, as provided in the Medicare 
Claims Processing Manual, IOM 100-04, Chapter 12, section 
30.6.9.B.\106\ We discussed additional policies relating to a single 
billing practitioner providing services to a single beneficiary on the 
same day in section II.F.3.d. below.
---------------------------------------------------------------------------

    \106\ The manual states, ``A/B MACs (B) pay a physician for only 
one hospital visit per day for the same patient, whether the 
problems seen during the encounters are related or not. The 
inpatient hospital visit descriptors contain the phrase ``per day'' 
which means that the code and the payment established for the code 
represent all services provided on that date. The physician should 
select a code that reflects all services provided during the date of 
the service.''
---------------------------------------------------------------------------

    Comment: Many commenters supported our proposal to adopt both the 
CPT's consolidation of the Hospital Inpatient and Observation Care 
services and the updates to the code descriptors. Commenters noted that 
the descriptor revisions, which will allow practitioners to bill by 
time or MDM, will simplify the documentation requirements for these 
codes and reduce administrative burden for practitioners. These 
commenters also maintained that the change allowing visit level 
selection using time or MDM will promote consistency across E/M code 
families, as these changes parallel the recent changes to the O/O E/M 
visit codes (specifically, allowing visits to be selected based on time 
or MDM, and eliminating the requirements that a certain number of 
``components'' must be completed). Several commenters specifically 
indicated that they found the revisions to the O/O E/M descriptors in 
CY 2021 to be positive in terms of reducing administrative burden, and 
supported similar changes to the Hospital Inpatient and Observation 
Care descriptors. Several commenters noted it may reduce situations in 
which practitioners and their coders must distinguish between hospital 
inpatient and observation status for correct billing.
    However, one commenter raised concerns about the proposed changes 
to the Hospital Inpatient and Observation Care descriptors, 
particularly that the level of visit will be based on time or MDM only. 
The commenter expressed concern that the new guidelines will discourage 
physicians from performing a comprehensive history and physical exam. 
The commenter suggested that hospital quality issues could arise if E/M 
documentation does not include the information needed for billing 
services under the Inpatient Prospective Payment System or document 
information in accordance with hospital Conditions of Participation 
(such as 42 CFR 482.22(c)(5)(i), which requires completion and 
documentation of a history and physical exam for each hospital patient 
within a specified timeframe of admission).
    Response: We appreciate commenters' feedback. We refer readers to 
the discussion of our multi-year effort with the American Medical 
Association (AMA) and other interested parties to update coding and 
payment for evaluation and management (E/M) visits in section II.F.1. 
above. We note that, per the new CPT code descriptors, a medically 
appropriate history and/or examination will be required, but will no 
longer be used to select visit level. We do not believe the revised CPT 
descriptors are in conflict with hospital documentation requirements 
outside of the PFS. Practitioners working in hospitals should continue 
to be aware of the documentation needed to meet requirements for other 
payment systems or CoPs, in addition to the documentation required to 
bill Hospital Inpatient and Observation Care codes under the PFS.
    Comment: While not opposing our proposal to adopt the consolidation 
of the two code families, two commenters requested a delay in 
implementation of the revised coding. One commenter requested a 90-day 
delay in implementation to allow for updates to their electronic 
billing system (to update both the time changes in the descriptors and 
the removal of the observation code set.). Similarly, another commenter 
expressed concern about the overall ability of emergency physician 
practices to adapt to E/M changes for CY 2023, specifically changes to 
documentation guidelines and, restructured observation care codes, and 
a continued discrepancy between CPT and PFS coding for critical care 
services that took effect in CY 2022. This commenter was also concerned 
about hospital staffing shortages impacting implementation of changes 
to the observation codes. This commenter stated that many changes to 
the observation codes and billing rules are complicated and will take 
time to fully incorporate into workflows; and that CMS should consider 
delaying or phasing in some of the changes to the observation codes and 
billing requirements.
    Response: We appreciate commenters' feedback. CPT has finalized its 
consolidation of and changes to the Hospital Inpatient and Observation 
Care code families effective January 1, 2023. This means, effective 
January 1, 2023, the observation care codes (CPT codes 99217-99220 and 
99224-99227) will no longer be valid, and the revised codes (CPT codes 
99221-99223, 99231-99236) will be in effect; this is a deadline set by 
CPT that CMS cannot influence. If we were to retain the observation 
coding or the CY 2022 descriptors even temporarily past January 1, 
2023, we would have to create G-codes to replace the deleted or altered 
CPT codes. In this instance, creating G-codes would not alleviate 
commenters' concerns about having to update electronic billing systems. 
In addition, we would have to delay revaluation, since the RUC-
recommended values are based on a survey of the codes as revised by CPT 
for CY 2023.
    As discussed throughout this section, it is our intention that, 
aside from the actual CPT codes selected and the changes to descriptor 
times, the billing policies for Hospital Inpatient and Observation Care 
will remain largely the same, unless otherwise specified.
    Comment: One commenter, while not opposing our proposal to adopt 
the revised CPT descriptors for the Hospital Inpatient and Observation 
Care codes, expressed dissatisfaction with some aspects of the revised 
coding (particularly CPT's guidelines for determining MDM).
    Response: We appreciate this commenter's feedback. We proposed to 
adopt the CPT guidelines for determining MDM levels, and we understand 
that the specialty societies contributed to their revision for 2023 
through the AMA Workgroup and CPT processes. Suggestions for additional 
revisions can be made to the AMA/CPT, and we will consider any future 
changes to the MDM guidelines for future rulemaking.
    Comment: One commenter interpreted our proposal to adopt the 
consolidation of the Hospital Inpatient and Observation Care code as an 
acknowledgment that there is no difference in the physician work or 
resources required for patients who have been admitted to a hospital 
versus patients seen in observation status. The commenter suggested 
that the consolidation of the code families is evidence that we should 
discontinue the application of our ``23-hour rule.''
    Response: At this time, we do not intend to discontinue our ``23-
hour

[[Page 69591]]

rule'' (which is discussed in greater detail in the CY 2011 PFS final 
rule at 75 FR 73226); such consideration would be out of scope for this 
section of the rule, which pertains specifically to revisions, 
policies, and valuations of the Hospital Inpatient and Observation Care 
code sets. However, as discussed further in section II.F.3.b. below, in 
light of the consolidation of the Hospital Inpatient and Observation 
Care code sets, we will review whether, and if so, how our policies 
relating to hospital inpatient and observation services (including the 
``23-hour rule'') interact and look forward to further engagement with 
the public.
    Comment: Several commenters requested clarification of our proposal 
to align with the CPT guidance that a continuous service that spans the 
transition of 2 calendar dates is a single service and is reported on 
the date the service began. The commenters indicated they were unclear 
what ``continuous'' means in this context.
    Response: We note that this instruction comes from the CPT 
Codebook, and we direct commenters to the CPT for additional 
clarification, if needed.
    After consideration of public comments, we are finalizing the 
updates to the Hospital Inpatient and Observation Care code descriptors 
and the other policies articulated in this section as proposed.
b. ``8 to 24-Hour Rule'' for Hospital Inpatient or Observation Care
    We proposed to retain what is known as the ``8 to 24-hour rule'' 
regarding payment of admission, discharge, or same-day admission/
discharge codes, depending on the length of stay and whether the 
patient was discharged on a different calendar date than they were 
admitted (refer to the Medicare Claims Processing Manual, IOM 100-04, 
Chapter 12, sections 30.6.8.B and 30.6.9.1.C.). As we discussed in the 
CY 2001 PFS final rule (65 FR 65376), the ``8 to 24-hour rule'' was 
designed to avoid unintended incentives to keep a patient in the 
hospital past midnight during a stay lasting less than 24 hours. When 
this policy was memorialized in the CY 2001 PFS final rule, it was 
applied to both the initial inpatient hospital care codes (CPT codes 
99221 through 99223) and the initial observation care codes (CPT codes 
99218 through 99220) which CPT has deleted for 2023. The policy we 
proposed at 87 FR 45990 appeared as follows:
     If the beneficiary receives less than 8 hours of hospital 
inpatient or observation services, the practitioner may not bill for 
the same-day admission/discharge codes or hospital inpatient and 
observation discharge day management services (to be described by CPT 
codes 99234-6 and 99238 and 99239, respectively). If a patient receives 
less than 8 hours of hospital inpatient or observation services, we 
proposed that the practitioner would bill only initial inpatient or 
observation care (described by CPT codes 99221, 99222, or 99223, as 
appropriate).
     If a beneficiary receives hospital inpatient or 
observation services for a minimum of 8 hours but less than 24 hours, 
we proposed that the practitioner would bill CPT codes 99234, 99235, or 
99236, as appropriate. (These codes, commonly referred to as ``same-day 
discharge'' codes, describe hospital inpatient or observation care that 
includes both admission and discharge as part of a single service.)
     If a beneficiary is admitted for hospital inpatient care 
or begins observation and is then discharged after more than 24 hours, 
we proposed that the practitioner could bill an initial hospital 
inpatient or observation care code (CPT codes 99221 through 99223) for 
the date of admission, and a hospital discharge day management service 
(CPT code 99238 or 99239) on the date of discharge.
    We wish to correct the policy as it was proposed in 87 FR 45990 and 
retract the examples we provided illustrating that policy as it 
appeared. It was our intention to synthesize the policy (which appears 
in several places in the Medicare Claims Processing Manual, as cited 
above), and to reiterate that it would remain in effect even after the 
consolidation of the Hospital Inpatient and Observation Care codes. 
When we summarized the policy, the references to discharge ``on the 
same calendar date'' or ``on a different calendar date'' were removed 
from parts of the policy in error. We apologize for this confusion.
    We intended to retain the billing policy for Hospital Inpatient 
codes as it is reflected in the Medicare Claims Processing Manual, 
Chapter 12, section 30.6.9.1.C, which states:

    ``When the patient is admitted to inpatient hospital care for 
less than 8 hours on the same date, then Initial Hospital Care, from 
CPT code range 99221-99223, shall be reported by the physician. The 
Hospital Discharge Day Management service, CPT codes 99238 or 99239, 
shall not be reported for this scenario. When a patient is admitted 
to inpatient initial hospital care and then discharged on a 
different calendar date, the physician shall report an Initial 
Hospital Care from CPT code range 99221-99223 and a Hospital 
Discharge Day Management service, CPT code 99238 or 99239. When a 
patient has been admitted to inpatient hospital care for a minimum 
of 8 hours but less than 24 hours and discharged on the same 
calendar date, Observation or Inpatient Hospital Care Services 
(Including Admission and Discharge Services), from CPT code range 
99234-99236, shall be reported.''

    We also intended to retain the 8 to 24-hour policy for observation 
care, as it is reflected in relevant part in the Medicare Claims 
Processing Manual, Chapter 12, section 30.6.8.B:

    ``When a patient receives observation care for less than 8 hours 
on the same calendar date, the Initial Observation Care, from CPT 
code range 99218-99220, shall be reported by the physician. The 
Observation Care Discharge Service, CPT code 99217, shall not be 
reported for this scenario. When a patient is admitted for 
observation care and then is discharged on a different calendar 
date, the physician shall report Initial Observation Care, from CPT 
code range 99218-99220, and CPT observation care discharge CPT code 
99217 . . . . When a patient receives observation care for a minimum 
of 8 hours, but less than 24 hours, and is discharged on the same 
calendar date, Observation or Inpatient Care Services (Including 
Admission and Discharge Services) from CPT code range 99234-99236 
shall be reported. The observation discharge, CPT code 99217, cannot 
also be reported for this scenario.''

    We note that the policy for observation care refers to CPT codes 
that will no longer be valid effective January 1, 2023. Per the 
discussion in section II.3.a., we are adopting the new CPT coding that 
consolidates Hospital Inpatient and Observation Care. Thus, we clarify 
that we intended to propose that while the policies reflected in the 
Medicare Claims Processing Manual (IOM 100-04) at Chapter 12, sections 
30.6.8.B. and 30.6.9.1.C), would still apply, both hospital inpatient 
and observation care coding should be billed as follows: When a patient 
receives hospital inpatient or observation care for less than 8 hours, 
only the Initial Hospital Inpatient or Observation Care (CPT codes 
99221-99223) shall be reported by the practitioner for the date of 
admission.\107\ Hospital or Observation Discharge Day Management (CPT 
codes 99238-99239) shall not be reported for this scenario. When a 
patient is admitted for hospital inpatient or observation care and then 
is discharged on a different calendar date, the practitioner shall 
report Initial Hospital Inpatient or Observation Care (CPT codes 99221-
99223) and Hospital

[[Page 69592]]

Inpatient or Observation Discharge Day Management (CPT code 99238 or 
99239). When a patient receives hospital inpatient or observation care 
for a minimum of 8 hours and is discharged on the same calendar date 
(thus the stay is less than 24 hours), Observation or Inpatient Care 
Services (Including Admission and Discharge Services) from CPT code 
range 99234-99236 shall be reported. CPT codes 99238-99239 cannot also 
be reported for this scenario.
---------------------------------------------------------------------------

    \107\ We believe this language is a more accurate reflection of 
this policy as it appears in 65 FR 65409, which reads, ``If a 
patient is admitted as a hospital inpatient or an observation care 
patient for less than 8 hours, we will pay for only the admission 
service (CPT codes 99221 to 99223 or 99218 to 99220) on that day. 
The discharge service is not a separately billable service.''
---------------------------------------------------------------------------

    Despite the inadvertent misstatement of the policy in the proposed 
rule, our central rationale for wanting to retain the rule remains 
intact. We believed it was necessary to retain our ``8 to 24-hour 
rule'' to avoid making overpayments, encouraging improper billing of 
two E/M visits on the same day, or creating incentives to unnecessarily 
extend beneficiaries' hospital stays past midnight. Initial Hospital 
Inpatient and Observation Care codes (CPT codes 99221 through 99223 and 
99234 through 99239) are billed ``per day,'' and have been valued to 
account for all services a practitioner furnishes during the day-long 
billing period. In an environment such as a hospital, where admissions 
can occur 24 hours a day, relying solely on the calendar date of an 
admission or observation stay, to determine a billing day can be 
misleading, which is why we proposed to retain the existing ``8 to 24-
hour rule.''
    Comment: One commenter expressed support for our proposal to retain 
the ``8 to 24-hour rule.'' The commenter questioned, however, whether 
there was a possible overlap between the ``8 to 24-hour rule'' and the 
``23-hour rule.''
    Response: We note that this is a distinct policy from the ``23-hour 
rule'' (which is discussed in greater detail in the CY 2011 PFS final 
rule at 75 FR 73226). We acknowledge that we have multiple policies 
that apply, for different purposes, to services delivered to hospital 
inpatients and outpatients. In light of the consolidation of the 
Hospital Inpatient and Observation Care code sets, we will begin an 
internal review of whether, and if so, how these policies interact; we 
welcome further engagement with the public as we consider whether 
future rulemaking is needed to reconcile any of our policies.
    Comment: Several commenters requested that we consider how the ``8 
to 24-hour rule'' interacts with the ``2-midnight rule.'' Specifically, 
commenters noted that the ``clocks'' for counting the ``8 to 24-hour 
rule'' versus the ``2-midnight rule'' may start running at different 
times, which the commenters regard as burdensome.
    Response: We note that the ``8 to 24-hour rule'' is distinct from 
the ``2-midnight rule'' (which is discussed in the CY 2016 Outpatient 
Prospective Payment Schedule final rule at 80 FR 70305). We acknowledge 
that we have multiple time-based policies, applicable under different 
payment systems, which relate to services delivered to hospital 
inpatients and outpatients. In light of the consolidation of the 
Hospital Inpatient and Observation Care code sets, we will review how 
these policies interact and look forward to further engagement with the 
public.
    Comment: Several commenters expressed concern either with the ``8 
to 24-hour rule'' itself, or with perceived changes to the policy. One 
commenter noted, correctly, our current policy which is reflected in 
the Medicare Claims Processing Manual, IOM 100-04, Chapter 12, section 
30.6.8.B: ``When a patient receives observation care for a minimum of 8 
hours but less than 24 hours, and then is discharged on the same 
calendar date, Observation or Inpatient Hospital Care Services 
(Including Admission and Discharge Services), from CPT code range 
99234-99236, shall be reported.'' However, the commenter noted that in 
the proposed rule at 87 FR 45990, we stated this policy differently--
namely, that we did not specify that CPT codes 99234-99236 may be 
billed if a patient is in the hospital for ``more than 8 hours but less 
than 24 hours, and discharged on the same date [emphasis added].'' 
Commenters were concerned that we were articulating a new requirement 
that patients must have been in the hospital for a complete 24 hours 
before a Hospital Inpatient or Observation Care Discharge Day 
Management code (CPT codes 99238-99239) could be billed.
    Several commenters observed that our proposed policy, as written in 
87 FR 45990, required that an entire 24-hour period be completed before 
being able to bill the same-day admission/discharge CPT codes 99234-
99236 (regardless of whether the 24-hour period spanned one calendar 
day or two.) Commenters stated that tracking a complete 24-hour 
interval would be difficult for their current recordkeeping systems.
    Response: As explained above, it was not our intention to 
articulate a new policy, but rather to retain the current policy, and 
clarify that it would remain in effect even after the consolidation of 
the Hospital Inpatient and Observation Care codes. We also intended to 
specify that observation care should be billed according to the new 
consolidated CPT coding for hospital inpatient and observation care. In 
the policy, as presented in the proposed rule, the references to 
discharge either on ``the same calendar date'' or ``a different 
calendar date'' were removed in error. We apologize for this confusion.
    We hope this clarification addresses the commenters' concerns. 
However, given the apparent confusion about the application of the ``8 
to 24-hour rule'' in general, we welcome additional public engagement 
on this issue as we continue to review the 8 to 24-hour rule and other 
billing or resource valuation policies that may affect hospital 
inpatient and observation services in light of our adoption of the CPT-
revised single set of codes for inpatient and observation care.
    Comment: One commenter raised a concern that the ``8 to 24-hour 
rule,'' as proposed, differed from CPT billing guidance, noting that 
CPT code selection is based on calendar date and the CMS policy (as 
represented in the proposed rule) is based on the time of service. The 
commenter stated that they understood the rationale for requiring at 
least 8 hours of service to report CPT codes 99234-99236, but did not 
agree with the apparent proposal to require that more than 24 hours 
must elapse before any code other than CPT codes 99234-99236 may be 
billed. The commenter also suggested that the RUC surveys and 
valuations for CPT codes 99234-99236 did not contemplate that these 
codes would span a mandatory 24-hour interval.
    Response: We believe that some of the commenter's concerns may be 
alleviated by the clarification of our ``8 to 24-hour rule'' as 
discussed in the prior response--namely that CPT codes 99234-99236 may 
be billed if a patient receives more than 8 hours of care and is 
discharged on the same calendar date; we are not requiring that a full 
24 hours must have elapsed.
    We note that the difference between our current ``8 to 24-hour 
rule'' (as clarified above) and the CPT reporting instructions 
effective beginning in 2023 appears to center on how to handle stays 
lasting less than 8 hours, and the definition of ``encounter'' (or lack 
of a definition) when CPT instructs that same-day admission and 
discharge codes may be reported when there is an admission encounter 
and a discharge encounter on the same day. (2023 CPT Codebook, p. 17). 
We remain concerned that, while unusual, very short hospital stays 
crossing a single midnight could be reported inappropriately using two 
codes, when the resources expended are better accounted for in one; or 
that a same-day admission and discharge code might be inappropriately 
reported instead of an initial visit code, where the latter would more 
appropriately describe the furnished service. We also

[[Page 69593]]

acknowledge that there may be circumstances in which patients may be in 
the hospital for short stays, but still require significant 
practitioner time. We believe practitioners may be able to bill the 
prolonged HCPCS code G0316 in these circumstances, which is discussed 
in section II.F.3.f. and Table 24.
    Since the AMA's public comment indicated that they will refer 
issues regarding multiple same-day visit billing back to CPT for 
review, we recommend that they include these issues in their review. We 
will continue to review any future clarifications or reporting 
instruction changes that may be made by CPT.
    Comment: One commenter requested that we delay enforcement of the 8 
to 24-hour rule for one year in light of all of the changes to the 
Hospital Inpatient and Observation Care codes.
    Response: The ``8 to 24-hour rule,'' itself, is not a new policy, 
but we acknowledge the need for ongoing review of this policy in light 
of the coding and valuation changes that take effect in 2023 for 
hospital inpatient and observation services.
    After consideration of public comments received, we are finalizing 
our proposal to retain the 8 to 24-hour rule as clarified above. We are 
retaining our 8 to 24-hour policy and updating it only to reflect the 
consolidation of the Hospital Inpatient and Observation Care code 
families. As updated, our final policy is summarized in Table 22.

     Table 22--Summary of Final Policy for the ``8 to 24-Hour'' Rule
------------------------------------------------------------------------
   Hospital length of stay        Discharged on        Code(s) to bill
------------------------------------------------------------------------
<8 hours....................  Same calendar date    Initial hospital
                               as admission or       services only.*
                               start of
                               observation.
8 or more hours.............  Same calendar date    Same-day admission/
                               as admission or       discharge.*
                               start of
                               observation.
<8 hours....................  Different calendar    Initial hospital
                               date than admission   services only.*
                               or start of
                               observation.
8 or more hours.............  Different calendar    Initial hospital
                               date than admission   services * +
                               or start of           discharge day
                               observation.          management.
------------------------------------------------------------------------
* Plus prolonged inpatient/observation services, if applicable.

c. Proposed Definition of Initial and Subsequent Hospital Inpatient or 
Observation Visit
    According to the 2023 CPT Codebook (p. 15), an ``initial'' service 
may be reported when ``the patient has not received any professional 
services from the physician or other qualified health care professional 
or another physician or other qualified health care professional of the 
exact same specialty and subspecialty who belongs to the same group 
practice during the stay. When advanced practice nurses and physician 
assistants are working with physicians they are in the exact same 
specialty and subspecialty as the physician.'' The revised CPT codes 
99231 through 99233 describe subsequent hospital inpatient or 
observation care services similarly. According to the 2023 CPT Codebook 
(2023 CPT Codebook, p. 15), a ``subsequent'' service is reported when 
the patient has received any professional services from the physician 
or other qualified health care professional or another physician or 
other qualified health care professional of the exact same specialty 
and subspecialty who belongs to the same group practice during the 
stay.
    As we do not recognize subspecialties, we proposed slightly amended 
definitions of ``initial'' and ``subsequent'' service:
     An initial service would be defined as one that occurs 
when the patient has not received any professional services from the 
physician or other qualified health care professional or another 
physician or other qualified health care professional of the same 
specialty who belongs to the same group practice during the stay.
     A subsequent service would be defined as one that occurs 
when the patient has received any professional services from the 
physician or other qualified health care professional or another 
physician or other qualified health care professional of the same 
specialty who belongs to the same group practice during the stay.
    These are the same definitions that we proposed for ``initial'' and 
``subsequent'' in the context of nursing facility visits below. We also 
proposed that for both initial and subsequent visits, when advanced 
practice nurses and physician assistants are working with physicians, 
they are always classified in a different specialty than the physician 
(please refer to additional discussion in section II.F.2 above).
    Comment: One commenter supported our proposed definition of initial 
and subsequent visits, noting that, given the large number of 
subspecialties, tracking ``initial'' or ``subsequent'' visits based on 
subspecialties is cumbersome.
    Response: We thank the commenter for their support.
    Comment: Several commenters requested that CMS adopt the CPT 
definition of ``initial'' and ``subsequent,'' which includes 
consideration of subspecialties.
    Response: As noted in our discussion above in section II.F.2, we 
are continuing to consider whether we could better align our payment 
taxonomy with clinical practice, including whether to recognize 
subspecialties. At this time, however, we are retaining our current 
taxonomy (which does not include recognition of subspecialties) as 
described in the Medicare Claims Processing Manual, Pub. 100-04, 
Chapter 26, section 10.8, et seq.
    Comment: Several commenters requested clarification on how these 
definitions would apply when care was provided by NPPs. The commenters 
questioned whether care provided by NPPs would be considered as having 
been delivered by a different specialty. Several commenters also asked 
if we were revising our specialty taxonomy as it pertains to NPPs.
    Response: We are not revising our specialty taxonomy for NPPs. As 
noted in our discussion above in section II.F.a.2, we are continuing to 
consider whether we could better align our payment taxonomy with 
clinical practice, including whether (and how) to recognize NPPs as 
being in the same specialty as the physician with whom they work. At 
this time, however, we are retaining our current taxonomy (which 
includes recognition of NPPs as being in their own specialties) as 
described in the Medicare Claims Processing Manual, Pub. 100-04, 
Chapter 26, section 10.8, et seq.
    After consideration of public comments, we are finalizing our 
definition of initial and subsequent visits as proposed.

[[Page 69594]]

d. Transitions Between Settings of Care and Multiple Same-Day Visits 
for Hospital Patients Furnished by a Single Practitioner
    We proposed to retain our current policy that, for the purposes of 
reporting an initial hospital inpatient or observation care service, a 
transition from observation status to inpatient status does not 
constitute a new stay (Medicare Claims Processing Manual, IOM 100-04, 
Chapter 12, section 30.6.8.D). For instance, if a practitioner places a 
beneficiary in observation status on one date of service (and bills an 
initial observation visit to be described under CPT code 99221 through 
99223), and then determines later in the stay that the beneficiary 
should be admitted to the hospital as an inpatient, the practitioner 
would not bill a second initial visit for the hospital inpatient stay. 
Rather, the practitioner would bill the work done on the inpatient 
admission day as a subsequent visit (CPT codes 99231, 99232, or 99233). 
This policy aligns with language in the 2023 CPT Codebook instructions. 
(2023 CPT Codebook, p. 16).
    We also proposed to retain our policy that, if a patient is seen in 
an office setting on one date and receives care at a hospital (for 
inpatient or observation care) on the next date from the same 
practitioner, both visits are payable to that practitioner, even if 
less than 24 hours has elapsed between the visit and the hospital 
inpatient or observation care (Medicare Claims Processing Manual, IOM 
100-04, Chapter 12, section 30.6.9.1.B). We also proposed, however, to 
retain our current policy that, when a patient is admitted to 
outpatient observation or as a hospital inpatient via another site of 
service (such as, hospital ED, office, nursing facility), all services 
provided by the practitioner in conjunction with that admission are 
considered part of the initial hospital inpatient or observation care 
when performed on the same date as the admission (Medicare Claims 
Processing Manual, IOM 100-04, Chapter 12, section 30.6.9.1.A). This 
policy differs somewhat from the instructions provided in the 2023 CPT 
Codebook (p. 15-16), which allows for payment of both visits on the 
same date using Modifier 25.
    We believe it is important to retain both policies, as they promote 
appropriate payment in situations in which the beneficiary visits the 
practitioner in a non-hospital setting, before the practitioner 
determines that hospital admission is necessary. The codes for initial 
hospital inpatient or observation visits (CPT codes 99221 through 
99223) are billed ``per day'' and include all work furnished by the 
practitioner on the day of admission. The initial hospital inpatient 
and observation care codes do not include work furnished by the 
practitioner prior to the date of admission. Thus, under our proposal, 
for example, if a practitioner sees a beneficiary in an office setting 
at 5 p.m. on April 1st, and the practitioner then admits the 
beneficiary to the hospital at 7 a.m. on April 2nd, these would be 
separately billable payments, because initial hospital inpatient or 
observation care codes (CPT code 99221 through 99223) billed for April 
2nd would not retroactively cover the work furnished on April 1st. 
However, if the practitioner sees the beneficiary in the office setting 
at 7 a.m. on April 1st and then admits the beneficiary at 9 p.m. on 
April 1st, all time the practitioner spent furnishing services to that 
beneficiary would be reportable under the initial hospital inpatient or 
observation care code (CPT code 99221 through 99223).
    We also proposed to retain our current billing policy in the 
Medicare Claims Processing Manual, IOM 100-04, Chapter 12, section 
30.6.1.A that a practitioner may bill only for an initial hospital or 
observation care service if the practitioner sees a patient in the ED 
and decides to either place the patient in observation status or admit 
the patient as a hospital inpatient. For discussion of additional 
policy proposals regarding patients seen in both the ED and the 
hospital, refer to section II.F.5. on Emergency Department Services.
    We proposed to preserve our current billing policies for patients 
in swing beds, which are as follows: If the inpatient care is being 
billed by the hospital as inpatient hospital care, the hospital care 
codes (CPT codes 99221 through 99223 and 99231 through 99239) apply 
(Medicare Claims Processing Manual, IOM 100-04, Chapter 12, section 
30.6.9.D). If the inpatient care is being billed by the hospital as 
nursing facility care, then the nursing facility codes (CPT codes 99304 
through 99316) apply. Please refer to section II.F.6 below on Nursing 
Facility Care Services for additional discussion of billing hospital 
inpatient or observation care and nursing facility care.
    Comment: Several commenters did not support our proposal to retain 
the current policy regarding the billing of multiple visits in 
different settings by the same practitioner for the same patient on the 
same date. Commenters observed that our policy does not align with CPT 
guidance on multiple same-day visits. Several commenters also noted 
that Medicare billing policy may allow for separate billing of multiple 
same-day E/M visits in certain situations.
    Response: We note that the policies in this section are 
restatements of longstanding policies regarding billing by the same 
practitioner for multiple same-day E/M visits furnished to the same 
patient. We acknowledge that our policies in some cases differ from CPT 
reporting instructions. We also agree that, as noted in several places 
in our manual and noted in this rule, there are circumstances in which 
we will allow payment for multiple same-day E/M visits. The goal of our 
policies is to avoid duplicative payments, where the work involved in 
multiple interactions with the same patient on the same day may 
overlap. We plan to consider different approaches to this issue in 
future rulemaking cycles.
    We will be monitoring billing patterns in the claims data, as we 
continue to consider these issues. In its public comment, the AMA 
indicated that it may refer the issue of multiple same-day visit 
billing back to CPT for additional review. We will also review any 
future changes that may be made to CPT reporting instructions.
    Comment: One commenter noted that, in our discussion of our 
proposal at 87 FR 45991 regarding the transition from observation 
status to inpatient, we stated, ``For instance, if a practitioner 
places a beneficiary in observation status on one date of service (and 
bills an initial observation visit to be described under CPT code 99221 
through 99223), and then determines later in the stay that the 
beneficiary should be admitted to the hospital as an inpatient, the 
practitioner would not bill a second initial visit for the hospital 
inpatient stay. . . .'' The commenter recommended that we clarify that 
in this instance, ``later in the stay'' should refer to ``later in the 
day.'' The commenter observed that a practitioner would not be able to 
submit two claims (one for the observation care and one for the 
hospital care) for care delivered on the same day.
    Response: We reiterate that we proposed to align our policy with 
the guidance in the 2023 CPT Codebook at p.16, where it says, ``For the 
purpose of reporting an initial hospital inpatient or observation care 
service, a transition from observation level to inpatient does not 
constitute a new stay.'' We agree with the commenter that a 
practitioner cannot submit two separate visits for Hospital Inpatient 
or Observation Care for care delivered to the same patient on the same 
date. However, the practitioner

[[Page 69595]]

can report prolonged inpatient or observation services, as applicable, 
if time is used to select visit level.
    Comment: One commenter requested clarification of the policy for 
physicians who see patients in the ED who are then placed in 
observation status.
    Response: We thank the commenter for this clarification request. 
First, we note that there was a typographical error in our proposed 
rule at 87 FR 45991. We had intended to state that we are retaining the 
policy in Medicare Claims Processing Manual, IOM 100-04, Chapter 12, 
section 30.6.9.1.A (not, as we stated in the proposed rule, section 
30.6.1.A). We clarify that we proposed to retain the policy reflected 
in section 30.6.9.1.A, which reads, ``A/B MACs (B) pay for an initial 
hospital care service if a physician sees a patient in the emergency 
room and decides to admit the person to the hospital. They do not pay 
for both E/M services. Also, they do not pay for an emergency 
department visit by the same physician on the same date of service.'' 
(We note that where the manual refers to ``physicians,'' the policy 
applies to both physicians and qualified NPPs, as appropriate.) In 
order to align our billing policies with the consolidated CPT coding 
(discussed in section II.3.a.), this policy would apply to hospital 
inpatient and observation care billed under CPT codes 99221-99223 and 
99231-99236.
    Comment: One commenter requested that we review our billing policy 
for people transitioning between observation status and NF settings.
    Response: We thank the commenter for their feedback. We will 
continue to review policies relating to the consolidation of coding for 
Hospital Inpatient and Observation Care, and identify policies that may 
need further adjustment or clarification in future rulemaking.
    After consideration of public comments, we are finalizing the 
following policies as proposed in this section:
     For the purposes of reporting an initial hospital 
inpatient or observation care service, a transition from observation 
status to inpatient status does not constitute a new stay.
     If a patient is seen in an office setting on one date and 
receives care at a hospital (for inpatient or observation care) on the 
next date from the same practitioner, both visits are payable to that 
practitioner, even if less than 24 hours has elapsed between the office 
visit and the hospital inpatient or observation care.
     When a patient is admitted to outpatient observation or as 
a hospital inpatient via another site of service (such as, hospital ED, 
office setting, nursing facility), all services provided by the 
practitioner in conjunction with that admission are considered part of 
the initial hospital inpatient or observation care when performed on 
the same date as the admission. Prolonged time can be counted toward 
reporting of prolonged inpatient/observation services (see Table 24).
     A practitioner may bill only for an initial hospital or 
observation care service if the practitioner sees a patient in the ED 
and decides to either place the patient in observation status or admit 
the patient as a hospital inpatient.
     If the inpatient care is being billed by the hospital as 
inpatient hospital care, the hospital care codes (CPT codes 99221 
through 99223 and 99231 through 99239) apply. If the inpatient care is 
being billed by the hospital as nursing facility care, then the nursing 
facility codes (CPT codes 99304 through 99316) apply.
e. Impact of Changes to Hospital Inpatient or Observation Codes on 
Billing and Claims Processing Policies
    We proposed that, starting in CY 2023, hospital inpatient and 
observation care by practitioners will be billed using the same CPT 
codes--CPT codes 99221 through 99223, 99231 through 99233, and 99238 
and 99239. (We noted that currently, both hospital inpatient and 
observation care are already billed under CPT codes 99234 through 99236 
for same-day discharge). Therefore, though the current observation care 
codes (CPT codes 99218 through 99220 and 99224 through 99226) are being 
deleted, practitioners will still be able to furnish and bill for 
observation services. We solicited feedback from the public on 
potential challenges to billing or claims processing policies for 
hospital inpatient or observation care as reflected in the Medicare 
Claims Processing Manual (IOM 100-04, Chapter 12), including possible 
impact on: billing for patients during a global period (Medicare Claims 
Processing Manual, IOM 100-04, Chapter 12, sections 30.6.8.E and 
30.6.9.2.A); documentation requirements (Medicare Claims Processing 
Manual, IOM 100-04, Chapter 12, sections 30.6.8.C and 30.6.9.1.D); 
modifiers associated with hospital inpatient or observation care claims 
(Medicare Claims Processing Manual, IOM 100-04, Chapter 12, section 
30.6.9.1.F); and any other issues not otherwise discussed in this 
proposed rule that may need to be addressed through additional 
guidance.
    Comment: We received a number of responses to our request for 
information about policies potentially impacted by the consolidation of 
Hospital Inpatient and Observation Care codes. These comments included 
requests for clarification on or review of:
     Changes (if any) to place of service (POS) for observation 
care claims;
     Changes (if any) to billing in circumstances where 
practitioners previously would have billed O/O E/M codes; and
     Changes (if any) to the use of the AI modifier to identify 
the attending practitioner on claims.
    We also received a recommendation to create a new POS code for 
patients in observation status to aid in reporting and tracking of E/M 
services for patients admitted under observation status versus patients 
seen in the emergency department.
    Response: We thank commenters for their feedback. We will continue 
to engage with the public and review our policies in light of the 
consolidation of the Hospital Inpatient and Observation Care codes. At 
this time, we are not making changes to POS policy (including the POS 
that should be placed on a claim for a patient receiving observation 
care). We are also not changing policies affecting billing, at this 
time, when multiple practitioners furnish E/M services to the same 
patient on the same day (such as the policy in Chapter 12 of the 
Medicare Claims Processing Manual (IOM 100-04), section 30.6.8.A, which 
specifies that while the practitioner who orders the observation care 
for a patient may bill for observation care, other practitioners 
providing additional evaluations for the patient bill their services as 
O/O E/M codes.) We are also not currently making any changes to current 
policy on the use of the AI modifier.
    We will consider the questions, concerns, and suggestions provided 
by commenters in our ongoing review of hospital inpatient and 
observation care policy. Absent further clarifications or additional 
rulemaking, billing practitioners and providers should continue to 
submit claims as they would have prior to the consolidation, though 
using the revised CPT codes 99221-99223, 99231-99233, 99238-99239, and 
G0316 (as applicable) to reflect observation care services (and unless 
otherwise specified in this final rule).
    Comment: One commenter requested clarification of guidance in the 
Medicare Claims Processing Manual, IOM 100-04, Chapter 4, regarding how 
time is counted and reported for HCPCS code G3078 (Hospital observation 
service, per hour).
    Response: We believe that the commenter's request pertains to 
payment made for observation under the

[[Page 69596]]

OPPS, which is outside the scope of this rulemaking as we only address 
observation care billed by practitioners under the PFS. We direct 
commenters with questions regarding hospital billing or payment to 
their MACs for further assistance.
    After consideration of public comments, we are finalizing our 
proposal that, starting for services furnished in CY 2023, hospital 
inpatient and observation care furnished by practitioners will be 
billed using CPT codes 99221 through 99223, 99231 through 99233, 99234 
through 99236, 99238 and 99239, and G0316 (as applicable). As noted 
above, we will also review our billing policies and consider updates as 
necessary.
f. Prolonged Services for Hospital Inpatient or Observation Care
    As part of its E/M revisions, the CPT Editorial Panel made several 
changes to prolonged codes that currently can be billed with inpatient 
or observation codes. In its February 2021 meeting, the CPT Editorial 
Panel deleted Prolonged Service with Direct Patient Contact (Except 
with Office or Other Outpatient Services), including CPT code 99356 
(Prolonged service in the inpatient or observation setting, requiring 
unit/floor time beyond the usual service; first hour; List separately 
in addition to code for inpatient or observation Evaluation and 
Management service) and CPT code 99357 (each additional 30 minutes), 
effective January 1, 2023. The 2022 CPT Codebook instructions indicate 
that CPT codes 99356 and 99357 can be used in conjunction with hospital 
inpatient or observation care (CPT codes 99218 through 99236). We refer 
readers to instructions on pages 41-42 of the 2022 CPT Codebook, for 
example.
    To replace deleted CPT codes 99356 and 99357, the CPT Editorial 
Panel created CPT code 99418 (Prolonged inpatient or observation 
evaluation and management service(s) time with or without direct 
patient contact beyond the required time of the primary service when 
the primary service level has been selected using total time, each 15 
minutes of total time.) (List separately in addition to the code of the 
inpatient and observation Evaluation and Management services), which 
was referred to in the CY 2023 PFS proposed rule under its placeholder 
CPT code 993X0. Additional guidance from the 2023 CPT Codebook states, 
``Code 99418 is used to report prolonged total time (that is, combined 
time with and without direct patient contact) provided by the physician 
or other qualified health care professional on the date of an inpatient 
E/M service (that is, CPT codes 99223, 99233, 99236, 99255, 99306, 
99310). Prolonged total time is time that is 15 minutes beyond the time 
required to report the highest-level primary service.'' (2023 CPT 
Codebook, p. 29.)
    We did not propose to adopt CPT code 99418, as we believed that the 
billing instructions for CPT code 99418 would lead to administrative 
complexity, potentially duplicative payments, and limit our ability to 
determine how much time was spent with the patient using claims data; 
these reasons are discussed in further detail below. We instead 
proposed to create a single G-code that describes prolonged inpatient 
or observation services, and that could be reported in conjunction with 
CPT codes 99223, 99233, and 99236. This G-code would be G0316 (referred 
to in the proposed rule as GXXX1):
     G0316 Prolonged hospital inpatient or observation care 
evaluation and management service(s) beyond the total time for the 
primary service (when the primary service has been selected using time 
on the date of the primary service); each additional 15 minutes by the 
physician or qualified healthcare professional, with or without direct 
patient contact (list separately in addition to CPT codes 99223, 99233, 
and 99236 for hospital inpatient or observation care evaluation and 
management services). (Do not report G0316 on the same date of service 
as other prolonged services for evaluation and management 99358, 99359, 
99415, 99416, 99418). (Do not report G0316 for any time unit less than 
15 minutes).
    In parallel to CPT's coding revisions for prolonged inpatient or 
observation services, we proposed that the G0316 prolonged code could 
only be applied to the highest-level hospital inpatient or observation 
care visit codes (CPT codes 99223, 99233, and 99236), and could only be 
used when selecting the E/M visit level based on time. In other words, 
we proposed that a prolonged code would only be applied once the 
greatest amount of time for initial, subsequent, or same-day discharge 
visits has been exceeded.
    We proposed to use G0316 instead of CPT code 99418 because we 
disagreed with the CPT instructions regarding the point in time at 
which the prolonged code should apply. According to the 2023 CPT 
Codebook, CPT code 99418 which represents a 15-minute interval, would 
apply to: CPT code 99223 when a practitioner reaches 90 minutes; CPT 
code 99233 when 65 minutes is reached; and CPT code 99236 when 100 
minutes is reached. Each of these times represents only 15 minutes more 
than the codes' descriptor times. We disagreed with this instruction, 
and we believed that a prolonged code should only be applicable after 
the total time for the primary service is exceeded (the total time used 
or assumed in valuation of the primary service, plus the full 15-
minutes described by the prolonged code).
    We noted that CPT code 99236, per the RUC-recommended times, 
includes not only 85 minutes of intraservice time (performed on the 
date of encounter) but an additional 12 minutes of post-service time. 
The RUC based this recommendation on a survey timeframe which was 
within 3 days of the date of encounter. We were concerned that the CPT 
instructions for CPT code 99418, as it applies to CPT code 99236, would 
result in duplicative payment, since the 12-minute post-service time 
was factored into the proposed valuation of CPT code 99236. It would be 
inappropriate to pay for a prolonged code based on post-service time 
that is already accounted for in the base code. We believed that the 
instruction for when to apply CPT code 99418 to the primary service CPT 
code 99236 would not accurately take into account this post-service 
time.
    We proposed that the prolonged service period described by G0316 
could begin 15 minutes after the total times (as established in the 
Physician Time File) for CPT codes 99223, 99233, and 99236 have been 
met. Additionally, we proposed that the proposed G0316 prolonged code 
would be for a 15-minute increment, and the entire 15-minute increment 
must be completed in order to bill G0316. Note that for administrative 
simplicity, we proposed to round the time when the prolonged service 
period begins to the nearest 5 minutes. For the times below, CPT code 
99223, which has a RUC-proposed total time of 74 minutes, would be 
treated as though it has 75 total minutes. CPT code 99233, which has a 
RUC-proposed total time of 52 minutes, would be treated as though it 
has 50 total minutes; and CPT code 99236, which has a RUC-proposed 
total time of 97 minutes will be treated as though it has 95 total 
minutes. The rounding here is solely for the purpose of calculating a 
proposed prolonged period, and would not affect the total times for 
these CPT codes in the time file. We note that the time file is 
included in the public files provided as part of each year's finalized 
PFS, which are posted at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.
    Thus, a practitioner could bill G0316 for base code CPT code 99223 
when 105

[[Page 69597]]

minutes is reached for an initial visit on the date of encounter. For 
the purposes of applying the proposed prolonged code, the CPT code 
99223 total time is rounded to 75 minutes on the date of encounter. The 
prolonged service period would begin at 90 minutes, 15 minutes beyond 
75 minutes. A practitioner would bill HCPCS code G0316 once the 15-
minute increment for G0316 is completed, at minute 105.
    A practitioner could bill G0316 for the base code CPT code 99233 
when 80 minutes is reached for a subsequent visit on the date of 
encounter. For the purposes of applying the prolonged code, the CPT 
code 99233 total time is rounded to 50 minutes on the date of 
encounter. The prolonged service period would begin at 65 minutes, 15 
minutes beyond 50 minutes. A practitioner would bill HCPCS code G0316 
once the 15-mimute increment for G0316 is completed, at minute 80.
    A practitioner could bill HCPCS code G0316 for base code CPT code 
99236 at 125 minutes for same-day discharge. For the purposes of 
applying the prolonged code, the CPT code 99236 total time is rounded 
to 95 minutes completed within 3 calendar days of the encounter. The 
prolonged service period would begin at 110 minutes, 15 minutes beyond 
95 minutes. A practitioner could bill HCPCS code G0316 once the 15-
minute increment for G0316 is completed, at minute 125.
    Refer to summary Table 18 in our proposed rule for a chart showing 
the proposed billing timeframe for G0316.
    We also proposed that the proposed G0316 would apply to both face-
to-face and non-face-to-face time spent on the patient's care within 
the survey timeframe. For CPT codes 99223 and 99233, this would be time 
spent on the date of encounter. For CPT code 99236, this would be time 
spent on the same date or within 3 subsequent calendar days. Since we 
proposed that prolonged services on any date within the service period 
(with or without direct patient contact, on the same or different date) 
would be reportable under HCPCS code G0318, we also proposed that CPT 
codes 99358-9 could not be billed for base codes CPT codes 99221 
through 99223 and 99231 through 99236.
    This approach was consistent with our final policy for O/O E/M 
visits, which requires the use of the prolonged code, G2212 (Prolonged 
office or other outpatient evaluation and management service(s) beyond 
the maximum required time of the primary procedure which has been 
selected using total time on the date of the primary service; each 
additional 15 minutes by the physician or qualified healthcare 
professional, with or without direct patient contact) for prolonged O/O 
E/M services. We continued to be concerned about program integrity, 
duplicative payments for time counted in both E/M base codes and 
prolonged E/M services codes, the administrative complexity of having 
multiple prolonged service codes, and our ability to tell how much time 
was spent with the patient using claims data (see our previous 
discussion of these issues in our CY 2020 and CY 2021 PFS final rules 
at 84 FR 62849 through 62850, and 85 FR 84572 through 84575, 
respectively). If we proposed to adopt the CPT codes for prolonged 
inpatient and observation E/M visits, we would not be able to identify 
the time spent with patients in the claims data alone, because we might 
not know which primary service is the companion code to the prolonged 
service code(s) due to the wide service timespan (for prolonged 
services without direct patient contact) and non-specific care settings 
within the prolonged CPT code descriptors.
    We received many comments regarding our proposal for Medicare-
specific coding for prolonged Other E/M services. We address comments 
that apply across the Other E/M visit families in this final rule in 
section II.F.11 below (Prolonged Services). We received a few comments 
that apply in isolation to the Inpatient/Observation visit family, and 
we address those as follows.
    Comment: One commenter questioned how the time was calculated for 
the application of G0316. The commenter noted that the revised CPT 
descriptors for CPT codes require at least 75 minutes for CPT code 
99223, at least 50 minutes for 99233, and at least 85 minutes for 
99236. The commenter questioned why G0316 would not apply to the base 
codes after an additional 15 minutes beyond the descriptor time had 
been reached. In particular, the commenter noted that they were not 
able to identify the ``post-service'' time that we applied to the total 
time for CPT code 99236, to calculate when G0316 would apply.
    Response: We appreciate this commenter's inquiries. We discuss in 
section II.F.11 below, and our regulatory impact analysis for 
alternatives considered, why we are not choosing to allow reporting of 
prolonged services once the minutes of service reach 15 or more minutes 
beyond the time in the CPT code descriptor. Specific to G0316, in our 
proposed rule (87 FR 45992), we explained that 12 minutes of post-
service time was included in the RUC-recommended total time for CPT 
code 99236 (which we are adopting in this final rule). Since the 12 
minutes is already accounted for in the valuation for CPT code 99236, 
we do not believe it should be counted again toward reporting G0316. We 
refer readers to section II.F.11 below for additional discussion of 
this issue.
    Comment: Several commenters requested clarification that if a 
practitioner performs non-face-to-face work on a day prior to a 
patient's hospital admission or placement on observation status, this 
time cannot be reported by the practitioner using G0316.
    Response:. The service times for initial inpatient and observation 
care do not include work performed on prior days by the same 
practitioner, therefore we are not allowing time on those days to count 
toward prolonged services for those services. We refer readers to 
section II.F.11 below, where we discuss our rationale for not allowing 
practitioners to count time spent on days that were not included in the 
surveyed timeframes for Other E/M visits, since such time is not 
presumed to be part of the service for purposes of valuation. When the 
AMA surveyed practitioners to identify how much work is performed when 
furnishing initial inpatient/observation care (measured by how much 
time is commonly spent), the survey respondents indicated that they do 
not spend time on days prior to the visit for any of the inpatient or 
observation care codes. If the same practitioner spends time prior to 
the visit as part of another E/M visit in a different setting or as 
part of care management services, the prior time can be counted toward 
reporting of the prior visit or care management service. (We refer 
readers to our PFS Care Management website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Care-Management for more information about billing for those services.
    Comment: One commenter did not support the use of G0316 only in 
instances when the visit level was selected based on time, and believed 
that the prolonged code should apply when visits are selected based on 
MDM. The commenter suggested that many practitioners do not currently 
select the level of visit based on time. The commenter also contended 
that, because the G0316 code was based on time, it would contribute to 
practitioner burnout by rewarding long hours and would penalize 
practitioners for treating patients efficiently.
    Response: We note that, as discussed above in section II.F.3.a, 
effective January 1, 2023, practitioners will have

[[Page 69598]]

the option of selecting the hospital inpatient or observation care 
codes by time or by MDM. We expect that more practitioners may begin 
selecting visit based on time as a result of this change. We refer 
readers to section II.F.11 below, where we discuss why we believe 
prolonged services should not be reportable for services that are not 
timed, and the intersection of our Medicare-specific prolonged service 
codes with practitioner incentives regarding time spent with patients.
    After consideration of public comments, we are finalizing our 
proposal to create a new code G0316 for prolonged Hospital Inpatient 
and Observation Care services (applicable to primary service CPT codes 
99223, 99233, and 99236), as proposed.
g. Valuation of Hospital Inpatient or Observation Care Services
    The revised hospital inpatient or observation care codes (CPT codes 
99221 through 99223 and 99231 through 99236) were surveyed for the 
October 2021 RUC meeting. The survey times captured the total time on 
the date of encounter by calendar date. In October 2021, the RUC 
referred these services to be resurveyed, because the survey did not 
include a request for distinct time before and after floor/unit time, 
and therefore, could not be compared to previous RUC surveys of these 
services. The RUC reviewed the resurveyed inpatient and observation 
services for the January 2022 RUC meeting.
    We proposed to accept the RUC recommendations for work RVUs and 
times for CPT codes 99221 (work RVU 1.63, intraservice time 40 minutes, 
total time 40 minutes); 99222 (work RVU 2.60, intraservice time 55 
minutes, total time 55 minutes); 99223 (work RVU of 3.50, intraservice 
time 74 minutes, total time 74 minutes); 99231 (work RVU 1.00, 
intraservice time 25 minutes, total time 25 minutes), 99232 (work RVU 
1.59, intraservice time 36 minutes, total time 36 minutes); 99233 (work 
RVU 2.40, intraservice time 52 minutes, total time 52 minutes); 99234 
(work RVU 2.00, intraservice time 45 minutes, total time 50 minutes); 
99235 (work RVU 3.24, intraservice time 68 minutes, total time 76 
minutes); and 99236 (work RVU 4.30, intraservice time 85 minutes, total 
time 97 minutes).
    There are no PE inputs for these codes.
    Comment: Many commenters supported our proposal to accept the RUC-
recommended values for these codes.
    Response: We thank commenters for their support.
    Comment: Several commenters, although not challenging the RUC 
recommendations, voiced general concerns that O/O E/M valuations may 
continue to be low, or that any increases in facility-based E/M 
services will shift RVUs away from primary care.
    Response: We thank the commenters for sharing their concerns. We 
will take these concerns into consideration as we continue to examine 
valuations for all E/M codes. Please see prior discussions of our 
review and revaluation of O/O E/M codes in the CY 2020 final rule (84 
FR 62844) and the CY 2021 final rule (85 FR 84548).
    Comment: Several commenters opposed the proposed values, 
particularly for initial Hospital Inpatient and Observation Care visit 
codes (CPT codes 99221-99223), for which we proposed reductions. Some 
of these commenters suggested that, to maintain relativity and rank 
order, it was important that the initial Hospital Inpatient or 
Observation Care codes be assigned higher work RVUs than O/O E/M codes. 
Other commenters suggested that the proposed valuations do not 
accurately reflect the complexity of hospital inpatient or observation 
care. One commenter, echoing concerns about relativity of initial 
Hospital Inpatient and Observation Care and new patient O/O E/M visits, 
suggested that we review the E/M visit valuations using an expert 
panel.
    Response: We appreciate commenters' feedback. We disagree with the 
commenters that the proposed RVUs for CPT codes 99221-99223 are too 
low, especially given the reductions in total time for these codes. We 
also continue to disagree with the assertion that facility-based codes 
are always inherently (or proportionately) more intense than E/M 
services provided in other settings. We reaffirm our discussion of this 
issue in section II.F.1.
    After consideration of public comments, we are finalizing the RVUs 
for CPT codes 99221-9223, 99231-99236 as proposed.
4. Hospital or Observation Discharge Day Management (CPT Codes 99217, 
99238 and 99239)
a. Coding Changes to Hospital Inpatient or Observation Discharge Day 
Management Services
    Effective January 1, 2023, the CPT Editorial Panel deleted the 
observation discharge code, CPT code 99217 (Observation care discharge 
day management) and revised the two hospital discharge day management 
codes, CPT codes 99238 (Hospital inpatient or observation discharge day 
management; 30 minutes or less) and CPT code 99239 (more than 30 
minutes) so that CPT codes 99238 and 99239 may be billable for 
discharge of hospital inpatient or observation patients.
    We proposed to adopt the revised CPT codes 99238 and 99239. We also 
proposed to retain our current hospital inpatient policy outlined in 
the Medicare Claims Processing Manual, Chapter 12, sections 30.6.9.2.B 
and 30.6.9.2.E, and expand it to include observation care. 
Specifically, we proposed that CPT codes 99238 and 99239 are to be 
billed by the practitioner who is personally responsible for discharge 
service (or, in the case of the death of the patient, the practitioner 
who personally performs the death pronouncement); services furnished by 
other practitioners, including: instructions to the patient, 
communication with the family/caregiver, and coordination of post 
discharge services would be reported as subsequent hospital inpatient 
or observation care with CPT codes 99231, 99232, and 99233. (Refer to 
the Medicare Claims Processing Manual, IOM 100-04, Chapter 12, Manual, 
IOM 100-04, Chapter 12, sections 30.6.9.2.B and 30.6.9.2.E; we note 
that we incorrectly cited to 30.6.9.2.A in the proposed rule).
    We proposed to retain our related policy that the same practitioner 
may not bill a hospital discharge CPT code 99238 or 99239 on the same 
day as a subsequent visit CPT codes 99231 through 99233. We refer 
readers to the Medicare Claims Processing Manual, IOM 100-04, Chapter 
12, section 30.6.9.2.C.
    Comment: Several commenters requested clarification on the proposed 
policy at 87 FR 45993 (which codifies that the discharge day management 
code can only be billed by the practitioner ``personally responsible 
for'' the discharge service. Commenters suggested this policy is 
difficult to decipher in light of team approaches to care delivery.
    Response: We appreciate commenters' feedback. First, we note that 
we intended to preserve the policy regarding billing of CPT codes 99238 
and 99239, as reflected in the Medicare Claims Processing Manual, IOM 
100-04, Chapter 12, section 30.6.9.2.B and 30.6.9.2.E. We intended to 
align this policy with both the consolidation of the Hospital Inpatient 
and Observation Care code sets and with the 2023 CPT Codebook 
guidelines. The 2023 Codebook (p.17) instruction for CPT codes 99238 
and 99239 is that, ``Codes 99238, 99239 are to be used by the physician 
or other qualified health care

[[Page 69599]]

professional who is responsible for discharge services.'' We note that 
our longstanding policy in section 30.6.9.2.B is that only one hospital 
discharge day management service is payable per patient per hospital 
stay, and this code is billed by the ``attending physician.''
    After consideration of public comments, we are finalizing the 
adoption of the revised descriptors for CPT codes 99238 and 99239 and 
other additional policies in this section as proposed or clarified.
     Only one claim for CPT code 99238 or 99239 may be 
submitted per patient, per hospital stay. The claim is submitted by the 
attending practitioner who is responsible for the discharge service. In 
the case of the death of the patient, CPT codes 99238 and 99239 are 
billed by the practitioner who personally performs the death 
pronouncement.
     The same practitioner may not bill both a hospital 
discharge CPT code 99238 or 99239 and a subsequent visit CPT codes 
99231 through 99233 for the same patient on the same day. (Note also 
additional policies affecting the billing of CPT codes 99238 and 99239 
discussed in II.F.3.b. above.)
b. Prolonged Services and Hospital Inpatient or Observation Discharge 
Day Management
    Effective January 1, 2023, the CPT Editorial Panel deleted CPT code 
99356 (Prolonged service in the inpatient or observation setting, 
requiring unit/floor time beyond the usual service; first hour) and CPT 
code 99357 (each additional 30 minutes) and replaced them with CPT code 
99418 (Prolonged inpatient or observation evaluation and management 
service(s) time with or without direct patient contact beyond the 
required time of the primary service when the primary service level has 
been selected using total time, each 15 minutes of total time). CPT 
codes 99356 and 99357 were not previously billable with discharge day 
management CPT codes 99238 or 99239. (Refer to, for example, 
instructions on pages 41-42 of the 2022 CPT Codebook.) Additionally, 
according to 2023 CPT Codebook instructions (p.29), CPT code 99418 
(referred to as CPT code 993X0 in the proposed rule) is not billable 
with CPT codes 99238 and 99239.
    We proposed that a practitioner would not be able to bill prolonged 
services for hospital discharge (CPT codes 99238 or 99239). This means 
that CPT codes 99418, 99358-9 (prolonged E/M service on a date other 
than the face-to-face E/M, and the proposed G0316 code (discussed in 
section II.F.3. of this final rule) would not be payable where the 
discharge day management code is CPT codes 99238 or 99239. We believe 
the code descriptors for CPT codes 99238 and 99239 do not allow for 
additional payment of prolonged services. The descriptor for CPT code 
99238 provides for hospital discharge day management, ``30 minutes or 
less.'' If a practitioner spends more than 30 minutes on a hospital 
discharge service for a patient, the practitioner would be able to bill 
CPT code 99239, which is defined in the code descriptor as ``30 minutes 
or more.'' Thus, a prolonged code (including CPT codes 99418, 99358, 
99359, and our proposed G0316) would not be appropriate for CPT code 
99238, because CPT code 99239 accounts for services that exceed 30 
minutes.
    The descriptor for CPT code 99239 states that the code is for 
``more than 30 minutes'' of hospital discharge day management services. 
When the RUC surveyed this code, the surveyed timeframe was within 3 
calendar days of the encounter. In other words, the descriptor time is 
more than 30 minutes, completed within 3 calendar days of the 
encounter. Neither the descriptor nor the CPT billing instructions 
provide an upper limit on how many minutes can be reported within the 
3-day timeframe for CPT code 99239. All face-to-face and non-face-to-
face activities performed by the practitioner during the date of 
encounter and within 3 calendar days from the date of encounter may be 
counted toward CPT code 99239, as applicable. Prolonged codes CPT codes 
99418, 99358, 99359, and our proposed G0316 code are intended to pay 
for time not included in the primary E/M codes during the surveyed 
timeframe; as it appears that CPT code 99239 already includes all 
services furnished during the surveyed timeframe, we do not believe it 
is appropriate to allow any prolonged codes to be billed with CPT code 
99239 as a base code.
    Comment: One commenter noted that in the section of the proposed 
rule where this proposal was discussed (87 FR 45993), we misstated the 
descriptor for CPT code 99239 as ``30 minutes or more'' when it should 
be ``more than 30 minutes.''
    Response: We agree with the commenter and thank them for their 
attention. We acknowledge our unintentional error.
    Comment: One commenter requested clarification on the applicable 
timeframe for when time is counted for CPT code 99239--namely whether 
the 3-day timeframe described in the proposed rule for the completion 
of time refers only to days after discharge, or can include time prior 
to discharge.
    Response: We clarify that the timeframe is within 3 calendar days 
after discharge. We note that time spent providing face-to-face or non-
face-to-face care on a date prior to discharge would be counted toward 
an appropriate initial or subsequent Hospital Inpatient or Observation 
Care code (CPT codes 99221-99223 or 99231-99233), which are discussed 
in section II.F.3.
    After consideration of public comments, we are finalizing this 
policy as proposed.
c. Valuation of Hospital Inpatient or Observation Discharge Day 
Management
    The revised discharge day management codes (CPT codes 99238 through 
99239) were surveyed for the January 2022 RUC meeting. We proposed to 
accept the RUC recommendations for CPT codes 99238 (work RVU 1.50, 
intraservice time 28 minutes, total time 38 minutes); and 99239 (work 
RVU 2.15, intraservice time 45 minutes, 64 minutes total time).
    We proposed the RUC-recommended direct PE inputs for CPT codes 
99238 and 99239 without refinement. We received one comment on this 
proposal.
    Comment: One commenter expressed support for our proposal to accept 
the RUC recommendations for this code set.
    Response: We thank the commenter for their support.
    After consideration of public comments, we are finalizing the RVUs 
for CPT codes 99238-99239 as proposed.
5. Emergency Department Visits (CPT Codes 99281-99285)
a. Coding
    We have revalued the ED visit codes under the PFS four times: in 
1997, 2007, 2020, and most recently in 2021 as part of the update for 
O/O E/M visits. In the past, consistent with AMA RUC recommendations, 
we revalued these services such that the values of levels 1 through 3 
of the ED visits were equal to levels 1 through 3 new patient O/O E/M 
visits, and the levels 4 and 5 ED visits were valued higher than the 
levels 4 and 5 new patient O/O E/M visits to reflect higher typical 
intensity. In addition, in the CY 2018 PFS final rule (82 FR 53018), we 
finalized a proposal to nominate all five ED visit codes as potentially 
misvalued, based on information suggesting that the work RVUs for ED 
visits may not appropriately reflect the full resources involved in 
furnishing these services. Specifically, some impacted parties

[[Page 69600]]

expressed concerns that the work RVUs for these services have been 
undervalued given the increased acuity of the patient population and 
the heterogeneity of the sites, such as freestanding and off-campus 
EDs, where ED visits are furnished. Accordingly, the RUC resurveyed and 
reviewed these five codes for the April 2018 RUC meeting, and provided 
a recommendation to CMS for consideration in CY 2020 rulemaking. In the 
CY 2020 PFS final rule (84 FR 62796), we finalized the RUC-recommended 
increases to the work RVUs of 0.48 for CPT code 99281, a work RVU of 
0.93 for CPT code 99282, a work RVU of 1.42 for 99283, a work RVU of 
2.60 for 99284, and a work RVU of 3.80 for CPT code 99285. The RUC did 
not recommend, and we did not finalize, any change in direct PE inputs 
for the codes in this family. We noted that the RUC submitted these 
recommended values to CMS prior to the submission of the RUC-
recommended revaluation of the O/O E/M visit code family.
    In response to our finalizing of the RUC-recommended values for the 
ED visits, and to our comment solicitation in the CY 2020 PFS proposed 
rule regarding whether we should revalue certain services commensurate 
with increases to the O/O E/M visits (84 FR 62859 through 62860), a 
commenter submitted a public comment stating that relativity between 
the ED visits and O/O E/M visits should be maintained, and submitted a 
specific recommendation for CPT codes 99283-99285 that was higher than 
the RUC-recommended values. The commenter stated we should preserve the 
relationship between the ED and O/O E/M visit code sets that was 
established in prior years and that they believe would have likely been 
maintained had the O/O E/M visits been reviewed prior to the ED visits. 
In order to avoid the rank order anomaly whereby an ED visit would be 
valued lower than the analogous O/O E/M visit, we proposed and 
eventually finalized the values recommended by this commenter in the CY 
2021 PFS final rule (85 FR 84562). This final policy increased the work 
RVU from 1.42 to 1.60 for CPT code 99283, from 2.60 to 2.74 for CPT 
code 99284, and from 3.80 to 4.00 for CPT code 99285.
    Following the implementation of the revisions to the O/O E/M visits 
for the CPT 2021 code set, the CPT/RUC Workgroup on E/M standardized 
the rest of the E/M sections in the CPT code set. In February 2021, the 
CPT Editorial Panel revised the five ED visit codes to align with the 
principles included in the E/M office visit services by documenting and 
selecting level of service based on medical decision making, effective 
January 1, 2023. The descriptor for CPT code 99281 was revised such 
that the code may not require the presence of a physician or other 
qualified health care professional. The CPT Editorial Panel also 
revised the MDM level in the descriptor for CPT code 99282 from ``low'' 
to ``straightforward'' complexity, and from ``moderate'' to ``low'' 
complexity for CPT code 99283. These five codes were resurveyed and 
reviewed at the April 2021 RUC meeting with recommendations submitted 
to CMS for the CY 2023 PFS rulemaking cycle.
    We received several comments related to our proposal to adopt the 
CPT revisions to the MDM guidelines for the ED visits. Below is a 
summary of the comments received and our responses.
    Comment: Several commenters raised concerns related to the proposed 
changes to the MDM guidelines. Their concerns were that considerable 
training and education will be required to ensure clinicians are 
prepared to appropriately code their encounters, and that CMS should 
consider delaying implementation of the new MDM guidelines in order to 
ensure proper education and training can occur. Other commenters noted 
that the MDM guidelines do not reflect the level of MDM visits 
appropriately for the ED visits using MDM, and they will be applying to 
CPT for changes to the MDM guidelines for 2024. Some commenters 
requested a delay and recommended to retain the MDM guidelines in their 
current form until the AMA reviews the need for additional changes. 
Other commenters were supportive of CMS's collaboration with AMA CPT 
and the revisions made.
    One commenter raised an issue with the current MDM guidelines for 
ED visits, involving a local MAC's interpretation and application of 
the term ``workup.''
    Response: We appreciate the commenters' feedback. It is our 
understanding that the AMA E/M workgroup revised the MDM guidelines for 
CY 2023 to reflect changes specific to ED visits already, and that ED 
member physicians already provided input and made changes to these 
guidelines. We are unsure of how the issue involving the term 
``workup'' would apply under the new MDM guidelines, and we recommend 
that interested parties ask CPT to clarify and consider any relevant 
revisions that might be needed for 2024. We understand that an ED 
specialty society will propose to CPT additional changes to the MDM 
guidelines that would impact ED visit level selection beginning in 
2024, if passed by CPT. We will consider additional changes if they are 
made by CPT, but we believe we should adopt the changes that have been 
made to date for 2023, since they already reflect an initial round of 
input from ED physicians in the AMA Workgroup, and a consensus that was 
reached at CPT. We will watch for additional changes recommended by 
CPT, and may consider any further changes in future rulemaking.
    Comment: One commenter agreed with our proposal to adopt the CPT 
framework for ED visits, whereby ED visit level would be based on MDM 
rather than time.
    Response: We thank the commenter for their support.
    Comment: One commenter requested clarification on CPT code 99281, 
and whether the proposed guideline is intended for professional 
services billing by the practitioner in charge of oversight of care, or 
is the new code for hospital billing only.
    Response: The level 1 ED visit (CPT code 99281) currently describes 
services by a physician or qualified health care professional (QHP), 
requiring a problem-focused exam and straightforward MDM, among other 
physician/QHP work. For 2023, this code is revised to describe an ED 
visit for the E/M of a patient that may not require the presence of a 
physician or other QHP. The purpose of this CPT code revision, as we 
understand it, was to create a more parallel structure between ED and 
O/O visits, since as of CY 2021, level 1 O/O visits may not require the 
presence of a physician/QHP. An example in the ED setting might be a 
patient presenting for suture removal for a laceration repair that was 
performed by another provider in a different location, where the wound 
is healing well. We are maintaining the active payment status for CPT 
code 99281, and we will be monitoring claims data to assess billing 
patterns for this and other E/M visits under the new framework.
b. Sites of Service and Multiple Same-Day E/M Visits for Emergency 
Department Patients
    As we discussed in the previous section (Hospital Inpatient or 
Observation Care (CPT codes 99218-99236)) the CPT Editorial Panel has 
revised CPT codes 99221 through 99223 to include both inpatient 
hospital and observation care services. (Note our proposal in that 
section regarding billing policy for transitions between ED and 
hospital inpatient or observation care.) We also proposed to modify our 
policy regarding when to bill ED codes

[[Page 69601]]

CPT codes or hospital inpatient care (CPT codes 99221 through 99223), 
as further described in the Medicare Claims Processing Manual, IOM 100-
04, Chapter 12, 30.6.11.E., to clarify that these policies apply to 
observation care billed under CPT codes 99221 through 99223 as well. We 
proposed that, if a physician advises their own patient to go to an ED 
of a hospital for inpatient care or observation and the physician 
subsequently is asked by the ED physician to come to the hospital to 
evaluate the patient and to advise the ED physician as to whether the 
patient should be admitted to the hospital, placed in observation 
status, or sent home, the physicians should bill as follows:
     If the patient is admitted to the hospital or placed in 
observation status by the patient's personal physician, then the 
patient's personal physician should bill only the appropriate level of 
the initial hospital inpatient or observation care (CPT codes 99221--
99223), because all E/M services provided by that physician in 
conjunction with that admission are considered part of the initial 
hospital inpatient or observation care when performed on the same date 
as the admission. The ED physician who saw the patient in the ED should 
bill the appropriate level of the ED codes.
     If the ED physician, based on the advice of the patient's 
personal physician who came to the ED to see the patient, sends the 
patient home, then the ED physician shall bill the appropriate level of 
ED service. The patient's personal physician shall also bill the level 
of ED code that describes the service they provided in the ED. If the 
patient's personal physician does not come to the hospital to see the 
patient, but only advises the ED physician by telephone, then the 
patient's personal physician may not bill the ED codes.
    Similarly, we proposed that if the ED physician requests that 
another physician evaluate a given patient, the other physician should 
bill an ED visit code. We also proposed that if the patient is admitted 
by the second physician performing the evaluation, that physician shall 
bill an initial hospital inpatient or observation care code (CPT codes 
99221 through 99223, as appropriate), and not an ED visit code. This 
policy appears in the Medicare Claims Processing Manual, (Pub. L. 100-
04, Chapter 12, section 30.6.11.F), and we are clarifying that this 
policy applies to both hospital inpatient and observation care billed 
under CPT codes 99221 through 99223.
    Finally, we noted that the 2023 CPT Codebook provides instructions 
that critical care and ED services may be billed on the same day under 
certain circumstances. We referred readers to the CY 2022 PFS final 
rule (86 FR 65163), where we finalized our policy that critical care 
and ED visits may be billed on the same day if performed by the same 
physician, or by physicians in the same group and specialty if there is 
documentation that the E/M service was provided prior to the critical 
care service at a time when the patient did not require critical care, 
that the service is medically necessary, and that the service is 
separate and distinct, with no duplicative elements from the critical 
care service provided later in the day, and that practitioners may bill 
for both services. Practitioners must use modifier -25 on the claim 
when reporting these critical care services. This policy is also in the 
Medicare Claims Processing Manual, IOM 100-04, Chapter 12, 30.6.12.6.
    Please refer to the next section, ``Nursing Facility Services'' 
(section II.F.6) for discussion of policies regarding patients seen in 
the ED and the nursing facility on the same day.
    We received comments specific to the ED to nursing facility 
transition. Please refer to the nursing facility section below (section 
II.F.6).
    After consideration of public comments, we are finalizing as 
proposed and will continue to consider for possible future rulemaking 
for these visits.
c. Valuation
    We proposed the RUC-recommended work RVU for four of the five codes 
in the ED Visits family. We proposed a work RVU of 0.25 for CPT code 
99281 (Emergency department visit for the evaluation and management of 
a patient, that may not require the presence of a physician or other 
qualified health care professional), a work RVU of 0.93 for CPT code 
99282 (Emergency department visit for the evaluation and management of 
a patient, which requires a medically appropriate history and/or 
examination and straightforward medical decision making), a work RVU of 
1.60 for CPT code 99283 (Emergency department visit for the evaluation 
and management of a patient, which requires a medically appropriate 
history and/or examination and low level of medical decision making), 
and a work RVU of 4.00 for CPT code 99285 (Emergency department visit 
for the evaluation and management of a patient, which requires a 
medically appropriate history and/or examination and high level of 
medical decision making).
    We disagreed with the RUC-recommended work RVU of 2.60 for CPT code 
99284 (Emergency department visit for the evaluation and management of 
a patient, which requires a medically appropriate history and/or 
examination and moderate level of medical decision making) and we 
proposed to maintain the current work RVU of 2.74. The survey conducted 
for CPT code 99284 maintained unchanged a work time of 40 minutes, and 
the level of medical decision making in the code's descriptor also 
remains unchanged at ``moderate'' complexity. Therefore, we continue to 
believe that the levels 4 and 5 ED visits are more accurately valued 
higher than the levels 4 and 5 new patient O/O E/M visits to reflect 
their higher typical intensity. This has been the historic relationship 
between these codes, and we previously finalized a proposal in the CY 
2021 PFS final rule, increasing the work RVU from 2.60 to 2.74 for CPT 
code 99284. Given that there has been no change in the surveyed work 
time or level of MDM for this service, we continue to believe that the 
work RVU of 2.74 that we finalized in the CY 2021 rule cycle remains 
the most accurate valuation for CPT code 99284 (85 FR 84562).
    The RUC did not recommend and we did not propose any direct PE 
inputs for these five ED visit codes.
    Comment: We did not receive any comments in opposition to the 
proposed values for this family, except for the level 4 ED visit. Most 
commenters expressed their support for the proposed work RVU of 2.74 
for CPT code 99284. Commenters stated they appreciated that CMS 
continues to recognize that the work RVU for a level 4 ED visit should 
be higher than for the corresponding level 4 O/O E/M visit, and that 
they supported our proposal to retain the historic relativity between 
the new patient O/O outpatient E/M codes and the ED E/M codes.
    Response: We appreciate the support for our proposed work RVUs from 
the commenters.
    Comment: A few commenters disagreed with the proposed work RVU of 
2.74 for CPT code 99284 and instead supported the RUC-recommended work 
RVU of 2.60. The commenters stated that the RUC agreed that the work 
RVU for the ED codes should be equivalent to the office/outpatient 
visit codes, based on level of MDM and urged CMS to finalize the RUC 
recommendation. Commenters stated that, although CPT codes 99204 and 
99284 would share the same work RVU of 2.60 under the RUC's 
recommendations, this was appropriate, because they asserted that CPT 
code 99284 would have notably higher

[[Page 69602]]

intensity due to its shorter work time of 40 minutes (as compared with 
60 minutes for CPT code 99204). Commenters also stated that the 
proposed work RVU of 2.74 would create a rank order anomaly within the 
family of ED codes, since the intensity of CPT code 99284 would be 
higher than the intensity of CPT code 99285. The commenters urged CMS 
to finalize the RUC recommendations for all five ED codes, including 
the work RVU of 2.60 for CPT code 99284.
    Response: We appreciate commenters' feedback. We disagree with the 
commenters and continue to believe that CPT code 99284 is more 
accurately valued at a higher rate than CPT code 99204 at the proposed 
work RVU of 2.74. As we noted in the proposed rule, the survey 
conducted for CPT code 99284 maintained--unchanged--a work time of 40 
minutes, and the level of medical decision making in the code's 
descriptor also remains unchanged at ``moderate'' complexity. We do not 
agree that the work RVU of CPT code 99284 should be reduced to match 
the work RVU of CPT code 99204, given that the code remains essentially 
unchanged. This is especially true, given that this has been the 
historic relationship between these codes, and that we previously 
finalized a proposal in the CY 2021 PFS final rule to increase the work 
RVU from 2.60 to 2.74 for CPT code 99284 specifically so that these 
codes would not share the same work RVU.
    We also disagree with the commenters that our proposed work RVU of 
2.74 creates a rank order anomaly within the ED family. The small 
difference in intensity between CPT codes 99284 and 99285 (about 3 
percent higher for CPT code 99284) is counterbalanced by the much 
longer work time of CPT code 99285. We do not believe that the work RVU 
of CPT code 99284 should be deliberately lowered to manipulate the 
intensity into a lower value than CPT code 99285. We also note that it 
is very common for intensity to be slightly lower for codes with longer 
work times, even within families where the code descriptors reflect 
more difficult MDM. For example, in the office/outpatient visit code 
family, CPT code 99204 has a slightly higher intensity than CPT code 
99205. This does not constitute a rank order anomaly within the family 
(or serve to justify lowering the work RVU for code 99204); rather, it 
is an artifact of the longer work time associated with CPT code 99205 
as compared with CPT code 99204. We continue to disagree that intensity 
would constitute a rationale for finalizing the RUC's recommended work 
RVU of 2.60 for CPT code 99284.
    After consideration of public comments, are finalizing the work 
RVUs and direct PE inputs for all five codes in the Emergency 
Department Visits as proposed.
d. Prolonged Services
    We proposed that the prolonged services described by HCPCS codes 
G0316, G0317, and G0318 would not be reportable in conjunction with ED 
visit codes, because the ED visit codes are not reported based on the 
amount of time spent with the patient.
    We did not receive any comments specific to this proposal, 
therefore we are finalizing as proposed. We refer readers to section 
II.F.11 below for a discussion of comments received on prolonged Other 
E/M services generally. Our final policy for ED visits is reflected in 
summary Table 24 in section II.F.12.e. of this final rule.
6. Nursing Facility Visits (CPT Codes 99304-99318)
a. Coding Overview
    The codes in the Nursing Facility (NF) services family are used to 
report E/M services primarily to patients in nursing facilities and 
skilled nursing facilities. Following the implementation of the 
revisions to the O/O E/M visits (CPT codes 99201 through 99215) for the 
CPT 2021 code set, the CPT/RUC Workgroup on E/M met to standardize the 
rest of the E/M sections in the CPT code set. We have received 
valuation recommendations from the AMA RUC for the Nursing Facility 
Visit codes (CPT codes 99304 through 99318) following completion of its 
survey and revaluation process for these codes. In its April 2021 
meeting, the RUC provided us the results of its review, and 
recommendations for work RVUs, practice expense inputs, and physician 
time (number of minutes) for the revised Nursing Facility Visits E/M 
code set. Therefore, we proposed changes in coding and values for the 
revised Nursing Facility Visits E/M code set. This code set is 
effective beginning in CY 2023, and the proposed values, if finalized, 
would go into effect with those codes as of January 1, 2023. In its 
February 2021 meeting, the CPT Editorial Panel deleted CPT code 99318, 
the annual nursing facility assessment code and revised the remaining 
nursing facility code to better align with the principles included in 
the E/M office visit services by documenting and selecting level of 
service based on total time or MDM. The remaining codes, initial and 
subsequent daily visits and nursing facility discharge day management 
codes were revised. Similar to what was done for the office visit 
codes, for CY 2023, we proposed when total time on the date of 
encounter is used to select the appropriate level of a nursing facility 
visit service code, both the face-to-face and non-face-to-face time 
personally spent by the physician (or other qualified health care 
professional that is reporting the office visit) assessing and managing 
the patient are summed to select the appropriate code to bill. 
Additionally, the codes have new descriptor times, assigned for when 
time is used to select visit level (We noted that we did not adopt the 
CPT Codebook instructions regarding the application of prolonged codes 
to CPT codes 99306 and 99310; see additional discussion under the 
subsection ``Prolonged Codes for NF Care'' in this section.). CPT 
provides that initial nursing facility care (CPT codes 99304 through 
99306) may be used once per admission, per practitioner, regardless of 
the length of stay in the NF; and that an initial service can be 
reported if the patient has not received any face-to-face professional 
services from the physician or other qualified health care professional 
or another physician or other qualified health care professional of the 
exact same specialty and subspecialty who belongs to the same group 
practice during the stay, or if the patient is a new patient as defined 
by CPT (2023 CPT Codebook, p.24). However, we proposed an alternative 
definition of initial NF visit, consistent with our current policy (see 
below).
    These nursing facility visits are noted by the RUC to be typically 
performed in the skilled nursing facility which requires a higher level 
of care than the nursing facility. The survey time captured includes 
pre-service time 1 day before the date of encounter, intra-service time 
is all the time on the date of encounter, and post-service time is 3 
days after the date of encounter. The RUC's recommendations for this 
code family are consistent with the 25th percentile of the survey 
results and is based on a comparison of the survey codes with the 
selected the O/O CPT codes as a crosswalk to the key reference 
services.
    While we have thoroughly reviewed the times and descriptors for all 
the codes in this family, and we proposed to accept the RUC 
recommendations as explained below, we noted our concerns regarding 
instances of inconsistencies and errors, where the time described in 
certain CPT code descriptors does not correctly relate to the time that 
would be used to select visit level for the

[[Page 69603]]

Nursing Facility visit (for example, CPT code 99306 and 99310 have the 
same times noted in the descriptors, where one is an initial visit and 
one is a subsequent visit). In general, the specialty societies and the 
RUC have advocated for increasing the work RVUs for the Nursing 
Facility visits, as compared to their previous values, regardless of 
some of the survey times, on the basis that values for these Nursing 
Facility visit codes should be valued the same as the values for the 
comparable O/O E/M visits. We considered the survey results, especially 
reductions in pre-, intra-, and post-service time, and noted that the 
comparison to O/O E/M visits is not accurate. These code families are 
incomparable for a few reasons, including, but not limited to: (1) the 
two families have a different number/stratification of levels for the 
visits, thus a one-to-one crosswalk is not possible; (2) times in the 
code descriptors detailing the typical time spent at the patient's 
bedside or hospital unit vary significantly; and (3) the patient 
populations differ substantially, when considering typical patients who 
require nursing facility services versus those in the general 
beneficiary community. Additional reasons are laid out in our overview 
section above. We do not believe that a comparison of these two code 
families can technically be made on a code-by-code basis. However, 
given the recent changes to the O/O E/M visit values that we finalized 
in the CY 2020 PFS final rule (84 FR 62846) and our interest in 
maintaining continuity in the overall code set, we proposed to accept 
the RUC recommendations for the work time values and work RVUs for 
these Nursing Facility visit codes and solicited public comment on our 
concerns for some of the codes as noted below in this section.
    We proposed to adopt a number of billing policies reflected in our 
current Medicare Claims Processing Manual, Chapter 12, section 30.6.13:
     We proposed that the initial comprehensive assessment 
required under 42 CFR 483.30(c)(4) shall be billed as an initial NF 
care visit (CPT code 99304 through 99306). We proposed that a 
practitioner may bill the most appropriate initial nursing facility 
care code (CPT codes 99304 through 99306) or subsequent nursing 
facility care code (CPT codes 99307 through 99310), if the practitioner 
furnishes services that meet the code descriptor requirements, even if 
the service is furnished prior to the initial comprehensive assessment 
required under Sec.  483.30.
    A practitioner who bills an initial NF visit (CPT codes 99304 
through 99306) for the initial comprehensive assessment required under 
Sec.  483.30(c)(4) may bill subsequent NF visits (CPT codes 99307 
through 99310), if the practitioner furnishes medically necessary face-
to-face and non-face-to-face care that meets the requirements in the NF 
services code descriptors (CPT codes 99307 through 99310) to the 
beneficiary prior to the completion of the initial comprehensive 
assessment required under Sec.  483.30. We proposed to allow for an 
initial or subsequent NF visit to be furnished and billed by the 
appropriate practitioner (physician, physician assistant, nurse 
practitioner, or clinical nurse specialist as specified in Sec.  483.30 
for the type of visit furnished) regardless of whether the initial 
comprehensive assessment was performed.
     We proposed to retain our policy to not pay a physician 
for an ED visit or an office visit and a comprehensive nursing facility 
assessment on the same calendar day, because it would be duplicative 
care. If the practitioner saw the patient in the nursing facility once 
on a given date, they have performed a lot of the work that is included 
in the other visit E/M visits, for example an ED visit. The services 
furnished on the same date and provided in sites other than the nursing 
facility are already bundled into the initial nursing facility care 
code when performed on the same date as the nursing facility admission 
by the same physician.
    We noted that the Medicare Claims Processing Manual also states 
that ED visits provided on the same day as a comprehensive nursing 
facility assessment are not paid, regardless of whether the ED and 
nursing facility visits are by the same or different practitioners 
(Chapter 12, section 30.6.11.D). We proposed to retain this policy as 
well. We noted that the 2023 CPT Codebook does not limit the number of 
visits that can be billed. We proposed that more than one ED and 
nursing facility visit could not be billed if both visits are furnished 
by the same practitioner on the same date of service.
     We proposed to adopt the 2023 CPT Codebook guidance that, 
for reporting initial nursing facility care, transitions between 
skilled nursing facility level of care and nursing facility level of 
care do not constitute a new stay. (2023 CPT Codebook, p. 24.)
     We proposed that an initial service is one that occurs 
when the patient has not received any professional services from the 
physician or other qualified health care professional or another 
physician or other qualified health care professional of the exact same 
specialty who belongs to the same group during the stay. We proposed 
that a subsequent service is one that occurs when the patient has 
received any professional services from the physician or other 
qualified health care professional or another physician or other 
qualified health care professional of the exact same specialty who 
belongs to the same group during the stay. This is the same definition 
that we proposed for ``initial'' and ``subsequent'' in the context of 
inpatient and observation services above. According to CPT 
instructions, an ``initial'' service may be reported when the patient 
has not received any professional services from the physician or other 
qualified health care professional or another physician or other 
qualified health care professional of the exact same specialty and 
subspecialty who belongs to the same group practice during the stay. As 
we do not recognize subspecialties, we proposed to apply these slightly 
amended definitions of ``initial'' and ``subsequent'' service.
    We received public comments on these proposals. The following is a 
summary of the comments we received and our responses.
    Comment: One commenter requested clarification regarding whether we 
intended to retain our current policy, as reflected in the Medicare 
Claims Processing Manual, IOM 100-04, Chapter 12, section 30.6.9.2.D, 
which allows for payment of the hospital discharge day management code 
(CPT codes 99238 or 99239) in addition to a separate nursing facility 
admission code when they are billed by the same practitioner with the 
same date of service.
    Response: Consistent with our proposed retention of our other 
policies regarding billing by the same practitioner providing multiple 
E/M services to the same patient on the same day, it was our intention 
to retain this policy as well. We thank the commenter for bringing this 
additional related policy to our attention.
    Comment: One commenter asked that we permit billing of an ED E/M 
visit on the same day as a NF admission/comprehensive assessment, 
whether by the same or another practitioner.
    Response: The main goal of our proposed policies in this area was 
to maintain our current policy while we continue to consider, for 
potential future rulemaking, what our policies should be broadly 
regarding multiple, same-day E/M visits. In section 30.6.7.C, Chapter 
12 of the Medicare Claims Processing Manual (Pub. 100-04), we state, 
``MACs may not pay a physician

[[Page 69604]]

for an emergency department visit or an office visit and a 
comprehensive nursing facility assessment on the same day. Bundle E/M 
visits on the same date provided in sites other than the nursing 
facility into the initial nursing facility care code when performed on 
the same date as the nursing facility admission by the same 
physician.'' Therefore, we believe payment for a NF initial visit can 
be made to a practitioner other than the practitioner who furnished the 
ED visit on the same day, and we will retain this policy in 2023. If 
the NF initial visit and ED visit are furnished by the same 
practitioner on the same day, and time is used to select NF visit 
level, the time spent by the practitioner for the ED visit can be 
counted toward prolonged NF services (G0317) (see Table 24). We will 
continue to consider this issue for potential future rulemaking, if 
needed.
    After consideration of public comments, we are finalizing the 
following, as proposed.
     The initial comprehensive assessment required under 42 CFR 
483.30(c)(4) will be billed as an initial NF visit (CPT code 99304-
99306). A practitioner may bill the most appropriate initial nursing 
facility care code (CPT codes 99304-99306) or subsequent nursing 
facility care code (CPT codes 99307-99310), if the practitioner 
furnishes services that meet the code descriptor requirements, even if 
the service is furnished prior to the required initial comprehensive 
assessment.
     A given practitioner cannot bill an initial NF visit and 
another E/M visit (such as an O/O visit or ED visit) on the same date 
of service, for the same patient. However, the time the practitioner 
spends furnishing a visit in another setting can be counted toward 
reporting prolonged NF services, if requirements for reporting 
prolonged NF services are met.
     We are adopting the CPT instruction for reporting initial 
nursing facility care, which provides that transitions between SNF 
level of care and nursing facility level of care do not constitute a 
new stay.
     An initial service is one that occurs when the patient has 
not received any professional services from the physician or other 
qualified health care professional or another physician or other 
qualified health care professional of the exact same specialty who 
belongs to the same group during the stay. A subsequent service is one 
that occurs when the patient has received any professional services 
from the physician or other qualified health care professional or 
another physician or other qualified health care professional of the 
exact same specialty who belongs to the same group during the stay.
b. Valuation
    For CPT codes 99304 through 99310, we proposed to adopt the RUC-
recommended work RVUs for all of the nursing facility E/M visit codes 
given the new times surveyed by the RUC and specialty societies. 
Specifically, we proposed a work RVU of 1.50 for CPT code 99304 
(Initial nursing facility care, per day, for the evaluation and 
management of a patient, which requires a medically appropriate history 
and/or examination and straightforward or low level of medical decision 
making. When using total time on the date of the encounter for code 
selection, 25 minutes must be met or exceeded.), a work RVU of 2.50 for 
CPT code 99305 (Initial nursing facility care, per day, for the 
evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and moderate level of medical 
decision making. When using total time on the date of the encounter for 
code selection, 35 minutes must be met or exceeded.), a work RVU of 
3.50 for CPT code 99306 (Initial nursing facility care, per day, for 
the evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and high level of medical 
decision making. When using total time on the date of the encounter for 
code selection, 45 minutes must be met or exceeded.), a work RVU of 
0.70 for CPT code 99307 (Subsequent nursing facility care, per day, for 
the evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and straightforward medical 
decision making. When using total time on the date of the encounter for 
code selection, 10 minutes must be met or exceeded.), a work RVU of 
1.30 for CPT code 99308 (Subsequent nursing facility care, per day, for 
the evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and low level of medical 
decision making. When using total time on the date of the encounter for 
code selection, 15 minutes must be met or exceeded.), a work RVU of 
1.92 for CPT code 99309 (Subsequent nursing facility care, per day, for 
the evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and moderate level of medical 
decision making. When using total time on the date of the encounter for 
code selection, 30 minutes must be met or exceeded.), and a work RVU of 
2.80 for CPT code 99310 (Subsequent nursing facility care, per day, for 
the evaluation and management of a patient, which requires a medically 
appropriate history and/or examination and high level of medical 
decision making. When using total time on the date of the encounter for 
code selection, 45 minutes must be met or exceeded.). We proposed the 
RUC-recommended direct PE inputs for all the codes in the family, CPT 
codes 99305 through 99310.
    While we proposed to accept the RUC recommendations for CPT code 
99306, we considered maintaining the current work RVU of 3.06, since 
there was no change in the overall time. To support their 
recommendation, the RUC cited the survey key reference service, CPT 
code 99205 (Office or other outpatient visit for the evaluation and 
management of a new patient, which requires a medically appropriate 
history and/or examination and high level of medical decision making. 
When using time for code selection, 60-74 minutes of total time is 
spent on the date of the encounter), which has a much higher time noted 
in the descriptor and does not seem to be a valid comparison or support 
the increase in value to the RUC survey 25th percentile. There was no 
change in time for this service, and the code the RUC used for 
comparison has a higher total time. We also requested comment on the 
accuracy of the time noted in the descriptor for CPT code 99306. We 
noted that it is not clear to us why CPT code 99306, which is an 
initial service, would have the same descriptor time and medical 
decision making as CPT code 99310 which describes a subsequent visit. 
We sought clarification, especially with regard to the similarities 
between the code descriptors for these two services (CPT codes 99306 
and 99310).
    For CPT code 99308, we proposed to accept the RUC recommendations; 
however, we considered maintaining the current work RVU of 1.16 given 
there was a decrease in the total time for the service and no change in 
the descriptor time. We solicited comment regarding the RUC 
recommendations that the total time be rounded down to 15 minutes 
instead of rounding up to twenty minutes, when using total time on the 
date of the encounter for code selection (minutes must be met or 
exceeded), and sought clarification on this difference. In light of the 
changes made to the O/O E/M visits, however, we proposed the RUC-
recommended work RVU of 1.30 for CPT code 99308, but stated that we 
would appreciate comments regarding rounding.
    For CPT code 99309, we proposed a work RVU of 1.92. When compared 
to CPT code 99214 (Office or other outpatient visit for the evaluation 
and management of an established patient,

[[Page 69605]]

which requires a medically appropriate history and/or examination and 
moderate level of medical decision making. When using time for code 
selection, 30-39 minutes of total time is spent on the date of the 
encounter), we are acknowledging the increase in time required to bill 
CPT code 99309. We noted that the descriptor time for CPT code 99309 
went up since these codes were last revalued. We are focusing on the 
time in the descriptor, and if there is a change in the level of MDM. 
In light of recent changes made to the O/O E/M visits, however, we 
proposed the RUC-recommended work RVU of 1.92 for CPT code 99309.
    Although we proposed to adopt all the RUC-recommended work RVUs and 
times for this code family as explained above, we solicited comment 
regarding the discrepancies in times, which have implications both for 
valuation of individual codes (and for PFS ratesetting in general), 
since the intraservice times and total times are used as references for 
valuing many other services under the PFS. After reviewing the RUC 
recommendations, in conjunction with the revised code descriptors and 
documentation guidelines for CPT codes 99304 through 99310, we proposed 
to accept the RUC-recommended work and time values for the revised 
nursing facility visit codes with the PE refinements noted by the RUC 
for CY 2023.
    We received public comments on these valuation proposals. The 
following is a summary of the comments we received and our responses.
    Comment: Most commenters supported and commended CMS for proposing 
the RUC-recommended work RVUs for all the nursing facility codes, and 
stated that it is important to adopt them in the final rule.
    Response: We thank the commenters for their support.
    Comment: In their public comment, the AMA addressed the questions 
asked by CMS related to the times in the code descriptors for CPT codes 
99306 and 99310. The AMA explained that the wording of these code 
descriptors was intentional, such that descriptor times and MDM are the 
same, and that these codes only differ in their inclusion of the terms 
``initial'' versus ``subsequent,'' enabling practitioners to use these 
terms to decide which code to bill. Although the intra-service time for 
CPT code 99306 was 50 minutes, CPT assigned a descriptor time of 45 
minutes (which is the same descriptor time for 99310) to provide a 
consistent pattern of time increments, simplifying reporting. This 
results in descriptor times for CPT codes 99304, 99305, and 99306 that 
are 10 minutes apart (25, 35, and 45 minutes, respectively), providing 
an easy incremental pattern for those who are reporting these services 
based on time.
    Response: We appreciate the AMA's clarification. We note that this 
incremental pattern was not applied by CPT to CPT codes 99307 and 
99308, and CPT does not appear to consistently apply this approach 
within or across E/M visit families, historically or for 2023. For 
example, the new descriptor times for home/residence visits are not 
separated by identical increments, nor are the parallel 2022 
domiciliary codes or the 2023 inpatient/observation visit descriptor 
times. To help distinguish initial and subsequent NF visits having high 
MDM, and better match the descriptor time to the intraservice time, CPT 
could have adopted a descriptor time of 50 minutes for CPT code 99306. 
To avoid creating Medicare-specific codes for NF visits, for CY 2023 we 
are adopting the CPT code descriptors as revised for CPT codes 99306 
and 99310. However, we recommend that CPT revise the descriptor for CPT 
code 99306, and clarify the methodology being used to establish CPT 
code descriptor times within and across E/M visit families. Applying a 
consistent methodology seems important for establishing relativity 
within and across families.
    Comment: In their public comment, the AMA explained that the 
descriptor time for CPT code 99308 was rounded down, from 18 minutes 
intraservice time to 15 minutes in the descriptor, to maintain a 15-
minute incremental reporting pattern for time among the subsequent NF 
visit codes. As discussed above, we note that CPT does not consistently 
apply this approach within or across E/M visit families when 
establishing descriptor times, historically or for 2023. Applying a 
consistent methodology seems important for establishing relativity 
within and across families. We recommend that CPT revise the descriptor 
for CPT code 99308 to 20 minutes and clarify the methodology being used 
to establish CPT code descriptor times within and across E/M visit 
families. To avoid creating Medicare-specific codes for NF visits, for 
2023, we are adopting the CPT code descriptor as revised for CPT code 
99308.
    Regarding valuation for CPT code 99308, the RUC appears to have 
recommended the increased work RVU based upon a slightly increased 
intraservice time, despite a slight decrease in total time. We note 
that the specialty societies had requested an even higher work RVU (the 
median), which the RUC did not accept. Since the total time decrease 
was small, we are finalizing our proposal to accept the RUC-recommended 
work RVU (the survey 25th percentile), which will increase the work RVU 
for CPT code 99308 from 1.16 to 1.30.
    Comment: MedPAC agreed with the concerns we expressed regarding the 
times in the descriptors and the associated RUC-recommended valuations 
for this family, and was not in support of the proposal to accept the 
RUC recommendations for this code family. MedPAC suggested that the RUC 
address these concerns by revising the RVUs or that CMS develop its own 
RVUs for these services since nursing facility E/M visit codes are used 
as reference codes for valuing many other services in the fee schedule. 
MedPAC opined that assigning inaccurate work RVUs to these E/M codes 
could, therefore, lead to inaccurate payments--not just for these 
services, but also for a variety of other services that are valued in 
relation to these visits. MedPAC suggested that CMS ask the RUC to 
revisit its valuation of the nursing facility E/M visit codes; 
alternatively, CMS could propose its own work RVUs in next year's 
proposed rule. In the interim, MedPAC further suggested that CMS should 
retain the current RVUs for nursing facility E/M visit codes.
    Response: We had considered proposing to maintain the work RVUs for 
several of the codes, as stated above for the nursing facility code 
set, or alternatively, creating new coding or assigning different work 
values to address the concerns we identified for this code set. 
However, after reviewing our options and considering the potential 
impact on interested parties, including the process through which the 
codes would be revalued, we concluded it would be least disruptive to 
adopt the revised code set and values as proposed. As discussed above, 
we are recommending that the CPT Editorial Panel reconsider the 
descriptor times for several of the codes in this family, and apply a 
more consistent approach to descriptor times within and across 
families. We intend to monitor this code set and will propose any 
necessary changes through future rulemaking.
    After consideration of public comments, we are finalizing as 
proposed, to accept the RUC recommendations for this code family and 
adopt the CPT codes as revised. However, we recommend that the CPT 
Editorial Panel reconsider the descriptor times for several codes in 
this family, and provide more transparency and

[[Page 69606]]

consistency when establishing descriptor times for E/M visits.
c. Prolonged Services
    We proposed that prolonged nursing facility services by a physician 
or NPP would be reportable using prolonged service HCPCS code G0317, 
which would be used to account for additional time spent when the total 
time for the NF service (specified in the time file) is exceeded by 15 
or more minutes. The long descriptor would be G0317 (Prolonged nursing 
facility evaluation and management service(s) beyond the total time for 
the primary service (when the primary service has been selected using 
time on the date of the primary service); each additional 15 minutes by 
the physician or qualified healthcare professional, with or without 
direct patient contact (list separately in addition to CPT codes 99306, 
99310 for nursing facility evaluation and management services). (Do not 
report G0317 on the same date of service as other prolonged services 
for evaluation and management 99358, 99359, 99418). (Do not report 
G0317 for any time unit less than 15 minutes)). We proposed that the 
practitioner would include any prolonged service time spent within the 
surveyed timeframe, which includes the day before the visit, the day of 
the visit, and up to and including 3 days after the visit (please see 
summary Table 18 in our proposed rule). We proposed that prolonged 
physician or NPP NF services would be reportable when the total time 
(in the physician time file) is exceeded by 15 or more minutes which 
would be once 95 minutes are spent for initial NF visits, and once 85 
minutes are spent for subsequent NF visits, and for each additional 15 
minutes furnished thereafter. Consistent with CPT coding guidance as 
indicated below, there would not be any frequency limitation; 
therefore, we proposed that physicians and NPPs would be able to bill 
G0317 for each additional 15-minute increment of time beyond the total 
time for CPT codes 99306 and 99310.
    Since G0317 includes time without direct patient contact, there 
would no longer be a need to use CPT codes 99358 and 99359 (prolonged 
E/M service on a date other than the face-to-face E/M) in conjunction 
with NF visits. Therefore, we proposed to change the payment status for 
CPT codes 99358 and 99359 to ``I'' (Not valid for Medicare purposes. 
Medicare uses another code for reporting of, and payment for, these 
services). This is consistent with our final policy for O/O E/M visits, 
where prolonged time can no longer be reported using CPT codes 99358 
and 99359. We continue to be concerned about program integrity, 
counting time that was not included in the surveyed timeframe, and the 
administrative complexity of having multiple prolonged service codes 
associated with a given primary service (see our previous discussion of 
these issues in our CY 2020 PFS final rule at 84 FR 62849 through 
62850). As we stated in that rule, many other codes are available to 
report prolonged E/M work associated with an E/M visits that occurs 
outside of the timeframe included in the visit, such as CCM, TCM, PCM, 
behavioral health integration (BHI), and other care management service 
codes. We designed these codes to be used to report time spent outside 
the direct patient contact (but still in management/consideration of 
that given patient's case) on dates other than the E/M visit. While 
these care management codes are not identical to the prolonged visit 
codes, they can be used to report a number of similar activities. 
Additional information about those codes can be found on our PFS Care 
Management website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Care-Management. We also direct the 
reader to section II.E. of this final rule, where we proposed 
additional care management service codes for pain management and BHI.
    When prolonged nursing facility services are furnished by a 
physician or NPP, they would be reportable under HCPCS code G0317. We 
believe that allowing practitioners to report CPT code 99418 after the 
minimum time requirement for the highest level subsequent visit is met 
and then exceeded by at least 15 minutes would result in double-
counting time. As a specific example, CPT code 99310 requires that 45 
minutes must be met or exceeded up to 60 minutes. If the reporting 
practitioner spent 55 minutes of time, those 55 minutes would be billed 
and are included in the services described by CPT code 99310. After 60 
minutes has been met, any additional time should be counted toward the 
15 minutes required to report the add on CPT code for the prolonged 
service. Similar to the policy we finalized in the CY 2020 PFS final 
rule for the O/O E/M visits (84 FR 62849), which states that when the 
time of the reporting physician or NPP is used to select O/O E/M visit 
level, HCPCS code G2212 could be reported when the maximum time for the 
level 5 O/O E/M visit is exceeded by at least 15 minutes on the date of 
service.
    In addition, we noted that the CPT code descriptor for CPT code 
99418 does not include nursing facility. Further, the timeframes do not 
align for CPT codes 99418, 99358, and 99359. The survey time for CPT 
code 99418 is for time on the date of service, and when the nursing 
facility visit codes were resurveyed by the RUC, the survey time 
included the day before, the day of, and up to and including 3 days 
post the date of service. We proposed Medicare-specific coding in order 
to avoid duplicative counting of time, administratively simplify 
prolonged service coding, and better enable us to determine how much 
total time was spent with the patient. If we proposed to merely accept 
the CPT prolonged service coding changes, we would not be able to 
identify the time spent with patients in the claims data alone. This is 
because we might not know which primary service is the companion code 
to the prolonged service code(s) due to the wide service timespan (for 
prolonged services without direct patient contact) and non-specific 
care settings within the prolonged CPT code descriptors. Consistent 
with CPT's approach, we proposed that practitioners and NPPs would only 
be able to report the prolonged services code for NF (G0317) in 
conjunction with the highest level codes in the family (CPT code 99306 
and 99310). This would also be consistent with our policy for O/O E/M 
visits (see (84 FR 62849).
    We received many comments regarding our proposal for Medicare-
specific coding for prolonged Other E/M services. We address comments 
that apply across the Other E/M visit families in this final rule in 
section II.F.11 below (Prolonged Services).
7. Nursing Facility Discharge Management (CPT Codes 99315-99316)
a. Coding
    CPT codes 99315 (Nursing facility discharge day management; 30 
minutes or less) and 99316 (Nursing facility discharge day management; 
more than 30 minutes) were identified for RUC review in October 2021 
and were then postponed so that they could be reviewed at the same time 
as the inpatient hospital and observation care codes, in January 2022. 
Due to changes in physician work, changes in technology, patient 
population, and length of stay, the RUC determined that the nursing 
facility discharge services could be reviewed separately from the 
inpatient hospital discharge day services.
    The nursing facility discharge day management codes are used to 
report the total duration of time spent by a physician or other 
qualified health care

[[Page 69607]]

professional for the final nursing facility discharge of a patient. The 
codes include, as appropriate, final examination of the patient and 
discussion of the NF stay, even if the time spent on that date is not 
continuous. Instructions are given for continuing care to all relevant 
caregivers, as well as for preparation of discharge records, 
prescriptions, and referral forms. These services require a face-to-
face encounter, which may be performed on a calendar date prior to the 
actual discharge date. The time of the face-to-face encounter performed 
on a date prior to the discharge date is counted toward CPT code 99315 
and CPT code 99316 and not reported separately.
    We proposed to retain our policy that CPT codes 99315 and 99316 (as 
appropriate) shall be reported for a face-to-face visit with the 
patient provided by the physician or the qualified NPP, which is 
required in order to report the SNF/NF discharge day management 
service. The NF discharge day management visit shall be reported for 
the date of the actual visit by the physician or qualified NPP, even if 
the patient is discharged from the facility on a different calendar 
date. (Refer to Medicare Claims Processing Manual, IOM 100-04, Chapter 
12, 30.6.13.I.) Additionally, we proposed that a physician or qualified 
NPP may report CPT codes 99315 or 99316 for a patient who has expired 
only if the physician or qualified NPP personally performed the death 
pronouncement.
b. Valuation
    We proposed the RUC-recommended work RVU of 1.50 for CPT code 
99315. We considered maintaining the current work RVU of 1.28 for CPT 
code 99315, based on the total time ratio between the current time of 
40 minutes and the recommended time established by the survey of 40 
minutes. Utilizing our total time ratio methodology this ratio equals 
100 percent, and 100 percent of the current work RVU of 1.28, which 
indicates there is no change to the physician service and no change in 
the physician total time. We believe that, since the two components of 
work are time and intensity, significant decreases in time should be 
reflected in decreases to work RVUs. In this case, there was no change 
in total time. However, maintaining CPT code 99315 at the current value 
of a work RVU of 1.28 would cause a rank order anomaly with CPT code 
99308. Also, given the remaining NF codes were revised to align with 
the principles included in the O/O E/M visit services by documenting 
and selecting level of service based on total time or MDM, we concluded 
that the increase of the work RVU to 1.50 for CPT code 99315 would be 
appropriate.
    We proposed the RUC-recommended work RVU of 2.50 for CPT code 
99316. We considered proposing a work RVU of 2.22 based on the total 
time ratio between the current time of 54 minutes and the recommended 
time established by the survey of 63 minutes. When we reviewed CPT code 
99316, we found that the recommended work RVU was higher than nearly 
all of the other global XXX codes with similar time values, and we do 
not believe that this code would have an anomalously high intensity. As 
we stated earlier, in light of changes made to the O/O E/M visits and 
the changes to include documenting and selecting level of service based 
on total time or MDM, we proposed the RUC-recommended work RVU of 2.50 
for CPT code 99316. We proposed the RUC-recommended direct PE inputs 
for CPT code 99315 and the RUC-recommended direct PE inputs for CPT 
code 99316.
    Comment: We only received comments in support of the proposed 
valuation for CPT codes 99315 and 99316.
    Response: We appreciate the support for our proposed work RVUs for 
CPT codes 99315 and 99316, and are finalizing as proposed.
c. Prolonged Services
    CPT code 99315 and CPT code 99316, the two codes for nursing 
facility discharge management, are set up as a base code with an add-on 
code with no ceiling of time. Since time on any day can be included 
when billing CPT code 99315 or 99316, there is no need for a prolonged 
service code for either of these two codes. Allowing for a prolonged 
service code for either of these two codes could result in double 
counting a physician or NPP's time spent during a nursing facility 
discharge, which would not be appropriate. Additionally, CPT code 99418 
does not include Nursing Facility in the descriptor. Therefore, we 
proposed that prolonged services would not be reportable in conjunction 
with CPT codes 99315 and 99316 (NF discharge day management).
    The following is a summary of the comments we received on our 
proposal and our responses.
    Comment: We only received comments in support of our proposal that 
prolonged services would not be reportable in conjunction with CPT 
codes 99315 and 99316.
    Response: We appreciate the support from the commenters and are 
finalizing as proposed. We refer readers to section II.F.11 below for a 
discussion of comments received on prolonged Other E/M services 
generally.
8. Annual Nursing Facility Assessment (CPT Code 99318)
a. Coding
    CPT code 99318 (Evaluation and management of a patient involving an 
annual nursing facility assessment, which requires these 3 key 
components: A detailed interval history; A comprehensive examination; 
and Medical decision making that is of low to moderate 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 stable, recovering, or 
improving. Typically, 30 minutes are spent at the bedside and on the 
patient's facility floor or unit) was recommended for deletion by CPT 
for 2023. In February 2021, the CPT Editorial Panel deleted CPT code 
99318 and revised seven nursing facility codes to align with the 
principles included in the O/O E/M visits by documenting and selecting 
level of service based on total time or MDM.
    We proposed to accept CPT's deletion of CPT code 99318. Our 
longstanding manual guidance states that an annual nursing facility 
assessment visit code may substitute as meeting one of the required 
physician visits, as specified in 42 CFR 483.30 (c)(1), if the code 
requirements for CPT code 99318 are fully met (Medicare Claims 
Processing Manual (Pub. 100-04) Chapter 12, section 30.6.13 (B)). Due 
to the longstanding nature of the manual section, we believe some 
provisions may be outdated, and it is possible to satisfy this 
requirement through other codes. We solicited comment on whether there 
is a need to keep this code for Medicare purposes. As we consider 
accepting the CPT's deletion of CPT code 99318, we are concerned that 
the absence of a similar code could cause an unwarranted increase in 
valuation of other services under the PFS, and CMS would not have a 
means of tracking how often these visits are occurring. While CPT code 
99308, CPT code 99309, and CPT code 99310 could be used to report the 
required annual visit, if we were to accept deletion of CPT code 99318, 
we believe most of the utilization for that former code would instead 
be reported under CPT code 99309, with a RUC-recommended work RVU of 
1.92 which is described in the valuation section below.

[[Page 69608]]

b. Valuation
    After considering the utilization and the need for the service 
described by CPT code 99318, we proposed to accept the CPT's deletion 
of CPT code 99318. Given the proposed deletion of CPT code 99318, the 
RUC recommends that 10 percent of the CPT code 99318 utilization would 
go to CPT code 99308, with a work RVU of 1.16; 85 percent of the 
utilization would go to CPT code 99309, with a work RVU of 1.55; and 5 
percent of the utilization would go to CPT code 99310, with a work RVU 
of 2.35.
    The following is a summary of the comments we received on our 
proposal and our responses.
    Comment: All commenters supported the CPT Editorial Panel decision 
to delete CPT code 99318, and stated that the service is reported 
sufficiently with other codes.
    Response: We appreciate the feedback from the commenters regarding 
our proposal to accept the CPT Editorial Panel decision to delete CPT 
code 99318 and are finalizing as proposed to accept the CPT's deletion 
of CPT code 99318. We are also finalizing our proposal to accept the 
RUC-recommended utilization estimates for visits that would have been 
reported under this code.
9. Home or Residence Services (CPT Codes 99341, 99342, 99344, 99345, 
99347-99350)
a. Coding
    Beginning in 2023, the CPT Editorial Panel is merging the two E/M 
visit families currently titled ``Domiciliary, Rest Home (eg, Boarding 
Home), or Custodial Care Services'' and ``Home Services.'' The new 
family will be titled ``Home or Residence Services,'' and the codes in 
this family will be used to report ``evaluation and management services 
provided in a home or residence. . .[and] when the residence is an 
assisted living facility, group home (that is not licensed as an 
intermediate care facility for individuals with intellectual 
disabilities), custodial care facility, or residential substance abuse 
treatment facility. For services in an intermediate care facility for 
individuals with intellectual disabilities and services provided in a 
psychiatric residential treatment center, see Nursing Facility 
Services.'' (2023 CPT Codebook, p.25-26). There are no changes to the 
included care settings from each respective family, rather the current 
care settings for each of the current families are being included 
within the new, merged family.
    More specifically, in its February 2021 meeting, effective 
beginning in 2023, the CPT Editorial Panel deleted the nine CPT codes 
in the Domiciliary, Rest Home (for example, Boarding Home), or 
Custodial Care Services code family (CPT codes 99324-99328, and 99334-
99337), and one CPT code in the Home Services family (CPT code 99343), 
to merge these services with the eight remaining home visit services. 
The eight remaining home services CPT codes (99341, 99342, 99344, 
99345, and 99347-99350) were revised to describe Home or Residence 
Services to align with the principles of the O/O E/M visit codes by 
allowing physicians and NPPs to document and select the level of 
service based on total practitioner time or MDM level. These changes 
include combining the domiciliary, rest home and custodial care CPT 
codes with the home visit CPT codes, resulting in a single family of 
CPT codes that describe these types of services. In addition, CPT 
revised the descriptors to allow reporting that is based on time or MDM 
level--in alignment with the O/O E/M visit CPT codes. We proposed to 
accept these coding revisions.
    The following is a summary of the comments we received and our 
responses.
    Comment: The commenters supported our proposal to accept the CPT 
coding changes for Home or Residence Services codes.
    Response: We appreciate the feedback from the commenters regarding 
our proposal, and are finalizing as proposed to adopt the CPT merger of 
the home and domiciliary visits into one family, and adopt the CPT 
codes as revised for reporting these services.
b. Valuation
    The RUC survey time includes pre-service time 3 days before the 
date of encounter, intraservice time on the date of encounter, and 
post-service time that includes 7 days after the date of encounter. 
These eight CPT codes were reviewed at the October 2021 RUC meeting 
with recommendations submitted to CMS for the CY 2023 rule cycle. The 
RUC recommended the survey 25th percentile value for all CPT codes in 
the Home or Residence Services code family, except for CPT code 99350, 
for which the RUC recommended the median value. We proposed the RUC-
recommended work RVU for all eight CPT codes in the Home or Residence 
Services CPT code family. We proposed a work RVU of 1.00 for CPT code 
99341 (Home or residence visit for the evaluation and management of a 
new patient, which requires a medically appropriate history and/or 
examination and straightforward medical decision making), a work RVU of 
1.65 for CPT code 99342 (Home or residence visit for the evaluation and 
management of a new patient, which requires a medically appropriate 
history and/or examination and low level of medical decision making), a 
work RVU of 2.87 for CPT code 99344 (Home or residence visit for the 
evaluation and management of a new patient, which requires a medically 
appropriate history and/or examination and moderate level of medical 
decision making), a work RVU of 3.88 for CPT code 99345 (Home or 
residence visit for the evaluation and management of a new patient, 
which requires a medically appropriate history and/or examination and 
high level of medical decision making), a work RVU of 0.90 for CPT code 
99347 (Home or residence visit for the evaluation and management of an 
established patient, which requires a medically appropriate history 
and/or examination straightforward medical decision making), a work RVU 
of 1.50 for CPT code 99348 (Home or residence visit for the evaluation 
and management of an established patient, which requires a medically 
appropriate history and/or examination and low level of medical 
decision making), a work RVU of 2.44 for CPT code 99349 (Home or 
residence visit for the evaluation and management of an established 
patient, which requires a medically appropriate history and/or 
examination and moderate level of medical decision making), and a work 
RVU of 3.60 for CPT code 99350 (Home or residence visit for the 
evaluation and management of an established patient, which requires a 
medically appropriate history and/or examination and high level of 
medical decision making).
    We proposed the RUC-recommended direct PE inputs for CPT codes 
99345 and 99347-99350 without refinement. For CPT codes 99341 and 
99342, we are refining the direct PE inputs by removing supply item 
SK062 (patient education booklet). For CPT code 99344, we are refining 
the direct PE inputs by removing supply items SK062 (patient education 
booklet), SJ053 (swab-pad, alcohol), and SJ061 (tongue depressor). Per 
the PE Summary of Recommendations provided by the RUC, CPT codes 99341, 
99342, 99344, and 99347 would typically have procedures performed on 
the same date of service. For those CPT codes, the RUC stated that they 
removed supplies that would be duplicative, such as gloves, alcohol 
wipes, booklet, and tongue depressor. However, we found that not all of 
these duplicative supplies had been removed from CPT codes

[[Page 69609]]

99341, 99342, and 99344 by the RUC. Therefore, we proposed to remove 
these duplicative supplies from CPT codes 99341, 99342, and 99344, and 
accept the remaining RUC-recommended direct PE inputs without 
refinement.
    The following is a summary of the comments we received and our 
responses.
    Comment: The majority of commenters supported our proposal to 
accept the RUC-recommended RVUs for all of the Home or Residence 
Services codes.
    Response: We appreciate the feedback from the commenters regarding 
our proposal.
    Comment: A few commenters stated the RVUs for the Home or Residence 
Services code family were too low, and fail to adequately account for 
travel, addressing social determinants of health, and other 
comprehensive care. One commenter suggested that we maintain the 
current RVUs for codes 99341, 99344, 99345, 99347, and 99348, for which 
the RUC-recommended RVUs decreased, while supporting our proposal to 
accept the increased RVUs for codes 99342, 99349, and 99350 recommended 
by the RUC. Another commenter suggested that we increase the RVUs for 
the entire code family to reflect travel expenses, and expressed 
concern that unreimbursed travel will be detrimental to the care 
provided to very ill patients and threaten the financial viability of 
physician practices that provide home or residence visits.
    Response: We continue to believe that the RUC-recommended RVUs are 
the appropriate values for CPT codes 99341, 99342, 99344, 99345, and 
99347-99350. We appreciate the commenters' remarks, and we acknowledge 
the concerns regarding providing patient care and addressing social 
determinants of health and other issues during home or residence 
visits. Historically, travel costs incurred by the physician or 
practitioner are not included in the valuation of E/M codes, since 
travel time and/or mileage is not considered a resource involved in 
furnishing the service. The RUC survey for the Home or Residence 
Services code family did not include information on physician travel or 
mileage. Also, the CPT E/M guidelines for selecting the level of home 
or residence service, when performed based on time, specifically says 
not to count the time spent on travel (2023 CPT Codebook, p. 26). 
Therefore, we are finalizing the RUC-recommended work RVUs as proposed.
    Comment: One commenter requested that we not refine the direct PE 
inputs for codes 99341, 99342, and 99344 as proposed. For CPT codes 
99341 and 99342, we proposed removing supply item SK062 (patient 
education booklet). For CPT code 99344, we proposed removing supply 
items SK062 (patient education booklet), SJ053 (swab-pad, alcohol), and 
SJ061 (tongue depressor).
    Response: Per the PE Summary of Recommendations provided by the 
RUC, CPT codes 99341, 99342, 99344, and 99347 would typically have 
procedures performed on the same date of service, which would already 
include some of the same supply items. For these CPT codes, the RUC 
stated that they had removed the PE inputs for supplies that would be 
duplicative with the procedure on the same day, such as gloves, alcohol 
wipes, a booklet, and a tongue depressor. Although the RUC did remove 
the duplicative supplies for CPT code 99347 from the direct PE inputs 
they recommended, we found that the RUC had not removed all of these 
duplicative supplies from CPT codes 99341, 99342, and 99344. Therefore, 
we proposed to remove these duplicative supplies from the direct PE 
inputs for CPT codes 99341, 99342, and 99344. We continue to believe 
these supplies are duplicative with a same-day procedure, and are, 
therefore, finalizing the direct PE inputs for CPT codes 99341, 99342, 
99344, and 99347 as proposed.
    After consideration of the public comments, we are finalizing the 
work RVU values for the Home or Residence Services code family as 
proposed. We are also finalizing the direct PE inputs for these codes 
as proposed.
c. Prolonged Services for Home or Residence Services
    We proposed that prolonged home or residence services by a 
physician or NPP would be reportable using HCPCS code G0318 (Prolonged 
home or residence evaluation and management service(s) beyond the total 
time for the primary service (when the primary service has been 
selected using time on the date of the primary service); each 
additional 15 minutes by the physician or qualified healthcare 
professional, with or without direct patient contact (list separately 
in addition to CPT codes 99345, 99350 for home or residence evaluation 
and management services). (Do not report G0318 on the same date of 
service as other prolonged services for evaluation and management 
99358, 99359, 99417). (Do not report G0318 for any time unit less than 
15 minutes)). Code G0318 would be reportable when the total time for 
the home or residence visit (specified in the time file) is exceeded by 
15 or more minutes. Prolonged services (whether on the same date or 
another date within the surveyed timeframe) would be reportable as an 
add-on code to CPT codes 99345 or 99350 once the practitioner spends 
15+ minutes beyond the total time finalized for the primary service (as 
specified in the time file). We would allow the physician or NPP to 
include any prolonged service time spent within the surveyed timeframe 
for the Home or Residence Services code family, which includes pre-
service time 3 days before the date of encounter, intraservice time on 
the date of encounter, and post-service time that includes 7 days after 
the date of encounter. This means that for CPT code 99345, assuming we 
finalized the RUC-recommended total time of 126 minutes, prolonged 
services would be reportable once 141 or more minutes are spent by a 
physician or NPP providing the home or residence visit. Likewise, for 
CPT code 99350, assuming we finalized the RUC-recommended total time of 
97 minutes, prolonged services would be reportable once 112 or more 
minutes are spent by a physician or NPP providing the home or residence 
visit. See Table 18 in our proposed rule for a table summarizing this 
information.
    Since we proposed that prolonged services on any date within the 
service period (with or without direct patient contact, on the same or 
different date) would be reportable under G0318, we also proposed that 
CPT code 99358 (Prolonged evaluation and management service before and/
or after direct patient care; first hour), 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)), and CPT code 99417 (Prolonged outpatient 
evaluation and management service(s) time with or without direct 
patient contact beyond the required time of the primary service when 
the primary service level has been selected using total time, each 15 
minutes of total time (List separately in addition to the code of the 
outpatient Evaluation and Management services)) cannot be billed for 
CPT codes 99345 and 99350. We proposed to change the status indicator 
for CPT codes 99358 and 99359 to ``I,'' which indicates that these 
codes are not valid for Medicare purposes, and that Medicare uses 
another code for reporting of, and payment for, these services.
    We continued to be concerned about program integrity, duplicative 
time, counting time that was not included in the surveyed timeframe, 
the administrative complexity of having multiple prolonged service 
codes, and our ability to determine how much time was spent with the 
patient using claims data. If we proposed to merely accept

[[Page 69610]]

the CPT coding for prolonged home or residence E/M visits, we would not 
be able to identify from the claims data the time spent with patients. 
This is because we might not know which primary service is the 
companion code to the prolonged service code(s) due to the wide service 
timespan (for prolonged services without direct patient contact) and 
non-specific care settings within the prolonged CPT code descriptors. 
See our previous discussion of these issues in our CY 2020 PFS final 
rule at 84 FR 62849 through 62850. As we stated in that rule, many 
other codes are available to report prolonged E/M work associated with 
an E/M visit that occurs outside of the timeframe included in the 
visit, such as CCM, TCM, PCM, behavioral health integration (BHI), and 
other care management service codes. We designed these codes to be used 
to report time spent outside the direct patient contact on dates other 
than the E/M visit. While these care management codes are not identical 
to the prolonged visit codes, they can be used to report a number of 
similar activities. Additional information about the care management 
codes can be found on our PFS Care Management web page on the CMS 
website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Care-Management. We also directed readers to 
our proposals for additional care management service codes for pain 
management and BHI.
    We received many comments regarding our proposal for Medicare-
specific coding for prolonged Other E/M services. We address comments 
that apply across the Other E/M visit families in this final rule in 
section II.F.11 below (Prolonged Services). We received a few comments 
that apply specifically to prolonged service codes for home or 
residence visits, and we address those as follows.
    Comment: A few commenters stated it is unclear whether the time for 
prolonged code G0318 must occur on the date of the home or residence 
visit, or could be over the span of 3 days prior and 7 days after the 
home or residence visit occurs.
    Response: The prolonged time can occur on the date of the visit, or 
within the 3 days prior or 7 days after the visit date. These 11 days 
comprise the service period used by the AMA RUC to develop recommended 
values for home or residence visits. See Table 24 for a summary of this 
information. We note that for ease of reporting, we are rounding to the 
nearest 5 minutes for the time threshold to report G0318, which results 
in a lower time by 1 or 2 minutes, shown in Table 24.
    Comment: One commenter suggested that we allow code G2211 (Visit 
complexity inherent to evaluation and management associated with 
medical care services that serve as the continuing focal point for all 
needed health care services and/or with medical care services that are 
part of ongoing care related to a patient's single, serious condition 
or a complex condition. (add-on code, list separately in addition to 
office/outpatient evaluation and management visit, new or established)) 
to be reported with the home or residence visit codes.
    Response: Section 113 of the Consolidated Appropriations Act, 2021 
delayed Medicare payment for G2211 until at least January 1, 2024. For 
further discussion on code G2211, see 2. Overview of Policy Proposals, 
in this section above, in this final rule.
    After consideration of the public comments, we are finalizing our 
proposal to create new code G0318 for a prolonged home or residence 
visit. We are also finalizing our proposal to change the status 
indicator for prolonged CPT codes 99358 and 99359 to ``I,'' which 
indicates that these codes are not valid for Medicare purposes, and 
that Medicare uses another code for reporting of, and payment for, 
these services.
10. Cognitive Assessment and Care Planning (CPT Code 99483)
a. Coding and Valuation
    In February 2021, the CPT Editorial Panel revised CPT code 99483 to 
replace ``50 minutes'' from its descriptor with a revised time value 
determined by the RUC survey to align with the principles underlying 
the O/O E/M CPT codes. The 2023 descriptor time for CPT code 99483 will 
be 60 minutes typical time instead of 50 minutes typical time.
    Due to the increase in the valuation for O/O E/M visits in the CY 
2021 PFS final rule (85 FR 84556), we finalized a proposal to increase 
the value of CPT code 99483 from 3.44 to 3.80 work RVUs as a service 
that is analogous to the O/O E/M visits, because CPT code 99483 
includes a high-level O/O E/M visit. We stated that 99483 includes an 
evaluation of a patient's cognitive functioning and requires collecting 
pertinent history and current cognitive status, all of which require 
MDM of moderate or high complexity. To not create a rank order anomaly 
with CPT code 99205 (Office or other outpatient visit for the 
evaluation and management of a new patient, which requires a medically 
appropriate history and/or examination and high level of medical 
decision making. When using time for code selection, 60-74 minutes of 
total time is spent on the date of the encounter) we increased 99483 by 
using the ratio of the increase between the CY 2020 and CY 2021 values 
for 99205 to commensurate with the increase to CPT code 99205.
    We did not propose the RUC-recommended work RVU of 3.50, because we 
continued to believe that this service is appropriately valued more 
highly than the analogous O/O E/M visit code, CPT code 99205. Given 
what we viewed as the appropriate rank order among these services, we 
did not believe a reduction in work RVU, especially with a ten-minute 
increase in physician time, is warranted. In the interest of supporting 
access to this service, we instead proposed a slight increase from the 
current 3.80 to 3.84 to account for the increase in physician time with 
use of a total time ratio: we divided the RUC-recommended total time of 
86 by the current total time of 85 and then multiplied the product by 
the current work RVU of 3.80 to arrive at 3.84. We proposed the RUC-
recommended PE inputs without refinement.
    Comment: Several commenters supported our proposal to increase the 
work RVU to account for the increase in physician time.
    Response: We appreciate the support for this proposal and are 
finalizing as proposed a work RVU of 3.84 for CPT code 99483. We are 
finalizing as proposed the RUC-recommended PE inputs without 
refinement.
b. Prolonged Services
    We proposed that prolonged services would not be reportable in 
conjunction with CPT code 99483, because it has a typical time in its 
descriptor, which is not necessarily the actual time spent. 
Accordingly, we would not know when the prolonged services exceeded the 
service time.
    Comment: A commenter did not agree with our proposal that prolonged 
services codes cannot be reported with cognitive assessment and care 
planning services, stating that since the inception of the code, 
prolonged services have been allowed, and that if 99483 cannot be 
reported as a prolonged service, the practitioner may have incentives 
to instead use time and report it as 99205.
    Response: Since our final policy for other types of prolonged Other 
E/M services allows prolonged services reporting once total time, as 
reflected in the time file, is exceeded by the appropriate increment 
(not once the CPT code descriptor time is exceeded by

[[Page 69611]]

that increment), we do not believe the presence of a typical time in 
the descriptor for CPT code 99483 should prevent reporting of prolonged 
Cognitive Impairment Assessment services. We are persuaded that it 
would be appropriate for CPT code 99483 to be billable with prolonged 
services. We believe this would be consistent with our approach to 
other prolonged Other E/M services, which is that prolonged services 
can be reported if the physician or NPP spends 15 or more minutes 
beyond the total time (as specified in the time file and shown in Table 
24).
    After consideration of the public comments, we are not finalizing 
our proposal that prolonged services would not be reportable in 
conjunction with CPT code 99483. Instead, we are finalizing that CPT 
code 99483 can be billed with HCPCS code G2212 (prolonged office/
outpatient E/M services) when 15 or more minutes beyond the total time 
is spent by the physician or NPP (summarized in Table 24). We are 
rounding the total time to the nearest 5 minutes for ease of reporting, 
which results in a prolonged services reporting threshold of 100 
minutes (1 minute lower than the total time of 101 minutes). Time that 
is spent by the physician or NPP on any date within the surveyed 
timeframe for CPT code 99483 (within 3 days prior or 7 days after the 
date of the in-person visit) may be counted toward the reporting of 
prolonged services. Accordingly, we are revising the long descriptor 
for G2212 to include reference to CPT code 99483 as a code that can be 
listed separately with G2212.
11. Prolonged Services
    As discussed in the sections above, we proposed Medicare-specific 
coding for prolonged Other E/M services. We proposed three G codes 
(G0316, G0317 and G0318) for reporting of prolonged Other E/M services 
(one for each Other E/M family for which prolonged services would 
apply, namely inpatient/observation visits, nursing facility visits, 
and home or residence visits). This would be consistent with our 
previously finalized approach to prolonged O/O E/M services. In this 
section of our final rule, we address public comments regarding this 
proposal that apply across the Other E/M visit code families. We refer 
readers to individual sections above for public comments specific to a 
given code family.
    Comment: Many commenters were disappointed with our proposal to use 
Medicare-specific coding for prolonged Other E/M services. Their 
overarching concern was potential confusion and administrative burden 
resulting from different approaches between Medicare and CPT, and the 
potential for variation among payers. Some commenters noted that CPT's 
approach, dividing prolonged time into time spent on the date of the 
visit (described by one code set) and time spent on another date 
(described by another code set), is more intuitive for reporting than 
combining all time spent during the service time (as surveyed and 
valued) into a single code set as we proposed. Some commenters 
suggested that we should not align reported time with surveyed 
timeframes, which they assert are relatively inaccessible (other than 
the table provided by CMS in the proposed rule). However, some 
commenters supported our proposal. These commenters agreed with CMS 
that the proposed Medicare-specific coding will avoid duplicative 
payment, and corrects a lack of transparency in the CPT reporting times 
in comparison to survey times and work valuation.
    The AMA stated that it is imperative that physicians have one set 
of clear codes and guidelines to report prolonged services. The AMA's 
strong preference is for CMS to rely on the CPT codes and guidelines, 
and if not, the AMA Workgroup on E/M will reconvene to discuss whether 
revisions are needed to the CPT codes and guidelines. The AMA urged CMS 
to work with the CPT/RUC E/M Workgroup to bring CMS and CPT prolonged 
services policies into alignment. The AMA also expressed interest in 
receiving CMS input earlier in its processes, which could improve 
alignment with a given CMS rulemaking cycle.
    In their public comment, the AMA outlined ways in which they had 
sought to align the revised CPT coding with CMS' historical approach to 
prolonged services, and avoid creating a global period for E/M visits. 
The AMA noted that, during the E/M Workgroup process and CPT processes, 
there was much debate about whether to divide total time for reporting 
purposes into multiple codes, according to whether the time was spent 
on the date of the visit or another date. The E/M Workgroup believed 
that total time on the date of the encounter would be simpler to track 
and document for the primary service.
    The AMA also noted that their recommended valuations for prolonged 
service codes are mathematically correct and simpler administratively.
    Regarding prolonged services on a date other than the face-to-face 
E/M service (CPT codes 99358-9), the AMA recognized the concerns of CMS 
and agreed that potential overlap should be eliminated. The AMA also 
noted that the other care management services have not eliminated the 
need to recognize a substantial amount of work that occurs on single 
day. They stated that they expected the volume for CPT codes 99358-9 to 
drop substantially, as reporting would no longer be allowed for time on 
the date of the encounter. The AMA stated that incorrect reporting 
should be addressed, but improper reporting by the few should not lead 
to these codes being eliminated. The AMA further stated that the CPT 
Editorial Panel may consider revisions to the prolonged service codes, 
but requested that CMS be an active participant in the public and open 
CPT processes rather than only in CMS rulemaking.
    Response: We appreciate the commenters' concerns, and agree that 
the ideal approach would be a uniform CPT code set for reporting 
prolonged services. Generally, we prefer coding that is clear and 
consistent for practitioners to use, and we create Medicare-specific 
coding only when there is a significant program integrity concern or 
programmatic need, such as tailoring a code to a specific Medicare 
statutory benefit category.
    Historically, time could only be used to select visit level when 
counseling and care coordination comprised more than half of the visit 
(See Medicare Claims Processing Manual (Pub. 100-04) Chapter 12, 
section 30.6.15.1.H). Prolonged services could be billed in that 
situation, only when the time for the highest-level visit in a given 
code family was exceeded by the prolonged services time increment. 
Prolonged services could also be billed for any visit level if the 
typical time was exceeded by the prolonged services time increment. 
Until 2017, prolonged services were only separately paid for face-to-
face prolonged service time, which generally occurred on the date of 
the visit.
    CY 2023 will be the first year in PFS history that almost any E/M 
visit level can be selected using time, whether that time was spent on 
the same day or another day. Almost all E/M visit codes have new times, 
new survey data, new valuations, new parameters for how visit level is 
selected, and revised MDM levels. Some of the highest volume code 
families will be merged, and a number of code families will have a 
different number of levels within the family than previously. It is 
hard to contemplate a single aspect of E/M visit coding that will not 
change in some way, and these services account for a high share of PFS 
spending. Therefore, it is appropriate for us to take a fresh look at 
our policy. In recent years, the E/M visit overhaul has

[[Page 69612]]

involved substantial work in a compressed timeframe, and our policy 
views have continued to evolve with each rulemaking cycle. We greatly 
appreciate and value the opportunity to attend the AMA meetings, but as 
a federal agency obligated under the Administrative Procedure Act and 
section 1871 of the Act to use notice and comment rulemaking procedures 
to establish regulations, and given that we generally use the AMA's CPT 
coding and RUC recommendations as the starting point to describe and 
value services to meet our statutory mandates for the PFS, it would not 
be appropriate for us to participate in AMA processes in a way that 
could steer its decisions. Additionally, CMS engages in an extensive 
internal deliberative process to develop its proposed and final 
policies that are ultimately issued through notice and comment 
rulemaking.
    We have noted our concerns with the AMA's approach to prolonged 
services in several rulemaking cycles. We laid out many concerns with 
CPT codes 99358-9 when we adopted them in 2017 as an interim approach, 
given that at that time there were not many care management codes to 
account for physician time (81 FR 80228 through 80230). We laid out 
many more concerns in 2021 when finalizing our policy for prolonged O/O 
visits (84 FR 62847 through 62851). Although we initially adopted the 
CPT code for prolonged O/O services, we expressed our belief that there 
should be a single code for prolonged O/O service reporting, and 
subsequently finalized a Medicare-specific code because of our concerns 
about duplicative time counting under the revised CPT code (85 FR 84572 
through 84575).
    Prolonged service codes function like add-on codes for ``extra-
long'' E/M visits. We believe the role of prolonged service codes is to 
account for time spent beyond the total service time, which is 
established in the AMA RUC survey for the primary service (the code 
with which the prolonged service code is billed, such as Level 3 home/
residence visit), and reflected in the primary service's valuation. In 
contrast, the AMA seems to view prolonged services as accounting for 
time spent beyond intra-service time, which is only part of the visit. 
However, the total times recommended and used by the RUC to recommend 
values for the primary services, which we review and consider in 
establishing values for the PFS, are not limited to intra-service time. 
They include pre- and post-service time as well, and as such, the 
primary service is already valued to include total time. It would be 
redundant to reflect this time under the primary service code, and then 
again using prolonged service code(s) in addition to the primary 
service code.
    We understand that viewing the service as a whole requires the 
billing practitioner to look back once the visit is completed to 
identify the total time spent furnishing the service, rather than 
billing one code at the end of the calendar date of the face-to-face 
visit, and another code to reflect additional time spent on other days. 
However, we do not see another way to more accurately account for time. 
If practitioners want to bill immediately for time spent on the date of 
a visit, or during the face-to-face portion of the service, then 
perhaps the AMA's surveys (and associated valuation recommendations) 
should be limited to that timeframe, instead of including other time. 
We do not believe it would be appropriate to adopt a policy suggesting 
that a practitioner can bill an extra code that describes time and work 
that was already reflected in the survey, valuation, and PFS payment as 
part of the pre-/post-service time for the primary visit code.
    We laid out a summary table (Table 18 in the proposed rule), 
displaying information that we thought would help practitioners who may 
not be immediately aware of the surveyed timeframes for E/M visits, and 
who may lack familiarity with the AMA process where visits are assumed 
to take place over a number of days (and with different timeframes for 
different types of visits) and valued accordingly. We anticipate 
providing a similar table in our manual, website, and other 
subregulatory guidance to facilitate practitioner access to this 
information. We do not believe the solution lies in open-ended codes 
like CPT codes 99358-9, which have no beginning, end, or specified 
setting, seemingly could be used when a visit is not timed, and cannot 
readily be associated or connected with a particular face-to-face 
visit. Since practitioners may find it easier to follow time thresholds 
for reporting that are rounded, we are rounding all of the total times 
to the nearest 5 minutes, as reflected in Table 24. (This results in 
rounding down the reporting time thresholds for prolonged Other E/M 
services by 1 or 2 minutes in several instances).
    We appreciate the AMA's understanding of the many issues we laid 
out for CPT codes 99358-9, describing prolonged time spent on a date 
other than the visit, and planning for additional review. We will 
continue to follow any additional developments on these codes and 
prolonged service coding generally should the AMA make additional 
changes.
    Comment: In its public comment, the AMA defended payment for the 
15-minute prolonged service code for one minute of service time by 
pointing out the conundrum of any time threshold, where small time 
increments can result in disproportionate RVU increases when 
transitioning between levels of service (for example, from a level 4 to 
level 5 O/O visit) where time is being used to select visit level. The 
AMA used examples from the O/O visit code set, rather than the Other E/
M visit code set to demonstrate this point.
    Response: We appreciate the AMA's feedback. Based on the AMA E/M 
Workgroup discussions, we understood that the AMA views prolonged 
services as a type of additional visit level, based solely on 
additional time. Viewed through that lens, it might be understandable 
to allow reporting of the code representing the next highest level, as 
soon as the floor of that next level is reached. However, CPT did not 
define prolonged services as an additional visit level. Also, we 
believe that prolonged services should describe additional time beyond 
the total time (not just the intra-service time), since the primary 
service is already valued based on total time.
    Comment: One commenter recommended requiring a 15-minute time 
increment beyond the CPT code descriptor time, which they noted is the 
same as CPT's approach.
    Response: We appreciate the commenter's feedback. We considered 
this approach in our proposed rule (87 FR 46426). However, our 
understanding is that the time in the CPT code descriptors for the 
Other E/M primary services generally corresponds to the intra-service 
time for the primary service. As previously discussed, we believe 
prolonged services should be billed to account for time surpassing the 
total time rather than just the intra-service time, since pre- and 
post-service time is already included in the primary service valuation.
    We continue to believe that adopting the CPT codes for prolonged 
services would result in duplicative time counting, and reported times 
that do not align with work times used for valuation. Having three sets 
of codes for reporting time associated with a single visit is overly 
complex, and hinders our ability to assess how much time was spent, or 
trends in time spent, with patients using claims data under the new 
framework. However, we agree with commenters that a uniform code set 
for use by all payers for prolonged services is preferable to further 
reduce

[[Page 69613]]

administrative burden. After consideration of the public comments, we 
are finalizing our proposals for prolonged Other E/M services as 
proposed, and we will continue to work with the AMA to consider further 
refinements and standardization of this code set through notice and 
comment rulemaking. In Table 24, we provide a summary listing of the 
required time thresholds to report prolonged Other E/M services 
beginning in CY 2023, and show the time periods during which 
practitioners may count time spent toward prolonged service reporting.
12. Prolonged Services Valuation
a. Prolonged Services With Direct Patient Contact (CPT Codes 99354-
99357)
    The CPT Editorial Panel is deleting CPT codes 99354-99357 
(prolonged services with direct patient contact (except with office or 
other outpatient services)). These codes are currently used to report 
prolonged E/M visit time involving direct patient contact by physicians 
or NPPs beyond the usual service in settings other than O/O settings. 
We proposed to accept this deletion, since this work would be reported 
instead under the Medicare-specific codes that we proposed for 
prolonged physician/NPP time, discussed in each family's section above.
    We did not receive public comments on this proposal, and therefore, 
we are finalizing as proposed.
b. Prolonged Services on a Different Date Than the E/M (CPT Codes 
99358-99359)
    We noted that the RUC resurveyed and provided recommendations to 
revalue these codes. However, we proposed to assign an inactive status 
to these codes for purposes of Medicare payment as discussed above. We 
received comments on this proposal, which we discuss above as 
applicable within each family.
    After consideration of the public comments, we are finalizing as 
proposed to assign an inactive status to these codes for purposes of 
PFS payment as discussed above.
c. Prolonged Clinical Staff Services (CPT Codes 99415 and 99416)
    CPT code 99415 was created to describe the first hour of prolonged 
clinical staff services provided in addition to an office E/M visit, 
while CPT code 99416 was created to describe each additional 30 minutes 
beyond that first hour of prolonged clinical staff service time that 
was provided in addition to the O/O E/M visit. For these codes, we 
proposed the RUC-recommended direct PE inputs without refinement.
    We did not receive public comments on this proposal, and therefore, 
we are finalizing as proposed.
d. Valuation of Prolonged Other E/M Services (HCPCS Codes G0316, G0317 
and G0318)
    As discussed above in the Overview section, we do not agree that 
there is necessarily inherently greater complexity of patient need or 
intensity of work for E/M visits furnished in non-office settings (for 
example, inpatient, ED, and home settings) compared to the office 
settings. Therefore, we believe it would be more accurate to make 
payment based on the same time increment of physician work in these 
various settings. We proposed that the three prolonged visit HCPCS G 
codes G0316-G0318 (discussed above under each applicable family) be 
valued identically across settings, based on the RUC-recommended value 
for CPT code 99417. Therefore, we proposed a work RVU of 0.61 for these 
codes with a crosswalk to CPT code 99417. We likewise proposed direct 
PE inputs for these three codes that are identical to the RUC-
recommended PE inputs for CPT code 99417 (prolonged office/outpatient 
services). For the purposes of ratesetting, our utilization for these 
services included the assumption that one third of the services 
currently reported with 99356 would be reported with each of HCPCS 
codes G0316, G0317, and G0318, and one third of the services currently 
reported with 99357 would be reported with each of HCPCS codes G0316, 
G0317, and G0318. We would continue to use HCPCS code G2212 as 
previously finalized in lieu of CPT code 99417.
    Comment: The AMA stated that our approach to prolonged services 
would result overall in a decreased valuation for prolonged services, 
compared to their historical valuation. They noted this runs contrary 
to our original goal of shortening the prolonged service period, in 
order to increase prolonged services reporting (see 83 FR 35773, 
59580).
    Response: We appreciate this concern. Given the many changing 
aspects of E/M visit coding and payment, it does not seem feasible to 
estimate how prolonged services reporting and payment may change in 
2023 compared to historical levels, and how this might impact the 
amount of time spent with patients. One of our key considerations in 
redesigning the prolonged services code set is whether we will be able 
to see more clearly how much time is spent with patients through claims 
data. We note that practitioners will be allowed to count time spent on 
visit documentation (documenting clinical information), which will help 
them reach reporting thresholds based on time earlier than they could 
historically. Regarding valuation compared to historical levels, the 
Medicare-specific coding has comparable or higher work per unit of time 
(see Table 23). We will monitor the claims data for prolonged services, 
and potentially consider future rulemaking if we observe under-
reporting of prolonged services.
[GRAPHIC] [TIFF OMITTED] TR18NO22.050


[[Page 69614]]


    Comment: A commenter did not support the establishment of HCPCS 
codes G0316, G0317, and G0318, saying that this approach and our 
proposed work RVU of 0.61 for these G codes, inappropriately modifies 
the relativity between the prolonged visit codes and other services 
under the PFS. A commenter urged us to implement prolonged nursing 
facility and home/residence visits using CPT codes 99418 and 99417, and 
to adopt the RUC-recommended work RVUs of 0.81 and 0.61 respectively.
    Response: As discussed in this final rule in section II.F.11 above 
(Prolonged Services), we do not agree that there is necessarily 
inherently greater service complexity or intensity of work for E/M 
visits furnished in non-office settings (for example, inpatient, ED, 
and home settings) compared to the office settings. We are finalizing 
as proposed HCPCS codes G0316, G0317, and G0318 with a work RVU of 0.61 
and direct PE inputs for these three codes that are identical to the 
RUC-recommended PE inputs for CPT code 99417.
e. Summary of Required Time Thresholds To Report Other E/M Prolonged 
Services
    Table 24 summarizes the final rules for reporting Other E/M 
prolonged services by physicians or NPPs (See each family section above 
for detailed information).
[GRAPHIC] [TIFF OMITTED] TR18NO22.051

13. Consultations (CPT Codes 99241-99255)
    The RUC revised the code descriptors, deleted two codes, and 
revalued the RVUs of the consultation codes during its October 2021 and 
January 2022 RUC meetings. We did not review the RUC recommendations 
for the eight revised consultation codes (CPT codes 99242, 99243, 
99244, 99245, 99252, 99253, 99254, and 99255). In our proposed rule, we 
noted that CMS stopped paying for the consultation codes beginning in 
CY 2010. We refer readers to 74 FR 61767 through 61775, where we 
discuss our payment policy for these services.
14. Payment for Multiple Same-Day Visits
    Our manuals include many longstanding policies regarding when more 
than one Other E/M visit can be billed by the same practitioner for the 
same patient on the same date of service, particularly when a patient 
is being transferred among multiple care settings. In contrast, CPT 
code reporting instructions generally do not limit the number of visits 
that can be billed. We proposed to continue our longstanding policies 
for same-day visits, and refer the reader to the sections above 
regarding our final policies in application to each individual Other E/
M family.
15. Split (or Shared) Services
    The split (or shared) ``substantive portion'' policy for services 
furnished in facility settings was reflected in subregulatory guidance 
until it was withdrawn in May of 2021, in response to a petition under 
the Good Guidance regulation. In the CY 2022 PFS final rule (86 FR 
65150 through 65159), we finalized a policy for E/M visits furnished in 
a facility setting, to allow payment to a physician for a split (or 
shared) visit (including prolonged visits), where a physician and NPP 
provide the service together (not necessarily concurrently), and the 
billing physician personally performs a substantive portion of the 
visit. At that time, commenters were generally supportive of our 
approach, with some divide with regard to our definition of substantive 
portion. Some commenters preferred the use of MDM or one of the three 
key visit components as opposed to time for purposes of defining what 
is the substantive portion of the service.

[[Page 69615]]

a. Background
    A split (or shared) visit refers to an E/M visit performed by both 
a physician and an NPP in the same group practice. In the non-facility 
(for example, office) setting, the rules for ``incident to'' billing 
apply under this circumstance. However, ``incident to'' services are 
not available for services furnished in a facility setting. 
Longstanding CMS policy has been that, for split (or shared) visits in 
the facility (for example, hospital) setting, the physician can bill 
for the services if they perform a substantive portion of the 
encounter. Section 1833(a)(1)(N) of the Act specifies that payment is 
made for services furnished and billed by a physician at the PFS rate, 
while under section 1833(a)(1)(O)(i) of the Act, NPPs are paid for the 
services they furnish and bill for at a reduced PFS rate (85 percent of 
the PFS).
    We defined substantive portion in the CY 2022 PFS final rule (86 FR 
65152 through 65156) and provided for billing of split (or shared) 
visits in certain settings (86 FR 65156 through 65157) and for certain 
patient types (new and established) (86 FR 65156). After consideration 
of the public comments on the CY 2022 PFS proposed rule, we finalized a 
phased in approach to this policy (86 FR 65153). For CY 2022, we 
finalized the definition of substantive portion as one of the 
following: history, or exam, or MDM, or more than half of total time. 
In the CY 2022 PFS final rule (86 FR 65152 and 65153), we finalized 
that for CY 2023, the definition of substantive portion is more than 
half of total time.
    As part of our ongoing engagement with interested parties, we are 
hearing continued concern about the implementation of our phased in 
approach with regard to defining ``substantive portion'' only as more 
than half of the total time of the visit, and continue to receive 
requests that we also recognize MDM as the substantive portion. Many of 
these concerns relate to practice patterns where the physician does not 
spend half or more of the time with the patient, as well as possible 
adjustments needed to the practice's internal processes or information 
systems used to track visits based on time, rather than MDM. After 
consideration of public feedback, we proposed to delay implementation 
of our definition of the substantive portion as more than half of the 
total time until January 1, 2024. We continued to believe it is 
appropriate to define the substantive portion of a split (or shared) 
service as more than half of the total time, and proposed that this 
policy will be effective beginning January 1, 2024. While we continued 
to believe that the definition of substantive portion we finalized in 
the CY 2022 PFS final rule is appropriate, delaying implementation of 
this aspect of our policy would also allow for the changes in the 
coding and payment policies for Other E/M visits to take effect for CY 
2023, and allow for a one-year transition for providers to get 
accustomed to the new changes and adopt their workflow in practice. 
Additionally, this delay would allow interested parties another 
opportunity to comment on this policy, and gives us time to consider 
more recent feedback and evaluate whether there is a need for 
additional rulemaking on this aspect of our policy. To reflect the 
proposed delay, we proposed to amend our regulation text at 42 CFR 
415.140 to revise the definition of substantive portion, and noted the 
current definition of substantive portion applies for visits other than 
critical care visits furnished in CY 2022 and CY 2023.
    We proposed to amend Sec.  415.140 by adding to paragraph (a) ``and 
2023'' after the phrase ``For visits other than critical care visits 
furnished in calendar year 2022''. Therefore, the proposed paragraph 
would specify, for visits other than critical care visits furnished in 
calendar year 2022 and 2023, substantive portion means one of the three 
key components (history, exam or MDM) or more than half of the total 
time spent by the physician and NPP performing the split (or shared) 
visit.
    We received comments related to our proposal to delay 
implementation of the definition of substantive portion, as more than 
half of the time spent by the physician and non-physician practitioner 
(NPP), until CY 2024. Below is a summary of the comments received and 
their responses.
    Comment: Commenters were generally in support of the delay. We 
received a number of comments consistent with the public comments that 
we received and addressed in our CY 2022 final rule (86 FR 65152 
through 86 FR 65156). These commenters believe that tracking the time 
for purposes of determining the substantive portion for billing is too 
burdensome, and they recommend that we allow MDM to serve as the 
substantive portion, potentially supported by an attestation statement 
from the billing practitioner in the medical record affirming that the 
billing practitioner furnished the MDM. Some commenters were concerned 
that defining the substantive portion of a service by time alone would 
disrupt collaborative and team-based care, and interfere with the way 
care is delivered in the facility setting. Some commenters also offered 
that there is significant variability in how much time it takes to 
perform elements of the visit, depending on the level of training and 
expertise of the physician and NPP. They stated that using MDM to 
direct the management of the patient's care determines the course of 
treatment for the patient, but it typically does not require the most 
time. Some commenters recommended that we remove our split (or shared) 
visit policy.
    Response: We thank the commenters for their views and suggestions, 
and note that we have previously addressed these issues. These comments 
were consistent with the comments we received when we finalized in the 
CY 2022 PFS final rule (86 FR 65152 through 86 FR 65156). We appreciate 
hearing from these interested parties and will continue to consider the 
issues raised in their comments for possible future rulemaking.
    Comment: The AMA indicated in its public comment letter that it 
intended to refer the definition of split (or shared) services back to 
CPT for potential further review.
    Response: We will review any revisions made by the CPT Editorial 
Board to standardized language, including any definition of 
``substantive portion'' for split (or shared) services. We will take 
any revised CPT definitions or guidance into consideration for possible 
future rulemaking.
    Comment: One commenter suggested an alternative policy that would 
create a ``carve out'' for rural practitioners, whereby practitioners 
furnishing split (or shared) services in rural areas or Health 
Professional Shortage Areas (HPSAs) would be able to use MDM as the 
substantive portion. Some commenters suggested discontinuing 
differential PFS payment for physicians and NPPs, or suggested 
splitting the difference to 7.5 percent.
    Response: We appreciate the commenters' concerns and will continue 
to consider the potential impact of our policy on rural or health 
professional shortage areas for future rulemaking. The differential 
payment to physicians and NPPs is a statutory requirement. Therefore, 
we do not have discretion to discontinue or modify the differential PFS 
payment rates for services furnished and billed by physicians and NPPs.
    Comment: Several commenters were unclear how performance of the 
history or exam could be considered a substantive portion under the new 
CPT framework for facility E/M visits, where

[[Page 69616]]

MDM or time will be used to select the level of service.
    Response: We thank the commenters for seeking clarification. Given 
the proposed delayed implementation of our substantive portion policy 
until CY 2024, our current policy remains in place. As such, when an E/
M visit requires a medically appropriate history and/or physical exam, 
in accordance with its code descriptor, these service element(s) can 
qualify as the substantive portion, when performed.
    After considering the public comments we received, we are 
finalizing our proposed policy to delay implementation of our 
definition of the substantive portion as more than half of the total 
practitioner time until January 1, 2024. We are revising our 
regulations at 42 CFR 415.140 accordingly.
16. Technical Correction to the Conditions for Payment: Split (or 
Shared) Visits
    In the CY 2022 PFS final rule (86 FR 64996), we finalized our 
definition of split (or shared) visits as proposed, and codified it in 
a new section of our regulations at Sec.  415.140. We established 
regulation text for this definition of split (or shared) visits. We 
subsequently discovered an inadvertent typographical error in the 
instructions we used to codify the new regulation at Sec.  415.140. 
Specifically, we added the regulation text for Sec.  415.140 under 
subpart D, Physician Services in Teaching Settings, rather than subpart 
C, Part B Carrier Payments for Physician Services to Beneficiaries in 
Providers. Because this regulation was inadvertently included with 
policies relating to teaching physician services, and is more 
appropriately placed with other policies relating to payment for 
physicians' services to beneficiaries in providers, we proposed to 
revise our regulation to correct this error. As such, we proposed to 
amend part 415 subpart D by removing the regulation at Sec.  415.140 
and relocating that section to subpart C, such that subpart D will then 
begin at Sec.  415.150.
    We did not receive public comments on this proposal, and therefore, 
we are finalizing as proposed.
17. Technical Correction for Split (or Shared) Critical Care Services
    In the CY 2022 PFS final rule, starting at 86 FR 65159, we 
finalized a number of billing policies for critical care CPT codes 
99291 (Critical care, evaluation and management of the critically ill 
or critically injured patient; first 30-74 minutes) and 99292 (each 
additional 30 minutes). At 86 FR 65162, we stated in error, ``Similar 
to our proposal for split (or shared) prolonged visits, the billing 
practitioner would first report CPT code 99291 and, if 75 or more 
cumulative total minutes were spent providing critical care, the 
billing practitioner could report one or more units of CPT code 
99292.'' We intended to state that CPT code 99292 could be billed after 
104, not 75, or more cumulative total minutes were spent providing 
critical care. As correctly stated elsewhere in the CY 2022 PFS final 
rule (regarding critical care furnished by single physicians at 86 FR 
65160, and regarding concurrent care furnished by multiple 
practitioners in the same group and the same specialty to the same 
patient at 86 FR 65162), our policy is that CPT code 99291 is 
reportable for the first 30-74 minutes of critical care services 
furnished to a patient on a given date. CPT code 99292 is reportable 
for additional, complete 30-minute time increments furnished to the 
same patient (74 + 30 = 104 minutes). We clarify that our policy is the 
same for critical care whether the patient is receiving care from one 
physician, multiple practitioners in the same group and specialty who 
are providing concurrent care, or physicians and NPPs who are billing 
critical care as a split (or shared) visit.
    Comment: Although this was a technical correction, we received many 
comments on this policy. Commenters requested that we review or modify 
this billing policy. Many commenters urged us to adopt CPT's policy for 
reporting CPT code 99292 when 75 minutes had elapsed. Commenters also 
contended that this correction reflected a change in our billing policy 
for these codes. Some commenters also suggested that this policy 
amounted to an undervaluation for CPT code 99291. These commenters 
suggested that, while the purported time for CPT code 99291 is 30-74 
minutes, our policy essentially extends the time covered by CPT code 
99291 from 30-103 minutes.
    Response: We agree with commenters that our policy as expressed in 
the CY 2022 final rule is different from the billing guidance in the 
CPT codebook. While we often align with CPT, there will be occasions 
when our billing policies differ. Specific to critical care, we noted 
in the CY 2022 PFS final rule at 86 FR 65159, ``We proposed to adopt 
the CPT prefatory language for critical care services as currently 
described in the CPT Codebook, except as otherwise specified [emphasis 
added].'' We then went on to specify in the CY 2022 PFS final rule a 
billing policy for reporting CPT code 99292 that is different from the 
CPT guidance.
    We disagree that the technical correction reflects a change in 
policy as it was presented in the CY 2022 PFS final rule. At 86 FR 
65160, we stated, ``Under our proposal, the physician or NPP would 
report CPT code 99291 for the first 30-74 minutes of critical care 
services provided to a patient on a given date . . . Thereafter, the 
physician or NPP would report CPT code 99292 for additional 30-minute 
time increments provided to the same patient.''
    At 86 FR 65162, we specified, ``[The] total time spent by the 
practitioners could be aggregated to meet the time requirement to bill 
CPT code 99291. Under this proposal, once the cumulative required 
critical care service time is met to report CPT code 99291, CPT code 
99292 could not be reported by a practitioner in the same specialty and 
group unless and until an additional 30 minutes of critical care 
services are furnished to the same patient on the same day (74 minutes 
+ 30 minutes = 104 total minutes).''
    At this time, as we were not proposing a new policy for CY 2023, we 
are retaining the CPT code 99292, as it was finalized in the CY 2022 
PFS, and we again note that it can be billed after 104 cumulative total 
minutes were spent providing critical care. However, we will take 
commenters' concerns regarding alignment with CPT instructions and the 
valuation of CPT code 99291 under consideration.

G. 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, practice expense 
(PE), and malpractice (MP)). We discuss the localities established 
under the PFS below in this section. Although the statute requires that 
the PE and MP GPCIs reflect 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

[[Page 69617]]

1848(e)(1)(E) of the Act provides for a 1.0 floor for the work GPCIs, 
which has been extended by many successive amendments to the statute. 
The 1.0 floor for the work GPCI under section 1848(e)(1)(E) of the Act 
was most recently extended by section 101 of the Consolidated 
Appropriations Act of 2021 (Pub. L. 116-260, enacted December 27, 2020) 
through CY 2023 (that is, for services furnished no later than December 
31, 2023). Therefore, as proposed, the CY 2023 work GPCIs and 
summarized GAFs reflect the 1.0 work floor. Additionally, as required 
by sections 1848(e)(1)(G) and (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, were reflected in the CY 2023 proposed GPCIs.
    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 \1/2\ of 
the adjustment that otherwise would be made. Therefore, since more than 
1 year has passed since the previous GPCI update was implemented in CY 
2020 and 2021, we proposed to phase in \1/2\ of the proposed GPCI 
adjustment in CY 2023 and the remaining \1/2\ of the adjustment for CY 
2024.
    We have completed our review of the GPCIs and are finalizing new 
GPCIs beginning for CY 2023 in this final rule. We also calculated a 
geographic adjustment factor (GAF) for each PFS locality. The GAFs are 
a weighted composite of each PFS locality's proposed work, PE and MP 
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 a useful metric for purposes of comparing 
overall costs and payments across fee schedule areas. The actual effect 
of GPCIs 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 reflected in the GAF.
    As noted above, section 101 of the Consolidated Appropriations Act 
of 2021 extended the 1.0 work GPCI floor for services furnished through 
December 31, 2023. Therefore, the final CY 2023 work GPCIs and 
summarized GAFs reflect the 1.0 work floor. Additionally, as required 
by sections 1848(e)(1)(G) and (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, reflected in the CY 2023 final GPCIs. See Addenda D and 
E to this final rule for the CY 2023 final GPCIs and summarized GAFs. 
These Addenda are available on the CMS website under the supporting 
documents section of the CY 2023 PFS final rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
2. Payment Locality Background
    Prior to 1992, Medicare payments for physicians' services were made 
under the reasonable charge system. Payments under this system largely 
reflected the charging patterns of physicians, which resulted in large 
differences in payment for physicians' services among types of 
services, physician specialties and geographic payment areas.
    Local Medicare carriers initially established 210 payment 
localities, to reflect 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. In 1994, we 
undertook a study that culminated in a comprehensive locality revision 
(based on locality resource cost differences as reflected by the GPCIs) 
that we implemented in 1997. The development of the current locality 
structure is described in detail in the CY 1997 PFS final rule (61 FR 
34615) and the subsequent final rule with comment period (61 FR 59494). 
The revised locality structure reduced the number of localities from 
210 to 89, and increased the number of Statewide localities from 22 to 
34.
    Section 220(h) of the Protecting Access to Medicare Act (PAMA) 
(Pub. L. 113-93, enacted April 1, 2014) required modifications to the 
payment localities in California for payment purposes beginning with 
2017. As a result, in the CY 2017 PFS final rule (81 FR 80265 through 
80268) we established 23 additional localities, increasing the total 
number of PFS localities from 89 to 112. The current 112 payment 
localities include 34 Statewide areas (that is, only one locality for 
the entire State) and 75 localities in the other 16 States, with 10 
States having two localities, two States having three localities, one 
State having four localities, and three States having five or more 
localities. The remainder of the 112 PFS payment localities are 
comprised as follows: the combined District of Columbia, Maryland, and 
Virginia suburbs; Puerto Rico; and the Virgin Islands. We note that the 
localities generally represent a grouping of one or more constituent 
counties.
    The current 112 fee schedule areas, also referred to as payment 
localities, are defined alternatively by State boundaries (Statewide 
areas 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 
geographically adjusted 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. We refer readers to the 
CY 2014 PFS final rule with comment period (78 FR 74384 through 74386) 
for further discussion regarding additional information about locality 
configuration considerations.
3. GPCI Update
    As required by the statute, we developed GPCIs to measure relative 
cost differences among payment localities compared to the national 
average for each of the three fee schedule components (that is, work, 
PE, and MP). The changes to the proposed CY 2023 GPCIs for each 
locality reflected the updated resource cost data in each area to 
better adjust PFS payments for geographic cost differences compared to 
national average costs. We noted that the changes in the proposed GPCIs 
reflect the statutory floors and limitations on variation discussed 
above that may advantage some rural localities. We described the data 
sources and methodologies we use to calculate each of the three GPCIs 
below in this section. Additional information on the CY 2023 GPCI 
update is available in a final report, ``Final Report for the CY 2023 
Update of GPCIs and MP RVUs for the Medicare PFS,'' on our website 
located under the supporting documents section for the CY 2023 PFS 
final rule 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 cost of 
physician labor by Medicare PFS locality. As required by statute, the 
work GPCI reflects one quarter of the relative wage

[[Page 69618]]

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.
    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 and Wage Statistics (OEWS), 
formerly known as Occupational Employee Statistics (OES), wage data as 
a replacement for the 2000 Census data. The BLS OEWS 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 OEWS 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 OEWS 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 OEWS data (2009 through 2011) as a replacement for the 2006 
through 2008 data to compute the work GPCIs; for the CY 2017 GPCI 
update, we used updated BLS OEWS data (2011 through 2014) as a 
replacement for the 2009 through 2011 data to compute the work GPCIs; 
and for the CY 2020 GPCI update, we used updated BLS data (2014 through 
2017) as a replacement for the 2011 through 2014 data to compute the 
work GPCIs.
    Because of its reliability, public availability, level of detail, 
and national scope, we believe the BLS OEWS data continue to be the 
most appropriate source of wage and employment data for use in 
calculating the work GPCIs (and as discussed below, the employee wage 
component and purchased services component of the PE GPCI). Therefore, 
for the CY 2023 GPCI update, we used updated BLS OEWS data (2017 
through 2020) as a replacement for the 2014 through 2017 data to 
compute the proposed work GPCIs.
b. Practice Expense (PE) GPCIs
    The PE GPCIs are designed to measure the relative cost difference 
in the mix of goods and services comprising PEs (not including MP 
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 2020), we 
used 2014 through 2017 BLS OEWS data to calculate the employee wage and 
purchased services indices for the PE GPCI. As discussed previously in 
this section, because of its reliability, public availability, level of 
detail, and national scope, we continue to believe the BLS OEWS is the 
most appropriate data source for collecting wage and employment data. 
Therefore, in calculating the CY 2023 GPCI update, we used updated BLS 
OEWS data (2017 through 2020) as a replacement for the 2014 through 
2017 data for purposes of calculating the employee wage component and 
purchased service index component of the PE GPCI.
    In calculating the CY 2023 GPCI update for the office rent index 
component of the PE GPCI, we used the 2015 through 2019 American 
Community Survey (ACS) 5-year estimates as a replacement for the 2013 
through 2017 ACS data. The 2016 through 2020 5-year estimates were 
supposed to be released in December 2021, but the release date was 
delayed to March 17, 2022. Therefore, the recent 2015 through 2019 5-
year estimates, which preceded any COVID-19 impacts, were used in the 
CY 2023 GPCI update, rather than the 2016 through 2020 ACS data, which 
were not publicly released in time for the development of the proposed 
rule. The Census Bureau noted that COVID-19 impacted data collection 
for the 2020 ACS, and the resulting challenges have the potential to 
affect the quality of the data. In particular, the Census Bureau noted 
that there were lower response rates, and nonresponse bias was found in 
the data collected for 2020.\108\ We will analyze the ACS data 
collected in 2020 and subsequent years that occurred during the COVID-
19 pandemic, and consider using those data for the next GPCI update 
after we better understand their integrity and validity for our 
purposes. Because the office rent index is based on 5-year estimates, 
we expect minimal impact from the non-response bias in the CY 2020 data 
on the next GPCI update, but we will examine the subsequent years' ACS 
data that could be similarly impacted by conditions during the COVID-19 
pandemic. Because the 2020 ACS data were not released in time for us to 
use them in the development of the proposed rule, and the public would 
not have an opportunity to comment on the use of those data if we were 
to adjust the proposed GPCIs in the final rule to

[[Page 69619]]

reflect the 2020 ACS data, we noted that we would not consider using 
the 2020 ACS data for the CY 2023 final GPCIs.
---------------------------------------------------------------------------

    \108\ https://www.census.gov/library/working-papers/2021/acs/2021_CensusBureau_01.html.
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c. Malpractice Expense (MP) GPCIs
    The MP GPCIs measure the relative cost differences among PFS 
localities for the purchase of professional liability insurance (PLI). 
To ensure that premium data are homogenous and comparable across 
geographic areas, data were collected for policies with uniform 
coverage limits of $1 million per occurrence and $3 million aggregate 
($1 million/$3 million). The MP GPCIs are calculated based on insurer 
rate filings of premium data for $1 million/$3 million mature claims-
made policies (policies for claims made rather than losses occurring 
during the policy term). For the CY 2020 GPCI update, we used premium 
data presumed in effect as of December 10, 2017. The CY 2023 MP GPCI 
update reflects premium data presumed in effect no later than December 
31, 2020. We note that we finalized a few technical refinements to the 
MP GPCI methodology in CY 2017, and refer readers to the CY 2017 PFS 
final rule (81 FR 80270) for additional discussion of those.
d. GPCI Cost Share Weights
    For the CY 2023 GPCIs, we proposed to continue to use the current 
2006-based MEI cost share weights for determining the proposed PE GPCI 
values. Specifically, we use the cost share weights to weight the four 
components of the PE GPCI: employee compensation, office rent, 
purchased services, and medical equipment, supplies, and other 
miscellaneous expenses, as shown in Table 22. 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 we also finalized for use in the CY 2017 and CY 
2020 GPCI updates.
    We noted that we proposed to rebase and revise the MEI cost share 
weights for CY 2023, and we referred readers to the detailed discussion 
in section II.M. of the proposed rule, but we proposed to maintain the 
use of the current 2006-based MEI cost share weights for the CY 2023 
GPCIs, thus delaying the implementation of the rebased and revised MEI 
cost share weights for this purpose. We refer readers to our discussion 
about using the proposed rebased and revised MEI cost share weights for 
purposes of proportioning the work, PE, and MP RVU pools in PFS 
ratesetting and for the purposes of updating the GPCIs for CY 2023 in 
sections II.B. and VI. of this final rule. In those sections, we 
discuss our considerations for updating the MEI cost share weights for 
the RVUs and the GPCIs and the potential redistributive impact that 
making such a change would have on PFS payments. We have historically 
updated the GPCI cost share weights to make them consistent with the 
most recent update to the MEI, which was most recently done for CY 2014 
(78 FR 74382 through 74383). However, in light of the overall impacts 
of making this change and in the interest of maintaining stability in 
payments, we proposed to maintain the use of the current 2006-based MEI 
cost share weights for the CY 2023 final PE GPCIs. We believe that 
allowing interested parties the opportunity to review and comment on 
the proposed rebased and revised MEI cost share weights as discussed in 
section II.M. of the proposed rule and their potential impacts before 
we actually use such rebased and revised MEI cost share weights for 
purposes of proportioning the work, PE, and MP RVU pools in PFS 
ratesetting and updating the GPCIs is important. This approach 
maintains consistency in the data used to update both the GPCI and PFS 
ratesetting inputs for CY 2023; the proposal to delay implementation of 
the rebased and revised MEI cost share weights is consistent with our 
efforts to balance payment stability and predictability with 
incorporating new data through more routine updates. We refer readers 
to section VI. of this final rule for additional discussion on this 
issue and impacts as it relates to PFS ratesetting and the GPCI update 
for CY 2023. We also refer readers to the comment solicitation in 
section II.B. of this final rule, where we discuss our ongoing efforts 
to update data inputs for PE to aid stability, transparency, 
efficiency, and data adequacy. In addition, we direct readers to the CY 
2011 PFS final rule (75 FR 73256) where we similarly delayed 
implementation of updated MEI cost share weights in response to 
commenters' concerns about our separate, ongoing analysis that would 
inform future GPCI changes and the reallocation of labor-related costs 
from the medical equipment and supplies and miscellaneous component to 
the employee compensation component of the PE GPCI.
    In the CY 2011 PFS final rule (75 FR 73256), we acknowledged that 
we typically update the GPCI cost share weights concurrently with the 
most recent MEI rebasing and revision, but in consideration of the 
commenters' concerns in response to the proposed rule, we did not use 
the revised cost share weights for the CY 2011 GPCIs and instead 
finalized the implementation of the rebased and revised MEI cost share 
weights through subsequent rulemaking. We invited comments on the delay 
in implementation of the MEI cost share weights for purposes of the CY 
2023 GPCIs and PFS ratesetting, given the impacts discussed in section 
VI. of the proposed rule (87 FR 46419 through 46425). We also solicited 
comments on how best to proceed with implementation of the rebased and 
revised MEI cost share weights in the future. More specifically, we 
sought comment on how best to incorporate the MEI cost share weights 
into the PE GPCI if we were to implement them outside the statutorily 
required triennial update in which we phase in all aspects of the GPCI 
update through the previously discussed 2-year (\1/2\ in each year) 
phase-in required by section 1848(e)(1)(C) of the Act. Section 
1848(e)(1)(C) of the Act requires that, if more than one year has 
elapsed since the date of the last 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. Therefore, specifically, 
we sought comment on potentially incorporating the rebased and revised 
MEI cost share weights into the CY 2024 GPCIs. We noted that we would 
not be required by statute to phase in the adjustment over 2 years as 
specified in section 1848(e)(1)(C) of the Act because, in CY 2024, no 
more than one year would have elapsed since the last GPCI adjustment. 
Therefore, we also sought comment on whether it would be appropriate to 
use a multi-year transition to incorporate the rebased and revised MEI 
cost share weights for purposes of the PE GPCI and PFS ratesetting as 
we have done in the past when incorporating other new data into the PFS 
payment methodology (for example, the clinical labor update), or if, 
because the MEI cost share weights only impact the composition of the 
PE GPCI, such a transition would not be warranted. If we were to 
instead apply the rebased and revised MEI cost share weights for 
purposes of the PE GPCI and PFS ratesetting for CY 2025 or later, we 
would be required under section 1848(e)(1)(C) of the Act to phase in 
the GPCI adjustments over 2 years. We sought comments on whether, in 
that case, it would be appropriate to similarly apply a transition to 
implement the MEI cost share weights for purposes of PFS ratesetting as 
well, and referred readers to section II.B and VII. of the proposed 
rule for more

[[Page 69620]]

discussion regarding the alternatives considered and impacts of a 
phase-in of the rebased and revised MEI cost share weights in PFS 
ratesetting. The final CY 2023 GPCI cost share weights are displayed in 
Table 25. We note that the finalized rebased and revised cost share 
weights discussed in detail in section II.M. of this final rule are 
also displayed in Table 25 for awareness regarding potential future 
rulemaking and GPCI updates.
[GRAPHIC] [TIFF OMITTED] TR18NO22.052

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 2023 PFS proposed rule. The qualifying 
States are: Montana; Wyoming; North Dakota; South Dakota; and Nevada. 
In accordance with statute, we will apply a 1.0 PE GPCI floor for these 
States in CY 2023.
f. Methodology for Calculating GPCIs in the U.S. Territories
    Prior to CY 2017, for all the island territories other than Puerto 
Rico, the lack of comprehensive data about unique costs for island 
territories had minimal impact on GPCIs because we used either the 
Hawaii GPCIs (for the Pacific territories: Guam; American Samoa; and 
Northern Mariana Islands) 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, in 
the CY 2017 PFS final rule (81 FR 80268 through 80270), we finalized a 
policy to treat the Caribbean Island territories (the Virgin Islands 
and Puerto Rico) in a consistent manner. We do so by assigning the 
national average of 1.0 to each GPCI index for both Puerto Rico and the 
Virgin Islands. We refer readers to the CY 2017 PFS final rule for a 
comprehensive discussion of this policy.
g. California Update to the Fee Schedule Areas Used for Payment Under 
Section 220(h) of the Protecting Access to Medicare Act
    Section 220(h) of the PAMA added a new section 1848(e)(6) to the 
Act that modified the fee schedule areas used for payment purposes in 
California beginning in CY 2017. Prior to CY 2017, the fee schedule 
areas used for payment in California were 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 required 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 required 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 increased its number of fee schedule areas from 9 under the 
current locality structure to 27 under the MSA-based locality 
structure; although for the purposes of payment, the actual number of 
fee schedule areas under the MSA-based locality structure is 32. We 
refer readers to the CY 2017 PFS final rule (81 FR 80267) for a 
detailed discussion of this operational decision.
    Section 1848(e)(6)(D) of the Act defined transition areas as the 
counties in fee schedule areas for 2013 that were in the rest-of-State 
locality, and locality 3, which was comprised of Marin County, Napa 
County, and Solano County. Section 1848(e)(6)(B) of the Act specified 
that the GPCI values used for payment in a transition area are to be 
phased in over 6 years, from 2017 through 2022, using a weighted sum of 
the GPCIs calculated under the new MSA-based locality structure and the 
GPCIs calculated under the PFS locality structure that was in place 
prior to CY 2017. That is, the GPCI values applicable for these areas 
during this transition period were a blend of what the GPCI values 
would have been for California under the locality structure that was in 
place prior to CY 2017, and what the GPCI values would be for 
California under the MSA-based locality structure. For example, in CY 
2020, which represented the fourth year of the transition period, the 
applicable GPCI values for counties that were previously in the rest-
of-State locality or locality 3 and are now in MSAs were a blend of \2/
3\ of the GPCI value calculated for the year under the MSA-based 
locality

[[Page 69621]]

structure, and \1/3\ of the GPCI value calculated for the year under 
the locality structure that was in place prior to CY 2017. The 
proportions continued to shift by \1/6\ in each subsequent year so 
that, by CY 2021, the applicable GPCI values for counties within 
transition areas were 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 locality structure that was in place prior to CY 
2017. Beginning in CY 2022, the applicable GPCI values for counties in 
transition areas were the values calculated solely under the new MSA-
based locality structure; therefore, the phase-in for transition areas 
is complete. Additionally, section 1848(e)(6)(C) of the Act establishes 
a hold harmless requirement 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 locality structure that was in place prior to CY 
2017. There are 58 counties in California, 50 of which were in 
transition areas as defined in section 1848(e)(6)(D) of the Act. The 
eight counties that were not within transition areas are: Orange; Los 
Angeles; Alameda; Contra Costa; San Francisco; San Mateo; Santa Clara; 
and Ventura counties. We note that while the phase-in for transition 
areas is no longer applicable, the hold harmless requirement is not 
time-limited, and therefore, is still in effect.
    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 finalized the policy to start by 
calculating the national GPCIs as if the fee schedule areas that were 
in place prior to CY 2017 are still applicable nationwide; then, for 
the purposes of payment in California, we 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 to 
applying the hold harmless requirement 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 made for 
purposes of payment after both the GPCIs and PFS budget neutrality have 
already been calculated.
    Additionally, section 1848(e)(1)(C) of the Act requires that, if 
more than 1 year has elapsed since the date of the last 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. For a comprehensive discussion of this provision, transition 
areas, and operational considerations, we refer readers to the CY 2017 
PFS final rule (81 FR 80265 through 80268).
(1) Proposed Refinement to Number of Unique Fee Schedule Areas in 
California
    In the CY 2020 final rule (84 FR 62622), a commenter indicated that 
some of the distinct fee schedule areas that were used during the 
period between CY 2017 and CY 2018 are no longer necessary. 
Specifically, with regard to the Los Angeles-Long Beach-Anaheim MSA, 
which contains 2 counties (across two unique locality numbers, 18 and 
26) that are not transition areas, we acknowledge that we only needed 
more than one unique locality number for that MSA for payment purposes 
in CY 2017, which was the first year of the implementation of the MSA-
based payment locality structure. Neither of the counties in the Los 
Angeles-Long Beach-Anaheim MSA (Orange County and Los Angeles County) 
are transition areas under section 1848(e)(6)(D) of the Act. Therefore, 
the counties were not subject to the aforementioned GPCI value 
incremental phase-in (which is no longer applicable) or the hold-
harmless provision at section 1848(e)(6)(C) of the Act. Similarly, the 
San Francisco-Oakland-Berkeley MSA contains four counties--San 
Francisco, San Mateo, Alameda, and Contra Costa counties--across three 
unique locality numbers, 05, 06, and 07. These counties are not 
transition areas and will receive the same GPCI values, for payment 
purposes, going forward. In response to the comment, we acknowledged 
that we did not propose any changes to the number of fee schedule areas 
in California, but would consider the feasibility of a technical 
refinement to consolidate into fewer unique locality numbers; and if we 
determined that consolidation was operationally feasible, we would 
propose the technical refinement in future rulemaking. This refinement 
would ultimately change the number of distinct fee schedule areas for 
payment purposes in California from 32 to 29. In light of the 
foregoing, for CY 2023, we proposed to identify the Los Angeles-Long 
Beach-Anaheim MSA, containing Orange County and Los Angeles County, by 
one unique locality number, 18, as opposed to two, thus retiring 
locality number 26, as it is no longer needed. Similarly, we proposed 
to identify the San Francisco-Oakland-Berkeley MSA containing San 
Francisco, San Mateo, Alameda, and Contra Costa counties by one unique 
locality number, 05, as opposed to four, thus retiring locality numbers 
06 and 07, as they are no longer needed. Additionally, we noted that we 
would modify the MSA names as follows: the San Francisco-Oakland-
Berkeley (San Francisco Cnty) locality (locality 05) would become San 
Francisco-Oakland-Berkeley (San Francisco/San Mateo/Alameda/Contra 
Costa Cnty), and Los Angeles-Long Beach-Anaheim (Los Angeles Cnty) 
locality (locality 18) would become Los Angeles-Long Beach-Anaheim (Los 
Angeles/Orange Cnty). We noted that because Marin County is in a 
transition area and subject to the hold harmless provision at section 
1848(e)(6)(C) of the Act, we needed to retain a unique locality number 
for San Francisco-Oakland-Berkeley (Marin Cnty), locality 52. We sought 
comment on the proposed technical refinements to consolidate unique fee 
schedule areas and their locality numbers in California, where the 
unique localities are not operationally necessary. Based on support 
from commenters, we are finalizing to identify the Los Angeles-Long 
Beach-Anaheim MSA, containing Orange County and Los Angeles County, by 
one unique locality number, 18, and the San Francisco-Oakland-Berkeley 
MSA containing San Francisco, San Mateo, Alameda, and Contra Costa 
counties by one unique locality number, 05, as proposed. While we 
believe these changes are appropriate to consolidate fee schedules 
areas that are no longer operationally necessary, we are unable to 
operationalize these changes for CY 2023 due to timing constraints 
relating to the actions and coordination with the various systems 
maintainers required to effectuate changes to claims processing. 
Therefore, for CY 2023, there will be no changes to the existing 
locality numbers 05, 06, 08, 18, or 26. We intend to operationalize 
these finalized changes for CY 2024. We note that these changes, when 
operationalized, do not have any payment implications under the PFS.
h. Refinements to the GPCI Methodology
    In the process of calculating GPCIs for the purposes of the 
proposed rule, we identified four technical refinements to the 
methodology that yielded improvements over the current method; these 
refinements are applicable to the work and MP GPCIs, the employee wage 
index component of the PE GPCI, and the GAFs. For purposes of the final 
rule, we are finalizing these changes as proposed.

[[Page 69622]]

    We conducted a thorough review of the BLS OEWS occupation codes 
within each of the seven occupation groups used in past updates to 
track and document the changes over time. As new BLS OEWS data are 
released, the availability of specific occupation codes is subject to 
change, and it is possible that new codes can be added, changed, or 
removed over time; therefore, we believe it is important to 
periodically review and update the occupation groups and codes based on 
our review during the GPCI updates. We reviewed the occupation codes 
and groups used to capture geographic variation in professional wages 
to assess other potential codes and groups that could be used in 
addition to the current selections to calculate the work GPCI, with 
significant consideration given to the extent to which the data exist 
in the file (data existence) and how well the occupation codes are 
represented in the data (data sufficiency). Based on our review, we 
proposed the addition of two new occupation groups (and their 
corresponding occupation codes), Management Occupations and Business 
and Financial Operation Occupations, to the preexisting seven 
occupation groups for CY 2023, as described in Table 20 in the proposed 
rule (87 FR 46009) and Table 26 of this final rule.

[[Page 69623]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.053

    We also proposed to add four occupation codes to the Computer, 
Mathematical, Life, and Physical Science group, and three occupation 
codes to the Social Science, Community and Social Service, and Legal 
group, for

[[Page 69624]]

CY 2023, as shown in Table 21 in the proposed rule (87 FR 46010) and 
Table 27 in this final rule. The practical effect of the inclusion of 
these occupation groups and codes on the work GPCI is minimal because 
the statute at section 1848(e)(1)(A)(iii) of the Act requires that the 
work GPCI reflect only one quarter of cost differences, but their 
inclusion adds meaningful data regarding the geographic variation in 
professional wages for CY 2023.
[GRAPHIC] [TIFF OMITTED] TR18NO22.054

    We proposed to modify the list of occupation codes used within the 
first PE GPCI component, Employee Wages, to conform more closely to the 
clinical labor categories used in PFS ratesetting. Specifically, six 
occupation codes listed as sources for clinical labor rates used to 
establish PE RVUs in PFS ratesetting that were previously inadvertently 
excluded in the Employee Wage Index calculation are now included in the 
final CY 2023 Employee Wage Index (29-1126, 29-1124, 19-3031, 29-1031, 
29-1181, 29-1127). Lastly, we proposed a technical refinement to the 
method used to calculate each locality's GAF. The GAFs are calculated 
as the weighted composite of the three GPCIs (work, PE, and MP), 
essentially representing the net geographic adjustment that would be 
made to a theoretical standard service. Instead of the 2006-based MEI 
cost share weights, which were used to calculate GAFs in previous 
updates to the GPCIs, we calculated the CY 2023 GAFs using weights that 
reflect the share of total RVUs that each component (work, PE, and MP) 
accounts for, based on Medicare utilization data from CY 2020. The GAFs 
are not used for payment under the PFS but are a useful measure to 
illustrate the overall effect of geographic adjustments under the PFS 
across Medicare fee schedule areas. We believe that using the share of 
RVUs reflected in recent Medicare utilization data as weights when 
calculating the CY 2023 GAFs results in GAFs that more accurately 
reflect the composite effect of geographic adjustment on payment, year 
over year, as compared to the GAFs calculated using the 2006-based MEI 
cost share weights. This change also allows the use of current Medicare 
utilization data that are available each year as opposed to the MEI 
cost share weights that are not updated as frequently. The final 
weights used to calculate the CY 2023 GAFs are displayed in Table 28.
[GRAPHIC] [TIFF OMITTED] TR18NO22.055

    These four methodological refinements, including changes to: (1) 
the occupation group; (2) occupation codes; (3) occupation codes used 
for the Employee Wage Index; and (4) the GAF weighting adjustment, 
yield improved mathematical precision in the final CY 2023 GPCIs and 
GAFs by providing for a more accurate, full landscape of occupations 
that should be accounted for in the work and PE GPCIs, and by aligning 
the GAF equation weights to

[[Page 69625]]

use routinely available data. We are finalizing all four refinements as 
proposed. Additional information on the GPCI methodology and the 
refinements are available in the final report, ``Final Report for the 
CY 2023 Update of GPCIs and MP RVUs for the Medicare PFS'' on our 
website located under the supporting documents section of the CY 2023 
PFS final rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
i. Alternatives Considered Related to the Use of the American Community 
Survey (ACS) Data for Office Rent Index
    Commenters often express concern about the use of residential rents 
as a proxy for physician office space costs for purposes of updating 
the PE GPCIs, and state that CMS should collect commercial rent data 
and use it either as the basis for measuring geographic differences in 
physician office rents, or if this is not feasible, use it to validate 
the residential rents as a proxy for physician office rents. In the 
past, commenters have requested that CMS provide a specific explanation 
of the barriers to obtaining better commercial rent data and that we 
reevaluate existing databases to find or develop a nationwide measure 
of commercial office rents for use in calculating PE GPCIs. For each 
GPCI update, we have noted that our efforts are ongoing to identify a 
publicly-available, robust, nationally representative commercial rent 
data source that could be made available to CMS for this purpose. We 
have welcomed opportunities to discuss such data sources with 
interested parties and to incorporate such data, as appropriate in the 
GPCI calculation process, through our annual rulemaking process.
    Because Medicare is a national program, and section 1848(e)(1)(A) 
of the Act requires us to establish GPCIs to measure relative cost 
differences among localities compared to the national average, we 
believe it is important to use the best data source that is available 
on a nationwide basis, that is regularly updated, and retains 
consistency area-to-area, year-to-year. The ACS is administered by the 
United States Census Bureau, which is a leading source of national, 
robust, high quality, publicly available data. We agree that a data 
source for commercial office rents that provided for adequate 
representation of urban and rural areas nationally would be preferable 
to a residential rent data source as a proxy for commercial rents. We 
have previously discussed in the CY 2005, CY 2008, CY 2011, and CY 2017 
(69 FR 66262, 72 FR 66376, 75 FR 73257, and 81 FR 80265, respectively) 
final rules that we recognize that apartment rents may not be a perfect 
proxy for physician office rent.
    We have conducted searches for commercial rent data sources for 
consideration as an alternative to the ACS data in the past and have 
not found or received public comments with suggestions of reliable data 
sources that meet our needs. As discussed in the proposed rule, for CY 
2023, we conducted another search for reliable commercial rent data 
sources that are publicly available for the CY 2023 update and did not 
find any reliable data sources that would meet our needs. The principal 
characteristic of any substitute data source for the ACS data would be 
that it captures geographic variation in the office space cost for 
physician practices. We primarily investigated sources that report data 
on commercial real estate, but we also considered a few residential 
rent data sources and one data source that reports on a type of 
property that would be unable to house a physician practice--U.S. Post 
Office (P.O.) box rentals. Because the underlying property in which the 
P.O. boxes are located is commercial in nature, the rental rates may 
reflect the underlying geographic variation in facility cost. Because 
this source has other features that are important for creating a 
geographic index, we have included it for consideration. Although 
interested parties may prefer a database focused on the types of 
properties that physicians would use for offices (that is, a commercial 
rent database), the identified potential data alternatives discussed 
below failed to meet one or more of five criteria that we believe are 
critical to the creation of an appropriate geographic index.
    We used the following five criteria to analyze the potential data 
sources for this search: (1) applicability to planned use; (2) 
standardization of the measure; (3) potential bias; (4) geographic 
scope, distribution, and granularity of the data; and (5) availability, 
continuity, and price of the data. Our review revealed challenges with 
the commercial real estate market data in several of these criteria. 
Under the first criterion, there are two sub-criteria that present 
problems with the type of real estate data reported when we considered 
their use for creating a geographic index: (1A) leases versus sales of 
commercial real estate, and (1B) comparables versus listings versus 
assessments of commercial real estate. For the first sub-criterion, the 
commercial and residential real estate markets can be subdivided into 
markets for leases and sales. Terms for commercial leased properties 
are often varied and not readily available. Commercial sales, 
especially of office condominiums, may be more readily available and 
require less adjustment for use in a geographic index. The availability 
of different arrangements--leasing versus owning--may vary 
geographically, affecting the underlying stability and 
representativeness of an index based on either. Under the second sub-
criterion, an important distinction is whether the data in the 
alternative data source represents closed transactions (known as 
``comparables'' or ``comps'') or asking prices (known as ``listings''), 
regardless of whether the source is reporting data for leased or sales 
of commercial property. Because asking prices are often aspirational, 
professional real estate appraisers rely on comparable transactions in 
order to estimate a price for sale or lease. Therefore, comparables 
provide the most reliable substitute dataset for consideration for use 
in creating a geographic index. Assessments are the estimated values of 
real property set by the tax assessors in each State, which are 
generally intended to reflect full cash value of the property, though 
there may be State-specific laws and regulations that interfere (that 
is, by limiting the percentage increase in a property from year to year 
if it has not been transferred). Assessments for commercial properties 
often rely heavily on the ``income method'' of valuation, which 
capitalizes the net income the property does or could receive if 
rented. The advantage of assessments for use in creation of a 
geographic index is their existence for every property in the United 
States.
    The second criterion is that appropriate adjustments need to be 
made to reduce variation for other factors, or the standardization of 
the data reported by a considered alternative data source. The primary 
data adjustment is to standardize the size of the property. For 
commercial space, conversion to a price per square foot (price/SF) 
value allows for direct comparison between properties. There are other 
factors involved in standardizing commercial rents and sale prices. The 
Building Owners and Managers Association (BOMA) groups buildings into 
three property classes:
     Class A: Most prestigious buildings competing for premiere 
office users with rents above market average for the area. These 
buildings have high quality standard finishes, state of the art 
building systems and amenities, exceptional accessibility, and a 
definite market presence.

[[Page 69626]]

     Class B: Buildings competing for a wide range of users 
with rents in the average range for the market. Buildings finishes are 
good to fair for the area, and systems are adequate but the building 
does not compete with Class A at the same price.
     Class C: Buildings competing for tenants requiring 
functional space at rents below average for the market.\109\
---------------------------------------------------------------------------

    \109\ https://www.boma.org/BOMA/Research-Resources/Industry_Resources/BuildingClassDefinitions.aspx.
---------------------------------------------------------------------------

    A dataset of commercial rentals or sales must include the building 
class information so properties can be appropriately compared to each 
other, similar to the way that CMS currently only compares ACS rent 
data for two-bedroom apartments. For leases, the dataset would also 
need to specify lease type (Single Net, Double Net, Triple Net, 
Bondable Net, Full Service Gross, Modified Gross, and or 
Percentage).\110\ The same property rented under a type of Net lease 
would be expected to have a lower rent than if it were rented under a 
Full-Service lease because the lessee would pay some amount towards 
operating expenses. Although a dataset may contain an indication of the 
type of lease, it may not include the amount of operating expenses paid 
by the lessee that would be necessary to standardize the rent or other 
terms that affected the final transaction price. There are often 
considerable privacy considerations with respect to commercial 
transactions in order to maintain competitive advantage, so accurate 
information is often difficult to obtain. Typically, the sale price for 
a leased property, assuming an arms-length transaction, accounts for 
the detailed lease terms applicable to the property and likely would 
not require adjustment for this factor. Another consideration is the 
effective date of the transaction. Market prices for leases and sales 
can change rapidly or slowly, and even transactions occurring within 
the same calendar year may or may not require adjustment in order to be 
reflective of the market at the intended point in time, and therefore, 
the transaction date is critical for professional appraisals. Markets 
are also localized, so even data reported for areas in relatively close 
proximity may not experience the same price fluctuations.
---------------------------------------------------------------------------

    \110\ https://www.reonomy.com/blog/post/commercial-lease-types.
---------------------------------------------------------------------------

    The third criterion is that potential bias is limited in a 
considered alternative data source. Our search to date was unable to 
locate any scientifically designed national survey of commercial 
property costs. Many of the data sources are intended to facilitate the 
sale of commercial property and provide listings, rather than 
comparables. They also may only contain a fraction of the listings on 
the market and have been selected by brokers to advertise for sale, 
rather than to represent the entire market, resulting in substantial 
bias. Even the most comprehensive and detailed data sources for 
verified transactions are designed to support valuation of individual 
properties. These databases reflect the mix of properties that are 
either currently available or have been sold or leased during a defined 
period. The aggregate data are not intended to produce an unbiased 
estimate of the average cost per square foot in a particular geographic 
area, whereas, the ACS is a scientifically designed and implemented 
national housing survey created by the U.S. Census Bureau that has been 
designed to reduce bias in the statistics it creates.
    The fourth criterion is that the alternate data source would need 
to be national in scope and sufficiently granular to capture the 
characteristics of highly localized real estate markets. The ACS data 
have been consistently available in each year for the majority of 
counties in the nation. Although some of the commercial data sources 
may range nationwide and provide property-level data, there may be a 
much higher proportion of areas with missing data. An important 
consideration for the office rent index is that it sufficiently 
captures data in both urban and rural areas. Rural areas may have a 
less active commercial real estate market than urban areas, in which 
case there may be few transactions to use in a geographic index.
    Lastly, the fifth criterion is that the data source be publicly 
available, consistently available for CMS' GPCI update years, and/or 
reasonably priced in order to facilitate transparency and 
administrative efficiency. Proprietary databases can only be accessed 
by those who sign up for the service, and use of the data is governed 
by Terms of Service (TOS) that may preclude its use in derivative 
works, such as the creation of a geographic index, or dissemination of 
the data. Public databases are more likely to be accessible and able to 
be used for derivative work, such as the creation of the GPCIs. Any 
change in the data source we use in the creation of the index is likely 
to cause changes in index values, and possibly invoke critique if the 
resulting changes are significant. If CMS were to consider a change in 
data source, the change would need to be sustainable over time, and 
therefore, the data must be consistently accessible for subsequent GPCI 
updates, and data sources must maintain consistency over time in order 
to avoid any potential dramatic changes and/or the need to refine the 
adjustments to a dataset each update year, which would introduce 
unnecessary variation in the index. If the data source changes or 
discontinues the dataset, CMS would need to find a replacement data 
source, possibly within a short time period. This would likely 
introduce the possibility of dramatic changes and variation in the 
index that does not reflect the real geographic changes between update 
years--stemming from the use of different data sources. Additionally, 
the price to obtain and make necessary adjustments to the data 
discussed above may be prohibitive for use in the GPCIs.
    The Federal Government already paid for the construction of the 
ACS, the ACS provides the data in a very usable form, CMS can 
consistently and freely access the data, and relatively minor 
processing is required to turn it into an index. Every proprietary 
database is likely to charge substantial amounts to access the data as 
it is currently provided, which will be geared to uses very different 
from the creation of an office rent index. There may be substantial 
work required to gather and process the data and TOS conditions imposed 
by the database owners may not allow even free data to be used for the 
intended purpose. In all cases, it is likely that CMS would need to 
negotiate the terms for utilizing any proprietary sources.
    We identified eight data sources for analysis as potential 
alternatives to the ACS, but all failed to meet one or more of the five 
key criteria discussed above that would allow us to better reflect 
geographic cost variation for the office rent component of the PE GPCI 
that is currently measured using the ACS. We specifically identified 
the following potential data sources: (1) REIS[supreg] Real Estate 
Solutions by Moody's Analytics[supreg]; (2) CompStak; (3) 
CoStarTM; (4) Zillow[supreg] Assessor and Real Estate 
Database (ZTRAX); (5) U.S. Postal Service (USPS[supreg]) P.O. Box 
Rental; (6) GSA[supreg] Lease Inventory; (7) Reonomy[supreg]; and (8) 
SMR Research. Three of the eight data sources had substantial costs 
associated with obtaining the data, and we were unable to obtain 
pricing information for an additional two of the eight without 
extensive discussions with a sales representative. Two of the eight 
sources lacked necessary building class information, and many of the 
eight sources presented challenges with TOS restrictions, 
representativeness of rural areas, small or undisclosed sample sizes, 
sample sizes that differed from

[[Page 69627]]

year to year, and/or a large number of geographic areas with missing 
data.
    While we determined that none of these data sources are appropriate 
substitutes for the ACS data we currently use, based on their failure 
to meet one or more of the five key criteria discussed above, some of 
the sources possess useful qualities that allowed for further 
preliminary research into the correlation between commercial and 
residential rent that fell within the confines of our contractual 
restrictions. To investigate whether the use of ACS residential rents 
captures geographic variation in office rents, as discussed above, we 
identified a few data alternatives above for further research and 
examined their correlation with the ACS residential rent data in effort 
to evaluate the validity of the ACS data as a proxy for determining 
geographic variation in office rents. Overall, our ongoing analysis 
shows that the ACS residential rent data are highly correlated with 
commercial rents across areas. Therefore, we have concluded that the 
continued use of the ACS data for the office rent component of the PE 
GPCI is appropriate. We considered the use of USPS P.O. Box Rental data 
for preliminary analysis, as it is free, publicly available, and 
national in scope (in all zip codes where P.O. Boxes are available), 
but resource and time constraints limited us from considering this for 
the CY 2023 update. P.O. Box rent data is available online, but it is 
not formatted in an easy-to-use dataset that we could readily analyze 
without conducting resource-intensive data extraction and preparation. 
Considering that the P.O. Box rent data would have required significant 
resources, and that expending such resources was not feasible for the 
CY 2023 proposed rule, we identified the GSA Lease Inventory data 
source as the next best alternative data source to use to evaluate the 
correlation between residential and commercial rents because it is 
publicly available, free, and accessible in an easy-to-use format that 
required limited adjustments to allow analysis. To get a comparative 
sense of the rents per square foot that would be suggested for a 
specific geographic area, we chose to compare the GSA Lease Inventory 
data and the ACS data for available counties in the State of Maryland. 
As shown in Table 29, the GSA Lease Inventory data are missing for 
approximately half of the counties in Maryland. For those counties with 
available GSA data, the rent per square foot of the GSA leased 
facilities is shown in Table 29 and can be compared to the 
corresponding ACS residential rent data for that county.
[GRAPHIC] [TIFF OMITTED] TR18NO22.056


[[Page 69628]]


    Figure 1 shows a rank order test for the counties in Maryland where 
both GSA Lease Inventory data and ACS data are available. Allegany 
County has the lowest rent per square foot in the GSA Lease Inventory 
data and the lowest residential rent in the ACS data. Anne Arundel 
County has the highest residential rent data and the second highest GSA 
Lease Inventory data. Analysis shows that the rank order of the 
available counties in the GSA Lease Inventory data follow a relatively 
similar pattern (positive, linear relationship) to the same counties in 
the ACS data.
[GRAPHIC] [TIFF OMITTED] TR18NO22.057

    We expanded the comparison of the GSA Lease Inventory data with the 
ACS residential rent data from available counties in Maryland to all 
available counties nationwide by creating a rent per square foot 
measure for all GSA Lease Inventory records using the January 2017 GSA 
Leased Inventory data. The comparison was done by condensing the GSA 
Lease data to the county level, merging it with the ACS data (for 
counties where GSA data were available), and aggregating it to the 
Medicare locality level, weighting by county population. We performed 
two rank order tests for both ACS (median two-bedroom rent) and GSA 
(rent per SF) measures in all available localities where at least 50 
percent, and 75 percent, subsequently, of the locality population was 
represented in the county-level GSA data file. Similar to our findings 
from the initial analysis of Maryland counties, the expanded 
comparisons generally show a positive, linear relationship between rank 
of ACS (median two-bedroom rent) and rank of GSA (rent per SF) 
measures. Because the GSA Lease Inventory data are not geographically 
complete, our analyses were limited. GSA Lease Inventory data are 
sparse or nonexistent in some counties, therefore, we calculated the 
percent of the locality population and only included localities in our 
analysis with county-level data where at least 50 percent (and 75 
percent for the second analysis) of the locality population was 
represented in the county-level GSA data file. For example, Locality A 
includes county 1 and county 2. If the GSA data includes county 1 (with 
a population of 1,000), but not county 2 (population of 50), we 
included Locality A in the analysis, as it met the 50 percent and 75 
percent thresholds. In contrast, if the GSA data includes county 2 
(population of 50), but not county 1 (population of 1,000), we did not 
perform analysis on Locality A. The January 2017 GSA data file includes 
information on approximately 8,200 GSA leases across the country, which 
were then aggregated to the county level, and then to the Medicare 
locality level for our analysis. After these two aggregations, we had 
enough GSA Lease Inventory data to perform two rank order tests on 52 
Medicare localities, one rank order test for counties where at least 50 
percent of the locality population was represented and a second rank 
order test for counties where 75 percent of the locality population was 
represented. We further analyzed the outlier localities (where the ACS 
rank differs from the GSA rank by 30 ranks) and found that 
when the population threshold increased from 50 percent to 75 percent, 
we see a reduction in outliers from 13 to only two localities, 
indicating that more

[[Page 69629]]

complete data (that is, 75 percent of the locality population 
represented in GSA lease data) yields higher correlation between the 
median two-bedroom rent in the ACS data and the rent per square foot in 
the GSA data. This correlative effect supports the continued use of ACS 
data in the GPCI update for CY 2023, as it indicates that GSA lease 
data (a commercial rent data source) and ACS residential rents varied 
similarly across geographic areas.
    It is important to note that we use the ACS data to create an index 
to measure cost differences, and not as a direct proxy for commercial 
office rents. Rather, the ACS data are used to measure geographic 
variation in residential rents, which is used as a proxy for the 
geographic variation in commercial office rent. Based on our limited 
analyses comparing the GSA and ACS data, which showed that commercial 
and residential rents varied similarly across geographic areas, and the 
lack of any identified alternative data source that meets all five of 
the criteria discussed above, we believe that it is appropriate to 
continue use of the ACS data.
    With regard to the suggestion that CMS should collect commercial 
rent data, we note that we discussed this issue in the CY 2012 PFS 
final rule with comment period (76 FR 73088) and stated that the 
development and implementation of a survey could take several years if 
CMS were to survey physicians directly to gather data to compute the 
office rent index. Additionally, we have historically not sought direct 
survey data from physicians related to the GPCI to avoid issues of 
circularity and self-reporting bias. In the CY 2011 PFS final rule with 
comment period (75 FR 73259), we solicited public comments regarding 
the benefits of utilizing physician cost reports to potentially achieve 
greater precision in measuring the relative cost difference among 
Medicare localities. We also asked for comments regarding the 
administrative burden of requiring physicians to routinely complete 
these cost reports and whether this should be mandatory for physicians' 
practices. We did not receive any feedback related to that comment 
solicitation during the open public comment period for the CY 2011 PFS 
final rule with comment period.
    We reiterate that the GPCIs are not an absolute measure of practice 
costs. Rather they are a measure of the relative cost differences for 
each of the three GPCI components. The U.S. Census Bureau is a Federal 
agency that specializes in data collection, accuracy, and reliability, 
and we continue to believe that where such a publicly available 
resource exists that can provide useful data to assess geographic cost 
differences in office rent, even though it is a proxy for the exact 
data we seek, that we should utilize that available resource. In 
addition to reviewing alternative data sources, we also explored 
whether there are alternative ways of using the ACS data that could 
improve geographic representation or improve interested parties' 
confidence in it as a reasonable way to capture geographic variation in 
office rent, including consideration of alternative ways to handle 
counties where we are missing ACS data, as well as using alternative 
variables within the ACS data to assess whether there are other similar 
variables that have more complete data than median gross rent for two-
bedroom residences. Our research indicates that using alternatives 
within the ACS would likely result in minimal changes to the resulting 
index and would likely not address commenters' concerns regarding use 
of residential rent data as a proxy for office rent. Our research also 
suggests that the variation captured by the two-bedroom measure is 
highly correlated with the geographic variation in one-bedroom and 
three-bedroom units. The high correlation coefficient strengthens the 
support for using the ACS two-bedroom measure to capture office rent 
variation across areas. We explored the continued use of the ACS data 
to see if there are other available variables that have a lower count 
of missing observations. The data includes variables on the median 
gross rent for no bedrooms, one bedroom, two bedrooms, three bedrooms, 
four bedrooms, five or more bedrooms, and the total median gross rent. 
Table 30 shows the number of observations that are missing for each of 
the median gross rent variables in the 2017 5-year ACS data.
[GRAPHIC] [TIFF OMITTED] TR18NO22.058

    Based on the 2017 5-year ACS data, total median gross rent and 
median gross rent for three bedrooms are two available alternative 
variables that have fewer missing county-level ACS data than the 
currently used median gross rent for two bedrooms. However, it is 
important to note that the number of missing observations for each 
variable could change over time. While the median gross rent for two 
bedrooms has a relatively low count for missing observations, it could 
be substituted with the total median gross rent, which has the smallest 
count of missing observations. In future years of ACS data, there could 
be more or fewer missing observations for this list of variables. 
Moving to use of the median gross rent for three bedrooms would result 
in slightly fewer missing observations in the 2017 ACS 5-Year 
Estimates, but this may not be the case for all update years.
    There are also alternative ways of handling counties that are 
missing data. In the CY 2020 update, we imputed county-level rent 
estimates using the average value for a given county's MSA. Other 
options include using the average value for contiguous counties, using 
an average value for the county's State or removing the missing 
observation from

[[Page 69630]]

the calculation. However, we note that the current method of handling 
counties that are missing data is a reasonable approach and any 
alternative would not likely affect the calculation materially. 
Additionally, since there are so few counties that are missing data 
(less than one percent), these alternatives (even if we had reason to 
prefer one of them) would likely have no impact on the resulting index. 
Table 31 shows the correlation coefficients between the available 
residential rent variables in the ACS. The variation captured by the 
two-bedroom measure is highly correlated with the geographic variation 
in one-bedroom and three-bedroom units (approximately 0.9). This 
relationship is similar, but not quite as prominent for the other 
residential measures. The correlation coefficient between three-bedroom 
and four-bedroom rent measures is also approximately 0.9. Based on our 
research, the geographic variation in residential rents is consistent 
regardless of specific measure used, and therefore, a change in the ACS 
variable used or a change in the way of handling counties that are 
missing data would likely result in minimal changes to the resulting 
index.
[GRAPHIC] [TIFF OMITTED] TR18NO22.059

    Given its national representation, reliability, high response rate 
and frequent updates, and based on the rank order comparison of GSA and 
ACS data and high correlation coefficients for the ACS residential rent 
variables discussed above, we continue to believe the ACS residential 
rent data is the most appropriate data source available at this time 
for the purposes of calculating the rent index of the PE GPCI. We 
undertook a comprehensive analysis of alternatives to the ACS data and 
concluded that there is still no acceptable national data source 
available for physician office or other comparable commercial rents, 
and therefore, we proposed to continue to use county-level residential 
rent data from the ACS as a proxy for the relative cost differences in 
commercial office rents for the proposed CY 2023 update, and have done 
so in calculating the CY 2023 final GPCIs.
j. GPCI Update Summary
    As explained in the Background section above, section 1848(e)(1)(C) 
of the Act mandates the periodic review and adjustment of GPCIs. For 
each periodic review and adjustment, we publish the proposed GPCIs in 
the PFS proposed rule to provide an opportunity for public notice and 
comment, and allow us to consider whether any revisions in response to 
comments are warranted prior to implementation. The CY 2023 updated 
GPCIs for the first and second year of the 2-year phase-in, along with 
the GAFs, are displayed in Addenda D and E to this final rule available 
on our website under the supporting documents section of the CY 2023 
PFS final rule web page at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
    The following is a summary of the public comments received on the 
proposed revisions to the CY 2023 GPCIs and our responses:
    Comment: Some commenters expressed support for the proposed 
methodological refinements to the GAF calculation and the refinement to 
the number of unique fee schedule areas in California.
    Response: We thank the commenters for the support of our proposed 
methodological refinements to both the GAF calculation and the number 
of unique fee schedule areas in California. As noted above, we are 
finalizing to identify the Los Angeles-Long Beach-Anaheim MSA, 
containing Orange County and Los Angeles County, by one unique locality 
number, 18, and the San Francisco-Oakland-Berkeley MSA containing San 
Francisco, San Mateo, Alameda, and Contra Costa counties by one unique 
locality number, 05, as proposed. As noted above, there will be no 
changes to the existing locality numbers 05, 06, 08, 18, or 26 for CY 
2023 due to timing constraints relating to the operationalization of 
these changes. As noted above, we intend to operationalize these 
finalized changes for CY 2024. We note that these changes, when 
operationalized, do not have any payment implications under the PFS.
    Comment: Some commenters urged CMS to apply the locality RVUs 
rather than the national RVUs when calculating the GAFs. One commenter 
stated that this adjustment to the proposed GAF calculation methodology 
would provide the most precise information at the locality level. In 
doing so, the commenter stated that calculating a locality's GAF * 
Total RVUs * Conversion Factor would more accurately reflect locality 
payments.
    Response: We remind commenters that the GAFs are a weighted 
composite of each PFS locality's work, PE and MP expense GPCIs, which 
were previously calculated using the national GPCI cost share weights. 
For CY 2023, we proposed to update the GAF calculation to weight each 
component by total RVUs that each component accounts for, based on 
Medicare utilization data from CY 2020. We reiterate that we believe 
using the share of RVUs reflected in recent Medicare utilization data 
as weights when calculating the CY 2023 GAFs results in GAFs that more 
accurately reflect the composite effect of geographic adjustment on 
payment, year over year, as compared to the GAFs calculated using the 
2006-based MEI cost share weights. In the proposed rule, we noted that 
this change, if finalized, would allow the use of current Medicare 
utilization data that are available each year as opposed to the MEI 
cost share weights that are not updated as frequently. We note that the 
difference between the GAFs, when calculated using the current 
calculation methodology and the proposed calculation methodology is 
very minimal, differing only by a maximum of 0.717 percent. We also 
remind

[[Page 69631]]

commenters that we do not actually use GAFs in computing the fee 
schedule payment for a specific service; rather, the GAFs are useful in 
comparing overall costs and payments among fee schedule areas. 
Therefore, we disagree with the commenter that utilizing the locality 
RVUs when calculating the GAFs would more accurately reflect locality 
payments, as we do not utilize the GAFs to calculate payment under the 
PFS. We also note that because the GAFs were previously calculated 
using the national GPCI cost share weights, we believe that it would be 
more appropriate to use the national RVUs, rather than locality RVUs as 
suggested by commenters, to aid transparency between update years. We 
are finalizing the adjustment to the proposed GAF calculation 
methodology as proposed.
    Comment: Some commenters stated that our proposed methodologic 
changes to the work GPCI occupation groups and codes create unnecessary 
complexity and limited transparency. The commenters stated that CMS did 
not provide an impact analysis or criteria for inclusion (that is, how 
well it correlated as a proxy) other than significant consideration to 
the extent to which the data exist in the file (data existence) and how 
well the occupation codes are represented in the data (data 
sufficiency). The commenters stated that, without further explanation, 
two additional occupation groups were added to the previous seven 
occupation groups, which increased the greater than 100 current 
occupation codes by 60. One commenter believes that it is unlikely that 
the cumulation of so many professions will accurately reflect the 
relative difference in work of a single profession such as a physician; 
the commenter stated that, if one were to compare the BLS OEWS data 
file used for the work GPCI with that of the healthcare provider 
dataset, there is a discordance. The commenters agreed that the 
healthcare provider dataset should not be used for developing the work 
GPCI due to circularity, but believe it can be used to validate the 
proposed work GPCIs and to identify a much smaller subset of 
professions that would act as more reliable proxies than what was 
proposed. The commenters urged CMS to apply a smaller number of 
professions to the work GPCI, as they thought that doing so would 
result in a more reliable and accurate proxy for physician work, and 
provide more information about the correlation between physician work 
and the proxy professions to allow the public to verify its accuracy.
    Response: As noted in the final report, ``Final Report for the CY 
2023 Update of GPCIs and MP RVUs for the Medicare PFS,'' on our website 
located under the supporting documents section for the CY 2023 PFS 
final rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html, we conducted a thorough review of 
the BLS OEWS occupation codes within each of the seven occupation 
groups used in past updates to track and document the changes over time 
for the CY 2023 GPCI update. As new BLS OEWS data are released, the 
availability of specific occupation codes is subject to change, and it 
is possible that new codes can be added, changed, or removed from the 
BLS OEWS data over time; therefore, we believe it is important to 
periodically review and update the occupation groups and codes that are 
included in our triennial GPCI updates based on our review. This review 
of the BLS OEWS occupation codes is consistent with previous updates. 
We use the most updated resource cost data in each area to better 
adjust PFS payments for geographic cost differences compared to 
national average costs, therefore, we continue to believe that as 
updated, more complete BLS OEWS data becomes available, we should 
incorporate that data into our methodologies as appropriate.
    We note that the seven proxy professional wage categories span 
several different industries, including pharmacists and registered 
nurses, which demonstrates that the healthcare industry is represented 
in those proxy wage categories. We also remind commenters that the work 
GPCI captures the relative cost of physician and non-physician 
practitioner labor across Medicare payment localities, not absolute 
costs. In other words, the proxy professional wages from the BLS OEWS 
data are not a proxy for physician wages, but rather, the geographic 
variation in proxy professional wages is used as a proxy for the 
geographic variation in physician wages. The work GPCI reflects 
differences in living and other costs faced by practitioners in 
different areas, since other similarly educated professionals face 
similar costs. Regarding the commenter's statement that information 
regarding correlation should be provided, we note that including 
physician wage data in the work GPCI would potentially introduce some 
circularity, therefore we remind commenters that, consistent with our 
longstanding practice, a set of proxy occupation groups representing a 
variety of highly educated professionals are used in the work GPCI 
calculation. As discussed in previous rulemaking in response to 
commenters' concerns with the use of unrelated proxy data for physician 
wages, specifically that MedPAC studies have confirmed that the data 
sources currently relied upon for geographic adjustment bear no 
correlation to physician earnings, we have stated that we will continue 
to consider the possibility of establishing a physician cost report and 
requiring a sufficiently large sample of physicians in each locality to 
report data on actual costs incurred (81 FR 80264). However, we also 
stated that we believed that a physician cost report could take years 
to develop and implement, and could be prohibitively expensive (75 FR 
73259). We solicited public comment regarding the potential benefits to 
be gained from establishing a physician cost report and whether this 
approach is appropriate to achieve potentially greater precision in 
measuring the relative cost differences in physicians' practices among 
PFS localities. We also solicited public comments on the potential 
administrative burden of requiring physicians to routinely complete and 
submit a cost report. We did not receive any feedback specifically 
related to that comment solicitation (76 FR 73088). We note that we do 
not claim the proxy professions themselves, or the absolute wages of 
the proxy professionals are correlated to physician wages, but rather, 
that the geographic variation in proxy professional wages is similar to 
the geographic variation in physician wages.
    We believe that there would be similar geographic variation if one 
were to compare the BLS OEWS data used for the work GPCI with data from 
a healthcare provider dataset, as we continue to believe in the 
majority of instances, the earnings of physicians will vary among areas 
to the same degree that the earnings of other professionals across an 
array of industries vary. Further, we welcome opportunities to discuss 
data sources that can be used to validate the work GPCIs, similar to 
the analysis that we performed for residential and commercial rent data 
used for the office rent index.
    Comment: One commenter stated that they agree with the use of more 
recent wage data, but encouraged CMS to consider the potential effects 
of the COVID-19 pandemic on the GPCIs given that the timeframe of the 
BLS OEWS data is pre-pandemic and wages have increased drastically 
since the start of the pandemic.
    Response: We reiterate that the work GPCI captures the relative 
cost of physician and non-physician practitioner labor across Medicare

[[Page 69632]]

payment localities, not absolute costs. We note that overall nationwide 
wage changes would not be reflected in the work GPCI, but rather, the 
geographic variation compared to the national average would be 
reflected. We note that we did not use the Census Bureau's 2020 ACS 
data in the office rent index for the proposed CY 2023 GPCI update due 
to potential COVID-19 pandemic impacts on data, as previously discussed 
in the proposed rule. We noted in the proposed rule that we would 
analyze the ACS data collected in 2020 and subsequent years that 
occurred during the COVID-19 pandemic, and consider using those data 
for the next GPCI update after we better understand their integrity and 
validity for our purposes. Similarly, we understand that the BLS OEWS 
data could be impacted by conditions during the COVID-19 pandemic, 
therefore, we will perform similar analyses on the BLS OWES data for 
the next GPCI update.
    Comment: A few commenters stated that the GPCIs for Hawaii do not 
account for the unique costs of providing medical services in Hawaii 
and that this will lead to an accelerating shortage of health care 
providers across the state of Hawaii. The commenter stated that the 1.5 
work GPCI floor for Alaska, and the 1.0 PE GPCI floor for the Frontier 
States should serve as a basis for reevaluating the cost of providing 
medical services in Hawaii. The commenter stated that the GPCIs should 
be adjusted to reflect a factor at least equal to Alaska's work GPCI. 
Another commenter requested that Hawaii's GPCIs be increased for the 
cost of rent and supplies in Hawaii. One commenter stated that Hawaii's 
unique geography makes providing care more expensive and that the cost 
of living ranks amongst the highest in the nation, and the data used by 
CMS do not reflect the cost of living.
    Response: We reiterate that the GPCIs, in particular the work GPCI 
and the PE GPCI to which the commenters refer, are based on nationally-
representative and publicly-available wage data from the BLS OEWS for 
the work GPCI and employee wage and purchased services components of 
the PE GPCI, and the Census Bureau's ACS data for the rent index 
component of the PE GPCI. The GPCIs are a measure of relative resource 
cost differences among localities compared to the national average as 
informed by the data (not a measure of absolute costs). We remind 
commenters that the work GPCI value for Alaska is not based on the data 
for that State, instead section 1848(e)(1)(G) of the Act sets a 
permanent 1.5 work GPCI floor for Alaska. Similarly, section 
1848(e)(1)(I) of the Act sets a permanent PE GPCI floor of 1.0 for the 
Frontier States.
    Comment: One commenter stated that it disputes the claim that the 
equipment, supplies, and miscellaneous expenses component of the PE 
GPCI do not vary by geographic area. The commenter states that small 
specialty practices in rural communities do not have the volume to 
negotiate with the national suppliers, particularly for specialty 
testing, for which there are only a few places to get the specialty 
supplies. The commenter states that prices are typically presented by 
the supplier based on volume, and suppliers rarely compromise on order 
minimums for rural providers. The commenter also noted that many 
medical supplies have expiration dates, and rural areas struggle to 
utilize the supplies prior to their expiration dates because of lower 
volume and large supply shipments based on a supplier's order minimum. 
The commenter expressed concern with access to urgent and direct 
patient care services because the national corporations and 
laboratories will not provide these low paying services in rural areas.
    Response: With regard to the supplies, equipment, and miscellaneous 
expense cost index component of the PE GPCIs, we note that we made no 
proposals regarding our current policy for this component of the PE 
GPCI. We have stated that we believe there is a national market for 
these items and there is not significant geographic variation in those 
costs, and as such we assign a value of 1.00 for this component for 
each locality, consistent with the national average. The commenter did 
not provide any data or information to quantify the variation of costs 
of supplies, the amount of supplies lost to expiration dates, or 
national suppliers' order minimums in contrast to a rural specialty 
practice's demand for these supplies. We encourage the commenter and 
other interested parties to submit data supporting their assertions for 
consideration in future rulemaking; specifically, we would be 
interested in information regarding potential data sources for shipping 
costs and the costs of medical equipment and supplies for different 
geographic regions. Ideally, the potential data sources are accessible 
to the public, available on a national basis for both urban and rural 
areas, and updated regularly. Similarly, we have previously attempted 
to locate data sources specific to geographic variation in shipping 
costs, and we found no comprehensive national data source for this 
information, and therefore, we have not been able to quantify variation 
in costs specific to islands or rural communities.
    Comment: A few commenters stated that they do not believe that 
local taxes are accounted for in the GPCIs, such as a general excise 
tax that is applied to medical services provided in a State.
    Response: We note that costs associated with practicing in a 
particular locality are accounted for in the data that underpin the 
GPCI calculations. Therefore, we disagree with the commenter's 
statement that the GPCIs do not account for geographic differences in 
taxes.
    Comment: Two commenters stated that there is a lack of transparency 
into the GPCI data and methodology used to derive the GPCIs. One 
commenter stated that they cannot accurately validate CMS' GPCI 
calculations because there is little transparency and access to the 
data and methods used. The commenter stated that they submitted a 
comment on the CY 2022 Physician Fee Schedule proposed rule urging CMS 
to provide more transparency into the GPCI calculations in general, 
including a more detailed description of the step-by-step methodology 
and the specific data files used to derive the GPCIs. In addition to 
making the RVUs by county available, the commenters urged CMS to make 
available the source data for the work GPCI by county, the source data 
for each component of the practice expense GPCI, and all budget 
neutrality adjustments and calculations.
    The commenters stated that CMS provided these data prior to 2020 
and that they used it to reproduce and validate the CMS methodology for 
calculating the GPCIs each year. One commenter stated that they have 
identified substantial errors in previous proposed rules which CMS has 
swiftly corrected. The commenters stated that it is important that CMS 
provide more detailed information related to this critical component of 
the PFS in the proposed rule in order for the public to reproduce and 
validate the GPCIs. The commenters stated that the information should 
be published with the proposed rule just as CMS provides the practice 
expense RVUs, but with the specific data files.
    Response: We refer readers to the step-by-step instructions 
provided in the final report, ``Final Report for the CY 2023 Update of 
GPCIs and MP RVUs for the Medicare PFS,'' on our website located under 
the supporting documents section for the CY 2023 PFS final rule at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html. We also refer readers to Table 4.A.1: 
Summary of Elements Required for GPCI Calculation

[[Page 69633]]

in the final report, and the previous discussion, for the data sources 
used for the work GPCI and each component of the practice expense GPCI. 
As noted in the proposed rule, and as previously stated in this final 
rule, we discuss the years and timeframes of data used from each 
source. We note that we provide web links to the publicly-available 
data sources used in this GPCI update, the methodological parameters, 
as well as an overview of how we develop each GPCI component in the 
final report. This practice is consistent with previous updates. We 
also note that the budget neutrality adjustment and statutory floors 
applied after the budget neutrality adjustment are detailed in the 
note, ``CY 2023 GPCI Update Note_County_Data,'' on our website located 
under the supporting documents section for the CY 2023 PFS proposed and 
final rules at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
    Regarding the interested parties' comment on the CY 2022 proposed 
rule urging CMS to provide more transparency on the GPCI calculations, 
including a more detailed description of the step-by-step methodology 
and the specific data used to derive the GPCIs, we note that we did not 
make any proposals relating to the GPCIs in the CY 2022 proposed rule, 
so did not solicit or respond to public comments on that rule regarding 
GPCIs. However, we remind commenters that, in response to the 
commenters' concerns expressed in rulemaking for the CY 2020 GPCI 
update, we included more detailed steps in the final report, ``Final 
Report for the CY 2020 Update of GPCIs and MP RVUs for the Medicare 
Phys Fee Sched_v19Feb2020'', which is available on the CMS website 
under the downloads section of the CY 2020 PFS final rule at https://www.cms.gov/Medicare/Medicare-Fee-forService-Payment/PhysicianFeeSched/index.html, to assist interested parties in navigating these data. 
Additionally, as part of our ongoing commitment to transparency, we 
post the county-level data that we use to develop the proposed GPCIs, 
which allows interested parties to further examine and replicate our 
GPCI methodology. This file is available on the CMS website on our 
website under the Downloads section, titled ``CY 2023 Proposed Rule 
GPCI County-Level Data File.'' We believe that we sufficiently 
addressed previous commenters concerns for the CY 2023 GPCI update in 
the proposed rule and aforementioned CY 2020 and CY 2023 interim and 
final reports.
    Comment: Some commenters that addressed the proposed rebased and 
revised MEI supported the proposed delayed implementation of the 
updated MEI in the PE GPCI and PFS ratesetting for CY 2023, but we note 
that most commenters specifically commented on the data and 
methodologies proposed in section II.M. of the proposed rule, rather 
than the proposed delayed implementation, as proposed in sections II.B. 
and II.G. of the proposed rule. One commenter expressed concern with 
the geographic redistribution that could potentially occur with 
implementation of the rebased and revised MEI cost share weights used 
in the PE GPCI. The commenter stated that when CMS proposes to modify 
the weights of the practice expense categories (employee compensation, 
office rent, purchased services and equipment/supplies/other) within 
the practice expense GPCI, a significant reduction in the weight of 
office rent could lead to reductions in the payment to urban sites and 
increases to payment in rural areas and states with a single GPCI. The 
commenter urged CMS to also consider the impact of implementation of 
the rebased and revised MEI cost share weights for geographical areas 
with relatively high malpractice premiums, given the decreased weight 
of PLI in the proposed rebased and revised MEI.
    Response: We thank the commenters for the support of our proposed 
delayed implementation of the rebased and revised MEI weights for the 
GPCIs and PFS ratesetting for CY 2023. We note that we address specific 
comments regarding the rebased and revised MEI in section II.M. of this 
final rule. We also note that we provided alternate Addenda D and E to 
show the CY 2023 GPCIs and summarized GAFs if the rebased and revised 
MEI cost share weights proposed in section II.M. of the proposed rule 
were incorporated to weight the proposed CY 2023 PE GPCIs (for 
comparison to Addenda D and E with the proposal to maintain the current 
2006-based MEI cost share weights for the PE GPCIs). We refer readers 
to the discussion of the impacts of the alternative considered (to 
implement the proposed rebased and revised MEI in the proposed CY 2023 
PE GPCI) in section VI. (2. Alternatives Considered for the Practice 
Expense (PE) Geographic Practice Cost Index (GPCI)) of the proposed 
rule. We remind commenters that the implementation of the proposed 
rebased and revised MEI would only impact the PE GPCI (and GAFs, as the 
PE GPCI factors into the calculation of the GAF), as the MEI cost share 
weights are only used in the GPCIs to weight the four components of the 
PE GPCI. Therefore, the implementation of the rebased and revised MEI 
would not impact the work or MP GPCIs. We refer readers to the 
discussion of the impacts of the alternative considered (to implement 
the proposed rebased and revised MEI in CY 2023 ratesetting) in section 
VI. (1. Alternatives Considered for Adjusting RVUs To Match PE Share of 
the Medicare Economic Index (MEI)) of the proposed rule for impacts of 
decreased PLI weight in the proposed rebased and revised MEI on PFS 
ratesetting.
    Comment: One commenter expressed appreciation for CMS' efforts to 
analyze the commercial rent data sources as alternatives considered for 
the residential rent data used in the practice expense GPCI. The 
commenter stated that they believe the criteria applied to evaluate 
alternative sources of rent data were appropriate and encouraged CMS to 
continue this ongoing effort.
    Response: We thank the commenters for the support of our efforts 
and encourage commenters to submit information regarding potential data 
sources for our consideration in future rulemaking. We note that our 
efforts are ongoing to identify a publicly-available, robust, 
nationally representative commercial rent data source that could be 
made available to CMS for this purpose. Further, we welcome 
opportunities to discuss such data sources with interested parties and 
to incorporate such data, as appropriate, in the GPCI calculation 
process.
    After considering the public comments, we are finalizing the CY 
2023 GPCI update, and the methodological refinements, as proposed. As 
discussed previously in this section of the final rule, we are 
finalizing to identify the Los Angeles-Long Beach-Anaheim MSA, 
containing Orange County and Los Angeles County, by one unique locality 
number, 18, and the San Francisco-Oakland-Berkeley MSA containing San 
Francisco, San Mateo, Alameda, and Contra Costa counties by one unique 
locality number, 05, as proposed. As noted above, there will be no 
changes to the existing locality numbers 05, 06, 08, 18, or 26 for CY 
2023 due to timing constraints relating to the operationalization of 
these changes. As noted above, we intend to operationalize these 
finalized changes for CY 2024. We note that these changes, when 
operationalized, do not have any payment implications under the PFS. As 
a result, the final CY 2023 GPCIs and summarized GAFs in Addenda D and 
E to this final rule do not reflect the California locality changes as 
finalized, as there will be no

[[Page 69634]]

changes to the existing locality numbers 05, 06, 08, 18, or 26 for CY 
2023, and note that the changes will be reflected in Addenda D and E 
for CY 2024 when the finalized changes are operationalized.

H. Determination of Malpractice Relative Value Units (RVUs)

1. Overview
    Section 1848(c) of the Act requires that valuations for each 
service under the PFS be composed of three components: work, practice 
expense (PE), and malpractice (MP) expense. As required by section 
1848(c)(2)(C)(iii) of the Act, beginning in CY 2000, MP RVUs are 
resource based. 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 (79 FR 67591 
through 67596), 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 PFS proposed rule (79 FR 40349 through 40355) and 
final rule with comment period (79 FR 67591 through 67596). In the CY 
2018 PFS proposed rule (82 FR 33965 through 33970), we proposed to 
update the specialty-level risk factors, used in the calculation of MP 
RVUs, prior to the next required 5-year update (CY 2020), using the 
updated MP premium data that were used in the eighth Geographic 
Practice Cost Index (GPCI) update for CY 2017; however, the proposal 
was ultimately not finalized for CY 2018.
    We consider the following factors when we determine MP RVUs for 
individual PFS services: (1) specialty-level risk factors derived from 
data on specialty-specific MP premiums incurred by practitioners; (2) 
service-level risk factors derived from Medicare claims data of the 
weighted average risk factors of the specialties that furnish each 
service; and (3) an intensity/complexity of service adjustment to the 
service-level risk factor based on either the higher of the work RVU or 
clinical labor portion of the direct PE RVU. 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 adjusted (or scaled) 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 was 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 
(RF) was applied for the new/revised code and source code, but the work 
RVU for the new/revised code was 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. Under 
this approach, for new and revised codes, we generally assign a 
specialty-level risk factor to individual codes based on the same 
utilization assumptions we make regarding specialty mix we use for 
calculating PE RVUs and for PFS budget neutrality. We continue to use 
the work RVU or clinical labor RVU to adjust the MP RVU for each code 
for intensity and complexity. In finalizing this policy, we stated that 
the specialty-level 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.
    Section 1848(e)(1)(C) of the Act requires us to review, and if 
necessary, adjust the GPCIs at least every 3 years. In the CY 2020 PFS 
final rule with comment period, we implemented the fourth review and 
update of MP RVUs, and we also conducted the statutorily required 3-
year review of the GPCIs. For a comprehensive discussion of the fourth 
review and update of MP RVUs, see the CY 2020 PFS proposed rule (84 FR 
40504 through 40510) and final rule with comment period (84 FR 62606 
through 62615). The MP premium data used to update the MP GPCIs are the 
same data used to determine the specialty-level risk factors, which are 
used in the calculation of MP RVUs. Therefore, for the CY 2020 update 
of MP RVUs we finalized a policy to align the update of MP premium data 
with the update to the MP GPCIs to increase efficiency. Effective 
beginning in CY 2020, our policy is to review, and if necessary update, 
the MP RVUs at least every 3 years, similar to our review and update of 
the GPCIs.
2. Methodology for the Revision of Resource-Based Malpractice (MP) RVUs
a. General Discussion
    As discussed in the CY 2023 PFS proposed rule (87 FR 46016), we 
calculated the MP RVUs that we proposed for CY 2023 using updated MP 
premium data obtained from State insurance rate filings. We used a 
calculation methodology for the CY 2023 review and update of resource-
based MP RVUs that largely parallels the process used in the CY 2020 
update; however, we proposed to incorporate some methodological 
refinements, which we described in the proposed rule. The MP RVU 
calculation requires us to obtain information on specialty-specific MP 
premiums that are linked to specific services, and using this 
information, we derive relative risk factors (RFs) for the various 
specialties that furnish a particular service. Because MP premiums vary 
by State and specialty, the MP premium information must be weighted 
geographically and by specialty. The MP RVUs that we proposed were 
calculated using four data sources:
     MP premium data presumed to be in effect as of December 
31, 2020;
     CY 2020 Medicare payment and utilization data;
     Higher of the CY 2022 final work RVUs or the clinical 
labor portion of the direct PE RVUs; and
     CY 2022 MP GPCIs.
    We used the higher of the CY 2022 final work RVUs or clinical labor 
portion of the direct PE RVUs in our calculation to develop the CY 2023 
proposed MP RVUs while maintaining overall PFS budget neutrality.
    Similar to the CY 2020 update, the proposed MP RVUs were calculated 
using specialty-specific MP premium data because they represent the 
expense incurred by practitioners to obtain MP insurance as reported by 
insurers. For CY 2023, the most current MP premium data available, with 
a presumed effective date of no later than December 31, 2020, were 
obtained from insurers with the largest market share in each State. We 
identified insurers with the largest market share using the National 
Association of Insurance Commissioners (NAIC) market share report. This 
annual

[[Page 69635]]

report provides State-level market share for entities that provide 
premium liability insurance (PLI) in a State. Premium data were 
downloaded from the System for Electronic Rates & Forms Filing Access 
Interface (SERFF) (accessed from the NAIC website) for participating 
States. For non-SERFF States, data were downloaded from the State-
specific website (if available online) or obtained directly from the 
State's alternate access to filings. For SERFF States and non-SERFF 
States with online access to filings, the 2020 market share report was 
used to select companies. These were the most current data available 
during the data collection and acquisition process.
    MP insurance premium data were collected from all 50 States, and 
the District of Columbia. Efforts were made to collect filings from 
Puerto Rico; however, no recent filings were submitted at the time of 
data collection, and therefore, filings from the previous update were 
used. Consistent with the CY 2020 update, no filings were collected for 
the other U.S. territories: American Samoa; Guam; Virgin Islands; or 
Northern Mariana Islands. MP premiums were collected for coverage 
limits of $1 million/$3 million, mature, claims-made policies (policies 
covering claims made, rather than those covering losses occurring, 
during the policy term). A $1 million/$3 million liability limit policy 
means that the most that would be paid on any claim is $1 million and 
the most that the policy would pay for claims over the timeframe of the 
policy is $3 million. Adjustments were made to the premium data to 
reflect mandatory surcharges for patient compensation funds (PCF, funds 
used to pay for any claim beyond the State's statutory amount, thereby 
limiting an individual physician's liability in cases of a large suit) 
in States where participation in such funds is mandatory.
    Premium data were included for all physician and nonphysician 
practitioner (NPP) specialties, and all risk classifications available 
in the collected rate filings. Although premium data were collected 
from all States, the District of Columbia, and previous filings for 
Puerto Rico were utilized, not all specialties had distinct premium 
data in the rate filings from all States. In the CY 2020 PFS final rule 
(84 FR 62607 through 62610), we finalized methodological improvements 
that expanded the specialties and amount of filings data used to 
develop the proposed risk factors, which are used to develop the 
proposed MP RVUs.
b. Methodological Refinements
    For the CY 2023 update, we proposed the following methodological 
improvements to the development of MP premium data:
    (1) Improving our current imputation strategy to develop a more 
comprehensive data set when CMS specialty names are not distinctly 
identified in the insurer filings, which sometimes use unique specialty 
names or do not include all CMS specialties.
    In instances where insurers report data for some (but not all) 
specialties that explicitly corresponded to a CMS specialty, where 
those data were missing, we finalized in the CY 2020 final rule (84 FR 
62607 through 62610) to use partial imputation based on available data 
to establish what the premiums would likely have been had that 
specialty been delineated in the filing. In instances where there were 
no data corresponding to a CMS specialty in the filing, we finalized a 
policy to use total imputation to establish premiums for that 
specialty. We proposed to further refine our strategy for imputing risk 
factor values for specialties that have incomplete data during the data 
collection process by using rates mapped from the more commonly 
reported specialty within risk class as opposed to excluding 
underrepresented filing data.
    For example, Hospice and Palliative Care is typically assigned the 
same risk class as Internal medicine. Rather than excluding Hospice and 
Palliative Care because there is insufficient filing data, we would use 
Internal Medicine rates in filings that did not explicitly report 
Hospice and Palliative Care. For the CY 2020 update, commenters 
requested that we continue to improve our data collection process to 
ensure that as much specialty-specific data as possible are used to 
calculate risk factors. Therefore, we proposed to utilize this small 
improvement for collecting risk value input data in the future, as this 
retains as much data as possible and maps specialties more 
intentionally.
    (2) Creation of a risk index for the calculation of MP RVUs.
    We proposed to utilize a true MP risk index as opposed to derived 
risk factors when calculating MP RVUs. Historically, we have used risk 
factors, which is a ratio of a specialty's national average premium to 
a single referent specialty's national average premium. This 
denominator has typically been based on the national average premium 
for the Allergy/Immunology specialty, which has had the lowest average 
premium for 2017 and 2020. As proposed, the risk index would be 
calculated as a ratio of the specialty's national average premium to 
the volume-weighted national average premium across all specialties. We 
discussed that we believe the change would increase consistency with 
the calculation of MP RVUs, so that changes in the MP risk index 
reflect changes in payment, as opposed to changes relative only to the 
specialty with the lowest national average premium. We noted that we 
believe that this definitional change to risk index does not impact the 
pricing of services in the PFS since it does not change relative risk 
across specialties, and MP RVUs are rescaled for purposes of budget 
neutrality to be equal to the overall pool of MP RVUs. Readers can 
refer to the section of the proposed rule entitled, ``Application of BN 
to Adjustments of RVUs'' for a discussion of our budget neutrality 
process.
c. Steps for Calculating Malpractice RVUs
    Calculation of the proposed MP RVUs conceptually follows the 
specialty-weighted approach used in the CY 2015 PFS final rule with 
comment period (79 FR 67591), along with the proposed methodological 
improvements. The specialty-weighted approach bases the MP RVUs for a 
given service on a weighted average of the risk index of all 
specialties furnishing the service. This approach ensures that all 
specialties furnishing a given service are reflected in the calculation 
of the MP RVUs. The steps for calculating the MP RVUs are described 
below.
    Step (1): Compute a preliminary national average premium for each 
specialty.
    Insurance rating area MP premiums for each specialty are mapped to 
the county level. The specialty premium for each county is then 
multiplied by its share of the total U.S. population (from the U.S. 
Census Bureau's 2015-2019 American Community Survey (ACS) 5-year 
estimates). This is in contrast to the method used for creating 
national average premiums for each specialty in the 2015 update; in 
that update, specialty premiums were weighted by the total RVU per 
county, rather than by the county share of the total U.S. population. 
We referred readers to the CY 2016 PFS final rule with comment period 
(80 FR 70909) for a discussion of why we have adopted a weighting 
method based on share of total U.S. population. This calculation is 
then divided by the average MP GPCI across all counties for each 
specialty to yield a normalized national average premium for each 
specialty. The specialty premiums are normalized for geographic

[[Page 69636]]

variation so that the locality cost differences (as reflected by the 
2022 GPCIs) would not be counted twice. Without the geographic 
variation adjustment, the cost differences among fee schedule areas 
would be reflected once under the methodology used to calculate the MP 
RVUs and again when computing the service specific payment amount for a 
given fee schedule area.
    Step (2): Determine which premium service risk groups to use within 
each specialty.
    Some specialties had premium rates that differed for surgery, 
surgery with obstetrics, and non-surgery. These premium classes are 
designed to reflect differences in risk of professional liability and 
the cost of MP claims if they occur. To account for the presence of 
different classes in the MP premium data and the task of mapping these 
premiums to procedures, we calculated a distinct risk index for 
surgical, surgical with obstetrics, and nonsurgical procedures where 
applicable. However, the availability of data by surgery and non-
surgery varied across specialties. Historically, no single approach 
accurately addressed the variability in premium class among 
specialties, and we previously employed several methods for calculating 
average premiums by specialty. These methods are discussed below.
    Developing Distinct Service Risk Groups: We determined that there 
were sufficient data for surgery and non-surgery premiums, as well as 
sufficient differences in rates between classes for 17 specialties 
(there were 15 such specialties in the CY 2020 update). These 
specialties are listed in Table 26. The CY 2023 update uses the same 
structure of specialty/service risk group as the previous update except 
that Unknown Physician Specialty (99) is now divided into surgery and 
non-surgery groups. We were able to collect an expanded amount of 
premium data for this specialty relative to the previous update, and 
this service risk group structure change is reflective of the patterns 
observed in the most current premium data. For all other specialties 
(those that are not listed in Table 32) that typically do not 
distinguish premiums as described above, a single risk index value was 
calculated, and that specialty risk index value was applied to all 
services performed by those specialties. For further discussion of the 
information contained in Table 26, refer to ``Final Report for the CY 
2023 Update of GPCIs and MP RVUs for the Medicare Physician Fee 
Schedule'' Available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.
BILLING CODE 4150-28-P
[GRAPHIC] [TIFF OMITTED] TR18NO22.060

    Step (3): Calculate a risk index for each specialty.
    The relative differences in national average premiums between 
specialties are expressed in our methodology as a specialty-level risk 
index. These risk index values are calculated by dividing the national 
average premium for each specialty by the volume-weighted national 
average premium across all specialties. For specialties with sufficient 
surgical and non-surgical premium data, we calculated both a surgical 
and non-surgical risk index value. Similarly, for specialties with rate 
filings that distinguished surgical premiums with obstetrics, we 
recognized that service-risk subgroup of the specialty and calculated a 
separate surgical with obstetrics risk index value.
    Table 33 shows the risk index values by specialty type and service 
risk group.

[[Page 69637]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.061


[[Page 69638]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.062

BILLING CODE 4150-28-C
    Step (4): Calculate MP RVUs for each CPT/HCPCS code.
    Resource-based MP RVUs were calculated for each CPT/HCPCS code that 
has work or PE RVUs. The first step was to identify the percentage of 
services furnished by each specialty for each respective CPT/HCPCS 
code. This

[[Page 69639]]

percentage was then multiplied by each respective specialty's risk 
index value as calculated in Step 3. The products for all specialties 
for the CPT/HCPCS code were then added together, yielding a specialty-
weighted service specific risk index reflecting the weighted MP costs 
across all specialties furnishing that procedure. The service specific 
risk index was multiplied by the greater of the work RVU or clinical 
labor portion of the direct PE RVU for that service, to reflect 
differences in the complexity and risk-of-service between services.
    Impacts of expanded data collection: As we discussed in the 
proposed rule, we proposed important methodological improvements to our 
process for calculating MP RVUs. The improvements were in response to 
comments from interested parties suggesting that we continue to improve 
data collection to ensure that we use as much specialty-specific data 
as possible to reflect the most accurate trends in malpractice 
premiums. When we do not have sufficient premium data for a specialty, 
our practice has been to use the data from the specialty with the 
lowest premium. As discussed in the proposed rule, we now have 
specialty-specific data for many more specialties. However, although 
the newly captured specialty-specific premium data are more accurate, 
the new data produce premiums and risk index values that are 
significantly lower for some specialties than the ones we applied in 
the absence of sufficient specialty-specific data.
    We acknowledged that this reduction in premiums and risk index 
value is expected to negatively impact payment for services furnished 
by those specialties that are affected by the improved data collection 
process. Based on our analyses of the new risk index data, we 
identified an impact threshold to guide how we could integrate the new 
information into our calculations and minimize the impact on affected 
specialties. Specifically, we identified a reduction of approximately 
\1/3\ to the risk index calculated for specialties based on the new 
specialty-specific premium data compared to the information we had 
previously used. To mitigate the negative impact on affected 
specialties, promote payment stability, and prevent potential 
reductions in access to services for beneficiaries, for specialties for 
which the use of newly available premium data would result in a 30 
percent or greater reduction in the risk index for CY 2023 as compared 
to the current risk index value for CY 2022, we proposed to phase in 
the reduction in MP RVUs over the 3 years that precedes the next 
update, by \1/3\ of the change in MP RVUs for those specialties in each 
year that have a 30 percent or more threshold reduction in risk index 
value as a result of the update. For a detailed explanation of how the 
phase-in will be applied per specialty, a file is available on our 
website under downloads for the CY 2023 PFS proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html. As proposed, the 
phase-in is similar to the 2-year phase-in required under section 
1848(e)(1)(C) of the Act for changes to the GPCIs when it has been more 
than one year since the last changes. We proposed to phase in the 
reduction in MP RVUs over 3 years rather than 2 years because the MP 
risk index values are updated every 3 years. The list of specialties 
that would be subject to the phase-in under the proposed policy, and 
the corresponding risk index values for each specialty is available on 
our website under downloads for the CY 2023 PFS proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
    Low volume service codes: As we discussed in the proposed rule, for 
low volume service codes, we used the list of expected specialties who 
may perform a service instead of the claims-based specialty mix when 
calculating MP RVUs. We finalized this approach in the CY 2018 PFS 
final rule to address concerns from interested parties about the year-
to-year variability in PE and MP RVUs for low volume services (which 
also includes no volume services). (82 FR 53000 through 53006). Low 
volume codes are codes that have 100 or fewer allowed services for a 
year. These service-level overrides are used to determine the expected 
specialty for low volume procedures for both PE and MP.
    In the CY 2018 PFS final rule (82 FR 53000 through 53006), we also 
finalized our proposal to eliminate general use of an MP-specific 
specialty-mix crosswalk for new and revised codes. However, we 
indicated that we would continue to consider, in conjunction with 
annual recommendations, specific recommendations regarding specialty 
mix assignments for new and revised codes, particularly in cases where 
coding changes are expected to result in differential reporting of 
services by specialty, or where the new or revised code is expected to 
be low-volume. Absent such information, the specialty mix assumption 
for a new or revised code would derive from the analytic crosswalk in 
the first year, followed by the introduction of actual claims data, 
which is consistent with our approach for developing PE RVUs.
    For CY 2023, we solicited public comment on the list of expected 
specialties. As noted in the proposed rule, the proposed list of codes 
and expected specialties was made available on our website under 
downloads for the CY 2023 PFS proposed rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
    We received public comments on the list of expected specialties. 
The following is a summary of the comments we received and our 
responses.
    Comment: Commenters suggested additional CPT codes to be added to 
the Expected Specialty Overrides for Low Volume Service Codes list.
    Response: We appreciate commenters' suggested additions of low 
volume service CPT codes to the Expected Specialty Overrides for Low 
Volume Service Codes list. We refer readers to the PE RVU Methodology 
section of this final rule for a discussion regarding the expected 
specialties list and the suggested additions for CY 2023.
    Step (5): Rescale for budget neutrality.
    The statute requires that changes to fee schedule RVUs must be 
budget neutral. Thus, the last step is to adjust for relativity by 
rescaling the proposed MP RVUs so that the total proposed resource-
based MP RVUs are equal to the total current resource-based MP RVUs 
scaled by the ratio of the pools of the proposed and current MP and 
work RVUs. This scaling is necessary to maintain the work RVUs for 
individual services from year to year while also maintaining the 
overall relationship among work, PE, and MP RVUs.
    Specialties Excluded from Ratesetting Calculation: In section II.B. 
of the proposed rule, Determination of Practice Expense Relative Value 
Units, we discussed specialties that are excluded from ratesetting for 
the purposes of calculating PE RVUs. We proposed to treat those 
excluded specialties in a consistent manner for the purposes of 
calculating MP RVUs. We noted that all specialties are included for 
purposes of calculating the final BN adjustment. The list of 
specialties excluded from the ratesetting calculation for the purpose 
of calculating the PE RVUs that we proposed to also exclude for the 
purpose of calculating MP RVUs is available in section II.B. of the 
proposed rule, Determination of Practice Expense Relative Value Units. 
The resource-based MP RVUs are shown in Addendum B, which is available 
on the CMS website under the downloads section of the CY 2023 PFS final 
rule at

[[Page 69640]]

https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html.
    Because a different share of the resources involved in furnishing 
PFS services is reflected in each of the three fee schedule components, 
implementation of the resource-based MP RVU update will have much 
smaller payment effects than implementing updates of resource-based 
work RVUs and resource-based PE RVUs. On average, work represents about 
50.9 percent of payment for a service under the fee schedule, PE about 
44.8 percent, and MP about 4.3 percent. Therefore, a 25 percent change 
in PE RVUs or work RVUs for a service would result in a change in 
payment of about 11 to 13 percent. In contrast, a corresponding 25 
percent change in MP values for a service would yield a change in 
payment of only about 1 percent. Estimates of the effects on payment by 
specialty type is detailed in section VII. of the proposed rule, the 
Regulatory Impact Analysis.
    Additional information on our methodology for updating the MP RVUs 
is available in the ``Final Report for the CY 2023 Update of GPCIs and 
MP RVUs for the Medicare Physician Fee Schedule,'' was made available 
on the CMS website under the downloads section of the CY 2023 PFS 
proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.
    The following is a summary of the public comments received on the 
proposed revisions to the Determination of Malpractice RVUs and our 
responses:
    Comment: The majority of commenters are in support of the proposed 
methodological improvements to our imputation strategy and expanded 
data collection efforts to create a risk index rather than risk 
factors. In particular, most commenters are pleased with the expanded 
data collection efforts that have resulted in increased accuracy for 
non-physician practitioner's premium data and a risk index system that 
is volume-weighted to the national average premium across all 
specialties, rather than allergy/immunology. One commenter requested 
that CMS not implement the update to the 2023 MP RVUs, as proposed, due 
to concern for an increase in professional liability costs over the 
next few years. The commenter noted there could be an increase in 
malpractice claims caused by the public health emergency, and 
therefore, any negative impacts would be exacerbated.
    Response: We thank commenters for their feedback and overall 
support. We believe that the negative impacts of this MP update are 
relatively modest and we agree with the majority of commenters that 
believe that the impacts do not outweigh the benefit of updated and 
expanded premium data that yield more accurate professional liability 
insurance costs across all specialties. Therefore, we are finalizing 
our methodological improvements as proposed.
    Comment: A few commenters requested that CMS not implement the 
proposed phase-in of risk index values that have decreased by 30 
percent or more as a result of the expanded data collection efforts. 
These commenters requested that we implement the risk index values in 
their entirety for 2023 and noted that there has been a request for 
expanded data collection efforts and, therefore, more accurate premium 
data for several years. The commenters stated that these changes to 
risk index values were anticipated as a result of expanded data 
collection, and are relatively minor. Additionally, some commenters 
noted that in previous updates to the MP RVU data, CMS has not 
implemented a phase-in in response to dramatic reductions in premiums 
for a few specialties. One commenter was appreciative of the phase-in 
and requested that it be implemented as proposed.
    Response: We acknowledge that, for previous MP RVU updates, 
reductions in risk index values have not always been phased-in over 
time when there is a significant impact to a specific specialty. We 
also acknowledge commenters' opinions that changes to risk index values 
are anticipated when there are expanded data collection efforts. 
However, we remain committed to reducing burdens on practitioners by 
maintaining stability in Medicare payment and removing barriers to 
access for beneficiaries that could occur as a result of impacts from a 
reduction in payment to practitioners. Therefore, we believe it is 
important to implement a phase-in for those specialties for which we 
observed a large reduction in risk index value. We are finalizing our 
MP RVU phase-in strategy as proposed.
    Comment: One commenter suggested that CMS make changes to the 
specialty data source for a few specialties that they believe are 
incorrectly mapped for purposes of data imputation. The commenter also 
noted that they would like us to further improve our imputation 
methodologies by publishing impacts for all CMS specialties instead of 
mapping to related specialties in the regulatory impact table included 
in all PFS Federal Register notices. Additionally, the commenter stated 
that they would like CMS to work with the RUC to better identify 
appropriate cross-walks when necessary. The commenter's requested 
changes to mappings are as follows: 19- Oral Surgery (dental only) 
(ALL) to Other, 13-Neurology (SURG) to Other, 14- Neurosurgery (ALL) to 
Other, 72- Pain Management (ALL) to 11- Internal Medicine, 98-
Gynecologist/oncologist (ALL) to 91-Surgical oncology (ALL), C0-Sleep 
medicine (ALL) to 13-Neurology (NO SURG), C7-Advanced heart failure and 
transplant cardiology (ALL) to 06-Cardiology (NO SURG), 71- Registered 
Dietician to Other, and 42-Certified Nurse Midwife to Other.
    Response: We appreciate the commenter's mapping suggestions for 
some specialties that require imputation of premium data. We would also 
like to reiterate that we will continue to work with all interested 
parties to improve the data used for calculating risk index values. We 
continue to believe that the regulatory impact table (Table 8.A CMS 
Specialty Map into Impact Specialty) of the ``Interim Report for the CY 
2023 Update of GPCIs and MP RVUs for the Medicare Physician Fee 
Schedule'' is a useful tool to assist us with mapping premium data when 
specialty specific premium data are not included in a filing. However, 
as we discussed in the proposed rule and above, we have adopted 
policies to improve our data imputation and employ partial imputation 
based on available data to approximate the premiums when we do not have 
complete specialty specific premium data, as reflected in Table 8.C 
(Source Specialty/Service Risk Group for Imputation for Updated PLI 
Premium Data) of the ``Interim Report for the CY 2023 Update of GPCIs 
and MP RVUs for the Medicare Physician Fee Schedule.''. In particular, 
71- Registered Dietician, (for purposes of impacts) is mapped to Other 
in Table 8.A. 42- Certified Nurse Midwife is also mapped to Obstetrics/
Gynecology. However, we were able to collect sufficient premium data 
such that partial imputation was not required and we were able to use 
the actual premium data to formulate a risk index value for both 
specialties. Therefore, we disagree with commenters and will not re-map 
Registered Dietician or Certified Nurse Mid-wife in Table 8.A (CMS 
Specialty Map into Impact Specialty), as no mapping for premium data 
was required. We believe that the expanded premium data collected is an 
accurate representation of those specialty's premiums for this update. 
Therefore, they are also not required to be listed in Table 8.C. for 
specialties that require partial imputation. Additionally, 19-

[[Page 69641]]

Oral Surgery (dental only) is mapped to Maxillofacial surgery for 
purposes of data imputation. We note that when collecting premium data, 
Oral Surgery frequently appears together with Maxillofacial surgery. 
Without additional information to change this mapping and in 
consideration of their frequency of reporting together, we do not 
believe it is appropriate to change the mapping for this update. 
Additionally, without additional information to support a change in 
mapping, we do not believe it is necessary to change the mapping for 
13-Neurology (SURG) and 14-Neurosurgery (ALL). We note that 13- 
Neurology (SURG) and 14-Neurosurgery (ALL) have had the same risk value 
for the last two updates of the MP RVUs. For the other requested re-
mappings listed above, after further review and consideration of the 
commenters requests, we are finalizing a change for the following 
specialties for purposes of partial imputation as reflected in Table 
8.C.: 72- Pain Management (ALL) to 11- Internal Medicine (ALL), 98- 
Gynecologist/oncologist (ALL) to 91- Surgical oncology (ALL), C0-Sleep 
medicine (ALL) to 13-Neurology (NO SURG), and C7- Advanced heart 
failure and transplant cardiology (ALL) to 06- Cardiology (NO SURG).
    Comment: Several commenters alerted CMS to a technical ratesetting 
error for technical component (TC)-only services. Commenters were 
concerned about the ratesetting error causing an inappropriate 
redistribution effect within the technical component (TC) and 
professional component (26) such that the relationship became inverted 
with MP RVUs being drawn away from the 26 services and added to the TC 
services. Commenters stated that they believe that this error was 
caused by the change to a risk index and an error within ratesetting to 
map TC-only services to a 1.00 risk value. Commenters requested that 
CMS correct the error or delay implementation of the MP RVU update.
    Response: We appreciate commenters bringing to our attention the 
error in calculating the proposed MP RVUs for TC-only services. We 
agree with commenters that a technical error in our ratesetting system 
that mapped all TC-only services to a 1.00 risk value resulted in the 
TC and 26 MP RVU distribution error. For the CY 2020 update of the MP 
RVUs (84 FR 62606 through 62615), we finalized that we would assign a 
risk factor of 1.00, which was the lowest physician specialty risk 
factor (allergy/immunology), to TC-only services due to a lack of 
sufficient professional liability premium data. For the proposed CY 
2023 update of the MP RVUs (87 FR 46016), we stated that, ``When we do 
not have sufficient premium data for a specialty, our practice has been 
to use the data from the specialty with the lowest premium. We now have 
specialty-specific data for many more specialties.'' Our expanded data 
collection efforts resulted in sufficient premium data such that we 
could directly assign a risk value for TC-only services without the 
need for mapping. However, due to a technical error, we continued to 
assign a 1.0 risk factor for all TC-only services which resulted in an 
incorrect calculation of the proposed MP RVUs for TC-only services. In 
consideration of commenters asking us to find a way to resolve the 
inappropriate distribution or delay implementation, we are finalizing a 
correction to the ratesetting error for the 2023 update of the MP RVUs. 
The correction will again map TC-only services to allergy/immunology 
for this update, which is a risk index value of 0.430. We believe that 
using this risk value will correct the identified error, while also 
maintaining as much stability as possible for TC-only services so that 
there is not a major shift in value from current MP RVUs for the TC and 
26 components. We will continue to re-evaluate the MP RVU methodology 
for TC-only services for future updates.
    Additional information on our methodology for updating the MP RVUs 
is available in the ``Final Report for the CY 2023 Update of GPCIs and 
MP RVUs for the Medicare Physician Fee Schedule,'' which is available 
on the CMS website under the downloads section of the CY 2023 PFS final 
rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.
    After consideration of the comments, we are finalizing the CY 2023 
update as proposed with a modification to address an error with respect 
to the risk values for TC-only services, as indicated above. We are 
finalizing our proposal to implement a risk index rather than risk 
factors and improve upon our data imputation strategy by mapping to 
service risk group/class. We are also implementing a 3-year phase-in 
for specialties with a reduction in risk value of 30 percent or more to 
reduce burden, maintain stability in reimbursement for practitioners, 
and maintain access to services for beneficiaries.

I. Non-Face-to-Face Services/Remote Therapeutic Monitoring (RTM) 
Services

    Remote Therapeutic Monitoring (RTM) is a family of five codes 
created by the CPT Editorial Panel in October 2020, valued by the RUC 
at its January 2021 meeting, and finalized for Medicare payment in the 
CY 2022 PFS final rule (86 FR 65114 through 65117). The RTM codes 
include three PE-only codes and two professional work, treatment 
management codes.
    In the CY 2022 PFS final rule, we finalized refinements to payment 
for the three PE-only RTM codes: CPT code 98975 (Remote therapeutic 
monitoring (e.g., respiratory system status, musculoskeletal system 
status, therapy adherence, therapy response); initial set-up and 
patient education on use of equipment); CPT code 98976 (Remote 
therapeutic monitoring (e.g., respiratory system status, 
musculoskeletal system status, therapy adherence, therapy response); 
device(s) supply with scheduled (e.g., daily) recording(s) and/or 
programmed alert(s) transmission to monitor respiratory system, each 30 
days); and CPT code 98977 (Remote therapeutic monitoring (e.g., 
respiratory system status, musculoskeletal system status, therapy 
adherence, therapy response); device(s) supply with scheduled (e.g., 
daily) recording(s) and/or programmed alert(s) transmission to monitor 
musculoskeletal system, each 30 days). We valued the three PE-only 
codes by: (1) cross-walking CPT code 98975 to the PE RVU value of CPT 
code 99453 (Remote monitoring of physiologic parameter(s) (e.g., 
weight, blood pressure, pulse oximetry, respiratory flow rate), 
initial; set-up and patient education on use of equipment); and by (2) 
cross-walking CPT codes 98976 and 98977 to the PE RVU of comparable CPT 
code 99454 (Remote monitoring of physiologic parameter(s) (e.g., 
weight, blood pressure, pulse oximetry, respiratory flow rate), 
initial; device(s) supply with daily recording(s) or programmed 
alert(s) transmission, each 30 days), a code that includes payment for 
the medical device used to collect and transmit data.
    For the two RTM treatment management codes, we finalized the RUC-
recommended work RVU of 0.62 for CPT code 98980 (Remote therapeutic 
monitoring treatment management services, physician/other qualified 
health care professional time in a calendar month requiring at least 
one interactive communication with the patient/caregiver during the 
calendar month; first 20 minutes) and the RUC-recommended work RVU of 
0.61 for its add-on code, CPT code 98981 (Remote therapeutic monitoring 
treatment management services, physician/other qualified health care 
professional time in a calendar month requiring at least one 
interactive communication with the

[[Page 69642]]

patient/caregiver during the calendar month; each additional 20 minutes 
(List separately in addition to code for primary procedure)).
    We also finalized the RUC-recommended direct PE inputs for the two 
treatment management codes without refinement. The direct PE for these 
two codes includes clinical labor. According to the supporting 
materials in the RUC recommendations that we accepted, CPT code 98980 
includes 40 minutes of activities performed by clinical staff while CPT 
code 98981 includes 20 minutes of activities performed by clinical 
staff as direct practice expenses (PE). The RUC materials describe the 
activities of clinical staff who perform the clinical labor involved in 
each of these codes as including: communicating with the patient 
throughout the month, resolving technology or data transmission 
concerns, reviewing data with the billing practitioner, updating and 
modifying care plans, and addressing lack of patient improvement. These 
activities performed by clinical staff of the billing practitioner 
would be considered services provided incident to the services of the 
billing practitioner. For more information about ``incident to'' 
services, see Sec.  410.26.
    We expressed concern in the CY 2022 PFS final rule (86 FR 65116) 
about the treatment management codes as described by the CPT and RUC. 
In particular, we expressed concern about the inclusion of clinical 
labor in codes that could be billed by qualified nonphysician 
healthcare professionals because Medicare Part B does not include a 
benefit for services furnished ``incident to'' the services of some 
types of qualified nonphysician healthcare professionals including 
CSWs, CRNAs, PTs, OTs, and SLPs. Commenters on the CY 2022 PFS proposed 
rule (86 FR 65116) agreed with our assessment and suggested that we 
consider developing new coding to resolve the issue. In the CY 2022 PFS 
final rule, we finalized a policy that permitted therapists and other 
qualified healthcare practitioners to bill the RTM codes. We stated 
that where the practitioner's Medicare benefit does not include 
services furnished incident to their professional services, the 
services described by the codes must be furnished directly by the 
billing practitioner or, in the case of a PT or OT, by a therapy 
assistant under the billing PT's or OT's supervision.
    The commenters also expressed concern about another issue with the 
RTM coding that also relates to the clinical labor in the direct PE for 
the two treatment management codes (86 FR 65116). The commenters 
acknowledged that the clinical labor involved in these codes, that is, 
the portion of these services performed by clinical staff incident to 
the services of the billing clinician, requires direct supervision by 
the billing practitioner. The commenters stated that direct supervision 
of clinical staff performing these activities was burdensome, and 
suggested that physicians and nonphysician practitioners who can bill 
for ``incident to'' services would be unlikely to use the codes if 
direct supervision were required. The commenters suggested that we 
designate CPT codes 98980 and 98981 as care management services or 
alternatively, that we develop HCPCS G codes that would allow the 
``incident to'' clinical labor portions of the services to be furnished 
under general supervision of the billing physician or nonphysician 
practitioner.
    Since the CY 2022 PFS final rule was issued, we have remained in 
communication with interested parties. Conversations continue to 
revolve around the two concerns detailed above related to the clinical 
labor in the direct PE for the two RTM treatment management codes, CPT 
codes 98980 and 98981. Thus, for CY 2023 we proposed to create four new 
HCPCS G codes with one pair of codes aimed at increasing patient access 
to remote therapeutic monitoring services and the second pair aimed at 
reducing physician and NPP supervisory burden.
    In the proposed rule, we noted that we also considered requests 
from interested parties to develop a generic device code for RTM, and 
that we had decided to wait to develop a generic RTM device code. We 
explained that we would seek comment to inform any new coding relating 
to devices. Thus, we sought comment about RTM devices that are used to 
deliver services that meet the ``reasonable and necessary'' standard 
under section 1862(a)(1)(A) of the Act. We sought information related 
to the types of data collected using RTM devices, how the data that are 
collected solve specific health conditions and what those health 
conditions are, the costs associated with RTM devices that are 
available to collect RTM data, how long the typical episode of care by 
condition type might last, and the potential number of beneficiaries 
for whom an RTM device might be used by the health condition type.
    Summary of the proposal to develop two HCPCS G codes that allow 
certain qualified nonphysician healthcare professionals to furnish RTM 
services. As discussed in the proposed rule, we have heard that a 
primary reason for developing the RTM codes was to increase beneficiary 
access to remote monitoring services by allowing the services to be 
furnished by a broad array of qualified nonphysician healthcare 
professionals (87 FR 46023 and 46024). However, concerns with the CPT 
coding structure related to the inclusion of clinical labor integral to 
the professional services have complicated the achievement of those 
goals. In the CY 2022 PFS final rule, we finalized a policy that 
permitted therapists and other qualified healthcare practitioners to 
bill the RTM codes, though we expressed some concerns about the ability 
of therapists to bill for these codes because the Medicare benefit does 
not include services provided incident to the services of a therapist 
(86 FR 65116). We stated that where the practitioner's Medicare benefit 
does not include services furnished incident to their professional 
services, the services described by the codes must be furnished 
directly by the billing practitioner or, in the case of a PT or OT, by 
a therapy assistant under the billing PT's or OT's supervision. We 
stated that these practitioners could bill CPT codes 98980 and 98981 
even when the practitioner's Medicare benefit category did not include 
services furnished incident to their professional services as long as 
the services were furnished directly by the billing practitioner.
    In this year's proposed rule, as a means of increasing beneficiary 
access to RTM services, as well as to more clearly define the services 
of RTM for qualified nonphysician healthcare practitioners whose 
Medicare benefit category does not include services provided incident 
to their own services, we proposed to create two new codes that would 
expressly facilitate RTM services furnished by qualified nonphysician 
healthcare professionals who cannot bill under Medicare Part B for 
services furnished incident to their professional services. These codes 
would not include ``incident to'' activities in the PE. Neither of the 
two proposed new codes included clinical labor inputs in the direct PE. 
We also proposed to make the current CPT codes 98980 and 98981 codes 
non-payable by Medicare.
    We proposed the following two HCPCS G codes:
     GRTM3 (Remote therapeutic monitoring treatment assessment 
services, first 20 minutes furnished personally/directly by a 
nonphysician qualified health care professional over a calendar month 
requiring at least one interactive communication with the patient/
caregiver during the month).
     GRTM4 (Remote therapeutic monitoring treatment assessment

[[Page 69643]]

services, additional 20 minutes furnished personally/directly by a 
nonphysician qualified health care professional over a calendar month 
requiring at least one interactive communication with the patient/
caregiver during the calendar month (List separately in addition to 
code for primary procedure)).
    For CY 2023, we proposed a work RVU of 0.62 for the base code, 
HCPCS code GRTM3, which is the RUC-recommended work RVU we established 
for CPT code 98980 in the CY 2022 PFS final rule. Similarly, for the 
add-on code, HCPCS code GRTM4, we proposed a work RVU of 0.61, which is 
the RUC-recommended value we established for CPT code 98981. We 
proposed to remove the clinical labor inputs in the direct PE for both 
codes, which will facilitate the use of these codes by qualified 
nonphysician healthcare practitioners who cannot bill under Medicare 
Part B for services furnished incident to their professional services. 
See Table 34: Summary of Proposed HCPCS G Codes for Remote Therapeutic 
Monitoring Services for more detailed information about the codes.
    Additionally, we noted that all the RTM codes including proposed 
HCPCS codes GRTM3 and GRTM4 would be designated as ``sometimes 
therapy'' codes, which means that the services could be billed outside 
a therapy plan of care by physicians and certain NPPs. We noted that 
when the services described by proposed HCPCS codes GRTM3 and GRTM4 are 
furnished by PTs, OTs, or SLPs, the services would always need to be 
furnished under a therapy plan of care. We reminded readers that RTM 
services that relate to devices specific to therapy services should 
always be furnished under a therapy plan of care regardless of who 
provides them. See the Medicare Benefit Policy Manual Chapter 15, 
Section 230 for more information about the practice of PT, OT, and SLP.
    Summary of the proposal to develop two HCPCS G codes allowing 
general supervision of auxiliary personnel. As we described in the 
proposed rule, since the CY 2022 PFS final rule was published, we have 
continued to hear concerns from interested parties that, as for most 
``incident to'' services, the clinical labor activities described in 
the direct PE of CPT codes 98980 and 98981 must be furnished under the 
direct supervision of the billing practitioner, which imposes burden on 
physicians and NPPs who are delivering services to other patients. 
Thus, for CY 2023, we proposed to create two HCPCS G codes, one base 
code and one add-on code, that include clinical labor activities (that 
is, incident to services such as communicating with the patient, 
resolving technology concerns, reviewing data, updating and modifying 
care plans, and addressing lack of patient improvement) that can be 
furnished by auxiliary personnel under general supervision. These two 
new G codes, GRTM1 and GRTM2, include physician work and direct PE 
inputs as currently described in CPT codes 98980 and 98981 but allow 
general supervision of the clinical labor found in the direct PE 
inputs. See Table 34: Summary of Proposed HCPCS G Codes for Remote 
Therapeutic Monitoring Services for more detailed information about the 
codes and use of the codes.
    We proposed the following two HCPCS G codes:
     HCPCS code GRTM1 (Remote therapeutic monitoring treatment 
management services, physician or NPP professional time over a calendar 
month requiring at least one interactive communication with the 
patient/caregiver during the calendar month; first 20 minutes of 
evaluation and management services).
     HCPCS code GRTM2 (Remote therapeutic monitoring treatment 
management services, physician or NPP professional time over a calendar 
month requiring at least one interactive communication with the 
patient/caregiver over a calendar month; each additional 20 minutes of 
evaluation and management services during the calendar month (List 
separately in additional to code for primary procedure).
    For CY 2023, we proposed a work RVU of 0.62 for HCPCS code GRTM1, 
which reflects the work RVU for CPT code 98980 that we finalized in the 
CY 2022 PFS final rule. For HCPCS code GRTM2, we proposed a work RVU of 
0.61, which is the RUC-recommended value we finalized for the similar 
CPT code 98981. We proposed the direct PE inputs associated with CPT 
codes 98980 and 98981 without refinement for HCPCS codes GRTM1 and 
GRTM2, respectively. As stated previously, we proposed to make the 
current CPT codes 98980 and 98981 codes non-payable by Medicare.
BILLING CODE 4150-28-P

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[GRAPHIC] [TIFF OMITTED] TR18NO22.063


[[Page 69645]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.064

BILLING CODE 4150-28-C
Review of New RTM Device Code: Cognitive Behavioral Therapy Monitoring 
(CPT Code 989X6)
    During its October 2021 meeting, the CPT Editorial Panel replaced 
two Category III codes: 0702T (Remote therapeutic monitoring of a 
standardized online digital cognitive behavioral therapy program 
ordered by a physician or other qualified health care professional; 
supply and technical support, per 30 days) and 0703T (Remote 
therapeutic monitoring of a standardized online digital cognitive 
behavioral therapy program ordered by a physician or other qualified 
health care professional; management services by physician or other 
qualified health care professional per calendar month) (e.g., 
respiratory system status, musculoskeletal system status, cognitive 
behavioral therapy, therapy adherence, therapy response) with the 
Category 1 CPT code 989X6, Cognitive Behavioral Therapy Monitoring 
(Remote therapeutic monitoring (e.g., respiratory system status, 
musculoskeletal system status, cognitive behavioral therapy, therapy 
adherence, therapy response); initial set-up and patient education on 
use of equipment; device(s) supply with scheduled (e.g., daily) 
recording(s) and/or programmed alert(s) transmission to monitor 
cognitive behavioral therapy, each 30 days). The CPT Editorial Panel 
created 989X6 for CY 2023 and deleted Codes 0702T and 0703T.
    Also, during the October 2021 meeting, the CPT Editorial Panel 
revised the code descriptors for the PE-only RTM codes (that is, CPT 
codes 98975, 98976, and 98977) that CMS finalized in the CY 2022 PFS 
final rule (86 FR 65114 through 65117) to include ``cognitive 
behavioral therapy'' as another example of the type of service 
described by the coding. The RUC indicated that it considered this 
revision to be editorial.
    During the January 2022 RUC review, the definition of new CPT code 
989X6 was further refined to read Remote therapeutic monitoring (e.g., 
therapy adherence, therapy response); device(s) supply with scheduled 
(e.g., daily)

[[Page 69646]]

recording(s) and/or programmed alert(s) transmission to monitor 
cognitive behavior therapy, each 30 days). During the RUC review of CPT 
code 989X6, specialty societies indicated that the technologies for 
this service are still evolving. As a result, there were no invoices 
for devices specific to the cognitive behavioral therapy monitoring 
services described by the code that could be shared. In response, the 
RUC recommended that CPT code 989X6 be contractor priced.
    Given the anticipatory nature of this code, we agreed with the RUC 
recommendation that this new code should be contractor priced until we 
learn more about the devices being used to furnish the service. Thus, 
we proposed to accept the RUC recommendation to contractor price CPT 
code 989X6, a PE-only device code. There is no professional work 
associated with the code. We noted that we would work with our Medicare 
Administrative Contractors (MACs) to better understand the kinds of 
devices and device costs they are encountering as they review claims 
for payment for the new cognitive behavioral monitoring code, CPT code 
989X6.
    We thanked last year's commenters and the many others who have 
contacted us with their questions and ideas. We noted that we 
appreciated the continuing dialogue about the remote monitoring codes 
and welcomed comments including any additional information that the 
medical community and other members of the public believe may provide 
further clarity on how remote patient monitoring services are used in 
clinical practice, and how they would be most appropriately coded, 
billed and valued under the Medicare PFS.
    The following is a summary of the public comments received on the 
proposed revisions to the Non-Face-to-Face Services/Remote Therapeutic 
Monitoring (RTM) Services and our responses:
    Comment: A number of commenters provided specific feedback about 
our discussion of the purpose and intent of the proposed new codes, 
GRTM1-4. In particular, commenters noted that if finalized, the aims of 
increasing access to RTM services while reducing burden associated with 
use of the codes may not manifest. In particular, some questioned 
whether our proposals would result in appropriate levels of payment 
that reflect the burden of supervision and coordination of different 
levels of clinical staff and skills, including use of auxiliary 
personnel, required to furnish RTM services. Some commenters noted that 
creating G codes as a means to address various different levels of 
effort of clinical staff involved in rendering these services would 
possibly create confusion and increase burden; these commenters also 
responded that various types of clinical staff activities are already 
accounted for in the existing RTM codes. One commenter cited our 
finalized policies from last year, expressed confusion about the 
complexity and utility of creating a new set of codes, and stated that 
CMS should instead modify the level of supervision required for the 
existing codes because the supervision requirements are themselves 
within our specific delegated authority to adjust.
    Response: We thank commenters for the feedback on our proposed GRTM 
codes, and note that our response here is consistent with our 
discussion of the existing code set in previous rulemaking. In our CY 
2022 final rule, we noted that despite our concerns about the 
construction of the codes, we believe the services RTM described by the 
codes are important to beneficiaries. (86 FR 65116). In this year's 
rulemaking, we find similar themes. Commenters remain supportive of our 
efforts to enhance access to RTM and RPM services, yet commenters also 
continue to raise concerns similar to feedback received on last year's 
proposals for RTM. Our proposals for GRTM1-4 drew concern from various 
perspectives.
    As commenters noted, the existing RTM codes do reflect a broad 
range of clinical activities, and use of various levels and involvement 
of auxiliary staff. To this point, in the CY 2022 PFS final rule (86 FR 
65114 through 65117), we discussed and finalized a policy that permits 
therapists and other qualified healthcare professionals to bill the RTM 
codes. As noted, the billing rules for the current family of RTM codes 
do allow a broader range of clinical activities and varied levels and 
involvement of auxiliary staff. We refer readers to our discussion in 
the CY 2022 PFS final rule that addresses the RTM family of codes: the 
initial set-up and patient education services (CPT code 98975), as well 
as the device codes (CPT codes 98976 and 98977), as well as the 
treatment management codes (CPT codes 98980 and 98981). There we 
explained our thinking and experience with the RTM code family which 
led us to this year's proposed G-codes. We reiterate that the general 
feedback we have received for RTM codes suggested two possible paths 
forward. One path was reflected in the proposal that appeared in this 
year's proposed rule; another path is an alternative that we described 
in response to comments in the CY 2022 PFS final rule. The alternative 
to the creation of new G-codes as we proposed was to instead modify our 
supervision policy for services furnished incident to a practitioner's 
professional service to require a general level of supervision, rather 
than direct supervision, for the existing RTM codes (CPT codes 98975, 
98976, 98977, 98980, and 98981) as we have done for certain designated 
care management services. We thank commenters for continuing to provide 
feedback, and agree with commenters who noted that the current CPT code 
descriptions for RTM treatment management encompass a broad range of 
practitioners and clinical staff activities. We refer readers to our 
discussion in last year's final rule for background on the valuation of 
CPT codes 98980 and 98981 (86 FR 65116).
    However, we acknowledge that our proposals may have generated 
confusion among some interested parties. Based on some of the comments 
received, we believe some interested parties may have misinterpreted 
our proposed valuation of the G-codes, GTRM-3 and GTRM-4. Specifically, 
we received comments that misunderstood our proposed valuation for 
GTRM-3 and GTRM-4 to mean that we proposed an across-the-board cut to 
payment for all Medicare Part B payment for certain types of non-
physician practitioners that current may bill the RTM treatment 
management codes (CPT codes 98980 and 98981). Based on public comments, 
we agree that confusion remains about how the new G-codes, if 
finalized, would or would not possibly create a chilling effect on the 
availability of RTM services.
    Comment: Some commenters submitted general feedback regarding the 
RTM codes rather than our specific proposals, and stated that 
individual practitioners or their employers would not engage in further 
investment of time and resources that would be required to implement, 
maintain, and support RTM services without better clarity on three main 
aspects of our RTM policy. In brief, these comments focused concerns 
about the burden associated with maintaining direct supervision for all 
auxiliary staff involved in furnishing RTM services, the difficulty of 
navigating ambiguity as to the data that must be kept and maintained 
for recordkeeping and care coordination, and uncertainty about whether 
certain devices would or could be used in light of the first two issues 
regarding supervision and recordkeeping requirements. We received 
feedback that generally questioned how practitioners should navigate 
furnishing RTM services when the requirements

[[Page 69647]]

appeared to create a risk of later needing to return payments after 
potential future CMS audits. Some commenters also suggested that CMS 
would ``claw back'' payment for these services if an individual 
beneficiary received concurrent RTM services from two different 
clinicians engaged in separate episodes of care that involved provision 
of RTM services for the same beneficiary during the same month, which 
is not allowed under current policy. Some commenters also shared 
anecdotal evidence that suggests RTM services do or will improve health 
equity, and were concerned that our imposition of limitations or 
burdensome requirements, or possible payment denials or recovery of 
overpayments, may create disincentives that reduce beneficiary access 
to RTM services.
    Response: We believe that our goals have remained consistent 
throughout our efforts to shape RTM and RPM coding and payment policy, 
and refer to our CY 2020 (84 FR 62697 through 62698), CY 2021 (85 FR 
84542 through 84546), and CY 2022 (86 FR 65114 through 65116) rules for 
further background discussion of these goals. In the CY 2023 PFS 
proposed rule, we included proposals to address specific issues 
relating to the CPT code set for RTM services, and in particular the 
RTM treatment management codes (CPT codes 98980 and 98981). We 
recognize and appreciate the more generalized concerns raised by these 
commenters and will take these comments into consideration for possible 
future rulemaking.
    Comment: Many commenters requested that CMS reconsider the 
proposals because the burden of the proposed GRTM codes would involve a 
requirement that certain supply codes (CPT codes 98975 and 98976 or 
98977) must be billed prior to furnishing the services reflected in 
GRTM1-4. This feedback came from various interested parties, which 
included a diverse set of perspectives and roles across the medical 
community, various trade associations, many professional societies, and 
health IT vendors. In summary, the commenters suggest that the timing 
and sequence of proposed requirements for the proposed GRTM codes would 
possibly create gaps in care, or delays in access to care.
    Some commenters expressed concern about initiating an episode of 
RTM services without necessary claims data available to know whether an 
existing and overlapping RTM service is being billed for the same 
beneficiary for a different episode of care initiated by a different 
practitioner in any given month. We received comments from healthcare 
providers and vendors that support medical practices expressing concern 
about the need to avoid situations where a practitioner may furnish RTM 
services, and later be expected to return Medicare payment, if CMS were 
to determine that all applicable requirements were not met. These 
commenters suggested that such scenarios could result in unstable or 
uncertain financial liability. Vendors requested more clarity about the 
structure and form of data that would need to be available at the 
point-of-care, including claims history that would be necessary to 
track a beneficiary's current use of RTM services and assess whether 
the beneficiary would be eligible to begin any additional RTM service. 
Some in the clinical community suggested that it would be difficult or 
impossible to track the necessary information to know whether a 
beneficiary is eligible for RTM services.
    Commenters who raised these concerns explained that CMS' proposals 
may cause delays in delivery of necessary care, or unduly limit access. 
Further, commenters reiterated feedback we had received in previous 
rulemaking that CMS should allow multiple, concurrent RTM services for 
an individual beneficiary, which would not be permitted under existing 
policies or under our proposed policy changes, if finalized.
    Response: We thank the commenters for sharing their views and 
appreciate the questions and concerns they presented. We continue to 
gather information and experience with coding and payment policies for 
RTM services. We will continue our discussions with healthcare 
providers and MACs to understand opportunities and challenges related 
to our policies and claims processing for RTM codes, and consider the 
need for further guidance, practitioner education, program 
instructions, or further rulemaking regarding these services.
    Comment: Commenters who responded to our request for feedback on 
the possible future development of a generic RTM device code noted that 
a generic RTM device code would allow a broader range of types of 
remote therapy monitoring, beyond the existing codes that allow payment 
for services that address respiratory system status, musculoskeletal 
status, and therapy adherence, or therapy response. Some commenters 
stated that a path forward is unclear because certain approved devices 
monitor conditions that presently have no available RTM code (for 
example, specific neurological conditions), and requested that we 
consider establishing in the future a mechanism to submit data on these 
types of devices and conditions that any clinical specialty. Commenters 
generally supported the concept of a generic RTM device code, and 
offered a wide variety of possible use cases, where FDA approved 
devices already exist for the purpose of monitoring various conditions 
that do not meet the current scope of the existing RTM codes. These 
included monitoring during episodes of care for various neurological 
conditions, and others.
    Response: We thank the many commenters who suggested ways we could 
consider implementation of a possible future generic device code for 
RTM. We note that it remains unclear whether a generic device code 
would be administrable as a permanent policy, for many reasons. We 
refer readers to last year's discussion of valuations of supplies and 
equipment for RTM services (86 FR 39173). Comments received in response 
to the CY 2023 PFS proposed rule seem to reinforce that it may be 
difficult to establish an appropriate valuation for a single device 
code that would reflect the myriad of possible applicable devices.
    We note that the valuation of a generic device code would require 
some consensus on the mix and balance of costs for these devices, which 
would be difficult to develop when there such wide variability in the 
devices themselves and in how the devices support delivery of RTM 
services. Further, we note that a generic device code would require 
covering many more clinical topics than exist under our current 
policies. Our current policies allow payment using the RTM codes for 
services that support an episode of therapy where the clinical issue 
ties to musculoskeletal, or respiratory, or medication adherence/
response.
    Commenters noted the varied ways that an individual device is 
costed and priced for use on the market. Vendors also make available a 
broad array of pricing models that clinical practices could consider in 
making technology investments to furnish RPM and RTM services. For 
example, vendors may offer discounts, or waivers of licensing fees, or 
reduced fees for licensing of a device when used with other, unrelated 
products; all of these influence the cost of a given device.
    We reiterate our clarification included in previous rulemaking (85 
FR 84545) that even when multiple medical devices are provided to a 
patient, the services associated with all the medical devices can be 
billed by only one practitioner, only once per patient, per 30-day 
period, and only when at least 16 days of data have been collected; and

[[Page 69648]]

that the services must be reasonable and necessary.
    We continue to weigh the possible tradeoffs that would be necessary 
to further reduce coding and billing complexity for RTM, and increase 
care delivery flexibility and retain appropriate beneficiary access to 
RTM services. As noted in the CPT codebook, at page 843, RTM services, 
``...represent the review and monitoring of data related to signs, 
symptoms, and functions of a therapeutic response. These data may 
represent objective device-generated data or subjective inputs reported 
by a patient. These data are reflective of therapeutic responses that 
provide a functionally integrative representation of patient status.'' 
We will look to evidence-based peer-reviewed sources, as well as 
clinical practice guidelines, in addition to engaging with interested 
parties, to inform any decisions about whether it would be practicable 
to establish a generic RTM device code that is potentially agnostic to 
the specific body system involved (that is, musculoskeletal, 
respiratory) or therapy type (that is, medication therapy response) 
that the device monitors, in future rulemaking. However, we note that 
the CPT codebook makes clear that RTM services must be ordered by a 
physician or other qualified health care professional, and that any 
device used must be a medical device as defined by the FDA, and that 
CPT codes 98980 and 98981 (RTM treatment management codes) should not 
be used for time that can be reported using codes for more specific 
monitoring services. (CPT codebook, at page 843). Informed by our 
experience with RPM payment policy refinements, and in light of 
possible forthcoming changes to CPT coding for both RPM and RTM, it 
remains unclear whether generic device codes would undermine or stall 
progress toward a wider set of specific codes that would provide less 
ambiguity. As such, we appreciate the commenters' views on this topic 
and the continuing dialogue on these important issues around coding and 
payment policies for RTM services.
    Comment: Some commenters suggested that the indirect PE allocations 
for the proposed GRTM codes do not adequately consider the costs of the 
included use of various computer software, and stated that certain 
types of software are incorrectly categorized within the PFS; or that 
the concepts related to software, and devices themselves, should not be 
addressed as categorical questions specific to RTM. Among these 
comments, some also expressed concern about the definition of 
``device'' in the RTM codes. One commenter noted that CMS does include 
specific software costs as supplies within direct PE for other codes, 
and suggested that this should be a basis for both reconsidering our 
GRTM proposals and the current RPM valuations. Other commenters 
requested more clarity about what specific devices would be appropriate 
for purposes of RTM services. Many commenters recommended that we 
separately consider Software as a Medical Device (SaMD), use of 
artificial intelligence (AI)/machine learning algorithms (ML), and 
related topics as part of a standalone RFI which would later inform 
updates to specific codes because the influence of these topics have 
impacts far beyond the RTM codes alone.
    Response: Historically, we have considered most computer software 
and associated licensing fees to be indirect costs. We refer readers to 
our previous discussions of this topic in our CY 2019 final rule. (83 
FR 59577). Further, we continue to believe that licensing fees that 
would not be allocated to the use of a specific piece of software/
equipment/device for an individual patient for an individual service, 
are better understood as forms of indirect costs similar to office rent 
or administrative expenses. Refer to our discussion of this aspect of 
licensing specifically in our CY 2019 proposed rule (83 FR 35771). As 
we noted in section II.B. of this final rule (the RFI for Updates to PE 
Methodology section), interested parties have routinely expressed 
concerns with allocations of indirect costs, especially for evolving 
technologies that rely primarily on software and licensing fees with 
minimal costs in equipment or hardware. We continue to engage in 
discussions and conduct further research into these topics of AI, SaMD, 
and other related evolving technologies, to understand ways that we may 
refine our allocations of cost for software and licensing.
    We remind readers that in finalizing valuations for the current 
family of RTM codes, we have considered the RUC-recommended inputs for 
the codes, and in doing so, considered all elements of RTM described by 
the AMA in CPT code descriptors. For more detail on this discussion, 
refer to last year's proposed rule (86 FR 39173). Within the RTM family 
of codes, the structure of the code set relies on use of device codes 
(PE only) that are used in conjunction with the remainder of the RTM 
codes. CPT code 98976 and 98977 are intended to report a 30-day device 
supply with scheduled recordings or program alert transmission to 
monitor the respiratory system (98976) or musculoskeletal system 
(98977). In the CY 2022 PFS final rule, we finalized refinements to 
payment for the three PE-only RTM codes: CPT code 98975 (Remote 
therapeutic monitoring (e.g., respiratory system status, 
musculoskeletal system status, therapy adherence, therapy response); 
initial set-up and patient education on use of equipment); CPT code 
98976 (Remote therapeutic monitoring (e.g., respiratory system status, 
musculoskeletal system status, therapy adherence, therapy response); 
device(s) supply with scheduled (e.g., daily) recording(s) and/or 
programmed alert(s) transmission to monitor respiratory system, each 30 
days); and CPT code 98977 (Remote therapeutic monitoring (e.g., 
respiratory system status, musculoskeletal system status, therapy 
adherence, therapy response); device(s) supply with scheduled (e.g., 
daily) recording(s) and/or programmed alert(s) transmission to monitor 
musculoskeletal system, each 30 days).
    We refer readers to the publicly available FDA guidance and 
explanations for medical devices, including explanations of SaMD. As 
SaMD, as a broader topic, is outside the scope of our proposed 
policies, we are not issuing any specific guidance. FDA guidance on 
SaMD is available at https://www.fda.gov/medical-devices/digital-health-center-excellence/software-medical-device-samd. Additionally, we 
refer readers to CPT Appendix S: AI taxonomy for medical services & 
procedures (available at https://www.ama-assn.org/practice-management/cpt/cpt-appendix-s-ai-taxonomy-medical-services-procedures). We note 
that our proposals do not include a specific RTM device list, nor 
specific examples of RTM devices that would be appropriate for use when 
furnishing RTM services. We believe that a possible unintended 
consequence of express reference to a device, or list of devices, may 
include a preference or shift toward use of one device or class of 
device simply because of its inclusion on a list. We believe that the 
pace of innovation and evidence-based clinical decision-making inherent 
to use of the devices that support furnishing RTM services calls for 
medical and behavioral health professionals, groups of behavioral 
health and medical professionals, or professional societies, each to 
study carefully the needs of the populations under their care, and 
identify guidelines that shape selection and use of any specific device 
in clinical practice.
    Comment: A number of commenters expressed concerns with the 
duration of data collection required to meet

[[Page 69649]]

reporting minimums for these codes. Various commenters gave examples of 
monitoring requirements for individual clinical needs that would not 
require a full 16 days of data. Examples provided addressed use of 
standardized screening tools, such as electronically-reported Patient-
Reported Outcomes (e-PRO) tools, which may be collected through SaMD. A 
beneficiary using these tools self-reports clinically relevant 
information by responding to prompts, based on recall over shorter 
periods of time (for example, over the past day, or 7 days). Other 
commenters explained that it was ambiguous whether the act of data 
collection must occur at least 16 days per month, or if data collection 
less than 16 times in a 30-day period would satisfy the requirement 
when these data are representative of 16 or more days of clinically 
relevant transmittable information.
    Some commenters suggested that our proposals would create 
unintended consequences of overtreatment to satisfy data collection 
minimums, when therapeutic benefit would otherwise be possible in far 
fewer therapy sessions or discrete uses of the RTM device. Other 
commenters explained that facilitating patient self-management through 
tracking adherence, and symptom and trigger logging via a mobile app 
all represent collection of data that would be useful to provide 
practitioners better insight into clinically meaningful events; 
commenters provided examples, such as the use of a remote therapy 
monitoring device that connects a patient to an as-needed means to 
track potential side-effects of an ongoing, current medication therapy 
regimen. In these examples, commenters stated that when a frequency of 
use requirement is set in place by the practitioner to satisfy billing 
requirements, the requirement represents unnecessary burden for the 
beneficiary and may degrade the validity of patient-reported data.
    Response: We thank commenters for the feedback on our minimum data 
requirements for reporting RTM. Readers should also refer to our 
discussion of these requirements in previous rulemaking. (85 FR 84544). 
We believe a restatement of our current policies, which points to 
existing resources that are publicly available, and were available to 
the public when we finalized our existing RTM requirements, would 
assist readers in easier access to resources that may inform individual 
clinical and beneficiary choices. To avoid possible interference with 
clinical decision-making and shared decision-making, at this time, as 
discussed in the response immediately above, we are not issuing 
specific examples of devices that might be used in the delivery of RTM 
services because we believe that to do so could generate further 
confusion, as well as have the possible unintended consequence of 
implying our approval or endorsement of a specific tool, device, use of 
a device, or shift by practitioners toward use of a specific device 
when offering RTM services. However, we would be supportive of the 
clinical community offering such examples in the context of clinical 
practice guidelines, preferably generated with a patient-centered focus 
and an emphasis on health equity considerations.
    For more background on our earlier development of payment policies 
for the related RPM family of codes, refer to the discussion in the CY 
2019 FR (83 FR 53015). We believe that as with RPM policy development, 
this year's finalized policies may not mitigate the need for further 
revisions to coding and payment policies for RTM services, which would 
be addressed in future rulemaking, in order to account for some of the 
concerns raised by commenters regarding the broad nature of codes that 
describe professional collection and interpretation of stored patient 
data. Further, also similar to the trajectory of the RPM policies we 
developed and refined over the last 5 years, we continue our efforts to 
understand better how CPT code revisions that are expected soon, or 
planned for future years, would possibly address certain concerns, and 
in the specific case of minimum reporting specifications, the CPT 
Editorial Committee's consideration of new codes that would require 
less than 16 days of data collection.
    After considering all of the public comments received on our RTM 
proposals this year, we are not finalizing the proposed creation of 4 
new G-codes, (GRTM-1-4). Instead, for CY 2023, we are maintaining our 
current policies for the RTM treatment management CPT codes 98980 and 
98981, with exceptions as noted below. Commenters expressed many 
perspectives, views, and general support for remote therapeutic 
monitoring services. Yet, the totality of the circumstances and broad 
range of interests and priorities presented by commenters leads us to 
believe that there should be continued discussion on these topics 
before CMS finalizes changes to the current RTM coding and payment 
policies that go beyond refinements to our supervision and 
documentation requirements for RTM. We continue to engage with the 
public, and assess the landscape of RTM devices and services, and will 
consider addressing the RTM codes and associated payment policies in 
future rulemaking that will aim to build on progress in this area, 
while mitigating commenters' concerns.
    We are not finalizing our proposal to create 4 new G-codes, (GRTM-
1-4) which we proposed to address various issues relating to incident-
to services, inclusions of clinical staff time, and supervision levels. 
CMS proposed to establish a general level of supervision for the two G 
codes (GRTM-1 and GRTM-2) that include services incident-to services of 
physicians and NPPS, but not for the other G codes (GRTM-3 and GRTM-4). 
Commenters recommended that CMS instead permit general supervision of 
incident-to services described by the two treatment management CPT 
codes (98980, and 98981). With that said, in this final rule, we are 
issuing a clarification and finalizing a new policy regarding the 
billing requirements for the current RTM codes: CPT codes 98975, 98976, 
98977, 98980, and 98981. Beginning January 1, 2023, below modifications 
to our existing RTM policies take effect:
     General supervision for all RTM services. Any RTM service 
may be furnished under our general supervision requirements.
     Cognitive behavioral therapy monitoring device. We are 
finalizing our proposal to accept the RUC recommendation to contractor 
price CPT code 989X6, a PE-only device code. There is no professional 
work associated with the code. We will work with our Medicare 
Administrative Contractors (MACs) to better understand the kinds of 
devices and device costs they are encountering as they review claims 
for payment for the new cognitive behavioral monitoring code, CPT code 
989X6.
Therapy KX Modifier Threshold Amounts
    The KX modifier thresholds, formerly referred to as therapy caps, 
were established through section 50202 of the Bipartisan Budget Act 
(BBA) of 2018. These per-beneficiary amounts under section 1833(g) of 
the Act (as amended by section 4541 of the Balanced Budget Act of 1997) 
(Pub. L. 105-33, August 5, 1997) are updated each year based on the 
Medicare Economic Index (MEI). Specifically, these amounts are 
calculated by updating the previous year's amount by the MEI for the 
upcoming calendar year and rounding to the nearest $10.00.
    For CY 2023, we proposed to rebase and revise the MEI to a 2017-
base year as discussed in section II.M. of this final rule, and we are 
finalizing the 2017-

[[Page 69650]]

based MEI for CY 2023, with technical modifications based on public 
comments. Therefore, we are increasing the CY 2022 KX modifier 
threshold amount of $2,150 by the CY 2023 MEI of 3.8 percent and 
rounding to the nearest $10.00, which results in a CY 2023 KX threshold 
amount of $2,230 for PT and SLP services combined and $2,230 for OT 
services.
    Section 1833(g)(7)(B) of the Act was also added by section 50202 of 
the BBA of 2018 and it retains the targeted medical review process, but 
at a lower threshold amount of $3,000 (until CY 2028 when it is updated 
by the MEI). Accordingly, for CY 2023, the MR threshold is $3,000 for 
PT and SLP services combined and $3,000 for OT services. Under the 
established targeted review process, some, but not all, claims 
exceeding the MR threshold amount are subject to review. Information on 
the targeted manual medical review process is available at https://www.cms.gov/ResearchStatistics-Data-and-Systems/MonitoringPrograms/Medicare-FFSCompliancePrograms/Medical-Review/TherapyCap.html.
    We track each beneficiary's incurred expenses for therapy services 
annually and count them towards the KX modifier and MR thresholds by 
applying the PFS rate for each service less any applicable MPPR amount 
for services of CMS-designated ``always therapy'' services.
    We apply the same PFS-rate accrual process noted above to 
outpatient therapy services furnished by critical access hospitals 
(CAHs), even though they are not paid for their therapy services under 
the PFS and may be paid on a cost basis (effective January 1, 2014).
    When the expenses incurred for the beneficiary's outpatient therapy 
services for the year have exceeded one or both of the KX modifier 
thresholds, therapy suppliers and providers use the KX modifier on 
claims for subsequent medically necessary services. By using the KX 
modifier, the therapist and therapy provider attest that the services 
above the KX modifier thresholds are reasonable and necessary and that 
documentation of the medical necessity for the services is in the 
beneficiary's medical record. Claims for outpatient therapy services 
exceeding the KX modifier thresholds without the KX modifier included 
are denied.

J. Payment for Skin Substitutes

1. Background
    In the CY 2022 PFS final rule, in order to address the need to 
establish a payment mechanism for synthetic skin substitutes in the 
physician office setting and to be responsive to feedback received from 
commenters, we finalized an approach for payment of each of 10 
synthetic skin substitutes in the physician office setting for which we 
had received a HCPCS Level II coding application, and we finalized that 
those products would be payable in the physician office setting as 
contractor priced products that are billed separately from the 
procedure to apply them. The ten products are as follows: 
NovoSorb[supreg] SynPathTM, Restrata[supreg] Wound Matrix, 
SymphonyTM, InnovaMatrixTM AC, Mirragen[supreg] 
Advanced Wound Matrix, bio-ConneKt[supreg] Wound Matrix, 
TheraGenesis[supreg], XCelliStem[supreg], Microlyte[supreg] Matrix, and 
Apis[supreg] (86 FR 65121). After the CY 2022 PFS Final rule was 
released, we deleted the ``A'' code that was established for bio-
ConneKt Wound Matrix after subsequent determination that a HCPCS Level 
II code, Q4161, was already established for this product. We note that 
since we issued the CY 2022 PFS final rule, we have received additional 
HCPCS Level II coding applications for similarly situated 510(k) 
cleared wound care management products. HCPCS ``A'' codes have been 
issued that described those products and are payable in the physician 
office setting as contractor priced products that are billed separately 
from the procedure to apply them.
    We also received several comments in response to our finalized 
policies expressing concern about potential inconsistencies in our 
policies for synthetic and non-synthetic skin substitutes. We indicated 
we would take these concerns into future consideration.
2. Key Objectives/Roadmap for Consistent Treatment of Skin Substitutes
    We outlined our HCPCS Level II coding and payment policy objectives 
in section III.N. of the CY 2023 PFS proposed rule (87 FR 46249) 
because we believed it would be beneficial for interested parties to 
understand our priorities as we work to create a consistent approach 
for the suite of products we have referred to as skin substitutes. As 
discussed in the CY 2023 PFS proposed rule, we have a number of 
objectives related to refining our Medicare policies in this area, 
including: (1) ensuring a consistent payment approach for skin 
substitute products across the physician office and hospital outpatient 
department setting; (2) ensuring that appropriate HCPCS codes describe 
skin substitute products; (3) using a uniform benefit category across 
products within the physician office setting, regardless of whether the 
product is synthetic or comprised of human or animal based material, so 
we can incorporate payment methodologies that are more consistent; and 
(4) maintaining clarity for interested parties on CMS skin substitutes 
policies and procedures. Interested parties have asked CMS to address 
what they have described as inconsistencies in our payment and coding 
policies, indicating that treating clinically similar products (for 
example, animal-based and synthetic skin products) differently for 
purposes of payment is confusing and problematic for healthcare 
providers and patients. These concerns exist specifically within the 
physician office setting; however, interested parties have also 
indicated that further alignment of our policies across the physician 
office and hospital outpatient department settings would reduce 
confusion.
    In past years, interested parties have suggested that all skin 
substitutes, regardless of the inclusion of human, animal, or synthetic 
material in the product, should be treated as drugs and biological 
products. Furthermore, they believe all skin substitute products should 
receive product-specific ``Q'' codes and receive separate payment under 
the ASP+6 methodology. They have expressed confusion regarding our 
assignment of HCPCS Level II ``A'' codes to 9 \111\ skin substitute 
products referenced in the CY 2022 PFS final rule, which are codes we 
typically assign to identify ambulance services and medical supplies, 
instead of ``Q'' codes, which we typically assign to identify drugs and 
biologicals. They have indicated that the use of HCPCS Level II ``A'' 
codes has caused confusion, not only for interested parties, but also 
for the A/B MACs. The interested parties assert that the A/B MACs have 
inconsistently processed submitted claims in part because the products 
are assigned HCPCS ``A'' codes are treated as supplies and are subject 
to contractor pricing under the PFS. Additionally, interested parties 
have expressed concern that physicians and practitioners are hesitant 
to use the products associated with ``A'' codes because they are unsure 
what they will be paid when using those products. When considering 
potential changes to policies involving skin substitutes, we noted that 
we believe it would be appropriate to take a phased approach over the 
next 1 to 5 years that allows CMS sufficient time to consider input

[[Page 69651]]

from interested parties on coding and policy changes, primarily through 
our rulemaking process, with the goal of ensuring access to medically 
necessary care involving the use of these products.
---------------------------------------------------------------------------

    \111\ As explained above, we deleted the A code for one product 
after determining that it had already been assigned a Q code.
---------------------------------------------------------------------------

    We welcomed comment on our policy objectives for creating a 
consistent approach for treatment of the suite of products we have 
referred to as skin substitutes. Additionally, we welcomed feedback on 
the phased approach and associated timeline. To achieve our objective 
of creating a consistent approach for paying for skin substitutes 
across the physician office and hospital outpatient department setting, 
we included similar proposed changes in the CY 2023 OPPS proposed rule.
    Comment: A few commenters stated that they appreciate CMS' efforts 
to improve and clarify policies and procedures and expressed support 
for the key objectives and roadmap outlined by CMS for the consistent 
treatment of skin substitutes.
    Response: We appreciate the commenters' support of our key 
objectives and roadmap.
    Comment: One commenter suggested that CMS should also consider a 
fifth objective to guide decision making with regards to skin 
substitutes. Specifically, the commenter suggested that CMS should aim 
to provide broad access to these products by Medicare beneficiaries who 
would benefit from their use, regardless of wound size, wound type, or 
geographic location.
    Response: We appreciate this feedback from the commenter and note 
that we are interested in health equity for all Medicare beneficiaries. 
We will consider potential additional objectives in future rulemaking.
3. Changing the Terminology of Skin Substitutes
    In the CY 2023 PFS proposed rule (87 FR 46028), we stated that as 
we work to clarify our policies for these products, we believe that the 
existing terminology of ``skin substitutes'' is an overly broad 
misnomer. In the CY 2021 OPPS/ASC final rule with comment period, we 
revised our description of skin substitutes to refer to a category of 
biological and synthetic products that are most commonly used in 
outpatient settings for the treatment of diabetic foot ulcers and 
venous leg ulcers (85 FR 86605). We noted that skin substitute products 
are not a substitute for a skin graft as they do not actually function 
like human skin that is grafted onto a wound. We also clarified that 
our definition of skin substitutes does not include bandages or 
standard dressings, and that within the hospital outpatient department, 
these items cannot be assigned to either the high cost or low-cost skin 
substitute groups or be reported with either CPT codes 15271 through 
15278 or HCPCS codes C5271 through C5278. (85 FR 86066).
    While this description has been updated to provide clarity that 
synthetic products typically regulated as devices by the FDA are 
considered to be skin substitutes, there is still confusion with the 
usage of the term skin substitutes because as noted in the discussion 
above, these skin substitute products are technically not a substitute 
for skin, but rather, a wound covering. We have used the current term 
``skin substitutes'' to describe the suite of products that are 
currently referred to as skin substitutes. Additionally, the term 
``skin substitutes'' is used within the Current Procedural Terminology 
(CPT[supreg]) code series 15271-8 as maintained by the American Medical 
Association. Also, skin substitute products are generally regulated by 
the FDA as medical devices under section 510(k) of the Federal Food, 
Drug and Cosmetic (FD&C) Act and implementing regulations per 21 CFR 
part 807, or as HCT/Ps solely under section 361 of the PHS Act and the 
FDA regulations in 21 CFR part 1271. The FDA approves new drugs through 
the New Drug Application (NDA) pathway, and approves biological 
products through the Biologics License Application (BLA) pathway.
    We believe that improving how we reference these products by using 
a more accurate and meaningful term will help address confusion among 
interested parties about how we describe these products, and further, 
how we pay for them. We proposed to replace the term ``skin 
substitutes'' with the term ``wound care management'' or ``wound care 
management products.'' We explained that we believe this new term more 
accurately describes the suite of products that are currently referred 
to as skin substitutes while providing enough specificity to not 
include bandages or standard dressings, which as noted above, are not 
considered skin substitutes. We noted that we understand that the 
proposed terms contain the words ``care management'' which could be 
construed to implicate the care management series of AMA CPT codes (for 
example, 99424-99427, 99437, 99439, 99487, 99489, 99490-99491) that are 
commonly used by healthcare professionals. We also explained that we 
understand that the use of the word ``management'' in the proposed 
terms might be construed by some to implicate AMA CPT Evaluation or 
Assessment and Management (E/M) codes. We clarified that the proposed 
terms, ``wound care management'' and ``wound care management 
products,'' would not implicate the care management series of AMA CPT 
codes (for example, 99424-99427, 99437, 99439, 99487, 99489, 99490-
99491), or our own G-codes that describe care management services. Nor 
would our proposed terms relate to the AMA CPT E/M codes. Unlike ``care 
management'' or ``evaluation and management'' codes and services, the 
proposed terms would describe a category of items or products, not a 
type of services. Lastly, we noted that we also considered alternate 
terms such as wound coverings, wound dressings, wound care products, 
skin coverings and cellular and/or tissue-based products for skin 
wounds but believe the proposed terms are more technically accurate and 
descriptive for how these products are used than the alternatives 
considered.
    We solicited comment on the proposal to change the terminology we 
use for the suite of products referred to as ``skin substitutes'' to 
instead use the term ``wound care management'' or ``wound care 
management products,'' and on the alternative terms we considered 
including wound coverings, wound dressings, wound care products, skin 
coverings and cellular and/or tissue-based products for skin wounds. We 
noted that we were particularly interested in how these products are 
referenced in current CPT coding and would appreciate feedback from the 
CPT Editorial Panel and other interested parties on how to address the 
challenges we discuss above. We also requested comment on other 
possible terms that could be used to more meaningfully and accurately 
describe the suite of products currently referred to as skin 
substitutes.
    Comment: A few commenters agreed with the proposed terminology 
change to wound care management products.
    Response: We thank the commenters for their feedback and support.
    Comment: Several commenters disagreed with the proposed terminology 
change, as well as with all of the alternative terms we considered; and 
suggested that we should retain the term skin substitute. Some 
commenters stated that the CPT Editorial Panel was purposeful in 
creation of the skin substitutes application codes (CPT codes 15271-
15278) to specifically describe instances that are, and are not, 
appropriate to report as the application of skin substitutes. In 
contrast, the CPT procedure codes associated with wound care management 
are distinctly different in both purpose and products used in their 
delivery. A few commenters stated that it is clear that skin 
substitutes are very specific and separately reportable from wound 
dressings, and changing the

[[Page 69652]]

terminology to wound management would differ from CPT nomenclature and 
cause confusion and inconsistent reporting. A few commenters stated 
that changing the terminology to wound care management products would 
conflate skin substitute products with other products like wound care 
dressings or bandages. The commenters stated that the proposed 
terminology incorrectly suggests that the skin substitute products are 
not technically a substitute for skin, but rather, a wound covering 
that is used to promote healing. The commenters stated that this is not 
accurate, as the application of skin substitutes serves a specific 
purpose of temporary or permanent coverage of open skin wounds. 
Therefore, the commenters stated that the assumption that a skin 
substitute is just a wound covering is inaccurate. They stated that the 
application of the product is part of the recovery process, and 
indicated that the product does function similarly to skin as it is not 
always removed. The commenters stated that whether the product is 
applied temporarily and later removed, or is placed and not removed, 
the skin substitute is allowing for the construction of natural dermis 
which goes above and beyond a ``wound covering.'' The commenters 
further pointed out that the CPT coding guidelines specifically outline 
the application of skin substitutes grafts as non-autologous human skin 
grafts, non-human skin substitute grafts, and biological products that 
form a sheet scaffolding for skin growth. The commenters asserted that 
there is a possibility that as technology evolves, new categories of 
wound care may become available; however, the CPT guidelines and 
reporting for skin substitutes are clear and they do not include the 
application of non-graft wound dressings (for example, powder, 
ointment, foam, liquid) or injected skin substitutes, and those items 
should not be lumped together in a catch-all terminology such as wound 
management. Some commenters stated that the proposed terminology is not 
necessarily more accurate or meaningful than the existing term. A few 
commenters suggested that CMS work directly with the CPT Editorial 
Panel, relevant medical specialty societies, and industry 
representatives to determine the optimal approach to updating skin 
substitutes terminology.
    Response: While we continue to believe that the term skin 
substitutes is an overly broad misnomer, and believe that improving how 
we reference these products by using a more accurate and meaningful 
term will help to address confusion about how we describe these 
products, we also believe that it is important to adopt the most 
appropriate terminology to more accurately capture the full suite of 
products. After considering the public comments, we believe that 
additional dialogue will be beneficial before finalizing new 
terminology. The feedback received through the public comments process 
has been helpful and informative, and we would like to further engage 
with stakeholders prior to adopting any new terminology in future 
rulemaking. As such, we are not finalizing changes to the terminology 
at this time. We will continue to carefully consider the comments that 
were received in response to this proposed rule, and welcome additional 
input from interested parties. Additionally, we intend to hold a Town 
Hall in early 2023, prior to CY 2024 rulemaking, to have additional 
discussions in an effort to further understand the concerns interested 
parties have about potential new terminology we could consider and any 
other alternative terms not yet considered.
    Comment: Several commenters agreed that the term skin substitute is 
not accurate and stated that it does not reflect the entry of 
synthetics in the marketplace, but disagree with the proposed 
terminology.
    Response: As indicated above, though we still intend to change the 
terminology to more accurately capture the full suite of products, we 
are not finalizing a change in terminology at this time. We intend to 
discuss this issue further in a Town Hall and anticipate addressing it 
in future rulemaking.
    Comment: A few commenters suggested alternatives including: 
Cellular and/or Synthetic Grafts for Surgical Wound Management; 
Bioengineered, Cellular or Tissue-Based Products; Skin Matrix/Matrices; 
and Ulcer/Wound Care Products. Several commenters supported use of one 
of the alternative terms we considered, Cellular and/or tissue-based 
products (CTPs) for skin wounds, and stated that it was consistent with 
the American Society for Standards and Materials (ASTM) definition of 
skin substitutes, and is nomenclature used by wound care clinicians; 
one commenter also indicated that CTPs is inclusive of both current and 
future technology.
    Response: We appreciate the support from commenters for one of the 
alternative terms we considered. We intend to have more discussion 
about appropriate changes to the terminology for skin substitutes as 
indicated above. We expect to hold a Town Hall early next year before 
CY 2024 rulemaking to provide an opportunity to further engage 
interested parties on this matter and provide a forum for additional 
discussion as we seek to identify the most reasonable approach going 
forward.
    Comment: One commenter stated that changing the terminology to 
wound care management products does not align with FDA guidance on 
permitted use of HCT/Ps for reconstruction, repair, or replacement 
under 21 CFR 1271.3(f)(1), and therefore, HCT/Ps which are a subset of 
CTPs should not be considered as equivalent to other wound care 
management products and considering HCT/Ps as equivalent to other wound 
care management products would create confusion.
    Response: We appreciate the feedback from the commenter. As 
previously indicated, we are not finalizing changes to the terminology 
at this time, and intend to further engage interested parties on this 
matter.
    Comment: One commenter expressed support for CMS's efforts to more 
accurately describe skin substitute products amid an evolving wound 
care environment, but disagreed with the proposed name change and 
recommended that we continue with the term skin substitute which they 
believe accurately reflects this category. The commenter stated that 
while skin substitutes are not a term under the FDA, the terminology 
has been used for some time in medical vernacular. The commenter stated 
that the proposal to change the terminology will in effect diminish the 
time, resources, and cost that goes into manufacturing and applying 
these products.
    Response: We disagree that the term skin substitute is the best 
term to reflect this suite of products despite the longstanding use of 
the term in the industry. We continue to believe that improving how we 
reference these products by using a more accurate and meaningful term 
will be beneficial as we work to create a consistent approach for 
treatment of these products across settings. As previously indicated, 
we are not finalizing changes to the terminology at this time, and 
intend to further engage interested parties on this matter.
    Comment: One commenter stated that they support the goal of 
replacing old terminology, but stated that purely synthetic products 
should not be included within the classification. The commenter also 
stated that excluding synthetics is consistent with the industry 
standards including ASTM which defines CTPs. The commenter recommended 
that we exclude all 100

[[Page 69653]]

percent synthetic products. Another commenter stated that CTPs is an 
outdated misnomer because the term explicitly excludes synthetic skin 
substitutes since it only refers to a subset of skin substitutes (those 
comprised of animal or human cells or tissues).
    Response: As stated in the proposed rule, one of our key objectives 
in creating a consistent coding and payment approach for the suite of 
products currently referred to as skin substitutes is to address 
concerns regarding differential treatment for clinically similar 
products (as an example, animal-based, and synthetic skin products). 
Additionally, we note that the Standard Guide for Categories and 
Terminology of Cellular and/or Tissue-Based Products (CTPs) for Skin 
Wounds (ASTM F3163-22) available on ASTM's website (https://www.astm.org/f3163-22.html), states that CTPs may include synthetic 
components.
    Comment: A commenter stated that changing the terminology would 
create confusion and coding challenges because the AMA has already 
published the 2023 CPT Codebook, and applications for changes to the CY 
2024 CPT Codebook may no longer be made. Therefore, a change to the 
terminology contained in the CPT code set for the codes that describe 
product application procedures could not take effect until CY 2025. The 
commenter stated that creating a discrepancy between the way CMS refers 
to such products and CPT describes the application procedures in the 
CPT code set would create burdensome disruptions to providing wound 
care services.
    Response: We note that as we navigate our roadmap, we anticipate 
that there will likely be some transition time, in which the industry 
would potentially need to clarify or adopt new terminology more 
broadly; however, as previously indicated, we are not finalizing a 
change in terminology at this time to allow an opportunity for 
additional discussions and input from interested parties.
    Comment: One commenter stated that CMS should treat powder skin 
substitute products the same as sheet products under the PFS. The 
commenter stated that powder skin substitutes are not bandages or 
simple wound dressings and that when applied to a wound, powder 
products have demonstrated the same ability to form a sheet scaffolding 
for wound healing as sheet products.
    Response: We did not make any specific proposals regarding the 
treatment of powder skin substitute products. Therefore, this comment 
is outside the scope of the proposals in the proposed rule. We thank 
the commenter for the suggestions.
4. Revising Payment for Skin Substitutes
    In 2003, the Medicare Modernization Act established the Average 
Sales Price (ASP) approach for drugs and biologicals as described under 
section 1847A of the Act. We generally considered skin substitute 
products to be biologicals in our initial implementation of the ASP 
methodology. However, with the introduction of synthetic skin 
substitute products over the last several years, we are reviewing our 
categorization of these products, especially as we work to establish 
payment policies for these products across the various care settings. 
As explained above, we announced in the CY 2022 PFS final rule that we 
would establish HCPCS Level II codes for certain products for which we 
had received a HCPCS Level II coding application. We also finalized 
that these products would be payable in the physician office setting as 
contractor priced products that are billed separately from the 
procedure to apply them (86 FR 65120). After we issued the CY 2022 PFS 
final rule, we assigned nine HCPCS ``A'' codes for the synthetic skin 
substitute products that were addressed in the rule.
    In the CY 2022 PFS final rule, we stated that we recognized there 
was no payment mechanism for synthetic skin substitute products within 
the PFS, and we acknowledged the need to reconcile the gap in payment 
for synthetic products in the physician office setting without delay 
(86 FR 65121). Additionally, as we described in the CY 2022 PFS final 
rule, a commenter stated that skin substitutes are a heterogenous group 
and there is an increasing intersection between biological, 
bioengineered, and synthetic components. This highlights that the 
current categorization of skin substitutes as either synthetic or non-
synthetic is not mutually exclusive given the expansion of skin 
substitute products that may contain both biological and synthetic 
elements. The increasing overlap of both synthetic and non-synthetic 
skin substitute products emphasizes the importance of treating all skin 
substitute products in a similar manner in terms of coding and payment.
    After further review, we agree with interested party 
recommendations that the suite of products referred to as skin 
substitutes should be treated in a uniform manner across different 
outpatient care settings. In terms of payment for these products within 
the office setting, we acknowledge the current variation between 
contractor pricing for synthetic skin substitute products and payment 
based on ASP+6% for non-synthetic skin substitute products; and also, 
the challenges to the clear categorization of products as synthetic or 
non-synthetic. We believe establishing a consistent framework for how 
these products are treated within the physician office and hospital 
outpatient settings will help ensure equitable access and appropriate 
payment for these services.
    In order to ensure we treat skin substitutes consistently in terms 
of coverage, coding, and payment, we proposed that skin substitute 
products that are commonly furnished in the physician office setting be 
considered as incident-to supplies in accordance with section 
1861(s)(2)(A) of the Act, effective January 1, 2024. ``Incident-to 
supplies'' refers to supplies that are furnished as an integral, 
although incidental, part of the physician's personal professional 
services in the course of diagnosis or treatment of an injury or 
illness (Sec.  410.26). As proposed, in the office setting, we would no 
longer pay separately for skin substitute products under the ASP+6% 
payment methodology.
    We proposed that as we are categorizing skin substitute products 
that are furnished in the office setting as incident-to supplies, we 
would consider the cost of the supply used in furnishing a physicians' 
service through the PFS practice expense (PE) methodology. Treating 
these products as incident-to supplies would mean that the resource 
costs for these products would be included in establishing PE relative 
value units (RVUs) for the associated physicians' service with which 
they would be furnished. For example, for CPT Code 15271 (application 
of skin substitute graft, leg or ankle), we establish the PE RVU by 
considering three separate categories of PE resource costs involved in 
furnishing the service: clinical labor, supplies, and equipment. 
Together, these costs are the total direct PE resource inputs. When 
considering these skin substitute products as a supply, we would add 
their associated cost to the direct PE inputs for the service with 
which the product is furnished. For a more detailed description of the 
PE RVU methodology, please refer to section II.B. of this final rule, 
Determination of Practice Expense Relative Value Units in the rule.
    We acknowledged that the proposed change to consider skin 
substitute products furnished in the office setting as incident-to 
supplies would not be implemented immediately in CY 2023. Rather, we 
explained that we would need to transition toward consistent

[[Page 69654]]

coding and payment for these products. We referred readers to section 
III.N. of the proposed rule for the proposed changes to our process for 
assigning HCPCS Level II codes to wound care management products.
    We discussed that we believe it is necessary to establish an 
effective date of January 1, 2024, for the proposed payment of skin 
substitutes in the non-facility setting as incident-to supplies in 
order to align with the HCPCS Level II coding proposals for wound care 
management products as described in section III.N. of the proposed 
rule, to ensure all interested parties have the same opportunity to 
effectively transition toward the coding and payment changes. 
Additionally, we noted that we intend to engage with interested parties 
via an open-door forum/listening session to receive additional 
feedback.
    To summarize, we proposed to treat skin substitutes (including 
synthetic skin substitutes) as incident-to supplies as described under 
section 1861(s)(2)(A) of the Act when furnished in non-facility 
settings and to include the costs of these products as resource inputs 
in establishing practice expense RVUs for associated physician's 
services effective January 1, 2024. The proposal would mean skin 
substitutes are treated in the same manner for purposes of payment when 
furnished in non-facility settings, and would be consistently 
contractor priced through CY 2024. Given these changes, we believe 
maintaining the current treatment of these products for purposes of 
payment during CY 2023 will ensure a smooth transition. We also 
proposed to discontinue the use of the term skin substitutes beginning 
January 1, 2024 and to instead refer to this suite of products as 
``wound care management products.'' We solicited feedback on the 
proposals.
    The following is a summary of the public comments received on the 
proposed revisions to the Payment for Skin Substitutes and our 
responses:
    Comment: Many commenters stated that the proposal to revise payment 
for skin substitutes does not provide enough information about how 
these skin substitute products will be packaged and paid for if 
finalized in the CY 2023 final rule to be effective for CY 2024. More 
specifically, several commenters requested clarification on cost 
information used to establish contractor pricing for skin substitute 
products, how skin substitute products will be incorporated in the PE 
RVU methodology, and the dollar amount that would be included in the 
bundle for these skin substitute products. Additionally, these 
commenters mentioned that our proposal lacks sufficient time for 
interested parties to effectively transition products that were 
previously assigned Q codes to shift to A codes in order to meet the 
proposed changes to incident-to supply effective CY 2024. As a result, 
these commenters stated that they could not provide meaningful comment 
on these significant policy changes and urged CMS to delay the 
implementation of this proposal until these necessary details are 
addressed.
    Response: We appreciate all of the public comments on the proposal, 
especially questions and comments received regarding how we intend to 
achieve our policy goals. To clarify several significant questions, for 
CY 2023, CMS did not propose to make any changes to the existing 
payment methodology under the PFS associated with the proposed change 
to pay for skin substitute products as incident-to supplies. Rather, 
our proposal was to pay for these products beginning for CY 2024 as 
incident-to supplies in the same way that we pay for other incident-to 
supplies.
    Based on our review of the comments received, we understand that it 
would be beneficial to provide interested parties more opportunity to 
comment on the specific details of changes in coding and payment 
mechanisms prior to finalizing a specific date when the transition to 
more appropriate and consistent payment and coding for these products 
will be completed. While we continue to believe that the current, 
transitory situation where like products are not being paid and treated 
consistently is unsatisfactory, unsustainable over the long term, and 
rooted in historical practice established two decades ago prior to 
significant evolutions in medical technology and practice, we believe 
additional opportunity for information sharing and subsequent 
rulemaking is necessary before the transitory policies can be retired. 
In consideration of the comments and in the interest of ensuring 
appropriate payment and access in accordance with our above outlined 
policy objectives for creating a consistent payment approach across 
payment systems, benefit categories, and coding for treatment of the 
suite of products we have referred to as skin substitutes, we are going 
to conduct a Town Hall in early CY 2023 that will be open to interested 
parties in order to provide additional opportunity for discussion to 
address these concerns as well as discuss potential approaches to the 
methodology for payment of skin substitute products under the PFS. We 
will take into account the comments we received in response to CY 2023 
rulemaking and feedback from the Town Hall in order to strengthen 
proposed policies for skin substitutes in future rulemaking.
    Comment: Some commenters stated that the proposal to revise payment 
for skin substitute products under the PFS is concerning because the 
proposal did not include an impact analysis.
    Response: Since the proposal to categorize skin substitute products 
as incident to supplies does not take effect until CY 2024, any 
corresponding impact analysis would be included as part of rulemaking 
for CY 2024. However, as stated above, we recognize the need to ensure 
more opportunity for information sharing, notice, and comment 
rulemaking prior to completing the transition to equitable payment for 
like products. As a result, we will further discuss approaches towards 
a consistent payment mechanism for skin substitute products at the Town 
Hall with interested parties.
    Comment: Many commenters disagreed with bundling the payment of 
skin substitute products into the payment for the procedures that use 
the products under the PFS. These commenters raised the concern that 
packaging payment of skin substitute products in non-facility settings 
will cut payment for the products and pose financial burden to 
providers, which would limit or eliminate the options of skin 
substitute products offered to patients. Commenters also stated that 
cutting payment rates for skin substitutes would stifle innovation for 
these products that are necessary to effectively treat a vulnerable 
patient population. Additionally, some commenters stated that if CMS 
were to bundle skin substitute products similar to the bundling of 
policies under the OPPS for services furnished in the hospital 
outpatient department, then large wounds would not be treated any 
longer in the physician office setting due to the excessive cost and 
low payment for the supplies, thus, redirecting these patients toward 
more costly inpatient hospital settings. Furthermore, commenters stated 
that the PE RVU methodology referenced in the proposed rule should not 
be used as a payment methodology for skin substitute products since 
these products are expensive, and absorbing them into the PE would 
cause a decrease in PE payment for other areas due to the PE RVU's 
budget neutrality requirements.
    Response: We thank commenters for their feedback and concerns 
regarding bundling payment and using the PE RVU methodology for skin 
substitute products under the PFS. In response to

[[Page 69655]]

these and other similar comments, and as previously stated, we are not 
finalizing the proposed payment methodology for skin substitute 
products under the PFS.
    Comment: Many commenters disagree with the proposal to recategorize 
all skin substitute products as incident-to supplies. Commenters stated 
that biological skin substitute products should be a category of its 
own due to the complexity of biological skin substitutes and the 
certain preparation and procedural codes that are required for 
biological skin substitutes. Thus, commenters stated that they believe 
that grouping the biological and synthetic skin substitute products 
together disregards how these products are treated clinically. 
Commenters also stated that skin substitutes are incorporated into the 
wound bed to aid healing and have certain regulatory requirements 
unique to skin substitutes. Due to these issues, commenters emphasized 
that skin substitutes are vastly different from other supplies such as 
wound dressings/bandages, which fall within the incident-to supply 
category. Furthermore, these commenters reiterated similar concerns to 
other commenters about bundling payment for skin substitutes with 
payment for the procedures in which they are used, which would also 
accompany recategorizing these products as incident-to supply.
    Response: As mentioned previously, we plan to hold additional 
discussions with interested parties during a Town Hall session to 
discuss potential alternative approaches for equitable payment and 
treatment of skin substitute products in the physician office setting. 
This will ensure ongoing dialogue to address concerns around bundling 
payment (which is typically the approach for incident-to supplies) for 
all skin substitute products.
    Additionally, we noted in the proposed rule that skin substitute 
products are not a substitute for a skin graft as they do not actually 
function like human skin that is grafted onto a wound. We also 
clarified that our definition of skin substitutes does not include 
bandages or standard dressings (87 FR 46028). As highlighted in the 
proposed rule, skin substitutes are a heterogenous group and there is 
an increasing intersection between biological, bioengineered, and 
synthetic components. This highlights that the current categorization 
of skin substitutes as either synthetic or non-synthetic is not 
mutually exclusive given the expansion of skin substitute products that 
may contain both biological and synthetic elements (87 FR 46028). 
Therefore, prompting us to recognize the need to achieve a standardized 
approach to pay for these products.
    Comment: Some commenters presented a few concerns that our proposal 
to treat all skin substitute products as incident-to supplies is 
contrary to current statute. Specifically, these commenters were 
concerned that categorizing skin substitute products as incident-to 
supplies in the physician office setting would be inconsistent with the 
applicable payment framework for biologicals provided in a physician 
clinic, as set out in sections 1842 and 1847A in the Act. Another 
commenter also stated that the products approved through a drug or 
biological pathway like a BLA or NDA are vastly different compared to 
products approved as 510(k) devices or regulated as HCT/Ps; therefore, 
the commenter believes NDA/BLA skin substitute products should remain 
separate and paid as a drug/biological. Lastly, one commenter stated 
that the lack of any impact analysis or evidence that supports our 
proposal is contrary to Administrative Law.
    Response: As mentioned previously, we recognize the importance of 
information sharing and notice, which we look forward to addressing 
with interested parties at the Town Hall.
    Comment: Several commenters suggested various alternative payment 
approaches. For example, one commenter suggested that CMS should 
separately identify and pay for high-cost disposable supplies priced 
more than $500 using appropriate HCPCS codes, where the pricing would 
be based on a transparent and annual review process under the PFS. 
Another commenter suggested that we create five unique A-codes that 
would cover all skin substitutes based on composition-based categories. 
Then, the skin substitute approved products would be paid separately at 
the same rate per square centimeter in order to ensure there are no 
gaps in care for large wounds.
    Response: We thank commenters for their feedback and look forward 
to ongoing discussions regarding alternative payment approaches for 
skin substitutes.
    Comment: Several commenters expressed concern about what they 
viewed as a payment disadvantage for synthetic skin substitute 
products, if biological skin substitute products are paid using the 
ASP+6% payment methodology, whereas synthetic skin substitute products 
are contractor priced under the PFS. Overall, these commenters 
supported our proposal to treat all skin substitute products as 
incident-to supplies, since it ensures consistency for all skin 
substitute products in terms of payment, across multiple settings.
    Response: We thank the commenters for their support. As noted in 
the CY 2023 PFS Proposed Rule, we acknowledged the current variation 
between contractor pricing for synthetic skin substitutes and payment 
based on ASP+6% for biological skin substitute products. As a result, 
we believe achieving a consistent payment mechanism is important and 
look forward to discussing ways in which to achieve this with 
interested parties at the Town Hall.
    Comment: A few commenters stated that they support a multi-year 
phased approach consistent with the five-year timeline to improve 
clarity and consistency of payment policies for skin substitutes, but 
expressed confusion regarding the longer-term road map given the stated 
implementation date of CY 2024.
    Response: We appreciate the commenters' support for our phased 
approach, and clarify that we anticipate addressing various 
considerations over the next few years through rulemaking. As indicated 
above, we are delaying changes to the terminology to allow for 
additional discussions with, and input from interested parties. 
Additionally, we will consider payment approaches in future rulemaking.
    After consideration of the public comments, we are not finalizing 
our proposal to change the terminology for skin substitutes at this 
time, and intend to further engage interested parties and allow an 
additional opportunity for input regarding the most appropriate term 
that could be used to more meaningfully and accurately describe the 
suite of products currently referred to as skin substitutes. We intend 
to revisit the change in terminology in future rulemaking as early as 
next year. Further, after considering the issues raised in public 
comments, we are not finalizing the payment approach outlined in the 
proposed rule where we considered establishing payment under our 
typical approach for incident- to supplies using our PE RVU 
methodology. Instead, we intend to conduct a Town Hall with interested 
parties in early CY 2023 to discuss alternative potential payment 
approaches for skin substitute products prior to CY 2024 rulemaking in 
order to achieve a transition to equitable payment for like products; 
we will also use this Town Hall as an opportunity to discuss the 
aforementioned change to the terminology.

[[Page 69656]]

K. Provision To Allow Audiologists To Furnish Certain Diagnostic Tests 
Without a Physician Order

    Audiologists are recognized under Medicare Part B to provide 
certain diagnostic audiology services as defined at section 1861(ll)(3) 
of the Act. Specifically, the statute describes audiology services that 
include such hearing and balance assessment services as the audiologist 
is legally authorized to perform under State law, as would otherwise be 
covered if the services were furnished by a physician. The definition 
of qualified audiologist appears at section 1861(ll)(4)(B) of the Act. 
Currently, the only other provision in the Medicare statute that 
relates to audiology services is found at section 1862(a)(7) of the 
Act, which excludes payment for hearing aids and related examinations. 
This exclusion is codified at Sec.  411.15(d)(1), which precludes 
payment for hearing aids or examinations for the purpose of 
prescription, fitting, and changing hearing aids. There are no other 
Medicare statutory provisions addressing audiologists or audiology 
services. Diagnostic tests are included as a Medicare Part B benefit 
under section 1861(s)(3) of the Act.
    For many diagnostic testing services, payment under the PFS can be 
made in two separate components of the service when parts of the 
services are furnished by two different physicians, practitioners, or 
other suppliers: the technical component (TC) and the professional 
component (PC). The TC is the portion of the service that involves the 
collection of information from the patient--for example, a sample, 
specimen, radiological image, or interrogatory study. When the TC is 
furnished separately, the ``TC'' modifier is used with the relevant 
HCPCS code to bill for the service under the PFS. The PC of a 
diagnostic test is the portion of the service involving the 
interpretation of the collected information by a physician or other 
practitioner. When the PC is furnished separately, the service is coded 
with modifier ``26''. When the same physician or practitioner furnishes 
both the TC and PC of the service, the relevant HCPCS code (known as 
the ``global'') is billed without a modifier. We have established 
general requirements for furnishing and billing diagnostic tests at 
Sec.  410.32.
    In the CY 1997 PFS final rule, we established in regulations at 
Sec.  410.32(a), based on long-standing manual provisions, that all 
diagnostic tests, including audiology tests, must be ordered by the 
physician who is treating the beneficiary who will use the results to 
manage the beneficiary's care. We believed this requirement was 
necessary to ensure that the physician had a relationship with the 
beneficiary, and would ensure the tests were reasonable and medically 
necessary, as well as prevent patterns of abuse. At the same time, we 
finalized a regulatory provision at Sec.  410.32(c) (later redesignated 
to Sec.  410.32(a)(2)) to recognize as the treating practitioner for 
the purpose of ordering diagnostic tests certain nonphysician 
practitioners (NPPs) who are authorized under the statute to provide 
services that would be physician services if furnished by a physician 
when they are operating within the scope of their State license. The 
NPPs who can serve as the treating practitioner for purposes of 
ordering diagnostic tests include physician assistants (PAs), nurse 
practitioners (NPs), and clinical nurse specialists (CNSs) (defined in 
sections 1861(s)(2)(K)(i) and (ii) of the Act, respectively), certified 
nurse-midwives (defined in section 1861(gg) of the Act), qualified 
psychologists (defined in section 1861(ii) of the Act), and social 
workers (defined in section 1861(hh) of the Act)) (61 FR 59497 through 
59498). We note that all of these NPPs are included as practitioners 
who must accept Medicare payment on an assignment-related basis under 
section 1842(b)(18)(C) of the Act. As such, these NPPs can only collect 
any applicable cost-sharing from the patient, and cannot balance bill 
the patient for additional amounts above the Medicare payment amount. 
The regulation reflecting the ordering requirements for diagnostic 
tests has not been substantively amended since that time, except to add 
an exception to the treating practitioner ordering requirement for 
screening mammography and, in response to the PHE for COVID-19, to add 
a limited exception for a single, otherwise-covered COVID-19 diagnostic 
test (and one otherwise covered diagnostic laboratory test for flu or 
similar respiratory condition needed to diagnose COVID-19) per patient 
per year during the PHE.
    In the CY 1998 final rule (62 FR 59057 through 59070), we also 
amended Sec.  410.32(a) to clarify that the ordering requirement is 
based on the exclusion in section 1862(a)(1)(A) of the Act and 
contained in Sec.  411.15(k)(1); that is, diagnostic testing services 
that do not meet the ordering requirements in Sec.  410.32(a) are 
considered not reasonable and necessary for the diagnosis and treatment 
of illness or injury or to improve the functioning of a malformed body 
member. We explained that we found tests not demonstrably reasonable 
and medically necessary if they are not ordered by the beneficiary's 
treating physician or practitioner who will use the test results to 
manage the beneficiary's condition or symptom. Also in the CY 1998 PFS 
final rule, while we continued to require physician supervision for 
most diagnostic tests, we amended our regulation to except diagnostic 
tests personally furnished by audiologists (as well as psychologists 
and certain physical therapists board-certified in electrophysiology) 
from the physician supervision requirement.
    As explained above, all of the NPPs that we recognize as treating 
practitioners in Sec.  410.32(a)(2) for purposes of the diagnostic test 
order requirement who must accept Medicare payment on an assignment-
related basis can only collect any applicable cost-sharing from the 
patient and cannot balance bill the patient for additional amounts. 
Audiologists are not NPPs as defined by the statute (that is, they are 
not listed at section 1842(b)(18)(C) of the Act). However, beginning in 
2008, we allowed audiologists to enroll in the Medicare program so that 
they could independently bill for their audiology services rather than 
relying on physicians or other enrolled practitioners to bill on their 
behalf. As such, audiologists are not required to accept payment on an 
assignment-related basis.
    Over the past several years, interested parties have requested that 
CMS eliminate the treating physician or other practitioner order 
requirement for the hearing and balance assessment services furnished 
by audiologists. They have suggested that CMS has the administrative 
authority to eliminate the order requirement for audiology services via 
notice and comment rulemaking, and that doing so would enable greater 
access to these important services. The interested parties believe that 
an order from the treating physician or practitioner is not required by 
the statute, and that audiology services are covered unless they are 
otherwise excluded, such as because they are not reasonable and 
necessary in a particular circumstance. To support their points, these 
interested parties shared with us a report prepared in 2020 by a 
consultant concluding that removal of the treating physician or 
practitioner ordering requirement for audiology hearing and balance 
assessment services would result in an estimated savings to Medicare 
over a 10-year period of approximately $108 million, which includes a 
savings of $36 million in

[[Page 69657]]

beneficiary copayments. These savings estimates are based on projected 
Medicare payments and beneficiary copayments that would not occur if 
Medicare beneficiaries directly accessed the audiology hearing and 
balance services furnished by an audiologist without the order of a 
treating physician or other practitioner. In addition, we have heard 
from interested parties that an order is not required for audiology 
services by certain other public or private health insurers including 
Medicare Advantage plans, Medicaid, plans under the Federal Health 
Benefit Program, and the Veterans Administration. We do not know the 
scope of services that are covered by these plans or insurers when 
furnished by audiologists, including whether these health insurers 
cover only hearing and balance assessment services (as the Medicare 
program does in accordance with the statute) or also hearing aid 
examinations for the prescription, fitting, and programming of hearing 
aids or other services excluded from payment under Medicare Part B and/
or whether only some or all of the plans allow payment directly to 
audiologists for some or all of the covered services without a 
physician/NPP order. Additionally, we note that some of these health 
insurance programs involve closed systems with greater levels of 
interprofessional communication and control (for example, within 
certain accountable care organizations (ACOs), managed care plan 
networks, or through various Veterans Affairs medical centers). In 
contrast, the physicians and practitioners furnishing care under the 
fee-for-service Medicare Part B program often practice independently 
from each other, which can pose barriers to communication and 
coordination of care between health care professionals such as 
audiologists and the treating physicians or other practitioners.
    In addition, the nature of audiology services personally furnished 
by audiologists is such that these services are often billed based on 
the audiologist's reassignment of billing rights by an entity other 
than the furnishing audiologist, so we are currently unable to 
determine the number of audiologists furnishing these services or the 
full scope of beneficiary utilization of these services in those 
settings.
    While we believe that CMS has the administrative authority to 
remove the treating physician or practitioner order requirement for 
audiology hearing and balance assessment services via notice and 
comment rulemaking, we do not agree with the suggestions of interested 
parties that audiologists should be considered in the same way as the 
NPPs we recognized as treating practitioners for purposes of the order 
requirement under Sec.  410.32(a)(2). Specifically, we allowed the NPPs 
(including PAs, NPs, and CNSs) to order diagnostic tests for the 
beneficiaries they treat, and we continued to require that the results 
of the tests be used in the management of the patient's specific 
medical problem. In these cases, the relationship of the patient to the 
NPP who orders diagnostic tests and uses the results in managing the 
beneficiary's medical condition serves to provide assurance that the 
services are medically necessary. In contrast, audiologists are not 
recognized under Medicare Part B to treat or manage patients. We 
consider audiologists' services to be more specialized than those of 
other physicians and NPPs who provide diagnostic services. That is, 
their diagnostic tests are more limited and focused in scope than 
others furnishing services under the Medicare Part B benefit for 
diagnostic tests at section 1861(s)(3) of the Act. Unlike PAs, NPs or 
CNSs who may bill for E/M services, and for whom Medicare Part B covers 
services and supplies incident to their own professional services as 
provided in the regulation at Sec.  410.26, the scope of audiology 
services under the Medicare Part B statute includes only diagnostic 
hearing and balance assessment services. We are concerned that removal 
of the order requirement for hearing and balance services furnished by 
audiologists could lead to the furnishing and payment of services that 
are not used by a treating physician or practitioner in the management 
of the patient's medical condition, and thus, not medically necessary. 
We are also concerned about patient safety if Medicare beneficiaries 
seek hearing and balance services directly from audiologists without 
the involvement of a treating physician or practitioner. For example, 
the beneficiary could have an acute condition or symptom such as acute 
sensorineural hearing loss resulting from a viral neuronitis that needs 
to be diagnosed and treated by a physician or practitioner on an 
emergent basis, and that care could be delayed if the beneficiary first 
sought care directly from an audiologist. As an additional example, 
disequilibrium has many possible causes, including potentially life 
threatening cardiologic (for example, arrythmias, heart attack, or 
cardiac ischemia) and neurologic etiologies (for example, migraines, 
TIAs (transient ischemic attacks), strokes). The wide variety of 
possible causes of disequilibrium with some of these in both categories 
being potentially life threatening (for example, stroke, heart attack, 
arrythmias) speaks to the importance of a physician or NPP being 
involved in the initial patient assessment. Such an assessment would 
include a careful history, a physical examination, and immediate 
office-based testing (for example, EKG) to look for some of the more 
critical possible causes of disequilibrium, and the physician or NPP 
would determine the plan for the progression of the outpatient workup. 
That is to say, the physician or NPP would decide, given the history 
and clinical exam, whether the evaluation should continue along 
cardiologic, neurologic, or vestibular perspectives--the latter of 
which could possibly result in an order/referral to an audiologist for 
balance assessments using the vestibular dysfunction testing codes. For 
these reasons, we believe patients with disequilibrium would be best 
served by seeing a physician or NPP before being referred to an 
audiologist as appropriate. Furthermore, as previously noted, 
audiologists are not required to accept Medicare payment on an 
assignment-related basis, and therefore, can balance bill the 
beneficiary. We are concerned that the removal of the treating 
physician or practitioner ordering requirement, and potentially 
increased volume of audiology services, could lead to unnecessary costs 
to beneficiaries. In addition, in the absence of a required order of 
the treating physician or practitioner, we are concerned that the 
direct access to audiologists might incentivize changes in behavior and 
practice patterns among audiologists that could lead to overutilization 
of audiology services.
    We have carefully considered the interested parties' requests to 
remove the treating physician or practitioner order requirement for 
diagnostic audiology hearing and balance assessment services. We 
believe it would be appropriate to provide a limited exception to the 
order requirement for diagnostic hearing testing services furnished by 
audiologists in order to broaden patient access to these services. In 
response to the requests of interested parties, we proposed to amend 
our regulation by adding a paragraph at Sec.  410.32(a)(4) to remove 
the order requirement under certain circumstances for certain audiology 
services furnished personally by an audiologist for non-acute hearing 
conditions. These non-acute hearing conditions would not include 
balance assessments that are used for patients with disequilibrium, 
because as we

[[Page 69658]]

explained above, the physician/NPP needs to first evaluate the patient 
clinically due to the many serious medical conditions the beneficiary 
might have, and ensure the patient is cleared medically before setting 
them on track to receive vestibular function tests, possibly from an 
audiologist. The list of audiology services for which Medicare payment 
can be made when an audiologist personally performs them on the order 
of the treating physician or NPP can be found on the Medicare physician 
fee schedule web page under the link titled ``Audiology Services'' at 
https://www.cms.gov/medicare/medicare-Fee-for-Service-Payment/Physicianfeesched. We proposed to permit the services described by the 
codes listed in Table 35 to be furnished under the proposed exception 
without the order of the treating physician or NPP. We noted that Table 
35 does not include the codes for vestibular function tests in the CPT 
code ranges of 92517-92519 and 92537-92549 because, as discussed above, 
we believe it is in the clinical interest of the beneficiary to be 
assessed by a treating physician or NPP for potentially serious medical 
implications of disequilibrium symptoms, including cardiologic and 
neurologic etiologies before they can be cleared and referred for 
vestibular function tests.
BILLING CODE 4150-28-P
[GRAPHIC] [TIFF OMITTED] TR18NO22.065

BILLING CODE 4150-28-C
    We proposed to create HCPCS code GAUDX (Audiology service(s) 
furnished personally by an audiologist without a physician/NPP order 
for non-acute hearing assessment unrelated to disequilibrium, or 
hearing aids or examinations for the purpose of prescribing, fitting, 
or changing hearing aids; (service may be performed once every 12 
months) to describe these audiology services furnished personally

[[Page 69659]]

by an audiologist without the order of the treating physician or other 
practitioner. We noted that we believe that limiting the audiology 
services that can be furnished without an order to include only hearing 
conditions that are non-acute in onset and balance services (patients 
with disequilibrium symptoms) by removing the CPT codes for vestibular 
dysfunction would be appropriate to address our patient safety 
concerns. We also proposed to specify in the code descriptor for HCPCS 
code GAUDX that the audiology services can be performed only once every 
12 months. We noted that we believe this limitation is appropriate to 
avoid potential program integrity issues, such as audiologists billing 
for GAUDX with a greater frequency, or providing services that are not 
reasonable and necessary for the treatment of the patient's illness or 
injury. We selected once every 12 months, rather than every 6 months, 
for two reasons. The first is because 6 months did not seem long enough 
for a new, non-acute hearing condition to arise, and if an acute 
hearing condition were to onset, it would necessitate an evaluation 
with a physician/NPP. The second reason is that, at any time, the 
beneficiary may always elect to see their physician/NPP for any hearing 
conditions--acute or non-acute--or for conditions with disequilibrium 
symptoms.
    As proposed, an audiologist would be able to bill code GAUDX once 
every 12 months for a beneficiary. The GAUDX code would include and be 
used to bill for any number of audiology services furnished in that 
particular encounter with the beneficiary. Since the proposed GAUDX 
code is generic, the tests provided could include those that are split 
into PC/TC and those that are not. As with all services, the actual 
tests provided and their results would need to be documented in the 
medical record, for purposes of medical review. Further, we proposed 
that no more than one unit of code GAUDX could be billed--that means 
``1'' is inserted in the ``days or units'' block 24G on the CMS 1500 
professional claim form. We noted concerns that beneficiaries may 
receive services billed as code GAUDX from more than one audiologist in 
the 12-month period and/or be mistaken or misled into thinking that 
code GAUDX represents a screening/preventive service which Medicare 
does not cover. To avoid the potential for inappropriate use of HCPCS 
code GAUDX, we explained that we plan to establish system edits through 
our usual change management process to ensure that GAUDX is only paid 
once every 12 months, per each beneficiary. We noted that the code 
descriptor proposed for GAUDX could be billed for patients seeking care 
for non-acute hearing conditions, and that the furnished audiology 
services would still have to be medically necessary. As proposed, after 
receiving audiology services from an audiologist accessed directly 
without the order of a treating physician or practitioner, the 
beneficiary would have to wait a full 12 months before receiving 
additional diagnostic tests from an audiologist without a physician/NPP 
order. The beneficiary would remain free to seek care from a treating 
physician (or/NPP) if needed, and that care could potentially include a 
referral with an order for further diagnostic testing furnished by an 
audiologist.
    To value HCPCS code GAUDX, we proposed to use the combined values 
of CPT codes 92557 (Comprehensive audiometry threshold evaluation and 
speech recognition (92553 and 92556 combined)) and 92567 (Tympanometry 
(impedance testing)), which we believe would represent a typical 
service provided by audiologists. We explained that we chose CPT Codes 
92557 and 92567 as typical because they make up 72 percent of all 
billings for audiologists; and, when all physician and practitioner 
specialties are considered, including audiologists, CPT code 92557 is 
billed with CPT code 92567 over 60 percent of the time and CPT code 
92567 is billed with CPT code 92557 over 83 percent of the time in the 
same clinical encounter, according to Medicare claims data.
    Thus, we proposed a total work RVU of 0.8 for GAUDX, calculated by 
combining the 0.60 work RVU for CPT code 92557 and 0.20 work RVU for 
CPT code 92567. We proposed to establish the PE value for GAUDX by 
combining the unduplicated PE of CPT codes 92557 and 92567. 
Specifically, we proposed to include the following direct practice 
expense (PE) inputs for supply items: two SD046 (Ear tip, tympanometry 
probe), two SJ053 (Swab pad, alcohol), one SM0251 (Specula tips, 
otoscope), one (SK059) sheet of recording paper, and two SD047 (Ear tip 
insert with sound tube); and the following direct PE inputs for 
equipment: EQ054 (Audiometric soundproof booth (exam and control room)) 
for 20 minutes, EQ053 (Audiometer, clinical, diagnostic) for 20 
minutes, and EQ244 (Tympanometer with printer) for 4 minutes. We also 
proposed to apply the same provisions for code GAUDX as those set for 
CPT codes 92557 and 92567 (for example, PC/TC indicator, bilateral 
indicator, physician supervision indicator, etc.), as they now appear 
in the PFS Relative Value file found at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Relative-Value-Files.
    We discussed in the proposed rule that we believe that proposed 
HCPCS code GAUDX, if finalized, will allow us to better understand the 
scope of beneficiary access to these services with or without the order 
requirement. We also noted that we believe that proposed HCPCS code 
GAUDX, if finalized, will allow us to better assess possible burdens to 
the beneficiary when attempting to access these services. We noted 
that, given the makeup and intended use of proposed code GAUDX, we 
would like to increase our understanding about how and where these 
audiology services would be provided without the order of a treating 
physician or practitioner. We requested comments from interested 
parties about what settings might represent the typical places of 
service and which institutional providers might bill for HCPCS code 
GAUDX.
    The following is a summary of the public comments received on the 
Proposal to Allow Audiologists to Furnish Certain Diagnostic Tests 
Without a Physician Order and our responses:
    Comment: One commenter informed us that the final three codes 
listed in Table 29 of the proposed rule (Proposed Codes for Tests that 
can be Encompassed by HCPCS Code GAUDX . . .) were transcribed 
incorrectly as CPT codes 92561, 92562, and 92563. However, the correct 
codes related to auditory evoked potential (AEP) testing are CPT codes 
92651, 92652, 92653.
    Response: We agree that we included the incorrect codes in Table 29 
of the proposed rule. We have corrected our error, and the correct AEP 
testing codes now appear below in Table 36 as part of our final policy.
    Comment: Several commenters supported the proposal to provide a 
limited list of codes that could be provided without the treating 
physician/NPP order. However, many of these commenters did not support 
the use of the HCPCS code GAUDX, recommending that the existing CPT 
codes should be billed and paid at the PFS rate. A few commenters 
(including the RUC) specifically disagreed with our proposed G-code 
valuation process, telling us that it would not preserve relativity 
with other codes in the family, and does not reflect the clinical input 
and expertise of the audiologists that furnish the services.
    Response: We appreciate that interested parties supported our

[[Page 69660]]

proposal for a limited code set that would allow for direct access to 
audiologists, without a physician/NPP order, for non-acute hearing 
assessments unrelated to disequilibrium. We also appreciate hearing the 
commenters' thoughts about the valuation of code GAUDX, as well as the 
commenters' recommendations to use the CPT codes to bill for these 
services, instead of the proposed GAUDX code. We agree with the 
commenters about the usefulness of the CPT codes listed in Table 36, as 
we detail in our final policy below.
    Comment: We heard from several commenters who opposed our proposal 
to provide for limited direct access to audiologists without a 
physician/NPP order, and most of these commenters asked us to reverse 
our proposal. A few commenters explained that they opposed the proposal 
because physicians have more education and training than audiologists, 
and this additional training enabled them to treat patients 
holistically, yielding a better ability to treat and diagnose the 
serious medical conditions associated with hearing loss. Most of these 
commenters noted that there are negative consequences of removing 
physicians from the care team. One commenter stated they would 
conditionally support our proposal as long as we did not revise our 
current safeguards (that is, direct access to audiologists for nonacute 
hearing assessments unrelated to disequilibrium), because they have 
consistently stood against a ``blanket'' direct access to audiologist 
services without the order of a physician or practitioner, believing 
that such broadly available direct access will generate considerable 
patient safety and cost consequences without yielding significant 
improvements to access to care. This commenter also suggested that CMS 
should make payment to audiologists using the CPT codes based on the 
valuations CMS adopts after review through the RUC process, rather than 
using the proposed CMS-valued GAUDX code. Further, the commenter 
requested that CPT code 92640 (for programming of an auditory brainstem 
implant (ABI)) be removed from the list of 36 codes that are permitted 
without an order. The commenter stated that because this service 
carries risk of stimulating part of the brainstem and associated 
cardiac events, a physician should supervise the first activation 
provided by the audiologist.
    Response: We appreciate the commenters' views, but we do not agree 
that we should withdraw our proposal. As we noted above, we believe it 
would be appropriate to provide a limited exception to the order 
requirement for diagnostic hearing testing services furnished by 
audiologists in order to broaden patient access to these services. We 
appreciate the commenter that expressed their conditional support for 
limited direct access to audiology services without a physician or NPP 
order with the proposed safeguards that are built into the GAUDX long 
descriptor. We further explain these safeguards below in the discussion 
of our final policy. We also appreciate the commenter's recommendation 
to remove the initial episode of CPT code 92640 (for ABI programming) 
from the set of codes for services that could be furnished without a 
physician or NPP order under the proposed policy, and remind the 
commenter that the presence of a code on the list does not preclude a 
physician (including the ABI surgeon) or NPP from writing an order for 
this service. Moreover, we anticipate that most physicians will write 
an order for the initial ABI programming upon discharge from this 
brainstem surgery. We plan to gather data about audiologists' use of 
CPT code 92640 without a physician or NPP order, and will consider this 
recommendation in future rulemaking.
    Comment: Several commenters disagreed with the safety concerns we 
discussed in the proposed rule. Several commenters stated that 
audiology malpractice insurance is very low, and that, if there were 
safety risks, it would be higher than what they currently pay, which is 
around $500 each year. A few commenters noted that delaying care until 
the patient can obtain an order from a physician/NPP could 
inadvertently have harmful consequences--noting that untreated hearing 
loss over time can increase the likelihood of falls, social isolation, 
and accelerated cognitive decline. Another commenter stated that 
audiologists are qualified to identify, diagnose, manage, and treat 
disorders of hearing and balance and have the training and knowledge to 
recognize conditions needing medical treatment, as well as an ethical 
obligation to refer patients that require medical services.
    Response: The patient safety concerns discussed in the proposed 
rule were related to the lack of involvement of a treating physician or 
NPP with Medicare beneficiaries seeking hearing and balance services 
directly from audiologists. There may be certain acute conditions and/
or symptoms that need to be medically diagnosed and treated on an 
emergent basis by a physician or NPP. We continue to believe that 
beneficiaries with acute hearing loss and disequilibrium symptoms need 
to be medically managed, due to the potential for serious underlying 
pathology, such as strokes or heart attacks, if such appropriate 
identification and care are delayed. As we gain experience and 
information under the direct access policy we are finalizing, we may 
consider these issues further in future rulemaking.
    Comment: Several audiologist commenters stated that, while they 
appreciated CMS' proposal to remove physician/NPP order requirements as 
a first step, they otherwise found the proposed HCPCS code GAUDX to be 
impracticable, and thought that it would limit beneficiary access to 
care and add a significant administrative burden to audiologists. These 
commenters suggested that CMS should recognize the vestibular codes as 
part of the direct access proposal allowing audiologists to provide 
service(s) without a physician/NPP order, allow direct access for both 
acute and nonacute hearing and balance conditions, and remove the 
requirement that the services described by HCPCS code GAUDX only be 
furnished to a beneficiary once every 12 months. These commenters 
disapproved of the valuation of GAUDX, and its use as an umbrella code 
to encompass the 36 different codes, as it would sometimes overpay for 
the services provided and underpay for other services. One commenter 
noted the GAUDX value is approximate $30-$100 less than the value of 
each cochlear implant-related service, and asked that these codes be 
removed from the GAUDX umbrella, because the cochlear implant centers 
would be disproportionately financially impacted. Instead, many 
commenters requested that some or all of the CPT codes proposed for 
inclusion in the GAUDX code be used together with a new modifier that 
could be used for services personally provided by an audiologist 
without a physician/NPP order. A few of these commenters suggested that 
the GAUDX code should encompass a smaller subset of codes than the 
codes listed in Table 29 of the proposed rule, so that more codes would 
be paid at CPT code-specific rates, even if they require a physician 
order. One commenter suggested that CMS consider the use of a modifier 
for even a smaller subset of the existing CPT codes for services 
provided by an audiologist without an order, rather than finalizing the 
GAUDX code (even if this reduces access to audiologists without an 
order), if the full list of 36 codes was unworkable for CMS. Another 
commenter submitted a suggested list of 7 codes that audiologists would 
provide without a referral that could be billed with a

[[Page 69661]]

modifier in place of the GAUDX code, and another list of 7 codes for 
services specific to a cochlear implant, auditory osseointegrated 
implant (AOI), or ABI (but the commenter was unclear as to the 
requirements for each list). Several commenters also submitted a list 
of CPT codes that are specific to the services surrounding cochlear 
implants, AOIs, and ABIs, such as evaluation to determine candidacy for 
an implanted hearing device and post-surgical evaluation of performance 
(for example, cochlear, AOI, or ABI implants), as well as for 
diagnostic analysis and subsequent reprogramming of the cochlear 
implant, AOI or ABI. The commenters suggested that these codes could be 
billed with the potential modifier for direct access to an audiologist, 
noted that the clinical standard of care for some of these services 
requires them to be repeated more often than once every 12 months. The 
commenters explained that the audiologist does not need an order from a 
physician or NPP for these services because the patient's physician and 
implanting surgeon are involved with these patients and, suggested that 
the order requirement presents a nuisance for the audiologist, 
physician or surgeon, and beneficiary.
    Response: We thank the commenters for their suggestions. We are 
struck by the number of commenters that requested that we use a 
modifier with the CPT codes rather than the proposed GAUDX code, so 
that audiologists could bill more accurately for the specific tests 
they furnished and could be paid at the CPT code-specific PFS rates, 
instead of at the single rate for code GAUDX (which bundled 36 services 
of varying payment rates together). We also appreciate the suggestions 
of some commenters to reduce the scope of services/codes that would 
have been bundled under the GAUDX code, which would also allow them to 
more specifically bill for the services furnished and be paid at rates 
valued at the established value for those services. We note that 
several commenters recommending that fewer services be included in the 
proposed GAUDX code, even if it meant that a physician/NPP order would 
be required for more services. We agree with commenters' overwhelmingly 
consistent recommendations to use a modifier instead of the proposed 
HCPCS code GAUDX, as explained in the description of our final policy 
that follows. We would like to point out that a given modifier would 
only have one descriptor and uniform rules/restrictions, but it would 
allow for greater specificity in billing and payment for services as 
suggested by commenters. All of the commenters that supported the use 
of the modifier generally disfavored the proposed GAUDX code because, 
as we noted above, the valuation of GAUDX would potentially overpay for 
some services and underpay for others. We agree that appending a 
modifier to the specific CPT code for the service furnished will more 
accurately pay for the specific service furnished. Additionally, the 
use of a modifier with the specific CPT codes for services furnished by 
audiologists without an order will allow CMS to track the actual 
services that are being by audiologists without the physician or NPP 
order. We also believe that use of a modifier will reduce burden for 
audiologists as compared to using a new code, because audiologists are 
familiar with the code set and are currently using these codes to bill 
for services. Using a modifier allows audiologists to more specifically 
identify and bill be paid for the services they furnish, as opposed to 
billing using one code that is paid at the proposed bundled rate across 
the 36 codes, and allows CMS to have more detailed information on which 
services are furnished through direct access to audiologists without an 
order.
    Comment: Several audiologist commenters questioned how to handle 
situations in cases where patients directly access an audiologist, but 
may be uncertain whether they have seen a different audiologist without 
an order of their physician or NPP in the past 12 months. They 
questioned whether billing GAUDX more frequently than once every 12 
months requires an Advanced Beneficiary Notice (ABN) where there is no 
physician or NPP order, to transfer financial responsibility to the 
beneficiary. Another commenter asked whether they need to keep a 
voluntary or mandatory ABN on file in case the GAUDX claim is rejected 
to avoid the financial responsibility themselves. Several commenters 
noted that a CMS-developed, real-time, online tool should be made 
available for them to ascertain the needed eligibility information, so 
that an ABN can be administered to the beneficiary when necessary.
    Response: We appreciate these comments and plan to communicate how 
audiologists can best prepare for and handle these types of situations 
through healthcare provider education vehicles and other guidance.
    Comment: Some commenters requested more context surrounding the 
nonacute terminology and how it applies to nonacute hearing assessments 
that are unrelated to disequilibrium.
    Response: For purposes of the audiology direct access policy, 
including all the 36 codes listed in Table 36, acute hearing loss 
involves a sudden onset in one or both ears--and is a perceived change 
in hearing by a beneficiary that is not consistent with the progressive 
loss of hearing over many years that is typical with the aging process. 
A nonacute hearing loss is a more gradual hearing loss that one may 
experience with advancing age, known as presbycusis, which the National 
Institute on Deafness and Other Communication Disorders defines as: 
``Age-related hearing loss (presbycusis) is the loss of hearing that 
gradually occurs in most of us as we grow older. Age-related hearing 
loss most often occurs in both ears, affecting them equally.'' 
Audiologists can furnish services among those listed in Table 36, the 
results of which can provide essential information for them to 
recommend, for example, further testing or a medical referral to the 
patient's treating physician or NPP. It is for these nonacute types of 
gradual hearing loss and for hearing loss that is treated via 
surgically implanted hearing devices such as cochlear implants, AOIs, 
and auditory brainstem implants (discussed above) that beneficiaries 
may be seen by the audiologist without a physician/NPP order.

[[Page 69662]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.066

    After consideration of public comments received, we are finalizing 
amendments to the regulation at Sec.  410.32(a)(4) with modifications 
effective for services furnished on or after January 1, 2023. We 
proposed to allow audiologists to furnish the services included on a 
list of 36 services without a physician order (as listed in Table 36 
(which we corrected to identify CPT codes, 92651, 92652, and 92653). We 
are finalizing our proposal that these services can be covered and paid 
when furnished without the order of the treating physician or NPP for 
non-acute hearing assessment unrelated to disequilibrium, or hearing 
aids, or examinations for the purpose of prescribing, fitting, or 
changing hearing aids (in alignment with statutory and regulatory 
restrictions); that the services may be performed once every 12 months 
per beneficiary. We are not finalizing our proposal to create G-code 
(GAUDX) for use to bill for audiology services furnished without the 
order of a physician or NPP. Instead, audiologists are to use the 
individual CPT codes to identify the services they furnish without the 
order of a physician or NPP, within the list of 36 allowed services 
(Table 36), and append a new modifier we will create (modifier AB). We 
were persuaded by comments from interested parties to use the modifier 
approach, which allows us to better identify which services are 
actually furnished (as opposed to the bundled GAUDX code) and reduces 
burden for audiologists, who already are familiar with the relevant CPT 
codes. In the last sentence of Sec.  410.32(a)(4), we are replacing the 
proposed term ``code'' with the term ``modifier'' so that the final 
sentence of Sec.  410.32(a)(4) will now state that audiology services 
furnished without an order from the treating physician or NPP are 
billed using a modifier CMS designates for this purpose.
    The AB modifier will be used together with the 36 CPT codes on 
Table 36 (which has been updated from Table 35 to reflect the corrected 
CPT code numbers--92651, 92652, and 92653--as

[[Page 69663]]

discussed above), to indicate that the service/test was provided on a 
single treatment day, without an order from the physician/NPP treating 
the patient. We continue to believe that the patient safety, medical 
necessity, and program integrity safeguards we proposed are 
appropriate. Therefore, we are finalizing our proposal to limit direct 
access to audiology services without the order of the treating 
physician or NPP to non-acute hearing services to services listed in 
Table 36, and to establish a once per 12-month frequency limitation. 
These limitations on audiology services furnished without the order of 
the treating physician or NPP, which were proposed for HCPCS code 
GAUDX, will be reflected in the descriptor for the new AB modifier. 
Additionally, to align our final policy to use the modifier instead of 
HCPCS code GAUDX with the once per 12-month limitation, we are further 
modifying our final policy for use of the modifier with the codes 
available (please refer to Table 36). If an audiologist furnishes one 
or more services on the list of available codes without the order of a 
physician or NPP on a single date of service, the AB modifier must be 
appended to each of the CPT codes billed for that date of service, and 
all of the services will be considered payable. However, if a service 
is billed with the AB modifier on one date of service and the 
beneficiary returns at a later date for another service (without an 
order) and that service is within the 12-month period after the prior 
service is furnished (either for the same or a different service on the 
list in Table 36), then the subsequent service(s) would not be 
considered payable under the PFS.
    Aligning our final policy to use modifier AB instead of HCPCS code 
GAUDX necessitates multiple changes to our claims processing systems, 
which will take some time to operationalize, possibly until mid-year 
2023. Until such time, audiologists may use the AB modifier that is 
available for dates of service on and after January 1, 2023 to provide 
services/tests to beneficiaries who have directly accessed their 
services. Audiologists who furnish these services without an order are 
expected to follow our policy and safeguards built into the AB 
modifier, as above and in the code descriptor below. As we noted above, 
we plan to communicate to audiologists via provider education and other 
guidance, including the Audiology Services web page page at https://www.cms.gov/audiology-services.
    The long descriptor for Modifier AB is as follows: Audiology 
service furnished personally by an audiologist without a physician/npp 
order for non-acute hearing assessment unrelated to disequilibrium, or 
hearing aids, or examinations for the purpose of prescribing, fitting, 
or changing hearing aids; service may be performed once every 12 
months, per beneficiary.

L. Medicare Parts A and B Payment for Dental Services

1. Background on Medicare Payment for Dental Services
    Section 1862(a)(12) of the Act generally precludes payment under 
Medicare Parts A or B for any expenses incurred for services in 
connection with the care, treatment, filling, removal, or replacement 
of teeth or structures directly supporting teeth. (Collectively here, 
we will refer to ``the care, treatment, filling, removal, or 
replacement of teeth or structures directly supporting teeth'' as 
``dental services.'') That section of the statute also includes an 
exception to allow payment to be made under Medicare Part A for 
inpatient hospital services in connection with the provision of such 
dental services if the individual, because of their underlying medical 
condition and clinical status or because of the severity of the dental 
procedure, requires hospitalization in connection with the provision of 
such services. Our regulation at 42 CFR 411.15(i) similarly excludes 
payment for dental services except for inpatient hospital services in 
connection with dental services when hospitalization is required 
because of: (1) the individual's underlying medical condition and 
clinical status; or (2) the severity of the dental procedure.
    However, under our current policy, we make payment under both 
Medicare Parts A and B for certain dental services in circumstances 
where the services are not considered to be in connection with dental 
services within the meaning of section 1862(a)(12) of the Act or our 
regulation at Sec.  411.15(i). We make payment when a doctor of dental 
medicine or dental surgery (hereinafter referred to as a ``dentist'') 
furnishes dental services that are an integral part of the covered 
primary procedure or service furnished by another physician treating 
the primary medical illness. In these limited circumstances, Medicare 
payment can be made for dental services such as, but not limited to, 
the wiring of teeth when done in connection with a reduction of a jaw 
fracture, the extraction of teeth to prepare the jaw for radiation 
treatment of neoplastic disease, and/or an oral or dental examination 
on an inpatient basis performed as part of a comprehensive workup prior 
to renal transplant surgery. (See Medicare Benefit Policy Manual (IOM 
Pub 100-02, Chapter 15, section 150); and Medicare National Coverage 
Determinations Manual Chapter 1, Part 4 (IOM Pub 100-03, Chapter 1, 
Part 4, section 260.6)). Medicare Administrative Contractors (MACs) 
make claim-by-claim determinations as to whether a patient's 
circumstances do or do not fit within the terms of the preclusion and 
exception specified in section 1862(a)(12) of the Act and Sec.  
411.15(i) of our regulations, and in accordance with the CMS manual 
provisions.
    As described in the CY 2023 PFS proposed rule (87 FR 45860, 46033 
and 46034), we have received feedback from interested parties 
suggesting that our interpretation of section 1862(a)(12) of the Act is 
unnecessarily restrictive, which may contribute to inequitable 
distribution of dental services for Medicare beneficiaries. 
Additionally, a recent report from the National Institutes of Health, 
``Oral Health in America Advances and Challenges,'' discusses how 
unequal distribution of dental services and prohibitive costs, 
particularly for older adults who are at the highest risk for poor oral 
health, can lead to and further complicate the treatment of other 
medical conditions (for more information, see https://directorsblog.nih.gov/2022/06/14/using-science-to-solve-oral-health-inequities/). The interested parties also suggested that there are 
instances where dental services are directly related to the clinical 
success of an otherwise covered medical service under Medicare Parts A 
and B, and that the regulation at Sec.  411.15(i) should be amended to 
reflect that Medicare payment is available in these circumstances. 
Recognizing that there may be instances where medical services 
necessary to diagnose and treat the individual's underlying medical 
condition and clinical status may require the performance of certain 
dental services, we stated that we believe that there are instances 
where dental services are so integral to other medically necessary 
services that they are not in connection with the care, treatment, 
filling, removal, or replacement of teeth or structures directly 
supporting teeth within the meaning of section 1862(a)(12) of the Act. 
Rather, such dental services are inextricably linked to the clinical 
success of an otherwise covered medical service, and therefore, are 
instead substantially related and integral to that primary medical 
service. We also stated that we believe that there are circumstances 
where the dental services are in direct connection with the care,

[[Page 69664]]

treatment, filling, removal, or replacement of teeth or structures 
directly supporting teeth, and are not inextricably linked to the 
clinical success of a covered medical service. In these instances, we 
continue to believe that Medicare payment is precluded by section 
1862(a)(12) of the Act except when, due to the patient's underlying 
medical condition and clinical status, or the severity of the dental 
procedure, hospitalization is required; and that in those instances, 
the Medicare Part A exception provided under section 1862(a)(12) of the 
Act would apply.
    To provide greater clarity to our current policies and respond to 
issues raised by interested parties, in the CY 2023 PFS proposed rule 
(87 FR 45860, 46033 through 46041) we: (1) proposed to clarify our 
interpretation of section 1862(a)(12) of the Act and codify certain of 
our current Medicare FFS payment policies for medically necessary 
dental services; (2) proposed and sought comment on payment for other 
dental services, such as dental examinations, including necessary 
treatment, performed as part of a comprehensive workup prior to organ 
transplant surgery, or prior to cardiac valve replacement or 
valvuloplasty procedures, that are similarly inextricably linked to, 
and substantially related and integral to the clinical success of, 
certain other covered medical services; (3) requested comments on other 
types of clinical scenarios where the dental services may be 
inextricably linked to, and substantially related and integral to the 
clinical success of, other covered medical services; (4) requested 
comments on the potential establishment of a process to identify for 
our consideration and review submissions of additional dental services 
that are inextricably linked and substantially related and integral to 
the clinical success of other covered medical services; (5) requested 
comment on other potentially impacted policies; and (6) requested 
comment on potential future payment models for dental and oral health 
care services. We sought public comments on these proposals and issues.
2. Clarifying the Interpretation of Section 1862(a)(12) of the Act and 
Codifying Current Payment Policies for Certain Dental Services
a. Payment for Inpatient Hospital Dental Services
    As explained above and in the CY 2023 PFS proposed rule (87 FR 
45860, 46033 and 46034), under our interpretation of the statute and 
our current regulation, and as reflected in our regulation and manuals, 
items and services furnished in connection with the care, treatment, 
filling, removal, or replacement of teeth or structures directly 
supporting the teeth generally are not covered, and no payment may be 
made for them under either Medicare Part A or Part B. Section 
1862(a)(12) of the Act and our regulation at Sec.  411.15(i) include an 
exception to allow Medicare Part A payment to be made for inpatient 
hospital services in connection with the provision of dental services 
if the individual, because of their underlying medical condition and 
clinical status or because of the severity of the dental procedure, 
requires hospitalization in connection with the provision of such 
services. We stated that we believe that there are instances in which a 
Medicare beneficiary may require dental services that are in direct 
connection with the care, treatment, filling, removal, or replacement 
of teeth or structures directly supporting teeth such that the 
application of the Medicare Part A payment exception would apply when 
hospitalization is required because of: (1) a patient's underlying 
medical condition and clinical status; or (2) the severity of the 
dental procedure. Under these circumstances, we would continue to apply 
the exception under section 1862(a)(12) of the Act, and make payment 
for inpatient hospital services. We solicited public comments on what 
professional services, including, but not limited to dental services, 
may occur during and prior to the patient's hospitalization or 
procedure requiring hospitalization under this exception. We noted in 
the proposed rule that we may consider finalizing, based on our review 
of public comments, additional payment policies in this area.
b. Clarifying the Interpretation of Section 1862(a)(12) of the Act and 
Codifying Current Payment Policies for Certain Dental Services
    As explained above, Medicare payment can be made for inpatient 
hospital services associated with dental services that fall within the 
statutory exception under section 1862(a)(12) of the Act. However, 
under our current policy, if a dental service and other related 
services (for example, anesthesia or imaging services) are performed as 
incident to and as an integral part of a covered procedure or service 
performed by a dentist, the total service performed by the dentist is 
covered, and payment can be made under Medicare Parts A and B as 
appropriate. This policy is based on the idea that some dental services 
that would ordinarily be excluded by statute from payment are 
inextricably linked to, and substantially related and integral to the 
clinical success of, certain other covered medical services. When that 
is the case, we stated that then we believe those dental services are 
not in connection with dental services within the meaning of section 
1862(a)(12) of the Act, but are instead inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
other covered medical services. As such, we proposed to interpret the 
statute under section 1862(a)(12) of the Act to permit Medicare payment 
under Parts A and B for dental services where the dental service is 
inextricably linked to, and substantially related and integral to the 
clinical success of, certain other covered medical services and allow 
payment to be made, regardless of whether the services are furnished in 
an inpatient or outpatient setting. Under these circumstances, we 
proposed that the exclusion under section 1862(a)(12) of the Act would 
not apply, because the service is not in connection with the care, 
treatment, filling, removal, or replacement of the teeth or structures 
supporting the teeth, but instead is inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
other covered medical services.
    As described in section II.L.1. of the proposed rule, in a limited 
number of circumstances, Medicare Part B currently pays for dental 
services under the PFS when a dentist furnishes a service(s) that is 
integral to the covered primary procedure or service rendered when 
treating the primary medical illness. Our current payment policies for 
dental services are contained in manual provisions (The Medicare 
Benefit Policy Manual Chapter 15 (IOM Pub 100-02, Chapter 15, section 
150) and Medicare National Coverage Determinations Manual Chapter 1, 
Part 4 (IOM Pub 100-03, Chapter 1, Part 4, section 260.6)) that reflect 
the proposed interpretation of section 1862(a)(12) of the Act discussed 
in the proposed rule.
    Our payment policy contained in Medicare National Coverage 
Determinations Manual Chapter 1, Part 4 (IOM Pub 100-03, Chapter 1, 
Part 4, section 260.6) \112\ (herein ``the NCD Manual'') provides for 
payment of an oral or dental examination performed on an inpatient 
basis as part of a comprehensive workup prior to renal transplant 
surgery. In the CY 2023 PFS proposed rule (87 FR 45860, 46035), we 
stated that we believe Medicare

[[Page 69665]]

payment is permitted under this manual provision for such a dental or 
oral examination prior to renal transplant surgery, because the 
examination is inextricably linked to, and substantially related and 
integral to the clinical success of, the renal transplant procedure. As 
such, we stated that we believe such services are not subject to the 
payment preclusion under section 1862(a)(12) of the Act. However, we 
also stated that we believe that comprehensive workups prior to renal 
transplant surgery, including related dental examinations, can occur in 
either the inpatient and outpatient setting. As such, we proposed to 
provide Medicare payment for oral or dental examinations performed as 
part of a comprehensive workup prior to renal transplant surgery when 
these services occur in either the inpatient or outpatient setting, and 
revise our regulation at Sec.  411.15(i) accordingly.
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    \112\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs-Items/CMS014961.
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    We noted that the NCD Manual states that, when performing a dental 
or oral examination, a dentist is not recognized as a physician under 
section 1861(r) of the Act. We stated that we believe this statement is 
based on an unnecessarily narrow reading of section 1861(r) of the Act, 
and is also not consistent with other manual provisions. The statutory 
definition of physician includes a doctor of dental surgery or dental 
medicine in section 1861(r)(2) of the Act, and a similar definition of 
physician is included in our IOM Pub 100-1, Section 70.2\113\ when 
dental or oral examinations, and specific treatments, are within the 
State scope of practice for the dentist. As such, we proposed to amend 
Sec.  411.15(i) to clarify that Medicare Part B coverage and payment 
can be made for such a dental or oral examination prior to renal 
transplant surgery when performed by a doctor of dental surgery or 
dental medicine as defined in section 1861(r)(2) of the Act.
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    \113\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs-Items/CMS050111.
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    The Medicare Benefit Policy Manual Chapter 15 (IOM Pub 100-02, 
Chapter 15, section 150) (herein ``the MBP Manual'') states that if an 
otherwise noncovered procedure or service is performed by a dentist as 
incident to and as an integral part of a covered procedure or service 
performed by the dentist, the total service performed by the dentist on 
such an occasion is covered.\114\ The MBP Manual continues by providing 
several specific examples where CMS would pay for dental services:
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    \114\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs-Items/CMS012673.
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     The reconstruction of a ridge when it is performed as a 
result of and at the same time as the surgical removal of a tumor 
(other than for dental purposes).
     The wiring of teeth when done in connection with the 
reduction of a jaw fracture.
     The extraction of teeth to prepare the jaw for radiation 
treatment of neoplastic disease.
     The dental splint when performed in conjunction with 
treatment that is determined to be a covered medical condition.
    Specifically, in the MBP Manual, we describe that the 
reconstruction of a ridge performed primarily to prepare the mouth for 
dentures is a noncovered procedure and therefore would not generally be 
eligible for payment. However, when the reconstruction of a ridge is 
performed as a result of and at the same time as the surgical removal 
of a tumor (for other than dental purposes), the totality of surgical 
procedures is a covered service. In the case of the procedure of ridge 
reconstruction occurring in conjunction with the surgical removal of a 
tumor, we believe that the dental services are inextricably linked to, 
and substantially related and integral to the clinical success of, the 
other covered medical services, that is, the removal of a tumor; and 
therefore, Medicare Parts A and B payment could be made. Additionally, 
the MBP Manual explains that Medicare makes payment for the wiring of 
teeth when this is done in connection with the reduction of a jaw 
fracture. Once again, we stated that we believe that the dental 
services of wiring of the teeth are inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
other covered medical services, which in this case is the reduction of 
a jaw fracture, and therefore, Medicare Parts A and B payment could be 
made. Likewise, the MBP Manual states that the extraction of teeth to 
prepare the jaw for radiation treatment of neoplastic disease is also 
currently covered. We continue to believe that in this clinical 
scenario the dental services related to teeth extraction are 
inextricably linked to, and substantially related and integral to the 
clinical success of, the radiation treatment of neoplastic disease; and 
therefore, Medicare Parts A and B payment could be made. The Manual 
also describes a specific situation in which certain dental services 
may be considered a covered service, depending on whether the 
underlying medical condition is deemed to be covered. The Manual 
explains that dental splints used to treat a dental condition are 
generally excluded from coverage under section 1862(a)(12) of the Act, 
but if the treatment is determined to be a covered medical condition 
(that is, dislocated upper/lower jaw joints), then the splint can be 
covered. We stated that we believe that dental splint services could be 
covered and paid, because the dental services could be inextricably 
linked to, and substantially related and integral to the clinical 
success of, a covered medical service, such as treatment of a 
dislocated jaw. Therefore, we proposed to clarify and modify the 
regulations text at Sec.  411.15(i) to include this scenario of dental 
splints used in the treatment of a covered medical condition. We sought 
comments on this aspect of the proposal.
    Therefore, we proposed to codify and clarify in the regulation at 
Sec.  411.15(i) that payment can be made under Medicare Parts A and B 
for dental services that are inextricably linked to, and substantially 
related and integral to the clinical success of, certain other covered 
medical services, including (1) reconstruction of a ridge when it is 
performed as a result of and at the same time as the surgical removal 
of a tumor; (2) the wiring or immobilization of teeth when done in 
connection with the reduction of a jaw fracture; (3) the extraction of 
teeth to prepare the jaw for radiation treatment of neoplastic disease; 
and (4) a dental splint only when used in conjunction with covered 
treatment of a medical condition. This provision would clarify existing 
policy, as we are codifying existing manual provisions in regulation.
    The MBP Manual states that payment can be made under Medicare Parts 
A and B for a covered dental procedure regardless of where the service 
is performed, noting that the hospitalization or non-hospitalization of 
a patient has no direct bearing on the coverage, payment, or exclusion 
of a given dental procedure in specific circumstances. As such, dental 
services that are not excluded from Medicare payment under section 
1862(a)(12) of the Act could be appropriately furnished in inpatient or 
outpatient settings. We proposed to clarify in the regulation at Sec.  
411.15(i) that payment for dental services that do not fall within the 
scope of section 1862(a)(12) of the Act, and that are inextricably 
linked to, and substantially related and integral to the clinical 
success of, certain other covered medical services, could be made 
regardless of whether the services are furnished on an inpatient or 
outpatient basis. We sought comments on whether it is clinically 
appropriate for these services to be furnished in inpatient or 
outpatient settings.

[[Page 69666]]

    The MBP Manual further states that the coverage of services such as 
the administration of anesthesia, diagnostic x-rays, and other related 
procedures depends upon whether the primary procedure being performed 
by the dentist is itself covered. The MBP Manual explains that an x-ray 
taken in connection with the reduction of a fracture of the jaw or 
facial bone is covered, while a single x-ray or x-ray survey taken in 
connection with the care or treatment of teeth or the periodontium is 
not covered. In order to clarify and codify this current policy, we 
proposed to amend our regulation at Sec.  411.15(i) to provide that 
payment can be made for dental services provided in conjunction with 
medical services that are inextricably linked to, and substantially 
related and integral to the clinical success of, covered medical 
services, such as X-rays, administration of anesthesia, and use of the 
operating room.
    The MBP Manual also specifies that payment can be made for services 
and supplies furnished incident to other dental services for which 
Medicare payment can be made, for example, services furnished incident 
to the dentist's professional services by a dental technician or 
registered nurse under the dentist's direct supervision. Medicare 
payment policy for services furnished incident to the services of the 
billing practitioner are contained in Sec.  410.26 of our regulations.
    Additionally, the MBP Manual provides that when an excluded service 
is the primary procedure involved, dental services are not covered, 
regardless of complexity or difficulty. The MBP Manual describes an 
example of the extraction of an impacted tooth as not covered, and goes 
on to state that certain procedures, including an alveoplasty (the 
surgical improvement of the shape and condition of the alveolar 
process) and a frenectomy, are excluded from coverage when either of 
these procedures is performed in connection with an excluded service, 
for example, the preparation of the mouth for dentures. Additionally, 
the MBP Manual states that the removal of a torus palatinus (a bony 
protuberance of the hard palate) may be a covered service, but notes 
that it is often provided in connection with an excluded service (that 
is, the preparation of the mouth for dentures), and in that event, 
Medicare does not pay for this procedure.
    We did not propose to modify this policy. No payment is made for 
dental services when an excluded service is the primary procedure 
involved. Our interpretation of section 1862(a)(12) of the Act allows 
for Medicare payment when dental services are inextricably linked to, 
and substantially related and integral to the clinical success of, 
certain other covered medical services. Therefore, no payment is made 
when dental services are related to medical services that are not 
covered, even if the dental services are inextricably linked to, and 
substantially related and integral to the clinical success of, the non-
covered services. We stated that the proposed amendment to Sec.  
411.15(i) would specify that, in order for Medicare payment to be made, 
the dental services must be inextricably linked to, and substantially 
related and integral to the clinical success of, certain other covered 
medical services.
    As proposed, the provision to clarify and codify our current 
payment policy for dental services, section 1862(a)(12) of the Act does 
not apply only when dental services are inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
other covered medical services, such that the standard of care for that 
medical service would be compromised or require the dental services to 
be performed in conjunction with the covered medical services. When 
such medically necessary dental services are furnished by a physician 
or practitioner, including a dentist, Medicare Part A or B payment can 
be made for the dental services and other services integral or incident 
to those dental services. Specifically, such services include:
     The wiring of teeth when done in connection with an 
otherwise covered medical service,
     The reduction of a jaw fracture (such as services 
described by CPT code sets 21440-21490),
     The extraction of teeth to prepare the jaw for radiation 
treatment of neoplastic disease (such as services described by Current 
Dental Terminology (CDT) \115\ codes D7140 and D7210 for ICD-10 C41.1 
Malignant neoplasm of mandible),
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    \115\ https://www.ada.org/publications/cdt.
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     Dental splints only when used in conjunction with covered 
treatment of a medical condition (such as dislocated upper/lower jaw 
joints), or
     An oral or dental examination performed as part of a 
comprehensive workup prior to renal transplant surgery (such as 
services described by ICD-10 Z94.0, and codes D0150, D0180, or D0160).
    We proposed that Medicare Parts A and B payment for these dental 
services can be made, because the services are inextricably linked to, 
and substantially related and integral to the clinical success of, the 
other covered medical services. We further sought comment on whether, 
given current clinical advances, the descriptions of these dental 
services are clinically accurate and appropriate. For example, we are 
interested in whether the phrase ``wiring of the teeth'' is still 
clinically accurate or if other terminology would be more appropriate.
    Given that such dental services would not be subject to the 
preclusion on payment under section 1862(a)(12) of the Act, Medicare 
would make payment to the furnishing dentist or another physician or 
practitioner for the professional dental services. As described in the 
MBP Manual, payment may also be made for services and supplies 
furnished incident to those dental services furnished by the dentist or 
other physician or practitioner, and for other ancillary services 
integral to the dental services. For example, Medicare payment could be 
made for services furnished incident to the professional dental 
services by auxiliary personnel, such as a dental hygienist, dental 
therapist, or registered nurse who is under the direct supervision of 
the furnishing dentist or other physician or practitioner, if they meet 
the requirements for ``incident to'' services as described in Sec.  
410.26 of our regulations. When such dental services are furnished in a 
facility setting, such as an inpatient acute care hospital or hospital 
outpatient department, payment for the facility or ancillary services 
would be made under the applicable payment system.
    In summary, we proposed to amend Sec.  411.15(i) to codify that 
payment can be made under Medicare Parts A and B for dental services 
that are inextricably linked to, and substantially related and integral 
to the clinical success of, an otherwise covered medical service. We 
further proposed to amend Sec.  411.15(i) to include examples of 
services for which payment can be made under Medicare Parts A and B on 
that basis. Specifically, we proposed to include as examples the 
following dental services for which payment is permitted under our 
current policy: (1) dental or oral examination as part of a 
comprehensive workup prior to a renal organ transplant surgery; (2) 
reconstruction of a dental ridge performed as a result of and at the 
same time as the surgical removal of a tumor; (3) wiring or 
immobilization of teeth in connection with the reduction of a jaw 
fracture; (4) extraction of teeth to prepare the jaw for radiation 
treatment of neoplastic disease; and (5) dental splints only when used 
in conjunction with medically necessary treatment of a medical 
condition. We further proposed

[[Page 69667]]

that Medicare payment would be made for these dental services 
regardless of whether the services are furnished in an inpatient or 
outpatient setting, and we proposed that payment can also be made for 
services that are ancillary to these dental services, such as x-rays, 
administration of anesthesia, use of an operating room, other facility 
services.
    We sought comment on all aspects of this proposal. We stated that, 
if finalized, we would make conforming changes to the MBP Manual to 
reflect changes or clarifications, and to remove any text that is no 
longer applicable. We also noted that we would make conforming changes 
to other Manual provisions or National Coverage Decision policies as 
necessary.
    As discussed, MACs may determine on a claim-by-claim basis whether 
a patient's circumstances do or do not fit within the terms of the 
preclusion or exception specified in section 1862(a)(12) of the Act and 
Sec.  411.15(i). The proposed policies outlined in the proposed rule 
would not prevent a MAC from making a determination that payment can be 
made for dental services in other circumstances not specifically 
addressed in the proposed rule and the proposed amendments to Sec.  
411.15(i).
c. Update to Current Payment Policies for Dental Services
    As discussed in section II.L.2 of the proposed rule, we proposed 
that payment can be made under Medicare Parts A and B for dental 
services such as the reconstruction of a dental ridge performed as a 
result of and at the same time as the surgical removal of a tumor, the 
wiring or immobilization of the teeth when done in connection with a 
reduction of a jaw fracture, the extraction of teeth to prepare the jaw 
for radiation treatment of neoplastic disease, dental splints only when 
used in conjunction with covered treatment of a medical condition, and 
an oral or dental examination performed as part of a comprehensive 
workup prior to renal transplant surgery. We noted in the proposed rule 
that we believe, after further review of current medical practice, 
through consultations with interested parties and our medical officers, 
that there are additional circumstances that are clinically similar to 
these examples, and where Medicare payment for the service could be 
made, because the dental services are inextricably linked to, and 
substantially related and integral to the clinical success of, the 
other covered medical service(s).
    For example, after further review, we stated that we believe that 
if a patient requiring an organ transplant has an oral infection, the 
success of that transplant could be compromised if the infection is not 
properly diagnosed and treated prior to the transplant surgery. Without 
an oral or dental examination to identify such an infection, and the 
necessary treatment, such as restorative dental services, to eradicate 
it prior to the transplant procedure, the patient's ability to accept 
the organ transplant could be seriously complicated or compromised. 
Examples of restorative dental services to eradicate infection could 
include: extractions (removal of the entire infection, such as pulling 
of teeth--for example, CDT D7140, D7210), restorations (removal of the 
infection from tooth/actual structure, such as fillings--for example, 
CDT D2000-2999), periodontal therapy (removal of the infection that is 
surrounding the tooth, such as scaling and root planing--for example, 
CDT D4000-4999, more specifically D4341, D4342, D4335 and D4910), or 
endodontic therapy (removal of infection from the inside of the tooth 
and surrounding structures, such as root canal--for example, CDT D3000-
3999). If such an infection is not treated prior to transplant, and 
immunosuppressant therapy is initiated to preserve the transplant, then 
there is an increased likelihood for morbidity and mortality resulting 
from spreading of the local infection to sepsis. Similarly, without a 
dental or oral exam and necessary diagnosis and treatment of any 
presenting infection of the mouth prior to a cardiac valve replacement 
\116\ or valvuloplasty procedures, an undetected, non-eradicated oral 
or dental infection could lead to bacteria seeding the valves, seeding 
surrounding cardiac muscle tissues involved with the surgical site, and 
conceivably leading to systemic infection or sepsis, all of which 
increase the likelihood of unnecessary and preventable acute and 
chronic complications for the patient. Because an oral or dental 
infection can present substantial risk to the success of these 
procedures, such that the standard of care would be to not proceed with 
the procedure when there is a known oral or dental infection present, 
we noted that we believe dental services furnished to identify, 
diagnose, and treat oral or dental infections prior to organ 
transplant, cardiac valve replacement, or valvuloplasty procedures are 
not in connection with the care, treatment, filling, removal, or 
replacement of teeth or structures directly supporting teeth, but 
instead are inextricably linked to, and substantially related and 
integral to the clinical success of, these other covered medical 
services. We noted that, in these circumstances, the necessary 
treatment to eradicate an infection may not be the totality of 
recommended dental services for a given patient. For example, if an 
infected tooth is identified in a patient requiring an organ 
transplant, cardiac valve replacement, or valvuloplasty procedure, the 
necessary treatment would be to eradicate the infection, which could 
result in the tooth being extracted. Additional dental services, such 
as a dental implant or crown, may not be considered immediately 
necessary to eliminate or eradicate the infection or its source prior 
to surgery. Therefore, we stated that such additional services would 
not be inextricably linked to, and substantially related and integral 
to the clinical success of, the organ transplant, cardiac valve 
replacement, or valvuloplasty services. As such, no Medicare payment 
would be made for the additional services that are not immediately 
necessary prior to surgery to eliminate or eradicate the infection.
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    \116\ Knox, K.W., & Hunter, N. (1991). The role of oral bacteria 
in the pathogenesis of infective endocarditis. Australian dental 
journal, 36(4), 286-292. https://doi.org/10.1111/j.1834-7819.1991.tb00724.x.
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    As discussed, we noted that we believe that there are circumstances 
where the clinical success of medical or surgical services required for 
a successful organ transplantation, cardiac valve replacement, and 
valvuloplasty procedure may require the performance of certain dental 
services. As such, we proposed to amend our regulation at Sec.  
411.15(i)(3) to provide that dental services that are inextricably 
linked to, and substantially related and integral to the clinical 
success of, a certain covered medical service are not subject to the 
exclusion under section 1862(a)(12) of the Act; and that payment can be 
made under Medicare Parts A and B for such dental services. We proposed 
to amend Sec.  411.15(i) to include examples of payable services under 
Medicare Parts A and B, as: (1) the dental or oral examination as part 
of a comprehensive workup prior to an organ transplant, cardiac valve 
replacement, or valvuloplasty procedure; and (2) the necessary dental 
treatments and diagnostics to eliminate the oral or dental infections 
found during a dental or oral examination as part of a comprehensive 
workup prior to an organ transplant, cardiac valve replacement, or 
valvuloplasty procedure. We noted that we believe that clinical 
practice is such that these services can occur within the inpatient

[[Page 69668]]

hospital or outpatient setting, and we further propose that Medicare 
Parts A and B would make payment for these dental services, as 
applicable, regardless of whether the services are furnished in an 
inpatient or outpatient setting. Furthermore, we proposed that payment 
under the applicable payment system could also be made for services 
that are ancillary to these dental services, such as X-rays, 
administration of anesthesia, and use of the operating room.
    We sought comment on the proposed policy and our proposed 
amendments to Sec.  411.15(i)(3) to specify that payment under Medicare 
Parts A and B can be made for an oral or dental examination, and 
medically necessary diagnostic and treatment services to eliminate an 
oral or dental infection, prior to an organ transplant, cardiac valve 
replacement, or valvuloplasty procedure. We proposed to continue to 
contractor price the dental services for which payment is made 
currently, and for the dental services that can be made under the 
proposed amendments to Sec.  411.15(i)(3) for CY 2023, or until we have 
further data to establish prospective payment rates. We solicited 
comment on the proposals, including the expected utilization of these 
services discussed in our proposals.
i. Other Clinical Scenarios for Dental Services Integral to Other 
Covered Medical Services
    In addition to the examples of dental services for which payment is 
made under our current policy, and dental services to avoid risk of an 
oral or dental infection prior to organ transplant, cardiac valve 
replacement, or valvuloplasty procedures, we stated that we believe 
there may be other clinical scenarios where dental services may not be 
in connection with the care, treatment, filling, removal, or 
replacement of teeth or structures directly supporting teeth, but 
instead are inextricably linked to, and substantially related and 
integral to the clinical success of, certain other covered medical 
services. These could include certain dental exams and medically 
necessary diagnostic and treatment services prior to treatments for 
head and neck cancers, such as radiation therapy with or without 
chemotherapy, or the initiation of immunosuppressant therapy, such as 
those used during cancer treatments, where the standard of care is such 
that it is clinically advisable to eliminate the source of infection 
prior to proceeding with the necessary medical care, or the standard of 
care for the primary medical condition would be significantly 
materially compromised if the dental services are not performed. As 
with any assessment of patient health prior to initiating 
immunosuppressant therapy, it may be necessary to eradicate all sites 
of infection, including oral infections, prior to suppressing the 
immune system, regardless of the reason for prescribing an 
immunosuppressant. We also noted that some medications may have an 
immunosuppressant effect, even though they are not prescribed 
principally to suppress the immune system. We stated that we believe, 
in these circumstances, eradicating oral or dental infection prior to 
beginning a medication that has been found to have a suppressant effect 
on that part of the immune system required to eradicate infectious 
agents could be necessary to the clinical success of the medication 
therapy.
    Similarly, in joint replacement surgery (such as total hip and knee 
arthroplasty surgery) we stated that we believe there may be risks to 
the outcome of the procedure if an oral infection is not treated. There 
is evidence that some joint replacement patients have significant 
dental pathology found before their surgery.\117\ Given the incidence 
of dental pathology in joint replacement patients, there may be some 
joint replacement patients who would experience a clinically 
significant benefit from a pre-operative dental exam and medically 
necessary treatment of oral pathology(ies). As in transplant surgery, 
patients having joint replacement surgery are at risk for surgical site 
infection, and there may be an increased risk for those patients with 
significant dental pathology. The presence of an overlooked oral 
infection may increase the risk for acute and chronic surgical site 
infection.118 119
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    \117\ https://www.aaos.org/aaosnow/2011/feb/clinical/clinical2/.
    \118\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4919067/.
    \119\ https://www.nebh.org/blog/why-its-a-good-idea-to-see-a-dentist-before-your-joint-replacement/ replacement/.
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    We acknowledged there is other clinical evidence that does not 
support the need for a dental exam and necessary treatment prior to 
total joint replacement surgery, specifically total hip and knee 
arthroplasty.120 121 Rather, there is evidence that further 
study is needed to determine whether pre-operative dental exams and 
treatments are necessary and clinically beneficial.\122\ Therefore, we 
sought public comment providing systematic clinical evidence as to 
whether there is an inextricable link between dental service(s) and 
joint replacement surgery such that the dental services are 
substantially related and integral to the clinical success of the 
surgical procedures. We noted that if we receive compelling clinical 
evidence, we may finalize in this final rule additional clinical 
scenarios, such as dental services prior to joint replacement surgery 
(for example, total hip and knee arthroplasty surgery), where payment 
could be made under Medicare Part A or Part B. We sought comment on 
whether there is a significant quality-of-care detriment if certain 
dental services are not provided prior to joint replacement surgery 
(such as total hip and knee arthroplasty surgery), and if so, we 
requested a description of that systematic evidence. Specifically, we 
requested medical evidence that the provision of certain dental 
services leads to improved healing, improved quality of surgery, and 
reduced likelihood of readmission and/or surgical revisions, because an 
infection has interfered with the integration of the implant and 
interfered with the implant to the skeletal structure. We stated that 
evidence needed to be clinically meaningful and represent a material 
difference that results in some level of persistence in the clinical 
success of the procedure to support that pre-operative dental services 
are similarly inextricably linked to, and substantially related and 
integral to the clinical success of, certain other covered medical 
services, and therefore, in connection with, and substantially related 
and integral to that primary covered medical service. We stated that if 
commenters were able to provide us with compelling evidence to support 
that a dental exam and necessary treatment prior to joint replacement 
procedures such as total hip and knee arthroplasty surgery would result 
in clinically significant improvements in quality and safety outcomes, 
for example, fewer revisions, fewer readmissions, more rapid healing, 
quicker discharge, quicker rehabilitation for the patient, then we 
would consider whether such dental services may be inextricably linked 
to, and substantially related and integral to the clinical success of, 
the joint replacement surgery.
---------------------------------------------------------------------------

    \120\ Barrere S., Reina N., Peters OA, Rapp L., Vergnes JN, 
Maret D. Dental assessment prior to orthopedic surgery: A systematic 
review. Orthop Traumatol Surg Res. 2019 Jun;105(4):761-772. doi: 
10.1016/j.otsr.2019.02.024. Epub 2019 May 3. PMID: 31060914.
    \121\ Young, H., Hirsh, J., Hammerberg, E.M., & Price, C.S. 
(2014). Dental disease and periprosthetic joint infection. The 
Journal of bone and joint surgery. American volume, 96(2), 162-168. 
https://doi.org/10.2106/JBJS.L.01379.
    \122\ https://www.sciencedirect.com/science/article/pii/S1877056819301318.
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    We also noted that we believe there may be other clinical scenarios

[[Page 69669]]

involving dental services that we have not yet considered, where 
certain dental services may be similarly inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
otherwise covered medical service such that the exclusion under section 
1862(a)12) of the Act would not apply. For example, we proposed to 
codify current policy that Medicare payment can be made for the wiring 
of teeth when done in connection with the reduction of a jaw fracture. 
We requested comment on whether there are other dental services 
associated with stabilizing and/or repairing the jaw after accidental 
injury or trauma and similarly that similarly would not be subject to 
the exclusion under section 1862(a)(12) of the Act, and for which we 
should consider providing Medicare payment.
    We solicited comment on our current approach to payment for dental 
services that we have already identified under our current and proposed 
policies as inextricably linked to, and substantially related and 
integral to the clinical success of, certain covered services, as well 
as those services we may yet identify, and other operational topics we 
should consider further. We acknowledged that there may be other 
clinical circumstances we have not yet identified where dental services 
may not be in connection with the care, treatment, filling, removal, or 
replacement of teeth or structures directly supporting teeth, and 
instead are similarly inextricably linked to, and substantially related 
and integral to the clinical success of, certain other covered medical 
services. There may be other clinical scenarios involving physiologic 
or anatomic conditions in which dental services could be a medically 
critical precondition to the clinical success of other services, such 
as certain surgical procedures or cancer treatments. For these reasons, 
we solicited comment on whether there are other clinical scenarios for 
medical or surgical services where the standard of care is such that 
the performance of certain dental services (for example, an exam, and 
certain diagnostic and treatment services) is considered to be a 
critical clinical precondition to proceeding with the primary medical 
procedure and/or treatment, and therefore, may be similarly 
inextricably linked to, and substantially related and integral to the 
clinical success of, a certain covered service, and therefore, not 
subject to the exclusion under section 1862(a)(12) of the Act. We 
discussed in the proposed rule that if we were to finalize the proposed 
policies as discussed under sections II.L.2.a. and II.L.2.b. of the 
proposed rule, we may consider finalizing, based on our review of 
public comments, these additional examples of dental services that may 
not be subject to the payment exclusion under section 1862(a)(12) of 
the Act because they are similarly inextricably linked to, and 
substantially related and integral to the clinical success of, covered 
medical services. We also noted that if we were to finalize such 
additional examples of dental services, we would list those services as 
examples under the regulation at Sec.  411.15(i)(3), as discussed in 
section II.L.2.c. of the proposed rule. Lastly, as discussed above, we 
stated that we recognize that the dental services we have identified 
for which Medicare payment could be made under our proposed policies 
would occur either prior to, or contemporaneously with, the covered 
medical service. We also solicited comments on whether, on the same 
basis, there are clinical circumstances under which Medicare payment 
could be made for dental services furnished after the covered medical 
procedure or treatment.
ii. Establishment of a Process To Consider Additional Clinical 
Scenarios for Future Updates
    As discussed, we stated that we believe that there may be clinical 
scenarios where dental services are not in connection with the care, 
treatment, filling, removal, or replacement of teeth or structures 
directly supporting teeth, and instead are inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
covered medical services. We also stated that we believe there may be 
additional clinical scenarios we have not yet identified under which 
Medicare payment could be made for certain dental services on this 
basis. To ensure we are appropriately considering other potential 
clinical scenarios that may involve such dental services, we discussed 
that we believe it may be appropriate to establish a process whereby 
interested parties can share recommendations for our consideration, 
review, and analysis for potential inclusion on the list of dental 
services for which payment can be made under Sec.  411.15(i)(3) through 
future rulemaking. If an interested party believes that there is a 
clinical scenario in which certain dental services are similarly 
inextricably linked to, and substantially related and integral to the 
clinical success of, certain covered medical services, we invited 
interested parties to submit information about the clinical scenario 
and the medical evidence to support that the standard of care for the 
medical service is such that one would not proceed with the medical 
procedure or service without performing the dental services, because 
the covered medical services would or could be significantly and 
materially compromised, or where dental services are a clinical 
prerequisite to proceeding with the primary medical procedure and/or 
treatment. We described that the interested party should explain why 
the particular dental services should not be subject to the general 
preclusion on payment for dental services under section 1862(a)(12) of 
the Act, because they are inextricably linked to, and substantially 
related and integral to the clinical success of, covered medical 
services, and provide the medical evidence to support that conclusion.
    To ensure that a thorough review can occur, we encouraged 
interested parties to include relevant medical literature, clinical 
guidelines or generally accepted standards of care, and other 
supporting documentation to support our review and consideration of the 
clinical scenario involving dental services. To facilitate our 
consideration of interested parties' recommendations within an annual 
rulemaking cycle, we requested that interested parties submit this 
information by February 10th of that year at 
[email protected]. Submissions received outside 
of the public comment period for a PFS proposed rule would be 
considered for possible inclusion in future notice and comment 
rulemaking cycles. Recommendations received by February, 10th of a 
calendar year would be reviewed for consideration and potential 
inclusion within the PFS proposed rule for the subsequent calendar 
year. For example, information received by February 10, 2024, would be 
reviewed for consideration and potential inclusion within the CY 2025 
PFS proposed rule. We encouraged interested parties to engage with us 
and provide medical evidence to support their recommendations for 
additional clinical scenarios where dental services may not fall within 
the scope of the payment preclusion under section 1862(a)(12) of the 
Act.
    As discussed previously, we stated that we may consider finalizing 
a change, after reviewing public comments, in the CY 2023 PFS final 
rule to revise the list of examples of dental services for which 
Medicare payment can be made. Furthermore, we solicited feedback on: 
(1) whether there are additional clinical circumstances we should 
consider where dental services are inextricably linked to, and 
substantially related and integral to the clinical success of, covered 
medical

[[Page 69670]]

services; and (2) the establishment of a process to review additional 
clinical scenarios identified by the public, which we may consider 
finalizing, after review of public comments received, in this final 
rule.
iii. Request for Comment on Dental Services Integral to Covered Medical 
Services Which Can Result in Improved Patient Outcomes
    As described in section II.L.2 of the proposed rule, we stated that 
we believe there are clinical scenarios where the standard of care is 
such that there is an immediate need for certain dental services as the 
necessary clinical prerequisite to an otherwise covered medical 
service. We stated that we believe there may be other clinical 
scenarios, however, where the ongoing disease management of the patient 
receiving the medically necessary procedure may have an improved 
outcome or see a clinical benefit from the performance of dental 
services, but that the dental service may not be inextricably linked 
to, or substantially related and integral to the clinical success of, 
the otherwise covered medical service.
    For example, we believe there may be certain circumstances where 
the clinical benefit of medical care or treatment of a diabetic patient 
could be improved if certain dental services are furnished. We 
solicited public feedback on whether certain dental services (for 
example, a dental exam, necessary treatment of a dental condition such 
as the extraction of an infected and mobile tooth) should be considered 
so integral to the standard of care for an otherwise covered medical 
service that the preclusion on Medicare payment under section 
1862(a)(12) of the Act does not apply.
    Additionally, we solicited comments on whether the success of a 
given surgery is dependent upon eradication of dental or oral 
infection. As noted in section II.L.2.c. of the proposed rule, we 
stated that we believe surgeries dealing with organ transplants, 
cardiac valve replacement, or valvuloplasty procedures may require a 
dental exam and treatment prior to the surgery because the services to 
identify and eradicate dental or oral infection are inextricably linked 
to, and substantially related and integral to the success of, these 
otherwise covered medical services. However, we solicited feedback on 
whether there are other types of surgery for which certain dental 
services would meet this threshold. We invited public comment on 
whether there are other clinical scenarios involving acute or chronic 
conditions that would have an improved patient outcome if dental 
services are furnished, and if so, whether we should consider these 
services as inextricably linked to, and substantially related and 
integral to the clinical success of, certain covered medical services.
3. Request for Comment on Other Potentially Impacted Policies
    As discussed in section II.L.2.a-b of the proposed rule, we 
proposed to codify and clarify our current payment policies for dental 
services. We recognized that under these policies there may be 
instances where multiple health care providers may need to coordinate 
the performance of certain medical and dental services based on the 
patients' chronic conditions and/or serious illnesses. We noted that we 
continue to consider improvements to our payment policies for care 
management services as health care delivery models evolve. As such, we 
sought comment on whether our current policies for care management 
services make clear that time spent by physicians or non-physician 
practitioners coordinating care with dentists regarding the performance 
and outcomes of services as proposed under section II.L.2 of the 
proposed rule, may be counted for purposes of applicable care 
management codes. We also solicited feedback on whether existing care 
management codes adequately describe and account for time spent 
coordinating with dentists and their clinical staff. We sought comments 
regarding the impact of changes in how health care is delivered, and 
whether an increased integration and coordination of care among health 
care providers should also be taken into account in considering dental 
services that may be inextricably linked to, and substantially related 
and integral to the clinical success of, a primary medical service. 
Additionally, we sought comment as to whether, and to what extent, the 
proposed policies as described in section II.L.2 of the proposed rule 
would address any inequitable distribution of dental services for 
Medicare beneficiaries.
    Finally, we recognized that many Medicare beneficiaries have 
separate or supplemental dental coverage, such as through a Medigap 
plan or other plan offering. We noted that if we were to finalize in 
the CY 2023 PFS final rule our proposed policies as described further 
in section II.L.2 of the proposed rule, we sought comment on how 
current coordination of dental benefits operates, and where 
improvements could be provided. Additionally, we sought comment on what 
aspects of coordinating benefits among supplemental dental providers we 
should consider if we were to finalize the proposed policies as 
specified under section II.L.2 of the proposed rule.
4. Request for Comment on Potential Future Payment Models for Dental 
and Oral Health Care Services
    Our authority under section 1115A(d)(1) of the Act provides broad 
authority for the Secretary to waive such requirements of title XVIII 
of the Act, which pertain to Medicare, as may be necessary solely for 
purposes of carrying out section 1115A of the Act with respect to 
testing models described in section 1115A(b) of the Act.
    In 2014, the Health Care Innovation Awards (HCIA) Round 2, a 
limited time grant initiative, included awards with the goal to improve 
the health of populations through activities focused on engaging 
beneficiaries, prevention, wellness, and comprehensive care that 
extended beyond the clinical service delivery setting. Several 
participants used their HCIA Round 2 funds to test models of clinical 
care that included payment for dental and oral care services. For 
further information regarding the success of these awards as applied to 
dental and oral care services please review the HCIA Round 2 Final 
Awardee Evaluation Report (2014-2018).\123\
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    \123\ https://innovation.cms.gov/data-and-reports/2020/hcia2-fg-finalevalrpt.
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    We sought comment on additional ways to integrate the payment for 
dental and oral health care services within existing and future payment 
models using the Innovation Center's waiver authority in existing or 
future service delivery models, including models focused on equity, 
care coordination, total cost of care and specific disease condition.
Summary of Finalized Policies
    As described further in the following sections, we are finalizing 
effective for CY 2023 (1) a clarification our interpretation of section 
1862(a)(12) of the Act and codification of certain of our current 
Medicare FFS payment policies for medically necessary dental services; 
(2) Medicare Parts A and B payment for dental services, such as dental 
examinations, including necessary treatment, performed as part of a 
comprehensive workup prior to organ transplant surgery, or prior to 
cardiac valve replacement or valvuloplasty procedures effective CY 
2023; (3) For CY 2024, we are finalizing Medicare Parts A and B payment 
for dental services, such as dental

[[Page 69671]]

examinations, including necessary treatments, performed as part of a 
comprehensive workup prior to the treatment for head and neck cancers, 
which we indicated we may consider finalizing based on comments 
received on the proposed rule; and (4) Effective CY 2023, the 
establishment of a process to identify for our consideration and review 
submissions of additional dental services that are inextricably linked 
and substantially related and integral to the clinical success of other 
covered medical services, which we indicated we may consider finalizing 
in this final rule.
    We are also finalizing amendments to our regulation at Sec.  
411.15(i) to provide that dental services that are inextricably linked 
to, and substantially related and integral to the clinical success of, 
a certain covered medical service(s) are not subject to the exclusion 
under section 1862(a)(12) of the Act; and that payment can be made 
under Medicare Parts A and B, under the applicable payment system, for 
such dental services that occur within the inpatient hospital and 
outpatient setting, as clinically appropriate. We are also finalizing, 
with modifications, an amendment to Sec.  411.15(i) to include examples 
of services that are not subject to the exclusion under section 
1862(a)(12) of the Act and for which payment can be made under Medicare 
Parts A and B.
    The policies we are finalizing take into account commenters' 
feedback and information provided in clinical literature, such as peer 
reviewed publications or clinical guidelines supported by clinical 
evidence, supporting the inextricable link between dental services and 
certain covered medical services. First, commenters supported our 
interpretation of section 1862(a)(12) of the Act that there may be 
instances where medical services necessary to diagnose and treat the 
individual's underlying medical condition and clinical status may 
require the performance of certain dental services. Second, many 
commenters provided recommendations that CMS collaborate with 
interested parties to allow for more time to explore the link between 
medical and dental services, refine the policy, and respond to many of 
the operational and implementation questions raised. We believe that 
the process we are finalizing, as described in section II.L.2.c.ii, to 
engage with interested parties and review their recommendations 
regarding the inextricable link between dental services and certain 
covered medical services will serve the need expressed by commenters 
for continued engagement on these issues. We are also finalizing for CY 
2024, Medicare payment under Parts A and B for dental services prior to 
treatment for head and neck cancers, as an additional example of dental 
services that are inextricably linked to certain covered medical 
services than was presented in the proposed rule. This will allow us to 
continue to further consider definitional issues over the coming year. 
Additionally, we intend to continue to engage in discussions with the 
public on a wide spectrum of issues relating to Medicare payment for 
certain dental services that do not fall within the preclusion or 
exclusion under section 1862(a)(12) of the Act and related topics. 
Furthermore, we remain open to adjusting our finalized policy through 
future rulemaking and/or additional guidance as necessary. We 
appreciate the thoughtful questions raised by commenters and are 
committed to continued engagement.
    We are not finalizing, at this time, payment for dental services 
prior to the initiation of immunosuppressant therapy, joint replacement 
surgeries, or other surgical procedures, which we had indicated in the 
CY 2023 PFS proposed rule that we may finalize in this final rule. As 
further described below, we agree with the feedback received from many 
commenters that additional time is necessary to consider the 
inextricable link between dental services and these covered medical 
services, and with commenters' requests to develop definitions to guide 
decision making. We are committed to continuing to explore the 
potential inextricable relationship between dental services and these 
covered medical services through the process we proposed, as described 
under section II.L.2.c.ii of this final rule, and are finalizing 
beginning for CY 2023.
Comments and Responses to the Policies Discussed in the Proposed Rule
    In this section, we summarize and respond to public comments on the 
policies that we either proposed within the CY 2023 PFS proposed rule 
(87 FR 45860, 46033 through 46040) or indicated that we may consider 
finalizing within the CY 2023 PFS final rule. Commenters included 
individuals, patient advocacy organizations, hospitals and hospital 
associations, medical and dental associations representing several 
different specialties and specialty societies, and health insurance 
companies, among others. We note that some commenters requested that we 
consider Medicare coverage policies that were outside the scope of the 
policies discussed in the CY 2023 PFS proposed rule. We thank the 
commenters and note that we will take these comments into consideration 
for the future.
    We note that many commenters responded to our request for 
information under section II.L.2.c.iii. of this rule to express the 
view that payment of dental services could improve patient outcomes and 
quality of life and reduce Medicare expenditures overall by avoiding 
the need to cover medical complications arising from untreated dental 
conditions. Many commenters encouraged CMS to apply its authority to 
pay for dental services associated with certain covered medical 
services to as broad of a range of clinical scenarios as possible, 
including, but not limited to, payment for routine dental care for 
patients with (or at risk of developing) medical conditions such as 
diabetes, cardiovascular disease, some lung diseases, or physical and 
cognitive impairments that impact individuals' ability to perform 
activities of daily living (including tooth brushing). Commenters also 
encouraged us to consider the provision of dental care in relation to 
treatments such as bisphosphonate therapy, substance use disorder 
treatment, prescription of certain psychiatric medications, or any 
surgery that may result in hospitalization. We thank commenters for 
both the personal and clinical information submitted regarding the 
importance between dental and oral health, and various medical 
conditions and certain medical services. We are still reviewing the 
wide array of suggestions, clinical information to elucidate the 
connection between dental health and clinical outcomes of many of the 
medical services, and other information provided in response to this 
request for information. Given these factors, we want to continue to 
engage with interested parties and consider this material through the 
public process as finalized under section II.L.2.c.ii. of this final 
rule or potentially in future rulemaking. Additionally, we encourage 
additional public discussions and engagement on a wide range of issues 
relating to Medicare payment for certain dental services that do not 
fall within the exclusion under section 1862(a)(12) of the Act.
    Finally, we thank commenters for their thoughtful feedback on the 
requests for information on other potentially impacted policies 
(section II.L.3. of this final rule) and potential future payment 
models for dental and oral health care services (section II.L.4. of 
this final rule). We did not indicate in the CY 2023 PFS proposed rule 
that

[[Page 69672]]

we may finalize policies in these areas in the CY 2023 PFS final rule. 
We continue to review this feedback and will consider these comments on 
other potentially impacted payment policies within the public process 
we are finalizing, as described under section II.L.2.c.ii. of this 
final rule, and in potential future rulemaking or guidance, as 
necessary. We also look forward to ongoing discussions with the public 
on issues relating to the provisions described in this rule as well as 
dental services that do not fall within the exclusion under section 
1862(a)(12) of the Act.
Payment for Inpatient Hospital Dental Services and Request for Comment
    Comment: Commenters generally expressed support for our 
interpretation of the statute and our current regulation to allow 
Medicare payment for inpatient hospital services in connection with the 
provision of dental services if the individual, because of their 
underlying medical condition and clinical status or because of the 
severity of the dental procedure, requires hospitalization in 
connection with the provision of such services. Some commenters 
recommended that CMS undertake a Medicare demonstration for 
beneficiaries with underlying medical conditions who require integral 
dental services as a condition of their covered primary Medicare Part A 
service to determine the financial and operational efficiencies.
    Other commenters requested that CMS provide further clarity around 
the type of dental services, medical conditions and services, and 
patient clinical statuses that would allow for Medicare payment in this 
manner. Commenters also requested that CMS further define whether the 
types of underlying medical conditions include hospitalizations for 
mental health or substance use disorders.
    Response: We appreciate the commenters' support for our proposal to 
clarify and codify our current policy to allow Medicare payment to be 
made for inpatient hospital services in connection with the provision 
of dental services, if the individual, because of their underlying 
medical condition and clinical status or because of the severity of the 
dental procedure, requires hospitalization in connection with the 
provision of such services. We appreciate the requests made by 
commenters for additional guidance to promote consistent application of 
the policy. We also believe that the codification and clarification of 
our current policy will assist in fostering consistent national 
application of this policy. We intend to provide additional guidance to 
CMS Medicare Administrative Contractors (MACs) and the public as needed 
to facilitate further consistent application of this policy.
Clarifying the Interpretation of Section 1862(a)(12) of the Act and 
Codifying Current Payment Policies for Certain Dental Services
    Comment: Many commenters supported our proposal to interpret 
section 1862(a)(12) of the Act to permit Medicare payment under Parts A 
and B for dental services, where the dental service is inextricably 
linked to, and substantially related and integral to the clinical 
success of, certain other covered medical services. These commenters 
supported our proposal to allow payment to be made because they agreed 
that the service is not in connection with the care, treatment, 
filling, removal, or replacement of the teeth or structures supporting 
the teeth, but instead is inextricably linked to, and substantially 
related and integral to the clinical success of, certain other covered 
medical services. The majority of commenters also supported our 
proposal to clarify in regulation that payment for dental services that 
do not fall within the scope of section 1862(a)(12) of the Act because 
they are inextricably linked to, and substantially related and integral 
to the clinical success of, certain other covered medical services, 
could be made regardless of whether the services are furnished on an 
inpatient or outpatient basis. These commenters encouraged CMS to apply 
this policy in all clinical circumstances where appropriate. Some 
commenters suggested that such outpatient dental services might be 
provided through mobile clinics, via teledentistry, and in congregate 
care settings such as nursing facilities, assisted living facilities, 
etc.
    One commenter questioned whether current hospital billing 
requirements would influence whether patients needing dental services 
will be admitted on an inpatient basis or treated as on an outpatient 
basis, and whether that would affect how much beneficiaries pay for 
these services.
    Other commenters suggested that our proposal was focused too 
narrowly, and suggested broader interpretations of 1862(a)(12). One 
commenter suggested that oral care services (such as examinations; 
biopsies; radiological studies; other tests; and treatments of growths 
and lesions, benign or malignant, of the cheeks, lips, and tongue) are 
distinct from, and therefore not excluded from Medicare payment as 
dental services in connection with the care, treatment, filling, 
removal, or replacement of teeth or structures directly supporting 
teeth. Similarly, another commenter suggested that the Medicare statute 
excludes coverage and payment only for those dental services performed 
primarily for the purpose of treatment of the teeth or structures 
directly supporting the teeth, and therefore all other dental services 
performed to support another Medicare-covered procedure would be 
eligible for payment.
    Response: We appreciate commenters' support for our proposal to 
permit Medicare payment under Parts A and B for dental services, where 
the dental service is inextricably linked to, and substantially related 
and integral to the clinical success of, certain other covered medical 
services; and to allow payment to be made regardless of whether the 
services are furnished in an inpatient or outpatient setting. As such, 
we are finalizing our proposal to codify and clarify in the regulation 
at Sec.  411.15(i) that payment can be made under Medicare Parts A and 
B for dental services that are inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
other covered medical services; and that payment will be allowed for 
services furnished in inpatient and outpatient settings (where 
clinically appropriate) with payment being made for covered services 
under the applicable payment system. We appreciate the concerns raised 
by commenters regarding our interpretation of section 1862(a)(12) of 
the Act. However, we believe that section 1862(a)(12) allows for 
payment in this manner because such dental services are not in 
connection with the care, treatment, filling, removal, or replacement 
of teeth or structures directly supporting teeth within the meaning of 
section 1862(a)(12) of the Act. Instead, we believe they are 
inextricably linked to the clinical success of an otherwise covered 
medical service, and therefore, are substantially related and integral 
to that primary medical service. We appreciate commenters' request for 
guidance on this policy and will work to provide additional guidance, 
as needed, to promote consistent application of this policy. We expect 
such guidance may also reinforce and clarify that medical care 
involving the mouth, not in connection with the care, treatment, 
filling, removal, or replacement of teeth or structures directly 
supporting teeth, is not subject to exclusion under section 1862(a)(12) 
of the Act, that CMS MACs may make claim-by-claim determinations, as 
necessary.

[[Page 69673]]

    Comment: Some commenters recommended that we limit the scope of 
Medicare payments for oral examinations prior to certain covered 
medical services. These commenters stated that Medicare should continue 
to make payment for oral examinations under Medicare Part A if 
performed by a dentist on a hospital's staff; however, Medicare Part B 
should only make payment for oral examinations performed by a 
physician, excluding dentists. These commenters requested that CMS not 
clarify in regulation that the statutory definition of physician under 
section 1861(r)(2) of the Act applies in these circumstances, and 
instead requested that CMS maintain, as stated in the NCD Manual (IOM 
Pub 100-03, Chapter 1, Part 4, section 260.6), that when performing a 
dental or oral examination, a dentist is not recognized as a physician 
under section 1861(r) of the Act. These commenters stated that 
physicians should be the leaders of the patient care team and that 
diagnosis of the medical issue, and subsequent care plan, should be 
determined only by the medical professional, not the dentist. Other 
commenters asked whether medical professionals could perform the dental 
exams in accordance with current policy. These commenters further 
requested clarification as to whether we would apply equivalent 
physician administrative (such as electronic health record reporting 
and merit-based incentive payments), enrollment, and compliance 
requirements to dentists as are applied to other physician 
professionals under Medicare Part B.
    Response: We appreciate commenters' questions regarding our 
proposal to provide Medicare payment for oral or dental examinations 
performed as part of a comprehensive workup prior to certain covered 
medical services, and acknowledge their request to narrow the scope of 
the proposal. However, we continue to believe that the current language 
in the NCD manual is based on an unnecessarily narrow reading of 
section 1861(r) of the Act, and is not consistent with other manual 
provisions. We believe the statutory definition of physician under 
section 1861(r) of the Act is clear in its inclusion of a doctor of 
dental surgery or of dental medicine, and a similar definition of 
physician is included in our Medicare General Information, Eligibility, 
and Entitlement Manual (IOM Pub 100-1, Chapter 5, section 70.2) when 
dental or oral examinations, and specific treatments, are within the 
State scope of practice for the dentist.
    We thank commenters for their request for clarification of the 
medical professionals' (physician or non-physician practitioner) role 
within the performance of dental services that are inextricably linked 
to the clinical success of certain covered medical services. We agree 
that involvement and integration between medical and dental 
professionals is an important component of the delivery of these 
medical services, and is fundamental to our policy permitting payment 
for certain dental services under Medicare Parts A and B. Further, we 
appreciate the commenters' point, and also believe that physician and 
non-physician practitioner engagement in the patient's care team is 
important. As such, Medicare Parts A and B payment for dental services 
not in connection with the care, treatment, filling, removal, or 
replacement of teeth or structures directly supporting teeth within the 
meaning of section 1862(a)(12) of the Act can occur only when dental 
and medical services are integrated and when the dental services are 
inextricably linked to certain covered medical services. Without both 
integration between the medical and dental professional, and the 
inextricable link between the dental and covered medical services such 
that the dental services are integral to the clinical success of the 
medical services, Medicare payment for the services would be precluded 
under Medicare Part B and therefore section 1862(a)(12) of the Act. We 
note that dental services that are precluded from payment under Part B 
under the statutory payment exclusion in section 1862(a)(12) of the Act 
may be eligible to be covered and paid by supplemental dental plans.
    We believe integration between medical and dental professionals can 
occur when these professionals coordinate care. This level of 
coordination can occur in various forms such as, but not limited, to a 
referral or exchange of information between the medical professional 
(physician or non-physician practitioner) and the dentist. This 
coordination should occur between a dentist and another medical 
professional (physician or other non-physician practitioner) regardless 
of whether both individuals are affiliated with or employed by the same 
entity. We note that to be eligible to bill and receive direct payment 
for professional services under Medicare Part B, the medical 
professional and dentist would need to be enrolled in Medicare and meet 
all other requirements for billing under the PFS. (Alternatively, a 
dentist not enrolled in Medicare could perform services incident-to the 
professional services of a Medicare enrolled physician. In that case, 
the services would need to meet the requirements for incident-to 
services under Sec.  410.26, including the appropriate level of 
supervision. Payment would be made to the enrolled physician who would 
bill for the services.) Furthermore, the state scope of practice for 
the medical and dental professional must support the professional 
performing the specific dental service(s). If there is no exchange of 
information between the medical professional (physician or other non-
physician practitioner) and the dental professional, then we do not 
believe there can be an inextricable link between the dental and 
covered medical service for purposes of Medicare payment for the dental 
services within the meaning of section 1862(a)(12) of the Act. This is 
because the medical and dental professionals would not have the 
necessary information to decide that the dental service is inextricably 
linked to a covered medical service, and therefore, not subject to a 
statutory payment exclusion under section 1862(a)(12) of the Act.
    In regard to commenters' request for clarification as to whether 
equivalent administrative, enrollment, and compliance requirements 
would apply to dentists as are applied to other physicians, 
practitioners, and healthcare professionals under Medicare Part B, we 
note that dentists are included in the statutory definition of 
physician at section 1861(r)(2) of the Act, and would generally be 
considered and treated as a physician for purposes of enrollment, 
compliance, and other administrative programs including the Merit-Based 
Incentive Payment Systems (MIPS) (for more information about MIPS 
eligibility please see: https://qpp.cms.gov/mips/how-eligibility-is-determined), which includes requirements related to electronic health 
record (EHR) usage for physicians, and is applicable to eligible 
professionals as defined in section 1848(k)(3)(B) of the Act. Because 
``a physician'' is specified as an eligible professional under this 
definition, and a doctor of dental surgery or dental medicine is 
included in the definition of physician in section 1861(r) of the Act, 
the MIPS reporting requirements would apply to dentists who are 
determined to MIPS eligible clinicians.
    We appreciate the concerns raised by commenters and will work to 
provide additional guidance to answer enrollment, billing, compliance, 
and other administrative questions for dentists as needed.
    Comment: Commenters generally supported our proposal to codify 
examples of dental services for which payment is permitted under our 
current

[[Page 69674]]

policy: (1) dental or oral examination as part of a comprehensive 
workup prior to a renal organ transplant surgery; (2) reconstruction of 
a dental ridge performed as a result of and at the same time as the 
surgical removal of a tumor; (3) wiring or immobilization of teeth in 
connection with the reduction of a jaw fracture; (4) extraction of 
teeth to prepare the jaw for radiation treatment of neoplastic disease; 
and (5) dental splints only when used in conjunction with medically 
necessary treatment of a medical condition. One commenter suggested 
that the term ``wiring of the teeth'' be instead identified as 
``stabilization of teeth'' to align with current medical terminology. 
Another commenter noted that ``wiring'' and ``splinting'' are commonly 
used and accepted terms, and that they are sometimes used 
interchangeably, along with ``stabilization.'' The same commenter 
requested clarification as to the rationale for including, ``dental 
splints only when used in conjunction with covered treatment of a 
medical condition such as dislocated jaw joints'' in proposed Sec.  
411.15(i)(3)(i)(E) as well as ``wiring or immobilization of teeth in 
connection with the reduction of a jaw fracture'' in proposed Sec.  
411.15(i)(3)(i)(C) and suggested that the two related paragraphs be 
combined.
    Response: We appreciate commenters' support for our proposal to 
codify examples of dental services for which payment is permitted under 
our current policy. We thank commenters for suggesting updates in 
medical terminology. We agree that the dental services examples 
provided under current policy: (1) dental or oral examination as part 
of a comprehensive workup prior to a renal organ transplant surgery; 
(2) reconstruction of a dental ridge performed as a result of and at 
the same time as the surgical removal of a tumor; (3) wiring or 
immobilization of teeth in connection with the reduction of a jaw 
fracture; (4) extraction of teeth to prepare the jaw for radiation 
treatment of neoplastic disease; and (5) dental splints only when used 
in conjunction with medically necessary treatment of a medical 
condition, are examples of dental services that are inextricably linked 
to, and substantially related and integral to the clinical success of, 
certain other covered medical services, and therefore, continue to 
believe that Medicare Parts A and B payment could be made for them.
    As such, we are finalizing our proposal to amend Sec.  411.15(i) to 
clarify that: (1) dental or oral examination as part of a comprehensive 
workup prior to a renal organ transplant surgery (and as discussed in 
detail below, we are expanding this to include all organ transplant 
surgeries); (2) reconstruction of a dental ridge performed as a result 
of and at the same time as the surgical removal of a tumor; and (3) 
extraction of teeth to prepare the jaw for radiation treatment of 
neoplastic disease, are examples of dental services that are 
inextricably linked to, and substantially related and integral to the 
clinical success of, certain other covered medical services, and 
therefore, and continue to believe that Medicare Parts A and B payment 
could be made for them.
    We were persuaded by the information provided by commenters 
regarding the medical terminology we use at Sec.  411.15(i)(3)(C), the 
suggestion to replace ``wiring or immobilization of the teeth'' with 
``stabilization,'' and also the suggestion to combine two related 
paragraphs, Sec. Sec.  411.15(i)(3)(C) and 411.415(i)(3)(E). In 
response to comments, we are finalizing a revision to Sec.  411.15(i) 
to merge the two related paragraphs into one paragraph at Sec.  
411.15(i)(3)(C). The revised paragraph will refer to, ``The 
stabilization or immobilization of teeth in connection with the 
reduction of a jaw fracture and dental splints only when used in 
conjunction with covered treatment of a covered medical condition, such 
as dislocated jaw joints.''
    Comment: Several commenters expressed support for our proposal to 
provide that payment can be made for ancillary services and supplies 
furnished incident to covered dental services, including but not 
limited to x-rays, administration of anesthesia, and use of the 
operating room. Several commenters recommended removal of any 
requirements for direct supervision of auxiliary personnel, such as for 
services performed by dental hygienists, for ancillary services and 
supplies furnished incident to covered dental services, because they 
stated the physical presence of the dentist could limit access to 
services. These commenters stated that requiring direct supervision of 
dental hygienists would also be in conflict with some state's scope of 
practice for these auxiliary personnel. Other commenters requested that 
certified registered nurse anesthetists (CRNAs) continue to be 
recognized as anesthesia professionals able to administer anesthesia in 
these circumstances and receive Medicare payment.
    Response: We appreciate commenters' support for our proposal to 
provide that Medicare payment can be made for ancillary services and 
other supplies furnished incident to covered dental services, such 
ancillary services including but not limited to x-rays, administration 
of anesthesia, and use of the operating room. We note that we did not 
propose to modify our current policies with respect to the scope of 
professional services, or the administration of anesthesia services, by 
CRNAs.
    In order for physicians and other practitioners, including 
dentists, to receive Medicare Part B payment for services that are 
performed by auxiliary personnel incident to their professional 
services, the services generally must be performed under the direct 
supervision of the physician or practitioner. This is one of the 
requirements specified in our regulation at Sec.  410.26 for ``incident 
to'' services, such as services performed by dental hygienists and 
billed by the dentist incident to their professional services. We note 
that the definition of direct supervision does not require the 
physician or dentist to be physically present within the room during 
the performance of the dental services. We did not propose to modify 
our regulatory requirements under Sec.  410.26 for services furnished 
incident to physicians' services. Therefore, those regulatory 
requirements continue to apply. We will consider the commenters' 
recommendations for adjusting the supervision requirements of auxiliary 
personnel, including dental hygienists, performing covered dental 
services incident to dental services of a physician for potential 
future rulemaking.
Update to Current Payment Policies for Dental Services
    Comment: Many commenters supported the proposed updates to include 
payment for medically necessary dental services related to additional 
conditions (prior to organ transplant, cardiac valve replacement, or 
valvuloplasty procedures), stating that dental services in these 
circumstances are inextricably linked to the proposed medical services, 
are medically necessary, and providing payment for them will foster and 
improve patient outcomes related to these medical conditions.
    Response: We appreciate the commenters' support and agree that the 
payment policy updates we proposed represent examples of dental 
services that are inextricably linked to, and substantially related and 
integral to the clinical success of, covered medical services. As 
discussed, these examples include payment for dental services prior to 
organ transplant, cardiac valve replacement, or valvuloplasty 
procedures. As such, we are finalizing

[[Page 69675]]

our proposal that Medicare Part A and Part B payment can be made for 
dental or oral examinations, including necessary treatment, performed 
as part of a comprehensive workup prior to organ transplant surgery, or 
prior to cardiac valve replacement or valvuloplasty procedures, that 
are inextricably linked to, and substantially related and integral to 
the clinical success of, these covered medical services.
    Comment: Many commenters expressed support for the proposed update 
for payment for medically necessary dental services related and 
integral to the clinical success of organ transplants, cardiac valve 
replacement or valvuloplasty procedures, as the commenters believe that 
these revisions would serve to promote health equity and increase 
access to medically necessary services for vulnerable members of the 
Medicare population. The commenters asserted that underserved 
populations generally do not have access to the necessary oral health 
services required for successful outcomes related to organ 
transplantation and cardiac valve replacement or valvuloplasty 
procedures.
    Response: We appreciate the commenters' support regarding the 
potential health equity impact of the proposed updates to the current 
policy for payment under Medicare Parts A and B for dental services 
that are inextricably linked to, and substantially related and integral 
to the clinical success of, covered medical services to now include 
organ transplant, cardiac valve replacement, or valvuloplasty 
procedures. We further appreciate the feedback that Medicare payment 
for dental examinations, including necessary treatment, performed as 
part of a comprehensive workup prior to organ transplant surgery, or 
prior to cardiac valve replacement or valvuloplasty procedures could 
help advance health equity for people who are medically underserved.
    Comment: Many commenters expressed support for the proposal to 
include Medicare Parts A and B payment for dental examination, and 
medically necessary diagnostic and treatment services to eliminate an 
oral or dental infection, prior to an organ transplant. Commenters 
indicated that it is standard practice for candidates for organ 
transplants to require a dental assessment and/or screening for, and 
treatment of, decay and infections including periodontal disease before 
transplant surgery, as these conditions potentially compromise the 
outcomes of surgery including organ rejection. Commenters noted a wide 
variation of terms and clinical scenarios where certain dental services 
may be necessary for certain patients surrounding a transplantation 
procedure, and requested CMS further delineate specific circumstances 
where payment may be made under Medicare Parts A and B.
    Commenters stressed the importance of remedial oral or dental care 
in advance of transplantation to reduce dental and oral infection and 
stated that the resolution or stabilization of dental problems prior to 
transplant procedures lowers the risk for infection and sepsis post-
transplant. Several of these commenters provided citations from opinion 
pieces to support their perspectives. Some commenters noted that, 
according to the National Institute of Dental and Craniofacial 
Research, ``Whenever possible, all active dental disease should be 
aggressively treated before transplantation, since post-operative 
immunosuppression decreases a patient's ability to resist systemic 
infection.'' We note that the authors further stated that, ``there was 
an association between dental focus and hospital readmission/stay. 
However, our methods do not provide conclusive proof of causality. 
Hospitalization due to acute dental infection was rare.'' \124\
---------------------------------------------------------------------------

    \124\ National Institute of Dental and Craniofacial Research. 
April 2011. Dental Management of the Organ Transplant Patient. 
https://www.in.gov/health/files/OrganTransplantProf.pdf.
---------------------------------------------------------------------------

    Commenters also asserted that inflammation combined with required 
immune suppression for transplant procedures can yield poor outcomes 
post-transplantation and that high rates of poor oral health, including 
periodontal disease and xerostomia, are risk factors for compromising 
successful transplant outcomes. Moreover, a few commenters noted that 
patients are generally required to demonstrate good oral hygiene to 
even be considered active on the organ transplant waiting list.
    Commenters also stated that they believe dental services that are 
substantially related and integral to the clinical success of 
transplants need to be provided to candidates before any such 
procedure, regardless of whether transplantation ultimately occurs. 
Commenters noted that the elimination of oral or dental infection is 
necessary prior to surgery, even if the procedure does not take place. 
Commenters also noted that medically necessary services may be required 
during the transplantation procedure, as some oral issues may not be 
identified until the procedure is underway.
    Moreover, commenters expressed concerns that some patients who may 
be awaiting transplantation services could receive dental services and 
then undergo the transplantation procedure only to experience organ 
rejection, other non-ideal outcomes, or ultimately not receive 
transplantation procedure due to extenuating circumstances. The 
commenters were concerned that while the dental services are 
substantially related and integral to the clinical success of the 
planned or furnished covered transplantation services, in the event the 
transplant procedure is ultimately not successful due to rejection or 
the procedure does not occur for various medical reasons, Medicare 
could deny payment for the dental care that is substantially related 
and integral to the organ transplant because the transplant surgery was 
not completed or unsuccessful.
    Commenters explained that life-threatening infections related to 
the weakened immune systems of older adults (immunosenescence) and 
transplant-related immunosuppression can be serious complications of 
transplantation after the transplantation occurs. These commenters also 
stated that transplant patients typically take multiple medications 
involving long-term use of immunosuppressive drugs, as well as multiple 
medications for co-morbidities like diabetes and cardiovascular 
disease, and that dental services may be required in addressing these 
post-transplantation conditions.
    Several commenters requested that CMS provide payment under 
Medicare Parts A and Part B for medically necessary diagnostic and 
treatment services after an organ transplant, rather than only before 
or during the transplant procedure because they stated that dental 
services both before and after the transplantation procedure itself 
influence the outcome of the transplant. A commenter stated that 
screening for and treatment of oral inflammation and infections must 
begin pre-transplantation and continue as appropriate post-
transplantation, for a duration of approximately 3 to 6 months, in 
order to prevent sepsis and organ rejection until immunosuppression is 
resolved. Other commenters supported Medicare payment for dental 
services that occur post-transplant by asserting the importance of 
post-transplant oral care to clinical outcomes. Lastly, these 
commenters requested that CMS reconsider the statement asserting that 
no payment would be made for services that are not immediately 
necessary prior to surgery to eliminate or eradicate infection.

[[Page 69676]]

    Response: We appreciate the commenters' thoughtful and evidence-
based feedback regarding the link between oral or dental examinations, 
medically necessary diagnostic and treatment services to eliminate an 
oral or dental infection, and organ transplants.
    We agree with commenters that there is clinical evidence to support 
that the medically necessary dental care may advance the clinical 
success of organ transplants. We appreciate the clinical studies 
referenced to support the link between dental services prior to organ 
transplantation and improved health outcomes for certain patients. 
Therefore, we believe that payment can be made under Medicare Parts A 
and B for dental services such as dental examinations, including 
necessary treatment, performed as part of a comprehensive workup prior 
to organ transplant surgery and medically necessary diagnostic and 
treatment services immediately necessary to eliminate or eradicate the 
infection or its source that are provided before transplantation 
because such services are inextricably linked to, and substantially 
related and integral to the clinical success of, the organ transplant 
procedure.
    We also agree that medically necessary dental diagnostic and 
treatment services may be immediately necessary to eliminate or 
eradicate an infection or its source contemporaneously with the organ 
transplant. We understand that it may not be feasible to provide 
certain dental or oral services in advance of the transplant procedure 
and that the services may instead occur during the surgery itself.
    Examples of dental services to eradicate infection could include: 
extractions (removal of the entire infection, such as pulling of 
teeth--for example, CDT D7140, D7210), restorations (removal of the 
infection from tooth/actual structure, such as filling procedures--for 
example, CDT D2000-2999), periodontal therapy (removal of the infection 
that is surrounding the tooth, such as scaling and root planing--for 
example, CDT D4000-4999, more specifically D4341, D4342, D4335 and 
D4910), or endodontic therapy (removal of infection from the inside of 
the tooth and surrounding structures, such as root canal--for example, 
CDT D3000-3999).
    Additionally, we note that when dental services, such as dental 
examinations, including necessary treatment, are performed as part of a 
comprehensive workup prior to organ transplant surgery, and medically 
necessary diagnostic and treatment services immediately necessary to 
eliminate or eradicate the infection or its source, prior to, or 
contemporaneously with, the organ transplant occur, and, ultimately, 
the transplantation procedure does not yield ideal clinical outcomes 
including organ rejection etc., payment may still be made under 
Medicare Part A and Part B for the dental services provided. The dental 
services are inextricably linked to, and substantially related and 
integral to the clinical success of the transplantation procedure, and 
achievement of ideal clinical outcomes (for example, no occurrence of 
organ rejection) is not a requirement for the payment of these 
medically necessary services.
    Furthermore, we appreciate the commenters' feedback regarding those 
individuals who are awaiting organ transplantation and the commenters' 
request that Medicare provide payment for medically necessary dental 
services prior to transplantation, with the understanding that the 
transplantation procedure may not ultimately occur, and that payment 
should still be made under Medicare Part A and Part B for those 
medically necessary dental services.
    In a case where an individual is awaiting organ transplantation, we 
believe that it is appropriate for Medicare to provide payment for, 
including but not limited to, an oral or dental examination, and 
medically necessary diagnostic and treatment for only those services 
that are considered immediately necessary to eliminate or eradicate the 
infection or its source prior to the organ transplant. As previously 
discussed in this final rule, when a service is in connection with the 
care, treatment, filling, removal, or replacement of the teeth or 
structures supporting the teeth, but not inextricably linked to, and 
substantially related and integral to the clinical success of, the 
covered medical services, then payment may be made but only in specific 
circumstances as discussed in section II.L.2.a of this rule. We do not 
currently believe that our interpretation of section 1862(a)(12) of the 
Act would allow payment for dental services not inextricably linked to, 
and substantially related and integral to the clinical success of 
anticipated covered medical services. Therefore, payment would not be 
made in those circumstances.
    We appreciate the commenters' feedback regarding Medicare payment 
for medically necessary dental services after the transplantation 
procedure occurs. We thank commenters for the evidence they provided to 
connect the importance of dental care received after the organ 
transplant on the success of that transplant procedure. We received 
significant input from commenters in this area and want to thoroughly 
review the evidence provided. We plan to continue to review this 
evidence and engage with interested parties to issue additional 
guidance or future rulemaking, as determined necessary.
    With regard to commenters' questions on the types of clinical 
scenarios where dental services may be necessary prior to 
transplantation procedures, we reiterate that MACs have the flexibility 
to determine on a claim-by-claim basis whether a patient's 
circumstances do or do not fit within the terms of the preclusion or 
exception specified in section 1862(a)(12) of the Act and Sec.  
411.15(i). We will provide additional guidance to the MACs in order to 
make these determinations and further note that the finalized policies 
outlined in this section of this final rule would not prevent a MAC 
from making the type of determination that payment can be made for 
dental services in other circumstances not specifically addressed 
within this final rule and the finalized amendments to Sec.  411.15(i).
    In light of commenters' feedback, effective for CY 2023, we are 
finalizing that payment can be made under Medicare Part A and Part B 
for dental services for, including but not limited to, an oral or 
dental examination, and medically necessary diagnostic and treatment 
services that are considered immediately necessary to eliminate or 
eradicate the infection or its source prior to, or contemporaneously 
with, the organ transplant and when those dental services are 
determined to be inextricably linked to, and integral to the clinical 
success of, the transplant procedure. We plan to continue reviewing 
evidence submitted by commenters and may refine or explain this policy 
further in future guidance or rulemaking.
    We encourage the public to use the nomination process as finalized 
in section II.L.2.c.ii. of this final rule to identify additional 
clinical scenarios under which Medicare payment could be made for 
certain dental services that are similarly inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
covered medical services. We invite interested parties to submit 
information about clinical scenarios and related medical evidence to 
support that the standard of care for the medical service is such that 
one would not proceed with the medical procedure or service without 
performing the dental services, because the covered medical services 
would or could be significantly and materially

[[Page 69677]]

compromised, such that clinical outcomes of the medical service could 
be compromised absent the provision of the inextricably-linked dental 
services.
    Comment: Several commenters noted that while they acknowledge the 
connection between dental services and potential improved health 
outcomes in the cases of the proposed organ transplant, cardiac valve 
replacement, and/or valvuloplasty procedure scenarios, they urged CMS 
to delay any updates and use a methodical approach to adding further 
services as examples of clinical scenarios where Medicare payment could 
be made for certain dental services. Several commenters requested that 
CMS postpone finalizing the addition of dental exams and necessary 
treatments prior to organ transplants, heart valve replacements and 
valvuloplasty procedures until the establishment of a formal review 
process that could more thoroughly assess the clinical inextricable 
link between dental services and certain covered medical services 
before finalizing any additional examples of payable services.
    One commenter asserted that CMS had provided insufficient 
scientific justification for the addition of the organ transplant, 
cardiac valve replacement, or valvuloplasty procedure scenarios for the 
purposes of Medicare Parts A and B payment for dental services and 
therefore did not support the finalization of these additional 
scenarios. Additionally, a few commenters asserted that MACs already 
have the ability to make case-by-case determinations for dental 
services inextricably tied to Medicare Part A procedures, and 
therefore, the addition of the proposed categories were not necessary. 
Other commenters stated that CMS lacked the statutory authority to 
finalize payment for these types of dental services.
    Response: We appreciate the commenters' request that we conduct a 
thorough review of the clinical evidence related to the proposals. As 
discussed, we believe that the clinical evidence is clear that in cases 
of organ transplant, cardiac valve replacement, and valvuloplasty 
procedures, certain dental services are substantially related and 
integral to the clinical success of these scenarios because the success 
of the procedure would be compromised without eradicating the dental or 
oral infection prior to the initiation of such medical service. 
Therefore, we are amending Sec.  411.15(i) to include these clinical 
scenarios as examples under which Medicare payment under Part A and 
Part B would not be excluded.
    Additionally, as described further below, we are finalizing for CY 
2024 the inclusion of dental services prior to the treatment for head 
and neck cancers as a clinical scenario under which Medicare payment 
under Part A and Part B would not be excluded. We are finalizing this 
policy for CY 2024 to allow us additional time with the clinical data 
and to conduct additional analysis to consider whether greater 
specificity may be needed when implementing this policy and the 
applicability of certain terms with the medical services involved in 
this type of treatment. We reiterate that MACs have the flexibility to 
determine on a claim-by-claim basis whether a patient's circumstances 
do or do not fit within the terms of the preclusion or exception 
specified in section 1862(a)(12) of the Act and Sec.  411.15(i). We 
further note that the finalized policies outlined in this section of 
this final rule would not prevent a MAC from making the type of 
determination that payment can be made for dental services in other 
circumstances not specifically addressed within this final rule and the 
finalized amendments to Sec.  411.15(i).
    We appreciate the request that we continue to review whether there 
is an inextricable link between dental and medical services in general 
and we will continue to evaluate and review the clinical considerations 
submitted by commenters. We may refine or explain this policy further 
through future guidance or rulemaking. We also note that we are 
finalizing a process to review public recommendations for clinical 
scenarios where there may be an inextricable link between certain 
dental services and covered medical services, and encourage commenters 
to engage with us through the process we are finalizing in this final 
rule.
    With regard to the commenter who stated we did not have statutory 
authority to finalize a policy in this area, we continue to recognize 
that there may be instances where medical services necessary to 
diagnose and treat the individual's underlying medical condition and 
clinical status may require the performance of certain dental services. 
Furthermore, we believe that there are instances where dental services 
are so integral to other medically necessary services that they are not 
in connection with the care, treatment, filling, removal, or 
replacement of teeth or structures directly supporting teeth within the 
meaning of section 1862(a)(12) of the Act. Rather, we continue to 
believe, based on the review of comments, such dental services are 
inextricably linked to the clinical success of an otherwise covered 
medical service, and therefore, are instead substantially related and 
integral to that primary medical service.
    Comment: Several commenters requested clarification regarding the 
definition of organ transplant as it applies to Medicare payment for 
dental services that are substantially related and integral to the 
clinical success of certain covered medical services. Specifically, 
they requested that the definition include not only organ transplants, 
but also hematopoietic stem cell and other transplants.
    Commenters stated that dental examination and stabilization, 
specifically resolution of concerns related to oral health, are 
considered a standard of care in hematopoietic stem cell transplants 
(HSCT) since any patients who are on immunosuppressant therapies while 
receiving chemotherapy and radiation receive a clinical benefit from 
dental or oral stabilization care pre-transplant and continued care 
post-transplant,\125\ which the commenters assert represents the 
majority of the HSCT patient population.
---------------------------------------------------------------------------

    \125\ 2 Elad, S., Raber-Durlacher, J.E., Brennan, M.T. et al., 
Basic oral care for hematology-oncology patients and hematopoietic 
stem cell transplantation recipients: a position paper from the 
joint task force of the Multinational Association of Supportive Care 
in Cancer/International Society of Oral Oncology (MASCC/ISOO) and 
the European Society for Blood and Marrow Transplantation (EBMT). 
Support Care Cancer 23, 223-236 (2015). doi.org/10.1007/s00520-014-2378-x.
---------------------------------------------------------------------------

    Some of these commenters also noted that bone marrow 
transplantation may also require dental services that are inextricably 
linked to, and substantially related and integral to the clinical 
success of these covered medical services, as commenters asserted that 
dental and oral services serve to improve clinical outcomes for these 
types of transplants. Additionally, commenters stated that dental 
services prior to CAR-T cell therapies may also benefit the patient 
receive the medical service.
    Response: We appreciate the commenters' feedback regarding the 
scope of organ transplant as it applies to Medicare Parts A and B 
payment for dental services that are inextricably linked to, and 
substantially related and integral to the clinical success of certain 
covered medical services. We agree with the evidence commenters 
provided regarding the inextricable link between dental services and 
hematopoietic stem cell and bone marrow transplantation as consistent 
with the other organ transplants, particularly with regard to the risk 
of infection for patients requiring all of these organ transplants.

[[Page 69678]]

    In response to comments, we are clarifying that Medicare payment 
may be made under Parts A and B for dental or oral services prior to 
organ transplants, which for the purposes of this policy includes 
scenarios where the patient receives an organ transplant, including a 
bone marrow or hematopoietic stem cell transplant. We also recognize 
that term ``organ transplant'' may not be considered to include bone 
marrow or hematopoietic stem cell transplants in all contexts, and note 
that Medicare payment policies for organ procurement organizations or 
other payment policies may be applied differently for the purposes of 
paying for bone marrow and stem cell transplantations.
    Comment: Many commenters supported our proposal to provide Medicare 
payment for a dental or oral examination as part of a comprehensive 
workup and the necessary dental treatments and diagnostics to eliminate 
oral or dental infections prior to cardiac valve replacement or 
valvuloplasty procedures. Commenters indicated that poor dental health 
has proven to be highly associated with chronic disease and higher 
cardiovascular risks and that oral infections can undermine recovery 
from cardiac valve replacement or valvuloplasty procedures. Commenters 
also stated that dental infections and poor oral health increase the 
risk of infection in a newly implanted heart valve, and that patients 
may have primary bacterial endocarditis or secondary prosthetic valve 
endocarditis to neglected dental health and chronic dental abscesses. 
The commenters further stated that these life-threatening situations 
could be prevented with the provision of medically necessary oral or 
dental services prior to and, as necessary, during a cardiac valve 
replacement or valvuloplasty procedure.
    Response: We appreciate commenters' support regarding these 
proposed updates to the existing policy for payment under Medicare 
Parts A and B for dental services that are inextricably linked to, and 
substantially related and integral to the clinical success of certain 
covered medical services, and provided prior to and/or 
contemporaneously with, those covered medical services, such as cardiac 
valve replacement and valvuloplasty procedures. We agree that the 
evidence supports that dental examinations, including necessary 
treatment, performed as part of a comprehensive workup prior to and/or 
contemporaneously with cardiac valve replacement or valvuloplasty 
procedures, are inextricably linked to, and substantially related and 
integral to the clinical success of, certain other covered medical 
services. Specifically, we note that after a valve replacement, the 
valve is at risk of being a seeding source for future endocarditis. 
Endocarditis can carry high risk for mortality for these patients, so 
eliminating an infection prior to or contemporaneously with the 
procedure would be important for preventing future endocarditis seeding 
at the new valve.
    For these reasons, we are finalizing our proposal that Medicare 
Part A and Part B payment can be made for certain dental services, such 
as dental or oral examinations, including necessary treatment, 
performed as part of a comprehensive workup prior to, and/or 
contemporaneously with, cardiac valve replacement or valvuloplasty 
procedures, that are inextricably linked to, and substantially related 
and integral to the clinical success of, the procedures.
    Comment: Several commenters suggested that CMS provide additional 
guidance that would aid in processing claims for dental services that 
are inextricably linked to the Medicare-covered medical service. 
Commenters suggested we provide additional guidance about what types of 
specific dental treatments would be billable if provided under our 
finalized policy prior to, or contemporaneously with, Medicare-covered 
organ transplant, heart valve replacement, and valvuloplasty 
procedures. Some commenters requested CMS issue specific procedure and 
diagnosis codes associated with this policy. Other commenters 
recommended specific professional services codes, procedure codes and 
diagnosis codes for CMS to reference. Many commenters requested this 
information to allow a consistent application of the policy and for 
clinical decision-making purposes. A few commenters requested that CMS 
require the use of a modifier to identify dental services and claims 
that are inextricably linked to, and substantially related and integral 
to the clinical success of, certain covered medical services. Others 
requested that CMS implement prior authorization policies so that 
healthcare professionals have prior approval of the inextricable 
linkage between the dental and medical services. However, some 
commenters argued that the use of modifiers or prior authorization 
could be overly burdensome to providers.
    Response: We appreciate the commenters' request for additional 
guidance regarding how to identify what services may be payable, such 
as the use of modifiers or the prior authorization process, and how to 
ensure that the claims themselves can be successfully processed.
    Additionally, we note that if clinically necessary, Medicare could 
make payment for dental services occurring over multiple visits. We 
recognize that it may not be clinically appropriate to receive the 
totality of dental services, which are necessary to immediately 
eradicate an infection, that are inextricably linked to the covered 
medical services, within one visit. As such, Medicare could make 
payment, for example, for the required dental services immediately 
necessary to eradicate the infection if such services require multiple 
dental services and it is clinically advisable for those services to 
occur over multiple visits prior medical services such as an organ 
transplant, cardiac valve replacement, or valvuloplasty procedures.
    We will continue to consider commenters' request for additional 
specific considerations and scenarios, and may issue additional 
guidance or further address our policies in this area in future 
rulemaking. Furthermore, we will provide guidance to the MACs to assist 
them in determining this inextricable link between dental and medical 
services so that they can continue to make determinations on a claim-
by-claim basis for patient and clinical circumstances do or do not fall 
within the examples of services listed under Sec.  411.15(i), or within 
the preclusion or exception specified in section 1862(a)(12) of the Act 
and Sec.  411.15(i).
    Additionally, we are continuing to explore commenters' suggestions 
that we use claim modifiers or prior authorization policies.
    Comment: Multiple commenters supported the proposal that certain 
dental services that are substantially related and integral to the 
clinical success of organ transplant, cardiac valve replacement, or 
valvuloplasty procedure can occur within the inpatient hospital or 
outpatient settings and agreed that Medicare Parts A and B payment 
should be made for associated dental services, regardless of whether 
the services are furnished in an inpatient or outpatient setting.
    Response: We appreciate the commenters' support regarding the 
settings in which payment can be made for dental services. We agree 
that payment can be made for dental services that are inextricably 
linked, and substantially related and integral to the clinical success 
of, certain covered medical services can be furnished in multiple 
settings. As such, we are finalizing that Medicare Parts A and B 
payment can be made for such covered

[[Page 69679]]

dental services, as applicable, regardless of whether the services are 
furnished in an inpatient or outpatient setting, as clinically 
appropriate; and that payment under the applicable payment system. We 
will also make updates to appropriate Medicare payment data files to 
ensure that appropriate payments can be made under the applicable 
payment system. We note that this policy is consistent with the payment 
policy as specified within our existing manual guidance (See Medicare 
Benefit Policy Manual (IOM Pub 100-02, Chapter 15, section 150).)
    Comment: Several commenters supported our proposal that payment 
under the applicable payment system could also be made for services 
that are ancillary to dental services for which Medicare payment can be 
made, such as x-rays, administration of anesthesia, and use of the 
operating room.
    Response: We appreciate the commenters' support and agree that 
payment can be made for ancillary services or supplies associated with 
the provision of covered, medically necessary dental services. As such, 
we are finalizing our proposal that payment under the applicable 
payment system could also be made for services that are ancillary to 
these dental services, such as x-rays, administration of anesthesia, 
and use of the operating room.
    Comment: Several commenters requested additional information 
regarding the operational aspects of both the proposal to codify and 
clarify existing policy and the proposal to update dental services that 
are inextricably linked to, and substantially related and integral to 
the clinical success of, the covered medical services. Specifically, 
commenters raised concerns about issues, including: (1) what claims 
form dentists would use to submit claims for dental services; (2) what 
procedure code set and what diagnostic codes would be reflected on the 
claims; (3) if National Coverage Determinations (NCDs) will be issued 
to ensure consistent claim payment across the country; (4) 
clarification on any frequency limits, documentation requirements, and 
authorization processes; and (5) Medicare enrollment processes for 
dentists and any efforts CMS may make to ensure network adequacy.
    Other commenters suggested that CMS establish a demonstration to 
initially test the operational feasibility of a Medicare payment policy 
of this magnitude. These commenters suggested, that by using a 
demonstration format for payment in this manner, we could continue to 
refine the policy and operational aspects of the policy with input from 
interested parties prior to implementing nationally.
    Response: We appreciate the commenters' thoughtful feedback and 
questions. We note first that under our current policy (which is being 
codified in this final rule), dental services with an inextricable 
linked to certain Medicare-covered medical services can, and have been, 
paid under Medicare Parts A and B. At this time, dentists, as 
appropriate, should continue to enroll in Medicare according to the 
current process. Dentists and other qualified practitioners who furnish 
dental services that are eligible for payment under Parts A and B 
(because they are inextricably linked to another Medicare-covered 
medical service) should continue to submit claims using current 
processes, and can consult with their MACs for specific claims 
submission questions.
    However, we also recognize that with the codification and 
clarification of our policies regarding dental services that are 
inextricably linked to Medicare-covered medical services (including 
prior to organ transplant, cardiac valve replacement, and 
valvuloplasty), the volume of dental service claims being submitted may 
increase. We appreciate the commenters' thoughtful feedback and 
questions regarding the operational aspects of this proposal, and we 
agree that these are necessary areas to address. We acknowledge the 
need to address and clarify certain operational issues, and we are 
working to address these issues, including claims processing questions 
raised by the commenters. We anticipate resolving many of the 
additional operational issues raised by commenters potentially as soon 
as CY 2024, including efforts to adopt the dental claim form. We will 
also make updates to appropriate Medicare payment data files to ensure 
that covered dental services can be billed and paid (in a manner 
described below) based on the applicable payment system for services 
furnished. We will continue to work with our MACs and encourage 
continued feedback from interested parties to help identify concerns or 
questions regarding submission and processing of dental claims. We also 
plan to provide guidance and engage in further rulemaking, as 
necessary, as operational strategies and plans are refined and 
implemented. We will also monitor service utilization to identify any 
concerns about consistency of claims processing and adequacy of access 
across the country. We appreciate the questions raised by commenters 
and plan to take them into consideration as we continue to refine 
operational issues relating to this policy, and make any necessary 
refinements.
    Comment: Several commenters supported our proposal to continue to 
contractor price dental services that are substantially related and 
integral to the clinical success of certain covered medical services 
for CY 2023, or until such time that CMS has data to establish 
prospective payment rates. Conversely, several commenters objected to 
MAC-specified payment, as the commenters expressed concern regarding 
potential for incongruent payment amounts based on MAC region and also 
expressed apprehension regarding potential health equity impacts if 
payments were not aligned across geographies. Commenters made 
recommendations regarding the creation of a framework that ensures 
applicable payment policies across MAC regions and also requested 
annual updates for these payments. Other commenters requested that CMS 
encourage the use of specific public data sources in setting payment 
rates for dental services, and in order to account for geographic 
variations in the costs of providing dental and oral services.
    Response: We appreciate the commenters' feedback regarding our 
proposal to contractor price dental services that are inextricably 
linked to, and substantially related and integral to the clinical 
success of, certain covered medical services, including organ 
transplant, cardiac valve replacement, or valvuloplasty procedures. We 
continue to believe that MACs are appropriately situated to establish 
contractor prices for these services given that the MACs currently 
establish contractor pricing for the dental services for which payment 
is currently made. As it is for dental services currently payable under 
Medicare Parts A and B, we believe that it is appropriate to continue 
contractor pricing for dental services for which payment is made in the 
additional clinical scenario examples we are finalizing in this final 
rule, until we have additional pricing data that could enable national 
pricing. As such, we are finalizing our proposal to continue to 
contractor price these services based on the applicable payment system 
for services furnished. However, we agree with the suggestions made by 
commenters that there may be publicly available data sources that could 
aid MACs in determining these payment rates. We plan to issue 
operational guidance to the MACs for these final policies and will note 
the potential usefulness of these data sources when establishing 
payment rates for these applicable dental services.

[[Page 69680]]

    Comment: A few commenters expressed concerns regarding the 
financial impact of possible payment under Medicare Parts A and B for 
dental services substantially related and integral to the clinical 
success of certain covered medical services, including organ 
transplant, cardiac valve replacement, or valvuloplasty procedures. The 
commenters stated that these services are high-volume procedures and 
expressed concerns that paying for these dental services through the 
PFS would negatively impact the budget neutrality adjustments to the 
conversion factor, and would negatively impact payments for other 
physicians' services. These commenters urged CMS to consider the 
implications on the PFS payment system prior to finalizing any expanded 
policy in this area, or until financial impact was better understood 
and available for interested parties' review and comment.
    Response: We appreciate the commenters' feedback regarding possible 
financial impacts for payments made under Medicare Part A and Part B 
for dental services that are inextricably linked to, and substantially 
related and integral to the clinical success of, certain covered 
medical services. Also, we proposed to clarify our interpretation of 
section 1862(a)(12) of the Act and codify certain aspects of our 
current Medicare PFS payment policies for dental services. We also 
proposed and sought comment on payment for other dental services, such 
as dental exams and potential necessary treatments prior to organ 
transplants, cardiac valve replacements and valvuloplasty. Because we 
proposed to codify and update existing policy, these proposals would 
not impact budget neutrality under the PFS, or require adjustments to 
the PFS conversion factor. Additionally, while we recognize that the 
impact of access to these services to individual beneficiaries may be 
very significant, we still do not anticipate significant impact in the 
context of overall spending and utilization under the Physician Fee 
Schedule. We intend to closely study the trends in utilization and 
payment for these services and make refinements to the payment policy 
as needed in future rulemaking.
Other Clinical Scenarios for Dental Services Integral to Other Covered 
Medical Services
    Comment: Many commenters supported our suggestions that dental care 
may be inextricably linked to the clinical success of, treatments for 
head and neck cancer, immunosuppressive therapy, or joint replacement. 
Commenters also noted general support for coverage of dental care in 
both inpatient and outpatient settings, and coverage of ancillary 
services such as x-rays and anesthesia, needed to perform any covered 
dental care. Many commenters supplied data and studies that spoke to 
the prevalence of chronic conditions or health disparities among 
different populations, as well as information supporting the benefits 
of good dental health. However, only a few commenters provided clinical 
evidence with their comments to explicitly support the link between 
dental services and the clinical success of these specific medical 
services.
    Many commenters noted that without clear definitions or narrowly 
tailored guidance, identifying dental services that are inextricably 
linked to, and substantially related and integral to the clinical 
success of, a certain covered medical service may prove challenging. 
Several commenters noted that this standard could be interpreted overly 
broadly since, as many commenters noted, there is a great deal of 
evidence suggesting that dental health is generally an important 
component of overall health. Alternatively, a few commenters were 
concerned that this standard could be interpreted too narrowly, such as 
by assuming that a dental service must always be performed 
contemporaneously with another covered procedure to be considered 
``integral'' to that procedure. These commenters collectively worried 
that beneficiaries, practitioners, and MACs may be confused about what 
dental services can be covered, which would lead to inconsistent 
payment of claims and potential unanticipated financial burdens on 
beneficiaries or practitioners.
    Response: We thank the commenters for these insights and agree that 
these are critical issues to consider as we review recommendations and 
clinical evidence relating to Medicare payment for dental services. 
However, we note that while many commenters expressed support for the 
inextricable link between dental services and medical services such as 
immunosuppressive therapy, or joint replacement, we do not currently 
believe we have sufficient clinical evidence to fully evaluate whether 
certain dental services are inextricably linked to, and substantially 
related to the clinical success of, medical services such as the 
initiation of immunosuppressant therapy, or joint replacement 
surgeries, and need more time to review. We will continue to review the 
information submitted by commenters during the rulemaking cycle, and we 
encourage the public to provide additional information, including 
through the finalized process under section II.L.2.c.ii. of this rule.
    Comment: Many commenters agreed with our analysis that dental 
services prior to head and neck cancer treatments are integral to the 
clinical success of those treatments. One commenter recommended that we 
specify that by ``head and neck cancer,'' we are referring to treatment 
for patients with cancer related to the ``mid-neck through skull.'' 
Many commenters provided links to resources that they believed provided 
clinical evidence to support the link between dental care and the 
clinical success of, or standard of care for patients receiving 
treatment for head and neck cancer. Commenters also provided numerous 
examples of the consequences that can occur if cancer treatment is 
undertaken in a patient with poor dental health, and shared personal 
experiences to note the interrelationship between dental health and 
cancer treatment, including the physical and financial impacts of the 
extensive damage that can be caused by poor dental health during and 
after cancer treatments.
    Commenters also submitted specific information showing that 
radiation therapy used to treat head and neck cancer can cause a number 
of oral conditions, including radiation caries, problems with the 
salivary glands, mucositis, candidiasis, dysgeusia, xerostomia (dry 
mouth), and osteoradionecrosis (bone cell death) of the jaw. Several 
commenters noted that osteoradionecrosis, if not prevented, is 
difficult to treat and can necessitate surgery that may disfigure and 
functionally impair the patient's face and jaw. Several commenters also 
provided data illustrating that conditions such as mucositis or 
osteonecrosis may require multiple hospitalizations and other costly 
treatment.
    Commenters suggested that if dental infections are not addressed 
prior to radiation treatment, the treatment may be less effective, or 
the patient may be prone to other infections. One commenter stated that 
treating dental infections prior to the start of radiation can reduce 
some of the tissue damage in the mouth that can result from the 
radiation. Several commenters shared studies to support the assertion 
that dental care prior to radiation treatment is integral to the 
clinical success of head and neck cancer treatment and survivorship 
(although one commenter noted that the reasons why dental care prior to 
radiation therapy improves survival rates is not entirely clear). 
Several commenters observed that

[[Page 69681]]

Medicare already covers extractions of teeth prior to radiation 
treatment for neoplastic disease, and regarded dental exams as a close 
analog to this preparatory care.
    Commenters also provided information showing that chemotherapy 
drugs used for treatment of head and neck cancers can have many side 
effects, including sores and lesions in the mouth and throat tissues, 
difficulty swallowing, bleeding in the mouth, and tooth decay. 
Additionally, commenters stated that because chemotherapy reduces the 
body's ability to fight opportunistic infections, patients who begin 
chemotherapy with untreated infections (including infections in the 
oral cavity) are at risk of developing a number of complications, 
ranging from fungal or viral infections of the mouth and throat to 
systemic infections or fatal sepsis. Commenters observed that 
complications arising from untreated infections could cause treatment 
interruptions which could compromise the success of the treatment and 
the patient's outcomes. One commenter observed that the need for 
removing oral infection prior to starting chemotherapy is analogous to 
the rationale for providing oral care prior to renal transplant, and 
thus (like dental exam prior to renal transplant) should be considered 
substantially related and inextricably linked to the clinical success 
of the treatment. Commenters recommended that patients receiving 
chemotherapy for head or neck cancer receive a dental exam and 
stabilization, if applicable. Several commenters noted that providing 
an oral exam prior to starting chemotherapy is the standard of care in 
many cancer centers.
    Response: We thank the commenters for the information. We 
appreciate the individual examples and the clinical information 
commenters shared illustrating connections between head and neck cancer 
treatments and dental care. We will continue to refer to the relevant 
conditions by the common term ``head and neck cancer,'' but appreciate 
the suggested clarification offered by one of the commenters and will 
consider further refining what is meant by ``head and neck cancers,'' 
beyond the treatment such as radiation therapy with or without 
chemotherapy, as part of our ongoing operationalization work.
    As discussed in sections II.L.1. and II.L2. of this rule, we are 
finalizing the codification of existing Medicare payment policy provide 
that payment can be made under Medicare Parts A and B for extractions 
of teeth to prepare the jaw for radiation treatment of neoplastic 
disease. We agree with commenters that providing dental exams and 
necessary treatments to eradicate infection and/or otherwise prepare 
the oral cavity for the treatment of head and neck cancer presents an 
analogous clinical circumstance for which we currently provide payment. 
We note that the presentation of an analogous clinical circumstance is 
not the sole basis on which we plan to add head and neck cancer 
treatments to our list of examples in Sec.  411.15(i) of dental 
services that are inextricably linked to Medicare-covered medical 
services. However, we find that the analogous clinical circumstance 
between head and neck cancer treatment and radiation treatment in the 
jaw, in addition to clinical evidence showing an inextricable link 
between dental services and the success of head and neck cancer 
treatment (discussed below) is compelling.
    We find clinical evidence supplied by commenters linking dental 
care and the clinical outcomes of cancer treatments for head and neck 
cancers persuasive. We looked particularly to a systematic review and 
meta-analysis cited by commenters that was supportive of the 
inextricable link between dental care and successful treatment of head 
and neck cancer, showing a significantly higher survival rate in those 
who receive recommended dental care prior to and during treatment of 
their cancer.\126\ We also received references from several commenters 
to a literature review that concluded that good oral hygiene (including 
topical fluoride treatments) is critical for patients being treated 
with radiation for head and neck cancer, due to the lowered biological 
potential for healing of the periodontium (alveolar bone, periodontal 
ligament, cementum) after radiotherapy.\127\ We believe that this 
information is sufficient to support the basic assertion that removing 
infections in the oral cavity (in addition to potentially removing 
teeth) is necessary to prepare patients for treatment and is 
inextricably linked to, and substantially related and integral to the 
clinical success of radiation treatment (with or without chemotherapy) 
for cancers of the head and neck. As such, we are finalizing a policy 
for CY 2024 that Medicare Parts A and B payment may be made for dental 
or oral examination performed as part of a comprehensive workup in 
either the inpatient or outpatient setting (as well as medically 
necessary diagnostic and treatment services to eliminate an oral or 
dental infection), prior to or contemporaneously with Medicare-covered 
treatments for head and neck cancer.
---------------------------------------------------------------------------

    \126\ Refer to Haynes, D., Vanison, C., Gillespie, M., 
Laryngoscope 2022 Jan;132(1):45-52. doi: 10.1002/lary.29494. Epub 
2021 Feb 26. The Impact of Dental Care in Head and Neck Cancer 
Outcomes: A Systematic Review and Meta-Analysis.
    \127\ Refer to Acharya, A. Geist, S.-M.R.Y., Powell, V. & 
Torres-Urquidy, M.H. (2019). Chapter 3: An environmental scan of the 
various oral-systemic contact points. In Acharya, A. Powell, V., 
Torres-Urquidy, M.H., Posteraro, R.H., & Thyvalikakath, T.P. (Eds.), 
Integration of medical and dental care and patient data (2nd ed., 
pp.35-46), citing to Vissink A, Burlage FR, Spijkervet FK, et al. 
Prevention and treatment of the consequences of head and neck 
radiotherapy. Crit Rev Oral Biol Med. 2003;14(3):213-25.
---------------------------------------------------------------------------

    We believe there are several aspects of this policy that may 
require additional refinement or clarification. As noted in an earlier 
response, we are cognizant of concerns that, absent clear guidelines 
and definitions, beneficiaries, practitioners, and MACs may need 
additional information prior to providing payment under Medicare Parts 
A and B, and without it could lead to inconsistent application of the 
policy. In particular, we believe it is important to determine whether 
any additional guidance is necessary to identify conditions considered 
``head and neck cancer'' and qualifying covered medical services 
considered within the treatments for these cancers beyond just 
radiation (with or without chemotherapy). ``Head and neck cancer'' is a 
commonly-used term that describes a number of specific conditions; the 
treatments for these cancers are delivered through multiple modalities. 
We would also like to review and consider specifically if ``head and 
neck cancers'' implies any neoplasm, whether primary or metastatic, 
located in the head and neck, regardless of where the cancer 
originated. We would like to review and consider whether further 
definitions and guidance are necessary. Additionally, given that some 
patients might undergo medical services under multiple rounds of 
treatment, we plan to review how this is applied when payment may be 
made for dental services provided prior to or contemporaneously with 
covered medical services.
    We believe finalizing this policy for CY 2024 will acknowledge our 
agreement with commenters that the clinical scenario of dental services 
associated with head and neck cancers is one where Medicare Part A and 
Part B payment could be made in accordance with our interpretation of 
section 1862(a)(12), and also allow us to continue to engage with 
interested parties to further develop and refine the policy as 
necessary in the interim. We reiterate that we are open to additional 
refinements or clarifications to our definitions of head and neck 
cancer treatment, which we would develop and

[[Page 69682]]

discuss through future rulemaking or through additional guidance as 
needed or necessary. We also note that the finalized policies outlined 
in this section of this final rule (including the policy we are 
finalizing here for CY 2024) would not prevent a MAC from making 
determinations on a claim-by-claim basis for dental services furnished 
in other circumstances not specifically addressed within this final 
rule and the finalized amendments to Sec.  411.15(i).
    We also encourage interested parties to submit additional 
information through the process that we are finalizing under section 
II.L.2.c.ii. of this rule that could inform further refinements or 
clarifications to this policy.
    Comment: Several commenters recommended that we pay for additional 
types of dental services, such as preventive, diagnostic (including 
imaging), periodontal, caries removal, and extractions in both hospital 
inpatient and outpatient settings. Commenters recommended dental 
services including exam, extraction, scaling, and root planing as 
needed prior to and in some cases during cancer treatment. 
Additionally, several commenters recommended fluoride treatment for 
patients receiving radiation therapy for head and neck cancer to help 
strengthen the teeth. Several commenters provided lists of specific 
dental codes that should be payable.
    Response: We thank the commenters for the specific suggestions. As 
noted above, we are finalizing a policy for CY 2024 that Medicare Parts 
A and B payment may be made for dental or oral examination performed as 
part of a comprehensive workup in either the inpatient or outpatient 
setting (as well as medically necessary diagnostic and treatment 
services to eliminate an oral or dental infection), prior to Medicare-
covered treatments for head and neck cancer. We will make conforming 
edits to Sec.  411.15(i)(3) for CY 2024 to add to our list of examples 
of dental services that may be paid under Medicare Parts A and B dental 
or oral examination performed as part of a comprehensive workup in 
either the inpatient or outpatient setting (as well as medically 
necessary diagnostic and treatment services to eliminate an oral or 
dental infection), prior to Medicare-covered treatments for head and 
neck cancer. We will continue to make refinements to the policy as 
necessary, which we would discuss through future rulemaking or through 
additional guidance as needed.
    We note again that the finalized policies outlined in this section 
of this final rule would not prevent a MAC from making a determination 
that payment can be made for dental services in other circumstances not 
specifically addressed within this final rule and the finalized 
amendments to Sec.  411.15(i). Under the PFS, we will continue to 
contractor price the dental services for which payment can be made in 
accordance with our regulation at Sec.  411.15(i)(3) as inextricably 
linked to, and integral to the clinical success of, covered medical 
services. This includes dental services for which payment may be made 
under our current payment policy, which we are codifying and 
clarifying, those for which payment can be made under the finalized 
amendments to Sec.  411.15(i)(3), and other dental services for which 
MACs may determine payment can be made. We note that we will continue 
to contractor price covered dental services prior to head and neck 
cancer treatments, consistent with our current policy, until we have 
further data to establish prospective payment rates. We will also 
update associated payment files so that these services can be billed 
appropriately under the applicable payment system for services 
furnished in either the inpatient or outpatient setting.
    Comment: Some commenters recommended that patients treated for head 
and neck cancer receive follow-up or ongoing dental care after 
treatment, noting that patients continue to be at risk for many or all 
of the conditions discussed above (including dental caries, 
osteonecrosis, and so forth) even after treatment is concluded. Some 
commenters noted that there is a period after treatment when patients 
remain immunosuppressed, and recommended that follow-up care be 
provided until the immunosuppression ends and, as applicable, when all 
dental infections are resolved. Several other commenters also described 
scenarios in which teeth may become impacted or brittle after radiation 
treatment and require eventual extraction after the radiation therapy 
has concluded. Other commenters noted that it is not always possible to 
perform restorative surgeries at the same time as the cancer treatment 
and requested that we pay for restorative dental services performed on 
a later date.
    Response: As discussed, we are finalizing for CY 2024 that payment 
can be made under Medicare Parts A and B for dental services furnished 
prior to or contemporaneously with head and neck cancer treatment in 
order to prepare the patient's oral cavity for treatment; we will 
continue to review feedback provide by commenters regarding potential 
follow-up dental services necessary for patients receiving head or neck 
cancer treatments to consider whether dental services provided after 
the medical service are inextricably linked to, and substantially 
related and integral to the clinical success of, other covered medical 
services for head and neck cancer.
    Comment: Some commenters also suggested that we clarify whether 
Medicare payment would extend to surgical procedures to fix physical 
damage caused by cancer treatments; commenters observed that surgical 
reconstructions can be essential to restoring capacity to eat, drink, 
and swallow to maintain nutrition and overall health. Commenters noted 
that we already pay for procedures like ridge repair when they are 
performed simultaneously with tumor removal. One commenter provided a 
list of recommended services for which Medicare Parts A and B should 
payment for patients who have had portions of bone removed as a result 
of cancer treatment. Another commenter also suggested we define 
specific dental services allowed for patients who had gum removal due 
to mouth cancer.
    Response: We thank the commenters for their suggestions. The 
commenters provided a number of scenarios, with varying level of 
detail, and we cannot, at this time, make categorical statements about 
whether the scenarios presented by commenters would be payable under 
Medicare Parts A and B. Some scenarios that commenters provided may be 
contemplating might fall within our statutory exclusion of dental 
services at section 1862(a)(12) of the Act, which prohibits Medicare 
payment for the care, treatment, filling, removal, or replacement of 
teeth or structures directly supporting teeth. However, others 
depending on the specific circumstances may fall within our policy for 
dental services performed prior to or contemporaneously with Medicare-
covered treatment for head and neck cancer. We note that the policies 
finalized in this section do not prevent a MAC from making appropriate 
determinations, on a claim-by-claim basis, as to whether a patient's 
clinical scenario fits within the terms of the exceptions specified in 
section 1862(a)(12) of the Act and Sec.  411.15(i).
    Comment: Commenters also noted that patients with other types of 
cancer would benefit from coverage of dental examinations prior to or 
after cancer treatment. Many commenters recommended that we expand 
payment of dental care to all cancer patients. Commenters noted that 
the increased risk of infections and sepsis among cancer patients can 
constitute major health setbacks that are costly to treat

[[Page 69683]]

and can compromise the success of the cancer treatment.
    Response: We thank the commenters for the additional information. 
We will continue to review and evaluate information that supports the 
relationship between dental care and covered treatments (including 
treatments related to conditions not localized in the head, neck, or 
oral cavity). Please refer to the discussion in L.2.c.ii. relating to 
our finalized policy to create a process to review recommendations for 
other scenarios in which dental care may be inextricably linked, and 
substantially related and integral to the clinical success of, covered 
medical services.
    Comment: We received many comments in response to our request for 
information about the relationship between dental care and 
immunosuppressant treatments. Commenters shared personal experiences of 
dental challenges arising from immunosuppression. Commenters also noted 
that some individuals without dental coverage often cannot afford 
dental treatment and may be left with an impaired ability to eat, 
speak, or swallow. Many of these commenters discussed how general 
dental health, or routine dental care, impacts a patient's overall 
health.
    Commenters recommended Medicare pay for dental care for patients 
taking immunosuppressants for a variety of auto-immune conditions. We 
also received many comments recommending that we pay for dental 
services for patients on immune checkpoint inhibitors, patients on 
immunosuppressants as part of a cancer treatment, or who have 
experienced immunosuppression as a result of cancer treatments, and 
patients taking immunosuppressants following a transplant surgery. 
Several commenters stated that evidence suggests that screening for and 
treatment of oral inflammation and infections, including decay 
(extractions, fillings), gingivitis, and periodontitis (scaling and 
root planing), should begin pre-transplantation and continue as 
appropriate post-transplantation, after 3-6 months, to prevent sepsis 
and organ rejection until immunosuppression is resolved.
    These commenters noted that immunocompromised patients are at 
increased risk of serious infection that can lead to severe conditions. 
Some commenters noted that individuals with blood cancers, such as 
leukemia and lymphoma, or other types of cancers may be prone to 
infections. Other commenters noted that older adults naturally have 
lowered immune systems, which can compound the effects of a weakened 
immune system and that patients on immunosuppressive therapies with 
secondary health conditions can also be especially susceptible to 
dental infections. Some commenters provided clinical evidence that they 
indicated supported the need for Medicare payment, while others did not 
include references. Additionally, several commenters stated that 
additional time was needed for interested parties to consider the 
inextricable link between dental services and medical services for 
immunocompromised patients. Others ask clarifying questions and how 
immunocompromised could be defined and which types of therapies could 
meet the definition. Others asked how CMS planned to define an 
immunocompromised patient, while additional commenters asked whether 
certain clinical scenarios or therapies with immunosuppressive side 
effects would meet the definition of ``immunocompromised'' for the 
purposes of this policy. Lastly, some commenters provided clinical 
scenarios where they stated cause a patient to be susceptible to 
infection, and therefore, are immunocompromised.
    Response: We thank the commenters for both the personal and 
clinical information regarding the interrelationship between various 
immunocompromised and immunosuppressed conditions and dental health. 
Some commenters provided clinical evidence related to dental services 
for people who are immunocompromised or who are receiving therapies 
that cause immunosuppression, others provided opinion pieces, no 
supporting clinical literature, or literature to support that general 
dental health benefits a patient's overall health.
    We appreciate the many thoughtful questions and comments raised by 
commenters surrounding how to define immunosuppression or an 
immunocompromised patient. As discussed, we continue to consider these 
questions and the clinical literature provided by commenters to 
determine whether other clinical scenarios, such as the initiation of 
immunosuppressive therapies, where Medicare payment should not be 
excluded for dental services under section 1862(a)(12) of the Act 
because the services are inextricably linked to, and substantially 
related and integral to the clinical success of, certain other covered 
medical services. We agree with commenters that people who are 
immunocompromised may be prone to serious infection. We also believe 
that information provided by commenters further supports the idea that, 
broadly, dental health is an important component of good overall 
health. However, we reiterate that dental services in connection with 
the care, treatment, filling, removal, or replacement of teeth, or 
structures directly supporting the teeth are statutorily excluded from 
payment under Medicare Parts A and B unless a specific exception 
applies.
    We agree with commenters that beneficiaries undergoing treatment 
for bone cancers could be immunocompromised and also prone to 
infection. We note that treatment protocols for some of these patients 
could include bone marrow transplants, and, as described previously, we 
are finalizing that Medicare Parts A and B payment can be made for 
dental services prior to and contemporaneously with organ transplants, 
including bone marrow transplants.
    Some commenters requested that CMS take additional time to review 
the clinical literature and to engage with CMS to a payment policy in 
this area further. Given the clarifying questions raised by commenters 
and the need to future review the clinical literature to determine 
whether there is an inextricable link between dental services and the 
medical services treating conditions for immunocompromised patients, we 
agree with commenters and believe we need additional time to consider 
definitions surrounding immunosuppressant therapy (such as distinctions 
between therapies prescribed specifically for their immunosuppressive 
effect and therapies that are prescribed to treat a different condition 
but have a side effect of immunosuppression). We look forward to 
reviewing clinical evidence that will help us to identify among these 
clinical scenarios where dental services are inextricably linked with 
specific clinical outcomes of a medical services of people with 
immunosuppression. Such review may allow us to propose relevant 
policies in next year's notice and comment rulemaking.
    As discussed, we are open to continued engagement with interested 
parties through the process that we will be creating under our final 
policy as described in section II.L.2.c.ii. of this rule, and to 
considering future refinements to our policy through potential guidance 
or future rulemaking as needed. These specific questions are ones that 
we will explore and contemplate further in CY 2024 rulemaking and 
through the finalized process to review recommendations for future 
rulemaking. We encourage parties

[[Page 69684]]

interested in this specific policy to engage with us through the 
process as described in section II.L.2.c.ii. of this rule. 
Specifically, we would encourage interested parties to submit medical 
evidence to support the inextricable link between dental services and 
the medical services involved in treating immunosuppressed patients 
(for example, empiric evidence to support a strong association between 
dental services prior to the initiation immunosuppressive therapies and 
reduced infection) by providing any of the following: (1) relevant 
peer-reviewed medical literature and research/studies regarding the 
medical scenarios requiring medically necessary dental care; (2) 
evidence of clinical guidelines or generally accepted standards of care 
for the suggested clinical scenario (we would prefer the clinical 
guidelines to have undergone clinical rigor in their development); (3) 
other supporting documentation to justify the inclusion of the proposed 
medical clinical scenario requiring dental services; and/or (4) 
suggestions for definitions, and supporting rationales for those 
definitions, surrounding this policy for further consideration.
    Comment: Some commenters supported the idea that dental care prior 
to joint replacement surgery or joint arthroplasty could be beneficial. 
One commenter observed that as hip and knee replacements are among the 
most common joint replacement surgeries, providing dental care to 
patients prior to hip and knee surgeries would benefit a large number 
of joint replacement recipients. Commenters offered some research 
studies showing that dental care prior to a joint replacement was 
associated with a reduction of infection at the surgical site. Some 
commenters also noted that dental care prior to any type of surgery may 
have a positive impact with only some commenters providing supporting 
evidence. Other commenters noted that additional time was necessary to 
review whether there was an inextricable linkage between dental 
services and joint replacement surgeries. Others also commented that 
clinical evidence is lacking to support the causation between dental 
services and the success of joint replacement surgeries. Some 
commenters providing clinical evidence to support that the clinical 
evidence for antibiotic use prior to joint replacement surgery was 
inconclusive.
    Response: We thank the commenters for the information regarding the 
possible relationship between joint replacement surgery and dental 
health. Several commenters discussed the benefits that good dental 
health has on general outcomes for joint replacement surgeries rather 
than the inextricable linkage between dental services and the 
arthroplasty procedure. Although some commenters were supportive, we 
are unable to determine from the studies and other evidence we received 
whether there is an inextricable link to the clinical success of joint 
replacement surgery and dental care. It is important for us to 
delineate between evidence suggesting that dental services are integral 
to the clinical success of the covered medical services and evidence 
suggesting a possible improvement in outcomes for a medical condition. 
We also encourage interested parties to submit additional information 
through the process that we are finalizing under section II.L.2.c.ii. 
of this rule that could inform further refinements or clarifications. 
Specifically, we would encourage interested parties to submit medical 
evidence to support the inextricable link between dental services and 
the medical services involved in joint replacement surgeries (for 
example, empiric evidence to support a causal inference of dental 
services being necessary before joint replacement surgeries to prevent 
infection) by providing any of the following: (1) relevant peer-
reviewed medical literature and research/studies regarding the medical 
scenarios requiring medically necessary dental care; (2) evidence of 
clinical guidelines or generally accepted standards of care for the 
suggested clinical scenario (we would prefer the clinical guidelines to 
have undergone clinical rigor in their development); (3) other 
supporting documentation to justify the inclusion of the proposed 
medical clinical scenario requiring dental services; and/or (4) 
suggestions for definitions, and supporting rationales for those 
definitions, surrounding this policy for further consideration.
    Comment: We received general support for permitting payment for 
dental care that might be associated with traumatic injury of the jaw. 
One commenter also provided a list of congenital maxillofacial 
conditions that require surgical repair.
    Response: We thank commenters for their support. We note that we 
are finalizing our proposal to codify and clarify current payment 
policies related to services such as, but not limited to, the 
stabilization of teeth when done in connection with a reduction of a 
jaw fracture and certain dental services associated with a dislocated 
jaw unit regardless of whether the services are associated with 
accidental injury. We note that these services would not be subject to 
the exclusion under section 1862(a)(12) of the Act, and would be 
eligible for Medicare payment. We are uncertain if the recommendations 
we received from commenters are referring to services that are already 
covered by the exception under section 1862(a)(12) of the Act or if the 
commenters were describing services the commenters believed to be 
currently excluded from payment under Medicare Parts A and B. We 
encourage these commenters to discuss with us further whether they were 
referring to dental services prior to maxillofacial surgeries or just 
the maxillofacial surgeries themselves. We also encourage interested 
parties to submit additional information through the process that we 
are finalizing under section II.L.2.c.ii. of this rule that could 
inform further refinements or clarifications.
Establishment of a Process To Consider Additional Clinical Scenarios 
for Future Updates
    Comment: The majority of commenters supported the creation of a 
process for considering whether there are additional examples clinical 
scenarios where dental services may be inextricably linked to, and 
substantially related and integral to the clinical success of, other 
covered medical services. These commenters stated that such a process 
would allow for further clinical evaluation and analysis of the 
inextricable link between certain medical and dental services. These 
commenters also stated that clear definitions of the link between 
medical and dental services would be beneficial, as such a process 
would also allow for a thorough exploration of the threshold of this 
connection, and further definition of immediately necessary, integral 
dental treatments. Commenters stated that the evaluation of the 
efficacy other medically necessary dental treatments for covered 
medical services should rely on comprehensive clinical reports to 
confirm the intrinsic relationship of the dental services to a certain 
medical outcome. These commenters urged CMS to engage with interested 
parties through the creation of an advisory panel or formal process.
    Response: We appreciate the commenters' support regarding the 
establishment of a process for the consideration of additional examples 
of clinical scenarios that we should consider for future updates to our 
regulation at Sec.  411.15(i)(3) to identify dental services that may 
be inextricably linked to, and substantially related and integral to 
the clinical success of, other covered medical services. We believe 
such a process will allow for review,

[[Page 69685]]

evaluation, and modification to the list of those dental services for 
which payment is not excluded under the statute at section 1862(a)(12) 
of the Act and can be made under Medicare Parts A and B. We agree with 
commenters that the establishment of a process would also allow for a 
thorough review of clinical evidence, allow CMS to modernize policies 
with evolving medical advances, and engage with interested parties.
    Comment: Several commenters provided recommendations regarding 
possible features for a potential process for consideration of 
additional clinical scenarios. Commenters asserted that the annual 
notice and comment rulemaking process for the PFS serves as an 
appropriate mechanism for CMS to consistently revisit the process for 
and identification of covered medical conditions and associated dental 
services that are substantially related and integral to the clinical 
success of the proposed covered medical services.
    Several commenters stated that the clinical examination of proposed 
additional scenarios should be transparent and open to the public, with 
the agency providing notification regarding any dental, medical, or 
other groups that submit such suggested procedures.
    A few commenters requested that CMS institute a process to allow 
medical and dental experts to serve on an advisory panel that would 
hear and evaluate relevant evidence and research on which covered 
medical services require dental services that are substantially related 
and integral to the clinical success of the covered medical services. 
The commenters contended that thorough clinical consideration should 
occur for each proposal before any additional scenarios are considered 
payable.
    A few commenters also requested that CMS require the presentation 
and review of research, as well as clinical evidence to justify the 
link between a proposed, covered Medicare Parts A or B medical service 
and dental services that are inextricably linked to, substantially 
related and integral to the clinical success of certain covered medical 
services. Commenters suggested that the requirements for submission 
should include clinical evidence that demonstrates that dental services 
are effective in addressing the proposed medical scenario, treatment 
timelines for each medical diagnosis and correlated dental care for the 
stage(s) of the disease, and other considerations for communication or 
coordination amongst the care team.
    Several commenters requested that CMS expressly solicit proposals 
regarding the ancillary services (such as anesthesia or x-rays) 
associated with the proposed Medicare Part A or Part B procedures and 
that those proposals also be shared publicly for public comment and 
possible inclusion.
    Response: We appreciate commenters' suggestions regarding the 
review process for the addition of possible clinical scenarios. We 
agree with the commenters that the process should be consistent and 
that supporting materials for proposed clinical scenarios should be 
evidence-based, all of which should be partnered with the opportunity 
for interested party feedback regarding possible future updates to the 
policies for Medicare Parts A and B payment for dental services. We 
seek to engage with interested parties and collaborate with respect to 
identifying those medical services that include dental services that 
are inextricably linked to, and substantially related and integral to 
the clinical success of the covered medical service. Additionally, we 
agree that ancillary or related services should be considered when 
evaluating a medical scenario for inclusion in this policy.
    We appreciate the commenters' recommendation that CMS establish and 
then leverage an expert advisory panel for the review of clinical 
scenarios for future updates. We also agree with commenters that 
thoughtful engagement with interested parties is important to further 
clarifying the link between dental services and certain covered medical 
services. We therefore believe that it is important to create a process 
that can be implemented in a time-sensitive fashion, which would 
facilitate and expedite the identification of medical services that are 
potentially inextricably linked to corresponding dental services 
because such dental services are substantially related and integral to 
the clinical success of that covered medical service.
    We agree with commenters that public feedback is important, 
especially when considering Medicare payment for critical treatments 
that may benefit the clinical outcomes for certain covered medical 
services for Medicare beneficiaries. We believe that discussing the 
recommendations we are considering further in the course of our annual 
rulemaking will allow the public to comment and submit further medical 
evidence to assist us in evaluating whether the standard of care for 
that medical service is such that one would not proceed with the 
medical procedure or service without performing the dental service(s), 
because the covered medical services would or could be significantly 
and materially compromised, such that clinical outcomes could be 
compromised absent the provision of the inextricably-linked dental 
services, or where dental services are a clinical prerequisite to 
proceeding with the primary medical procedure and/or treatment. This 
would also allow the public to comment on whether the particular dental 
services should or should not be subject to the general preclusion on 
payment for dental services under section 1862(a)(12) of the Act, 
because they are or are not inextricably linked to, and substantially 
related and integral to the clinical success of, covered medical 
services; and provide the medical evidence to support their position. 
We have an existing process within the framework of annual PFS 
rulemaking, which we believe we should continue to leverage to allow 
for this level of public engagement. We believe that this would be an 
efficient approach and would provide an immediately achievable avenue 
for submissions from the public, and review and analysis by CMS and the 
public.
    Therefore, we are finalizing an annual process for the review of 
public nominations. We will use the PFS annual rulemaking process to 
determine whether certain dental services should be considered not 
subject to the general preclusion on payment for dental services under 
section 1862(a)(12) of the Act because they are inextricably linked to, 
and substantially related and integral to the clinical success of, 
other covered medical services. This process serves to facilitate the 
codification and clarification of our existing policy as described in 
section II.L. of this final rule, as a nomination process that will 
allow us to evaluate additional examples under which payment could be 
made under Medicare Part A and Part B for dental services.
    The establishment of an advisory panel would require significant 
time and procedural effort per statute and regulation.\128\ \129\ At 
this time, we will not be implementing an advisory panel, but 
appreciate this recommendation.
---------------------------------------------------------------------------

    \128\ https://www.gsa.gov/policy-regulations/policy/federal-advisory-committee-management/statutes-and-related-legislation.
    \129\ https://www.gsa.gov/policy-regulations/policy/federal-advisory-committee-management/legislation-and-regulations/faca-final-rule-2001.
---------------------------------------------------------------------------

    The public is encouraged to engage with us regularly to submit 
clinical scenarios for consideration. In order for public 
recommendations to be potentially considered within the annual PFS 
rulemaking cycle, interested parties should submit evidence and 
nominations for consideration by

[[Page 69686]]

February 10th of each calendar year. This date is consistent with the 
date used for submission of other information to CMS for consideration 
in the upcoming rulemaking process, such as nominations for misvalued 
codes, additions to the telehealth services list, and submission of 
invoices for pricing direct PE supply and equipment items. We will 
evaluate the supporting documentation and decide whether the medical 
services should be further considered as not subject to the general 
preclusion on payment for dental services under section 1862(a)(12) of 
the Act during that calendar year's rule-making cycle. For example, 
information received by February 10, 2023, would be reviewed for 
consideration and potential inclusion within the CY 2024 PFS proposed 
rule. Submissions received after February 10th will still be reviewed, 
but may be considered in subsequent rulemaking instead of that calendar 
year's rulemaking cycle.
    We note that we may identify additional clinical scenarios for 
review based on our review of public submissions or identified through 
our own internal research and if so, would make those clinical 
scenarios available for public review through the annual PFS rulemaking 
cycle.
    We agree with commenters that clinical evidence should be 
thoughtfully considered and evaluated by interested parties. As such, 
we encourage stakeholders who believe they have identified dental 
services that are inextricably linked to, and substantially related and 
integral to the clinical success of, other covered medical services to 
nominate these scenarios, supported by documentation, through the 
public process. Commenters are also welcome to submit additional 
information regarding some of the clinical scenarios presented, but not 
included in a finalized policy, in this final rule, including 
immunosuppressant therapies, joint replacement surgeries, and 
management of chronic conditions such as diabetes, and other surgical 
procedures. We also encourage interested parties to submit to us 
suggestions for further clarification of current policy, such as but 
not limited to, recommendations on implementation, payment, and 
provider enrollment.
    We agree with commenters that we should thoroughly consider the 
clinical evidence to review whether there is an inextricable link 
between certain dental and medical services. As such, accompanying 
documentation should be provided to support or refute the link between 
certain medical and dental services. Specifically, this medical 
evidence should support that the provision of certain dental services 
leads to improved healing, improved quality of surgery, and the reduced 
likelihood of readmission and/or surgical revisions, because an 
infection has interfered with the integration of the implant and 
interfered with the implant to the skeletal structure. We expect 
evidence to be clinically meaningful and demonstrate that the dental 
services result in a material difference in terms of the clinical 
outcomes and success of the procedure such that the dental services are 
inextricably linked to, and substantially related and integral to the 
clinical success of, certain other covered medical services, and 
therefore not subject to the statutory payment preclusion in section 
1862(a)(12) of the Act. The clinical evidence should be compelling to 
support that certain dental services would result in clinically 
significant improvements in quality and safety outcomes, for example, 
fewer revisions, fewer readmissions, more rapid healing, quicker 
discharge, quicker rehabilitation for the patient.
    This evidence should include at least one of the following: (1) 
relevant peer-reviewed medical literature and research/studies 
regarding the medical scenarios requiring medically necessary dental 
care; (2) evidence of clinical guidelines or generally accepted 
standards of care for the suggested clinical scenario; (3) other 
ancillary services that may be integral to the covered medical 
services; and/or (4) other supporting documentation to justify the 
inclusion of the proposed medical clinical scenario requiring dental 
services.
    Interested parties are encouraged to submit their recommendations 
by February 10th of a calendar year via email at 
[email protected] for consideration and 
potential inclusion within the PFS proposed rule for the subsequent 
calendar year. Interested parties should include the words `dental 
recommendations for CY 2XXX review' in the subject line of their 
submission email to facilitate processing (CY 2XXX should refer to the 
rulemaking cycle for the year). We note that we may also consider 
proposals submitted as public comments during the comment period 
following the publication of the PFS proposed rule.
    Final Action: After consideration of the comments received, and for 
the reasons previously discussed, we are finalizing our proposals, 
effective CY 2023, to: (1) clarify our interpretation of section 
1862(a)(12) of the Act and codify certain of current Medicare FFS 
payment policies for medically necessary dental services; and (2) our 
proposal that payment may be made for other dental services, such as 
dental or oral examinations, including necessary treatment, performed 
as part of a comprehensive workup prior to organ transplantations 
(including hematopoietic stem cell and bone marrow transplantations), 
or prior to cardiac valve replacement or valvuloplasty procedures, that 
are similarly inextricably linked to, and substantially related and 
integral to the clinical success of, certain other covered medical 
services. We are also finalizing for CY 2024 that Medicare Parts A and 
B payment may be made for dental services, such as dental or oral 
examinations, including necessary treatment, performed as part of a 
comprehensive workup prior to treatment for head and neck cancers, for 
which we stated we may consider finalizing in this final rule, because 
those services are similarly inextricably linked to, and substantially 
related and integral to the clinical success of, certain other covered 
medical services. We are not finalizing, at this time, that payment may 
be made under Medicare Parts A and B for dental services prior to the 
initiation of immunosuppressant therapy, joint replacement procedures 
or other surgical procedures, for which we stated we may consider 
finalizing in this final rule. We remain committed to exploring the 
inextricable link between dental and medical services associated with 
immunosuppressant therapy, joint replacement surgeries and other 
surgical procedures, and we will continue to review the clinical 
evidence to determine whether the services are inextricably linked to, 
and substantially related and integral to the clinical success of, 
certain other covered medical services and would welcome continued 
engagement from the public. We will address additional clinical 
scenarios involving dental services, such as services inextricably 
linked and integral to particular kinds of treatments for 
immunocompromised patients, in 2024 rulemaking.
    Effective CY 2023, we are finalizing the establishment of a process 
to identify for our consideration and review submissions of additional 
dental services that are inextricably linked and substantially related 
and integral to the clinical success of other covered medical services. 
We note that we stated in this proposed rule that we may consider 
finalizing such process in this final rule after a review of the 
commenters received. Specifically, we

[[Page 69687]]

are finalizing an annual process for the review of public nominations 
of dental services that the public is recommending not be considered 
subject to the general preclusion on payment for dental services under 
section 1862(a)(12) of the Act. Interested parties should submit 
evidence and nominations via email at 
[email protected], and should include the words 
dental recommendations for CY 2XXX review' in the subject line of their 
submission email to facilitate processing (CY 2XXX should refer to the 
rulemaking cycle for the year), by February 10th of each calendar year 
in order for these recommendations to be potentially considered within 
the annual PFS rulemaking cycle. Recommendations may also make 
suggestions for clarifications for this policy generally, such as but 
not limited to, recommendations on implementation, payment, and 
provider enrollment.
    We expect accompanying documentation to be provided. The medical 
evidence should support or refute whether the provision of certain 
dental services is inextricably linked to, and substantially related 
and integral to the clinical success of, certain other covered medical 
services. This evidence should include any of the following: (1) 
relevant peer-reviewed medical literature and research/studies 
regarding the medical scenarios requiring medically necessary dental 
care; (2) evidence of clinical guidelines or generally accepted 
standards of care for the suggested clinical scenario; (3) other 
ancillary services that may be integral to the covered medical 
services; and/or (4) other supporting documentation to justify the 
inclusion of the proposed medical clinical scenario requiring dental 
services.
    We are finalizing our proposed amendments to the regulations at 
Sec.  411.15(i). First, we are finalizing our proposed amendments, 
without modifications, to our existing regulations at Sec.  
411.15(i)(1) and (2) that dental services are not covered in connection 
with the care, treatment, filling, removal, or replacement of teeth, or 
structures directly supporting the teeth, with the exception for dental 
services for inpatient hospital services in connection with such dental 
procedures when hospitalization is required because of--
     The individual's underlying medical condition and clinical 
status; or
     The severity of the dental procedures.
    Second, we are finalizing, with modifications, to the regulations 
at Sec.  411.15(i), to include examples of services for which payment 
can be made under Medicare Parts A and B on that basis. Specifically, 
we are amending Sec.  411.15(i)(3)(i), to allow for payment under 
Medicare Part A and Part B for dental services, furnished in an 
inpatient or outpatient setting, that are inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
other covered medical services, including, but not limited to: (1) the 
dental or oral examination as part of a comprehensive workup prior to a 
Medicare covered organ transplant, cardiac valve replacement, or 
valvuloplasty procedure; (2) the necessary dental treatments and 
diagnostics to eliminate the oral or dental infections found during a 
dental or oral examination as part of a comprehensive workup prior to, 
and contemporaneously with, the organ transplant, cardiac valve 
replacement, or valvuloplasty procedure; (3) reconstruction of a ridge 
when it is performed as a result of, and at the same time as, the 
surgical removal of a tumor; (4) the stabilization or immobilization of 
teeth in connection with the reduction of a jaw fracture and dental 
splints only when used in conjunction with covered treatment of a 
covered medical condition such as dislocated jaw joints; and (5) the 
extraction of teeth to prepare the jaw for radiation treatment of 
neoplastic disease; and We will make conforming changes to the MBP 
Manual to reflect these changes or clarifications, and to remove any 
text that is no longer applicable.
    We will make amendments to Sec.  411.15(i)(3)(i)(A) for CY 2024 to 
specify that payment under Medicare Parts A and B can be made for an 
oral or dental examination, and medically necessary diagnostic and 
treatment services to eliminate an oral or dental infection, prior to, 
or contemporaneously with, treatment for head and neck cancers. These 
amendments to Sec.  411.15(i)(3)(i)(A) would conform with the policy 
finalized in this rule for CY 2024, as clarified by any further 
rulemaking, and add to the regulation as an example of dental services 
for which payment can be made under Medicare Parts A and B dental 
services furnished prior to and contemporaneously with the treatment 
for head and neck cancers.
    We are also finalizing our proposal, without modification, to amend 
our regulation at Sec.  411.15(i)(3)(i) to provide that payment can be 
made for dental services provided in conjunction with medical services 
that are inextricably linked to, and substantially related and integral 
to the clinical success of, covered medical services, such as X-rays, 
administration of anesthesia, and use of the operating room. 
Additionally, we are finalizing with modification the removal the word 
``other'' from the description of ``ancillary services and other 
supplies furnished incident to covered dental services'' to improve 
clarity and to avoid suggesting that ``services'' are ``supplies.'' 
This modification does not modify the proposed or final policy.
    Medicare will make payment under Parts A and B for these dental 
services that are determined to be inextricably linked to the clinical 
success of an otherwise covered medical service, and therefore, are 
instead substantially related and integral to that primary medical 
service, prior to or contemporaneously with certain covered medical 
services. No payment is made for dental services when an excluded 
service is the primary procedure involved. We continue to contractor 
price the dental services for which payment is made currently, and for 
the dental services that can be made under the amendments to Sec.  
411.15(i)(3) for CY 2023 and CY 2024, and until we have further data. 
We will update the applicable payment files so that services may be 
furnished and paid under the applicable payment system.
    We will make payment when a doctor of dental medicine or dental 
surgery (referred to as a dentist) furnishes dental services that are 
an integral part of the covered primary procedure or service furnished 
by another physician, or non-physician practitioner, treating the 
primary medical illness. If there is no exchange of information, or 
integration, between the medical professional (physician or other non-
physician practitioner) in regard to the primary medical service and 
the dentist in regard to the dental services, then there would not be 
an inextricable link between the dental and covered medical service 
within the meaning of our regulation at Sec.  411.15(i)(3). As such, 
the services would be in connection with the care, treatment, filling, 
removal, or replacement of teeth or structures directly supporting 
teeth within the meaning of section 1862(a)(12) of the Act. Without 
both integration between the Medicare enrolled medical and dental 
professional, and the inextricable link between the dental and covered 
medical services, dental services fall outside of the Medicare Part B 
benefit as they would be in connection with the care, treatment, 
filling, removal, or replacement of teeth or structures directly 
supporting teeth within the meaning of section 1862(a)(12) of the

[[Page 69688]]

Act; though they may be covered by types of supplemental health or 
dental coverage.
    Payment may also be made for services and supplies furnished 
incident to those dental services furnished by the dentist or other 
physician or practitioner, and for other ancillary services integral to 
the dental services. Medicare payment could be made for services 
furnished incident to the professional medical or dental services by 
auxiliary personnel, such as a dental hygienist, dental therapist, or 
registered nurse who is under the direct supervision of the furnishing 
dentist or other physician or practitioner, if they meet the 
requirements for ``incident to'' services as described in Sec.  410.26 
of our regulations.
    The finalized policies outlined in this section of this final rule 
would not prevent a MAC from making a determination that payment can be 
made for dental services in other circumstances not specifically 
addressed as examples within this final rule and the finalized 
amendments to Sec.  411.15(i). MACs may continue to determine on a 
claim-by-claim basis whether a patient's clinical circumstances do or 
do not fit within the terms of the preclusion or exception specified in 
section 1862(a)(12) of the Act and Sec.  411.15(i).
    Lastly, we may provide additional guidance or future rulemaking 
regarding these policies as determined appropriate or necessary. We 
encourage continued engagement through the process as finalized under 
section II.L.2.c.ii. of this final rule so that we may consider 
revisions to this policy potentially in the future.

M. Rebasing and Revising the Medicare Economic Index (MEI)

1. Background
    The Medicare Economic Index (MEI) is authorized under section 
1842(b)(3) of the Act, which relates to the reasonable charge-based 
payment methodology that was in place for physicians' services prior to 
the PFS implementation. That section states that prevailing charge 
levels beginning after June 30, 1973, may not exceed the level from the 
previous year except to the extent that the Secretary finds, on the 
basis of appropriate economic index data, that such higher level is 
justified by year-to-year economic changes. CMS began calculating the 
MEI for this purpose on July 1, 1975 and continues to do so today for 
several statutory and other purposes. The MEI reflects the weighted-
average annual price change for various inputs involved in furnishing 
physicians' services.
    The MEI is a fixed-weight input price index comprised of two broad 
categories: (1) Physicians' own time (compensation); and (2) 
physicians' practice expense (PE). Additionally, it includes an 
adjustment for the change in economy-wide, private nonfarm business 
total factor productivity (previously referred to as multifactor 
productivity).\130\ The U.S. Department of Labor's Bureau of Labor 
Statistics (BLS) publishes the official measures of productivity for 
the U.S. economy. We note that previously the productivity measure 
referenced in section 1886(b)(3)(B)(xi)(II) of the Act was published by 
BLS as private nonfarm business multifactor productivity. Beginning 
with the November 18, 2021 release of productivity data, BLS replaced 
the term multifactor productivity (MFP) with total factor productivity 
(TFP). BLS noted that this is a change in terminology only and will not 
affect the data or methodology.
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    \130\ https://www.bls.gov/news.release/prod5.nr0.htm.
---------------------------------------------------------------------------

    The current form of the MEI was described in the November 25, 1992 
Federal Register (57 FR 55896) and was based in part on the 
recommendations of a Congressionally-mandated meeting of experts held 
in March 1987. Since that time, the MEI has been updated or revised on 
five instances. First, the MEI was rebased in 1998 (63 FR 58845), which 
moved the cost structure of the index from 1992 data to 1996 data. 
Second, the methodology for the productivity adjustment was revised in 
the CY 2003 PFS final rule with comment period (67 FR 80019) to reflect 
the percentage change in the 10-year moving average of economy-wide 
private nonfarm business total factor (multifactor) productivity. 
Third, the MEI was rebased in the CY 2004 PFS final rule with comment 
period (68 FR 63239), which moved the cost structure of the index from 
1996 data to 2000 data. Fourth, the MEI was rebased in 2011 (75 FR 
73262), which moved the cost structure of the index from 2000 data to 
2006 data. Subsequently, in the CY 2014 PFS final rule with comment 
period (78 FR 74264), the MEI cost share weights were revised based on 
recommendations from the MEI technical advisory panel (MEI-TAP). From 
May 2012 through September 2012, the MEI Technical Advisory Panel 
conducted a technical review of the MEI, including analyses of the 
inputs, input weights, price-measurement proxies, and productivity 
adjustment. Details regarding the Panel's work and documents such as 
transcripts, meeting summaries, presentations, and the final report 
with recommendations to the Secretary of Health and Human Services are 
available at https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/MEITAP and in the CY 2014 PFS proposed rule (78 FR 43311) which 
provides details related to how the MEI TAP panel recommendations were 
implemented into the revised 2006-based MEI. The current 2006-based MEI 
relies on data collected from the American Medical Association (AMA) 
for self-employed physicians from the Physician Practice Information 
Survey (PPIS). The AMA has not fielded another survey since that 2006 
data collection effort and so the MEI has continued to be based on 
2006-based costs. In its August 28, 2012 report, the MEI-TAP expressed 
concern regarding the representativeness and availability of data to 
support the MEI and provided two recommendations regarding the data 
sources to update the MEI in the future. Recommendation 2.1 stated that 
CMS should research whether using self-employed physician data for the 
MEI cost weights continues to be the most appropriate approach given 
the trend toward larger, physician-owned practices, as well as the 
movement from physician-owned practices toward hospital-owned 
practices. Recommendation 2.2 stated that CMS should scan for and 
research additional data sources that may allow for more frequent 
updates to the MEI's cost categories and their respective weights.\131\
---------------------------------------------------------------------------

    \131\ The MEI-TAP's final report, including all findings and 
recommendations, are available at https://www.cms.gov/Regulations-and-Guidance/Guidance/FACA/MEITAP.
---------------------------------------------------------------------------

    Updates to the PFS conversion factor (CF) were previously 
calculated based on a prescribed statutory formula that used a 
combination of the MEI and a ``sustainable growth rate''; 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 of the Medicare 
Access and CHIP Reauthorization Act (MACRA) of 2015 (Pub. L. 115-05, 
April 16, 2015) repealed the previous statutory update formula and 
specified the update adjustment factors for calendar years 2015 and 
beyond. Therefore, effective beginning with CY 2015, the MEI was no 
longer used in calculating the annual update to the PFS CF. The annual 
growth in the MEI continues to be used to update the following: the 
Medicare telehealth originating site facility fee under section 
1834(m)(2)(B)(i) of the Act, the KX

[[Page 69689]]

Modifier Thresholds (formerly the therapy caps) under section 
1833(g)(2) of the Act, targeted medical review (MR) threshold amounts 
(beginning in 2029) under section 1833(g)(7)(B)(ii) of the Act, Rural 
Health Clinic Payment Limits under section 1833(f)(2) of the Act, and 
the annual update to the non-drug portion of the Opioid Treatment 
Program payment as finalized in the CY 2020 PFS final rule (84 FR 62668 
and 62669).
    While the MEI annual percentage change increase is not directly 
used in determining the update to the PFS CF, the MEI cost weights have 
historically been used to update the GPCI cost share weights to weigh 
the four components of the practice expense GPCI (employee 
compensation, office rent, purchased services, and medical equipment, 
supplies, and other miscellaneous expenses), as discussed in detail in 
section II.G. of the final rule, and to recalibrate the relativity 
adjustment to ensure that the total pool of aggregate PE RVUs remains 
relative to the pool of work and MP RVUs, as discussed in section II.B. 
and VI. of the final rule. The most recent recalibration was done for 
the CY 2014 RVUs when the MEI was last updated. As described in the CY 
2014 PFS final rule (78 FR 74236 through 74237, and 74241), in steps 3 
and 10, we adjusted the aggregate pool of PE costs in proportion to the 
change in the PE share in the revised MEI cost share weights. These 
adjustments were consistent with our longstanding practice to make 
adjustments to match the RVUs for the PFS components with the MEI cost 
share weights for the components, including the adjustments described 
in the CY 1999 PFS final rule (63 FR 58829), CY 2004 PFS final rule (68 
FR 63246 and 63247), and CY 2011 PFS final rule (75 FR 73275). 
Therefore, as discussed in the CY 2023 PFS proposed rule (87 FR 
460462), we believe that the MEI cost weights need to be updated to 
reflect more current market conditions faced by physicians in 
furnishing physicians' services, but note that we are finalizing to 
delay the implementation of the rebased and revised MEI cost weights 
for both CY 2023 PFS ratesetting and the finalized CY 2023 GPCIs. We 
explained that we believe that doing so will allow interested parties 
the opportunity to review and comment on the proposed rebased and 
revised MEI cost share weights discussed in section II.M. of the 
proposed rule and their potential impacts before we use such rebased 
and revised MEI cost share weights for purposes of proportioning the 
work, PE, and MP RVU pools in PFS ratesetting and updating the GPCIs. 
We refer readers to our discussion about using the proposed rebased and 
revised MEI cost share weights for purposes of proportioning the work, 
PE, and MP RVU pools in PFS ratesetting and to update the GPCIs for CY 
2023 in sections II.B. and VI. of this final rule. In those sections, 
we discuss our considerations for updating the MEI cost share weights 
for the RVUs and the GPCIs and the potential redistributive impact that 
making such a change would have on PFS payments. We solicited comments 
on the proposed delay and potential use of the proposed updated MEI 
cost weights in future years to recalibrate the RVU shares and to 
update the GPCI cost share weights, which were last realigned to the 
revised MEI weights in the CY 2014 PFS final rule (78 FR 74380 through 
74391).
    This section of the final rule provides an overview of the 
methodology for updating the MEI cost share weights and the results of 
the rebasing and revising of the MEI for purposes of estimating annual 
input price inflation for physician services, used for purposes of 
updating payments outside of the PFS ratesetting. We note that specific 
comments relating to the delayed implementation of the MEI in PFS 
ratesetting and CY 2023 GPCIs are discussed in sections II.B. and VI. 
of this final rule.
    The terms ``rebasing'' and ``revising,'' while often used 
interchangeably, actually denote different activities. Rebasing refers 
to moving the base year for the structure of costs of an input price 
index while revising relates to other types of changes such as using 
different data sources, cost categories, or price proxies in the input 
price index. Effective with this CY 2023 PFS rulemaking cycle, we 
proposed to rebase and revise the MEI based on a methodology that uses 
publicly available data sources for input costs that represent all 
types of physician practice ownership; that is, not limited to only 
self-employed physicians. We detailed the proposals regarding the 
derivation of the cost categories and associated cost share weights, 
selection of the price proxies in the MEI, and the results of the 
proposed 2017-based MEI as compared to the current 2006-based MEI in 
the proposed rule as well as below.
2. Developing the Cost Weights for Use in the MEI
    The 2006-based MEI was last rebased in the CY 2011 PFS final rule 
with comment period (75 FR 73262 through 73275) and subsequently 
revised in the CY 2014 PFS final rule with comment period (78 FR 74264 
through 74278). The proposed 2017-based MEI cost weights are derived 
predominantly from the annual expense data from the U.S. Census 
Bureau's Services Annual Survey (SAS, https://www.census.gov/programs-surveys/sas.html). Other data sources that were considered and analyzed 
as potential sources of expense data for Physician Offices included the 
BEA Benchmark Input-Output data, the Internal Revenue Services (IRS) 
Statistics of Income data for sole proprietors, and the Medical Group 
Management Association (MGMA) cost and revenue data. While each of 
these data sources provided information on physician input price 
expenses, we found the SAS data to be the most technically appropriate 
data source available based on various factors including public 
availability, level of detail of expense categories, and sample 
representativeness of the universe. The SAS data are publicly available 
data that provide annual receipts estimates for the service industries. 
Collected data include sources of revenue and expenses by type for 
selected industries and selected industry-specific items. Specifically, 
we proposed to use the 2017 SAS data from Table 5, Estimated Selected 
Expenses for Employer Firms for NAICS 6211 (Office of Physicians). The 
survey data collection in 2018 and 2019 were scaled back and therefore, 
data by expense category was limited for those years in comparison to 
the 2017 data. For example, the SAS expense data for lease and rental 
payments, professional and technical services, repair and maintenance 
services, and detailed utility costs were unavailable in 2018 and 2019. 
The 2020 data included a return to the more comprehensive collection of 
expense data; however, the presence of the PHE for COVID-19 raised 
questions regarding the representativeness and stability of the data 
given impacts on the utilization of physicians' services and associated 
expenses. Therefore, we proposed to use the 2017 SAS data for the 
proposed 2017-based MEI because it was the most recently available and 
complete data available at the time of rulemaking.
    We proposed to supplement the 2017 SAS expense data by using 
several data sources for further disaggregation of compensation costs 
and all other residual costs, including the 2017 Bureau of Labor 
Statistics (BLS) Occupational Employment and Wage Statistics (OEWS), 
the 2012 Bureau of Economic Analysis (BEA) Benchmark Input-Output data 
(I/O), the 2006 AMA PPIS, and the 2020 AMA Physician

[[Page 69690]]

Practice Benchmark Survey. Table 37 lists the set of mutually exclusive 
and exhaustive cost categories and weights for the proposed 2017-based 
MEI compared to the 2006-based MEI.
BILLING CODE 4150-28-P
[GRAPHIC] [TIFF OMITTED] TR18NO22.067

BILLING CODE 4150-28-C
    Total costs equal the sum of the costs for Physician Compensation 
and Practice Expenses. The development of the cost weights for each 
cost category in the proposed 2017-based MEI is described, in detail, 
as follows.
a. Physician's Compensation
    The component of the MEI that reflects physician work is 
represented by the estimated portion of compensation expenses 
attributable to physicians. The proposed 2017 cost weight associated 
with the physician's work (otherwise referred to as the Physician 
Compensation cost weight) is based on the estimated share of 2017 SAS 
expenses for total compensation associated with physician compensation. 
Since the compensation expense in the SAS data is only reported as an 
aggregate for all employees, we proposed to split the compensation 
expenses between physicians (including non-physician practitioners that 
can bill independently such as nurse practitioners (NPs), physician 
assistants (PAs), and other clinical personnel) and all other workers 
using the following process.
    Step 1: Total compensation costs are calculated by summing the 
reported expenses in the SAS for gross annual payroll, employer costs 
for fringe benefits (including health insurance, defined benefit, and 
defined contribution plans, payroll taxes, employer-paid insurance 
premiums, and all other benefits), and temporary staff and leased 
employees as reported in the 2017 SAS data for NAICS 6211 (Office of 
Physicians).
    Step 2: Determine the ratio of physician (including non-physician 
practitioners that can bill independently such as NPs, PAs, and other 
clinical personnel) wage costs to total wage costs. This ratio is 
calculated using data from the Bureau of Labor Statistics (BLS) 
Occupational Employment and Wage Statistics (OEWS) May 2017 National 
Industry-Specific Occupational Employment and Wage Estimates for 
Offices of Physicians (NAICS 6211). This data reports the number of 
employees by occupational category based on the Standard Occupational 
Classification System (SOC) and the mean hourly wage for each 
occupation. For each occupation, we multiplied the

[[Page 69691]]

number of employees by the mean hourly wage to estimate the total mean 
hourly wage expense. The sum of expenses for each occupation category 
represents total mean hourly wage expenses for all occupations in NAICS 
6211. Then to derive the total mean hourly wage expenses for physicians 
(including non-physician practitioners that can bill independently such 
as NPs, PAs, and other clinical personnel) we proposed to sum the 
expenses for the following occupations: Physicians and Surgeons (29-
1060); Chiropractor (29-1011); Optometrist (29-1041); Podiatrist (29-
1081); Physical Therapist (29-1123); Dieticians & Nutritionists (29-
1031); Physician Assistants (29-1071); Nurse Practitioners (29-1171); 
and All Other Diagnosing & Treating Occupations (29-11XX)), which 
includes compensation costs for Registered Nurses (29-1141). The ratio 
of physician total mean hourly wage costs to total mean hourly wage 
costs is 63.2 percent.
    Step 3: We proposed to multiply the total compensation expenses 
from Step 1 by the ratio determined in Step 2 to derive estimated 
Employed Physician Compensation Expenses, which in 2017 were estimated 
to account for 42.4 percent of total costs.
    Next, since the expenses estimated above reflect only employed 
physician compensation, we proposed to add an estimate of compensation 
costs to account for physician practice owners that are not classified 
as employees but instead would be included in the net income of the 
practice. The net income physician compensation costs are estimated by 
the following methodology. This amount is determined in three steps:
    Step 1: We proposed to subtract total expenses from total revenue 
as reported in the 2017 SAS data for NAICS 6211.
    Step 2: We estimated the share of owners versus employees of 
physician practices for 2017 based on the average share of ``owners'' 
for 2016 and 2018 as reported in Exhibit 1 of the 2020 AMA Physician 
Practice Benchmark Survey. This estimated share for 2017 is 46.5 
percent.
    Step 3: We multiplied the share determined in step 2 by the amount 
determined in step 1, which represents the estimated expenses for net 
income for owners of physician practices and is 4.845 percent of total 
costs in 2017.
    The proposed aggregate 2017-based Physician Compensation cost 
weight is the sum of the Employed Physician Compensation cost weight 
(42.416 percent) and Estimated Net Income for Physician Practice Owners 
cost weight (4.845 percent), or 47.261 percent. By comparison, the 
2006-based Physician Compensation cost weight was 50.866 percent and 
reflects the net income for self-employed physicians and the expenses 
for non-physician clinical staff that can bill Medicare independently. 
The proposed 2017-based MEI cost weight for Physician Compensation is 
3.6 percentage points lower than the 2006-based MEI cost weight. This 
difference is due to two key factors: (1) any changes that occurred in 
the cost to provide physician services between 2006 and 2017, and (2) 
the SAS data reflects relative costs for all physician ownership 
practices while the 2006 AMA PPIS data reflected relative costs only 
for self-employed physician practices.
    We proposed to split the Physician Compensation cost weight into 
two cost categories: Physician Wages and Salaries, and Physician 
Benefits. The proposed Physician Wages and Salaries cost weight is 
calculated by multiplying the total Physician Compensation weight by 
the ratio of the gross payroll to the sum of gross payroll and 
employer's cost for fringe benefits in the 2017 SAS data, which is 83 
percent. The proposed Physician Benefits cost weight is calculated by 
multiplying the total physician compensation weight by the ratio of the 
employee benefits to the sum of gross payroll and employer's cost for 
fringe benefits in the 2017 SAS data, which is 17 percent. As a result, 
the proposed Physician Wages and Salaries cost weight is 39.226 percent 
and the proposed Physician Benefits cost weight is 8.034 percent in the 
2017-based MEI.
b. Practice Expenses
    The Practice Expenses cost weight reflects all remaining operating 
costs other than physician compensation. We proposed to determine the 
remaining Practice Expense cost weights in the 2017-based MEI using the 
2017 SAS Expense data for NAICS 6211 expressed as a percentage of total 
costs. The explanations for the derivation of the individual cost 
weights under Practice Expenses are detailed below.
(1) Non-Physician Compensation
    We proposed to estimate the cost weight for Non-physician 
Compensation using the 2017 SAS data for these expenses. As mentioned 
previously, since the compensation expenses in the SAS data are only 
reported as an aggregate for all employees, we proposed to multiply the 
2017 SAS total compensation expenses for NAICS 6211 by 36.8 percent, 
which is the residual of the 63.2-percent share determined for 
physicians (including non-physician practitioners that can bill 
independently such as NPs, PAs, and other clinical personnel).
    Then, we proposed to multiply the total compensation expenses by 
the ratio of non-physician compensation expenses to total compensation 
expenses. This results in the proposed Non-physician Compensation cost 
weight of 24.716 percent in the proposed 2017-based MEI.
    Next, we proposed to split the Non-physician Compensation cost 
weight into two cost categories: Non-physician Wages and Salaries, and 
Non-physician Benefits. The Non-physician Wages and Salaries cost 
weight is calculated by multiplying the total Non-physician 
Compensation cost weight by the ratio of the gross payroll to the sum 
of gross payroll and employer's expense for fringe benefits in the 2017 
SAS data, which is 83 percent. The Non-physician Benefits cost weight 
is calculated by multiplying the total Non-physician Compensation 
weight by the ratio of the employee benefits to the sum of gross 
payroll and employer's expenses for fringe benefits in the 2017 SAS 
data, which is 17 percent. As a result, the proposed Non-physician 
Wages and Salaries cost weight is 20.514 percent in the proposed 2017-
based MEI and the proposed Non-physician Benefits cost weight is 4.202 
percent. For comparison purposes, the 2006-based MEI cost weights are 
11.885 percent and 4.668 percent, respectively. We also proposed to 
disaggregate the Non-physician Wages and Salaries cost weight into two 
categories: (1) Health-related, non-physician; and (2) Non-health, non-
physician Wages and Salaries.
    Of the 36.8 percent of total SAS compensation costs associated with 
non-physicians, 14.7 percentage points are determined to be associated 
with Health-related, non-physician Wages and Salaries. This percentage 
reflects the ratio of mean hourly wages to total mean hourly wages from 
the 2017 OEWS data for the following occupations: Health Technologists 
and Technicians (29-2000); Other Healthcare Practitioners and Technical 
(29-9000); and Healthcare Support (31-0000). Applying this share (about 
40 percent) to the non-physician wages cost weight results in a 
proposed weight of 8.208 percent for the health-related, non-physician 
Wages and Salaries cost weight for the proposed 2017-based MEI.
    The remaining share of non-physician compensation costs are 
associated with Non-health, non-physician Wages and Salaries (22.1 
percentage points of the 36.8 percent). This percentage reflects the 
ratio of mean hourly wages to total

[[Page 69692]]

mean hourly wages from the 2017 OEWS data for the following 
occupations: Management (11-0000); Business and Financial Operations 
(13-0000); Computer and Mathematical (15-0000); Architecture and 
Engineering (17-0000); Life, Physical, and Social Science (19-0000); 
Community and Social Service (21-0000); Legal (23-0000); Education, 
Training, and Library (25-0000); Arts, Design, Entertainment, Sports, 
and Media (27-0000); Protective Service (33-0000); Food Preparation and 
Serving Related (35-0000); Building and Grounds Cleaning and 
Maintenance (37-0000); Personal Care and Service (39-0000); Sales and 
Related (41-0000); Office and Administrative Support (43-0000); 
Construction and Extraction (47-0000); Installation, Maintenance, and 
Repair (49-0000); Production (51-0000); and Transportation and Material 
Moving (53-0000). Applying this share (about 60 percent) to the non-
physician wages cost weight results in a proposed weight of 12.306 
percent for the non-health, non-physician Wages and Salaries cost 
weight for the proposed 2017-based MEI.
    Next, since the non-health, non-physician wages represent various 
types of occupations that may experience different wage inflation 
pressures, we proposed to disaggregate the non-health, non-physician 
Wages and Salaries cost weight of 12.306 percent into four occupational 
subcategories. To arrive at a distribution for these separate 
occupational categories (Professional & Related (P&R) workers, 
Managers, Clerical workers, and Service workers), we determined an 
estimate of annual earnings for each using the Standard Occupational 
Classification (SOC) system. The professional and related wages & 
salaries consist of the following occupational categories: Business and 
Financial Operations (13-0000); Computer and Mathematical (15-0000); 
Architecture and Engineering (17-0000); and Life, Physical, and Social 
Science (19-0000). The Clerical wages & salaries consist of the 
occupational category Office & Administrative Support (43-0000). The 
Services wages & salaries consist of the following occupational 
categories: Community and Social Service (21-0000); Arts, Design, 
Entertainment, Sports, and Media (25-0000); Protective Service (33-
0000); Food Preparation and Serving Related (35-0000); Building and 
Grounds Cleaning and Maintenance (37-0000); Personal Care and Service 
(39-0000); Sales and Related (41-0000); Construction and Extraction 
(47-0000); Installation, Maintenance, and Repair (49-0000); Production 
(51-0000); and Transportation and Material Moving (53-0000).
    The non-health, non-physician Wages and Salaries cost weight of 
12.306 percent is multiplied by the relative share of each category to 
arrive at the detailed distribution. The occupational distribution in 
the proposed 2017-based MEI, as well as the distribution for the 2006-
based MEI, is presented in Table 38.
[GRAPHIC] [TIFF OMITTED] TR18NO22.068

(2) Other Practice Expenses
    We proposed that the remaining aggregate Other Practice Expenses 
would be derived using the 2017 NAICS 6211 SAS expense data and 
calculated as the sum of the expenses for the detailed categories 
expressed as a percentage of total expenses. The aggregate Other 
Practice Expenses include all SAS expenses other than gross annual 
payroll, fringe benefits, and temporary staff and leased employee 
expenses. Additionally, we proposed to remove the estimated expenses 
for drugs and separately billable supplies (which are paid outside of 
the PFS system) from total expenses in order to be consistent with the 
PFS. The Other Practice Expenses share of total costs in the proposed 
2017-based MEI is 28.023 percent compared to a cost weight of 32.582 
percent in the 2006-based MEI.
    We further proposed to use the 2017 SAS data for NAICS 6211 to 
disaggregate the Other Practice Expenses into the following ten cost 
categories: Utilities; All Other Products; Telephone; Administrative 
Support & Waste Services; All Other Services; Professional, Scientific, 
and Technical; Fixed Capital; Moveable Capital; Professional Liability 
Insurance; and Medical Supplies. Table 39 shows the 10 detailed cost 
weights for the Other Practice Expenses for the 2017-based MEI, which 
is 6 fewer categories than the 2006-based MEI. The major differences 
are: (1) we proposed to have one cost category for All Other Products 
in the proposed 2017-based MEI instead of having separate cost 
categories for Chemicals, Paper, Rubber and Plastics, and Other 
Miscellaneous Products as done for the 2006-based MEI, (2) we proposed 
to eliminate the separate cost category for Postage as the cost weight 
was small (less than 0.2 percentage point) and include the expenses for 
postage in the proposed All Other Products cost weight, and (3) we 
proposed to eliminate the cost category for Medical Equipment as the 
cost weight for the Moveable Capital in the proposed 2017-based MEI 
includes the expenses for all types of machinery and equipment, 
including medical equipment; we do not have a data source available to 
split the expenses between Medical Equipment and All Other Equipment in 
the SAS or I-O data.

[[Page 69693]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.069

    As previously mentioned, we proposed to make one adjustment to the 
medical supplies expenses as reported on the SAS data to exclude 
estimated expenses associated with drugs and separately billable 
supplies. We proposed to make this adjustment in order to exclude the 
expenses that are paid outside of the PFS and to be consistent with the 
expenses that were also excluded in the 2006-based MEI. Finally, we 
proposed to use the BEA 2012--Benchmark I/O data aged to 2017 to 
determine the split between All Other Products and All Other Services 
that are captured in the residual ``all other expenses'' line in the 
2017 SAS data. The BEA 2012--Benchmark I/O data can be accessed at 
https://www.bea.gov/industry/input-output-accounts-data#supplemental-estimate-tables. We noted that this method of splitting residual 
expenses is similar to the methodology used in the 2006-based MEI where 
the 2002 Benchmark I/O data was aged to 2006 to further disaggregate 
the residual expense from the AMA PPIS.
    The following is a description of the types of expenses included in 
each of the detailed categories under Other Practice Expenses:
(a) Utilities
    The proposed weight for Utilities was calculated using the 2017 SAS 
expense data expressed as a percentage of total expenses. Utilities 
expenses are calculated as the sum of the expenses from SAS for: (1) 
purchased electricity, (2) purchased fuels (except motor fuels), and 
(3) water, sewer, refuse removal, and other utility payments. The SAS 
survey questionnaire defines the purchased electricity expenses as 
costs paid for electricity. The SAS survey questionnaire defines the 
purchased fuels (except motor fuels) as the costs for fuel for heating, 
power, or generating electricity (for example, natural gas, propane, 
oil, coal). The SAS survey questionnaire defines the water, sewer, 
refuse removal, and other utility payments as the costs for hazardous 
waste removal. If the utility payments for any of these expenses are 
included with lease and rental payments then they are captured in the 
SAS question for lease and rental payments for land, building, 
structures, storage spaces, or offices. The proposed cost weight for 
Utilities in the 2017-based MEI is 0.366 percent.
(b) Telephone Services
    The Telephone cost weight in the proposed 2017-based MEI includes 
2017 SAS expenses reported for purchased communication services. The 
SAS survey questionnaire defines purchased communication services as 
telephone, cellular, and fax services; computer-related communications 
(for example, internet, connectivity, online), and other wired and 
wireless communication services. The proposed cost weight for Telephone 
Services is 0.471 percent.
(c) All Other Products
    The proposed cost weight for All Other Products for the proposed 
2017-based MEI was calculated in two steps. First, all other operating 
expenses are calculated as a percentage of total expenses from the 2017 
SAS, which was 9.158 percent. The SAS survey questionnaire defines the 
All Other operating expenses as operating expenses not reported or 
captured by any other survey expense question or specifically excluded 
in the general instructions. These expenses specifically excluded in 
the general instructions are: transfers made within the company, 
capitalized expenses, interest, bad debt, impairment, and income tax.
    Second, All Other Products expenses are calculated as the estimated 
percentage of expenses from SAS for all other operating expenses using 
Benchmark I/O data. In order to split the aggregate all other operating 
expenses, which reflects both products and services, we proposed to 
rely on the 2012 Benchmark I/O data for NAICS 6211, Offices of 
Physicians aged to 2017 for the NAICS categories that align with 
expenses in the SAS all other operating expenses. The process for doing 
this is explained step by step as follows:
    Step 1: We crosswalked the NAICS categories in the 2012 Benchmark 
I/O data to the expense questions in the 2017 SAS data. This process 
allowed for all Benchmark I/O costs to be grouped into similar buckets 
as the SAS Expenses as closely as possible.

[[Page 69694]]

    Step 2: We aged the 2012 Benchmark I/O costs to 2017 for each of 
the following major buckets of expenses: Physician Compensation, Non-
Physician Compensation, Capital-related expenses (fixed and moveable), 
PLI, Professional Services, Other Products, Other Services, Utilities, 
and Medical Supplies using the growth of the various price proxies used 
for these cost categories in the 2006-based MEI.
    Step 3: The share of each of the aged 2012 I/O expenses were 
calculated as a percentage of the total aged 2012 I/O expenses. The 
aged 2012 I/O categories of other products and other services were 
estimated to account for about 9.6 percent of total costs. This share 
is similar to the SAS residual cost share weight of 9.158 percent.
    The following Table 40 shows the Benchmark I/O NAICS categories 
that were crosswalked to the SAS all other operating expenses for all 
other product expenses.
BILLING CODE 4150-28-P

[[Page 69695]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.070

    Step 4: The share of expenses for the aged 2012 Benchmark I/O all 
other products to the aged total all other operating expenses in the 
Benchmark I/O were calculated. This resulted in products accounting for 
22.4 percent

[[Page 69696]]

and services accounting for 77.6 percent of the I/O expenses classified 
as all other costs. We then multiplied the SAS all other operating 
expenses (9.158 percent) by 22.4 percent to estimate expenses for the 
all other products.
    Step 5: Lastly, we divided the estimated all other products SAS 
expenses by the total SAS expenses and the resulting proposed 2017-
based MEI cost weight for All Other Products is 2.055 percent.
(d) Administrative Support and Waste Services
    The proposed weight for Administrative Support and Waste for the 
proposed 2017-based MEI is based on a portion of the 2017 SAS all other 
operating expenses (Residual). Similar to the methodology to calculate 
the All Other Products cost weight we follow a similar process for the 
Administrative Support & Waste Services cost weight and the All Other 
Services cost weight discussed in the next section. First, we estimated 
the total SAS residual expenses associated with other services by 
multiplying the SAS all other operating expenses by 77.6 percent, or a 
cost weight of 7.103 percent accounting for the SAS residual expenses 
associated with services rather than products.
    Next, we carved out a portion of these all other services expenses 
that we identified as Administrative Support and Waste Services from 
the I/O categories as shown in Table 41. These categories accounted for 
about 26 percent of All other operating expenses. Finally, we divided 
the estimated Administrative Support and Waste Services expenses by the 
Total SAS Expenses and the resulting proposed 2017-based MEI cost 
weight for Administrative Support and Waste Services is 2.341 percent.
[GRAPHIC] [TIFF OMITTED] TR18NO22.071

(e) All Other Services
    The proposed weight for All Other Services for the proposed 2017-
based MEI was determined in two steps. First, as was done for other 
products, we identified I/O categories (as shown in Table 42) 
associated with other services that would crosswalk to the 2017 SAS 
data for all other operating expenses. Next, we carved out a portion of 
these all other services expenses that were not assigned to 
Administrative Support and Waste Services from the I/O categories, the 
categories assigned to all other services are shown in Table 35. Using 
this information, we determined that All Other Services accounted for 
52 percent of the SAS expenses for other operating expenses, or a 
weight of 4.762 percent.

[[Page 69697]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.072

BILLING CODE 4150-28-C
    Second, we also proposed to include the expenses directly reported 
on the SAS survey for purchased repairs and maintenance to machinery 
and equipment in the other services category. The SAS survey 
questionnaire defines these expenses to include expensed repair and 
maintenance services to machinery, vehicles, equipment, and computer 
hardware. These expenses accounted for 0.461 percent of total expenses, 
and when added to the 4.762 percent calculated above, results in a 
proposed 2017-based MEI cost weight for All Other Services of 5.223 
percent.
(f) Professional, Scientific, and Technical Services
    The Professional, Scientific and Technical Services cost weight 
includes the sum of the 2017 SAS expenses for three categories: (1) 
data processing and other purchased computer services, (2) purchased 
advertising and promotional services, and (3) purchased professional 
and technical services. The SAS survey questionnaire defines data 
processing and other purchased computer services to include expenses 
for web hosting, computer facilities management services, computer 
input preparation, data storage, computer time rental, optical scanning 
services, and other computer-related advice and services (including 
training). The SAS survey questionnaire defines purchased advertising 
and promotional services to include marketing and public relations 
services. The SAS survey questionnaire defines purchased professional 
and technical services to include management consulting, accounting, 
auditing, bookkeeping, legal, actuarial, payroll processing, 
architectural, engineering, and other professional services. The cost 
weight for Professional, Scientific, and Technical Services is 6.350 
percent in the proposed 2017-based MEI.
(g) Fixed Capital
    The Fixed Capital cost weight includes the sum of the 2017 SAS 
expenses for four categories: (1) purchased repairs and maintenance to 
buildings, structures, and offices, (2) lease and rental payments for 
land, buildings, structures, store spaces, and offices, (3) an 
estimated portion of depreciation and amortization charges, and (4) 
governmental taxes and license fees. The SAS survey questionnaire 
defines purchased repairs and maintenance to buildings, structures, and 
offices as repair and maintenance to integral parts of buildings (for 
example, elevators, heating systems). The SAS survey questionnaire 
defines lease and rental payments for land, buildings, structures, 
store spaces, and offices to include the rental or lease expenses paid 
for these items including any penalties incurred for broken leases. The 
SAS survey questionnaire defines depreciation and amortization charges 
to include depreciation charges taken against tangible assets owned and 
used by this firm, tangible assets owned and used by this firm within 
leaseholds, tangible assets obtained through capital lease agreements, 
and amortization charges against intangible assets (patents, 
copyrights). We proposed to include the share of the depreciation 
expenses applicable to only the

[[Page 69698]]

structures by multiplying the total depreciation expenses by the share 
of total lease and rental payments that were associated with land, 
buildings, structures, store spaces, and offices as reported on the 
SAS, which is 89 percent. The SAS survey question defines governmental 
taxes and license fees as payments to government agencies for taxes and 
licenses including business and property taxes. The proposed cost 
weight for Fixed Capital for the proposed 2017-based MEI is 5.527 
percent.
(h) Moveable Capital
    The Moveable Capital cost weight includes the sum of the 2017 SAS 
expenses for five categories: (1) expensed equipment, (2) expensed 
purchases of other materials, parts, and supplies, (3) expensed 
purchases of software, (4) an estimated portion of depreciation and 
amortization charges, and (5) lease and rental payments for machinery, 
equipment, and other tangible items. The SAS survey questionnaire 
defines expensed equipment as expensed computer hardware and other 
equipment (for example, copiers, fax machines, phones, shop and lab 
equipment, CPUs, monitors). The SAS survey questionnaire defines 
depreciation and amortization charges to include depreciation charges 
taken against tangible assets owned and used by this firm, tangible 
assets owned and used by this firm within leaseholds, tangible assets 
obtained through capital lease agreements, and amortization charges 
against intangible assets (patents, copyrights). We proposed to include 
the share of the depreciation expenses applicable to only the machinery 
and equipment by multiplying the total depreciation expenses by the 
share of total lease and rental payments associated with machinery and 
equipment as reported on the SAS, which is 11 percent. The SAS survey 
question defines lease and rental payments for machinery, equipment, 
and other tangible items as lease and rental of transportation 
equipment without operators including penalties incurred for broken 
lease agreements. The proposed cost weight for Moveable Capital for the 
proposed 2017-based MEI is 2.221 percent.
(i) Professional Liability Insurance (PLI)
    The Professional Liability Insurance (PLI) cost weight includes 
2017 SAS expenses reported for professional liability insurance. The 
SAS survey questionnaire defines professional liability insurance as 
the premiums paid for professional liability insurance and the amounts 
set aside for self-insurance. The proposed cost weight for PLI is 1.398 
percent in the proposed 2017-based MEI.
(j) Medical Supplies
    The Medical Supplies cost weight includes 2017 SAS expenses 
reported for Medical supplies with an adjustment to remove the 
estimated expenses for drugs and separately billable medical supplies. 
The SAS survey questionnaire defines medical supplies as the materials 
and supplies used to provide medical services to others (except for 
medical equipment). Since the reported expenses in the SAS would 
include the expenses for drugs and biologicals, as well as the expenses 
for supplies that generally are paid separately under Medicare we 
proposed to remove the expenses for these two items from the SAS 
expenses reported using the following methodology:
    Step 1: To remove the separately billable drug expenses, we rely on 
the reported expenses for separately billable drugs from the 2006 AMA 
PPIS data. We inflate the reported AMA PPIS expenses for separately 
billable drugs to 2017 using the growth in Medicare Part B physician-
administered drug spending. Using this method, we inflated the 2006 AMA 
PPIS expenses for separately billable drugs to 2017 by an increase 
factor of 1.784 (or 78.4 percent).
    Step 2: To remove the non-separately billable drug expenses, we 
rely on a similar method where we start with the reported expenses for 
non-separately billable drugs from the 2006 AMA PPIS data. We inflate 
the reported AMA PPIS expenses for non-separately billable drugs to 
2017 using the growth in the PPI for prescription drugs. Using this 
method, we inflate the 2006 AMA PPIS expenses for non-separately 
billable drugs to 2017 by an increase factor of 2.122 (or 112.2 
percent).
    Step 3: To remove the non-separately billable supply expenses, we 
start with the reported expenses for non-separately billable supplies 
from the 2006 AMA PPIS data. We inflate the reported AMA PPIS expenses 
for non-separately billable supplies to 2017 using the growth in the 
Medical supplies price proxy in the 2006-based MEI (a 50/50 blend of 
the PPI--Commodity--Medical and surgical appliances and supplies and 
the CPI--Medical equipment and supplies). Using this method, we inflate 
the 2006 AMA PPIS expenses for non-separately billable supplies to 2017 
by an increase factor of 1.048 (or 4.8 percent).
    Step 4: We then calculate the share of estimated 2017 expenses for 
all drugs and separately billable supplies from steps 1-3 as a 
percentage of total drugs and medical supplies expenses from the 2017 
SAS for NAICS 6211. This share is 80 percent.
    Step 5: We multiply the SAS 2017 total medical supplies expenses by 
a factor of 0.2 (or 1-0.8) in order to estimate the 2017 SAS expenses 
for non-separately billable medical supplies only.
    Taking the 2017 estimated expenses for non-separately billable 
medical supplies as a ratio of total expenses as reported on the 2017 
SAS for NAICS 6211 results in a proposed Medical Supplies cost weight 
of 2.071 percent in the proposed 2017-based MEI.
    The following is a summary of the public comments received on the 
proposed 2017-based MEI and our responses:
    Comment: Many commenters agreed that the data currently used for 
the MEI is outdated and endorsed the principle of having a methodology 
that allows for regular and frequent updates to the MEI in the future 
to help ensure that payment rates reflect the current underlying 
realities of work, practice expenses, and malpractice insurance. A few 
commenters supported the proposal to update the MEI using publicly 
available data sources to estimate base year expenses that reflect 
current market conditions, thus they supported moving forward using the 
proposed 2017-based MEI methodology. However, a majority of the 
commenters urged CMS to delay any change in the MEI until the AMA's 
practice cost data collection work is completed in order to compare the 
weights based on the AMA and SAS data. The commenters noted that this 
will allow interested parties a better ability to provide comments on 
the potential impact to the PFS of refinements to physician practice 
expense distributions. Some commenters stated they believe it is 
important to retain consistency with the MEI measurement that has been 
based on data collected from the AMA Physician Practice Information 
(PPI) Survey that has been used by CMS since 1975. Some commenters 
stated that if the MEI revisions are adopted, they urge that they be 
phased in over a period of at least four years. Commenters noted that a 
transition approach would be consistent with other significant payment 
changes in the PFS including how CMS updated prices of supply and 
equipment inputs and its current transition of clinical labor updates 
for use in its PE methodology.
    Response: As detailed in the proposed rule (87 FR 46419 through 
46425), we are continuing to use the current 2006-

[[Page 69699]]

based MEI cost share weights for CY 2023 PFS ratesetting and GPCIs, 
effectively delaying the implementation of the rebased and revised MEI 
cost share weights for purposes of PFS ratesetting and CY 2023 GPCIs. 
However, we believe that it is important to rebase and revise the MEI 
to a more recent period. We look forward to reviewing future data when 
that information is available to compare to the results to our proposed 
methodology.
    Comment: MedPAC commented that they support CMS' proposal to rebase 
the MEI using data from 2017 because the MEI is currently based on data 
on physicians' expenses from 2006, which raises questions about its 
accuracy. However, they stated that CMS' proposed methodology for 
rebasing the MEI is not transparent and relies on several disparate 
data sources because no single data source contains information at the 
level of detail necessary to rebase the MEI. The commenter also stated 
that in the long term, CMS should strive to identify or develop a 
single data source that has more comprehensive information about 
physicians' input costs, such as physician compensation and 
compensation for other workers. However, the commenter supported CMS 
using its proposed rebased MEI in the interim, as well as waiting until 
2024 to use the new MEI cost weights to update the practice expense 
GPCI cost share weights and to recalibrate the total pools of physician 
work, PE, and PLI RVUs.
    Response: We agree that the current 2006-based MEI is outdated and 
this raises questions about its accuracy for measuring input price 
inflation for providing physician services. We provided detailed 
explanations of which data sources were used and while we agree that 
the methodology is complex as it relies on several disparate data 
sources, we believe that we have proposed a methodology that relies on 
the best available data for this purpose. For this final rule we have 
included additional language in order to more clearly explain how we 
have combined data sources to disaggregate cost data. We also would 
highlight that we believe that the proposed methodology for the 2017-
based MEI relies on data that are updated on a regular basis, publicly 
available, and reflective of the changing practice patterns of the 
overall industry.
    We appreciate the commenter's suggestion that CMS identify or 
develop a single data source that has more comprehensive information 
about physicians' input costs. While we share these aspirations, we are 
not currently aware of any such data source. We will continue to 
explore our options for a more comprehensive data source in the future, 
and any changes to the MEI thereof would be proposed in future 
rulemaking and subject to public comments.
    Comment: One commenter stated concern that the proposed MEI 
methodology would include expenses for all types of physician practice 
ownership, not just self-employed physicians. They state that they 
believe that using all types of physician practice ownership is another 
adjustment for which specialized care will shoulder the burden.
    Response: We believe that the MEI should reflect the current market 
for physician practices. There have been significant changes to 
physician practice ownership patterns since the MEI was originally 
implemented in the 1970s, and even more recently since the MEI was last 
rebased to reflect 2006 experience. Therefore, we believe that it is 
technically appropriate for the MEI to reflect the current physician 
practice ownership shares rather than only reflecting expenses for 
self-employed physicians. We note that the share of self-employed 
physicians has declined steadily over time, based on data from the AMA 
Physician Practice Benchmark Survey.
    Comment: Many commenters stated that the 2017 Service Annual Survey 
(SAS) data for the ``Offices of Physicians'' industry was not designed 
with the purpose of updating the MEI and that seven percent of the 
revenue for ``Offices of Physicians'' on the 2017 SAS was from non-
patient care sources (for example, grants, investment income) and any 
expenses associated with these sources cannot be excluded.
    Response: While we agree that there are non-patient care sources of 
revenue mixed in with the SAS revenue data, we note that the SAS 
revenue data for ``Offices of Physicians'' is used only to estimate the 
cost weight for owners of physician practices (or net income). Since 
the MEI is comprised of relative costs, the composition of the SAS 
revenue data would have a minimal impact on the proposed 2017-based MEI 
cost weights. We believe this methodology for estimating the proposed 
MEI cost share weights using the 2017 SAS data is a technical 
improvement over the 2006-based MEI.
    Comment: Many commenters expressed concerns with the proposed 
method for splitting the aggregate payroll and benefits expenses from 
the SAS data between physician and non-physician compensation. The 
commenters stated that the proposed method relies on a series of 
assumptions to determine the relative distribution of salaries between 
physician and non-physician compensation and results in skewed weights 
that underrepresent the portion of physician compensation relative to 
non-physician compensation. Commenters had several specific concerns 
with the proposed method.
    First, commenters stated that both the Census Bureau's SAS and BLS 
OEWS datasets only include costs for employed physicians within NAICS 
6211 and excludes 36 percent of physicians who are employed in other 
health care settings, such as hospitals. The commenters claim that 
hospital-based physicians have a higher proportion of physician 
earnings and PLI cost relative to other practice costs, as many of 
these other costs are the responsibility of the hospital or other 
facility.
    Secondly, commenters stated that the proposed methodology for 
estimating compensation for practice owners (that is, net income) to be 
unreasonable. The commenters stated that the estimated share of net 
income represents just 10 percent of total compensation for all 
physicians and QHPs, which they claim is an unreasonable estimate since 
nearly half of physicians in the United States are owners.
    The third methodological concern raised was the estimated share of 
employee compensation attributed to physicians and QHPs from the 2017 
of 63.2 percent is incorrect because it incorrectly classified 
registered nurses (RNs) in the estimated share of physician expenses 
rather than classified to non-physician compensation.
    Finally, MedPAC suggested that the occupational splits derived from 
the OEWS data as proposed do not account for differences in the number 
of hours worked by different occupational categories. The commenter 
suggested that including differentials in the average hours worked by 
occupation is technically appropriate and should be considered.
    Response: As mentioned by commenters, the SAS expense data does not 
explicitly report compensation separately for physicians/QHPs and non-
physicians, and therefore, we proposed a methodology relying on other 
data sources in order to split the costs between the two categories of 
workers. Though we agree with the first comment that both the SAS and 
OEWS for NAICS 6211, Offices of Physicians, do not include expenses or 
revenues for physicians who are employed in other healthcare settings 
directly, such as hospitals, we do not believe that

[[Page 69700]]

including costs for physicians that do not incur any operating expenses 
associated with running a practice would be technically appropriate. We 
note that the establishments selected for NAICS 6211, Offices of 
Physicians are defined as establishments of health practitioners having 
the degree of M.D. (Doctor of Medicine) or D.O. (Doctor of Osteopathy) 
primarily engaged in the independent practice of general or specialized 
medicine (for example, anesthesiology, oncology, ophthalmology, 
psychiatry) or surgery. These practitioners operate private or group 
practices in their own offices (for example, centers or clinics) or in 
the facilities of others, such as hospitals or HMO medical centers. 
Therefore, while the SAS data would not necessarily reflect physicians 
directly employed by a hospital they would reflect establishments that 
operate physician offices in other settings such as hospitals or HMO 
medical centers. Additionally, the current cost share weights based on 
the 2006 AMA Physician Practice Information Survey (PPIS) data also 
appropriately do not reflect the expenses of physicians employed 
directly by other industries such as hospitals or skilled nursing 
facilities. Therefore, we believe that the SAS and BLS OEWS data for 
Offices of Physicians are technically appropriate data sources to use 
to derive the cost share weights for the index that measures relative 
input price pressures of providing physician services.
    In response to commenters' second concern, the proposed methodology 
for estimating the net income for practice owners from the 2017 SAS 
data was developed to capture the proportion of net income from a 
physician practice that would reflect physician compensation but is not 
reported as payroll. The 2017 SAS data includes gross payroll expenses 
for employees, which would exclude the proportion of expenses that are 
compensation to proprietors or partners for unincorporated businesses. 
A sole proprietorship or partnership is often an unincorporated 
business owned and run by one or more individuals, with no distinction 
between the business and its owner. The owners of these unincorporated 
businesses are entitled to all profits and are also solely responsible 
for all the business's debts, losses and liabilities. Based on this 
definition, income to sole proprietors and partnerships from profits is 
not captured in the SAS gross payroll data; however, employed 
physicians who are not sole proprietors or unincorporated business 
would be eligible for inclusion in the sample and their compensation 
would be reported in the gross payroll costs. Therefore, we proposed to 
include a proportion of net income for owners of physician offices that 
are sole proprietors, partnerships, or unincorporated businesses to 
physician compensation expenses estimated from the SAS.
    As discussed in the proposed rule, in order to adjust the 2017 SAS 
expense levels, we first calculated the total net income for the 
industry. Within the SAS survey data for Offices of Physicians, the 
difference between total revenues and expenses would reflect 
compensation to the physician (net income) as well as funds that are 
likely reinvested in the business or used for other purposes, such as 
expansion or savings. Therefore, we proposed to allocate only a portion 
of the 2017 difference between revenues and expenses to physician 
compensation to account for the net income of owners of unincorporated 
businesses, and we believed using the proportion of physicians that are 
self-employed to be a reasonable assumption in determining this 
adjustment. We note that the estimated share of net income from the SAS 
data declined from 11.3 percent in 2006 to 9.2 percent in 2017. At the 
same time the percentage of physicians reported as owners of a practice 
rather than employees declined from 61 percent in 2006 to 46.5 percent 
in 2017, according to the AMA Physician Practice Benchmark Survey data.
    Given that the commenters felt that the proposed method to estimate 
net income wasn't reflecting the proportion of the revenue and expense 
difference that was allocated to physician compensation, we conducted 
further research and considered an alternative method. The IRS 
Statistics of Income (SOI) data for Offices of Physicians, by type of 
ownership, provides the level of revenue/receipts and net income 
separately for corporations, partnerships, and sole proprietors. The 
2017 SOI data shows that net income as a share of total receipts varies 
across ownership type. For example, the share of net income as a 
percentage of revenue is 49.6 percent for sole proprietors, 19.5 
percent for partnerships, and 6.9 percent for corporations. Since the 
SAS gross revenue less expenses amount would reflect a combination of 
ownership types, we believe that revising our method to account for the 
differences in shares of net income, by ownership type, would be an 
improvement over using the share of self-employed physicians of overall 
physicians. Our revised method is based on the following steps:
    Step 1: We estimated the share of total revenue for the three 
ownership types as reported on the 2017 IRS SOI data. For NAICS 6211, 
Offices of Physicians, corporations account for 74 percent of total 
industry revenue, partnerships account for 17 percent of total industry 
revenue, and sole proprietors account for 8 percent of total industry 
revenue. We applied these percentages to the total revenue amount 
reported in the 2017 SAS data to estimate the level of revenue for the 
three ownership types.
    Step 2: Using the 2017 IRS SOI data, we calculated the share of net 
income as a percentage of revenue/receipts for the three ownership 
types. The share of net income as a percent of revenue for corporations 
is 6.9 percent, for partnerships is 19.5 percent, and for sole 
proprietors in 49.6 percent.
    Step 3: We multiply the share of net income as a percentage of 
revenue for corporations, partnerships, and sole proprietors 
(calculated in step 2) to the revenue amounts for corporations, 
partnerships, and sole proprietors (calculated in step 1) to determine 
the net income by ownership type for each of the three practice types.
    Step 4: We add the estimated net income for partnerships and sole 
proprietors (calculated in step 3) together to determine the amount of 
net income from the 2017 SAS data that should be allocated to physician 
compensation.
    We believe this methodology addresses the commenters' concerns that 
the proposed method did not consider the variation in the percentage of 
costs assumed to be allocated to net income for sole proprietors and 
partnerships. We do not allocate any of the net income or profit for 
corporations to physician compensation as we believe that corporations 
would use the annual profit to reinvest in the business or for other 
business purposes. This revised method for estimating the net income 
for physician compensation relies upon IRS data for sole proprietors 
and partnerships in order to estimate net income that is not directly 
captured by the SAS survey question. We are unaware of any other 
publicly available data source available that would provide this 
information.
    This revised methodology results in an increase in the cost weight 
for net income from the proposed 4.8 percent of total expenses to 8.2 
percent of total expenses. Additionally, the revised method increases 
the share of physician net income as a share of total physician 
compensation from 10.3 percent to 16.7 percent of physician 
compensation costs. We believe this is a better estimate for deriving 
net income since it

[[Page 69701]]

takes into account the differences in the relative share of net income 
by ownership type, which the proposed method did not consider. 
Therefore, we are finalizing the revised method for estimating the net 
income add-on expense amount based on the revised method described 
above for the final 2017-based MEI.
    In response to commenters' third concern regarding the error in 
classification of RN compensation expenses, we agree that registered 
nurses (RNs) were inadvertently classified in the estimated share of 
physician expenses but would be more appropriately classified in non-
physician compensation. Within the BLS OEWS data, RNs are reported in 
the SOC 29-1141. Based on commenters' concerns we reallocated the 
associated expenses for RN compensation from Physician Compensation 
expenses to Clinical, non-physician Compensation expenses. The revised 
distribution results in a smaller share of SAS reported compensation 
costs allocated to physician compensation and an increase to the share 
of Clinical, non-physician compensation.
    In response to the final comment related to including variation in 
hours worked by occupation into the methodology for deriving the 
physician and non-physician split, we agree with the suggestion that 
the estimated shares for Office of Physicians occupational mix could be 
refined to account for differences in the number of hours worked by 
occupation. We obtained average weekly hours worked by occupation for 
NAICS 6211 from the Census Bureau's Current Population Survey (CPS). We 
have revised the proposed methodology for estimating the occupational 
mix of total compensation shares by multiplying the mean hourly 
earnings by occupation from the BLS OEWS survey by the average weekly 
hours by occupation from the CPS data. This product of mean hourly wage 
* average weekly hours by occupation is then multiplied by the number 
of employees by occupation as reported by the BLS OEWS data. This 
revised method for estimating the occupational mix shares to account 
for variation in the number of hours worked by occupation relies upon 
data captured by the CPS. We are unaware of any other publicly 
available data source that would provide this information.
    The revised distribution of the compensation weights accounting for 
both a reclassification of RNs to clinical non-physician compensation 
and accounting for average hours worked, by occupation, is shown in 
Table 43. Accounting for the differences in the average weekly hours by 
occupation increases the weight for physician compensation and 
decreases the weight for clinical, non-physician compensation, and non-
health related compensation compared to the proposed 2017-based MEI.
[GRAPHIC] [TIFF OMITTED] TR18NO22.710

    For the reasons detailed above, we believe that the three 
methodological revisions to the proposed method based on public comment 
feedback produces an improvement to the decomposition of SAS 
compensation expenses between physician compensation and non-physician 
compensation for purposes of the MEI.
    Comment: Several commenters noted they did not agree with the 
proposed method to exclude expenses for separately billable supplies 
and drugs. Commenters stated that the use of growth in Medicare Part B 
drug spending to age expenses forward is not entirely appropriate and 
that the use of an index that is inclusive of all drugs, such as the 
CPI or PPI to account for inflation would be better. Commenters also 
expressed concern that the total expenses that were being compared were 
estimated from different surveys and the expenses to include in each 
survey could be entirely different.
    Response: We disagree with commenters' concerns with the proposed 
approach for estimating the portion of separately billable supply and 
drug expenses. We believe that the question on the AMA PPIS survey for 
drugs and medical supplies align similarly with the types of expenses 
collected on the SAS survey questionnaire. The SAS survey questions for 
medical supply expenses asks respondents to report the costs for 
materials and supplies used in providing medical services to others 
(and States not to include costs for medical equipment in this amount). 
This medical supply expense would include drug costs as well as other 
medical supply costs. The AMA PPIS survey collects the expenses for 
drugs and medical supplies using two separate questions. The AMA 
question for medical supply expenses asks respondents to report ``total 
expenses for medical supplies such as sterile gloves, needles, 
bandages, specimen containers, and catheters.'' The AMA question also 
instructs respondents to not include expenses for medical equipment 
costs with medical supplies. The question for drug expenses asks 
respondents to report ``total expenses for all drugs administered in 
the office (for example, local anesthetics, infusions, antibiotics, 
vaccines) and instructs respondents to report the cost of the drugs, 
after considering any discounts and rebates.'' Additionally, the two 
questions on the AMA PPIS survey for medical supplies and drugs asks 
for the dollar amount of medical supplies and drugs that were 
separately billable; this information is not collected on the SAS 
questionnaire. Given the data available, we believe that the proposed 
method for removing all

[[Page 69702]]

drug expenses and separately billable supply expenses for the 2017-
based MEI is appropriate and is consistent with how these costs were 
excluded in the 2006-based MEI. The estimated price growth in Part B 
drugs and the estimated growth in the PPI for prescription drugs are 
relatively similar. The proposed method excludes approximately 80 
percent of medical supply expenses from the SAS data. If the separately 
billable drug expenses were inflated by the PPI for prescription drugs 
instead of the growth in Part B drug spending, then 81.8 percent of 
expenses would be excluded rather than 80 percent. We believe that the 
difference between the two methods is insignificant and believe the 
proposed approach is the better one.
    Comment: Many commenters stated that the decrease in the weight for 
PLI costs was unrealistic. One commenter noted that a weight of 1.4 
percent applied to Medicare spending on its share of these premiums and 
self-insured actuarial costs would equate to an unreasonably low 
premium amount that would contradict CMS's volume weighted national PLI 
premium costs of $21,700. The commenters, using this logic, stated that 
they believe a 4-5 percent PLI weight is more appropriate than the 
proposed 1.4 percent weight.
    Response: The proposed cost share weight for the 2017-based MEI, 
reflecting all types of physician ownership practices is substantially 
lower than the current 2006-based MEI PLI weight, which reflected the 
relative cost of PLI for self-employed physicians only. The drop in the 
PLI weight is the result of using both a more recent year of physician 
cost data as well as also using a sample of physicians that is 
inclusive of various ownership types.
    Based on analysis of several data sources, the 2017 cost weight for 
PLI shows that it is lower than the weight in the 2006-based MEI. For 
example, the IRS Statistics of Income data for Sole Proprietors shows a 
2006 PLI cost share weight of about 3.9 percent, which is relatively 
close to the 2006-based MEI PLI weight of 4.3 percent based on AMA PPIS 
data. Using the same data source the SOI data shows a 2017 PLI weight 
of 2.1 percent. This information indicates that trends between 2006 and 
2017 for self-employed, sole proprietors would by itself result in a 
drop of approximately 2 percentage points.
    However, as mentioned earlier, the data for the proposed 2017-based 
MEI also includes corporations and physician group practices that are 
not self-employed, including those that are hospital owned. These 
practices tend to be larger and have higher overall expenses than sole 
proprietor physician offices; additionally, group practice data 
indicates the relative share of PLI expenses is even lower (for 
instance, one private data source indicates a PLI weight below 1 
percent in recent years).
    For these reasons, we believe the proposed 2017-based cost weight 
is appropriate, given the data sources available reporting these costs. 
As we noted, the PLI weight in the MEI reflects the total expenses 
associated with paid PLI premiums for the industry relative to the 
total costs for other business expenses such as compensation, and 
equipment costs. Thus, it is not comparable to a measure of an average 
national premium such as the CMS national PLI premium cost of $21,700 
referenced in the rule.
    After consideration of the public comments, we are finalizing the 
proposed 2017-based MEI cost share weights as proposed for all cost 
categories in the MEI except for the compensation cost category weights 
where we are revising the methodology based on public comments received 
and summarized above. Specifically, we are: (1) revising the 
methodology for estimating the 2017 expenses for physician net income; 
(2) correcting the allocation of registered nurse (RN) compensation 
costs from physician compensation to clinical, non-physician 
compensation; and (3) adjusting the shares for allocating SAS 
compensation costs between physician and non-physicians by factoring in 
differences in average weekly hours by occupation. The following 
section highlights the specific changes we are finalizing to the 
proposed methodology and the resulting revised 2017-based MEI weights 
relative to both the 2006-based and the proposed 2017-based MEI 
weights.
    The development of the revised cost weights based on public 
comments is described, in detail, as follows.
a. Physician's Compensation
    The component of the MEI that reflects physician work is 
represented by the estimated portion of compensation expenses 
attributable to physicians. The revised 2017 cost weight associated 
with the physician's work (otherwise referred to as the Physician 
Compensation cost weight) is based on the estimated share of 2017 SAS 
expenses for total compensation associated with physician compensation. 
Since the compensation expense in the SAS data is only reported as an 
aggregate for all employees, we split the compensation expenses between 
physicians (including non-physician practitioners that can bill 
independently such as nurse practitioners (NPs), physician assistants 
(PAs), and other clinical personnel) and all other workers using the 
following process.
    Step 1: Total compensation costs are calculated by summing the 
reported expenses in the SAS for gross annual payroll, employer costs 
for fringe benefits (including health insurance, defined benefit and 
defined contribution plans, payroll taxes, employer paid insurance 
premiums, and all other benefits), and temporary staff and leased 
employees as reported in the 2017 SAS data for NAICS 6211 (Office of 
Physicians).
    Step 2: Determine the ratio of physician (including non-physician 
practitioners that can bill independently such as NPs, PAs, and other 
clinical personnel) wage costs to total wage costs. This ratio is 
calculated using data from the Bureau of Labor Statistics (BLS) 
Occupational Employment and Wage Statistics (OEWS) May 2017 National 
Industry-Specific Occupational Employment and Wage Estimates for 
Offices of Physicians (NAICS 6211). This data reports the number of 
employees by occupational category based on the Standard Occupational 
Classification System (SOC) and the mean hourly wage for each 
occupation. We proposed to revise the calculation of expenses for each 
occupation to also account for the variation in the average weekly 
hours worked, which were obtained for NAICS 6211 from the Census 
Bureau's Current Population Survey (CPS). Therefore, for each 
occupation, we multiply the number of employees by the mean hourly wage 
times the average weekly hours to estimate the total mean weekly wage 
expense. The sum of weekly expenses for each occupation category 
represents total mean weekly wage expenses for all occupations in NAICS 
6211. Then to derive the total mean weekly wage expenses for physicians 
(including non-physician practitioners that can bill independently such 
as NPs, PAs, and other clinical personnel) we sum the expenses for the 
following occupations: Physicians and Surgeons (29-1060); Chiropractor 
(29-1011); Optometrist (29-1041); Podiatrist (29-1081); Physical 
Therapist (29-1123); Dieticians & Nutritionists (29-1031); Physician 
Assistants (29-1071); Nurse Practitioners (29-1171); and All Other 
Diagnosing & Treating Occupations (29-11XX). We note that the proposed 
methodology included the allocation of compensation costs for 
Registered Nurses (29-1141) within the All Other Diagnosing & Treating 
Occupations category (29-11XX). As commenters highlighted, the 
compensation expenses

[[Page 69703]]

for RNs were inadvertently allocated to physician compensation. 
Therefore, we are correcting this error and correctly allocating these 
costs to the clinical, non-physician compensation cost category. As a 
result of these revisions, the ratio of physician mean weekly wage 
costs to total mean weekly wage costs falls to 60.7 percent compared to 
the proposed 63.2 percent. This change is the combination of two 
offsetting effects, correcting for the classification of RN expenses to 
clinical, non-physician compensation lowers the physician compensation 
share from 63.2 percent to 55.7 percent; then accounting for 
differences in weekly hours by occupation subsequently increases the 
physician compensation share from 55.7 percent to 60.7 percent.
    Step 3: We multiply the total compensation expenses from Step 1 by 
the revised ratio of 60.7 percent determined in Step 2 to derive the 
revised Employed Physician Compensation Expenses, or 39.3 percent of 
total costs.
    Next, since the expenses estimated above reflect only employed 
physician compensation, we proposed to add an estimate of compensation 
costs to account for physician practice owners that are not classified 
as employees but instead would be included in the net income of the 
practice. Based on comments received we re-evaluated the proposed 
methodology used to estimate the net income expenses.
    The IRS Statistics of Income (SOI) data for Offices of Physicians, 
by type of ownership provides the level of revenue/receipts and net 
income separately for corporations, partnerships, and sole proprietors. 
The 2017 SOI data shows that net income as a share of total receipts 
varies across ownership type. For example, the share of net income as a 
percentage of revenue is 49.6 percent for sole proprietors, 19.5 
percent for partnerships, and 6.9 percent for corporations. Since the 
SAS revenue less expense amount would reflect a combination of 
ownership types we revised our method to account for the differences in 
shares of net income, by ownership type using the following steps:
    Step 1: We estimated the share of total revenue for the three 
ownership types as reported on the 2017 IRS SOI data. For NAICS 6211, 
Offices of Physicians, corporations account for 74 percent of total 
industry revenue, partnerships account for 17 percent of total industry 
revenue, and sole proprietors account for 8 percent of total industry 
revenue. We applied these percentages to the total revenue amount 
reported in the 2017 SAS data to estimate the level of revenue for the 
three ownership types.
    Step 2: Using the 2017 IRS SOI data, we calculated the share of net 
income as a percentage of revenue/receipts for the three ownership 
types. The share of net income as a percent of revenue for corporations 
is 6.9 percent, for partnerships is 19.5 percent, and for sole 
proprietors in 49.6 percent.
    Step 3: We multiply the share of net income as a percentage of 
revenue for corporations, partnerships, and sole proprietors 
(calculated in step 2) to the revenue amounts for corporations, 
partnerships, and sole proprietors (calculated in step 1) to determine 
the net income by ownership type for each of the three practice types.
    Step 4: We add the estimated net income for partnerships and sole 
proprietors (calculated in step 3) together to determine the amount of 
net income from the 2017 SAS data that should be allocated to physician 
compensation. We do not allocate any of the net income or profit for 
corporations to physician compensation as we believe that corporations 
would use the annual profit to reinvest in the business or for other 
business purposes.
    This revised methodology results in an increase in the cost weight 
for net income from the proposed 4.8 percent of total expenses to 8.2 
percent of total expenses. The revised method increases the share of 
physician net income as a share of total physician compensation from 
10.3 percent to 16.7 percent of physician compensation costs.
    The revised aggregate 2017-based Physician Compensation cost weight 
is the sum of the Employed Physician Compensation cost weight (39.297 
percent) and estimated Net Income for Physician Practice Owners cost 
weight (8.226 percent), or 47.522 percent. By comparison, the 2006-
based Physician Compensation cost weight was 50.866 percent. The 
revised 2017-based MEI cost weight for Physician Compensation is 0.3 
percentage point higher than the proposed 2017-based MEI cost weight 
and is 3.3 percentage points lower than the 2006-based MEI cost weight.
    We proposed to split the Physician Compensation cost weight into 
two cost categories: Physician Wages and Salaries and Physician 
Benefits. We did not make any revisions to the proposed methodology for 
splitting physician compensation into Physician Wages and Salaries and 
Physician Benefits, therefore we split the physician compensation 
weight between wages and benefits using an 83/17 split. As a result, 
the Physician Wages and Salaries cost weight is 39.443 percent and the 
Physician Benefits cost weight is 8.079 percent in the revised 2017-
based MEI.
b. Practice Expenses
    The Practice Expenses cost weight reflects all remaining operating 
costs other than physician compensation. Based on public comments 
received on the proposed method, we are revising the cost weights for 
the non-physician compensation categories. We are finalizing the cost 
category weights for all practice expense cost categories other than 
non-physician compensation cost categories as proposed. We explain the 
revisions to the cost weights for the non-physician compensation 
practice expense cost weights.
(1) Non-Physician Compensation
    We proposed to estimate the cost weight for Non-physician 
Compensation using the 2017 SAS data for these expenses. As mentioned 
previously, since the compensation expenses in the SAS data are only 
reported as an aggregate for all employees, we proposed to multiply the 
2017 SAS total compensation expenses for NAICS 6211 by the residual of 
the share determined for physicians (including non-physician 
practitioners that can bill independently such as NPs, PAs, and other 
clinical personnel). The revised share for non-physician compensation 
is 39.307 percent. Multiplying the total compensation expenses by this 
ratio results in the final Non-physician Compensation cost weight of 
25.451 percent, slightly higher than the proposed 24.716 percent.
    Finally, we revised the weights for disaggregating the non-
physician wages and salaries into two categories: (1) Health-related, 
non-physician and (2) Non-health, non-physician Wages and Salaries.
    Of the 39.3 percent of total SAS compensation costs associated with 
non-physicians, 19.1 percentage points are determined to be associated 
with Health-related, non-physician Wages and Salaries. This percentage 
reflects the ratio of mean weekly wages to total mean weekly wages from 
the 2017 OEWS data for the following occupations: Registered Nurses 
(RNs) (29-1141); Health Technologists and Technicians (29-2000); Other 
Healthcare Practitioners and Technical (29-9000); and Healthcare 
Support (31-0000). Applying this share (about 49 percent) to the non-
physician wages cost weight results in a weight of 10.858 percent for 
the health-related, non-physician Wages and Salaries cost weight for 
the final 2017-based MEI.
    The remaining share of non-physician compensation costs are 
associated with

[[Page 69704]]

non-health, non-physician Wages and Salaries (20.2 percentage points of 
the 39.3 percent). This percentage reflects the ratio of mean weekly 
wages to total mean weekly wages from the 2017 OEWS data for the 
following occupations: Management (11-0000); Business and Financial 
Operations (13-0000); Computer and Mathematical (15-0000); Architecture 
and Engineering (17-0000); Life, Physical, and Social Science (19-
0000); Community and Social Service (21-0000); Legal (23-0000); 
Education, Training, and Library (25-0000); Arts, Design, 
Entertainment, Sports, and Media (27-0000); Protective Service (33-
0000); Food Preparation and Serving Related (35-0000); Building and 
Grounds Cleaning and Maintenance (37-0000); Personal Care and Service 
(39-0000); Sales and Related (41-0000); Office and Administrative 
Support (43-0000); Construction and Extraction (47-0000); Installation, 
Maintenance, and Repair (49-0000); Production (51-0000); and 
Transportation and Material Moving (53-0000). Applying this share 
(about 51 percent) to the non-physician wages cost weight results in a 
weight of 10.266 percent for the non-health, non-physician Wages and 
Salaries cost weight for the final 2017-based MEI.
    Next, since the non-health, non-physician wages represent various 
types of occupations that may experience different wage inflation 
pressures, we proposed to disaggregate the non-health, non-physician 
Wages and Salaries cost weight into four occupational subcategories. To 
arrive at a distribution for these separate occupational categories 
(Professional & Related (P&R) workers, Managers, Clerical workers, and 
Service workers), we determined an estimate of annual earnings for each 
using the Standard Occupational Classification (SOC) system. While we 
did not make any changes to the occupations included in each of the 
categories from what was proposed, the final cost weights are revised 
due to the revised non-physician wages and salary weight and the 
inclusion of average weekly hours by occupation.
    The non-health, non-physician Wages and Salaries cost weight of 
10.858 percent is multiplied by the relative share of each category to 
arrive at the detailed distribution. The occupational distribution in 
the final 2017-based MEI, the proposed 2017-based MEI, and the 2006-
based MEI is presented in Table 44.
[GRAPHIC] [TIFF OMITTED] TR18NO22.073

    Table 45 lists the set of mutually exclusive and exhaustive cost 
categories and weights for the final 2017-based MEI, proposed 2017-
based MEI, and the 2006-based MEI. While the methodology for deriving 
all other practice expenses did not change from the proposed method, 
their cost share weights are slightly lower due to the increases in 
total expenses that reflect the revised method for estimating physician 
net income; that is, both physician compensation and total expenses 
were higher based on the revised method in response to public comments.
BILLING CODE 4150-28-P

[[Page 69705]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.074

BILLING CODE 4150-28-C
3. Selection of Price Proxies for Use in the MEI
    To select prices proxies for the proposed 2017-based MEI cost 
categories, most of the proxy measures we considered are based on BLS 
data and are grouped into one of the following four categories:
     Producer Price Indices (PPIs): PPIs measure the average 
change over time in the selling prices received by domestic producers 
for their output. The prices included in the PPI are from the first 
commercial transaction for many products and some services (https://www.bls.gov/ppi/).
     Consumer Price Indices (CPIs): CPIs measure the average 
change over time in the prices paid by urban consumers for a market 
basket of consumer goods and services (https://www.bls.gov/cpi/). CPIs 
are only used when the purchases are similar to those of retail 
consumers rather than purchases at the producer level, or if no 
appropriate PPIs are available or if the particular expenditure 
category is likely to contain purchases made at the final point of 
sale.
     Employment Cost Indices (ECIs): 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. ECIs 
are superior to Average Hourly Earnings (AHE) as price proxies for 
input price indexes because they are not affected by shifts in 
occupation or industry mix, and because they measure pure price change 
and are available by both occupational group and by industry. The 
industry ECIs are based on the NAICS and the occupational ECIs are 
based on the Standard Occupational Classification System (SOC). We 
evaluated the price proxies using the criteria of reliability, 
timeliness, availability, and relevance:
     Reliability: Reliability indicates that the index is based 
on valid statistical methods and has low sampling variability. Widely 
accepted statistical methods ensure that the data were collected and 
aggregated in a way that can be replicated. Low sampling variability is 
desirable because it indicates that the sample reflects the typical 
members of the population. (Sampling variability is variation that 
occurs by chance because only a sample was surveyed rather than the 
entire population.)
     Timeliness: Timeliness implies that the proxy is published 
regularly, preferably at least once a quarter. The MEI levels are 
updated quarterly, and therefore, it is important for the underlying 
price proxies to be up-to-date, reflecting the most recent data 
available. We believe that using proxies that are published regularly 
(at least quarterly, whenever possible) helps to ensure that we are 
using the most recent

[[Page 69706]]

data available to update the MEI. We strive to use publications that 
are disseminated frequently, because we believe that this is an optimal 
way to stay abreast of the most current data available.
     Availability: Availability means that the proxy is 
publicly available. We prefer that our proxies are publicly available 
because this will help ensure that the MEI updates are as transparent 
to the public as possible. In addition, this enables the public to be 
able to obtain the price proxy data on a regular basis.
     Relevance means that the proxy is applicable and 
representative of the cost category weight to which it is applied.
    As discussed in the proposed rule, we believe the proposed PPIs, 
CPIs, and ECIs selected meet these criteria. Therefore, we believe that 
they continue to be the best measure of price changes for the cost 
categories to which they would be applied. In this rule, we present a 
detailed explanation of the price proxies that we proposed for each 
cost category weight. We noted that many of the proxies that we 
proposed to use for the proposed 2017-based MEI (as shown in Table 36) 
are the same as those used in the 2006-based MEI except as noted below.
a. Physician Compensation
(1) Physician Wages and Salaries
    We proposed to continue to use the ECI for Wages and Salaries for 
Professional and Related Occupations (Private Industry) (BLS series 
code CIU2020000120000I) to measure price growth of this category in the 
proposed 2017-based MEI. We noted that we believe this price proxy 
reflects the wage pressures faced by physicians in that it captures 
wage trends in labor markets of skilled professional workers without 
being directly affected by trends in physician income that may be 
influenced by the ownership structure of physician practices. This 
price proxy also follows the recommendation of the MEI-TAP that the 
price proxy would maintain consistency with the guidance provided in 
the 1972 Senate Finance Committee report titled ``Social Security 
Amendments of 1972,'' which stated that the index should reflect 
changes in practice expenses and ``general earnings''. This is the same 
proxy used in the 2006-based MEI.
(2) Physician Benefits
    We proposed to continue to use the ECI for Benefits for 
Professional and Related Occupations (Private Industry) to measure 
price growth of this category in the proposed 2017-based MEI. The ECI 
for Benefits for Professional and Related Occupations is derived using 
BLS's Total Compensation for Professional and Related Occupations (BLS 
series ID CIU2010000120000I) and the relative importance of wages and 
salaries within total compensation. We believe this series is 
technically appropriate because it better reflects the benefit trends 
for professionals requiring advanced training. This is the same proxy 
used in the 2006-based MEI.
b. Practice Expense
(1) Non-Health, Non-Physician Wages and Salaries
     Professional and Related: We proposed to continue using 
the ECI for Wages and Salaries for Professional and Related Occupation 
(Private Industry) (BLS series code CIU2020000120000I) to measure the 
price growth of this cost category. This is the same proxy used in the 
2006-based MEI.
     Management: We proposed to continue using the ECI for 
Wages and Salaries for Management, Business, and Financial (Private 
Industry) (BLS series code CIU2020000110000I) to measure the price 
growth of this cost category. This is the same proxy used in the 2006-
based MEI.
     Clerical: We proposed to continue using the ECI for Wages 
and Salaries for Office and Administrative Support (Private Industry) 
(BLS series code CIU2020000220000I) to measure the price growth of this 
cost category. This is the same proxy used in the 2006-based MEI.
     Services: We proposed to continue using the ECI for Wages 
and Salaries for Service Occupations (Private Industry) (BLS series 
code CIU2020000300000I) to measure the price growth of this cost 
category. This is the same proxy used in the 2006-based MEI.
(2) Non-Physician, Health-Related Wages and Salaries
    We proposed to continue to use the ECI for Wages and Salaries for 
Hospital Workers (Private Industry) (BLS series code CIU2026220000000I) 
to measure the price growth of this cost category in the proposed 2017-
based MEI. The ECI for Hospital workers has an occupational mix that 
approximates that of physicians' offices. This is the same proxy used 
in the 2006-based MEI.
(3) Non-Physician Benefits
    We proposed to continue using a composite ECI for non-physician 
employee benefits in the proposed 2017-based MEI. The weights and price 
proxies for the composite benefits index are shown in Table 46, which 
lists the five ECI series and corresponding weights used to construct 
the proposed composite benefit index for non-physician employees in the 
proposed 2017-based MEI. We noted the ECI benefits series are derived 
based on BLS published data from the applicable Total Compensation ECI 
and Wages & Salaries ECI as BLS does not publish the ECI Benefit 
Indexes directly.
[GRAPHIC] [TIFF OMITTED] TR18NO22.075


[[Page 69707]]


(4) Other Practice Expense
(a) Utilities
    We proposed to continue using 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.
(b) All Other Products
    We proposed to use the PPI--Final demand--Finished goods less foods 
and energy (BLS series code WPUFD413) as the price proxy for this 
category. We believe that the expenses for the products that physicians 
purchase for use in providing physicians services are better reflected 
by purchases at the wholesale or producer level rather than at the 
consumer level and the growth in overall prices less food and energy 
provides a good approximation for the inflation pressures experienced 
for these expenses. The 2006-based MEI used several PPI and CPI series 
to proxy the price growth for the products reflected in this category.
(c) Telephone
    We proposed to continue using the CPI for Telephone Services (BLS 
series code CUUR0000SEED) to measure the price growth of this cost 
category in the proposed 2017-based MEI. This is the same proxy used in 
the 2006-based MEI.
(d) Professional, Scientific, and Technical Services
    We proposed to continue to use the ECI for Total Compensation for 
Professional, Scientific, and Technical Services (Private Industry) 
(BLS series code CIU2015400000000I) to measure the price growth of this 
cost category in the proposed 2017-based MEI. This is the same proxy 
used in the 2006-based MEI.
(e) Administrative and Support Services
    We proposed to continue to use the ECI for Total Compensation for 
Administrative, Support, Waste Management, and Remediation Services 
(Private Industry) (BLS series code CIU2015600000000I) to measure the 
price growth of this cost category in the 2017-based MEI. This is the 
same proxy used in the 2006-based MEI.
(f) All Other Services
    We proposed to continue to use the ECI for Compensation for Service 
Occupations (Private Industry) (BLS series code CIU2010000300000I) to 
measure the price growth of this cost category.
(g) Fixed Capital
    We proposed to continue to use the PPI for Lessors of 
Nonresidential Buildings (BLS series code PCU531120531120) to measure 
the price growth of this cost category in the proposed 2017-based MEI. 
This is the same proxy used in the 2006-based MEI.
(h) Moveable Capital
    We proposed to continue to use the PPI for Machinery and Equipment 
(series code WPU11) to measure the price growth of this cost category 
in the proposed 2017-based MEI. This is the same proxy used in the 
2006-based MEI.
(i) Professional Liability Insurance
    Unlike the other price proxies based on data from BLS and other 
public sources, the proxy for PLI is based on data collected directly 
by CMS from a sample of commercial insurance carriers. The MEI-TAP 
discussed the methodology of the CMS PLI index, as well as considered 
alternative data sources for the PLI price proxy, including information 
available from BLS and through State insurance commissioners. As 
detailed in the CY 2014 PFS final rule (78 FR 74271), the MEI-TAP 
``believes the current index appropriately reflects the price changes 
in premiums throughout the industry.'' Accordingly, we proposed to 
continue using the CMS Physician PLI index to measure the price growth 
of this cost category in the proposed 2017-based MEI. This is the same 
proxy used in the 2006-based MEI.
(j) Medical Supplies
    We proposed to continue using a blended index comprised of 50/50 
blend of the PPI for Surgical Appliances (BLS series code WPU156301) 
and the CPI-U for Medical Equipment and Supplies (BLS series code 
CUUR0000SEMG). This is the same proxy used in the 2006-based MEI.
    Table 47 shows the 2017-based MEI cost categories and price 
proxies.

[[Page 69708]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.076

    We did not receive any comments on the proposed price proxies used 
in the MEI and we are finalizing all price proxies as proposed. We note 
that the price proxies within the benefits blend are the same as 
proposed; however, the final weights for the composite benefits index 
have changed due to the revisions we are finalizing to the methodology 
for deriving compensation costs (that is, changes to the physician net 
income estimated expenses, the correction to classification of RN 
compensation expenses, and the inclusion of variation in average hours 
worked by occupation). These factors resulted in a change to the 
weights for the composite benefits blend relative to the proposed rule 
as shown in Table 48.
    We are finalizing the continued use of a composite ECI for non-
physician employee benefits in the 2017-based MEI; however, the 
relative shares for each of the ECI benefits series within the blend 
differ from those presented in the proposed rule because the final 
relative shares are updated to reflect the revisions to the methodology 
that we are finalizing in this final rule. The weights and price 
proxies for the composite benefits index are shown in Table 48, which 
lists the five ECI series and corresponding weights used to construct 
the final composite benefit index for non-physician employees in the 
2017-based MEI. We noted the ECI benefits series are derived based on 
BLS published data from the applicable Total Compensation ECI and Wages 
& Salaries ECI as BLS does not publish the ECI Benefit Indexes 
directly.

[[Page 69709]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.077

4. Productivity Adjustment to the MEI
    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) total factor 
productivity (previously referred to as multifactor productivity) that 
were applied to the entire index. Previously, the index incorporated 
changes in productivity by adjusting the labor portions of the index by 
the 10-year moving average of economy-wide private nonfarm business 
labor productivity.
    The MEI-TAP's Finding 5.1 states that, ``[t]he Panel reviewed the 
basis for the current economy-wide multifactor productivity adjustment 
(Private Nonfarm Business Multifactor Productivity) in the MEI and 
finds 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 proposed to continue to use the current method of applying a 
productivity adjustment to the full MEI increase factor in the proposed 
2017-based MEI. As described in the CY 2003 PFS final rule with comment 
period, we believe this adjustment is appropriate because it explicitly 
reflects the productivity gains associated with all inputs (both labor 
and non-labor). We noted that we believe that using the 10-year moving 
average percent change in economy-wide total factor productivity is 
appropriate for deriving a stable measure that helps alleviate the 
influence that the peak (or a trough) of a business cycle may have on 
the measure. The adjustment would be based on the latest available 
historical economy-wide nonfarm business total factor productivity data 
as measured and published by BLS.
    We did not receive any comments on the proposed productivity 
adjustment to the MEI, and therefore, we are finalizing the 
productivity adjustment as proposed.
5. Results of Rebasing and Revising of the MEI
    Table 49 illustrates the results of the proposed update to the MEI 
cost weights for Physician Compensation, Practice Expenses (excluding 
PLI), and PLI from a 2006-based cost distribution, the proposed 2017-
based cost distribution, and the final 2017-based cost distribution 
including all the revisions as a result of public comments as 
specified.
[GRAPHIC] [TIFF OMITTED] TR18NO22.078

    Table 50 shows the average calendar year percent change for CY 2016 
to CY 2023 for the 2006-based MEI, the proposed 2017-based MEI, and the 
final 2017-based MEI. The final 2017-based MEI annual percent changes 
differ from the 2006-based MEI annual percent changes by 0.1 to 0.2 
percentage point for any given year.

[[Page 69710]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.079

    As shown in Table 50, the percent change of the final 2017-based 
MEI, the proposed 2017-based MEI, and the 2006-based MEI for CY 2023 is 
an increase of 3.8 percent based on historical data through the 2nd 
quarter of 2022.
    We did not receive any comments on the proposed updates as a result 
of rebasing and revising of the MEI, and, therefore, we are finalizing 
the update factor based on the most recent historical estimate of the 
MEI increase.

III. Other Provisions of the Final Rule

A. Requiring Manufacturers of Certain Single-Dose Container or Single-
Use Package Drugs To Provide Refunds With Respect to Discarded Amounts 
(Sec. Sec.  414.902 and 414.940)

1. Background
    Drugs and biologicals payable under Medicare Part B fall into three 
general categories: those furnished incident to a physician's service 
(hereinafter referred to as ``incident to'') (section 1861(s)(2) of the 
Act), those administered via a covered item of durable medical 
equipment (DME) (section 1861(s)(6) of the Act), and others as 
specified by statute (for example, certain vaccines described in 
sections 1861(s)(10)(A) and (B) of the Act). Payment limit amounts for 
most drugs and biologicals separately payable under Medicare Part B are 
determined using the methodology in section 1847A of the Act, and in 
many cases, payment is based on the average sales price (ASP) plus a 
statutorily mandated 6 percent add-on. Most drugs payable under Part B 
are covered under the ``incident to'' benefit under section 1861(s)(2) 
of the Act, which includes drugs and biologicals not usually self-
administered by the patient.
    Many drugs and biologicals (hereafter referred to as a drugs) 
payable under Medicare Part B are dosed in a variable manner such that 
the entire amount identified on the vial or package is not administered 
to the patient. For example, many drugs are dosed based on the 
patient's body weight or body surface area (BSA). Often times, these 
drugs are available only in single-dose containers. As stated in U.S. 
Food and Drug Administration (FDA) guidance for industry,\132\ a 
single-dose container is designed for use with a single patient as a 
single injection or infusion. The FDA-approved labeling for a drug 
packaged in a single-dose container typically includes statements 
instructing users to discard unused portions. When the labeling 
instructs a provider to discard the amount of drug that was unused 
(that is, the discarded amount) from a single-dose container or other 
single-use package of a drug after administering a dose to a Medicare 
beneficiary, the program provides payment for the unused and discarded 
amount, as well as the dose administered, up to the amount of the drug 
indicated on the vial or package labeling. On a Medicare Part B claim, 
the JW modifier (Drug amount discarded/not administered to any patient) 
is a Healthcare Common Procedure Coding System (HCPCS) Level II 
modifier used to report the amount of a drug that is discarded and 
eligible for payment.
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    \132\ https://www.fda.gov/media/117883/download.
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    Beginning on January 1, 2017, CMS revised the JW modifier policy to 
require the uniform use of the modifier for all claims for separately 
payable drugs with discarded drug amounts from single use vials or 
single use packages payable under Part B in order to more effectively 
identify and monitor billing and payment for discarded amounts of 
drugs.133 134 The policy does not apply to drugs that are 
not separately payable, such as packaged hospital outpatient 
prospective payment system (OPPS) drugs or those administered in the 
Federally qualified health centers (FQHC) or rural health clinics (RHC) 
setting. Additional details about this policy can be found in Chapter 
17 of the Medicare Claims Processing Manual \135\ and in the JW 
modifier frequently asked questions (FAQ) document.\136\
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    \133\ CR6603: https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R3538CP.pdf.
    \134\ MLN Matters[supreg] Number MM9603: https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNMattersArticles/Downloads/MM9603.pdf.
    \135\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c17.pdf.
    \136\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/JW-Modifier-FAQs.pdf.
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    Medicare Part B data for discarded amounts of drug (based on the JW 
modifier) have been published on the CMS website annually for calendar 
years beginning in 2017.\137\ Data for 2020 shows that Medicare paid 
nearly $720 million for discarded amounts of drugs from a single-dose 
container or single-use package (hereafter referred to as single-dose 
container \138\) paid under Part B with claims identifying the 
discarded amounts with the JW modifier. JW modifier data from 2020 is 
the most recent available at the time of this analysis. This data is 
comparable to 2017-2019 with regard to percentage of discarded amounts 
and total Medicare spending for discarded drugs each year, which ranged 
from approximately $700-750 million each year during that

[[Page 69711]]

time. More than half of Medicare spending for discarded amounts in 2020 
represents about 40 billing and payment codes (that is, HCPCS codes), 
for which 10 percent or more of the total charges for the drug were for 
discarded units. A large proportion of single source drugs with 10 
percent or more discarded units are dosed based on patient's body 
weight or BSA. We note that the JW modifier data published on the CMS 
website is limited to only billing and payment codes that are published 
on the ASP Drug Pricing File.\139\ There are likely additional billing 
and payment codes payable under Medicare Part B available in single-
dose containers that would be subject to the JW modifier policy and are 
not reflected in the data discussed above.
---------------------------------------------------------------------------

    \137\ https://data.cms.gov/summary-statistics-on-use-and-payments/medicare-medicaid-spending-by-drug/medicare-part-b-discarded-drug-units.
    \138\ https://www.fda.gov/media/117883/download.
    \139\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice.
---------------------------------------------------------------------------

    The calculated dose (based on weight or BSA) is drawn from one or 
more vials and any remaining amount of the drug is discarded. For 
example, if labeled dose of a drug is 20 mg/m\2\, the dose for a 
patient with a BSA of 1.9 m\2\ (the approximate average BSA of an adult 
male) would be 38 mg. If the drug is available in single-dose 60-mg 
vials, then 38 mg would be administered to the patient and 22 mg (36.67 
percent) would be discarded. If the ASP payment limit amount 
(typically, ASP plus 6 percent) for this drug for a given quarter is 
$190 per 1 mg, the total payment for the amount of drug that was 
administered to the beneficiary would be $7,220 and for the amount of 
drug that was discarded would be $4,180. Both the amount of drug 
administered and the amount discarded (consistent with the discarded 
drug policy) are subject to the deductible and coinsurance. For a 
beneficiary who has already met the deductible, the coinsurance for the 
entire 60-mg vial would be $2,280. Since the vial in this example 
contains enough drug to provide a 20 mg/m\2\ dose to an individual with 
a BSA of 3 m\2\, the full amount of drug labeled on the vial would be 
used in a small subset of patients.
    As discussed in the CY 2023 PFS proposed rule (87 FR 46055 through 
46062), section 90004 of the Infrastructure Investment and Jobs Act 
(Pub. L. 117-9, November 15, 2021) (hereinafter is referred to as ``the 
Infrastructure Act'') amended section 1847A of the Act to redesignate 
subsection (h) as subsection (i) and insert a new subsection (h), which 
requires manufacturers to provide a refund to CMS for certain discarded 
amounts from a refundable single-dose container or single-use package 
drug. The refund amount is the amount of discarded drug that exceeds an 
applicable percentage, which is required to be at least 10 percent, of 
total charges for the drug in a given calendar quarter. A refundable 
single-dose container or single-use package drug does not include a 
radiopharmaceutical or imaging agent, certain drugs requiring 
filtration, and certain new drugs. We proposed implementation of 
section 90004 of the Infrastructure Act including: how discarded 
amounts of drugs are determined; a definition of which drugs are 
subject to refunds (and exclusions); when and how often CMS will notify 
manufacturers of refunds; when and how often payment of refunds from 
manufacturers to CMS is required; refund calculation methodology 
(including applicable percentages); a dispute resolution process; and 
enforcement provisions. We also proposed regulatory changes to 
implement new section 1847A(h) of the Act at 42 CFR part 414, subpart 
K.
    We note, subsequent to the publication of the CY 2023 PFS proposed 
rule, sections 11101 and 11102 of the Inflation Reduction Act (IRA) 
(Pub. L. 117-169), relating to inflation rebates by manufacturers of 
drugs covered under Medicare Parts B and D, were signed into law on 
August 16, 2022. These provisions are effective January 1, 2023. We 
believe implementation of the Parts B and D rebates mandated under the 
IRA should be considered together with the operational implications of 
discarded drug refund discussed in this final rule, because the refunds 
and rebates both require CMS to accept payments from drug manufacturers 
to the Federal Supplementary Medical Insurance (SMI) Trust Fund. In 
order to align the operation of these programs and minimize burden, we 
are declining to finalize some aspects for collection of discarded drug 
refunds. Specifically, we are declining to finalize the timing of the 
initial reports and which quarters' information will be included in 
each report; this is discussed below in section III.A.4. of this final 
rule. We are also declining to finalize specific dates associated with 
the dispute resolution process (discussed below in section III.A.7. of 
this final rule), which are impacted by the reporting dates. We intend 
to address these aspects in future rulemaking.
2. Discarded Amounts
    The JW modifier has existed since 2003, and since 2017 its use has 
been required on claims for separately payable Part B drugs that 
include discarded amounts of single use vials or single use packages. 
Currently, there are no other modifiers to measure discarded units of 
Part B drugs. On the claim form, the amount of drug administered is 
billed on one line (reflected as billing units in the unit field); 
discarded amounts are billed on a separate line with the JW modifier 
(reflected as billing units in the unit field). The term ``billing 
unit'' is defined in section 1847A(b)(6)(B) of the Act as the 
identifiable quantity associated with a billing and payment code, as 
established by the Secretary. For example, in a circumstance where a 
single-dose container is labeled to contain 200 mg and the established 
billing unit for the billing and payment code is 2 mg, then there are 
100 billing units in the vial. If 95 billing units (190 mg) are 
administered to the patient and 5 billing units (10 mg) are discarded, 
the 95 billing units are billed on one line, and the discarded 5 
billing units are billed on another line using the JW modifier. Both 
line items are processed for payment.
    The JW modifier must not be used to report discarded amounts of 
overfill, which is any amount of drug greater than the amount 
identified on FDA-approved labeling. Additional information on the 
overfill policy is available in the PFS final rule published in the 
November 29, 2010 Federal Register (75 FR 73466 through 70). Contents 
of a vial or package that are considered overfill are not included in 
the total billing units contained in the vial or package and also do 
not count toward the number of billing units that are discarded.
    As discussed in the CY 2023 PFS proposed rule (87 FR 46056 through 
46058), section 1847A(h) of the Act specifies that discarded amounts of 
refundable single-dose container or single-use package drugs are to be 
determined using a mechanism such as the JW modifier used as of the 
date of enactment of the Infrastructure Act or any successor modifier 
that includes such data as determined appropriate by the Secretary. For 
consistency with our current billing procedures and to minimize burden, 
we proposed to use the JW modifier or any successor modifier that 
includes the same data to determine the total number of billing units 
of a billing and payment code (that is, the identifiable quantity 
associated with a billing and payment code, as established by CMS) of a 
refundable single-dose container or single-use package drug (defined in 
the next section), if any, that were discarded for dates of service 
during such quarter. We

[[Page 69712]]

proposed to use the JW modifier (or any successor modifier that 
includes the same data) to identify discarded billing units of a 
billing and payment code for the purpose of calculating the refund 
amount as described in section 1847A(h)(3) of the Act.
    We explained, currently under the OPPS and Ambulatory Surgical 
Center (ASC) Payment System, hospital outpatient departments (HOPDs) 
and ASCs use the JW modifier to identify all separately payable drugs 
and biologicals for which there is an unused or discarded amount. For 
consistency with our current billing procedures we proposed that HOPDs 
would be required to report the JW modifier or any successor modifier 
to identify discarded amounts of refundable single-dose container or 
single-use package drugs described by HCPCS codes that are assigned 
status indicator ``K'' (Nonpass-Through Drugs and Nonimplantable 
Biologicals, Including Therapeutic Radiopharmaceuticals) or status 
indicator ``G'' (Pass-Through Drugs and Biologicals) under the OPPS. 
Specifically, we proposed that the JW modifier would be used to 
determine the total number of billing units of the HCPCS code (that is, 
the identifiable quantity associated with a HCPCS code, as established 
by CMS) of a refundable single-dose container or single-use package 
drug (defined in the next section), if any, assigned status indicator 
``K'' or ``G'' that were discarded for dates of service during such 
quarter for the purpose of calculating the refund amount described in 
section 1847A(h)(3) of the Act. Similarly, we proposed that ASCs would 
be required to report the JW modifier or any successor modifier to 
identify discarded amounts of refundable single-dose container or 
single-use package drugs described by HCPCS codes assigned payment 
indicator ``K2'' ('Drugs and biologicals paid separately when provided 
integral to a surgical procedure on ASC list; payment based on OPPS 
rate) under the ASC payment system. Specifically, we proposed that ASCs 
would be required to report the JW modifier or any successor modifier 
that includes the same data to determine the total number of billing 
units of the HCPCS code (that is, the identifiable quantity associated 
with a HCPCS code, as established by CMS) of a refundable single-dose 
container or single-use package drug (defined in the next section), if 
any, assigned status indicator ``K2'' that were discarded for dates of 
service during such quarter.
    Consistent with section 1847A(h)(1)(C) of the Act, which excludes 
units that are packaged into the payment amount for an item or service 
and not separately payable, as well as current HOPD and ASC use of the 
JW modifier, we proposed that the JW modifier would not be required to 
identify discarded amounts of drugs that are not separately payable, 
such as drugs for which payment is packaged under the OPPS or ASC 
payment system or drugs administered in the FQHC or RHC setting. 
Specifically, in HOPD setting and the ASC setting, the JW modifier does 
not apply to drugs that are described by HCPCS codes assigned status 
indicator ``N'' (Items and Services Packaged into APC Rates) under the 
OPPS or assigned to a payment indicator of ``N1'' (Packaged service/
item; no separate payment made) under the ASC payment system.
    Similarly, we proposed to exclude from the refund amount those 
units of drugs for which payment is packaged into payment for a 
comprehensive ambulatory payment classification (C-APC) service under 
the OPPS. We proposed to exclude such drugs when payment is packaged 
into a C-APC service which is assigned to an OPPS status indicator of 
``J1'' (Hospital Part B Services Paid Through a Comprehensive APC) or 
``J2'' (Hospital Part B Services That May Be Paid Through a 
Comprehensive APC). For example, if a drug under the OPPS is assigned 
to status indicator ``K'', reports the JW or similar modifier, but is 
then packaged into a C-APC service assigned to a status indicator of 
``J1'' or ``J2'', we would exclude from the refund those units 
associated with the packaged drug.
    We stated that section 1847A(h) of the Act requires manufacturers 
to provide refunds for discarded amounts of refundable single-dose 
container or single-use package drugs for which payment is made under 
Part B exceeding an applicable percentage of at least 10 percent of the 
estimated total allowed charges for such a drug (less the amount paid 
for packaged drugs) during the quarter. Under our current discarded 
drug policy, no modifier is required when there are no discarded 
amounts from a single-dose container.\140\ However, as discussed in the 
proposed rule, we are aware that the JW modifier is often omitted on 
claims, and it is unclear whether the absence of the JW modifier on a 
claim for a single-dose container drug indicates that there were no 
discarded amounts or that the modifier was incorrectly omitted from the 
claim. This has led to incomplete data describing quantities of 
discarded amounts and the associated Medicare payments. We explained 
that there are a number of possible reasons why the modifier might be 
incorrectly omitted on the claim form, including provider burden for 
documentation or lack of awareness of the policy. In addition, there 
may not be strong incentive for appropriate JW modifier use because 
Medicare pays for administered and discarded amounts of the drug. For 
instance, if a provider administers a portion and discards a portion of 
a single-dose container, but bills for the entire vial as administered 
(incorrectly omitting the JW modifier), the provider payment and 
beneficiary coinsurance amounts would be the same as if the provider 
had correctly billed for the administered amounts and the discarded 
amounts (using the JW modifier). The JW modifier FAQs state that claims 
that do not use the modifier correctly may be subject to review, but we 
do not have quantifiable numbers regarding how often the modifier is 
omitted or how many discarded units are not accounted for because of 
such omissions. Because JW modifier data is incomplete and because 
refund amounts would rely on this data, we proposed that for dates of 
service on or after January 1, 2023, the JW modifier be required on 
claims for all single-dose container or single use drugs for which any 
amount is discarded (as reflected in our current policy and proposed 
above), and a separate modifier be required on claims for these drugs 
when there are no discarded amounts. Specifically, we proposed to 
require the use of a separate modifier, the JZ modifier, to attest that 
there were no discarded amounts. To align with the JW modifier policy, 
the JZ modifier would be required when there are no discarded amounts 
from single use vials or single use packages payable under Part B for 
which the JW modifier would be required if there were discarded 
amounts. So, on all claims for single use vials or single use packages 
payable under Part B, either the JW modifier would be used (on a 
separate line) to identify any discarded amounts or the JZ modifier (on 
the claim line with the administered amount) would be present to attest 
that there were no discarded amounts. We noted that we believe the 
proposed JZ modifier requirement would not increase burden on the 
provider because under the current JW modifier policy, the provider 
already needs to determine whether or not there are any discarded units 
from a single use vial or package, record discarded amounts in the 
patient medical record, and specify

[[Page 69713]]

administered and discarded amounts on the claim form.
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    \140\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/HospitalOutpatientPPS/Downloads/JW-Modifier-FAQs.pdf.
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    We sought comments on the proposals.
    The following is a summary of the public comments received on the 
discarded amount provisions and our responses:
    Comment: Several commenters expressed general support for the 
proposed policy. One commenter supported the requirement that 
manufacturers refund CMS for drug discards.
    Another commenter supported a variety of policies to reduce costs 
related to discarded drugs, including the manufacturer refunds for 
discards, re-examining the weight-based dosing of drugs, requiring 
pharmaceutical companies to have vial sizes that more appropriately 
meet the range of standard dosing, developing more multiple-dose vials 
that can be shared across multiple patients, and utilizing closed-
system transfer devices to extend beyond-use-dating time. One commenter 
stated the proposed policy may result in manufacturers acting to revise 
packaging methods and incentivize a reduction in waste across markets 
and programs. One commenter expressed their belief that the provision 
would reduce waste and spending in Medicare by discouraging 
manufacturers from including excessive amounts of drug single-dose 
containers. One commenter summarized their own analysis of drug 
discards at their facilities, noting that five chemotherapy drugs 
accounted for 59 percent of all chemotherapy drug discards, and that 
these drugs had discards about 3 to 7 times more than all studied drugs 
did on average.
    Response: We thank commenters for their support of these proposals. 
We also thank commenters for their view on discarded amounts of drugs 
and how the proposed policies may incentivize a reduction in spending 
on discarded amounts of drugs. We also appreciate the thoughtful 
analysis of discarded amounts from the practitioner's perspective. We 
agree that the proposed policies will create such incentives for 
improved package sizes and presentations of drugs that will reduce 
amounts that are discarded.
    Comment: Some commenters expressed general opposition to the 
implementation of the provision. Two commenters expressed concern that 
the proposal will disproportionately impact small biotech companies, 
who will either raise prices for patients or reduce research 
expenditures. One commenter stated that it is unreasonable to collect 
refunds for administration processes that generate discarded drug for 
which there are no or limited alternatives. One commenter expressed 
concern that the proposed policy would result in larger amounts of 
discarded drugs by compelling manufacturers to create more batches of 
smaller vials with the intention of reducing drug waste, but with the 
unintended consequence of creating more waste and added costs to 
undergo the process of retrofitting manufacturing facilities to produce 
different vial sizes. The commenter also expressed concern that the 
proposed policy would compel providers to spend effort learning how to 
administer drugs from new container and package configurations. Some 
commenters expressed concern that the proposed policy would increase 
operational burden by incentivizing container size reduction, for 
example by requiring providers to use more containers than had 
previously been needed to achieve an appropriate weight-based dose. Two 
commenters stated that the production of medications in multiple vial 
sizes would be costly for the manufacturer and inefficient in 
production. One commenter noted the cost and time required to develop 
and obtain regulatory approval for a new vial size, which they 
estimated to be about 2 years and $10 million. The commenter also noted 
that there are no assurances that if they gained approval for and 
distributed treatment in additional vial sizes to reduce discard 
amounts that providers would stock them. The commenter concluded that 
the effect of the provision's incentive to use a greater number of vial 
sizes would be increased treatment costs.
    One commenter requested CMS examine the implications of the 
proposals on products commonly used in neurology. The commenter stated 
several products commonly used by neurologists are packaged in a way 
that results in significant amounts of discarded drug. One commenter 
noted concern that, in response to the discarded drug refund policy, 
manufacturers may raise the price of certain drugs to compensate for 
the cost of any refund payments. The commenter urged CMS to ensure that 
implementation is closely monitored, and that appropriate action is 
taken to dissuade any manufacturer from compensating for lost revenue 
with a price increase.
    Response: With regard to commenters that are generally opposed to 
the implementation of section 90004 of the Infrastructure Act or 
generally opposed to CMS collecting a refund, we do not have discretion 
on whether or not to implement the provision. Regarding small biotech 
companies being disproportionately affected, we address concerns about 
exemptions and unique circumstances in the respective discussions 
below. This provision does not include any special treatment 
specifically for small biotech companies.
    With regard to the increased burden on manufacturers to potentially 
manufacture different vial sizes and to providers who would have to 
adjust to stocking and administering new vial sizes, we acknowledge 
these concerns, but note that the statute requires payment of refunds 
for single-dose containers for which the amount discarded exceeds the 
applicable percentage. We note that the 2020 data showed that Medicare 
Part B spending on discarded drugs is weighted heavily toward a small 
number of drug products. With regard to the possibility that the 
implementation of the provision could lead to increases in discarded 
drug amounts, we do not have any data that suggests this may be the 
case. On the contrary, we have seen at least one case in which 
discarded amounts of a drug decreased after the manufacturer began 
packaging the drug in an additional smaller vial size: Kyprolis[supreg] 
(carfilzomib) introduced a 10 mg vial in June 2018 in addition to its 
60 and 30 mg vials, and its discard percentages were 14.27 percent in 
2017, 12.68 percent in 2018, and 5.95 percent in 2019, suggesting the 
new vial size led to a decrease in the discard percentage below 10 
percent. In response to the comments that manufacturers may pass on 
costs from the investigation and manufacture of new vial sizes, or of 
refunds to patients, we do not speculate on drug manufacturer pricing 
strategies. We plan to continue to monitor the discarded amounts and 
trends with regard to this data; this will be for all drugs payable 
under Medicare Part B and not specific to any condition, such as 
neurology. We plan to track associated prices of such drugs and assess 
discretionary aspects of the policy over time and will undertake 
additional rulemaking, if warranted. In addition, as noted above, the 
Inflation Reduction Act was signed into law subsequent to the 
publication of the CY 2023 PFS proposed rule. Sections 11001 and 11101 
establish the Secretary's authority to negotiate prices with drug 
manufacturers for select Part B and Part D drugs and require 
manufacturers to pay rebates to the Federal SMI Trust Fund for amounts 
Part B drug prices exceed inflation-adjusted amounts, respectively.
    Comment: One commenter stated that the impact of this new 
requirement is unclear and could potentially increase

[[Page 69714]]

the cost of health care delivery, including drug acquisition costs and 
overhead and labor costs. The commenter requested we actively monitor 
potential downstream outcomes and mitigate any adverse impacts, as 
necessary.
    Response: We plan to continue engaging with manufacturers as we 
implement the drug discard refund provision to ensure we understand how 
implementation affects operations, pricing, and costs of healthcare 
delivery. In addition, section 1847A(h)(9) of the Act requires OIG to 
consult with CMS and FDA and report to several Congressional committees 
by November 15, 2024, the impact of this provision on the licensure, 
market entry, market retention, or marketing of biosimilar biological 
products. We also intend to monitor effects on other drugs and 
biologicals impacted by these policies in a similar manner, including 
but not limited to the ASP of such drugs and discarded units reported 
using the JW modifier. We already review quarterly ASP data for the 
calculation of payment allowances, so we will observe trends in the ASP 
for drugs subject to refunds.
    Comment: One commenter noted the proposal does not account for 
discards that occur due to clinical reasons, such as when a physician 
reduces the dosage of an administered drug if the patient has a heart 
condition or other comorbidities.
    Response: Although there may be situations in which there are 
increased discarded amounts due to clinical circumstances, there is no 
mechanism on a claim to denote discarded units for a change in clinical 
circumstance. Section 1847A(h)(3)(B)(i)(I) of the Act requires the 
refund amount to be the amount above an applicable percentage of 10 
percent of the total allowed charges for a drug. We believe that this 
threshold allows for a certain amount of drug to be discarded for 
various factors, including clinical reasons, without being subject to a 
refund. As we noted above, the most recent JW modifier data indicates 
that drugs with discarded amounts exceeding 10 percent is isolated to a 
small number of products. There are many drugs provided in single-dose 
containers with historical discarded amounts below 10 percent, 
including many chemotherapy drugs, which have specific instructions for 
reduced dosage in cases of toxicity experienced from the chemotherapy. 
For example, ixabepilone dosage is based on BSA and the drug is 
provided in a single-dose vial. The dose modifications indicated in the 
label direct clinicians to reduce the dose of the drug in certain 
clinical situations (the dose reduction could range from 20 to 50 
percent depending on the clinical circumstance). Based on the 2020 JW 
modifier data,\141\ this drug had just under 8 percent of units 
discarded, which is below the applicable percentage of 10 percent, and 
the manufacturer would not owe a refund if this data were to be for 
dates of service on or after the effective date of January 1, 2023.
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    \141\ https://data.cms.gov/summary-statistics-on-use-and-payments/medicare-medicaid-spending-by-drug/medicare-part-b-discarded-drug-units/data.
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    Comment: Two commenters stated the statutory construction of 
section 90004 of the Infrastructure Act requires CMS to define 
``unused'' to complete the statute's definition of ``discarded'' 
referenced in section 1847A(h)(1)(B) of the Act, as the commenters 
noted that the two are not interchangeable terms. Several commenters 
requested CMS not include in the definition of ``unused'' amounts that 
are required to safely administer a drug, such as liquid amounts in a 
vial that are needed to assure the appropriate dose is withdrawn into 
an injector. These commenters stated that determining discarded amounts 
is a two-step process: first that a drug amount was discarded, and 
second that the amount did not serve a useful purpose. One commenter 
noted that the same interpretation of the term ``unused'' is applied in 
the hydrogel example (section III.A.6.a of the CY 2023 PFS proposed 
rule (87 FR 46061 through 46062) in the discussion of unique 
circumstances) in which we stated that 35 percent would be an 
appropriate applicable percentage. Several commenters stated that we 
should consider liquid amounts required to express a needle (or that 
otherwise gets lost or stuck in the container or administration 
devices) and to account for dead volume in the transfer or priming of 
drug administration as useful and not as unused or as discards, in 
alignment with FDA's thinking on amount of liquid required in vial 
fills. Commenters stated these liquid amounts effectuate clinical 
outcomes. Another commenter suggested CMS define ``discarded amount 
subject to refund'' to exclude amounts left over when the product 
contains the minimum fill required for clinicians to draw up the 
appropriate labeled therapeutic dose.
    One commenter requested that we exclude units administered as part 
of a drug's induction or loading dose(s), which are initial dose(s) of 
a drug therapy that may differ from the subsequent maintenance dosing 
regimen. The commenter stated that induction and loading doses may 
involve variable dosing depending on the patient's specific 
circumstances. The commenter suggested we use a modifier to identify 
such doses in claims. This commenter also requested that we exclude 
units of drugs administered in combination with other drug therapies. 
The commenter explained that when drugs are used in combination, the 
dosing of each drug is likely to vary based on factors such as the 
disease/condition being treated and adjustments for potential adverse 
events, and it makes little sense to manufacture container sizes to 
take all such combinations into account. The commenter added a request 
that we establish a claims modifier to identify drugs administered in 
combination with others.
    Response: As we stated in the proposed rule, when a provider must 
discard the amount of drug that was unused (that is, the discarded 
amount) from a single-dose container of a drug after administering a 
dose to a Medicare beneficiary, the program provides payment for the 
unused and discarded amount, as well as the dose administered, up to 
the amount of the drug indicated on the vial or package labeling.
    We clarify how we interpret ``the amount of such drug that was 
unused and discarded,'' with respect to that which should be reported 
as discarded based on section 1847A(h)(1)(B) of the Act, as any amount 
that is not a part of the dose and is not intended to have a 
therapeutic effect in the patient. Even if certain amounts are 
extracted from the vial or are required to be in the vial to administer 
the prescribed dose, we do not consider them to be used if they are not 
intended for therapeutic effect as part of the prescribed dose. This is 
contemplated by the statute as evidenced by the exclusion of drugs 
requiring filtration during the preparation process as described in 
section 1847A(h)(8)(B)(ii) of the Act, and by the treatment of drugs 
that have unique circumstances in section 1847A(h)(3)(B)(ii) of the 
Act. If the amount of drug lost during filtration was not considered to 
be an unused and discarded amount, this exclusion would not be 
necessary. Similarly, with regards to the treatment of drugs with 
unique circumstances, the statute says the Secretary may, through 
notice and comment rulemaking, increase the applicable percentage in 
the case of a refundable single-dose container or single-use package 
drug that has unique circumstances involving similar loss of product as 
that described in section

[[Page 69715]]

1847A(h)(8)(B)(ii) of the Act, which describes the loss due to 
filtration. Since the statute prescribes that amounts lost in a manner 
similar to filtration during preparation may be considered a unique 
circumstance (and may warrant an increased applicable percentage), 
these amounts are generally considered unused and discarded for the 
purposes of determining discarded amounts. Otherwise, such amounts 
would not be required to be billed using the JW modifier, and an 
increased applicable percentages would not be needed. Based on this, 
generally, we consider the amount that is unused and discarded to be 
the labeled amount on the single-dose container (or containers if more 
than one is required) minus the dose (the dose being the prescribed 
amount of drug).
    As examples, we consider labeled amounts remaining in the vial, 
amounts remaining in the syringe hub, and amounts remaining in the 
syringe that are not a part of the dose intended for therapeutic effect 
(as reflected in the product label or that would be reflected on a 
provider's prescription for the drug) to be unused and discarded. As 
discussed above, such amounts are similar to situations where 
filtration is required during preparation, and therefore, are 
contemplated by the statute to be unused and discarded amounts. In 
addition, we believe that this approach is the simplest for providers 
to determine on claims forms and in the medical record.
    With regard to the request to exclude units administered as part of 
a drug's induction or loading dose and the request to exclude units of 
drugs administered in combination with other drug therapies, we 
disagree that such discarded amounts as a result of such doses should 
be excluded from being reported using the JW modifier, because the 
statute allows for a certain amount to be discarded (that is, the 
minimum applicable percentage of 10 percent). When an induction or 
loading dose is administered, there may subsequently be larger amounts 
of drug left in the single-dose container when compared with the amount 
of drug left in the container if a typical dose had been administered. 
As described above, we consider amounts left in the vial to be unused 
and discarded because they were not part of the dose that was intended 
for therapeutic effect. We disagree that an additional modifier is 
needed to report amounts administered in these circumstances because, 
as discussed above, the threshold of an applicable percentage of 10 
percent, as required in section 1847A(h)(3)(B)(i)(I) of the Act, allows 
for a certain amount of discarded drug. This 10 percent threshold 
allows for circumstances when a loading dose or induction dose is 
administered, or when a drug is administered in combination with other 
drug therapies, before a refund would be required.
    Comment: Three commenters supported CMS's proposal to exclude 
overfill amounts from being taken into consideration when determining 
the number of units that are discarded, but two of these commenters 
requested that the regulatory text be updated to clearly reflect this. 
The commenters stated that without this clarification, physicians may 
mistakenly report overfill amounts as discarded amounts, leading to 
inaccurate refund amounts. Commenters stated that while the preamble 
and guidance is clear, the regulatory text is confusing because some 
providers may interpret a ``billing unit'' to also reference overfill 
units. Commenters recommended revisions to the proposed regulatory text 
changes at Sec.  414.940(a)(1)(iii) and (c)(1)(i). One commenter 
requested clarification about whether providers should report discards 
of overfill. One commenter encouraged provider education that the JW 
modifier should not be used to report discarded amounts of overfill.
    Response: We disagree that changes to the regulatory text are 
needed for clarification. As stated in our longstanding JW modifier 
FAQs, the JW modifier must not be used to report discarded amounts of 
overfill, which is any amount of drug greater than the amount 
identified on FDA-approved labeling. We reiterate the overfill policy, 
as stated in the CY 2011 PFS final rule (75 FR 73466 through 73470), 
that contents of a vial or package that are considered overfill are not 
included in the total billing units contained in the vial or package, 
and also do not count toward the number of billing units that are 
discarded.
    Comment: Two commenters requested that we clarify that drug discard 
refunds under section 1847A(h) of the Act are excluded from ASP, 
average manufacturer price (AMP), and the Medicaid best price 
calculations.
    Response: We do not consider the discarded drug refund to be a 
price concession that is described in section 1927 of the Act. Since 
these Part B refunds represent reimbursement by manufacturers to 
Medicare for a discarded amount that is ``otherwise unsalable returned 
goods'' manufacturers may exclude these Part B discarded drug refunds 
from determinations of best price and AMP (including 5i AMP). Section 
1927(k)(1)(B)(i)(III) of the Act states that AMP shall exclude 
reimbursement by manufacturers for recalled, damaged, expired, or 
otherwise unsalable returned goods, including (but not limited to) 
reimbursement for the cost of the goods and any reimbursement of costs 
associated with return goods handling and processing. We implemented 
this statutory language in regulations for the determination of AMP 
(see 42 CFR 447.504(c)(16) and (e)(7)), and the determination of best 
price (see Sec.  447.505(c)(14)).
    We note that manufacturers typically have established internal 
policies regarding returned purchases, and to the extent that the 
reimbursement by the manufacturer for returned goods is consistent with 
the requirements of section 1927 of the Act and applicable federal 
regulations, such reimbursement made by the manufacturer shall be 
excluded from AMP. Standard industry practices and manufacturer 
policies should govern the determination of what is unsalable, provided 
such practices are consistent with section 1927 of the Act and 
applicable federal regulations. What is ``unsalable'' can vary by the 
product, and manufacturers should rely upon prevailing business 
standards to determine circumstances when their products are unsalable.
    Section 1847A(c)(2)(A) of the Act states that sales exempt from the 
inclusion in the determination of Medicaid best price are also excluded 
from the calculation the manufacturer's ASP. Since discarded drug 
refunds are considered to be ``otherwise unsalable returned goods'' and 
manufacturers may exclude discarded drug refunds from determination of 
best price, manufacturers may also exclude such refunds from the 
calculation of ASP.
    Therefore, with regard to the calculation of ASP, AMP, or the 
Medicaid best price, the refund amounts may be excluded from such 
determinations.
    Comment: Several commenters expressed support for our proposal to 
require the use of the JZ modifier to attest that there are no 
discarded amounts. One of the commenters expressed support for methods 
that could increase JW reporting. One commenter expressed support for 
our proposal to require institutional providers and ASCs to report the 
JW modifier, or any successor, on Part B medication claims.
    Response: We thank the commenters for their support. We believe 
that the JZ modifier requirement will improve the completeness of the 
discarded drug data to effectively implement section 90004 of the 
Infrastructure Act.

[[Page 69716]]

    Comment: Many commenters opposed our proposal to require the JZ 
modifier when no amount is discarded from a single-dose container. 
Commenters considered its use unnecessary for documenting discarded 
amounts, overly burdensome, and potentially confusing. Commenters 
stated that the JW modifier on its own is sufficient to calculate 
discarded amounts for drugs and biological products subject to this 
provision. A few commenters expressed the belief that providers are 
correctly reporting JW modifier data on claims, and that we have no 
evidentiary basis for believing our JW data is incomplete. Other 
commenters acknowledged that providers sometimes omit the JW modifier, 
and suggested several reasons for underreporting, including 
administrative resource constraints, the lack of incentives for its 
use, and inability to measure discard amounts. One commenter opposed 
the requirement to use the JZ modifier on the grounds that the burden 
of identifying drugs administered with no discarded amounts should fall 
on CMS or manufacturers, rather than the provider.
    Response: We disagree with the assertion that the JZ modifier is 
unnecessary and that we lack evidence to show that reported JW modifier 
data fails to convey a full account of drug discard data. The National 
Academies of Sciences, Engineering, and Medicine provided an analysis 
conducted by the Committee on Implications of Discarded Weight-Based 
Drugs \142\ which indicates low compliance with the JW modifier 
requirement. Their analysis of Medicare claims found that the level of 
compliance is variable among providers, and that nearly two-thirds 
never used the modifier at all. In addition, providers who use the 
modifier do not do so consistently, and they vary in their reporting 
from one drug to another, and across claims for the same patient and 
drug. Based on these findings, we believe current data for discarded 
drug amounts are underestimates due to omission of the JW modifier when 
it should be used, even though reporting the JW modifier has been 
required since 2017. Accordingly, we believe that more complete data is 
needed. We believe the most practicable method for improving our data 
quality is by requiring providers filing claims for drugs from single-
dose containers to report either a JW modifier when there are discarded 
amounts, or JZ modifier when no amount is discarded. We continue to 
believe providers are the only party that can obtain complete and 
accurate information on used and discarded amounts of variably dosed 
drugs. While we acknowledge that, in some situations, it may be 
difficult to quantify discarded quantities of drugs and associate the 
specific amount with a single beneficiary, we believe that, in most 
situations, there are no practical impediments that would prevent 
billing providers or other staff, such as nurses or pharmacists, from 
incorporating the measurement of discard amounts into the process of 
preparing and administering the drug. We also believe that the 
observation and recording of no discard amounts using the JZ modifier 
does not add additional burden beyond the existing requirement of 
measuring discarded amounts by use of the JW modifier. If a provider is 
already required to determine whether there are discarded amounts from 
single-dose packages, then they are already assessing and documenting 
what is needed for the JZ modifier. Since the assessment is already 
required, the only additional action needed by the provider is to add 
JZ on the claim form when there are no discarded amounts. Thus, we 
believe the burden for reporting the JZ modifier is minimal and 
justifiable.
---------------------------------------------------------------------------

    \142\ National Academies of Sciences, Engineering, and Medicine. 
2021. Medications in single-dose vials: Implications of discarded 
drugs. Washington, DC: The National Academies Press. https://doi.org/10.17226/25911. National Academies of Sciences, Engineering, 
and Medicine. 2021. Medications in Single-Dose Vials: Implications 
of Discarded Drugs. Washington, DC: The National Academies Press. 
https://doi.org/10.17226/25911.
---------------------------------------------------------------------------

    Comment: Commenters requested that we take care to minimize 
administrative burden in the implementation of section 90004 of the 
Infrastructure Act, and many suggested several alternatives to the JZ 
modifier. Several commenters recommended that we enhance education 
efforts and outreach to providers on JW modifier use instead of 
requiring the use of the JZ modifier. One commenter requested that we 
instead amend our claims policy to state that the absence of reporting 
the JW modifier on claims for single-dose containers is an attestation 
that there is no amount of discarded drug. Several commenters suggested 
we only require JW and JZ modifier use for drugs associated with 
significant discards and refund obligations while focusing data 
collection efforts on JW data for those drugs. Two commenters 
recommended that instead of requiring the use of the JZ modifier, we 
develop a new claims modifier for drugs subject to the refund which, in 
conjunction with JW modifier data, would produce the information set we 
need to issue refund obligations.
    Response: As noted above, since the JW modifier is underreported, 
the absence of the modifier cannot be relied upon to signify that there 
is no amount of discarded drug.
    In response to the request that we require the use of the JW and JZ 
modifiers only for drugs that are associated with high discard amounts 
in recent quarters, or any other subset of separately payable Part B 
drugs from single use vials or single use packages, we believe that 
approach is likely to lead to confusion among providers and billers, 
who may mistake which drugs are included or excluded from the relevant 
subset from one quarter to the next. Additionally, we do not see the 
practicality of establishing a separate modifier for drugs for which 
manufacturers will have refund obligations, particularly as the set of 
refundable drugs will likely shift across quarters.
    Comment: One commenter stated their current billing software cannot 
currently add either the JW or JZ modifier, so under the proposed 
modifier requirements for claims covered by the proposed policy, 
modifier codes would both have to be handwritten in by non-clinical 
staff that smaller facilities cannot afford to recruit. The commenter 
added that billing software is space-limited and requested CMS only 
require the use of modifiers that provide the most information.
    Two commenters stated that the addition of new claims requirements 
not paired with increased reimbursement or other incentives would 
exacerbate strains on provider resources at a time of staffing 
shortages. One commenter expressed concern about the additional 
workload collecting discard data would impose on pharmacists and 
pharmacy technicians. The commenter requested compensatory 
reimbursements for such pharmacists and pharmacy technicians for the 
work involved with collecting discard data. In addition, the commenter 
urged CMS to adopt a mechanism for calculating discard amounts that can 
be incorporated into existing processes and use as much automation as 
possible. One commenter requested that we assess administrative impacts 
the implementation of section 90004 of the Infrastructure Act will have 
on provider practices.
    Response: The JW modifier policy has been in place since 2017, and 
we are codifying it without change in this final rule. Providers should 
currently be reporting the JW modifier on their claims, as well as 
documenting the discarded amounts in the beneficiary's medical records. 
We understand that providers do not currently have the capability to 
accept or report the JZ

[[Page 69717]]

modifier. We expect that a 6-month delay in the requirement to use the 
JZ modifier would allow providers sufficient time to incorporate 
necessary updates to their claims systems to report JZ data. If a 
provider cannot report the JW or JZ modifiers as required by October 1, 
2023, they should hold their claims until they are able to do so. 
Claims submitted without required modifier data will not be accepted. 
If the provider has any other technical issues with submitting the 
required modifier data, we expect the provider to work with their 
Medicare Administrative Contractor (MAC) on an acceptable approach to 
submitting claims.
    We also understand that providers and administrative staff spend 
substantial time on recordkeeping and submitting claims, and adding 
claims requirements without removing requirements of equal burden 
places strain on provider practices. However, providers have been 
required to identify discarded amounts of drugs from single-dose 
containers since 2017, so providers should already have established 
processes for making these assessments and recording JW data as 
appropriate.
    In response to whether a method can be developed by CMS for the 
automated calculation of discard amounts, we are not in a position to 
know which vial or container size of a drug or biological a physician 
has selected for a patient nor the amount that has been discarded. For 
assistance in calculating discard amounts, we recommend providers and 
billers work with drug manufacturers to develop methods for assessing 
discard amounts in the easiest manner.
    Comment: One commenter requested clarification on all documentation 
elements of our proposal. The commenter expressed concern about 
documentation burdens, including documentation that proves that 
prepared and administered drug amounts match what was billed, as well 
as documentation that reports white-bagged or specialty drugs provided 
as patient assistance. The commenter added that this documentation is 
done manually.
    Response: The JW modifier policy has been in place since 2017, and 
we are codifying it without change in this final rule. In the JW 
modifier FAQ, it states that the JW modifier policy applies to 
providers and suppliers who buy and bill drugs and is intended to track 
discarded amounts of drugs that occur as a result of the preparation of 
a drug dose for administration to a beneficiary. Also, providers and 
suppliers must document the amount of discarded drugs in Medicare 
beneficiaries' medical records. The document also states that CMS 
expects that providers and suppliers will maintain accurate (medical 
and/or dispensing) records for all beneficiaries, as well as accurate 
purchasing and inventory records for all drugs that were purchased and 
billed to Medicare. General guidance on documentation is available in 
MLN Matters SE 1316. Providers and suppliers should also check with the 
MAC that processes their Part B drug claims for any additional 
information on billing and documentation is available at the local 
level.
    With regard to the JZ modifier, it must be used on the claim line 
with the billing and payment code of the drug when no amounts were 
discarded. CMS will not require that the provider note in beneficiary's 
medical record when no amounts are discarded. We will update the JW 
modifier FAQ document to clarify billing and documentation requirements 
consistent with this final rule.
    With regard to documentation for ``white bagged'' or specialty 
drugs that a provider does not purchase, such drugs are not payable 
under Part B, are not subject to the JW/JZ modifier policy, and are not 
subject to the discarded drug refund.
    Comment: Several commenters requested a delay in the requirement to 
use the JZ modifier in claims to account for the time needed to 
develop, test, and implement changes to claims processing systems, as 
well as for provider education and adoption. One commenter requested 
the effective date of the provision to be delayed one year, to January 
1, 2024, to accommodate software modifications to support the reporting 
of the JZ modifier. The commenter stated that it is not realistic to 
expect software development and adoption to occur by January 1, 2023.
    Several commenters expressed concern that confusion and errors in 
use of the JZ modifier by providers may cause billing errors, including 
claims denials, and could slow claims processing and provider revenues. 
One commenter expressed concern over general risks associated with 
noncompliance with the JZ modifier requirement.
    One commenter stated providers may experience confusion on correct 
JZ modifier use when billing for the administration of generic drugs.
    Several commenters urged that we undertake adequate educational 
efforts on JW and JZ reporting requirements, including the issuance of 
guidance and collaboration with provider communities. Several other 
commenters offered to collaborate with us on outreach and education 
efforts for the JW and JZ reporting requirements.
    Response: We thank the commenters for their feedback and note that 
they highlighted several constraints in the implementation of any new 
billing and coding elements. After consideration of these comments, we 
acknowledge that incorporating the new coding modifier by January 1, 
2023 may not be feasible for many providers. Therefore, the JZ modifier 
will be effective starting January 1, 2023, but not required until July 
1, 2023. For dates of service beginning July 1, 2023 or after, 
providers will be required to use the JZ modifier on claims for single-
dose containers when there are no discarded amounts, but CMS will not 
perform claims processing edits on its use. Then, beginning October 1, 
2023, we will begin edits for correct use of both the JW and JZ 
modifiers for billing and payment codes that are required to use the 
modifiers based on the policy we are finalizing in this final rule. We 
expect this 9-month transition period will allow providers, billing 
software vendors, and MACs enough time to adjust billing and claims 
review processes before providers are at risk for noncompliance, as CMS 
typically posts updates to the Medicare Claims Processing Manual 5 
months prior to implementation. Following the publication of this final 
rule, we will work to engage providers on claims coding requirements, 
including through the Medicare Learning Network, Changes Requests and 
associated CMS internet Only Manual sections, and updating the JW 
modifier FAQ document \143\ to reflect the new JZ modifier requirement, 
and the issuance of technical guidance to MACs. We will take any 
opportunity to engage with interested parties to improve our outreach 
and education efforts.
---------------------------------------------------------------------------

    \143\ https://www.cms.gov/medicare/medicare-fee-for-service-
payment/hospitaloutpatientpps/downloads/jw-modifier-faqs.pdf.
---------------------------------------------------------------------------

    We understand commenters' concerns that confusion about JW and JZ 
modifier use could cause compliance issues and, when edits for the 
modifies are implemented, delays to provider payments. We expect the 
delay in the compliance date for JZ modifier use to July 2023, as well 
as the delay in edits for both the JW and JZ modifiers to October 2023, 
will give providers time to become familiar with our educational 
resources on the new requirement, adopt necessary changes to their 
claims processing software, and adjust recordkeeping and billing 
practices accordingly.

[[Page 69718]]

    In response to the commenter's concern regarding the correct use of 
the JZ modifier on claims for the administration of generic drugs, we 
are clarifying that we are finalizing the requirement to code either 
the JW or JZ modifier on claims for drugs from all single-dose 
containers payable under Medicare Part B, regardless of whether the 
drug meets the definition of refundable single-dose container or 
single-use package drug; this includes both single source and multiple 
source drugs. This is consistent with our proposal to align the policy 
for the JZ modifier with the current JW modifier policy. That is, the 
JZ modifier would be required when there are no discarded amounts from 
single use vials or single use packages payable under Part B for which 
the JW modifier would be required if there were discarded amounts. As 
the requirement to use the JW modifier to report discarded amounts has 
been our policy since 2017, we are finalizing in this rule that 
providers must report the JW modifier in all outpatient settings 
beginning January 1, 2023, but as discussed, we are delaying the 
compliance date for the JZ modifier to July 1, 2023. Although we will 
only calculate manufacturer refunds with JW modifier data from single 
source drugs and biologicals, discarded drug data for drugs that do not 
meet the definition of refundable single-dose container or single-use 
package drug will provide us with useful information about drug 
discards in the Medicare program generally.
    Comment: Several commenters requested guidance on appropriate JW 
and JZ modifier use. A few inquired about application and proper use of 
the modifiers as they relate to claims for drugs that fall under one or 
more of the exclusions provided in section 90004 of the Infrastructure 
Act, drugs that are packaged for payment, drugs from pre-filled 
syringes, ``cellular and/or tissue-based products for skin wounds'', 
and drugs from single-dose containers that are used for multiple 
patients, as may occur with repackaged or compounded drugs.
    One commenter asked how the MACs will process claims that omit both 
the JW and JZ modifiers. One commenter requested clarification whether 
the billing provider should use the vial size purchased or smallest 
vial size available that could have been used to treat the patient as 
the basis for calculating discarded amounts. One commenter asked that 
we address confusion related to JW modifier policy as stated in MLN 
Matters article SE1316, issued August 1, 2013, that discarded drug 
amounts reported with the JW modifier ``must correspond with the 
smallest dose (vial) available for purchase from the manufacturer(s) 
that could provide the appropriate dose for the patient, while 
minimizing any wastage.'' The commenter stated that providers have 
difficulty identifying what is the smallest dose vial available for 
purchase for which they are required to report wastage.
    Response: As discussed above, we are finalizing that beginning 
January 1, 2023, use of the JW modifier will be required in claims for 
all drugs separately payable under Part B that are designated as a 
single-dose container on the FDA-approved label or package insert for 
which amounts of the drug are discarded. Similarly, beginning no later 
than July 1, 2023, the use of the JZ modifier will be required for all 
drugs separately payable under Part B that are designated as a single-
dose container on the FDA-approved label or package insert for which 
there are no discarded amounts. Claims for drugs subject to this 
provision that do not report the JW or JZ modifier on or after July 1, 
2023, may be subject to provider audits. Claims that do not report the 
modifiers as appropriate on or after October 1, 2023, will be returned 
as un-processable until claims are properly resubmitted.
    With regard to what vial size should be used to calculate discarded 
amounts, discarded amounts should be calculated using the labeled 
amount of the product that is actually purchased to prepare the dose, 
not the labeled amount of the smallest vial size that could have been 
purchased. The guidance referenced in MLN Matters article SE1316 is no 
longer effective, as it has been superseded by MLN Matters article 
MM9603, which was issued on June 9, 2016, and effective January 1, 
2017. This article notified providers of updates to JW modifier 
instructions in Claims Processing Manual 100-04, Chapters 17, in which 
providers are instructed to use the JW modifier line to bill for 
discarded amounts from the single use vial or other single use package 
of the drug or biological administered to the patient.
    As stated above, we will update our JW modifier FAQ, Change 
Requests and associated IOM guidance, and issue a new MLN article, to 
reflect the coding changes finalized in this rulemaking.
    Comment: One commenter requested direction on how to measure 
discard amounts of drugs from small container sizes, such as those with 
fill volumes of one mL or less.
    Response: As described in the proposed rule, when a provider must 
discard the amount of drug that was unused (that is, the discarded 
amount) from a single-dose container of a drug after administering a 
dose to a Medicare beneficiary, the program provides payment for the 
unused and discarded amount, as well as the dose administered, up to 
the amount of the drug indicated on the vial or package labeling. We 
clarified that above that, generally, we consider the dose (as 
described, for example, in the dosage and administration section of the 
FDA-approved labeling) as the administered amount and any other amount 
as discarded. This applies to determining discarded amounts from all 
vial sizes, including vial sizes less than 1 mL. The provider would 
bill the number of billing units that represent the dose administered 
on one line of the claim form and, on a separate line, bill the number 
of billing units of the drug that were discarded. The unused and 
discarded amount can be calculated by determining the labeled amount on 
the vial and subtracting the dose that was administered to the patient.
    Comment: Several commenters stated that the required use of the JZ 
modifier contradicts congressional intent in the drafting of this 
provision.
    Response: We disagree with the commenters. The statute specifies 
that we use a mechanism such as the JW modifier to collect data on 
discarded amounts. The use of the JZ modifier is consistent with such a 
mechanism because it will complement the use of the JW modifier and 
will likely increase the accuracy of JW modifier data.
    Comment: One commenter requested we extend the requirement to 
report discarded drug data with the JW modifier to additional drugs to 
obtain more information on discarded amounts and related costs in Parts 
B and C. The commenter requested the additional JW data be publicly 
reported.
    Response: At this time, we are only finalizing that JW and JZ 
modifiers be used for billing drug separately payable under Part B that 
are designated as a single-dose container on the FDA-approved label or 
package insert. Medicare data on Part B discarded amounts is available 
at https://data.cms.gov/summary-statistics-on-use-and-payments/medicare-medicaid-spending-by-drug/medicare-part-b-discarded-drug-units. While we did not consider expanding the scope of discarded drug 
reporting in this rulemaking, we look forward to further feedback from 
the public on methods to identify and reduce unnecessary costs in the 
Medicare program.
    After consideration of public comments, we are finalizing our 
proposal to codify our existing policy and require that billing 
providers report the JW modifier for all separately

[[Page 69719]]

payable drugs with discarded drug amounts from single use vials or 
single use packages payable under Part B, beginning January 1, 2023. We 
are also finalizing our proposal to require billing providers to report 
the JZ modifier for all such drugs with no discarded drug amounts 
beginning no later than July 1, 2023, and we will begin claims edits 
for both the JW and JZ modifier beginning October 1, 2023.
3. Refundable Single-Dose Container or Single-Use Package Drug
    As discussed in the CY 2023 PFS proposed rule (87 FR 46058 through 
46059), section 90004 of the Infrastructure Act added section 
1847A(h)(8) of the Act, which defines in subparagraph (A) of such 
section the term ``refundable single-dose container or single-use 
package drug'' as a single source drug or biological (as defined in 
section 1847A(c)(6)(D) of the Act) or a biosimilar biological product 
(as defined in section 1847A(c)(6)(H) of the Act) for which payment is 
made under Part B and that is furnished from a single-dose container.
    For the purposes of section 1847A(h) of the Act, we proposed that 
the definition of ``refundable single-dose container or single-use 
package drug'' would apply to drugs paid under Medicare Part B (that 
is, under any payment methodology) that are described as being supplied 
in a ``single-dose'' container or ``single-use'' package based on FDA-
approved labeling. This definition also includes drugs described in 
FDA-approved labeling as a part of a ``kit'' that is intended for a 
single dose or single use. We noted that the JW modifier data published 
on the CMS website is limited to only billing and payment codes that 
are published on the ASP Drug Pricing File. Therefore, there are likely 
billing and payment codes payable under Medicare Part B that would meet 
the proposed definition of refundable single-dose container or single-
use package drug that are not found on the ASP drug pricing file or the 
JW modifier data published on the CMS website.
    We stated that in our analysis of drugs that meet this definition, 
there may be a need to revise existing billing and payment codes or 
establish a new billing and payment codes for the purposes of 
implementing these provisions because estimated total number of units 
discarded and total allowed charges must be determined at the billing 
and payment code level for the purpose of calculating refund amounts. 
For example, if there is a drug that meets the definition of refundable 
single-dose container or single-use package drug that does not have a 
unique billing and payment code, a new code may be needed for the 
purposes of estimating the total number of units that were discarded 
during such quarter and the total allowed charges.
    We also stated that there may be drugs for which there are national 
drug codes (NDCs) of single-dose containers and NDCs of multiple-dose 
containers under the same FDA approval, and these NDCs are assigned to 
the same billing and payment code. We proposed that for a drug to meet 
the definition of ``refundable single-dose container or single-use 
package drug,'' all NDCs assigned to the drug's billing and payment 
code must be single-dose containers, as described in each product's 
labeling.
    We explained that section 1847A(h)(8)(B) of the Act specifies that 
the term ``refundable single-dose container or single-use package 
drug'' excludes drugs that are either radiopharmaceuticals or imaging 
agents, drugs that require filtration during the drug preparation 
process, and drugs approved on or after the date of enactment of the 
Infrastructure Act (that is, November 15, 2021) for which payment under 
Part B has been made for fewer than 18 months.
a. Exclusions for Radiopharmaceuticals and Imaging Agents
    Section 1847A(h)(8)(B)(i) of the Act excludes a drug or biological 
that is either a radiopharmaceutical or an imaging agent. We proposed 
to identify radiopharmaceuticals (including therapeutic or diagnostic 
radiopharmaceuticals) and imaging agents (including contrast agents) 
\144\ for purposes of the exception at section 1847A(h)(8)(B)(i) of the 
Act by language describing them as such in FDA-approved labeling.
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    \144\ https://www.fda.gov/media/72295/download.
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    We proposed to codify the exclusion of radiopharmaceuticals and 
imaging agents from the definition of ``refundable single-dose 
container or single-use package drug'' at Sec.  414.902.
b. Exclusions for Drugs Requiring Filtration
    Section 1847A(h)(8)(B)(ii) of the Act excludes from the definition 
of refundable single-dose container or single-use package a drug 
approved by FDA for which dosage and administration instructions 
included in the labeling require filtration during the drug preparation 
process, prior to dilution and administration, and require that any 
unused portion of such drug after the filtration process be discarded 
after the completion of such filtration process. As the statute states, 
for the purposes of this exclusion, the filtration must occur prior to 
dilution and administration. Therefore, for example, the definition 
excludes those drugs requiring filtration in order to remove the 
product from a vial, such as drugs contained within ampules or certain 
liposomal products that require filtration when removing the product 
from the manufacturer's vial consistent with FDA labeling. However, 
drugs that require in-line filters only as part of the drug 
administration process would not meet this exclusion. We proposed that, 
consistent with section 1847A(h)(8)(B)(ii) of the Act, requirement for 
filtration must be present on FDA labeling in order for the drug to be 
excluded.
    Additionally, consistent with our longstanding interpretation of 
the distinction between multiple source drugs and single source drugs 
(see program instructions available at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Downloads/051807_coding_annoucement.pdf), we are 
proposing if there is any NDC under a single New Drug Application (NDA) 
or Biologics License Application (BLA) that requires filtration as 
described in section 1847A(h)(8)(B)(ii) of the Act, then all NDCs of 
such drug or biological (that is, any billing and payment code to which 
any such NDCs are assigned) would be excluded from the definition of 
refundable single-dose container or single-use package drug, even if 
other products under the relevant approval and assigned to that billing 
and payment code do not require such filtration. We noted that this is 
appropriate because drugs and biologicals payable under Medicare Part B 
are billed at the level of the billing and payment code (not with the 
NDC of the individual product). If some products that require 
filtration and some products that do not require filtration are 
assigned to the same billing and payment code, we would not be able to 
distinguish (based on JW modifier data) which discarded amounts were 
from the filtered product and which were from the non-filtered product.
c. Exclusions for Drugs for Which Payment Under Medicare Part B has 
Been Made for Fewer Than 18 months
    Section 1847A(h)(8)(B)(iii) of the Act excludes from the definition 
of refundable single-dose container or single-use package drug approved 
by FDA on or after November 15, 2021 and for which payment has been 
made under Part B for fewer than 18 months. Typically, if their use is 
reasonable and

[[Page 69720]]

necessary and all other coverage requirements are met, FDA-approved 
drugs become payable under Medicare Part B on the date which they are 
marketed in the United States. However, we are not able to reliably 
determine the exact date on which the first Part B claim was paid for a 
particular new drug because they are usually first billed using an 
unclassified drug or biological billing and payment code. Therefore, 
our ability to accurately determine when payment for a new drug has 
been made under Part B for 18 months is exceedingly limited. Because of 
the operational challenges with identifying the date of when the first 
Part B claim was paid for a new drug and because this exclusion would 
be operationally difficult to implement if the 18-month period ends in 
the middle of a calendar quarter, we noted that we believe it is 
appropriate to measure the 18-month period using the first day of the 
calendar quarter following the date of first sale as reported to CMS, 
which is a required field for reporting ASP data.\145\ That is, for 
purposes of this exclusion, we proposed to consider the 18-month period 
to begin on the first day of the calendar quarter following the date of 
first sale as reported to CMS for the drug. Because 18 months is the 
equivalent of 6 calendar quarters, under our proposed approach, 
refundable single-dose container or single-use package drugs approved 
or licensed by FDA on or after November 15, 2021 would be excluded from 
the definition of refundable single-dose container or single-use 
package, and thus, not subject to a refund, for the first 6 full 
calendar quarters following the date of first sale for any NDCs of such 
drug. Thereafter, that is, beginning with dates of service after the 
last day of the sixth full sales quarter, the drug would no longer be 
excluded from the definition of refundable single-dose container or 
single-use package drug. For example, if a drug that would otherwise 
meet the definition of refundable single-dose container or single-use 
package drug is approved by FDA in June 2023 and the first date of sale 
is June 20, 2023, the first day of the calendar quarter following the 
date of first sale for such drug would be sales occurring in the third 
calendar quarter of 2023 (July 1, 2023 through September 30, 2023), and 
we would consider the drug to be excluded from the definition for the 
next 6 quarters (that is, through December 31, 2024). As of January 1, 
2025, the drug would no longer be excluded from the definition of 
refundable single-dose container or single-use package drug and would 
be subject to applicable refunds.
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    \145\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/Downloads/ASP_Data_Collection_Validation_Macro_User_Guide.pdf.
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    We proposed that exclusion would apply only once for a drug. That 
is, it would apply for the first NDC of such drug assigned to a billing 
and payment code and paid under Medicare Part B. If additional NDCs in 
the same billing and payment code, such as a new vial size or ready-to-
use syringe, were subsequently approved under the same FDA approved 
application (for example, under the same approved NDA or BLA number), 
marketed, and paid under Part B, these subsequent NDCs would not start 
a new 18-month exception period. We noted that we believe this proposed 
approach is appropriate to prevent a drug from periodic or continual 
exemption from reports and refunds due to new NDCs that are marketed 
under the same FDA-approval.
    We proposed to add a new definition at Sec.  414.902 of 
``refundable single-dose container or single-use package drug,'' which 
would be defined to mean a single source drug or biological or a 
biosimilar biological product for which payment is made under this part 
and that is furnished from a single-dose container based on FDA-
approved labeling or product information, except as otherwise 
specified. We welcomed comment on the proposed implementation of these 
statutory exclusions.
    The following is a summary of the public comments received on the 
refundable single-dose container or single-use package drug provisions 
and our responses:
    Comment: Several commenters requested CMS add additional exclusions 
from this provision for various drugs or drug categories. One commenter 
stated that implementation of this provision will likely have 
disproportionately negative impacts to small biotech companies that 
received FDA approval through expedited development and review 
programs. The commenter explained that under expedited programs such as 
Breakthrough Therapy Designation (BTD),\146\ it is more challenging for 
manufacturers to determine optimal vial size for the purpose of 
Medicare payment when focus is primarily on rapid clinical testing. The 
commenter stated for breakthrough therapy, the vial size is developed 
in a manner that would best match the dosage needed by most trial 
participants, while also promoting efficient care delivery. The 
commenter stated that in an expedited program using a single vial size 
is more efficient from a resource, compliance, and complexity 
standpoint. The commenter requested that CMS specifically exclude 
products from small biotech companies that received BTD and FDA 
Priority Review. The commenter noted that the Inflation Reduction Act 
has a similar exception for small biotech companies in its price 
negotiation provision.
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    \146\ https://www.fda.gov/patients/fast-track-breakthrough-therapy-accelerated-approval-priority-review/breakthrough-therapy.
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    Two commenters requested that we exclude orphan drugs because such 
drugs have differing manufacturing conditions because of the smaller 
scale of demand and production. One of these commenters stated that 
failure to exempt orphan drugs from refunds could have the detrimental 
effect of stifling innovation and limiting development of new rare 
disease treatments that may require weight-based dosing. One commenter 
added that even if an orphan drug were produced in multiple vial sizes, 
the supply of each vial size may be limited or providers may not stock 
all sizes due to the rarity of the condition being treated. One 
commenter requested that we exclude all biosimilar biological products. 
The commenter stated that they believe this would be justified because 
FDA regulations require that biosimilar biologicals have the same 
dosage form and packaging as their reference biologicals. In addition, 
the commenter noted that biosimilar biological manufacturers cannot 
make changes to factors such as vial size that are not first made by 
the reference product's manufacturer.
    Two commenters requested we exclude all ophthalmic drugs or drugs 
with small volumes administered (1 mL or less). Similarly, four 
commenters asserted that the exceptions for small vials are necessary 
because of unique circumstances. We discuss the unique circumstances of 
drugs with small volumes and vial sizes below in section III.A.6.a. of 
this final rule.
    One commenter requested we establish a unique modifier to signal 
the exclusion of drugs administered via ``microdose dispensing.''
    Response: We appreciate commenters' insight to the variety of 
manufacturers and products that may be affected if a product meets the 
definition of refundable single-dose container or single-use package 
drug and does not meet a statutory exclusion. The statute defines 
refundable single-dose container or single-use package drug broadly, 
makes limited exceptions to the definition, and directs the use of JW

[[Page 69721]]

modifier or similar mechanism to calculate the refunds owed. Drugs with 
BTD and FDA priority review and ophthalmic drugs with small vial sizes 
are not addressed by any of the statutory exclusions and are thus 
subject to the JW and JZ modifier policy. This JW modifier data will be 
used to calculate refund obligations as required by statute.
    Comment: One commenter suggested CMS consider excluding any off-
label use of applicable drugs from the annual report and calculations 
of the discarded drug refund, because off-label use could involve 
significantly different dosing that varies greatly from the tailored 
vial size that was designed for the labeled indication(s).
    Response: When a provider bills for a drug, it is reported using 
the drug's billing and payment code, which does not allow for 
particular designation regarding the indication (or whether the drug 
was used off-label). Therefore, there is no way to indicate on a claim 
that a drug from a single-dose container was used for an off-label use. 
Thus, the drug would still be subject to the JW and JZ modifier policy 
and that JW data would be used to determine refund obligations.
    Comment: One commenter stated that the discarded drug provision may 
interrupt access for some patients to certain treatments. This 
commenter stated that CMS should allow manufacturers additional time to 
comply with the provision to prevent supply interruptions, and 
suggested that CMS should temporarily exempt manufacturers from the 
refund while they develop new vial sizes for approval by the FDA. The 
commenter also suggested that CMS develop a process for exemption 
requests and the provision of temporary relief from compliance for the 
requesting party. In addition, the commenter suggested that CMS seek 
comment on other drug exceptions to the provision, such as when 
compliance would negatively impact patient access.
    One commenter requested CMS consider a broader, transparent 
exemption policy that would consider the wide range of reasons for 
which certain amounts of product may be unused (for example, an 
interrupted procedure, changes in clinical circumstance), including a 
detailed exemption request process. The commenter recommended that CMS 
strike a balance in providing exclusions to allow provider discretion 
when additional drug is needed.
    Response: CMS does not have discretion to delay the effective date 
of this provision, and therefore, cannot allow for an alternative 
effective date. As stated above, the statute defines refundable single-
dose container or single-use package drug broadly, makes limited 
exceptions to the definition, and directs the use of JW modifier to 
calculate the refunds owed. We are not considering an exemption policy 
at this time outside of the exclusions specified in statute. We have 
discretion, under the statute, to consider unique circumstances and 
increased applicable percentages, which are discussed further below.
    Comment: Several commenters stated that the proposed rule 
inappropriately applies the provision to drugs administered in hospital 
outpatient departments and ambulatory surgical centers, which would 
cause inappropriate refund obligations. In support of this argument, 
the commenters stated that the provision was placed within, and the 
statutory language only references calculations and payments under, 
section 1847A of the Act and does not reference section 1833(t) of the 
Act. These commenters stated that the lack of reference to payments 
under section 1833(t) of the Act precludes counting units paid under 
the OPPS or ASC payment system. One commenter stated the application of 
this provision is particularly inappropriate if future cuts to hospital 
reimbursement for 340B drugs are implemented. One commenter expressed 
concern about the possibility of an overlap between refunds calculated 
under this provision and discounts made available to covered 340B 
entities. The commenter asked CMS to develop a policy or process to 
ensure such layered price concessions do not occur, which could be done 
by stating that OPPS units are not included in the discarded drug 
refund calculation.
    Response: New section 1847A(h)(2) of the Act requires the 
manufacturer of a refundable single-dose container or single-use 
package drug to provide to the Secretary a refund that is equal to the 
amount specified in paragraph (3). Section 1847A(h)(8)(A) of the Act 
defines a refundable single-dose container or single use package drug 
for which a refund is owed as a single source drug or biological or a 
biosimilar biological product ``for which payment is made under this 
part'' meaning Medicare Part B. Payment is made for drugs furnished in 
hospital outpatient departments and ASCs under Medicare Part B. See 
section 1841(g) of the Act; see also section 1847A(h)(1)(A) of the Act 
(requiring use of a mechanism, such as the JW modifier, which applies 
to OPPS and ASC drugs, to determine the total number of units).
    We also note that section 1847A(h)(1)(C) of the Act excludes 
``units that are packaged into the payment amount'' from the refund 
calculation. This language also suggests that manufacturers are 
required to pay refunds for OPPS and ASC drugs by excluding packaged 
drugs, which is a common phenomenon under the OPPS and ASC payment 
system. Regarding the commenter's concern about future reductions in 
OPPS payment for 340B drugs, we note that, for CY 2023, we are 
finalizing a policy to pay for separately payable drugs at a default 
rate that is generally ASP plus 6 percent under the OPPS, regardless of 
whether a drug is acquired under the 340B program.
    Therefore, we are finalizing our proposal that HOPDs would be 
required to report the JW modifier or any successor modifier to 
identify discarded amounts of refundable single-dose container or 
single-use package drugs described by HCPCS codes that are assigned 
status indicator ``K'' (Nonpass-Through Drugs and Nonimplantable 
Biologicals, Including Therapeutic Radiopharmaceuticals) or status 
indicator ``G'' (Pass-Through Drugs and Biologicals) under the OPPS. We 
are finalizing that ASCs would be required to report the JW modifier or 
any successor modifier to identify discarded amounts of refundable 
single-dose container or single-use package drugs described by HCPCS 
codes assigned payment indicator ``K2'' (Drugs and biologicals paid 
separately when provided integral to a surgical procedure on ASC list; 
payment based on OPPS rate) under the ASC payment system. We are 
finalizing that the JW modifier would not be required to identify 
discarded amounts of drugs that are not separately payable, such as 
drugs for which payment is packaged under the OPPS or ASC payment 
system or drugs administered in the FQHC or RHC setting.
    Comment: One commenter requested that CMS clarify that the 
definition of refundable single-dose container or single-use package 
drug does not apply to vaccines described in section 1861(s)(10) of the 
Act. The commenter explained that the payment amount of those vaccines 
is not determined under section 1847A of the Act, and that section 
1847A of the Act is explicitly limited to payment for drugs and 
biologicals described in section 1842(o)(1)(C) of the Act, which 
explicitly excludes vaccines described in section 1861(s)(10)(A) or (B) 
of the Act.
    Response: CMS grounds its interpretation of this provision on 
language in new section 1847A(h) of the

[[Page 69722]]

Act that refunds are owed on refundable single-dose container or 
single-use package drugs which are or drugs ``for which payment is made 
under this part,'' which would include vaccines described in section 
1861(s)(10) of the Act. However, we discuss below that we are 
finalizing that for a drug to meet the definition of ``refundable 
single-dose container or single-use package drug,'' all NDCs assigned 
to the drug's billing and payment code must be single-dose, as 
described in each product's labeling. Many vaccines in section 
1861(s)(10) of the Act are available in both single-dose containers 
(usually prefilled syringes) and multiple-dose containers, and 
therefore, would not meet the definition of ``refundable single-dose 
container or single-use package drug''.
    In addition, we clarify that, with regard to the JW/JZ modifier 
policy, we will not require those modifiers for vaccines described 
under section 1861(s)(10) of the Act that are furnished from single-
dose containers. Since the influenza, pneumococcal, and COVID-19 
vaccines specified in section 1861(s)(10) of the Act are often roster 
billed by mass immunizers, and roster billing cannot accommodate 
modifiers, it would be impractical to require the JW and JZ modifiers 
for such vaccines. Such a requirement would likely result in 
substantial operational issues for mass immunizers and impair patient 
access to these vaccines. In addition, section 1847A(h)(1)(A)(i) of the 
Act describes that data reported by a claims modifier, such as the JW 
modifier, are the appropriate measure for determining discarded 
amounts. Since such vaccines would not be subject to the JW and JZ 
modifier policy, we would not expect to have discarded amount data for 
these billing and payment codes for the purposes of calculating the 
discarded drug refund.
    Comment: Two commenters requested we exempt drugs paid for under 
the End-Stage Renal Disease (ESRD) bundled payment. One commenter 
expressed concern regarding how implementation of the discarded drug 
refund might inadvertently impact ESRD products, including those used 
by home dialysis patients (for example, Extraneal, a peritoneal 
dialysis solution). The commenter noted the language in the proposed 
rule provided a limited number of examples of drugs that are not 
separately payable (for example, drugs for which payment is packaged 
under the OPPS or ASC payment system or drugs administered in the FQHC 
or RHC settings). The commenter requested that we clarify that this is 
not an exhaustive list and that drugs for which payment is packaged 
under the Medicare ESRD Prospective Payment System (PPS) is another 
example of drugs that are not separately payable and are, therefore, 
excluded.
    Response: We agree with the commenter and clarify that units for 
drugs that are packaged under the Medicare ESRD PPS are not subject to 
the JW modifier policy or the discarded drug refund.
    Comment: One commenter requested clarification on whether 
``cellular and/or tissue-based products for skin wounds'' are subject 
to the provisions in section 90004 of the Infrastructure Act.
    Response: If a product is a single source drug or biological for 
which payment is made under Medicare Part B (including any items, 
services, supplies, or products that are paid under Medicare Part B as 
a drug or biological), is from a single-dose container based on the 
FDA-approved labeling or product information, and is not otherwise 
excluded, then it meets the definition of refundable single-dose 
container or single-use package drug. If the product is also subject to 
billing using the JW and JZ modifier as described above, this data will 
be used to calculate refund obligations. Therefore, if a product is a 
single source drug or biological as defined in section 1847A(c)(6)(D) 
of the Act and meets these other requirements, then it is subject to 
the refund obligations under this provision.
    Comment: One commenter requested that if we finalize the proposal 
to create new billing and payment codes for circumstances in which a 
billing and payment code today is assigned to both single-dose and 
multiple-dose containers, we only create new billing and payment codes 
that include products that meet the 10 percent threshold, or a 5 
percent threshold, to minimize administrative and billing disruption 
and workload. According to the commenter, many shared billing and 
payment codes that include a single-dose container are associated with 
less than 1 percent discard each year. The commenter also expressed 
concern that creating new billing and payment codes in these 
circumstances would create challenges determining ``who is 
responsible,'' in addition to issues related to ASP calculations and 
pricing.
    Response: We stated in the proposed rule that there may be a 
circumstance in which we need to revise existing billing and payment 
codes or establish a new billing and payment codes for the purposes of 
implementing these provisions because estimated total number of units 
discarded and total allowed charges must be determined at the billing 
and payment code level for the purpose of calculating refund amounts. 
This statement was separate and apart from our proposal that for a drug 
to meet the definition of ``refundable single-dose container or single-
use package drug,'' all NDCs assigned to the drug's billing and payment 
code must be single-dose, as described in each product's labeling. As 
we discussed in the proposed rule, if there is a drug that meets the 
definition of refundable single-dose container or single-use package 
drug and does not have a unique billing and payment code by which the 
discarded units can be tracked for the purposes of the refund 
calculation, we may revise a code or create a new code for the drug.
    Comment: One commenter disagreed with our proposal to only include 
billing codes for which all NDCs are single-dose containers because in 
some circumstances, a manufacturer may sell predominantly single-dose 
containers and some, but very few, multiple-dose containers of a drug. 
The commenter stated that we instead include single-dose containers 
that are in billing codes that contain multiple-dose containers, and 
proposed that, since Medicare Part B does not bill drugs by NDC, we 
should instead calculate the refund by using: 10 percent of total 
charges for the billing and payment code (including all utilization 
regardless of whether single-dose or multiple-dose NDCs) or 10 percent 
of total charges for single-dose container NDCs in the billing code 
(based on the presence of JW or JZ modifiers).
    Response: We thank the commenter for their input regarding billing 
and payment codes to which both single-dose and multiple-dose 
containers are crosswalked. There are several operational challenges to 
applying the discarded drug refund to such billing and payment codes. 
Since the JW modifier would not be required for the multiple-dose 
product, the percentage of units discarded for the billing and payment 
code as a whole would be skewed. If a multiple-dose product is included 
in a billing and payment code along with single-dose products, there 
will be an underestimate for the percent discarded from the single-dose 
products. For example, if 100 billing units of the drug from a 
multiple-dose vial were billed under a billing and payment code and 100 
billing units of the drug from the single-dose vial were billed under 
the same billing and payment code, but some was discarded (for example, 
70 units administered and 30 units discarded and billed using the JW 
modifier), then the percentage discarded overall for the billing and 
payment code would be 15 percent. We

[[Page 69723]]

are not able to distinguish billing units from multiple- or single-dose 
containers on claims when they are assigned to the same billing and 
payment code.
    Based on our analysis of JW modifier data from CY 2020, we did not 
identify any billing and payment codes that have both multiple-dose and 
single-dose containers crosswalked to it for which 10 percent or more 
of billed amounts were discarded. Therefore, we believe this 
circumstance would not be common and we are finalizing that, for a drug 
to meet the definition of ``refundable single-dose container or single-
use package drug,'' all NDCs assigned to the drug's billing and payment 
code must be single-dose, as described in each product's labeling. 
However, if we find at a later time (particularly with expected 
improved data after implementation of the JZ modifier) that several 
products are excluded from the definition of refundable single-dose 
container or single-use package drug due to a multiple-dose product 
being crosswalked to the code, and the manufacturer would otherwise owe 
refunds for discarded amounts, we may find it necessary to revisit this 
policy in the future.
    Comment: Several commenters requested that, if there are drugs 
subject to the policy that are not currently found in the public ASP 
Drug Pricing File or JW modifier data published on the CMS 
website,\147\ that CMS begin publishing ASP and JW modifier data on 
those drugs. One commenter requested we publish and update quarterly a 
list of all known drugs that fall into a statutory exclusion from the 
discarded drug refund process. The commenter expressed concern that the 
lack of clarity regarding how CMS will identify excluded drugs may lead 
to confusion, and stated that such a publication would allow 
manufacturers the opportunity to anticipate valid or erroneous reports. 
One commenter requested that CMS issue guidance explaining the 
exclusions of drugs from the definition of refundable single-dose 
container or single-use package drug, as providers and manufacturers, 
particularly in the case of new drugs, may not know whether a drug 
falls under one of the exception categories. Another commenter 
requested that CMS clarify the process by which we identify excluded 
drugs.
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    \147\ https://data.cms.gov/summary-statistics-on-use-and-payments/medicare-medicaid-spending-by-drug/medicare-part-b-discarded-drug-units.
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    Response: With regard to publishing ASP data, CMS does not publish 
an ASP payment limit or crosswalk for all drugs that are reported by 
manufacturers. A number of factors, including but not limited to the 
setting in which the drug is used and the volume of use in Medicare 
Part B, are considered before a decision about national pricing is 
made. Since the refunds are determined after claims are submitted and 
processed, the specific billing and payment codes that will be subject 
to refund obligations will not be known at the time the annual ASP Drug 
Pricing File is published. Therefore, the information that would be 
required to publish a payment allowance for all drugs subject to the 
discarded drug policy would not be available at the time the annual ASP 
file is published and, thus, it would not be feasible for CMS to 
include that information.
    We thank commenters for their input regarding their request that 
CMS publish a quarterly list of all known drugs that fall into a 
statutory exclusion, and their request for CMS guidance to explain the 
exclusion of drugs from the definition of refundable single-dose 
container or single-use package drug. We will consider developing lists 
of drugs that fit a statutory exclusion as part of the operational 
process of implementing this provision.
    Comment: Two commenters requested that CMS exclude Part B drugs 
that are not administered by the billing supplier, including DME drugs 
that are administered by the beneficiary, from the discarded drug 
refund. One commenter stated that reporting, audit, and civil money 
penalties described in the proposed rule are inappropriate when drug 
products are administered outside the chain of custody once in the 
possession of the beneficiary. Three commenters requested that we 
clarify that drugs administered via an item of DME, and any other drug 
billed to the DME MACs, are not subject to the discarded drug refund 
provision. Commenters stated that such drugs are typically self-
administered by patient or caregiver in their home, administered over a 
period that spans several days, and dispensed by suppliers that have no 
visibility into discarded drug provision. They stated that reporting 
discarded units in these circumstances would present an increased 
burden for all parties involved. One of these commenters requested that 
we clarify that drugs whose FDA-approved labels indicate that they are 
intended for self-administration by the patient or their caregiver are 
not subject to the discarded drug provision. The commenter noted that 
this would ensure that the applicability of the discarded drug refund 
requirement does not depend on self-administered drug (SAD) list. The 
commenter suggested we develop a claims modifier to identify such self-
administered drugs in claims.
    Two commenters requested clarification on the application of the JZ 
modifier to drugs not administered by the billing supplier, such as 
drugs administered via a covered item of DME or those that are self-
administered by patients.
    Response: In the proposed rule, we proposed that, to align with the 
JW modifier policy, the JZ modifier would be required when there are no 
discarded amounts from single use vials or single use packages payable 
under Part B for which the JW modifier would be required if there were 
discarded amounts.
    At this time, we do not believe it would be appropriate to collect 
data about discarded amounts from beneficiaries. Section 
1847A(h)(1)(A)(i) of the Act describes that data reported by a claims 
modifier, such as the JW modifier, are the appropriate measure for 
determining discarded amounts. Discarded amounts (as identified by the 
JW modifier) are submitted by the billing provider and not the patient, 
typically before the patient administers the drug. Therefore, the JW 
and JZ modifiers are not required for refundable single-dose container 
or single-use package drugs that are self-administered by a patient or 
caregiver in the patient's home.
    Comment: One commenter expressed support for proposed exclusions 
from the discarded drug refund policy. Several commenters expressed 
support for the exclusion of radiopharmaceuticals. One commenter noted 
approval for our proposal to identify diagnostic and therapeutic 
radiopharmaceuticals and imaging agents eligible for the exclusion 
based on their FDA-approved labeling. Two commenters requested CMS 
explicitly confirm that the exclusion of imaging agents includes 
contrast agents.
    Two commenters stated that the drug, SusvimoTM 
(ranibizumab injection), which is for intravitreal use via ocular 
implant, meets the criteria for the filtration exclusion, both with its 
ocular implant initial fill and refill-exchange procedure. The drug's 
filtration step for the initial fill procedure is described in the 
dosage and administration instructions in the label and occurs during 
the drug preparation process; filtration occurs prior to dilution and 
administration; and the unused portion after filtration is discarded 
along with the filtration needle. The commenter stated that, exactly 
like the initial fill procedure, the refill-exchange procedure also 
includes filtration in a

[[Page 69724]]

manner that is consistent with the filtration exclusion criteria. One 
commenter stated that the drug, Onpattro[supreg] (patisiran injection), 
meets the criteria for the filtration exclusion. The dosage and 
administration instructions in Onpattro's FDA-approved prescribing 
information expressly state that the drug must be filtered and diluted 
prior to intravenous infusion, and practitioners must discard any 
unused portion of the drug after filtration.
    With regard to the exclusion for drugs approved by FDA on or after 
November 15, 2021 and for which payment has been made under Part B for 
fewer than 18 months, three commenters expressed support for this 
exclusion. One commenter suggested CMS extend the exclusion by running 
the 18-month period from the start of the effective date of this 
provision (January 1, 2023) for any new drug with an FDA approval date 
on or after July 1, 2021, and creating a data field to collect the 
estimated date for Part B reimbursement thereafter for any new drugs 
that are approved by the FDA after January 1, 2023. The commenter 
stated that this would simplify CMS' burden for monitoring manufacturer 
compliance with the new drug exclusion and is consistent with 
congressional intent for the grace period for new drugs on the market. 
One commenter suggested CMS exclude new drugs for 24 months following 
the first sale reported in order to provide adequate time to 
operationalize, shift resources, and properly train personnel. The 
commenter stated that CMS' proposal to exclude new drugs for 6 calendar 
quarters following date of first reported sale does not take into 
consideration certain factors, such as the fact that a provider's first 
prescription of a new drug is entirely dictated by the needs of the 
patient population served. Also, with manufacturers' drug timelines 
starting at different points, the health information technology 
requirements needed to modify claims may also come at different times.
    Response: With regard to the exclusion of radiopharmaceuticals and 
imaging agents, we recognize contrast agents as a category of imaging 
agents as described in FDA's Guidance for Industry referenced in the 
proposed rule.\148\ Therefore, we clarify that contrast agents are 
excluded from the definition of refundable single-dose container or 
single-use package drug.
---------------------------------------------------------------------------

    \148\ https://www.fda.gov/media/72295/download.
---------------------------------------------------------------------------

    With regard to Susvimo and Onpattro and the commenters' assertion 
that these drugs are excluded from the definition of refundable single-
dose container or single-use package drug based on filtration steps 
described in each drug's FDA-approved labeling, upon review of the 
labeling, we agree that both drugs would fit exclusion criteria as 
described in section 1847A(h)(8)(B)(ii) of the Act. In both 
circumstances, the labeling requires filtration during the drug 
preparation process, prior to dilution and administration, and require 
that any unused portion of such drug after the filtration process be 
discarded after the completion of such filtration process.
    With regard to the exclusion for drugs approved by FDA on or after 
November 15, 2021, and for which payment has been made under Part B for 
fewer than 18 months, we disagree that a data field to collect the 
estimated date for Part B payment in the ASP online collection system 
is needed. The proposed approach to measure the 18-month period using 
the first day of the calendar quarter following the date of first sale 
as reported to CMS is adequate for the purposes of measuring when the 
18-month period should begin for this exclusion because of the 
limitations of identifying the first date for which payment is made 
under Part B (as discussed in the proposed rule) and because of the 
quarterly nature of the ASP Drug Pricing File publications.
    Comment: One commenter requested clarification on the impact to 
current billing policy for unused and discarded amounts of the excluded 
products specified in statute. The commenter interpreted the exclusion 
of certain products to mean that manufacturers are not required to 
refund Medicare for the discarded amount of product, though providers 
can still bill for the amount discarded using the JW modifier for these 
drugs.
    Response: We agree with the commenter and clarify that even if a 
drug is excluded from the definition of refundable single-dose 
container or single-use package drug (and not subject to refunds), for 
example, multiple source drugs, claims for such drugs furnished from a 
single-dose container are still required to use the JW and JZ modifiers 
in accordance with the policy we are finalizing in this final rule. In 
addition, as we describe below, although such drugs described in 
section 1847A(h)(8)(B)(iii) of the Act are excluded from the definition 
of refundable single-dose container or single-use package drugs for an 
18-month period of time, we agree with the comment below that providing 
information regarding discarded amounts from such drugs would be 
beneficial to the manufacturers during the exclusion period. Therefore, 
for drugs meeting this time-limited exclusion, we plan to provide 
information on the total number of units of the billing and payment 
code that were discarded for calendar quarters during the 18-month 
exclusion period. Requiring the JW and JZ modifier for all single-dose 
container drugs will allow us to provide such information during the 
exemption period.
    After consideration of the public comments, we are finalizing the 
definition of ``refundable single-dose container or single-use package 
drug'' as proposed, to be codified at Sec.  414.902.
4. Provision of Information to Manufacturers
    In the CY 2023 PFS proposed rule (87 FR 46059 through 46060), we 
stated that section 1847A(h)(1) of the Act requires the Secretary to 
provide each manufacturer of a refundable single-dose container or 
single-use package drug (as defined in section 1847A(h)(8) of the Act) 
with a report, for each calendar quarter beginning on or after January 
1, 2023, that includes the following information:
     The total number of units of the billing and payment code 
of such drug, if any, that were discarded during such quarter, as 
determined using a mechanism such as the JW modifier used as of the 
date of enactment of this subsection (or any such successor modifier 
that includes such data as determined appropriate by the Secretary).
     The refund amount that the manufacturer is liable for 
pursuant to section 1847A(h)(3) of the Act.
    We proposed to use the definition of manufacturer at section 
1847A(c)(6)(A) of the Act, which is codified at Sec.  414.802 and 
defines manufacturer as any entity that is engaged in the following 
(this term does not include a wholesale distributor of drugs or a 
retail pharmacy licensed under State law):
    (1) Production, preparation, propagation, compounding, conversion 
or processing of prescription drug products, either directly or 
indirectly by extraction from substances of natural origin, or 
independently by means of chemical synthesis, or by a combination of 
extraction and chemical synthesis.
    (2) The packaging, repackaging, labeling, relabeling, or 
distribution of prescription drug products.
    We proposed to identify the manufacturer responsible for the 
provision of refunds by the labeler code of the refundable single-dose 
container or single-use package drug. If such product does not have an 
NDC, we proposed to use manufacturer

[[Page 69725]]

information included on the ASP data submission for the product.
    We proposed that there be a lag between the date of service quarter 
and the date we send reports to manufacturers to allow for claims 
maturity from the date of service. To operationalize reports to 
manufacturers, we must consider the timing with regard to the 
availability of JW modifier data. Providers and suppliers have a 12-
month period to submit Medicare Part B claims, including claims for 
drugs payable under Part B, so a lag exists between the date of service 
when a drug is administered and when the claim is submitted and 
adjudicated. Because of this lag in finalized claims, there may also be 
a lag in available JW modifier data for any given date of service 
quarter. An evaluation of July 2010 Medicare Part B claims in the 
Physician/Supplier-Carrier setting showed that 91.68, 96.84, and 98.32, 
and 99.13 percent of claims were final at 3, 6, 9, and 12 months, 
respectively, following the date of service. At 24 and 48 months, 99.83 
and 100 percent of the claims, respectively, were considered to be 
final.
    We stated that section 1847A(h)(1) of the Act does not specify the 
interval by which reports for each calendar quarter must be sent to 
manufacturers. We proposed that CMS provide an annual report to 
manufacturers with information for each calendar quarter. Sending 
reports (with information for each calendar quarter) annually would 
reduce the operational resources needed to implement this provision and 
would streamline the dispute resolution process. We proposed to send 
reports to manufacturers no later than October 1 of each year. We 
proposed that the report reflect claims data that is finalized by the 
end of the second calendar quarter (that is, June 30) of the year in 
which the report is sent. We noted that this would allow time for CMS 
to analyze the data and calculate refund amounts to provide reports to 
manufacturers no later than October 1. In addition, we proposed that 
annual reports would include any additional lagged claims data not 
included for the quarters first reflected in the prior year's report.
    In an effort to implement this provision in a timely manner, we 
proposed to send the first report to manufacturers no later than 
October 1, 2023. Under our proposal, this first report would contain 
information only for the first calendar quarter of 2023, because that 
would be the only quarter for which we would have a substantial amount 
of claims data that is finalized by the end of the second calendar 
quarter of the year in which the report is sent. We proposed to send 
the second annual report no later than October 1, 2024, and this report 
would include information for the second, third, and fourth quarters of 
2023 and the first calendar quarter of 2024. It also would include any 
additional lagged claims for dates of service in the first calendar 
quarter of 2023 that were not included in the first report. Subsequent 
annual reports would be done in this manner, meaning that they would 
provide the information required under section 1847A(h)(1) of the Act 
for the last 3 quarters of the prior year, the first quarter of the 
current year, and lagged claims data not reflected for the last 3 
quarters of the year that is 2 years prior and the first quarter of the 
prior year (that is, the quarters first reflected in the previous 
year's report). This means that reports (except for those in 2023 and 
2024) would include information for 8 calendar quarters: 4 new calendar 
quarters and 4 quarters with additional information for claims that 
were not yet finalized for those dates of service in the previous 
year's report. As proposed, we explained that we would expect to 
capture JW modifier data and total allowed charges from over 99 percent 
of claims for dates of service in a given quarter. For example, the 
report sent to manufacturers in 2025 would include information for 
dates of service in the second, third, and fourth quarters of 2024 and 
the first quarter of 2025 plus additional lagged claims that were not 
included in the report sent in 2024 (that is, information for dates of 
service in the second, third, and fourth quarters of 2023 and the first 
quarter of 2024).
    We noted that when lagged claims data is evaluated, any changes in 
the refund amount owed for those quarters and not already accounted for 
in the previous year's report would be calculated as described in 
section III.A.6. of the proposed rule.
    The following is a summary of the public comments received on the 
provision of information to manufacturers and our responses:
    Comment: One commenter expressed support for the transmittal of 
annual reports containing information on discards and refund amounts 
for each calendar quarter.
    Response: We thank the commenter for their support.
    Comment: One commenter requested that we clearly distinguish the 
calendar quarter associated with all discard amount claims data.
    Response: We thank the commenter for their feedback. The 
organization of discarded amount claims data by the date of service 
calendar quarter was part of our proposal for the provision of 
information to manufacturers. We are finalizing our proposal to send 
annual reports to manufacturers containing information described in 
section 1847A(h)(1)(A) of the Act, broken down by calendar quarter.
    Comment: One commenter requested that we provide quarterly 
estimates of projected payment obligations rather than reporting 
manufacturer obligations on an annual basis. The commenter expressed 
that more frequent notices would help manufacturers better budget their 
outlays. Another commenter stated that we should issue preliminary 
calculations of refund amounts to manufacturers in order to permit 
engagement between CMS and the manufacturer prior to the issuance of 
the report.
    Response: We appreciate the interest of manufacturers in having 
additional advance notice of their refund obligations, and agree with 
the commenter that CMS and manufacturers should have time to engage and 
address potential disagreements related to discard amounts and refund 
calculations before obligations are due. As we discuss below, we are 
not finalizing the date we will send the first report to manufacturers 
in this final rule and will revisit the timing of the first report to 
manufacturers in future rulemaking. However, we believe that it will be 
beneficial to provide manufacturers an opportunity to engage with us on 
discard amount data in the first year of this provision's 
implementation, and therefore, we plan to issue a preliminary report on 
estimated discarded amounts based on available claims data from the 
first 2 quarters of CY 2023 no later than December 31, 2023. This 
preliminary report will not reflect any final determinations of the 
number of discarded units, percentage of discarded units, or 
calculations of the refund amount obligations. That information will be 
sent in the initial report at a date that will be determined through 
future rulemaking.
    Comment: Several commenters stated that we should provide 
manufacturers all information we use to calculate refund amounts to 
allow them to validate the accuracy of our calculations, including 
claims for all drug units billed to Medicare, along with associated 
modifier data. One commenter requested claims-level information be 
provided to manufacturers in the annual report, or at the very least, 
following the initiation of the dispute process. One commenter 
suggested that manufacturers would not be able to engage meaningfully 
in the dispute process without seeing claims-

[[Page 69726]]

level data. The commenter cited reasoning related to sharing claims 
level data used in 2015 and 2020 Medicaid guidance CMS issued regarding 
measures to reduce discount disputes in the 340B program, as well as a 
2014 OIG report with the same emphasis.
    Response: We agree with commenters that they should have access to 
claims information to verify our refund calculations, including number 
of allowed claims, allowed charges, amounts administered, and reported 
discard amounts, to the extent that they do not violate the privacy of 
any beneficiary. Aggregate HCPCS code claims data are available at 
https://www.cms.gov/Research-Statistics-Data-and-Systems/Downloadable-Public-Use-Files/Part-B-National-Summary-Data-File/Overview. In 
addition, aggregate discarded drug data for all separately payable Part 
B drugs from single use vials or other single use packages is available 
at https://data.cms.gov/summary-statistics-on-use-and-payments/medicare-medicaid-spending-by-drug/medicare-part-b-discarded-drug-units. Though our proposal only considered including some version of 
the aggregated data sets available on those websites in the 
manufacturer reports, our aforementioned decision to not finalize the 
date we will issue the first reports allows us time to take the request 
for claims-level data under advisement. We will consider the inclusion 
of claims-level data in manufacturer reports in future rulemaking.
    Comment: One commenter requested that the CMS include information 
on the use of the JW modifier for drugs approved by FDA on or after the 
date of enactment of section 90004 of the Infrastructure Act, and with 
respect to which payment has been made under this part for fewer than 
18 months drugs in its annual reports to manufacturers while exempting 
them from the refund requirement.
    Response: Although such drugs described in section 
1847A(h)(8)(B)(iii) of the Act are excluded from the definition of 
refundable single-dose container or single-use package drugs, we agree 
that providing information regarding discarded amounts from such drugs 
would be beneficial to the manufacturers during the 18-month exclusion 
period. Therefore, we plan to provide information on the total number 
of units of the billing and payment code of drugs meeting this 
exclusion (and not meeting any other exclusion in section 
1847A(h)(8)(B) of the Act) that were discarded during the 18-month 
exclusion period.
    Comment: One commenter requested that we develop and specify a 
mechanism for manufacturers to validate the provider billing practices 
underlying reported discarded drug amounts.
    Response: The JW modifier FAQ defines discarded amounts as the 
amount of a single use vial or other single use package that remains 
after administering a dose/quantity of the drug to a Medicare 
beneficiary. We clarified this definition above as amounts that remain 
after administering a dose/quantity of the drug to a Medicare 
beneficiary. We will update our guidance documents to reflect this 
definition and we will work with provider groups to guide them to 
correctly report discarded amounts.
    Comment: One commenter requested CMS review sample data sets, 
propose validation mechanisms, and build the infrastructure needed to 
implement the provision with minimal risk of error in calculation of 
refund amounts.
    Response: We thank the commenter for their feedback. We will review 
these aspects of implementation and consider these ideas for future 
rulemaking.
    Comment: Several commenters requested we place a limit on how far 
back lagged discarded drug data may be included in the annual report to 
manufacturers.
    Response: Due to the enactment of the Inflation Reduction Act on 
August 16, 2022, and our efforts to efficiently implement two statutory 
provisions that require reporting and deposit mechanisms, we are not 
finalizing our proposal on the timing of the refund reports, which was 
to send the first report to manufacturers no later than October 1, 
2023, and subsequent reports no later than October 1 of each year 
following. As previously mentioned, the discarded drug refunds are to 
be deposited into the Federal SMI Trust Fund. Similarly, the Part B and 
Part D rebates described in the Inflation Reduction Act also are to be 
deposited into the Federal SMI Trust Fund. We aim to coordinate the 
collection of these funds in order to minimize the administrative 
burden on both manufacturers and CMS. This requires an alternative 
timeline for sending reports to manufacturers and different dates on 
which funds would be due and, therefore, we decline to finalize our 
proposal that the initial reports under the discarded drug refund 
provision to be sent no later than October 1, 2023. In addition, since 
the date that the initial report is sent will impact the number of 
quarters with mature claims data available, we also decline to finalize 
the policy regarding the inclusion of additional lagged data in reports 
in this final rule. We will revisit the date of the initial report and 
the inclusion of lagged discarded drug data in future rulemaking.
    Although we are not finalizing a date for the transmittal of 
reports in this final rule, we are finalizing our proposal to send 
reports to manufacturers containing discard information for each 
calendar quarter on an annual basis. We are also finalizing that we 
will send reports to all manufacturers of refundable single-dose 
container or single-use package drugs. We intend to address the timing 
of these reports in future rulemaking. We also note that we will issue 
a preliminary report on estimated discarded amounts based on available 
claims data from the first 2 quarters of CY 2023 no later than December 
31, 2023.
5. Manufacturer Provision of Refund
    As discussed in the CY 2023 PFS proposed rule (87 FR 46060), 
section 1847A(h)(2) of the Act states that, for each calendar quarter 
beginning on or after January 1, 2023, the manufacturer of a refundable 
single-dose container or single-use package drug shall, for such drug, 
provide to the Secretary a refund for such quarter. As described in the 
previous section, we proposed to issue reports for each calendar 
quarter on an annual basis. Section 1847A(h)(4) of the Act states that 
refunds under section 1847A(h)(2) of the Act must be paid in regular 
intervals as determined appropriate by the Secretary. We proposed that 
refunds be paid in 12-month intervals (that is, annually) to align with 
the proposal to issue reports for each calendar quarter on an annual 
basis. Additionally, we noted that we believe requiring refunds to be 
paid on an annual basis is operationally optimal because it allows for 
some claims runout while administering reports in a timely manner 
following the date of service and leaves more time for dispute 
resolution, which we believed would be important for refund calculation 
accuracy. Including lagged claims data from the previous year's report 
allows more time for claims to be finalized for a given calendar 
quarter, consequently represent a more accurate estimate of discarded 
units, and result in a more accurate refund calculation. Therefore, we 
proposed to specify that the regular interval for the payment of 
refunds is annual and that refund amounts for the quarters reported in 
an annual report must be paid no later than December 31 of the year in 
which the report was sent to the manufacturer except in circumstances 
where a dispute is pending. In the case of a dispute,

[[Page 69727]]

payment of the refund is due no later than 30 days after the resolution 
of the dispute. As discussed in more detail in the next section, we 
noted that we believe December 31 is an appropriate deadline because it 
would allow manufacturers to review their annual reports and initiate 
dispute resolution if needed. We proposed to require manufacturers 
owing refunds to transmit payment in a form and manner specified by 
CMS.
    We proposed to codify these provisions at Sec.  414.940.
    The following is a summary of the public comments received on the 
manufacturer provision of refund provisions and our responses:
    Comment: One commenter stated manufacturers should have 3 months 
after the receipt of the report to remit refund obligations.
    Response: We appreciate the commenter's feedback. Our proposal to 
issue reports to manufacturers by October 1 and require refund 
obligations to be paid by December 31 of the year in which reports are 
issued reflects the commenter's preference. However, as stated in the 
previous section, we are not finalizing the timing for reports to be 
sent or for refund obligations to be paid in this final rule. We will 
revisit the process and timeline for manufacturers' provisions of 
refunds in future rulemaking. Although we are not finalizing the 
proposed timing for reports sent to manufacturers, the effective date 
of the provision remains January 1, 2023, as required by statute, and 
reports will be sent for calendar quarters beginning on or after this 
date.
6. Refund Amount
    As discussed in the CY 2023 PFS proposed rule (87 FR 46060 through 
46062), section 1847A(h)(3) of the Act provides, with respect to a 
refundable single-dose container or single-use package drug of a 
manufacturer assigned to a billing and payment code for a calendar 
quarter beginning on or after January 1, 2023, that the refund for 
which the manufacturer is liable is the amount equal to the estimated 
amount (if any) by which:
     The product of:
    ++ The total number of units of the billing and payment code for 
such drug that were discarded during such quarter; and
    ++ The payment limit amount for the refundable single-dose 
container or single-use package drug;
     Exceeds an amount equal to the applicable percentage of 
the estimated total allowed charges for such a drug (less the amount 
paid for packaged drugs) during the quarter.
    We stated that section 1847A(h)(3) of the Act specifies that the 
applicable percentage is 10 percent, but authorizes us to increase this 
percentage as appropriate, through notice and comment rulemaking, in 
the case of a refundable single-dose container or single-use package 
drug that has unique circumstances involving similar loss of product as 
that described in section 1847A(h)(8)(B)(ii) of the Act.
    We proposed to calculate the refund required under section 
1847A(h)(1) of the Act using the number of discarded units for dates of 
services in the same calendar quarter to which the payment limit amount 
applies. We proposed to estimate the total allowed charges during the 
quarter by multiplying the drug's payment limit amount for the quarter 
by the total number of units of the billing and payment code of such 
drug that were subject to JW modifier reporting including those for 
which the JZ modifier would be required if no units were discarded. As 
specified in section 1847A(h)(1)(C) of the Act, the total number of 
units of the billing and payment code of a refundable single-dose 
container paid during a calendar quarter for purposes of subparagraph 
(A)(i), and the determination of the estimated total allowed charges 
for the drug in the quarter for purposes of paragraph (3)(A)(ii), 
exclude such units that are packaged into the payment amount for an 
item or service and are not separately payable.
    We illustrated how the refund would be calculated, if 2,000 units 
of a billing and payment code for a given drug were unused and 
discarded during dates of service in the first calendar quarter of 
2023, that number would be multiplied by the drug's payment limit 
amount for the first calendar quarter of 2023. If the payment limit 
amount was $100, that would be multiplied by 2,000 (the number of 
discarded units) to equal $200,000. If Medicare paid for 15,000 units 
of the billing and payment code subject to the JW modifier with dates 
of service in the first quarter of 2023, that would be multiplied by 
the same payment limit amount ($100) to determine the total allowed 
charges during the quarter ($1,500,000). Then, the applicable 
percentage (in this example, 10 percent) of those total allowed charges 
($150,000) would be subtracted out to determine the refund amount. For 
the sake of this example, that would be $200,000 (the amount described 
in section 1847A(h)(3)(A)(i) of the Act) minus $150,000 (the amount 
described in section 1847A(h)(3)(A)(ii) of the Act) to equal a refund 
amount of $50,000 for the first calendar quarter of 2023.
    We noted that section 1847A(h)(3)(A) of the Act states that the 
refund amount is equal to an estimated amount, and that the refund 
amount is the difference between: (1) the product of the estimated 
allowed charges and applicable percentage; and (2) the product of the 
total number of discarded units of a drug form a single-dose container 
during a given quarter and the payment limit for that drug during that 
quarter. Exact amounts are likely not attainable for these numbers 
because of, for example, lagged claims data, appeals, or reversals in 
the case of an audit. To obtain the most accurate estimates possible, 
we proposed to provide information and determine any refund amount for 
discarded refundable single-dose container or single-use package drugs 
annually, and to include additional lagged claims data not included in 
the previous year's report. Based on claims maturity data, we expect 
this approach would capture over 99 percent of claims for a given date 
of service quarter in an effort to make the most accurate estimates 
possible for the purposes of calculating refund amounts. We explained 
that if the assessment of lagged claims data increases the refund 
amount for a quarter, the manufacturer would be liable for that 
additional refund amount, which would be reflected in the report. If 
the assessment of lagged claims data decreases the refund amount for a 
quarter, we proposed that any overpayment be corrected. In the event 
that an assessment of lagged claims data for a calendar quarter causes 
the product of total discarded units and the payment limit amount to 
fall below the applicable percentage, which would result in no refund 
due from that manufacturer for the given quarter, we proposed that any 
overpayment be corrected. We solicited comments on the operational 
process of overpayment correction.
    We proposed to codify these provisions at Sec.  414.940.
a. Increased Applicable Percentage for Drugs With Unique Circumstances
    In the CY 2023 PFS proposed rule (87 FR 46061), we stated that 
section 1847A(h)(3)(B)(ii) of the Act provides that, in the case of a 
refundable single-dose container or single-use package drug that has 
unique circumstances involving similar loss of product as that 
described in section 1847A(h)(8)(B)(ii) of the Act, the Secretary may 
increase the applicable percentage otherwise applicable as determined 
appropriate by the Secretary.
    We did not propose an increase of the applicable percentage for any 
drugs

[[Page 69728]]

with unique circumstances. We noted that we expected that for most 
drugs supplied in single-dose containers, the amount of drug indicated 
on the vial or container reflects the amount of drug that could 
potentially be administered to a patient. This is consistent with FDA 
regulations at 21 CFR 201.51(g), which provide that for drugs in 
ampules or vials intended for injection, the declaration of net 
quantity of contents on the label is considered to express the minimum 
quantity of contents and that variation above the stated measure must 
comply with the excess volumes set forth in the United States 
Pharmacopeia (USP). FDA guidance for industry \149\ explains that USP 
General Chapter 1151 Pharmaceutical Dosage Forms provides excess volume 
recommendations for mobile and viscous liquids in a range of fill 
volumes, noting that the excess volumes recommended are usually 
sufficient to permit withdrawal and administration of the labeled 
volumes. In this guidance, FDA recommends that single-dose vials should 
not contain a significant volume beyond what would be considered a 
usual or maximum dose for the expected use of the drug product.
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    \149\ https://www.fda.gov/media/88138/download.
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    We noted that we recognized there may be very rare cases in which, 
as part of a drug's FDA-approved preparation and administration in 
labeling, the amount of drug identified on the package or labeling far 
exceeds the amount administered to a patient, thus leading to a 
substantial percentage of drug that is discarded. For example, in the 
case of a drug that is reconstituted with a hydrogel and administered 
via ureteral catheter or nephrostomy tube into the kidneys, there is 
substantial amount of reconstituted hydrogel that adheres to the vial 
wall during preparation.\150\ In this instance, the drug adhering to 
the vial wall (and not able to be extracted from the vial) must be 
discarded, which leads to a higher percentage of discarded units billed 
with the JW modifier. If the labeled amount of the package is 80 mg and 
the maximum extracted amount from the vial guarantees delivery of the 
maximum dose of 60 mg, then there would be at least 25 percent 
discarded units. We noted that in the case that a patient does not 
require the maximum dose, the percent of discarded units would be even 
higher. In this circumstance, an applicable percentage of 35 percent 
may be appropriate because it would allow for the amount drug diluted 
in hydrogel that adheres to the vial wall (25 percent) plus an 
additional 10 percent to align with the applicable percentage for drugs 
without a unique circumstance.
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    \150\ https://dailymed.nlm.nih.gov/dailymed/drugInfo.cfm?setid=3d3d5053-5427-4a68-a40b-edb60699521e.
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    We also noted that we considered whether we should adopt a higher 
applicable percentage for a drug in this circumstance. We welcomed 
comments on specifying a higher applicable percentage for drugs that 
are diluted in hydrogel and administered via the pyelocaliceal route, 
and we welcome comments on whether an applicable percentage of 35 
percent would be appropriate in this circumstance. We welcomed comments 
on whether there are other drugs with unique circumstances as described 
under section 1847A(h)(3)(B)(ii) of the Act that may warrant an 
increase in the applicable percentage.
    The following is a summary of the public comments received on the 
refund amount provisions and our responses:
    Comment: Several commenters supported our proposal to calculate the 
refund amount based on claims for each calendar quarter, as well as our 
proposal to present aggregate discard information for each quarter. 
Commenters stated that using actual claims would capture reductions in 
discarded drug amounts due to changes in manufacturers' container or 
package configuration.
    Response: We thank the commenters for their support.
    Comment: Several commenters expressed concern about cases in which 
a refund amount would be based on a higher amount than the provider or 
supplier was actually paid for the drug or biological. Commenters 
requested that we use the actual payment limit used to reimburse 
providers and suppliers for each claim to calculate refund amounts, 
particularly the 340B ceiling price or the rate drugs are reimbursed in 
the event of sequestration.
    Response: Section 1847A(h)(3)(A)(i) of the Act states that the 
refund amount must be the product of the number of discarded units and 
the amount of payment determined under either section 1847A(b)(1)(B) of 
the Act in the case of a single source drug or biological product, or 
section 1847A(b)(1)(C) of the Act in the case of a biosimilar 
biological product. In most cases, the former provides for a payment 
limit of 106 percent of the average sales price and the latter provides 
for a payment limit of the sum of the average sales price and 6 percent 
of the average sales prices of the reference biological product, or 8 
percent for qualifying biosimilars during an applicable 5-year period. 
These statutory provisions do not account for other payment amounts not 
specified in section 1847A(b)(1)(B) or (C) of the Act. We identified an 
error in our proposed regulation text, and we are making changes in 
this final rule to correct the language in regulation at Sec.  414.940 
to reflect payment amounts specified in section 1847A(b)(1)(B) or (C) 
of the Act.
    Comment: One commenter stated that manufacturers should have the 
option of excluding refund claims that are missing data elements such 
as provider ID, prescription number, total units billed, or the amount 
paid in order to ensure that CMS has verifiable information for the 
calculation of refund payments.
    Response: We appreciate the commenter's concern about the data 
quality used in discard amount and refund calculations. We agree that 
claims lacking certain information are unusable for the purposes of 
calculating discard and refund amounts and it is important the MACs do 
not adjudicate claims that omit those key data elements. Several of the 
data elements cited by the commenter, such as the billing provider's 
name and National Provider Identifier, the claims service date, HCPCS 
code and applicable modifier, and units of service are required and 
without which a claim would be returned to the provider. A full list of 
data elements institutional providers, physicians, and suppliers must 
include on claims submissions can be found in Claims Processing Manual 
100-04, Chapters 25 and 26, respectively. Those chapters are available 
here at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c25.pdf and https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c26pdf.pdf. In this final 
rule we are codifying the requirement to use the JW modifier, which has 
been required since 2017, and we are adopting a requirement to use JZ 
modifier beginning no later than July 1, 2023. However, several of the 
data elements cited by the commenter, such as the amount paid for the 
drug in question and the paid date, are populated by a MAC's claims 
processing system when a claim is finalized. Other elements cited by 
the commenter, such as the prescription number or NDC, are not 
necessary for accurate claims processing or the calculation of refund 
amounts and are generally not required on a Medicare Part B claim for 
payment.
    Comment: One commenter requested that we clarify our process for 
adjustments to discarded amount and refund calculations after audits 
find errors in underlying claims. Another commenter requested that we 
clarify our process for reconciling refund

[[Page 69729]]

obligations in subsequent reports to manufacturers after claims from 
calendar quarters contained in the previous report have matured.
    Response: We recognize that Medicare, through claims audits, may 
adjust claims based on audit findings, and this could occur after the 
payment of the discarded drug refund. However, since we are not 
finalizing the timing for reports to be sent or for refund obligations 
to be paid in this final rule, we will revisit the interaction of 
claims audits and lagged claims data in future rulemaking.
    Comment: One commenter requested that we exclude from the refund 
calculation any amounts billed for dually eligible beneficiaries, so 
that manufacturers are not required to pay both the discarded drug 
refund and rebates under the Medicaid Drug Rebate Program.
    Response: Section 1847A(h)(1) of the Act does not exclude units 
that are paid for dually eligible beneficiaries that would be subject 
to the rebates under the Medicaid Drug Rebate Program.
    Comment: With regard to consideration of a unique circumstance in 
the case of a drug that is reconstituted with a hydrogel and 
administered via ureteral catheter or nephrostomy tube into the 
kidneys, several commenters supported increasing the applicable 
percentage to 35 percent, because a substantial amount of product 
adheres to the vial wall and cannot be extracted from the vial. Many 
commenters specifically expressed support for the adoption of an 
increased applicable percentage for drugs diluted in hydrogel and 
administered via ureteral catheter or nephrostomy tube, specifically 
Jelmyto[supreg] (mitomycin for pyelocaliceal solution). Many commenters 
requested that CMS finalize a 35 percent applicable percentage 
described in the proposed rule's example for Jelmyto[supreg], because 
its viscosity makes a portion of the drug stick to the vial wall. One 
commenter requested that we consider whether an applicable percentage 
greater than 35 percent be applied to such hydrogel products because 
providers do not know until drug administration (after the hydrogel has 
been prepared by the pharmacy) the value of the patient's kidney 
volume, which determines what amount of drug administered.
    Response: We thank commenters for their input on the discussion in 
the proposed rule about the case discussed in the regarding a drug 
reconstituted with a hydrogel and administered via ureteral catheter or 
nephrostomy tube into the kidneys, in which there is a substantial 
amount of reconstituted hydrogel that adheres to the vial wall during 
preparation. We agree with the commenters that such a drug that is 
reconstituted with a hydrogel and has variable dosing based on patient-
specific characteristics (for example Jelmyto[supreg] (mitomycin for 
pyelocalyceal solution)), should be considered to have a unique 
circumstance as described in section 1847A(h)(3)(B)(ii) of the Act that 
would warrant an increased applicable percentage. We also thank 
commenters for input on whether an applicable percentage of 35 percent 
(10 percent applicable percentage plus 25 percent to account for drug 
that cannot be extracted from the vial) may be appropriate for such a 
drug. We agree with the vast majority of commenters that 35 percent is 
a reasonable applicable percentage that would be appropriate in this 
case. We disagree that an applicable percentage greater than 35 percent 
should be applied to such hydrogel products, because we believe that 35 
percent accounts for the hydrogel that adheres to the vial, and because 
we have allowed for an additional 10 percent of drug to be discarded 
before any refund would be owed.
    After consideration of public comments, we are adopting an 
increased applicable percentage of 35 percent for drugs reconstituted 
with a hydrogel and with variable dosing based on patient-specific 
characteristics. At this time, we have only identified one product, 
Jelmyto[supreg] (mitomycin for pyelocalyceal solution), that would fit 
this unique circumstance.
    Comment: Many commenters requested an increased applicable 
percentage for certain drugs or certain drug categories that may have 
unique circumstances other than the circumstance pertaining to the drug 
reconstituted in hydrogel. Several commenters requested that CMS 
specify increased applicable percentages for drugs that have highly 
variable dosing, such as drugs dosed by patient weight, or skin surface 
area, or wound size. One commenter specifically requested an increased 
applicable percentage for weight-based drugs, because it is impractical 
to manufacture many different vial sizes for such drugs, and even if 
mutable vial sizes were available, it would be unreasonable to expect 
facilities and pharmacies to keep a broad variety of vial sizes in 
stock. One commenter requested that CMS develop a process for examining 
each weight-based drug individually in order to determine the 
appropriateness of an applicable percentage, and to only include 
outlier cases under the discard refund policy.
    Another commenter suggested that CMS consider delaying 
implementation of a final rule or delay implementation for 
reconstituted products in order to evaluate why the provision 
disproportionally impacts reconstituted products. The commenter 
observed that 9 out of the 10 highest refund examples that CMS 
calculated from the 2020 claims data in the proposed rule were 
reconstituted products.
    Several commenters requested CMS use higher applicable percentages 
for drugs packaged with small vial fill amounts or low-volume products 
(those less than 1 mL). These commenters noted that, in some cases, the 
small volume of drug contained in the vial often represents the minimum 
necessary to safely and effectively prepare and administer the target 
dose volume. One commenter added that there are practical limits on 
providers' ability to measure such small amounts as the basis for 
refunds, as well as manufacturers' ability to produce smaller vials to 
prevent discarded amounts. One commenter suggested the applicable 
percentage of products with small vial fill amounts be product-specific 
and calculated using the difference between the labeled amount of 
product and the appropriate labeled therapeutic dose for those products 
that contain the minimum necessary fill required to draw up the labeled 
therapeutic dose. Alternatively, the commenter suggested such products 
have an increased applicable percentage, on a sliding scale based on 
volume, to account for the increased relative percentage lost in the 
vial and syringe with low-volume products. Three commenters requested 
100 percent applicable percentage for all products with vial fill 
volumes smaller than 1 mL
    One commenter stated that although the product, 
SusvimoTM (ranibizumab injection), qualifies for the 
filtration exclusion, the drug also has a unique circumstance because 
of the preparation process, which would justify an applicable 
percentage of 80 percent. The commenter explained that, though this 
percentage is appropriate because the label instructs that the entire 
contents of the vial must be removed to ensure the proper dose is 
administered, up to 80 percent of the vial contents are lost in the 
process of filtration, removing air bubbles from administration device, 
and removing bubbles from the implant. This loss in the preparation and 
administration procedure occurs in both the initial fill of the ocular 
implant and the refill-exchange procedures. The commenter added that, 
because the volume of drug provided in the

[[Page 69730]]

SusvimoTM vial is significantly less than the smallest 
packaging recommendations provided in USP General Chapter 1151 
Pharmaceutical Dosage Forms, it is not feasible to determine in an 
individual case how much volume is discarded after administration other 
than by deduction from the labeled instructions and amounts.
    One commenter requested an increase applicable percentage for 
Dexycu[supreg] (dexamethasone intraocular suspension), because the 
entire contents of the vial are mixed with a drug delivery vehicle, 
Verisome[supreg], to create a suspended product. The commenter stated 
that, because of this process, there is no unused product. In addition, 
the commenter stated that this drug has unique circumstances that could 
warrant an increased applicable percentage because of the small vial 
size with less than 1 mL fill; the viscosity of the suspension created 
in the vial resulting in some product adhering to the vial walls; the 
minimum depth of material in the vial is needed in order for providers 
to be able to pull the product into the 18-gauge needle and the vial; 
and that providers' withdrawal 0.2 mL leaves 0.3 mL of contents in the 
vial.
    One commenter requested an applicable percentage of at least 30 
percent for Visudyne[supreg] (verteporfin for injection) on the grounds 
that all of the active ingredient is reconstituted and, therefore 
``there is no unused product.'' In addition, the commenter stated that 
the drug is dosed based on BSA and the package amount is designed to 
account for varying body sizes. A 30 percent applicable percentage 
would account for the difference between doses for average-sized and 
larger individuals. The commenter stated that it is not practical to 
create multiple vial sizes.
    One commenter requested an applicable percentage of 20 percent for 
ElzonrisTM (tagraxofusp-erzs) due to the weight-based nature 
of its dosing, the small patient population its treatment is used for 
(300 people annually), and because of the leakage inherent in its 
storage, distribution, and administration beyond overfill that should 
not be considered discarded drug amounts. Another commenter suggested 
an increased applicable percentage for Vyvgart[supreg] (efgartigimod 
alfa injection) due to its weight-based dosing and required dilution 
prior to administration.
    One commenter requested an applicable percentage of 70 percent for 
Zynrelef[supreg] (bupivacaine and meloxicam solution), a local 
anesthetic used in surgical procedures, on the basis of highly variable 
dosing based on wound size. The commenter stated that although it 
produces multiple vial sizes, providers only stock two vial sizes due 
to storage limitations. In addition, providers have difficulty 
estimating how much of the product will be needed to cover the area 
inside the wound site. The commenter also stated Zynrelef should be 
considered to have a unique circumstance because it is a non-opioid 
pain management treatment.
    Another commenter requested an increased applicable percentage for 
eight of its products used for the treatment or care of wounds (ranging 
from 23 to 70 percent). The commenter stated that, because wounds come 
in an infinite number of sizes, shapes, and depths, it is not possible 
to manufacture an individual product sized for each potential wound. 
Such products must be tailored to fit the specific wound, and 
therefore, there will be discarded amounts every time the product is 
used.
    One commenter stated that the drug pegcetacoplan, an intravitreal 
injection that is under FDA Priority Review, has a 75 percent overfill 
amount in the vial due to the high viscosity of the product. They 
stated that their scientists determined that this was the appropriate 
amount to safely administer the dose amount without air bubbles.
    Four commenters requested that CMS utilize its discretion to 
increase the threshold for discarded unit refund requirements for cell, 
gene, and immunotherapies. Commenters explained that, because these 
therapies are unique and need to be given to a patient all at once, the 
maximum potentially needed amount of product must be available for each 
administration. Therefore, cell and gene therapies should have a 100 
percent applicable percentage. Two commenters suggested instructing 
providers to use the JZ modifier for all claims for cell and gene 
therapy.
    Two commenters requested that the applicable percentage for small 
biotech companies that received Breakthrough Therapy Designation (BTD) 
and FDA Priority Review during the NDA approval process be increased to 
30 percent. One commenter requested that CMS establish a review policy 
to adjust the applicable percentage for orphan drugs associated with 
large discarded amounts.
    Two commenters requested that CMS use increased applicable 
percentages for products that require complex delivery methods and 
necessarily use variable product volume, including those based on the 
following factors: mechanisms that deliver drugs to tiny anatomical 
spaces of the body, multiple procedures or steps for administration, 
variable and unpredictable patient characteristics, specialized 
equipment or equipment variability due to physician or facility 
preference, and immunogenicity concerns. The commenters requested CMS 
base the applicable percentage off of the maximum amount of drug 
utilized for successful administration. One commenter added these 
techniques often utilize extra product to ensure proper dosage. One 
commenter stated products used during complex administration procedures 
should be given a 100 percent applicable threshold or be given guidance 
to use the JZ modifier.
    Several commenters requested that CMS provide a list of criteria 
defining unique circumstances that justify an increased applicable 
percentage (for example, classes of products, modes of administration, 
or disease states) to guide manufacturers. Several commenters requested 
that CMS establish a formal process for requesting an increased 
applicable percentage based on particular circumstances and 
characteristics of their drugs. One commenter stated that such a 
process should, at minimum, include subregulatory guidance and 
standardized forms that outline the information that CMS deems 
necessary in order to assess whether an increased applicable percentage 
should be applied. The commenter stated the process should have an 
established timeline with deadlines for requests to be included in 
proposed rules, consideration of comments on the proposed rule, and the 
opportunity to appeal decisions. One commenter stated such a process 
would increase transparency and facilitate discussions more effectively 
between manufacturers and CMS to assess drugs and their discarded 
amounts. Another commenter suggested that, if an administrative process 
is developed, CMS do outreach to ensure that manufacturers are aware of 
the process and publish guidance on any applicable requirements or 
deadlines for submitting a request for an increased applicable 
percentage. In addition, one commenter recommended that such a process 
should include methods for CMS and manufacturers to consult with 
relevant expert agencies and other organizations, including FDA and the 
United States Pharmacopeia. One commenter requested CMS take patient 
safety into account when considering increased applicable percentages 
for variable-dose drugs (for example, regulatory review of new vial 
sizes, distribution and inventory constraints for multiple vial sizes).

[[Page 69731]]

    Response: We value the input commenters provided and the scope of 
drugs that may have unique circumstances. We recognize that there are 
products that may indeed have a unique circumstance, and an increased 
applicable percentage for these products would have to be determined 
through future notice and comment rulemaking as required by the 
statutory provision. Therefore, we are not adopting increased 
applicable percentage for any additional products in this final rule. 
After considering the public comments, we plan to collect additional 
information about drugs that may have unique circumstances along with 
potential increased applicable percentages that might be appropriate 
for each circumstance. We also plan to collect additional information 
about a process to identify unique circumstances based on manufacturer 
input. We will revisit additional increased applicable percentages for 
drugs that have unique circumstances, and a process to identify such 
circumstances, through future notice and comment rulemaking.
    Comment: One commenter expressed concern that, because they are a 
small biotech company, their refund obligation under the proposed rule 
would amount to about 10 percent of their net revenue, and that the 
refund would have a substantial impact on their capacity for research.
    Response: We understand the commenter's concern; however, section 
1847A(h) of the Act does not exempt drugs produced by small biotech 
companies from the refund requirement. We have discretion in section 
1847A(h)(3)(B)(II) of the Act to determine increased applicable 
percentages for drugs with unique circumstances involving loss of 
product similar to ones that require a filtration process through 
notice and comment rulemaking. While we only discussed an increased 
applicable percentage for one unique circumstance in the proposed rule 
and are finalizing an increased applicable percentage for it in this 
final rule, we plan to consider additional unique circumstances in 
future rulemaking.
    Comment: One commenter requested clarification on the process for 
manufacturers of new drugs with unique circumstances to request higher 
applicable percentages.
    Response: A drug that is exempt from the definition of ``refundable 
single-dose container or single-use package drug'' because it was 
approved by FDA on or after the date of enactment of the Infrastructure 
Act (that is, November 15, 2021), for which payment under Part B has 
been made for fewer than 18 months, may still be considered for an 
increased applicable percentage for unique circumstances during the 18-
month time period in which the drug is are exempt. We believe that this 
would actually be an efficient approach because, when the 18-month time 
period has ended (and if the drug otherwise meets the definition of 
refundable single-dose container or single-use package drug), 
consideration will have already been given to any potential unique 
circumstances and any appropriate increases in the applicable 
percentage in advance of the refund requirement.
    After consideration of the public comments, we are finalizing the 
manner in which the refund amount will be calculated as proposed at 
Sec.  414.940, with the addition of an increased applicable percentage 
of 35 percent for a drug that is reconstituted with a hydrogel and has 
variable dosing based on patient-specific characteristics.
7. Dispute Resolution
    In the CY 2023 PFS proposed rule (87 FR 46062), we explained that, 
as a part of implementing this section 90004 of the Infrastructure Act, 
we recognized the need to establish a dispute resolution process 
because of the nature of determining the estimated total allowed 
charges for a given calendar quarter and the methods by which the 
estimated refund amount is determined. Although a dispute resolution 
process is not expressly required by section 1847A(h) of the Act, we 
noted that we believed proactively establishing such a process will aid 
in the successful implementation of this provision. We proposed that 
each manufacturer have an opportunity to dispute the report by 
submitting an error report as described in this section.
    We proposed that to assert that there have been one or more errors 
in a report, a manufacturer must submit a dispute with each asserted 
error. We proposed that the dispute must include the following 
information: (1) Manufacturer name and address; (2) The name, telephone 
number, and email address of one or more employees or representatives 
of the manufacturer with whom the Secretary may discuss the claimed 
errors; (3) For a mathematical calculation error, the specific 
calculation element(s) that the manufacturer disputes and its proposed 
corrected calculation; and (4) For any other asserted error, an 
explanation of the nature of the error, how the error affects the 
refund calculation, an explanation of how the manufacturer established 
that an error occurred, the proposed correction to the error, and an 
explanation of why CMS should use the proposed corrected data.
    We proposed that in order to dispute a report, manufacturers must 
assert any basis for contesting its refund calculation during the 30-
day period following the issuance of the report. We noted that we would 
evaluate error reports and would decide whether the information (such 
as number of discarded billing units or refund amount calculation) 
requires correction based on the information provided. We proposed that 
we would provide manufacturers who have submitted a dispute a response 
to each dispute and inform manufacturers of the final refund amount no 
later than 30 days after receipt of the dispute. We proposed that if we 
find that a different refund amount is owed than what was stated on the 
report, we would issue a new report with updated discarded amounts and/
or refund. We proposed that if we disagree with the dispute, we would 
notify the manufacturer that refund amount on the report is still owed 
and should be paid as described above in section 5 (no later than 
December 31 of the year in which the report was sent). We welcomed 
comment on whether CMS should develop an appeal mechanism, which we 
will consider for future rulemaking.
    We proposed to codify the dispute resolution process at Sec.  
414.940.
    The following is a summary of the public comments received on the 
dispute resolution provisions and our responses:
    Comment: Several commenters expressed support for our dispute 
resolution proposal. One commenter expressed support for its simplicity 
and formal character.
    Response: We thank the commenters for their support.
    Comment: One commenter requested the effective date of the 
provision be delayed until after a ``detailed'' dispute resolution 
process is implemented.
    Response: We do not have the flexibility to delay the effective 
date of the provision of January 1, 2023, which is specified in 
statute. We may consider an appeal process in future rulemaking.
    Comment: Several commenters requested that we broaden the dispute 
resolution process to cover disputes related to manufacturer requests 
for higher applicable percentages or exclusions for particular drugs. 
Commenters offered that we could make these determinations as part of 
the annual rulemaking process and that the window for these disputes 
could immediately follow the issuance of the final rule.

[[Page 69732]]

    Response: We appreciate the commenters' suggestion. At this time, 
we are not establishing a separate process for requesting higher 
applicable percentages or disputing unique circumstance or applicable 
percentage determinations. Since the determination of unique 
circumstances or increased applicable percentages requires notice and 
comment rulemaking, all interested parties would have an opportunity to 
comment on these determinations through the rulemaking process.
    Comment: Several commenters requested that the window for 
manufacturers to file disputes be extended, with some suggesting an 
extension from 30 days to either 60 or 90 days. Several commenters 
suggested that, as an alternative to a longer filing window, we provide 
manufacturers with preliminary estimates of refund obligations. One 
commenter explained that preliminary estimates would be useful in 
allowing manufacturers a second opportunity to raise concerns about 
discard and refund calculations, which could be of significant help to 
manufacturers, since we proposed to include limited information in 
manufacturer reports. Commenters stated the proposed timeline does not 
allow enough time for engagement with the agency, particularly those 
with small regulatory staffs. A few commenters stated that 
manufacturers should not have to pay refund obligations when refund 
amounts are in dispute, and one requested that they have 90 days after 
dispute resolution to remit refund payments.
    Several commenters stated that the dispute resolution process 
should include an appeal process. One commenter requested an appeals 
process overseen by a third-party arbiter. One commenter suggested we 
incorporate an appeal process in regulatory text, in order to mirror 
the Parts A and B claims appeals process.
    Response: We disagree with commenters about the amount of time 
needed to file a dispute, and we continue to believe that 30 days is a 
sufficient filing period. The information provided in the report is 
required by statute to include two numbers: (1) the total number of 
units of the billing and payment code of such drug, if any, that were 
discarded during such quarter; and (2) the refund amount for which the 
manufacturer is liable. We do not expect that the formulation of a 
dispute regarding these two numbers should take longer than 30 days, 
since the calculations are straightforward. In addition, the 30-day 
dispute period is similar to the dispute period for several other CMS 
programs. Specifically, many of the Quality Reporting Programs have 30-
day ratings preview periods, including the Quality Payment 
Program.\151\ As noted above, we are not finalizing the date that we 
will issue the first reports, and we will revisit in future rulemaking 
other mechanisms that can ensure that manufacturers have enough time to 
process and validate discard data. As stated above, we plan to issue a 
preliminary report to manufacturers for the first 2 quarters of 2023 no 
later than December 31, 2023. With regard to amounts due while a 
dispute is ongoing, as we noted above, we clarify that our intent was 
to propose that manufacturers have until 30 days following the 
resolution of the dispute to pay the refund if dispute resolution 
results in an amount due, which was included in another part of the 
proposed rule. We are finalizing this payment deadline for disputed 
amounts.
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    We thank the commenters for their feedback on the potential 
benefits and structure of an appeals process. We will take this input 
under advisement and we plan to revisit the topic in future rulemaking.
    Comment: Commenters offered several suggestions and requests 
regarding the operational aspects of the dispute resolution process. 
One commenter requested that the dispute process be simple and easy to 
for manufacturers to use. One commenter had several suggestions on the 
process operations, including that we permit manufacturers to dispute 
as many errors as needed in each dispute, rather than having to file 
separate disputes. The commenter also suggested that the process be 
conducted through a web-based portal, that we employ dedicated staff to 
administer the dispute resolution process, and that we issue program 
instruction on the dispute process, including information on factors we 
consider in evaluating disputes. Several commenters requested that we 
state that the dispute resolution process is confidential, so that no 
manufacturer's confidential proprietary information is disclosed to the 
public. One commenter requested that we clarify that we will credit 
manufacturers in refund calculations in the case of disputes resolved 
in a manufacturer's favor. One commenter requested that we remain 
engaged with stakeholders while developing the dispute resolution 
process.
    Response: We agree that the dispute process should be simple and of 
minimal burden on manufacturers, and to that end, we will build as much 
as possible on data sets already familiar to the public. We will 
further address the dispute resolution process in future rulemaking. 
With regard to the number of errors that a manufacturer may submit in 
one filing, we clarify that we did not propose a limit; we proposed 
that a manufacturer would be able to identify as many errors as they 
need for each manufacturer report that they dispute. Should a 
manufacturer receive two reports for two drugs and the manufacturer 
would like to dispute both, the manufacturer would need to file two 
disputes, regardless of how many errors they identify in each. We 
believe that this aligns with the commenter's request. We would 
maintain the confidentiality of a manufacturer's proprietary 
information consistent with applicable law.
    At the conclusion of the process, if we agree that information 
presented by the manufacturer reveals errors in our original refund 
calculation, we will make appropriate adjustments to our calculation 
and issue a new report to the manufacturer. A report may indicate 
either that the manufacturer owes no refund obligation, or some amount 
that would be due to the agency within 30 days of the dispute 
resolution. If we conclude that information submitted in the dispute 
does not affect our original calculation, the manufacturer would owe 
the amount specified in the original manufacturer report within 30 days 
of the dispute resolution.
    We welcome continued engagement with commenters on all aspects of 
the dispute process.
    After consideration of public comments, we are finalizing our 
proposal to establish a dispute resolution process through which 
manufacturers can challenge refund calculations and underlying data in 
their section 1847A(h)(1)(A) of the Act manufacturer reports in Sec.  
414.940(d). We are finalizing that manufacturers will have 30 days 
after receipt to file a dispute of their report or reports and that, if 
following resolution of the dispute we affirm our original calculation, 
or if we resolve to issue a revised manufacturer report that specifies 
a new discard refund amount, the manufacturer will be required to pay 
the refund within 30 days of the dispute resolution. We are not 
finalizing the payment of the refund by December 31 of the year the 
report was issued, since we will be revisiting the timing of reports in 
future rulemaking. We will also revisit the issue of an appeals process 
in future rulemaking.

[[Page 69733]]

8. Enforcement
a. Audits
    As discussed in the CY 2023 PFS proposed rule (87 FR 46062), 
section 1847A(h)(6)(A)(i) of the Act requires that we perform periodic 
audits on each manufacturer of a refundable single-dose container or 
single-use package drug that is required to provide a refund under 
section 1847A(h) of the Act with respect to such drug and such refunds. 
We proposed to specify at 414.940(e) that we periodically audit 
manufacturers of refundable single-dose container or single-use package 
drugs consistent with this requirement. We welcomed comments about what 
such audits should entail, which we will consider for future 
rulemaking.
    We stated that section 1847A(h)(6)(A)(ii) of the Act requires us to 
conduct periodic audits of claims submitted under Medicare Part B with 
respect to refundable single-dose container or single-use package drugs 
in accordance with the authority under section 1833(e) of the Act. 
Under the JW modifier policy, claims for dates of service on or after 
January 1, 2017 containing billing for discarded drugs that do not use 
the JW modifier may be subject to review.\152\ We proposed that our 
review contractors would periodically review Part B medication claims 
to ensure the JW modifier, JZ modifier (if adopted), and discarded drug 
amounts are billed appropriately consistent with our normal claims 
audit policies and protocols.
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b. Civil Money Penalty
    We noted that provisions in section 1847A(h)(6)(B) of the Act give 
the Secretary authority to impose a civil money penalty on a 
manufacturer of a refundable single-dose container or single-use 
package drug who fails to comply with the requirement under section 
1847A(h)(2) of the Act for such drug for a calendar quarter.
    As set forth in section 1847A(h)(6)(B) of the Act, the civil money 
penalty would be an amount equal to the sum of--
     The amount that the manufacturer would have paid under 
such paragraph with respect to such drug for such quarter; and
     25 percent of such amount.
    We proposed to codify the civil money penalty at Sec.  414.940.
    The following is a summary of the public comments received on the 
enforcement provisions and our responses:
    Comment: Several commenters requested that the focus of 
manufacturer audits be limited to the manufacturers' responsibilities 
under section 1847A(h) of the Act, namely, the payment of obligations 
specified in CMS reports to manufacturers. The commenters also 
requested that the audits only be triggered by patterns of unusual 
payments, rather than being regularly scheduled. One commenter 
requested we engage with manufacturers as we develop the manufacturer 
audit process, and that we develop a system that is transparent, 
predictable, and minimally burdensome. The commenter requested a 60-day 
notice in advance of audits and that we provide instructions on the 
audit process and remedial measures. Several commenters requested more 
information on the lookback period, frequency, and scope of 
manufacturer audits, as well as remedial measures.
    One commenter requested that manufacturer audits be performed 
remotely.
    Response: We agree with the commenters, and at this time, we do not 
intend to conduct audits under section 1847A(h)(6)(A) of the Act beyond 
determinations they have either paid refund obligations or not. The 
remedial measure for nonpayment of refund obligations is the civil 
money penalty specified under section 1847A(h)(6)(B) of the Act, as 
discussed below. These determinations will be made following the 
issuance of the report to manufacturers, but as we are not finalizing 
the date we will issue the first report, we cannot finalize timing for 
determinations of nonpayment. Finally, this determination can be 
performed remotely.
    Commenter: One commenter suggested we conduct post-claims reviews 
for providers with unusual JW and JZ modifier reporting patterns. One 
commenter, while generally supporting our proposal for provider audits, 
requested a process for those audits that allows manufacturers to guide 
audit efforts by suggesting particular issues or trends that warrant 
attention. One commenter supported our proposal to not significantly 
increase the volume of post-payment claims reviews to identify claims 
submitted without the JW or JZ modifiers.
    Response: We agree with the commenter that provider audits should 
focus on unusual JW and JZ modifier reporting patterns. We also agree 
that engagement with manufacturers on potential issue areas in discard 
reporting practices can make the provider audit process more targeted 
and effective. In response to the comment about audits specifically for 
identifying claims without the JW or JZ modifiers, we are finalizing 
that we will continue the JW reporting requirement and that the JZ 
modifier will be required for dates of service beginning July 1, 2023. 
In addition, we will begin editing for the use of both the JW and JZ 
modifiers beginning October 1, 2023.
    Comment: One commenter stated that CMS's actions following adverse 
manufacturer audit findings should start with an opportunity for 
education and correction prior to any enforcement action or penalties.
    Response: We disagree with the commenter. We proposed to impose 
civil money penalties only on manufacturers who fail to remit refunds 
to CMS in a timely manner. We clarify our proposal on the amount of 
time manufacturers have to pay a refund if, after the resolution of a 
dispute, we find that the provider owes a refund. Although in one part 
of the proposed rule we stated that manufacturers have until 30 days 
following the resolution of the dispute to pay the refund, in another 
part of the proposed rule we stated refunds would be due December 31 of 
the year in which a report is issued to manufacturers even if the 
amount is under dispute. We are finalizing the former, as discussed 
above in section III.A.7 of this final rule. We continue to believe 
this is ample time for manufacturers to comply with a report for refund 
obligations.
    Comment: One commenter stated that the imposition of civil money 
penalties should not be set before a manufacturer has had the 
opportunity to meaningfully engage CMS in a dispute process.
    Response: We agree with the commenter that civil money penalties 
should not be imposed while the window for disputing a refund amount is 
still open, when the dispute process is ongoing, and not before a 
reasonable amount of time has passed since either the report was first 
sent to the manufacturer or the dispute process concluded with a 
decision finding that the manufacturer has a refund obligation.
    After consideration of the public comments, we are finalizing the 
regulations of Sec.  414.490(e) that at this time, manufacturer audits 
will be limited to determinations that they have paid refund 
obligations or not and will revisit timing of those determinations in 
future rulemaking. We are also finalizing that provider audits of Part 
B medication claims will be conducted periodically to determine whether 
the JW modifier, JZ modifier, and discarded drug amounts are billed 
appropriately consistent with our normal claims audit policies and 
protocols. Finally, we are

[[Page 69734]]

finalizing that we will impose a penalty of 125 percent of the fund 
amount owed if the manufacturer fails to remit refund obligations.
    Comment: We received public comments that were outside the scope of 
the discarded amount refund proposals included in the CY 2023 PFS 
proposed rule. These comments were related to: guidance to FDA on 
encouraging or requiring manufacturers to use more efficient drug 
packaging, the impacts of the policy on drug and biological research 
and development and market participation, the review burden imposed on 
FDA by the refund policy, the Medicare program's use of the refund 
revenues, the impact of the refunds for Medicare beneficiaries, and 
comparative billing reports to providers focusing on JW modifier 
reporting.
    Response: We consider these public comments to be outside the scope 
of the proposed rule, and therefore, we are not addressing them in this 
final rule. We may consider these public comments for possible 
proposals in future rulemaking.

B. Rural Health Clinics (RHCs) and Federally Qualified Health Centers 
(FQHCs)

1. Background
a. RHC and FQHC Payment Methodologies
    As provided in 42 CFR part 405, subpart X of our regulations, RHC 
and FQHC visits generally are defined as face-to-face encounters 
between a patient and one or more RHC or FQHC practitioners during 
which one or more RHC or FQHC qualifying services are furnished. RHC 
and FQHC practitioners are physicians, NPs, PAs, CNMs, clinical 
psychologists (CPs), and clinical social workers, and under certain 
conditions, a registered nurse or licensed practical nurse furnishing 
care to a homebound RHC or FQHC patient in an area with a shortage of 
home health agencies. Transitional Care Management (TCM) services can 
also be paid by Medicare as an RHC or FQHC visit. In addition, Diabetes 
Self-Management Training (DSMT) or Medical Nutrition Therapy (MNT) 
sessions furnished by a certified DSMT or MNT program may also be 
considered FQHC visits for Medicare payment purposes. Only medically 
necessary medical, mental health, or qualified preventive health 
services that require the skill level of an RHC or FQHC practitioner 
are RHC or FQHC billable visits. Services furnished by auxiliary 
personnel (for example, nurses, medical assistants, or other clinical 
personnel acting under the supervision of the RHC or FQHC practitioner) 
are considered incident to the visit and are included in the per-visit 
payment.
    RHCs generally are paid an all-inclusive rate (AIR) for all 
medically necessary medical and mental health services and qualified 
preventive health services furnished on the same day (with some 
exceptions). The AIR is subject to a payment limit, meaning that an RHC 
will not receive any payment beyond the specified limit amount. As of 
April 1, 2021, all RHCs are subject to new payment limits on the AIR, 
and this limit will be determined for each RHC in accordance with 
section 1833(f) of the Act.
    FQHCs were paid under the same AIR methodology until October 1, 
2014. Beginning that date, in accordance with section 1834(o) of the 
Act (as added by section 10501(i)(3) of the Affordable Care Act), they 
began to transition to the FQHC PPS system, in which they are paid 
based on the lesser of the FQHC PPS rate or their actual charges. The 
FQHC PPS rate is adjusted for geographic differences in the cost of 
services by the FQHC PPS geographic adjustment factor (GAF). The rate 
is increased by 34 percent when an FQHC furnishes care to a patient 
that is new to the FQHC, or to a beneficiary receiving an initial 
preventive physical examination (IPPE) or has an annual wellness visit 
(AWV).
    Both the RHC AIR and FQHC PPS payment rates were designed to 
reflect the cost of all services and supplies that an RHC or FQHC 
furnishes to a patient in a single day. The rates are not adjusted for 
the complexity of the patient health care needs, the length of the 
visit, or the number or type of practitioners involved in the patient's 
care.
b. Care Management Services in RHCs and FQHCs
    We have been engaged in a multi-year examination of coordinated and 
collaborative care services in professional settings, and as a result 
established codes and separate payment in the PFS to separately 
recognize and pay for these important services. The care coordination 
included in services, such as office visits, do not always adequately 
describe the non-face-to-face care management work involved in primary 
care. Payment for office visits may not reflect all the services and 
resources required to furnish comprehensive, coordinated care 
management for certain categories of beneficiaries, such as those who 
are returning to a community setting following discharge from a 
hospital or skilled nursing facility (SNF) stay.
    A separate payment was established in the CY 2016 PFS final rule 
with comment period (80 FR 71080 through 71088) for RHCs and FQHCs that 
furnish Chronic Care Management (CCM) services. We believe the non-
face-to-face time required to coordinate care is not captured in the 
RHC AIR or the FQHC PPS payment, particularly for the rural and/or low-
income populations served by RHCs and FQHCs. Allowing separate payment 
for CCM services in RHCs and FQHCs is intended to reflect the 
additional resources necessary for the unique components of CCM 
services.
    In the CY 2018 PFS final rule with comment period (82 FR 53169 and 
53180), we finalized revisions to the payment methodology for CCM 
services furnished by RHCs and FQHCs and established requirements for 
general Behavioral Health Integration (BHI) and psychiatric 
Collaborative Care Management (CoCM) services furnished in RHCs and 
FQHCs, beginning on January 1, 2018. We also initiated the use of HCPCS 
code G0511, a General Care Management code for use by RHCs or FQHCs 
when at least 20 minutes of qualified CCM or general BHI services are 
furnished to a patient in a calendar month. In the CY 2019 PFS final 
rule (83 FR 59683), we explained for CY 2018 the payment amount for 
HCPCS code G0511 was set at the average of the 3 national non-facility 
PFS payment rates for the CCM and general BHI codes and updated 
annually based on the PFS amounts. That is, for CY 2018 the 3 codes 
that comprised G0511 were CPT code 99490 (20 minutes or more of CCM 
services), CPT code 99487 (60 minutes or more of complex CCM services), 
and CPT code 99484 (20 minutes or more of BHI services).
    We also explained that another CCM code was introduced for 
practitioners billing under the PFS, CPT code 99491, which would 
correspond to 30 minutes or more of CCM furnished by a physician or 
other qualified health care professional and is similar to CPT codes 
99490 and 99487 (83 FR 56983). Therefore, for RHCs and FQHCs, we added 
CPT code 99491 as a general care management service and included it in 
the calculation of HCPCS code G0511. Starting on January 1, 2019, RHCs 
and FQHCs were paid for HCPCS code G0511 based on the average of the 
national non-facility PFS payment rates for CPT codes 99490, 99487, 
99484, and 99491 (83 FR 59687).
    In the CY 2020 PFS final rule with comment (84 FR 62692), we 
established a separate payment for Principle Care Management (PCM) 
services under the PFS. PCM services include

[[Page 69735]]

comprehensive care services for a single high-risk disease or complex 
condition, typically expected to last at least 3 months and may have 
led to a recent hospitalization, and/or placed the patient at 
significant risk of death. Beginning January 1, 2020, practitioners 
billing under the PFS can bill for PCM services using HCPCS codes G2064 
or G2065. HCPCS code G2064 is for at least 30 minutes of PCM services 
furnished by physicians or nonphysicians during a calendar month. HCPCS 
code G2065 is for at least 30 minutes of PCM services furnished by 
clinical staff under the direct supervision of a physician or non-
physician during a calendar month.
    In the CY 2021 PFS final rule (85 FR 84697 through 84699), we 
explained that since the requirements for the new PCM codes were 
similar to the requirements for the services described by HCPCS code 
G0511, we added HCPCS code G2064 and G2065 to G0511 as a general care 
management service for RHCs and FQHCs starting January 1, 2021. The 
payment rate for HCPCS G0511 for CY 2021 was the average of the 
national non-facility PFS payment rate for the RHC and FQHC care 
management and general behavioral health codes (CPT codes 99490, 99487, 
99484, and 99491), and PCM codes (HCPCS G2064 and G2065). Finally, we 
note that in the CY 2022 PFS final rule (86 FR 65118), HCPCS codes 
G2064 and G2065 were replaced by CPT codes 99424 and 99435. Therefore, 
for CY 2022 the current payment rate for HCPCS G0511 is the average of 
the national non-facility PFS payment rate for the RHC and FQHC care 
management and general behavioral health codes (CPT codes 99490, 99487, 
99484, and 99491), and PCM codes (CPT codes 99424 and 99425).
    Additional information on care management requirements is available 
on the CMS Care Management web page at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/Care-Management.html 
and on the CMS RHC and FQHC web pages at https://www.cms.gov/Center/Provider-Type/Rural-Health-Clinics-Center.html and https://www.cms.gov/Center/Provider-Type/Federally-Qualified-Health-Centers-FQHC-Center.html.
2. New Care Management Codes for Chronic Pain Management (CPM) and 
General Behavioral Health Integration (GBHI)
    As discussed in the CY 2023 PFS proposed rule (87 FR 46064 through 
46065), under the PFS we proposed two new HCPCS codes to describe CPM 
and the proposed CPM codes would be created to separately pay for a 
specified set of pain management and treatment services, specifically 
including the administration of validated rating scales, and a person-
centered care plan that includes strengths, goals, clinical needs, and 
desired outcomes.
    (1) HCPCS codes G3002: Chronic pain management and treatment, 
monthly bundle including, diagnosis; assessment and monitoring; 
administration of a validated pain rating scale or tool; the 
development, implementation, revision, and maintenance of a person-
centered care plan that includes strengths, goals, clinical needs, and 
desired outcomes; overall treatment management; facilitation and 
coordination of any necessary behavioral health treatment; medication 
management; pain and health literacy counseling; any necessary chronic 
pain related crisis care; and ongoing communication and care 
coordination between relevant practitioners furnishing care, e.g. 
physical therapy and occupational therapy, and community-based care, as 
appropriate. Required initial face-to-face visit at least 30 minutes 
provided by a physician or other qualified health professional; first 
30 minutes personally provided by physician or other qualified health 
care professional, per calendar month. (When using G3002, 30 minutes 
must be met or exceeded.)
    (2) HCPCS code G3003: Each additional 15 minutes of chronic pain 
management and treatment by a physician or other qualified health care 
professional, per calendar month. For G3002, CPM services, we are 
requiring a face-to-face visit of at least 30 minutes provided by a 
physician or other qualified health professional, per calendar month to 
a beneficiary who has a diagnosis of pain that has lasted more than 3 
months, which could be the result of an underlying medical disease or 
condition. HCPCS code G3003 will apply to up to three units of an 
additional 15 minutes of CPM and treatment by a physician or other 
qualified health care professional, per calendar month (listed 
separately in addition to HCPCS code G3002). The new codes for CPM 
would be valued using crosswalks to the CY 2023 PCM services, CPT codes 
99424 and 99425.
    We also discussed proposed new coding and payment under the PFS for 
general BHI services. That is, the new HCPCS code (G0323): (Care 
management services for behavioral health conditions, at least 20 
minutes of clinical psychologist or clinical social worker time, per 
calendar month, with the following required elements: initial 
assessment or follow-up monitoring, including the use of applicable 
validated rating scales; behavioral health care planning in relation to 
behavioral/psychiatric health problems, including revision for patients 
who are not progressing or whose status changes; facilitating and 
coordinating treatment such as psychotherapy, coordination with an/or 
referral to physicians and practitioners who are authorized by Medicare 
law to prescribe medications and furnish E/M services counseling and/or 
psychiatric consultation; and continuity of care with a designated 
member of the care team) describing general BHI services performed by 
clinical psychologists (CPs) and clinical social workers (CSWs). As 
proposed, the payment rate for the new General BHI code would be based 
on the payment rate for the current general BHI code, 99484. We noted 
that CPs and CSWs are statutorily authorized to furnish services in 
RHCs and FQHCs, as described by Sec.  405.2411(a)(6).
    We explained the requirements for the CPM service (that is, HCPCS 
code G3002) would be similar to the requirements for the general care 
management services furnished by RHCs and FQHCs and as such, we believe 
the non-face-to-face time required to coordinate care is not captured 
in the RHC AIR or the FQHC PPS payment, particularly for the rural and/
or underserved populations served by RHCs and FQHCs. The pain 
management coordination included in services, such as office visits, do 
not always adequately describe the non-face-to-face pain management 
services involved in primary care.
    Allowing separate payment for CPM services in RHCs and FQHCs is 
intended to reflect the additional time and resources necessary for the 
unique components of care coordination services. We did not propose to 
utilize the add-on HCPCS code G3003 for RHC/FQHC payments because RHCs 
and FQHCs do not pay their practitioners based on additional minutes 
spent by practitioners, as is the case for practitioners under the PFS. 
In an effort to be consistent with the new services that were proposed 
for practitioners billing under the PFS, we proposed to include CPM 
services in the general care management HCPCS code G0511 when these 
services are provided by RHCs and FQHCs. Since HCPCS code G3002 would 
be valued using a crosswalk to the PCM CPT code 99424, which is 
currently one of the CPT codes that comprise HCPCS code G0511, we did 
not propose a change to the average used to calculate the HCPCS code 
G0511 payment rate.
    In addition, as explained in the proposed rule, since CPs and CSWs 
are

[[Page 69736]]

statutorily authorized to furnish services in RHCs/FQHCs, we clarified 
that when CPs and CSWs furnish the services described in HCPCS code 
G0323 in an RHC or FQHC, they can bill HCPCS code G0511.
    We noted that if finalized as proposed, RHCs and FQHCs that furnish 
the new CPM and GBHI services furnished by CPs and CSWs would be able 
to bill these services using HCPCS code G0511, either alone or with 
other payable services on an RHC or FQHC claim for dates of service on 
or after January 1, 2023. The payment rate for HCPCS code G0511 would 
continue to be the average of the national non-facility PFS payment 
rates for the RHC and FQHC care management and general behavioral 
health codes (CPT codes 99484, 99487, 99490, and 99491) and PCM codes 
(CPT codes 99424 and 99425) and would be updated annually based on the 
PFS amounts for these codes.
    We also noted that we may consider other approaches in future 
rulemaking for calculating the rate of HCPCS code G0511 as the number 
of services is growing each year. For example, we could value HCPCS 
code G0511 using a weighted average of the services that comprise HCPCS 
code G0511 or using the national average of the top three services 
comprising HCPCS code G0511. We welcomed comments on potential 
methodologies.
    Finally, we note that the codes GYYY1, GYYY2, and GBHI1 in the 
proposed rule were placeholder codes and that the final code numbers 
will be HCPCS code G3002, G3003, and G0323 respectively and 
corresponding discussions have been updated.
    The following is a summary of the public comments received on the 
new care management codes for Chronic Pain Management (CPM) and General 
Behavioral Health Integration (GBHI) and our responses:
    Comment: The majority of the commenters supported our proposal to 
allow RHCs and FQHCs to furnish CPM services; however, they would like 
CMS to treat HCPCS code G3002 as an encounter and reimburse these 
services at the RHC AIR or at the FQHC PPS rate, instead of bundling 
the services under the general care management code, HCPCS code G0511. 
The commenters noted that the definition of an RHC or FQHC encounter is 
a face-to-face encounter between a patient and an RHC or FQHC 
practitioner during which a qualified service is furnished. They 
explained that the proposed codes require a face-to-face visit for at 
least 30 minutes with a RHC or FQHC practitioner, therefore clearly 
meeting the definition of an RHC or FQHC encounter.
    Response: We appreciate the feedback from commenters regarding the 
addition of CPM services and the proposed reimbursement for these 
services. We agree that the description of HCPCS code G3002 includes a 
face-to-face component. As explained in the CY 2023 PFS proposed rule 
(87 FR 45936 through 45937), to value CPM, we compared the proposed 
services to codes that involve care management. In doing so, we 
concluded that the CPM services were similar in work (time and 
intensity) to that of PCM in that both the PCM codes and proposed CPM 
codes reflected services that have similar complexities, possible 
comorbidities, require cognitive time on the part of the practitioner, 
and may involve coordination of care across multiple practitioners. 
Therefore, in an effort to pay the same for similar services, and for 
RHCs and FQHCs we pay PCM using HCPCS code G0511, we did not believe it 
is appropriate to pay CPM as a visit.
    After consideration of public comments, we have reconsidered our 
approach to billing CPM services. Many Medicare beneficiaries have 
multiple chronic conditions, and many of these conditions could involve 
chronic pain. We believe it is reasonable to assume that in many 
instances, the RHC or FQHC practitioner could be spending time with the 
Medicare patient discussing health and wellness related to a variety of 
conditions that a person may be experiencing, or expect to experience, 
and that interaction might also have a focus on the chronic pain 
aspects of the person's care. Addressing chronic pain as part of a 
visit would complete the face-to-face component of CPM. Billing of 
HCPCS code G0511 would address the non-face-to-face components of CPM. 
Therefore, both the face-to-face visit and the non-face-to-face 
components of CPM as an add-on service(s) could be on the same day if 
all requirements to report each service are met, without time or effort 
being counted more than once. We believe having the ability to bill 
both a face-to-face visit and a non-face-to-face CPM add-on service on 
the same day mitigates concerns from the commenters since payment for 
the RHC or FQHC visit accounts for the face-to-face component and 
payment for non-face-to-face CPM services accounts for the additional 
time and resources necessary for the unique components of care 
coordination for non-face-to-face CPM services furnished outside of the 
face-to-face visit with an RHC or FQHC practitioner. Therefore, we are 
finalizing as proposed to include non-face-to-face CPM services 
described in HCPCS code G3002 in the general care management HCPCS code 
G0511 when these services are furnished by RHCs and FQHCs.
    Comment: A few commenters encouraged CMS to permit RHCs and FQHCs 
to provide CCM and GBHI to a patient in the same calendar month and 
receive the separate reimbursement for each service.
    Response: We note that we did not specifically make any proposals 
in the CY 2023 PFS proposed rule to simultaneously bill CCM or BHI 
service in the same calendar month. In the CY 2021 PFS final rule with 
comment (86 FR 84699), we finalized a policy that general care 
management services furnished in RHCs and FQHCs can only be billed once 
per month per beneficiary when at least 20 minutes of CCM services, at 
least 30 minutes of PCM services, or at least 20 minutes of general BHI 
services have been furnished and all requirements have been met. 
Therefore, if the requirements for each of these care management 
services are met, then HCPCS code G0511 can be billed more than once in 
a calendar month, either alone or with other payable services and the 
same would apply for CPM and GBHI.
    Comment: One commenter recommended CMS to further designate if 
separately reportable procedures are able to be billed during the 
proposed 30-day CPM management period, and if CMS allows for separately 
reportable procedures (for example, injections, dry needling, 
acupuncture, PT/OT) to be performed during the same billing period, 
then CMS should define any limitations on which ones are, or are not, 
separately billable.
    Response: We appreciate the commenter's feedback. Procedures, such 
as injections, dry needling, acupuncture, and PT/OT, may be furnished 
by auxiliary personnel ``incident to'' an encounter with an RHC or FQHC 
practitioner in a medically appropriate timeframe, as described by 
Sec. Sec.  405.2413 and 405.2415. More than one ``incident to'' service 
or supply can be provided as a result of a single encounter with an RHC 
or FQHC practitioner. However, they cannot be separately billed as 
separate visits.
    Comment: One commenter requested that CMS allow RHCs and FQHCs to 
bill for the new HCPCS code G3003 which applies up to three units of an 
additional 15 minutes of CPM per month.
    Response: We appreciate the feedback from the commenter regarding 
the new CPM HCPCS code that describes the additional time spent by 
practitioners. We did not propose to utilize the add-

[[Page 69737]]

on HCPCS code G3003 for RHC/FQHC payments because RHCs and FQHCs do not 
pay their practitioners based on additional minutes spent by 
practitioners, as is the case for practitioners paid under the PFS. As 
we stated in the CY 2016 PFS final rule (80 FR 71086) when we added 
CCM, we explained that additional minutes as follows: the service 
period for billing CCM services in RHCs and FQHCs is one calendar 
month, and we expect the RHC or FQHC to continue furnishing services 
during a given month as applicable even after the 20-minute time 
threshold to bill the service is met. The RHC or FQHC could bill for 
the CCM service after completion of at least 20 minutes of qualifying 
CCM services during the service period, or any time after that until 
the end of the month. This is consistent for other care management 
services included in HCPCS code G0511 and now extends to CPM services. 
RHCs and FQHCs must meet the minimum of 30 minutes in order to bill 
HCPCS code G0511 for CPM services.
    Comment: Generally, commenters were supportive of the clarification 
that when CPs and CSWs provide the services described in HCPCS code 
G0323 in an RHC or FQHC, they can bill HCPCS code G0511 as statutorily 
authorized RHC and FQHC practitioners.
    Response: We appreciate the support received from commenters.
    Comment: Commenters urged CMS to create billing codes that reflect 
the complexities between RHC and FQHC patients and provide variable 
reimbursement rates that reflect the varying levels of care management 
services provided. Commenters opined that adding CPM and GBHI services 
further dilutes the reimbursement to RHCs and FQHCs under HCPCS code 
G0511 drawing attention to the fact that not every patient is the same 
as the level of providers needed to treat the patient and time spent 
may vary.
    Response: We appreciate the feedback in response to our comment 
solicitation on potential methodologies for calculating the rate of 
HCPCS code G0511 and will take this information into consideration for 
future rulemaking.
    After consideration of the public comments, and in an effort to be 
consistent with the new services finalized in section II.E of this 
final rule for practitioners billing under the PFS, we are finalizing 
as proposed to include CPM services described by HCPCS code G3002 in 
the general care management HCPCS code G0511 when these services are 
furnished by RHCs and FQHCs. Since HCPCS code G3002 is valued using a 
crosswalk to the PCM CPT code 99424, which is currently one of the CPT 
codes that comprise HCPCS code G0511, there is no change to the average 
used to calculate the HCPCS code G0511 payment rate to reflect CPM 
services. This is in addition to the face-to-face visit component of 
CPM services. We note as discussed in section II.E of this final rule, 
we are finalizing the descriptor of HCPCS code G3002 as follows, with 
the two modifications shown in italics: Chronic pain management and 
treatment, monthly bundle including, diagnosis; assessment and 
monitoring; administration of a validated pain rating scale or tool; 
the development, implementation, revision, and/or maintenance of a 
person-centered care plan that includes strengths, goals, clinical 
needs, and desired outcomes; overall treatment management; facilitation 
and coordination of any necessary behavioral health treatment; 
medication management; pain and health literacy counseling; any 
necessary chronic pain related crisis care; and ongoing communication 
and care coordination between relevant practitioners furnishing care, 
for example, physical therapy and occupational therapy, complementary 
and integrative approaches, and community-based care, as appropriate. 
Required initial face-to-face visit at least 30 minutes provided by a 
physician or other qualified health professional; first 30 minutes 
personally provided by physician or other qualified health care 
professional, per calendar month. (When using HCPCS code G3002, 30 
minutes must be met or exceeded.)
    In addition, CPs and CSWs are statutorily authorized to furnish 
services in RHCs and FQHCs, and therefore, we are finalizing the 
clarification that when CPs and CSWs provide the services described in 
HCPCS code G0323 in an RHC or FQHC, they can bill HCPCS code G0511.
    RHCs and FQHCs that furnish CPM and GBHI services are able to bill 
these services using HCPCS code G0511, either alone or with other 
payable services on an RHC or FQHC claim for dates of service on or 
after January 1, 2023. The payment rate for HCPCS code G0511 will 
continue to be the average of the national non-facility PFS payment 
rates for the RHC and FQHC care management and general behavioral 
health codes (CPT codes 99484, 99487, 99490, and 99491) and PCM codes 
(CPT codes 99424 and 99425) and will be updated annually based on the 
PFS amounts for these codes. In addition, we will take into 
consideration the comments we received in response to our comment 
solicitation on potential methodologies for calculating the rate of 
HCPCS code G0511 for future rulemaking.
3. Conforming Technical Changes to 42 CFR 405.2463 and 405.2469
    Last year in the CY 2022 PFS final rule with comment (86 FR 65211), 
we revised the regulatory requirement that an RHC or FQHC mental health 
visit must be a face-to-face (that is, in person) encounter between an 
RHC or FQHC patient and an RHC or FQHC practitioner. We revised the 
regulations under Sec.  405.2463 to state that an RHC or FQHC mental 
health visit can also include encounters furnished through interactive, 
real-time, audio and video telecommunications technology or audio-only 
interactions in cases where beneficiaries are not capable of, or do not 
consent to, the use of devices that permit a two-way, audio/video 
interaction for the purposes of diagnosis, evaluation or treatment of a 
mental health disorder. We noted that these changes aligned with 
similar mental health services furnished under the PFS. We also noted 
that this change allows RHCs and FQHCs to report and be paid for mental 
health visits furnished via real-time, telecommunication technology in 
the same way they currently do when these services are furnished in-
person.
    In addition, we revised the regulation under Sec.  405.2463 to 
state that there must be an in-person mental health service furnished 
within 6 months prior to the furnishing of the telecommunications 
service and that an in-person mental health service (without the use of 
telecommunications technology) must be provided at least every 12 
months while the beneficiary is receiving services furnished via 
telecommunications technology for diagnosis, evaluation, or treatment 
of mental health disorders, unless, for a particular 12-month period, 
the physician or practitioner and patient agree that the risks and 
burdens outweigh the benefits associated with furnishing the in-person 
item or service, and the practitioner documents the reasons for this 
decision in the patient's medical record (86 FR 65210 and 65211).
    We also revised the regulation under Sec.  405.2469, FQHC 
supplemental payments, to state that a supplemental payment required 
under this section is made to the FQHC when a covered face-to-face 
(that is, in-person) encounter or an encounter where services are 
furnished using interactive, real-time, telecommunications technology 
or

[[Page 69738]]

audio-only interactions in cases where beneficiaries do not wish to use 
or do not have access to devices that permit a two-way, audio/video 
interaction for the purposes of diagnosis, evaluation or treatment of a 
mental health disorder occurs between a MA enrollee and a practitioner 
as set forth in Sec.  405.2463. At Sec.  405.2469, we also revised 
paragraph (d) to describe the same in-person visit requirement 
referenced in Sec.  405.2463.
    As discussed in the CY 2023 PFS proposed rule (87 FR 46065), the 
Consolidated Appropriations Act, 2022 (Pub. L. 117-103) (CAA, 2022) 
signed into law on March 15, 2022, included the extension of a number 
of Medicare telehealth flexibilities established during the PHE for a 
limited 151-day period beginning on the first day after the end of the 
public health emergency (PHE) for COVID-19. Specifically, section 303 
of the CAA, 2022 amended section 1834(m)(8) of the Act to extend 
payment for telehealth services furnished by FQHCs and RHCs for the 
151-day period beginning on the first day after the end of the COVID-19 
PHE. We explained that payment would continue to be made under the 
methodology established for telehealth services furnished by FQHCs and 
RHCs during the PHE, which is based on payment rates that are similar 
to the national average payment rates for comparable telehealth 
services under the PFS. We noted that we did not believe it was 
necessary to conform the regulation for this temporary provision.
    We also discussed section 304 of the CAA, 2022 which delayed the 
in-person requirements under Medicare for mental health services 
furnished through telehealth under the PFS and for mental health visits 
furnished by RHCs and FQHCs via telecommunications technology. We noted 
this change required conforming regulatory text. For RHCs and FQHCs, 
in-person visits will not be required until the 152nd day after the end 
of the PHE for COVID-19. We noted that while the extensions of mental 
health telehealth visits under section 304 of the CAA, 2022 were placed 
into paragraphs of section 1834 of the Act applicable only to hospice 
patients served by RHCs and FQHCs, the overall intent of the amendments 
made by section 304 of the CAA, 2022 appear to be to provide an 
exception to the limitations otherwise in place on payment for mental 
health visits that are not in-person visits. Therefore, we proposed to 
apply the 151-day extension of non-in-person visits to all RHC and FQHC 
mental health visits.
    We proposed to make conforming regulatory text changes to the 
applicable RHC and FQHC regulations in 42 CFR part 405, subpart X, 
specifically, at Sec.  405.2463, ``What constitutes a visit,'' we 
proposed to amend paragraph (b)(3) and, at Sec.  405.2469 ``FQHC 
supplemental payments,'' we proposed to amend paragraph (d) to include 
the delay of the in-person requirements for mental health visits 
furnished by RHCs and FQHCs through telecommunication technology under 
Medicare until the 152nd day after the PHE for COVID-19.
    In the CY 2023 PFS proposed rule we listed the several other 
provisions of the CAA, 2022 that apply to telehealth services (those 
that are not mental health visits) furnished by RHCs and FQHCs. These 
provisions are also listed in the following paragraphs.
    Section 301 of the CAA, 2022 amended section 1834(m)(4)(C) of the 
Act to add a new clause (iii) expand the originating site requirements 
to include any site in the U.S. at which the beneficiary is located, 
including an individual's home, for a 151-day period beginning on the 
first day after the end of the PHE for COVID-19. It also prohibits an 
originating site facility fee from being paid unless the site is a 
setting included on the originating site list in section 
1834(m)(4)(C)(ii) of the Act, excluding the home of an individual.
    Section 305 of division P, title III, subtitle A of the CAA, 2022 
amended section 1834(m) of the Act to extend coverage and payment of 
telehealth services that are furnished via audio-only 
telecommunications system for the 151-day period beginning on the first 
day after the end of the PHE for COVID-19.
    Section 309 of division P, title III, subtitle A of the CAA, 2022 
authorized the Secretary to implement the Medicare telehealth 
provisions via program instruction or otherwise.
    The following is a summary of the public comments received on the 
conforming technical changes to Sec. Sec.  405.2463 and 405.2469 our 
responses:
    Comment: All commenters supported our proposal to make conforming 
regulatory text changes to the applicable RHC and FQHC regulations in 
42 CFR part 405, subpart X, specifically, at Sec.  405.2463, ``What 
constitutes a visit,'' and at Sec.  405.2469 ``FQHC supplemental 
payments'' to reflect the delay of the in-person requirements for 
mental health visits furnished by RHCs and FQHCs through 
telecommunication technology under Medicare until the 152nd day after 
the PHE for COVID-19. One commenter stated the delay of the in-person 
requirements would ensure consumers and caregivers have time to plan 
how they will attend an in-person visit, including arranging for 
childcare or transportation, and meeting other logistical challenges. 
Several commenters expressed concern that the in-person requirements 
would pose a challenge for some beneficiaries due to various social 
determinants of health and would like CMS to permanently remove the in-
person requirements.
    Response: We appreciate the feedback from commenters regarding the 
impact in-person requirements for mental health visits furnished by 
RHCs and FQHCs through telecommunication technology may have on access 
to care. Regarding concerns that the in-person requirements would pose 
a challenge for some beneficiaries due to various social determinants 
of health, we would like to direct you to Sec.  405.2463(b)(3) that 
describes the exceptions to the in-person visit requirements. An in-
person mental health service (without the use of telecommunications 
technology) must be provided at least every 12 months while the 
beneficiary is receiving services furnished via telecommunications 
technology for diagnosis, evaluation, or treatment of mental health 
disorders, unless, for a particular 12-month period, the physician or 
practitioner and patient agree that the risks and burdens outweigh the 
benefits associated with furnishing the in-person item or service, and 
the practitioner documents the reasons for this decision in the 
patient's medical record, between an RHC or FQHC patient.
    Comment: Commenters supported the Medicare telehealth extensions, 
but urged CMS to permanently allow RHCs and FQHCs to become distant 
sites for medical visits furnished using interactive, real-time, audio 
and video telecommunications, or audio-only interactions. Several 
commenters noted CMS has the authority to revise the definition of a 
medical visit for RHCs and FQHCs and should do so prior to the end of 
the COVID-19 PHE to avoid consequential gaps in care for some of the 
most vulnerable Medicare patients.
    Response: In response to comments that CMS permanently allow RHCs 
and FQHCs to become distant sites for medical visits, we note that the 
use of telecommunications technology by RHCs and FQHCs to furnish 
medical visits was not within the scope of this proposal. However, we 
anticipate that the extension of payment for distant site telehealth 
services furnished by RHCs and FQHCs for a 151-day period after the end 
of the PHE, as established in the CAA, 2022, would mitigate concerns 
regarding gaps in care since it could

[[Page 69739]]

provide time for transitioning patients to come into the RHC or FQHC.
    Comment: Commenters also provided comments on the following issues: 
Allowing RHCs and FQHCs to bill separately for remote physiologic 
monitoring (RPM) and remote therapeutic monitoring (RTM) services; 
recognizing pharmacists, DSMT providers, licensed professional 
counselors (LPCs) and licensed marriage and family therapist (LMFTs) as 
RHC and FQHC practitioners; and allowing RHCs and FQHCs to bill 
psychiatric collaborative care codes (G2214, 99492-99494).
    Response: We appreciate the feedback from commenters. Since we did 
not specifically make any proposals associated with these subjects in 
the CY 2023 PFS proposed rule, the comments are considered to be out of 
scope. We note that while we recognize that pharmacists, DSMT 
providers, LPCs, and LMFTs can be a valuable part of the health care 
team, we do not have the statutory authority to add providers to the 
list of RHC and FQHC practitioners whose services are included in the 
statutory definition of RHC and FQHC services, as specified in section 
1861(aa)(1) and (3) of the Act, respectively. However, incidental 
services furnished by auxiliary personnel are allowed incident to an 
encounter with and RHC or FQHC practitioner if furnished in a medically 
appropriate timeframe, as described by 42 CFR 405.2413 and 405.2415. As 
for allowing RHCs and FQHCs to bill RPM and RTM services separately and 
allowing RHCs and FQHCs to bill psychiatric collaborative care codes, 
we will continue to evaluate and may consider these in future 
rulemaking.
    After consideration of the comments received, we are finalizing our 
proposal to make conforming regulatory text changes to the applicable 
RHC and FQHC regulations in 42 CFR part 405, subpart X. Specifically, 
we are finalizing revisions at Sec. Sec.  405.2463 and 405.2469 to 
reflect the delay of the in-person requirements for mental health 
visits furnished by RHCs and FQHCs through telecommunication technology 
under Medicare until the 152nd day after the PHE for COVID-19 as 
proposed.
4. Specified Provider-Based RHC Payment-Limit Per-Visit
a. Background
    As discussed in the CY 2023 PFS proposed rule (87 FR 46065 through 
46066), beginning April 1, 2021, provider-based RHCs that meet 
qualifications in section 1833(f)(3)(B) of the Act are entitled to the 
special payment rules described in section 1833(f)(3)(A) of the Act. In 
order avail themselves of this exception, instead of utilizing the 
national statutory payment limit set out at section 1833(f)(2) of the 
Act, such RHCs have to meet the following specified criteria set out at 
section 1833(f)(3)(B)(i) of the Act:
     As of December 31, 2020, the provider-based RHC was in a 
hospital with less than 50 beds and after December 31, 2020 in a 
hospital that continues to have less than 50 beds (not taking into 
account any increase in the number of beds pursuant to a waiver during 
the PHE for COVID-19); and one of the following circumstances:
    ++ As of December 31, 2020, was enrolled in Medicare (including 
temporary enrollment during the PHE for COVID-19); or
    ++ Submitted an application for enrollment in Medicare (or a 
request for temporary enrollment during the PHE for COVID-19) that was 
received not later than December 31, 2020.
    In accordance with section 1833(f)(3)(A)(i)(I) of the Act, 
beginning April 1, 2021, for provider-based RHCs that had a per visit 
payment amount (or AIR) established for services furnished in 2020, the 
payment limit per visit shall be set at an amount equal to the greater 
of: (1) the per visit payment amount applicable to such RHC for 
services furnished in 2020, increased by the percentage increase in the 
MEI applicable to primary care services furnished as of the first day 
of 2021; or (2) the national statutory payment limit for RHCs per 
visit. We noted, the MEI was last revised in the CY 2014 PFS final rule 
with comment period (78 FR 74264) and we are finalizing to rebase and 
revise the MEI for CY 2023 as detailed in section II.M of this final 
rule.
    In a subsequent year (that is, after 2021), the provider-based 
RHC's payment limit per visit shall be set at an amount equal to the 
greater of: (1) the payment limit per visit established for the 
previous year, increased by the percentage increase in the MEI 
applicable to primary care services furnished as of the first day of 
such subsequent year; or (2) the national statutory payment limit for 
RHCs.
    As stated in the CY2022 PFS final rule (86 FR 65200), in accordance 
with section 1833(f)(3)(A)(i)(II) of the Act, beginning April 1, 2021, 
for provider-based RHCs that met the specified criteria under section 
1833(f)(3)(B) of the Act, but did not have a per visit payment amount 
(or AIR) established for services furnished in 2020, the payment limit 
per visit would be set at an amount equal to the greater of: (1) the 
per visit payment amount applicable to the provider-based RHC for 
services furnished in 2021; or (2) the national statutory payment limit 
for RHCs.
    In a subsequent year (that is, after 2021), the provider-based RHCs 
payment limit per visit will be the greater of: (1) the payment limit 
per visit established for the previous year, increased by the 
percentage increase in MEI applicable to primary care services 
furnished as of the first day of such subsequent year; or (2) the 
national statutory payment limit for RHCs.
    Once a provider-based RHC meets the qualifications of section 
1833(f)(3)(B) of the Act, it will lose its designation if the hospital 
does not continue to have less than 50 beds, beyond the exemptions 
provided for the COVID-19 PHE. If this occurs the provider-based RHC 
would be subject to the statutory payment limit per visit applicable 
for such year and will not be able to regain the specified provider-
based payment limit.
    In the CY 2022 PFS final rule (86 FR 65204), we discussed the 
provisions in section 1833(f) of the Act \153\ and finalized conforming 
regulations under Sec.  405.2462. On March 16, 2021, we issued Change 
Request 12185, Transmittal 10679, to instruct the Medicare 
Administrative Contractors (MACs) to establish the provider-based RHC 
payment limits per visit in accordance with section 1833(f)(3)(A) of 
the Act, beginning April 1, 2021. Change Request 12185, Transmittal 
10679, was rescinded and replaced by Transmittal 10780 issued on May 4, 
2021.\154\ Change Request 12489, Transmittal 11130, issued on November 
19, 2021, implemented the RHC payment limits for CY 2022.\155\
---------------------------------------------------------------------------

    \153\ As amended by Division CC, section 130 of the Consolidated 
Appropriations Act of 2021 (Pub. L. 116-260, December 27, 2020). 
Section 2 of H.R. 1868 (Pub. L. 117-7), enacted April 14, 2021, 
provided a technical correction to section 1833(f) of the Act. The 
amendments made by this technical correction took effect as if 
included in the enactment of the Consolidated Appropriations Act of 
2021 (Pub. L. 116-260).
    \154\ https://www.cms.gov/files/document/r10780OTN.pdf.
    \155\ https://www.cms.gov/files/document/r11130cp.pdf.
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b. Clarification to the RHC Payment Limit for Specified Provider-Based 
RHCs
    As we discussed in the CY 2023 PFS proposed rule (87 FR 46066 
through 46068), section 1833(f)(3)(A) of the Act instructed CMS to set 
payment limits per visit for specified provider-based RHCs under 
certain payment rules. For specified provider-based RHCs that had a per 
visit payment amount (that is, an AIR) established for services 
furnished in 2020, beginning April 1, 2021,

[[Page 69740]]

section 1833(f)(3)(A)(i)(I) of the Act requires the payment limit per 
visit to be set at an amount equal to the greater of: (1) the per visit 
payment amount applicable to such RHC for services furnished in 2020, 
increased by the percentage increase in the MEI applicable to primary 
care services furnished as of the first day of 2021 or; (2) the 
statutory payment limit per visit as described in section 1833(f)(2)(A) 
of the Act. For subsequent years, in accordance with section 
1833(f)(3)(A)(ii) of the Act, the payment limit per visit shall be set 
at an amount equal to the greater of: (1) the payment limit per visit 
established for the previous year, increased by the percentage increase 
in the MEI or; (2) the statutory payment limit described in section 
1833(f)(2) of the Act as applicable.
    For specified provider-based RHCs that did not have an AIR 
established for services furnished in 2020, beginning April 1, 2021, 
section 1833(f)(3)(A)(i)(II) of the Act requires the payment limit per 
visit shall be set at an amount equal to the greater of: (1) the per 
visit payment amount applicable to such RHC for services furnished in 
2021 or; (2) the statutory payment limit per visit as described in 
section 1833(f)(2)(A) of the Act. For subsequent years, in accordance 
with section 1833(f)(3)(A)(ii) of the Act, the payment limit per visit 
shall be set at an amount equal to the greater of: (1) the amount 
established in the previous year increased by the percentage increase 
in the MEI or; (2) the statutory payment limit described in section 
1833(f)(2) of the Act as applicable.
    In the CY 2022 PFS final rule (86 FR 65201), we interpreted the 
``per visit payment amount'' to align with the interim rate process the 
MACs use in determining an RHC's AIR.\156\ That is, as explained in 
Sec.  405.2464(a) the AIR is determined by the MAC using the most 
recently available cost report. Therefore, using the RHCs discussed in 
section 1833(f)(3)(A)(i)(I) of the Act as an example, we interpreted 
the term ``services furnished in 2020'' to mean the period at which the 
services were furnished in 2020 and that costs for those services were 
reported. We acknowledged that there may be more than one cost report 
that reports costs for services furnished in calendar year 2020 and 
explained that since section 1833(f)(3)(A)(i)(I)(aa) of the Act 
requires the ``per visit payment amount'' to be increased by the CY 
2021 MEI, if a provider has a cost reporting period that differs from a 
calendar year time-period (that is, January 1, 2020 through December 
31, 2020) then the MACs should use data based on the relevant cost 
report period ending in 2020.
---------------------------------------------------------------------------

    \156\ Note: A discussion of the interim rate process is provided 
in section III.A.2 of the CY 2022 PFS final rule (86 FR 65198 and 
65199).
---------------------------------------------------------------------------

    We noted that in the CY 2022 PFS final rule (86 FR 65200), we 
received comments from interested parties expressing concern about how 
the payment limit per visit is established for specified provider-based 
RHCs. To be appropriately reflective of an individual clinic's true 
costs, one commenter stated that grandfathered, clinic specific, upper 
payment limits should be based on the final cost settled amount for 
cost reporting periods that end in 2020, or 2021 (for grandfathered 
RHCs that did not have cost reporting period that end in 2020), not an 
interim rate. If an interim final rate is necessary for the time period 
before final cost settled rates are adjudicated, the commenter 
suggested that CMS set interim clinic-specific upper limits only until 
such time that a final rate is established. In our response to these 
comments, we agreed, and stated that what the commenter described was 
aligned with the statute and how we implemented the payment limit per 
visit for specified provider-based RHCs through Change Request 12185, 
Transmittal 10780, issued on May 4, 2021. That is, in accordance with 
section 1833(f)(3)(A) of the Act, specified provider-based RHCs that 
had a per visit payment amount (or AIR) established for services 
furnished in 2020, had their payment limit per visit based on their AIR 
determined from their final settled cost report ending in 2020 
increased by the percentage increase in the MEI applicable to primary 
care services furnished as of the first day of 2021 (CY 2021 MEI of 1.4 
percent). However, if the product of those two numbers (AIR established 
for services furnished in 2020 * 1.014) were less than the national 
statutory payment limit of $100, their payment limit per visit was 
established at $100. With regard to a specified provider based RHC that 
did not have an AIR established for services furnished in 2020 and 
received an interim rate until the MAC accepted and finalized the RHC's 
initial cost report, we again agreed with the commenter. We believed 
that what the commenter described also aligned with the statute and how 
we implemented the payment limit per visit for these specified 
provider-based RHCs through Change Request 12185, Transmittal 10780, 
issued on May 4, 2021. That is, in accordance with section 
1833(f)(3)(A) of the Act, specified provider-based RHCs that did not 
have an AIR established for services furnished in 2020, would have 
their payment limit per visit established based on their AIR determined 
by MACs using the RHC's final settled cost report ending in 2021. The 
interim rate estimate would be reconciled at cost report settlement for 
the cost reporting period ending in 2021 which is used to establish the 
RHC's payment limit per visit for services furnished in 2021.
    In the proposed rule, we stated that since publication of the CY 
2022 PFS final rule, interested parties requested clarification 
regarding the timing of cost reports, specifically if the payment limit 
could be set using a short cost report (less than 12 consecutive 
months). We noted that in the CY 2022 PFS final rule (86 FR 65198 
through 65202), we did not specifically address requiring the cost 
report to span a full 12-consecutive month period or whether MACs, 
following their interim rate setting process, could establish the 
payment limit using a specified RHC's short period cost report (less 
than 12 consecutive months). Since many questions were raised 
subsequent to the publication of the CY 2022 PFS final rule regarding 
the use of short-period cost reports (less than 12 consecutive months) 
versus 12-consecutive month cost reports to establish the payment limit 
for specified provider-based RHCs, in the proposed rule, we provided a 
discussion of the issue and provided clarification.
    For purposes of establishing the payment limit effective April 1, 
2021 for specified provider-based RHCs defined in section 
1833(f)(3)(A)(i)(I) of the Act, that is, had an AIR established for 
services furnished in 2020, we proposed that MACs use the cost report 
ending in 2020 that reports costs for 12 consecutive months. If the RHC 
does not have a 12-consecutive month cost report ending in 2020, the 
MACs should use the next most-recent final settled cost report that 
reports cost for 12 consecutive months. We explained that the proposal 
would impact specified provider-based RHC's that had an established AIR 
for services furnished in 2020 but submitted a short cost report (less 
than 12 consecutive months) ending in 2020 since that period would have 
been used by MACs for determining the RHC's payment limit per Change 
Request 12185, Transmittal 10679.
    The payment limit per visit is based on each specified provider-
based RHC's AIR determined from their final settled cost report ending 
in 2020 when such cost reporting period is for 12 consecutive months. 
If a 12-consecutive month cost report ending in 2020 is not available, 
we proposed that the MAC

[[Page 69741]]

use the next available 12-consecutive month cost report that reports 
costs for RHC services furnished in 2020, (for example, a cost 
reporting period October 1, 2020 through September 30, 2021 would be 
acceptable).
    We considered the idea of combining cost report data that spans 
from the end of one year into the next year to equal a 12-consecutive 
month cost report (for example, a cost report that consists of 3 months 
ending December 31, 2020 plus a cost report that ends July 31, 2021) 
and prorating the rates from the time services were furnished in both 
years. We decided against combining cost report data to equal a 12-
consecutive month cost report because prorating may result in an 
inaccurate AIR. We sought comment on whether we should combine cost 
report data that spans from one year into the next year to equal a 12-
consecutive month cost report.
    Consequently, for purposes of establishing the payment limit 
effective April 1, 2021 for specified provider-based RHCs defined in 
section 1833(f)(3)(A)(i)(II) of the Act (that is, those that did not 
have an AIR established for services furnished in 2020), we proposed 
that MACs use the cost report ending in 2021 that reports costs for 12 
consecutive months. We noted that if the RHC does not have a 12-
consecutive month cost report ending in 2021, the MACs should use the 
next most-recent final settled cost report that reports cost for 12 
consecutive months.
    In addition, we noted that for those specified provider-based RHCs 
who did not have an AIR established for services furnished in 2020, the 
2021 MEI percentage increase would not be applied. As discussed in the 
CY 2022 PFS final rule (86 FR 65200), for those specified provider-
based RHCs, the payment limit per visit would be at an amount equal to 
the greater of: (1) the per visit payment amount applicable to the 
provider-based RHC for services furnished in 2021; or (2) the national 
statutory payment limit for RHCs, and since the MEI is already built in 
the rate for services furnished in 2021 adding an MEI update would be 
duplicative. Therefore, those specified provider-based RHCs that did 
not have an AIR established for services furnished in 2020 would 
receive the CY 2023 percentage increase in the MEI. For CY 2023, we 
proposed to rebase and revise the MEI to a 2017-base year as discussed 
in section II.M. of this final rule, we are finalizing the 2017-based 
MEI for CY 2023, with technical modifications based on public comments.
    We noted that we believe the 12 consecutive months of cost report 
data would more accurately reflect the costs of providing RHC services 
and would establish a more accurate base from which the payment limits 
will be updated going forward. We sought comment on the proposed 
interpretation.
    The following is a summary of the public comments received on the 
specified provider-based RHC payment-limit per-visit provision and our 
responses:
    Comment: We received a few comments on our proposal to use 12-
consecutive month cost reports versus short-period cost reports (less 
than 12 consecutive months) to establish the payment limit for 
specified provider-based RHCs. Commenters were generally supportive of 
the use of 12 consecutive month cost reports to establish the payment 
limit for specified provider-based RHCs.
    Response: We appreciate commenters' support of the use of 12 
consecutive month cost reports to establish the payment limit for 
specified provider-based RHCs.
    Comment: We received a few comments on our proposal to rebase and 
revise the Medicare Economic Index (MEI) from a 2006-base year to a 
2017-base year. One commenter thanked CMS for rebasing and revising the 
MEI in such a way that it reflects more accurate payments to RHCs, 
however, the commenter urged CMS to explore its authority to ensure 
that rural practitioners are reimbursed a rate that reflects the 
current economic reality. Another commenter acknowledged and 
appreciated CMS' proposal to rebase the MEI for CY2023, but encouraged 
CMS to remain attentive to the inflationary impacts on providers now 
and over the coming years and to address the MEI formula accordingly. 
Another commenter urged CMS to establish a requirement to rebase the 
payment every 3 years or sooner as the market inflation costs will 
quickly fall below reimbursement rates.
    Response: As we noted in the CY 2023 proposed rule (87 FR 46067) 
and as discussed in section II.M. of this final rule, the MEI is 
authorized under section 1824(b)(3) of the Act. The MEI reflects the 
weighted-average annual price change for various inputs involved in 
furnishing physicians' services. CMS calculates the MEI for several 
statutory and other purposes, which includes the RHC payment policies. 
As discussed in section II.M of this final rule, we are finalizing the 
2017-based MEI for CY 2023 with technical modifications in response to 
public comments. The CY 2023 MEI update is 3.8 percent based on 
historical data through the 2nd quarter of 2022, of the finalized 2017-
based MEI.
    Comment: One commenter encouraged CMS to consider a more 
sustainable payment policy because they noted that over the years the 
RHC reimbursement policy has evolved to include a variety of different 
methodologies and systems patched together, which has led to 
increasingly complicated RHC billing and coding rules.
    Response: We reiterate that in this year's proposed rule, we 
focused on providing clarification regarding the timing of cost 
reports, specifically, the use of short-period cost reports (less than 
12 consecutive months) versus 12-consecutive month cost reports to 
establish the payment limit for specified provider-based RHCs. We note 
that in the CY 2022 final rule (86 FR 65199-65201), we discussed 
section 130 of the Consolidated Appropriations Act, 2021, which 
explained the implementation of the national statutory payment limit 
for RHCs, where RHCs will receive an increase in their payment limit 
per visit, over an 8-year period, with a prescribed amount for each 
year from 2021-2028. Then, in a subsequent year, at the limit 
established for the previous year increased by the percentage increase 
in the applicable MEI. We believe the intent of section 130 of the CAA 
was to provide sustainable payment for RHCs. The commenter did not 
provide examples of complicated billing and coding rules and we look 
forward to further engagement on these concerns.
    After consideration of the public comments, we are finalizing our 
proposal to use 12-consecutive month cost reports to establish the 
payment limit for specified provider-based RHCs as proposed.

C. Clinical Laboratory Fee Schedule: Revised Data Reporting Period and 
Phase-In of Payment Reductions, and Policies for Specimen Collection 
Fees and Travel Allowance for Clinical Diagnostic Laboratory Tests

1. Background on the Clinical Laboratory Fee Schedule
    Prior to January 1, 2018, Medicare paid for clinical diagnostic 
laboratory tests (CDLTs) on the Clinical Laboratory Fee Schedule 
(CLFS), with certain exceptions, under section 1833(a), (b), and (h) of 
the Act. Under the previous payment system, CDLTs were paid based on 
the lesser of: (1) the amount billed; (2) the local fee schedule amount 
established by the Medicare Administrative Contractor (MAC); or (3) a 
national limitation amount (NLA), which is a percentage of the median 
of

[[Page 69742]]

all the local fee schedule amounts (or 100 percent of the median for 
new tests furnished on or after January 1, 2001). In practice, most 
tests were paid at the NLA. Under the previous payment system, the CLFS 
amounts were updated for inflation based on the percentage change in 
the Consumer Price Index for All Urban Consumers (CPI-U), and reduced 
by a productivity adjustment and other statutory adjustments, but were 
not otherwise updated or changed. Coinsurance and deductibles generally 
do not apply to CDLTs paid under the CLFS.
    Section 1834A of the Act, as established by section 216(a) of the 
Protecting Access to Medicare Act of 2014 (PAMA), required significant 
changes to how Medicare pays for CDLTs under the CLFS. In the June 23, 
2016 Federal Register (81 FR 41036), we published a final rule entitled 
Medicare Clinical Diagnostic Laboratory Tests Payment System (CLFS 
final rule), that implemented section 1834A of the Act at 42 CFR part 
414, subpart G.
    Under the CLFS final rule, ``reporting entities'' must report to 
CMS during a ``data reporting period'' ``applicable information'' 
collected during a ``data collection period'' for their component 
``applicable laboratories.'' The first data collection period occurred 
from January 1, 2016 through June 30, 2016. The first data reporting 
period occurred from January 1, 2017 through March 31, 2017. On March 
30, 2017, we announced a 60-day period of enforcement discretion for 
the application of the Secretary's potential assessment of civil 
monetary penalties (CMPs) for failure to report applicable information 
with respect to the initial data reporting period.\157\
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    \157\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/Downloads/2017-March-Announcement.pdf.
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    In the CY 2018 PFS proposed rule (82 FR 34089 through 34090), we 
solicited public comments from applicable laboratories and reporting 
entities to better understand their experiences with data reporting, 
data collection, and other compliance requirements for the first data 
collection and reporting periods. We discussed these comments in the CY 
2018 PFS final rule (82 FR 53181 through 53182) and stated that we 
would consider the comments for potential future rulemaking or 
guidance.
    As part of the CY 2019 Medicare PFS rulemaking, we finalized two 
changes to the definition of ``applicable laboratory'' at Sec.  414.502 
(see 83 FR 59667 through 59681, 60074; 83 FR 35849 through 35850, 35855 
through 35862). First, we excluded Medicare Advantage (MA) plan 
payments under Part C from the denominator of the Medicare revenues 
threshold calculation, in an effort to broaden the types of 
laboratories qualifying as applicable laboratories. Specifically, 
excluding MA plan payments could allow additional laboratories of all 
types serving a significant population of beneficiaries enrolled in 
Medicare Part C to meet the majority of Medicare revenues threshold and 
potentially qualify as applicable laboratories (if they also meet the 
low expenditure threshold) and report data to CMS during the data 
reporting period. Because MA plan payments are now excluded from the 
total Medicare revenues calculation, the denominator amount (total 
Medicare revenues) would decrease. If the denominator amount decreases, 
the likelihood increases that a laboratory would qualify as an 
applicable laboratory. This is because the laboratory's PFS and CLFS 
revenues are being compared to a lower total Medicare payment amount 
than what they would have been compared to if MA plan payments remained 
in the denominator. Second, consistent with our goal of obtaining a 
broader representation of laboratories that could potentially qualify 
as applicable laboratories and report data, we also amended the 
definition of applicable laboratory to include hospital outreach 
laboratories that bill Medicare Part B using the CMS-1450 14x Type of 
Bill.
2. Payment Requirements for Clinical Diagnostic Laboratory Tests
    In general, under section 1834A of the Act, the payment amount for 
each CDLT on the CLFS furnished beginning January 1, 2018, is based on 
the applicable information collected during the data collection period 
and reported to CMS during the data reporting period, and is equal to 
the weighted median of the private payor rates for the test. The 
weighted median is calculated by arraying the distribution of all 
private payor rates, weighted by the volume for each payor and each 
laboratory. The payment amounts established under the CLFS are not 
subject to any other adjustment, such as geographic, budget neutrality, 
or annual update, as required by section 1834A(b)(4)(B) of the Act. 
Additionally, section 1834A(b)(3) of the Act, implemented at Sec.  
414.507(d), provides for a phase-in of payment reductions, limiting the 
amounts the CLFS rates for each CDLT (that is not a new advanced 
diagnostic laboratory test (ADLT) or new CDLT) can be reduced as 
compared to the payment rates for the preceding year. Under the 
provisions enacted by section 216(a) of PAMA, for the first 3 years 
after implementation (CY 2018 through CY 2020), the reduction cannot be 
more than 10 percent per year, and for the next 3 years (CY 2021 
through CY 2023), the reduction cannot be more than 15 percent per 
year. Under section 1834A(a)(1) and (b) of the Act, as enacted by PAMA, 
for CDLTs that are not ADLTs, the data collection period, data 
reporting period, and payment rate update occur every 3 years. As such, 
the second data collection period for CDLTs that are not ADLTs occurred 
from January 1, 2019 through June 30, 2019, and the next data reporting 
period was scheduled to take place from January 1, 2020 through March 
31, 2020, with the next update to the Medicare payment rates for these 
tests based on that reported applicable information scheduled to take 
effect as of January 1, 2021.
    Section 216(a) of PAMA established a new subcategory of CDLTs known 
as ADLTs, with separate reporting and payment requirements under 
section 1834A of the Act. The definition of an ADLT is set forth in 
section 1834A(d)(5) of the Act and implemented at Sec.  414.502.
    Generally, under section 1834A(d) of the Act, the Medicare payment 
rate for a new ADLT is equal to its actual list charge during an 
initial period of 3 calendar quarters. After the new ADLT initial 
period, ADLTs are paid using the same methodology based on the weighted 
median of private payor rates as other CDLTs. However, under section 
1834A(d)(3) of the Act, updates to the Medicare payment rates for ADLTs 
occur annually instead of every 3 years.
    Additional information on the private payor rate-based CLFS is 
detailed in the CLFS final rule (81 FR 41036 through 41101) and is 
available on the CMS website.\158\
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    \158\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ClinicalLabFeeSched/PAMA-regulations.
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3. Previous Statutory Revisions to the Data Reporting Period and Phase-
In of Payment Reductions
    Section 105(a) of the Further Consolidated Appropriations Act, 2020 
(FCAA) (Pub. L. 116-94, enacted on December 20, 2019), and section 3718 
of the Coronavirus Aid, Relief, and Economic Security Act, 2020 (CARES 
Act) (Pub. L. 116-136, enacted on March 27, 2020), revised the CLFS 
requirements for the next data reporting period for CDLTs that are not 
ADLTs under section 1834A of the Act. Additionally, the CARES Act 
revised the phase-in of payment reductions under section 1834A of the 
Act. Specifically, section 105(a)(1) of the

[[Page 69743]]

FCAA amended the data reporting requirements in section 1834A(a) of the 
Act to delay the next data reporting period for CDLTs that are not 
ADLTs by 1 year, so that data reporting would be required during the 
period of January 1, 2021 through March 31, 2021; the 3-year data 
reporting cycle for CDLTs that are not ADLTs would resume after that 
data reporting period. Section 105(a)(1) of the FCAA also specified 
that the data collection period that applied to the data reporting 
period of January 1, 2021 through March 30, 2021 would be the period of 
January 1, 2019 through June 30, 2019, which was the same data 
collection period that would have applied absent the amendments. In 
addition, section 105(a)(2) of the FCAA amended section 1834A(b)(3) of 
the Act regarding the phase-in of payment reductions to provide that 
payments may not be reduced by more than 10 percent as compared to the 
amount established for the preceding year through CY 2020, and for CYs 
2021 through 2023, payment may not be reduced by more than 15 percent 
as compared to the amount established for the preceding year. These 
statutory changes were consistent with our regulations implementing the 
private payor rate-based CLFS at Sec.  414.507(d) (81 FR 41036).
    Subsequently, section 3718 of the CARES Act further amended the 
data reporting requirements for CDLTs that are not ADLTs and the phase-
in of payment reductions under the CLFS. Specifically, section 3718(a) 
of the CARES Act amended section 1834A(a)(1)(B) of the Act to delay the 
next data reporting period for CDLTs that are not ADLTs by one 
additional year, to require data reporting during the period of January 
1, 2022 through March 31, 2022. As amended by the CARES Act, section 
1834A(a)(1)(B) of the Act provided that in the case of reporting with 
respect to CDLTs that are not ADLTs, the Secretary shall revise the 
reporting period under subparagraph (A) such that: (i) no reporting is 
required during the period beginning January 1, 2020, and ending 
December 31, 2021; (ii) reporting is required during the period 
beginning January 1, 2022, and ending March 31, 2022; and (iii) 
reporting is required every 3 years after the period described in 
clause (ii).
    The CARES Act did not modify the data collection period that 
applied to the next data reporting period for these tests. Thus, under 
section 1834A(a)(4)(B) of the Act, as amended by section 105(a)(1) of 
the FCAA, the next data reporting period for CDLTs that are not ADLTs 
(January 1, 2022 through March 31, 2022) would have been based on the 
data collection period of January 1, 2019 through June 30, 2019.
    Section 3718(b) of the CARES Act further amended the provisions in 
section 1834A(b)(3) of the Act regarding the phase-in of payment 
reductions under the CLFS. First, it extended the statutory phase-in of 
payment reductions resulting from private payor rate implementation by 
an additional year, that is, through CY 2024. It further amended 
section 1834A(b)(3)(B)(ii) of the Act to specify that the applicable 
percent for CY 2021 is 0 percent, meaning that the payment amount 
determined for a CDLT for CY 2021 shall not result in any reduction in 
payment as compared to the payment amount for that test for CY 2020. 
Section 3718(b) of the CARES Act further amended section 
1834A(b)(3)(B)(iii) of the Act to state that the applicable percent of 
15 percent will apply for CYs 2022 through 2024, instead of CYs 2021 
through 2023.
    In the CY 2021 PFS rulemaking (85 FR 50210 through 50211 and 85 FR 
84693 through 84694), in accordance with section 105(a) of the FCAA and 
section 3718 of the CARES Act, we proposed and finalized conforming 
changes to the data reporting and payment requirements at 42 CFR part 
414, subpart G. Specifically, we finalized revisions to Sec.  414.502 
to update the definitions of both the data collection period and data 
reporting period, specifying that for the data reporting period of 
January 1, 2022 through March 31, 2022, the data collection period is 
January 1, 2019 through June 30, 2019. We also revised Sec.  
414.504(a)(1) to indicate that initially, data reporting begins January 
1, 2017 and is required every 3 years beginning January 2022. In 
addition, we finalized conforming changes to our requirements for the 
phase-in of payment reductions to reflect the CARES Act amendments. 
Specifically, we finalized revisions to Sec.  414.507(d) to indicate 
that for CY 2021, payment may not be reduced by more than 0.0 percent 
as compared to the amount established for CY 2020, and for CYs 2022 
through 2024, payment may not be reduced by more than 15 percent as 
compared to the amount established for the preceding year.
4. Additional Statutory Revisions to the Data Reporting Period and 
Phase-In of Payment Reductions
    Section 4 of the Protecting Medicare and American Farmers from 
Sequester Cuts Act (PMAFSCA) (Pub. L. 117-71, enacted on December 10, 
2021) made additional revisions to the CLFS requirements for the next 
data reporting period for CDLTs that are not ADLTs and to the phase-in 
of payment reductions under section 1834A of the Act. Specifically, 
section 4(b) of PMAFSCA amended the data reporting requirements in 
section 1834A(a) of the Act to delay the next data reporting period for 
CDLTs that are not ADLTs by 1 year, so that data reporting would be 
required during the period of January 1, 2023 through March 31, 2023; 
the 3-year data reporting cycle for CDLTs that are not ADLTs would 
resume after that data reporting period. As amended by section 4 of 
PMAFSCA, section 1834A(a)(1)(B) of the Act now provides that in the 
case of reporting with respect to CDLTs that are not ADLTs, the 
Secretary shall revise the reporting period under subparagraph (A) such 
that--(i) no reporting is required during the period beginning January 
1, 2020, and ending December 31, 2022; (ii) reporting is required 
during the period beginning January 1, 2023, and ending March 31, 2023; 
and (iii) reporting is required every 3 years after the period 
described in clause (ii).
    Section 4 of PMAFSCA does not modify the data collection period 
that applies to the next data reporting period for these tests. Thus, 
under section 1834A(a)(4)(B) of the Act, as amended by section 
105(a)(1) of the FCAA, the next data reporting period for CDLTs that 
are not ADLTs (January 1, 2023 through March 31, 2023) will continue to 
be based on the data collection period of January 1, 2019 through June 
30, 2019, as defined in Sec.  414.502.
    Section 4 of PMAFSCA further amends the provisions in section 
1834A(b)(3) of the Act regarding the phase-in of payment reductions 
under the CLFS. First, it extends the statutory phase-in of payment 
reductions resulting from private payor rate implementation by an 
additional year, that is, through CY 2025. It further amends section 
1834A(b)(3)(B)(ii) of the Act to specify that the applicable percent 
for each of CY 2021 and 2022 is 0 percent, meaning that the payment 
amount determined for a CDLT for CY 2021 and 2022 shall not result in 
any reduction in payment as compared to the payment amount for that 
test for CY 2020. Section 4(a) of PMAFSCA further amends section 
1834A(b)(3)(B)(iii) of the Act to state that the applicable percent of 
15 percent will apply for CYs 2023 through 2025, instead of CYs 2022 
through 2024.
5. Conforming Regulatory Changes
    In accordance with section 4(b) of PMAFSCA, in the CY 2023 PFS 
proposed rule (87 FR 46068 through

[[Page 69744]]

46070), we proposed to make certain conforming changes to the data 
reporting and payment requirements at 42 CFR part 414, subpart G. 
Specifically, we proposed to revise Sec.  414.502 to update the 
definitions of both the ``data collection period'' and ``data reporting 
period,'' specifying that for the data reporting period of January 1, 
2023 through March 31, 2023, the data collection period is January 1, 
2019 through June 30, 2019. We also proposed to revise Sec.  
414.504(a)(1) to indicate that initially, data reporting begins January 
1, 2017 and is required every 3 years beginning January 2023. In 
addition, we proposed to make conforming changes to our requirements 
for the phase-in of payment reductions to reflect the amendments in 
section 4(b) of PMAFSCA. Specifically, we proposed to revise Sec.  
414.507(d) to indicate that for CY 2022, payment may not be reduced by 
more than 0.0 percent as compared to the amount established for CY 
2021, and for CYs 2023 through 2025, payment may not be reduced by more 
than 15 percent as compared to the amount established for the preceding 
year.
    We noted that the CYs 2022 and 2023 CLFS payment rates for CDLTs 
that are not ADLTs are based on applicable information collected in the 
data collection period of January 1, 2016 through June 30, 2016. We 
explained that under current law, the CLFS payment rates for CY 2024 
through CY 2026 for these tests will be based on applicable information 
collected during the data collection period of January 1, 2019 through 
June 30, 2019 and reported to CMS during the data reporting period of 
January 1, 2023 through March 31, 2023.
    The following is a summary of the public comments received on the 
proposed conforming regulatory changes and our responses:
    Comment: Several commenters supported our proposal to revise 
Sec. Sec.  414.502, 414.504 and 414.507 to conform with the current 
statutory provisions governing data reporting and payment for CDLTs on 
the CLFS.
    Response: We appreciate the commenters' support for these 
regulatory changes that reflect the recent statutory revisions required 
by section 4 of PMAFSCA.
    Comment: One commenter requested that the CLFS data collection 
period be revised to January 1, 2022, through June 30, 2022, from the 
current data collection period of January 1, 2019, through June 30, 
2019. The commenter asserted that such a change would serve to better 
reflect the current market conditions and private payor rates for 
laboratory tests.
    Response: We note that section 4 of PMAFSCA did not modify the data 
collection period that applies to the next data reporting period for 
CDLTs that are not ADLTs. Therefore, under section 1834A(a)(4)(B) of 
the Act, as amended by section 105(a)(1) of the FCAA, the next data 
reporting period for CDLTs that are not ADLTs (January 1, 2023, through 
March 31, 2023) will continue to be based on the data collection period 
of January 1, 2019, through June 30, 2019, as defined in Sec.  414.502. 
Because this requirement is statutory, we are unable to modify the data 
collection period.
    Comment: Several commenters suggested that CMS delay implementation 
of the phase-in of payment reductions under the CLFS for CY 2023 and 
instead utilize a 0.0 percent payment reduction for CY 2023.
    Response: We note that the phase-in of payment reductions to the 
CLFS payment amounts is statutory; therefore, we are unable to delay 
implementation and apply 0.0 percent payment reduction for CY 2023. The 
statute expressly states that there will be a 0.0 payment reduction for 
CY 2022 and, for CYs 2023 through 2025, payment may not be reduced by 
more than 15 percent as compared to the amount established for the 
preceding year.
    In consideration of these public comments and in accordance with 
section 4(b) of PMAFSCA, we are finalizing the proposed conforming 
changes to the data reporting and payment requirements at 42 CFR part 
414, subpart G, as proposed.
6. Laboratory Specimen Collection Fee and Travel Allowance Policies
    As discussed in the CY 2023 PFS proposed rule (87 FR 46070 through 
46074), section 1833(h)(3) of the Act generally requires the Secretary 
to provide for and establish a nominal fee for specimen collection for 
laboratory testing and a fee to cover transportation and personnel 
expenses for trained personnel to collect specimens from homebound 
patients and inpatients (not in a hospital), in addition to the amounts 
provided under the Medicare CLFS. We proposed to codify our 
longstanding specimen collection fee policies at Sec.  414.523(a)(1) 
and our travel allowance policies at Sec.  414.523(a)(2), as well as 
certain changes to modify or clarify those policies.
a. Background on Laboratory Specimen Collection Fee Policy
    Medicare Part B, which includes a variety of outpatient services, 
generally covers medically necessary CDLTs when a doctor or non-
physician practitioner orders them. Medically necessary CDLTs generally 
are not subject to coinsurance or deductible. Section 1833(h)(3)(A) of 
the Act provides that, in addition to the amounts provided under fee 
schedules (for tests furnished before January 1, 2017) or under section 
1834A of the Act (for tests furnished on or after January 1, 2017), the 
Secretary shall provide for and establish a nominal fee to cover the 
appropriate costs in collecting the sample on which a CDLT was 
performed and for which payment is made under Medicare Part B, except 
that not more than one such fee may be provided with respect to samples 
collected in the same encounter. As detailed in the proposed rule, we 
provided manual instructions regarding payment of the nominal specimen 
collection fee in the Medicare Claims Processing Manual Pub. 100-04, 
chapter 16, section 60.1,\159\ but we have not reflected these general 
policies in our regulations.\160\ The HCPCS codes for the nominal 
specimen collection fees currently listed on the CLFS (HCPCS codes 
36415, P9612, and P9615 \161\) have a payment rate of $3. Neither the 
annual deductible nor the 20 percent coinsurance for Medicare apply to 
the specimen collection fees or travel allowance for laboratory tests.
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    \159\ The Medicare Claims Processing Manual is available on the 
CMS website at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs-Items/CMS018912.
    \160\ In 1993, we proposed to implement the payment 
methodologies for the specimen collection fee and travel allowance 
in the regulations, see 53 FR 43837 through 43838, but did not 
finalize those proposals.
    \161\ HCPCS codes and long descriptors: 36415 (Insertion of 
needle into vein for collection of blood sample); P9612 
(Catheterization for collection of specimen, single patient, all 
places of); P9615 (Catheterization for collection of specimen(s) 
(multiple patients)).
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    Section 216(a) of the Protecting Access to Medicare Act of 2014 
(PAMA) (Pub. L. 113-93, enacted April 1, 2014) added section 
1834A(b)(5) to the Act, which increases by $2 the nominal fee that 
would otherwise apply under section 1833(h)(3)(A) of the Act for a 
specimen collected from an individual in a skilled nursing facility 
(SNF) or by a laboratory on behalf of a HHA. Therefore, effective April 
1, 2014, the nominal fee that would otherwise apply for a specimen 
collected from an individual in a SNF or by a laboratory on behalf of a 
HHA is $5, and the relevant HCPCS code is G0471.\162\ We

[[Page 69745]]

implemented this provision in our regulations at Sec.  414.507(f). 
However, as we discussed in the proposed rule, we proposed to codify 
our specimen collection fee policies in Sec.  414.523(a)(1), including 
moving that provision from Sec.  414.507(f) to Sec.  414.523(a)(1)(iv).
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    \162\ HCPCS code and descriptor: G0471 (Collection of venous 
blood by venipuncture or urine sample by catheterization from an 
individual in a skilled nursing facility (SNF) or by a laboratory on 
behalf of a home health agency (HHA)).
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    In the ``Medicare and Medicaid Programs; Policy and Regulatory 
Revisions in Response to the COVID-19 Public Health Emergency'' interim 
final rule with comment period (IFC), which appeared in the Federal 
Register on April 6, 2020 (85 FR 19230), we established that Medicare 
would pay a nominal specimen collection fee and associated travel 
allowance to independent laboratories for the collection of specimens 
for COVID-19 CDLTs for homebound and non-hospital inpatients (85 FR 
19256 through 19258). Under this policy, the nominal specimen 
collection fee for COVID-19 testing for homebound and non-hospital 
inpatients generally is $23.46 and for individuals in a SNF and 
individuals whose samples are collected by laboratory on behalf of an 
HHA is $25.46. We indicated in that IFC that this specimen collection 
fee policy was established for the duration of the PHE for COVID-19 (85 
FR 19256) and noted in that IFC and subsequent rules (86 FR 39309; 86 
FR 65327) that this policy will end once the PHE for the COVID-19 
pandemic has ended.
    In the CY 2022 PFS proposed rule (86 FR 39310), we requested broad 
comments on our policies for specimen collection fees for consideration 
for possible updates to those policies in the future through notice and 
comment rulemaking. We requested comments regarding the nominal 
specimen collection fees for trained personnel to collect specimens 
from homebound patients and inpatients (not in a hospital), how 
specimen collection practices may have changed as a result of, or from 
insight gained during, the PHE for COVID-19, and what additional 
resources might be needed for specimen collection for COVID-19 CDLTs 
and other tests after the PHE ends, as well as comments related to the 
calculation of costs for transportation and personnel expenses for 
trained personnel to collect specimens from such patients. In the CY 
2022 PFS final rule (86 FR 65327 through 65328), we described the 
comments received and provided responses to those comments. We 
expressed appreciation for the comments regarding the nominal specimen 
collection fees for the collection of specimens for COVID-19 CDLTs and 
acknowledged that the types of resources utilized and supplies needed 
for specimen collection have been influenced by the PHE for COVID-19. 
We stated that although we would not extend the increased payment 
amount beyond the PHE, we would take the feedback received from the 
comment solicitation into consideration for possible future rulemaking 
and guidance.
b. Longstanding Laboratory Specimen Collection Fee Policies and 
Practices
    In the CY 2023 PFS proposed rule (87 FR 46071 through 46073), we 
explained that CMS has longstanding policies and practices regarding 
the statutory requirements under section 1833(h)(3)(A) of the Act for 
the laboratory specimen collection fee, which are currently described 
in the Medicare Claims Processing Manual Pub. 100-04, chapter 16, Sec.  
60.1. However, we do not have corresponding regulations text related to 
the manual guidance and some of the manual guidance is no longer 
applicable. The manual guidance specifies when a specimen fee is 
allowed and not allowed. In particular, the manual provides guidance on 
the following topics: (1) specimen drawing by a physician; (2) specimen 
drawing by an independent laboratory; (3) specimen drawing for a 
dialysis patient; and (4) the coding requirements for specimen 
collection. We noted that laboratory services, including specimen 
collection and travel for specimen collection, paid under the CLFS must 
be reasonable and necessary as required under section 1862(a)(1)(A) of 
the Act.
    Specifically, the guidance provides that a specimen collection fee 
is allowed in circumstances such as drawing a blood sample through 
venipuncture (that is, inserting into a vein a needle with syringe or 
vacutainer to draw the specimen) or collecting a urine sample by 
catheterization. A specimen collection fee is not allowed for a throat 
culture or a routine capillary puncture for clotting or bleeding time. 
Additionally, the specimen fee will not be paid to anyone who has not 
extracted the specimen. The manual guidance addresses the number of 
specimen collection fees allowed for each specimen type per patient 
encounter. The manual also addresses how to treat a series of 
specimens; when a series of specimens is required to perform a single 
test (for example, a glucose tolerance test), the series is treated as 
a single encounter.
    The Medicare Claims Processing Manual (chapter 16, Sec.  60.1.1) 
describes specimen collection fees for physicians. Specifically, the 
manual states that Medicare allows a specimen collection fee for 
physicians only when: (1) it is the accepted and prevailing practice 
among physicians in the locality to make separate charges for drawing 
or collecting a specimen; and (2) it is the customary practice of the 
physician performing such services to bill separate charges for drawing 
or collecting the specimen.
    We noted that, in reviewing the specimen collection criteria for 
physicians to be paid for this service, we had concerns regarding 
outdated terminology and the eligibility criteria for these suppliers 
to bill Medicare for a specimen collection fee. For example, we found 
that these criteria were established prior to January 1, 1992, which is 
when Medicare began to pay for physicians' services under section 1848 
of the Act (56 FR 59502). Since that time, the provision of laboratory 
services and physicians' services have evolved. Therefore, we evaluated 
those criteria as they would apply today. In consideration of current 
standards of practice, we analyzed utilization of the specimen 
collection Current Procedural Terminology (CPT[supreg]) codes to 
determine if the physician office setting is billing for this fee. We 
found that, in 2019, office-based physician and nonphysician 
practitioners had 67.4 million claims billed with specimen collection, 
comprising 31.1 percent of all specimen collection claims.
    We also looked to the PFS to see if there are similar services that 
physicians and nonphysician practitioners can bill and be paid for 
under section 1848 of the Act. We found that there are codes available 
that address collection of blood, for example, CPT[supreg] codes 36410 
(Venipuncture, age 3 years or older, necessitating the skill of a 
physician or other qualified health care professional (separate 
procedure), for diagnostic or therapeutic purposes (not to be used for 
routine venipuncture)). These findings confirmed specimen collection 
occurs in the physician's office setting and there are coding options 
to bill for that service via the PFS when applicable. Therefore, we 
noted that we believed the criteria currently included in the manual 
for physician eligibility for the CLFS specimen collection fee no 
longer apply. We stated that we would not reflect those policies in 
regulation and would remove this section of the manual accordingly.
    The Medicare Claims Processing Manual (chapter 16, Sec.  60.1.2) 
describes policies for specimen drawing by independent laboratories. 
Specifically, the manual states the following:

[[Page 69746]]

    Medicare allows separate charges made by laboratories for drawing 
or collecting specimens whether or not the specimens are referred to 
hospitals or independent laboratories. The laboratory does not bill for 
routine handling charges where a specimen is referred by one laboratory 
to another. Medicare allows payment for a specimen collection fee when 
it is medically necessary for a laboratory technician to draw a 
specimen from either a nursing home patient or homebound patient. 
Payment for the specimen collection fee is made based on the CLFS. The 
technician must personally draw the specimen, for example, venipuncture 
or urine sample by catheterization. Medicare does not allow a specimen 
collection fee to the visiting technician if a patient in a facility 
is: (1) not confined to the facility; or (2) the facility has personnel 
on duty qualified to perform the specimen collection. Medical necessity 
for such services exists, for example, where a laboratory technician 
draws a blood specimen from a homebound or an institutionalized 
patient. A patient need not be bedridden to be homebound. However, 
where the specimen is a type that would require only the services of a 
messenger and would not require the skills of a laboratory technician, 
for example, urine or sputum, a specimen pickup service would not be 
considered medically necessary. The manual then refers to the Medicare 
Benefit Policy Manual, Chapters 7 and 15 of Pub. 100-02, for a 
discussion of ``homebound'' and a more complete definition of a 
medically necessary laboratory service to a homebound or an 
institutional patient.
    Under sections 1814(a) and 1835(a) of the Act, an individual shall 
be considered to be ``homebound'' or ``confined to his home'' if the 
individual has a condition, due to an illness or injury, that restricts 
the ability of the individual to leave his or her home except with the 
assistance of another individual or the aid of a supportive device 
(such as crutches, a cane, a wheelchair, or a walker), or if the 
individual has a condition such that leaving his or her home is 
medically contraindicated. While an individual does not have to be 
bedridden to be considered ``confined to his home,'' the condition of 
the individual should be such that there exists an inability to leave 
home such that leaving home requires a considerable and taxing effort 
by the individual. Moreover, Sec.  424.22(a)(1)(ii) describes homebound 
for the purposes of the provision of Medicare home health services as 
home health services are or were required because the individual is or 
was confined to the home, as defined in sections 1835(a) and 1814(a) of 
the Act, except when receiving outpatient services. Additionally, 
chapter 15 of the Medicare Benefit Policy Manual \163\ Section 60.4.1--
``Definition of Homebound Patient Under the Medicare Home Health (HH) 
Benefit'' describes the definition of homebound in that the patient is 
confined to his/her home, which has two criteria: (1) the patient must 
either, because of illness or injury, need the aid of supportive 
devices such as crutches, canes, wheelchairs, and walkers; the use of 
special transportation; or the assistance of another person in order to 
leave their place of residence; or (2) otherwise have a condition such 
that leaving his or her home is medically contraindicated. The patient 
must also meet two additional requirements defined in criterion two 
such that there must exist an inability to leave home; and leaving home 
must require a considerable and taxing effort.
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    \163\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c15.pdf.
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    The Medicare Claims Processing Manual (chapter 16, Sec.  60.1.2) 
also explains the information that must be included on an independent 
laboratory claim for specimen drawing. Specifically, the manual states 
that in addition to the usual information required on claim forms 
(including the name of the prescribing physician), all independent 
laboratory claims for such specimen drawing ordered by a physician 
should be appropriately annotated, for example, ``patient confined to 
home,'' ``patient homebound,'' or ``patient in nursing home, no 
qualified person on duty to draw specimen.'' The manual states that A/B 
MACs (B) must assure the validity of the annotation through scientific 
claims samples, as well as through regular bill review techniques. 
(This could be done by use of the information in A/B MAC (B) files, and 
where necessary, contact with the ordering physician.) If a physician 
requests an independent laboratory to obtain specimens in situations 
which do not meet, or without regard to whether they meet, medical 
necessity criteria in Medicare Benefit Policy Manual, Chapter 15, the 
manual provides that an educational contact with the ordering physician 
is warranted and, where necessary, corroborating documentation should 
be obtained on claims until the A/B MAC (B) is assured that the 
physician prescribes such services only when the criteria are met. The 
manual states that the specimen collection fee is paid based on the 
location of the independent laboratory where the test is performed and 
is billed in conjunction with a covered laboratory test.
    The Medicare Claims Processing Manual (chapter 16, Sec.  60.1.3) 
describes specimen drawing for dialysis patients. It states that, with 
the implementation of the End-Stage Renal Disease (ESRD) Prospective 
Payment System (PPS), effective for claims with dates of service on or 
after January 1, 2011, all ESRD-related laboratory services are 
included in the ESRD PPS base rate.\164\ Clinical laboratory tests for 
dialysis patients can be performed individually or in predetermined 
groups on automated profile equipment. The manual states that a 
specimen collection fee determined by CMS will be allowed only in the 
following circumstances:
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    \164\ The manual refers to the Medicare Benefit Policy Manual, 
Chapter 11, for a description of laboratory services included in the 
composite rate.
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     Drawing a blood sample through venipuncture (that is, 
inserting into a vein a needle with a syringe or vacutainer to draw the 
specimen).
     Collecting a urine sample by catheterization.
    The manual provides that special rules apply when such services are 
furnished to dialysis patients. That is, the specimen collection fee is 
not separately payable for patients dialyzed in the ESRD facility or 
for patients dialyzed at home. A specimen collection fee is also not 
separately payable when an ESRD facility is collecting a specimen for 
transplant eligibility or other transplant requirements. Payment for 
specimen collection is included under the ESRD PPS, regardless of 
whether the laboratory test itself is designated as payable under the 
ESRD PPS as a renal dialysis service or is separately billable by the 
ESRD facility with the AY modifier (see Medicare Claims Processing 
Manual, chapter 16, Sec.  40.6). Fees for taking specimens in the 
hospital setting, but outside of the dialysis unit, for use in 
performing laboratory tests not included in the ESRD PPS base rate, may 
be paid separately.
    We stated that we believed that the implementation of the ESRD PPS 
made the specimen collection provision for ESRD beneficiaries in the 
ESRD facility setting obsolete. That is, prior to the ESRD PPS, ESRD 
facilities could be paid for laboratory services furnished to ESRD 
beneficiaries that were considered to be separately payable. Under the 
prior composite rate system, ESRD

[[Page 69747]]

facilities with the appropriate Clinical Laboratory Improvement 
Amendments (CLIA) certification could bill Medicare Part B directly and 
be paid based on the CLFS for certain laboratory tests, and when 
appropriate, for a specimen collection fee.\165\ In implementing the 
ESRD PPS, we also implemented consolidated billing requirements in the 
CY 2011 ESRD PPS final rule (75 FR 49168 through 49173). In that ESRD 
PPS final rule, we stated that we established these consolidated 
billing requirements because the ESRD PPS provides an all-inclusive 
payment for renal dialysis services and home dialysis items and 
services and the ESRD facility is responsible for all of the renal 
dialysis services that its patients receive. We further explained that 
items and services that were paid separately under the basic case-mix 
adjusted composite rate (such as laboratory tests), would no longer be 
billed for by other entities (such as laboratories), and therefore, 
payment for these services would be made only to the ESRD facility so 
that duplicate payment is not made by Medicare (75 FR 49168).
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    \165\ Pub. 100-02, Chapter 11, Section 20.2.E.2 and 3. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/bp102c11.pdf.
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    Additionally, section 1881(b)(14)(B)(i) and (iv) of the Act 
provides that items and services included in the prior composite rate 
and other diagnostic laboratory tests not reflected in the composite 
rate that are furnished to individuals for the treatment of ESRD are 
renal dialysis services that must be included as part of the ESRD PPS 
bundled payment. In the CY 2011 ESRD PPS final rule, we explained that 
patients with ESRD often have comorbid conditions which would require 
many of the same laboratory tests as those required to monitor a 
patient's ESRD (75 FR 49168). In that ESRD PPS final rule, we 
acknowledged that it may be difficult to differentiate between a renal 
dialysis service laboratory test and tests ordered for non-renal 
dialysis service conditions. Therefore, to ensure proper payment in all 
settings, as part of the consolidated billing approach, we provided 
ESRD facilities and independent laboratories the ability to identify 
non-renal dialysis service laboratory tests, by using the AY modifier, 
which allows for separate payment under Medicare Part B (75 FR 49168 
through 49169). We noted that while this longstanding policy permits 
ESRD facilities to be paid separately for the non-renal dialysis 
service laboratory tests, the specimen collection fee is no longer 
available since staff time used to collect specimens is considered to 
be a composite rate service (Sec.  413.171), and therefore, payment for 
specimen collection is made through the ESRD PPS bundled payment to the 
ESRD facility. Therefore, we stated that we believed this section of 
the manual guidance describing specimen drawing for dialysis patients 
is no longer applicable, and we would not reflect this policy in 
regulation and would remove this section of the manual accordingly. We 
noted when an ESRD beneficiary goes to an independent laboratory or a 
hospital setting, the same payment rules would apply for specimen 
collection as they would for a non-ESRD beneficiary for that setting.
    Lastly, the Medicare Claims Processing Manual (chapter 16, Sec.  
60.1.4) includes coding requirements for the specimen collection fees. 
Specifically, the following HCPCS codes and terminology must be used:
     36415--Collection of venous blood by venipuncture.
     G0471--Collection of venous blood by venipuncture or urine 
sample by catheterization from an individual in a skilled nursing 
facility (SNF) or by a laboratory on behalf of a home health agency 
(HHA).
     P9612--Catheterization for collection of specimen, single 
patient, all places of service.
     P9615--Catheterization for collection of specimen(s) 
(multiple patients).
c. Codification of the Laboratory Specimen Collection Fee Policy in 
Regulation
    As noted previously, most of our laboratory specimen collection fee 
policies are not reflected in the CLFS regulations. In the CY 2023 PFS 
proposed rule, we proposed the laboratory specimen collection fee 
policies we would include in regulations.
    Section 1833(h)(3) of the Act specifies that payment amounts for 
the specimen collection fee and travel allowance are ``in addition'' to 
the payment amounts for CDLTs on the CLFS. As Sec.  414.507 pertains to 
payment for CDLTs, we stated that we believed it would be appropriate 
to create a separate regulation to more clearly reflect that payment 
for the specimen collection fee and travel allowance is in addition to 
payment for CDLTs. We proposed to create Sec.  414.523 titled Payment 
for laboratory specimen collection fee and travel allowance. We 
proposed to specify in Sec.  414.523(a) that in addition to the payment 
amounts provided for CDLTs, new CDLTs, and new ADLTs, CMS would pay a 
specimen collection fee and a travel allowance. In Sec.  414.523(a)(1), 
we proposed that we would reflect the longstanding specimen collection 
fee policies described in the manual that continue to be applicable. As 
noted in the proposed rule, we would not reflect in the regulation the 
specimen collection fee policies that are no longer applicable--
specifically, the policies relating to physician eligibility for 
specimen collection and specimen drawing for dialysis patients--and 
would remove those policies from the manual.
    First, we proposed that Sec.  414.523(a)(1) would specify that CMS 
will pay $3 for all specimens collected in one patient encounter. As 
previously stated, section 1833(h)(3)(A) of the Act requires the 
Secretary to provide for and establish a nominal fee to cover the 
appropriate costs in collecting the sample for laboratory testing. We 
have paid $3 as the nominal specimen collection fee amount for several 
years and proposed to maintain the $3 amount. We noted that the statute 
specifies that the amount is ``nominal'' and we believed $3 is an 
appropriate nominal amount to recognize the costs associated with 
specimen collection. We also stated that we believed that in enacting 
section 216(a) of PAMA, Congress recognized CMS's authority to 
establish the specific nominal fee amount as $3 when it added section 
1834A(b)(5) of the Act to increase by $2 the nominal fee that would 
otherwise apply under section 1833(h)(3)(A) of the Act for a specimen 
collected from an individual in a SNF or by a laboratory on behalf of 
an HHA. We solicited comments on the proposal to maintain the $3 
nominal specimen collection fee amount, including how this amount could 
be updated.
    We proposed to move and clarify the provision in our regulations 
regarding the increased specimen collection fee under section 
1834A(b)(5) of the Act, as discussed in the previous paragraph. We 
explained that we implemented this PAMA requirement in a Medicare 
Change Request (CR) transmittal effective December 1, 2014 (Transmittal 
#R3056CP; CR #8837) and ultimately finalized this policy in Sec.  
414.507(f).\166\ The CR provides that, in the case of a specimen 
collected from an individual in a SNF or from an individual by a 
laboratory on behalf of a HHA (billed using new HCPCS code, G0471 
(Collection of venous blood by venipuncture or urine sample by 
catheterization from an individual in a skilled nursing facility (SNF) 
or by a laboratory on behalf of a home health

[[Page 69748]]

agency (HHA))), the nominal fee that would otherwise apply under 
section 1833(h)(3)(A) of the Act shall be increased by $2, from $3 to 
$5, in accordance with section 216(a) of the PAMA. The specimen 
collection fee is raised from $3 to $5 only when the specimen is being 
collected by a laboratory technician and when the specimen is from an 
individual in either a SNF or HHA. We proposed that this requirement, 
which is currently reflected in Sec.  414.507(f), would be moved to 
Sec.  414.523(a)(1)(iv) and would be revised to state that beginning 
April 1, 2014, for a specimen collected from a Medicare beneficiary in 
a SNF or on behalf of an HHA, the specimen collection fee otherwise 
paid under paragraph (a)(1) of Sec.  414.523 is increased by $2.
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    \166\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals/Downloads/R3056CP.pdf.
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    In addition, we proposed to include in regulation that one specimen 
collection fee would be allowed for each single patient encounter. This 
means that, if different types or multiple specimens are drawn from one 
patient, only one specimen collection fee would be allowed. We noted in 
the proposed rule that we believed this policy is consistent with 
section 1833(h)(3)(A) of the Act, which provides that not more than one 
such fee may be provided under this paragraph with respect to samples 
collected in the same encounter. We proposed to reflect this policy in 
Sec.  414.523(a)(1) by indicating that CMS pays $3 for ``all specimens 
collected in one patient encounter.''
    In Sec.  414.523(a)(1)(i) through (iii), we proposed to indicate 
the specimen collection requirements that must be met for a specimen 
collection fee to be payable are as follows. The specimen is: used to 
perform a CDLT paid under the CLFS regulations in 42 CFR part 414, 
subpart G; collected by a trained technician from a Medicare 
beneficiary who is homebound as described in 42 CFR 424.22(a)(1)(ii) or 
is a non-hospital inpatient, but only when no qualified personnel are 
available at the facility to collect the specimen; of the following 
type--blood specimen collected through venipuncture or a urine sample 
collected by catheterization.
    In Sec.  414.523(a)(1)(ii), we proposed to clarify the requirement 
that the specimen must be collected by a ``trained technician.'' 
Section 1833(h)(3) of the Act refers to staff providing specimen 
collection services as ``trained personnel'' whereas the Medicare 
Claims Processing Manual, chapter 16, section 60.2, refers to ``the 
technician.'' The United States Bureau of Labor Statistics (BLS) 
defines clinical laboratory technologists and technicians as workers 
who collect samples and perform tests to analyze body fluids, tissue, 
and other substances.\167\ The term ``laboratory technician'' may not 
apply to those staff that would generally be providing specimen 
collection services, as the staff collecting specimens may not also be 
involved in analyzing the specimens. Therefore, for the purposes of our 
Medicare payment policies for specimen collection and travel allowance, 
we proposed to use the phrase ``trained technician'' to refer to those 
staff providing specimen collection services. We noted that we believed 
this clarification would more closely align the regulatory text 
pertaining to specimen collection and travel allowance with the 
statute.
---------------------------------------------------------------------------

    \167\ https://www.bls.gov/ooh/healthcare/clinical-laboratory-technologists-and-technicians.htm.
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    As discussed in the proposed rule, Medicare allows payment of a 
specimen collection fee when it is medically necessary for a trained 
technician to draw a specimen from either a nursing home patient or 
homebound patient. Medicare does not allow a specimen collection fee 
for the technician if a patient in a facility is: (1) not confined to 
the facility; or (2) the facility has qualified personnel available to 
perform the specimen collection. We proposed to reflect in regulation 
that the specimen must be collected either from a Medicare beneficiary 
who is homebound as described in Sec.  424.22(a)(1)(ii), or from a non-
hospital inpatient, but only when no qualified personnel are available 
at the facility to collect the specimen. We noted that we believed the 
proposed requirement regarding homebound beneficiaries would be 
consistent with Medicare policy, which describes home health services 
requirements. We proposed to clarify that payment for specimen 
collection would only be made to the laboratory when no qualified 
personnel are available at the inpatient facility to collect the 
specimen. We also noted that we believed the proposed clarification 
would reflect the justification for ``medical necessity'' for purposes 
of section 1862(a)(1) of the Act. We proposed to codify the requirement 
in Sec.  414.523(a)(1)(ii)(B) but would not explicitly state the term 
``medically necessary''.
    We proposed to clarify that a specimen collected by a trained 
technician would have to be either blood collected through venipuncture 
or a urine sample collected by catheterization. We proposed to codify 
the requirement in Sec.  414.523(a)(1)(iii), which would state that the 
specimen collection fees are permitted for only these two types of 
specimens: (1) blood collected through venipuncture or (2) a urine 
sample collected by catheterization. We acknowledged that the manual 
guidance (described above) uses the terms ``such as'' and ``example'' 
to describe the types of specimens for which specimen collection fees 
are paid, which suggests that specimen collections of samples other 
than blood and urine are eligible for specimen collection fees. We 
noted, however, that there are only two HCPCS codes for the two types 
of specimen collections, which means we do not pay, and have not been 
paying, specimen collection fees for any other types of specimens. 
Therefore, as discussed in the proposed rule, under our current policy 
a specimen collection fee would not be payable for any other specimen 
types, for example, a throat culture or a routine capillary puncture 
for clotting or bleeding time.
    We welcomed public comment on the proposed codification and 
modification of the laboratory specimen collection fee policies. We 
noted that if finalized, we would make conforming changes to the 
Medicare Claims Processing Manual, Chapter 16, section 60, to reflect 
changes or clarifications and remove sections that are no longer 
applicable.
    Lastly, we solicited comments on specimen collections performed by 
physician office laboratories (POLs). As discussed in the CY 2023 PFS 
proposed rule, we proposed to delete the section in the manual 
regarding physician specimen collection, as codes exist to describe 
these services when performed by physicians under the PFS. However, we 
noted in the proposed rule that we understand that specimens may be 
collected in the physician's office by POL personnel. As stated in 42 
CFR 410.32(d)(1)(iii), Medicare Part B pays for covered diagnostic 
laboratory tests that are furnished by the office of the patient's 
attending or consulting physician if that physician is a doctor of 
medicine, osteopathy, podiatric medicine, dental surgery, or dental 
medicine. When the physician's office is furnishing CDLTs for its own 
patients and collecting specimens for those tests, we do not believe 
this would include specimen collection for homebound or non-hospital 
inpatients or involve travel for specimen collection, since a POL is 
not an independent laboratory. However, we sought comments on any 
possible considerations for the removal of the manual section related 
to POL specimen collection.
    The following is a summary of the public comments received on the 
laboratory specimen collection fee proposals and our responses:

[[Page 69749]]

    Comment: Several commenters supported our proposal to codify 
longstanding specimen collection fee policies at Sec.  414.523(a)(1), 
as well as our proposal to make certain changes to modify or clarify 
those policies. Other commenters appreciated the ability to be paid for 
laboratory specimen collection.
    Response: We appreciate the commenters' support to codify 
longstanding specimen collection fee policies and make certain changes 
to modify or clarify those policies, as well as commenters' support for 
the payment of laboratory specimen collection required by section 
1833(h)(3)(A) of the Act.
    Comment: We received several comments on our proposal to maintain 
the $3 fee for specimen collection for venous blood by venipuncture 
(CPT[supreg] code 36415) and the $5 fee for specimen collection from a 
beneficiary in a SNF or by a laboratory on behalf of a home health 
agency (HCPCS code G0471). Some commenters requested that we increase 
the $3 specimen collection fees, with requested amounts ranging from 
$8.28 to $12, to account for labor shortages, wage increases, supplies 
cost increases, and inflation. Several commenters also recommended that 
CMS update the specimen collection fee for inflation by utilizing the 
CPI-U for the years since the establishment of the specimen collection 
fee and that CMS continue utilizing such an update for future years in 
order to account for the changes in costs for resources related to 
specimen collection.
    One commenter that requested an increase in the specimen collection 
fee amount to $8.28 supported their suggestion with an analysis of the 
costs associated with collecting a blood specimen using cost data, 
including supplies, wages, and benefits from three laboratories--one 
that services a variety of clients, one that services physician offices 
and SNFs, and one that services only SNFs--and selected the least 
expensive cost provided by the three laboratories for each line item in 
the cost analysis.
    Several commenters requested that we increase the $3 and $5 
specimen collection fee amounts to $12 and $14, respectively. The 
commenters noted that the $3 amount was inadequate when it was first 
implemented and the costs to provide specimen collection services have 
increased exponentially since the implementation of the fee. These 
commenters opined that a $12 collection fee amount is a ``nominal'' 
amount and is approximately one-half of the 2020 Medicare reimbursement 
for CPT[supreg] code 99211 (Office or other outpatient visit for the 
evaluation and management of an established patient that may not 
require the presence of a physician or other qualified health care 
professional), which, though less complex than specimen collection, is 
comparable in that the presenting problems are minimal, the service 
does not require the presence of a physician or other health care 
professional, and the service typically takes less than 5 minutes to 
complete. Commenters also noted that we drew this same comparison to 
CPT[supreg] code 99211 when determining a ``nominal'' fee for COVID-19 
specimen collection.
    One commenter stated that, in contrast to specimen collections for 
venous draws billed under CPT[supreg] code 99211 for Level 1 office 
visits, venous draws from patients in nursing homes are far more 
challenging because nursing home patients are often being treated with 
medications that affect their cognition, specimen collections may occur 
in the pre-dawn hours, and many patients suffer from multiple complex 
co-morbidities, which can complicate a venous draw. Additionally, the 
commenter noted that technicians collecting samples from Medicare 
beneficiaries in SNFs are also faced with numerous operational barriers 
and that the $5 reimbursement for specimen collection from SNF patients 
is approximately 80 percent less than reimbursement for a Level I 
office visit billed under CPT[supreg] code 99211.
    Response: We appreciate the thoughtful and detailed recommendations 
and comments on our proposal to maintain the $3 nominal specimen 
collection fee amount, and we recognize that some commenters believe 
this longstanding nominal fee amount does not cover the costs of 
specimen collection. As previously discussed, section 1833(h)(3)(A) of 
the Act requires the specimen collection fee to be ``nominal,'' which 
suggests that Congress did not intend it to be reimbursement for actual 
or specific costs. In fact, in 2014, Congress established a requirement 
in PAMA under section 1834A(b)(5) of the Act that specimens collected 
from a Medicare beneficiary in a SNF or by a laboratory on behalf of an 
HHA be paid an additional $2. We believe that specification of an 
additional $2 amount for those types of specimen collection was some 
indication Congress considered the $3 specimen collection fee at the 
time to be an appropriate amount and consistent with what Congress 
considered to be a ``nominal'' amount; Congress could have changed the 
$3 amount when it required the additional $2 for specimens collected 
from a Medicare beneficiary in a SNF or by a laboratory on behalf of an 
HHA. The statute also specifies that the nominal fee must ``cover the 
appropriate costs in collecting the sample.'' The history of the 
laboratory specimen collection fee policy indicates that drawing, 
collecting, or handling a specimen were the costs the policy was 
intended to cover.168 169 170 We believe these activities 
continue to be appropriate costs to be covered by the nominal specimen 
collection fee. While we have long considered the $3 fee amount to be 
an appropriate nominal fee to reflect those costs, based on the 
comments received and our further analysis, we believe that it is 
appropriate to now update the specimen collection fee amount for CY 
2023, and continue to update it in subsequent years.
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    \168\ See Omnibus Reconciliation Act of 1980 (OBRA), (Pub. L. 
96-499), https://www.congress.gov/96/statute/STATUTE-94/STATUTE-94-Pg2599.pdf.
    \169\ See section 2023 of the Deficit Reduction Act of 1984, 
July 18, 1984, https://www.congress.gov/98/statute/STATUTE-98/STATUTE-98-Pg494.pdf.
    \170\ https://www.ncbi.nlm.nih.gov/books/NBK223053/.
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    As commenters have stated, costs related to collecting, drawing, 
and handling specimens have increased over the years, with the PHE for 
COVID-19 starkly highlighting those increased costs and the ongoing 
need for specimen collection services. Commenters noted that the costs 
of drawing, collecting, or handling specimens have also increased due 
to typical inflation, among other factors, and these factors are 
expected to persist even once the PHE for COVID-19 ends. We recognize 
there are costs associate with the types of items and services 
necessary for drawing, collecting, or handling a specimen, and we 
understand there are an array of financial pressures associated with 
the maintenance of supplies and retaining staff, such as supply 
shortages, labor shortages, or wage increases. While the specimen 
collection fee is not intended to reimburse laboratories for actual 
costs incurred for drawing, collecting, or handling a specimen, we 
believe updating the $3 amount for inflation is an appropriate way for 
CMS to recognize that specimen collection costs do increase, and that 
increasing the nominal fee by the CPI-U will address those growing 
pressures.
    We appreciate commenters' analysis of specimen collection costs to 
justify updating the $3 amount. However, as we explained above, we do 
not believe the nominal fee for specimen collection is intended to 
reimburse for specific

[[Page 69750]]

costs. Therefore, we did not consider the data analysis provided by the 
commenter as a source for establishing an amount. We note, however, 
that the specimen collection fee amount resulting from the approach we 
are finalizing, $8.57, is very close to the amount suggested by the 
commenter, $8.28. We are also not accepting commenters' suggestion that 
we increase the specimen collection fee to $12 because it is 
approximately one-half of the 2020 Medicare reimbursement for 
CPT[supreg] code 99211. Although in the April 6, 2020 IFC, we did use 
CPT[supreg] code 99211 as a benchmark to establish a nominal fee for 
COVID-19 specimen collection, we believe the circumstances involved for 
routine specimen collection are vastly different from those involving 
collecting a sample to diagnosis a novel communicable infectious 
disease. As we discussed in the April 6, 2020 IFC (85 FR 19256), we had 
to look to similar services in other settings of care as a potential 
benchmark absent concrete information regarding the costs associated 
with independent laboratories collecting such specimens for COVID-19 
tests in the context of the PHE. We believe the $3.00 nominal fee is 
our benchmark for recognizing the costs associated with routine 
specimen collection, and deriving a fee amount based on a PFS service 
of CPT[supreg] code 99211 is not applicable outside of the PHE.
    As we noted above, we believe that it is appropriate to now update 
the specimen collection fee amount for CY 2023, and continue to update 
it in subsequent years, and we believe using the CPI-U is an 
appropriate way to do both. To establish the nominal specimen 
collection fee for CY 2023, we first calculated the inflation factor to 
be applied to the $3.00. To derive this inflation factor, we used the 
historical CPI-U from June of 2022 and divided it by the historical 
CPI-U for June 1984. We selected June of 1984 as the comparison date 
(that is, the date we are comparing past $3 value with present-day 
value) because that is the year Congress established the CLFS and the 
related laboratory specimen collection fees under section 1833(h)(3)(A) 
of the Act. We selected June 2022 as the date that reflects the present 
day because this will allow us to update the specimen collection fee 
amount for future years to reflect historical growth for a 12-month 
period in a consistent manner. This methodology, June 2022 CPI-U/June 
1984 CPI-U, yielded an inflation factor of 2.857. We multiplied the 
inflation factor of 2.857 by $3, which resulted in a payment rate of 
$8.57 ($3 x 2.857=$8.57). Accordingly, we are finalizing $8.57 as the 
nominal specimen collection fee for CY 2023. In addition, as required 
by PAMA, we are increasing this amount by $2 for specimens collected 
from a Medicare beneficiary in a SNF or by a laboratory on behalf of an 
HHA, which results in $10.57 as the specimen collection fee amount for 
specimens collected from those beneficiaries.
    Comment: Several commenters requested that we utilize the CPI-U to 
update the specimen collection fee amounts on an annual basis moving 
forward in order to account for the impact of inflation.
    Response: We appreciate the commenters' recommendations on how we 
might update the specimen collection fee amounts in future years. As we 
stated above, we are finalizing an increase to the specimen collection 
fee amount from $3 to $8.57 for CY 2023. As we also noted above, after 
considering the comments and conducting further analysis, we believe 
that it is appropriate to update the nominal specimen fee to account 
for inflation in subsequent years and we believe using CPI-U is an 
appropriate way to account for the annual impact of inflation on costs 
of drawing, collecting, or handling specimens.
    Thus, we are finalizing that, beginning January 1, 2024, we will 
update the specimen collection fee amount of $8.57 for each calendar 
year using the 12-month percentage increase in the CPI-U of the most 
recent year of data published by BLS, that is for the 12-month period 
ending June 30th of the year preceding the update year. We believe that 
updating the fee based on the 12-month percentage increase in the CPI-U 
is consistent with other CLFS authorities such as section 1833(h)(7) of 
the Act, which requires us to update the payment amount for a 
diagnostic or screening pap smear laboratory test annually by a 
percentage increase or decrease equal to the percentage increase or 
decrease in the CPI-U, as well as other Medicare payment systems (for 
example, the CLFS prior to 2018, the Ambulance Fee Schedule, and the 
Durable Medical Equipment, Prosthetics, Orthotics and Supplies Fee 
Schedule (DMEPOS)). In addition, we selected the updated period as the 
12-month period ending June 30th of the year preceding the update year, 
to maintain consistency with Medicare payment systems that are updated 
on annual basis.
    Comment: One commenter requested we establish a nominal fee to 
cover the packaging and shipping of definitive drug testing collection 
kits to and from patients who are being treated remotely.
    Response: Section 1833(h)(3)(A) of the Act requires the specimen 
collection fee to cover the appropriate costs of collecting the sample 
on which a CDLT is performed. The statute does not specify the 
establishment of a fee to cover packaging and shipping of definitive 
drug testing collection kits to and from patients who are being treated 
remotely.
    Comment: Several commenters requested that the HCPCS codes and 
nominal fees established for COVID-19 testing specimen collection in 
the ``Medicare and Medicaid Programs; Policy and Regulatory Revisions 
in Response to the COVID-19 Public Health Emergency'' IFC (85 FR 
19230), should be maintained past the end of the PHE because: expenses 
associated with specimen collection during the PHE (for example, 
increased use of PPE due to more stringent infection control 
requirements) have become permanent; COVID-19 and variants will 
continue to circulate in congregate living facilities such as SNFs and 
assisted living facilities for the elderly and in the community; the 
need for diagnostic and screening tests for COVID-19 will not terminate 
automatically when the PHE is terminated; the duration of a COVID-19 
vaccine's protective immunity is not known; and after the end of the 
PHE, the risks to those collecting specimens for COVID-19 testing will 
remain, as will the costs associated with mitigating those risks (for 
example, PPE and testing for specimen collectors themselves).
    Response: We appreciate commenters' recommendations on continuing 
the increased specimen collection fees in place for COVID-19 testing 
beyond the PHE. We recognize that the PHE may have changed the specimen 
collection landscape in that some COVID-19 protocols have become the 
standard for the types of resources utilized and supplies needed for 
other types of specimen collection. We have indicated that the 
increased specimen collection fees during the PHE will end with the end 
of the COVID-19 PHE (85 FR 19256; 86 FR 39309; 86 FR 65327).
    Comment: One commenter requested that we remove the proposal to 
only pay for specimens collected by ``trained technicians.'' The 
commenter asserted that the ``trained technician'' title is vague and 
does not properly distinguish between laboratory technicians with 
varying degrees of education and experience. Furthermore, the commenter 
expressed concern that the term ``trained technicians'' did not include 
phlebotomists, and therefore, would seemingly disincentivize the

[[Page 69751]]

employment of phlebotomists, create issues in workforce demand, and 
result in higher costs in acquiring personnel who were sufficiently 
qualified.
    Response: As previously noted, section 1833(h)(3) of the Act refers 
to staff providing specimen collection services as ``trained 
personnel,'' whereas the Medicare Claims Processing Manual, chapter 16, 
section 60.2, refers to ``the technician.'' The BLS defines clinical 
laboratory technologists and technicians as workers who collect samples 
and also perform tests to analyze body fluids, tissue, and other 
substances, and it defines a phlebotomist as a professional who draws 
blood for tests, transfusions, research, or blood donations. The term 
``laboratory technician'' may not apply to those staff that would 
generally be providing specimen collection services, as the staff 
collecting specimens may not also be involved in analyzing the 
specimens. Therefore, for the purposes of our Medicare payment policies 
for specimen collection and travel allowance, we proposed to use the 
phrase ``trained technician'' to refer to those staff providing 
specimen collection services. In our proposal, we noted that we 
believed this clarification would more closely align the regulatory 
text pertaining to specimen collection and travel allowance with the 
statute. We note that the term ``trained technician'' does not mandate 
certain educational requirements and, for the purposes of the specimen 
collection provisions, the term includes a phlebotomist. Therefore, we 
do not believe using the term trained technician will disincentivize 
laboratories from employing phlebotomists. In fact, in the proposed 
rule where we discussed our proposed codification and modifications of 
the CLFS specimen collection travel allowance policy, we indicated that 
we believed the BLS definition of phlebotomist more closely aligns with 
the trained technicians that we believed are providing the types of 
specimen collection services for which CMS provides a specimen 
collection fee. Therefore, we proposed that a component of the travel 
allowance mileage rate--the amount to cover expenses for a trained 
technician--would be based on the most recent median hourly wage for 
phlebotomists, as published in the BLS.
    After consideration of comments and further analysis, we are 
finalizing our specimen collection fee policies at Sec.  414.523(a)(1) 
with certain modifications. Beginning January 1, 2023, CMS will pay a 
general specimen collection fee of $8.57 for all specimens collected in 
one patient encounter. This fee will be increased by $2 ($10.57) for 
specimen collection from a Medicare beneficiary in a SNF or on behalf 
of an HHA for all specimens collected in one patient encounter. 
Additionally, we are finalizing that beginning January 1, 2024, we will 
update the specimen collection fee amount for each CY by the percent 
change in the CPI-U for the 12-month period ending June 30th of the 
year preceding the update year. We will issue these updates to the 
specimen collection fee amounts through subregulatory guidance, 
specifically the existing CMS change request process, on an annual 
basis. To be eligible for a specimen collection fee, the specimen must 
be: used to perform a CDLT paid under the CLFS regulations at 42 CFR 
part 414, subpart G; collected by a trained technician from a Medicare 
beneficiary who is homebound, as described in Sec.  424.22(a)(1)(ii), 
or is a non-hospital inpatient, but only when no qualified personnel 
are available at the facility to collect the specimen; and of the 
following type--a blood specimen collected through venipuncture or a 
urine sample collected by catheterization.
d. Background on the Laboratory Specimen Collection Travel Allowance 
Policy
    Section 1833(h)(3)(B) of the Act requires the Secretary to provide 
for and establish a fee to cover the transportation and personnel 
expenses for trained personnel to travel to the location of an 
individual to collect the sample on which a CDLT was performed, except 
that such a fee may be provided only to an individual who is homebound 
or an inpatient in an inpatient facility (other than a hospital). Like 
the laboratory specimen collection fee policy discussed previously, our 
longstanding policies and instructions regarding the statutory 
requirements for the CLFS specimen collection travel allowance are 
described in the Medicare Claims Processing Manual guidance and CRs, 
currently with no corresponding regulations text. In an August 18, 1993 
proposed rule titled ``Medicare and Medicaid: Programs; Payment for 
Clinical Diagnostic Laboratory Tests,'' we proposed to reflect both the 
CLFS specimen collection and travel allowance payment policies in 
regulation (58 FR 43838), however, the proposals therein were not 
finalized.
    As discussed in that proposed rule, due to the variability in time, 
distance, and wage circumstances in different localities, we 
implemented the travel allowance under section 1833(h)(3)(B) of the Act 
by allowing the MACs discretion in calculating travel allowances. We 
provided general guidance through our manuals, specifically in the 
Medicare Claims Processing Manual, chapter 16, section 60.2.\171\
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    \171\ https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c16.pdf.
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    The Medicare Claims Processing Manual guidance at chapter 16, 
section 60.2 describes two methods for calculating and billing travel 
allowance for specimen collection. HCPCS code P9603 is used when the 
average round trip to a beneficiary's home or nursing home is farther 
than 20 miles, paid on a mileage per trip basis. HCPCS code P9604 is 
used when the average round trip is less than or equal to 20 miles, 
paid on a flat rate per trip basis. The manual further states that the 
travel allowance is intended to cover the estimated travel costs for a 
laboratory technician to travel to collect the specimen and to reflect 
the technician's salary and travel costs. The travel allowance can be 
made only where a specimen collection fee is also payable; that is, no 
travel allowance is made where the technician merely performs a 
messenger service to pick up a specimen drawn by a physician or nursing 
home personnel. The manual also states that the travel allowance may 
not be paid to a physician unless the trip to the beneficiary's home, 
or to the nursing home where the beneficiary resides, was solely for 
the purpose of drawing a specimen. Otherwise, the travel costs are 
considered to be associated with the other purposes of the trip. 
Furthermore, the manual states that the travel allowance is not 
distributed by CMS. Instead, the MACs (that is, within the claims 
processing system) calculate the travel allowance for each claim using 
the rules for the HCPCS codes used for travel allowances, which are 
P9603--Per Mile Travel Allowance and P9604--Flat Rate.
    As described in the manual, the conditions for usage of HCPCS code 
P9603 are that the minimum ``per mile travel allowance'' is $1.04 
(based on CY 2022 instructions). The per mile travel allowance is to be 
used in situations where the average trip to beneficiaries' homes is 
farther than 20 miles, and is to be prorated in situations where 
specimens are drawn or picked up from non-Medicare patients in the same 
trip.
    The manual further states that the per mile allowance is computed 
using the Federal mileage rate (as determined by the Internal Revenue 
Service (IRS)), plus an additional 45 cents a mile to cover the 
technician's time and travel costs.

[[Page 69752]]

For 2022, the Federal mileage rate is 58.5 cents; \172\ that amount 
plus 45 cents equals $1.035, rounded up to $1.04. The manual currently 
indicates that contractors have the option of establishing a higher per 
mile rate in excess of the minimum ($1.04 a mile in CY 2022) if local 
conditions warrant it. The manual also states that the minimum mileage 
rate will be reviewed and updated in conjunction with the CLFS as 
needed, and that at no time will the laboratory be allowed to bill for 
more miles than are reasonable or for miles not actually traveled by 
the laboratory technician.\173\
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    \172\ https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2022.
    \173\ The Medicare Claims Processing Manual is available on the 
CMS website at https://www.cms.gov/regulations-and-guidance/guidance/manuals/downloads/clm104c16.pdf. The manual provides 
examples of the per-mile travel allowance in section 60.2--Travel 
Allowance.
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    For the flat-rate HCPCS code, P9604, the manual provides the 
following conditions of usage: CMS will pay a minimum of $10.40 for the 
flat rate code (HCPCS code P9604, based on CY 2022 instructions), which 
is the one-way flat rate travel allowance. The flat rate travel 
allowance is to be used in areas where average trips are less than 20 
miles. The flat rate travel allowance is to be prorated for more than 
one blood draw at the same address, and for stops at the homes of 
Medicare beneficiaries and non-Medicare patients. The laboratory 
performs the proration calculation when the claim is submitted based on 
the number of beneficiaries seen on that trip, and the specimen 
collection fee will be paid for each beneficiary encounter.
    The manual states that this rate is based on the assumption that a 
trip is an average of 15 minutes and up to 10 miles one way and uses 
the Federal mileage rate (as determined by the IRS) and a laboratory 
technician's time of $17.66 an hour, including overhead. The manual 
states that contractors have the option of establishing a flat rate in 
excess of the minimum of $10.00, if local conditions warrant it, and 
that the minimum national flat rate will be reviewed and updated in 
conjunction with the CLFS, as necessitated by adjustments in the 
Federal travel allowance and salaries. The manual provides examples of 
the flat rate calculation and describes further MAC flexibilities 
regarding payment for the CLFS specimen collection travel allowance. 
The manual also indicates that MACs may use their discretion for the 
payment of travel allowance in circumstances where the CDLTs are needed 
on an emergency basis outside the general business hours of the 
laboratory making the collection. The manual also states that updates 
to the travel allowance amounts will be issued by CMS via Recurring 
Update Notification (RUN) on an annual basis.
    In summary, the Medicare Claims Processing Manual, chapter 16, 
section 60.2, indicates that HCPCS code P9603 is used when the average 
round trip to a beneficiary's home or nursing home is farther than 20 
miles, paid on a mileage per trip basis. HCPCS code P9604 is used when 
the average round trip is less than or equal to 20 miles, paid on a 
flat rate per trip basis. In instances where one trip is made in order 
to execute specimen draws or pickups from multiple patients, the travel 
payment component is prorated based on the number of Medicare 
beneficiaries and non-Medicare patients (not the number of specimens 
collected) on that trip. All instances of specimen collection and 
pickups are included in the proration, and the prorated specimen 
collection travel allowance is billed on behalf of each Medicare 
patient.
    Furthermore, we have provided additional payment instructions 
through RUN CLFS--Medicare Travel Allowance Fees for Collection of 
Specimens CRs; the latest being CR 12593,\174\ which was issued on 
January 14, 2022. Consistent with the manual, CR 12593 states that the 
travel allowance HCPCS codes allow for payment either on a per-mileage 
basis (P9603) or on a flat-rate per-trip basis (P9604). The CR states 
that under either method, when one trip is made for multiple specimen 
collections (for example, at a nursing home), the travel payment 
component is prorated based on the number of specimens collected on 
that trip, for both Medicare and non-Medicare patients, either at the 
time the claim is submitted by the laboratory or when the flat rate is 
set by the contractor.
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    \174\ https://www.cms.gov/files/document/r11184cp.pdf.
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    CR 12593 states that the Per Mile Travel Allowance (P9603) is to be 
used in situations where the average trip to the patients' homes is 
longer than 20 miles round trip and is to be prorated in situations 
where specimens are drawn from non-Medicare patients in the same trip. 
For CY 2022, the allowance per mile was computed using the Federal 
mileage rate of $0.585 per mile plus an additional $0.45 per mile to 
cover the technician's time and travel costs. The IRS determines the 
standard mileage rate for businesses based on periodic studies of the 
fixed and variable costs of operating an automobile, and CMS utilizes 
this amount for P9604. The CR also states that the Per Flat-Rate Trip 
Basis Travel Allowance (P9604) is a set fee amount, which is $10.40 for 
CY 2022.
    In summary, CR 12593 states that the travel payment component is 
prorated based on the number of specimens collected on the trip (and 
not the number of Medicare and non-Medicare patients), for both 
Medicare and non-Medicare patients, which differs from the manual 
instruction which states that the travel allowance should be prorated 
based on the number of Medicare beneficiaries and non-Medicare patients 
(not the number of specimens collected) on that trip.
e. Policy Concerns and Recommendations on the CLFS Specimen Collection 
Travel Allowance
    Laboratories, members of the laboratory industry, and other 
interested parties have expressed concerns regarding our current CLFS 
travel allowance payment policy, suggesting that the travel proration 
methodology is unclear and that guidance in the Medicare Claims 
Processing Manual, payment CRs and guidance provided by the MACs are 
conflicting. Additionally, members of the public have asserted that the 
travel allowance requirements are administratively complex.
    In the CY 2022 PFS proposed rule (86 FR 39310), we requested broad 
comments on our policies for specimen collection fees and the travel 
allowance for consideration for possible updates to policies in the 
future through notice and comment rulemaking. As discussed in the CY 
2022 PFS final rule (86 FR 65328), commenters supported clarification 
to the existing travel allowance policy and also made suggestions 
regarding possible refinements.
    Several commenters described their concerns regarding the current 
travel allowance policy, stating that the current system requires the 
individual tracking of miles and paperwork documenting those miles, as 
well as the calculation of billable charges. Commenters stated that 
this system creates inconsistencies across facilities providing 
specimen collection services and creates confusion and burden for 
health care providers and MACs. One commenter also noted that because 
of the complex logistics involved in obtaining specimens from homebound 
patients and non-hospital inpatients and transporting the specimens for 
prompt processing, a disincentive is created for serving this 
potentially underserved patient population, leading to potential access 
issues for Medicare beneficiaries.

[[Page 69753]]

    Several commenters requested that CMS simplify the travel allowance 
by creating a single per-encounter flat-rate payment for travel, which 
would simplify personnel and transportation expenses by eliminating the 
individual tracking of miles and paper documenting of those miles as 
well as the calculation of billable charges. The commenters stated that 
a flat-rate approach would also provide greater consistency across 
facilities served and reduce the burden on health care providers and 
MACs, and therefore, further support continued patient access to these 
laboratory services. A few commenters suggested the creation of a rural 
add-on payment to provide payment to those laboratories serving 
Medicare beneficiaries residing in remote areas. Several commenters 
also stated that the current travel allowance is prone to billing 
inconsistencies, so simplifying the calculation of the travel allowance 
would increase the overall understanding of the policy among impacted 
parties, decrease the instances of health care providers inadvertently 
overbilling for mileage, reduce program integrity concerns, and improve 
clarity for all parties involved.
    Several commenters also recommended that business requirements 
outlined in the annual Medicare travel allowance CR be updated to 
require the contractor to search their files to adjust claims already 
paid at the prior year travel allowance rather than require action by 
laboratories. The commenter requested that contractors be instructed to 
review claims and reprocess at the updated rates rather than require 
laboratories to initiate the revisions.
    Additionally, the OIG issued an August 25, 2021 report, CMS Needs 
To Issue Regulations Related to Phlebotomy Travel Allowances (A-06-20-
04000),\175\ in which the OIG discussed ongoing concerns regarding the 
Medicare CLFS travel allowance policy and summarized findings from 
previous audits of MACs in which claims for phlebotomy travel 
allowances were paid using incorrect prorated mileage and claims for 
phlebotomy travel allowances were paid using incorrect payment rates. 
The OIG also described instances in which health care provider 
documentation was insufficient to warrant payment of the phlebotomy 
travel allowances.
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    \175\ https://oig.hhs.gov/oas/reports/region6/62004000.asp.
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    The 2021 OIG report presented recommendations to CMS regarding the 
CLFS travel allowance policy, including working with the MACs to 
educate health care providers about the documentation requirements for 
specimen collection travel allowances, instructing the MACs to identify 
and adjust any paid claims that incorrectly used the previous year's 
rate, and issuing regulations related to phlebotomy travel to clarify 
various aspects of the travel allowance payment policy.
    In the CY 2022 PFS proposed rule (86 FR 39310 through 39311) and CY 
2022 PFS final rule (86 FR 65328), we discussed the travel allowance 
policy and stated that we made permanent the option for laboratories to 
maintain electronic documentation of miles traveled for the purposes of 
covering the transportation and personnel expenses for trained 
personnel to travel to the location of an individual to collect a 
specimen sample. This option for laboratories to maintain electronic 
documentation applies to specimen collection for any CDLT. We noted 
that laboratories will need to be able to produce electronic 
documentation in a form and manner that can be shared with MACs, and 
should continue to consult with their local MACs regarding the format 
and process for submission of this information if necessary. We stated 
that we believed this flexibility to maintain electronic documentation 
of miles traveled provides clarity to laboratories about documentation 
requirements for the Medicare CLFS travel allowance for specimen 
collection payment policy.
    Additionally, we have instructed the MACs to identify and adjust 
any paid claims that incorrectly used the previous year's rate, thereby 
addressing the OIG's and commenters' suggestions regarding reprocessing 
using the updated rates through the revision of business requirements 
in the January 14, 2022 RUN CLFS--Medicare Travel Allowance Fees for 
Collection of Specimens CR 12593.\176\ The OIG and commenters alike 
recommended that we update the business requirements outlined in the 
annual Medicare travel allowance CR to require the MACs to search their 
files to adjust claims already paid at the prior year's travel 
allowance amount rather than require action by laboratories. 
Specifically, in the CR, we included the Business Requirement 12593.5, 
which states that ``Contractors shall adjust previously paid travel 
allowance claims with dates of service on or after January 1, 2022, in 
order to apply the updated payment rate and initiate those adjustments 
within 60 days, if claims are paid at the prior year's rates before the 
new rate is entered into the MACs' systems.'' We stated that we 
believed this modification to the business requirements will eliminate 
the need for action by laboratories for adjustments to claims and 
instead provide instruction to contractors to review claims and 
reprocess at the updated rates as appropriate.
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    \176\ https://www.cms.gov/files/document/r11184cp.pdf.
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f. Codification and Modifications of the CLFS Specimen Collection 
Travel Allowance Policy
    As described in detail in the CY 2023 PFS proposed rule (87 FR 
46070 through 46081), in light of the concerns from the public, and in 
an effort to respond to the OIG's recommendation that CMS issue 
regulations regarding certain aspects of the travel allowance for 
specimen collection payment policy, we proposed to codify in our 
regulations, and make certain modifications and clarifications to, the 
Medicare CLFS travel allowance policies. As discussed in the proposed 
rule, we believed the proposals would achieve CMS' aims of simplifying 
and clarifying our travel allowance policies. We proposed to add Sec.  
414.523(a)(2), ``Payment for travel allowance,'' to reflect the 
requirements for the travel allowance for specimen collection. 
Specifically, in accordance with section 1833(h)(3)(B) of the Act, we 
proposed to include in our regulations the following: (1) general 
requirement; (2) travel allowance basis; and (3) travel allowance 
amount.
    Section 1833(h)(3)(B) of the Act states that the Secretary shall 
provide for and establish a fee to cover the transportation and 
personnel expenses for trained personnel to travel to the location of 
an individual to collect the sample. We noted in the proposed rule that 
we believe this language indicates that only instances of specimen 
collection requiring trained technicians \177\ for the purposes of 
collecting the sample are to be included in the travel allowance 
calculation. Therefore, travel for simple pickup of specimens or for 
specimen collection that does not require the services of trained 
technicians should not be considered in the calculation of the travel 
allowance. This means, the travel allowance may be paid only if a 
specimen collection fee is also payable; for example, no travel 
allowance would be paid if a trained technician merely performs a 
messenger service to pick up a specimen drawn by other technicians.
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    \177\ As noted previously in this section of the proposed rule, 
we are proposing to use the term ``trained technician'' for purposes 
of our specimen collection fee and travel allowance policies.

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[[Page 69754]]

    The Medicare Claims Processing Manual, chapter 16, section 60.2 
states, ``The additional allowance can be made only where a specimen 
collection fee is also payable, that is, no travel allowance is made 
where the technician merely performs a messenger service to pick up a 
specimen drawn by a physician or nursing home personnel.'' We proposed 
to codify this general requirement at Sec.  414.523(a)(2)(i), 
indicating that the provision would state that CMS pays a travel 
allowance where the specimen is one for which a specimen collection fee 
is paid and would make clear that all of the requirements for the 
specimen collection fee to be paid (which are specified in Sec.  
414.523(a)(1)) would need to be met for the travel allowance to be 
payable.
    Additionally, section 1833(h)(3)(B) of the Act states that the 
travel allowance may be provided only with respect to an individual who 
is homebound or an inpatient in an inpatient facility (other than a 
hospital). We explained that we interpreted this statutory language to 
mean that the fee only applies when a trained technician draws a 
specimen from a patient who either is in an inpatient facility that is 
not a hospital or is a homebound patient. (A discussion regarding the 
definition of a homebound patient is provided in section III.B.6.b. of 
the proposed rule and III.C.6.b of this final rule.) The Medicare 
Claims Processing Manual, chapter 16, section 60.2 states that 
``Medicare, under Part B, covers a specimen collection fee and travel 
allowance for a laboratory technician to draw a specimen from either a 
nursing home patient or homebound patient.'' We noted that we believed 
it is appropriate to codify that the travel allowance is permitted only 
where the individual from whom the specimen is collected is homebound 
or is an inpatient in an inpatient facility (other than a hospital). We 
proposed to codify this requirement at Sec.  414.523(a)(2), which as we 
noted would therefore require all of the specimen collection fee 
requirements at Sec.  414.523(a)(1) to be met, and which would include 
the proposed requirement at Sec.  414.523(a)(1)(ii) that the specimen 
is collected from a Medicare beneficiary who is homebound as described 
in Sec.  424.22(a)(1)(ii) or a non-hospital inpatient.
    In Sec.  414.523(a)(2)(ii), we proposed to codify and clarify that 
CMS pays a travel allowance on the following bases: (A) flat-rate 
travel allowance; and (B) per-mile travel allowance. We explained that 
we interpreted the statutory language in section 1833(h)(3)(B) of the 
Act that requires us to pay a fee for trained personnel to travel to 
the location of an individual to collect the sample to mean that the 
travel allowance fee is only applicable to travel that is for the 
purpose of collecting the specimen from a Medicare beneficiary. To that 
end, we noted that we believed only one travel allowance payment may be 
made for specimen collection for a Medicare beneficiary based on the 
beneficiary's location, and only when a Medicare beneficiary requires 
the collection of a specimen necessary for performance of CDLTs. We 
also noted that we believed that non-Medicare patients should not be 
included in any portion of the calculation of the travel allowance. 
This interpretation would be a modification to existing guidance in the 
Medicare Claims Processing Manual, chapter 16, section 60.2, which 
states that the travel allowance ``is to be pro-rated in situations 
where specimens are drawn or picked up from non-Medicare patients in 
the same trip.'' As explained in the proposed rule, this modification 
would reflect our position that only Medicare patients should be 
considered in the calculation and payment of the travel allowance, 
which would more closely align with the statutory language regarding 
``the location of an individual,'' that is, the location of a Medicare 
beneficiary receiving specimen collection services. We also noted that 
we believed this modification would address concerns from laboratories, 
the OIG, and other interested parties who requested clarification 
regarding the inclusion of Medicare and non-Medicare beneficiaries in 
the travel allocation calculation.
    We proposed that, whether a laboratory bills the flat-rate travel 
allowance basis or the per-mile travel allowance basis would depend 
upon the total miles traveled and number of locations. Section 
1833(h)(3)(B) of the Act states, in establishing a fee to cover the 
transportation and personnel expenses for trained personnel to travel 
to the location of an individual to collect a sample, the Secretary 
shall provide a method for computing the fee based on the number of 
miles traveled and the personnel costs associated with the collection 
of each individual sample. Therefore, we noted that we believed a key 
component of the travel allowance payment for specimen collection is 
the number of miles traveled for the specimen collection.
    In considering potential methodologies for calculating a travel 
allowance for specimen collection, we discussed in the proposed rule 
that we conducted an analysis of the usage of the existing Per Mile 
Travel Allowance HCPCS code (P9603) to understand the usage of P9603 
and analyze the billing of miles related to travel allowance for 
specimen collection. In CY 2019, among professional and institutional 
Medicare claims, there were approximately 3.2 million total claim lines 
billed for HCPCS code P9603 (per-mile travel allowance). Among the 
P9603 claim lines, the average mileage billed per claim line was 18.8 
with a standard deviation of 33.4. However, the median distance 
traveled per line was 7 miles. Of all P9603 claim lines, 76.3 percent 
were billed with less than 20 miles, and 37.9 percent of all P9603 
claim lines were billed with less than five miles. The average payment 
per line for P9603 in CY 2019 was $18.13; however, the median payment 
per line was $6.09. Additionally, our analysis also showed that 23.7 
percent of miles traveled were greater than 20 miles, with 150,442 
claim lines of the approximately 3.2 million total claim lines, or 4.7 
percent, logging more than 85 miles per trip. As discussed in the 
proposed rule, we believed that these long-distance trips likely 
reflect specimen collection from beneficiaries in rural areas (which 
are generally underserved zones). Given that the majority of P9603 
claim lines (76.3 percent) are billed with less than 20 miles, we also 
noted that we believed that 20 miles would be an appropriate threshold 
for use in the travel allowance bases for specimen collection. In 
addition, to address concerns about administrative complexity, we 
proposed that the flat-rate travel allowance basis only would be 
available for trips involving one location.
    Specifically, we proposed in Sec.  414.523(a)(2)(ii)(A) that the 
flat-rate travel allowance basis would apply when the trained 
technician travels 20 eligible miles or less to and from one location 
for specimen collection from one or more Medicare beneficiaries. We 
stated that we believed that section 1833(h)(3) of the Act supports 
payment for specimen collection and travel allowance for only Medicare 
beneficiaries and should not include non-Medicare beneficiaries. As 
proposed, laboratories would bill Medicare using existing HCPCS code 
P9604 to receive payment for the flat-rate travel allowance amount, 
prorated by the number of beneficiaries for whom a specimen collection 
fee is paid. As discussed in the proposed rule, we believed that 
providing payment for the proposed flat-rate travel allowance basis 
would serve to simplify the administrative requirements for 
laboratories in terms of billing and

[[Page 69755]]

record-keeping activities. Additionally, we discussed in the proposed 
rule that the clarification regarding requirements for proration would 
address issues raised by interested parties, including the OIG, who 
expressed concerns regarding inconsistencies in current guidance. We 
sought comment on considerations related to the flat-rate travel 
allowance basis, including considerations for proposed distance, 
alternatives for a possible flat-rate travel allowance basis, as well 
as the utility of this basis or the potential exclusion of this basis 
for the purposes of the travel allowance for specimen collection.
    In addition to the flat-rate travel allowance basis, we proposed in 
Sec.  414.523(a)(2)(ii)(B) the per-mile travel allowance basis, which 
we explained would apply when the trained technician travels more than 
20 eligible miles to and from one location for specimen collection from 
one or more beneficiaries or when the trained technician travels to 
more than one location for specimen collection from more than one 
Medicare beneficiary. We clarified that this proposed basis would apply 
in two circumstances--where round-trip travel to one location is 
greater than 20 eligible miles and where travel is to more than one 
location, regardless of the number of miles traveled. We proposed to 
modify the per-mile travel allowance policy in this way for greater 
clarity, administrative simplification, and consistency with statute. 
As proposed, the laboratory would receive payment under the per-mile 
travel allowance basis for the total number of miles traveled for 
specimen collection, which would be allocated to each Medicare 
beneficiary for whom a specimen collection fee is paid. We discussed 
that we believed the proposal would serve to address the OIG's 
recommendations that CMS clarify various aspects of the travel 
allowance payment policy, including requirements for proration, which 
we discussed more fully in the travel allowance amount calculation 
proposal in the proposed rule. We sought comment on all aspects of the 
proposed per-mile travel allowance basis.
    Additionally, we proposed to specify travel allowance amount 
requirements pertaining to eligible miles, the travel allowance mileage 
rate, and the travel allowance amount calculation at Sec.  
414.523(a)(2)(iii). At Sec.  414.523(a)(2)(iii)(A), we proposed that 
eligible miles would begin at the laboratory and end at the laboratory 
where the trained technician returns the specimen(s) for testing. We 
noted that we believed the laboratory is the most likely place where 
the trained technician would become aware of the laboratory order and 
acquire the necessary supplies to perform the specimen collection. We 
explained that although we do not believe the trained technician would 
commence travel related to specimen collection from a location other 
than the laboratory, we sought comment as to whether there are 
alternative starting locations we should consider. We noted that the 
provision requiring that the mileage calculation begins at a 
laboratory, as proposed, would codify existing policy in the Medicare 
Claims Processing Manual, chapter 16, section 60.2, which provides 
several examples of travel allowance scenarios that reference the start 
of a travel allowance route as beginning at a laboratory, and would be 
consistent with section 1833(h)(3)(B) of the Act.
    We further proposed in Sec.  414.523(a)(2)(iii)(A) that eligible 
miles would not include miles traveled for any purpose unrelated to 
specimen collection, such as collecting specimens from non-Medicare 
beneficiaries or for personal reasons. We noted that we believed the 
statutory language in section 1833(h)(3)(B) of the Act supported the 
proposal to exclude from the calculation of eligible miles any miles 
traveled to a location where no specimens are collected, to the 
location of a non-Medicare beneficiary for specimen collection, to a 
Medicare beneficiary where no specimen collection occurs, or for 
personal purposes. We explained that the proposed provision would 
codify the Medicare Claims Processing Manual, chapter 16, section 60.2, 
which states that ``the travel allowance is intended to cover the 
estimated travel costs of collecting a specimen.''
    In Sec.  414.523(a)(2)(iii)(B), we proposed to set forth the travel 
allowance mileage rate, to be used in the travel allowance amount 
calculations. Section 1833(h)(3)(B) of the Act requires the travel 
allowance to cover both the ``transportation'' and ``personnel 
expenses'' for trained personnel to travel to the location of an 
individual to collect a sample. As proposed, the travel allowance 
mileage rate would reflect both of these components.
    As described in the proposed rule, we issue annual travel allowance 
amounts through CR publications, such as CR 12593.\178\ Currently, CMS 
adds the IRS standard mileage rate to an additional $0.45 per mile, 
which is intended to pay for the trained personnel's time, as described 
in CR 12593, where the additional $0.45 per mile addresses time and 
travel costs required by the technician for approximately 15 minutes of 
labor. The manual states that this rate is based on the assumption that 
a trip is an average of 15 minutes and up to 10 miles one way and uses 
the Federal mileage rate (as determined by the IRS) and a technician's 
time of $17.66 an hour, including overhead. For CY 2022, the IRS 
standard mileage rate is $0.585. That amount plus $0.45 for the trained 
personnel's labor yields a travel allowance mileage rate of $1.035, 
which is rounded up to $1.04 for CY 2022. We proposed to codify the 
travel allowance mileage rate in regulation, as well as modify and 
clarify certain aspects of it.
---------------------------------------------------------------------------

    \178\ https://www.cms.gov/files/document/r11184cp.pdf.
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    The IRS updates and issues standard mileage rates on a periodic 
basis, generally annually.\179\ These rates are used to calculate the 
deductible costs of operating an automobile for business, charitable, 
medical, or moving for the purpose of calculating Federal taxes. We 
proposed that the ``transportation'' component of the travel allowance 
mileage rate would equal the IRS standard mileage rate, which would be 
consistent with our current policy. We noted that we believed using the 
IRS standard mileage rate would continue to be an appropriate way to 
cover transportation as the IRS rate accounts for the costs associated 
with transportation per mile traveled. We sought comment on the 
proposal to use the IRS standard mileage rate to cover the 
transportation component of the travel allowance mileage rate.
---------------------------------------------------------------------------

    \179\ https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2022.
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    In addition, we proposed to include an amount to cover the 
``personnel expenses'' component of the travel allowance mileage rate 
where the trained technician's personnel expenses would be based on a 
wages-per-mile amount. First, we proposed that personnel expenses are 
wages in this context, where wages would represent the cost of the 
trained technician's time for traveling to collect the sample. We also 
proposed to base the specific wage amount on data from the BLS, which 
publishes salary statistics for occupations in the United States. The 
BLS defines a phlebotomist as a professional who draws blood for tests, 
transfusions, research, or blood donations.\180\ The BLS separately 
defines clinical laboratory technologists and technicians as workers 
who collect samples and perform tests to analyze body fluids, tissue, 
and other

[[Page 69756]]

substances.\181\ For purposes of the travel allowance, we stated that 
we believed the BLS definition of phlebotomist more closely aligns with 
the trained technicians that we believed are providing the types of 
specimen collection services described earlier in this section, as a 
phlebotomist typically draws blood or other specimens, while a 
laboratory technologist may both collect the specimen as well as 
analyze the specimen. We noted that we did not believe that trained 
technicians collecting the specimen for the purposes of our specimen 
collection policies are also analyzing the specimens. Therefore, we 
proposed to use wage data in the BLS-defined category of phlebotomist 
to establish the personnel expense component of the travel allowance 
mileage rate.
---------------------------------------------------------------------------

    \180\ https://www.bls.gov/ooh/healthcare/phlebotomists.htm.
    \181\ https://www.bls.gov/ooh/healthcare/clinical-laboratory-technologists-and-technicians.htm.
---------------------------------------------------------------------------

    For CY 2021 (the latest available information), the BLS states that 
the median pay (or the wage at which half of the workers in the 
occupation earned more than that amount and half earned less) for 
phlebotomists is $17.97 per hour.\182\ To account for the personnel 
expenses associated with travel for specimen collection, we proposed to 
use the latest available published figure for the median hourly wage 
amount for phlebotomists, which is published by the BLS, for the 
purposes of annually updating the travel allowance amount for specimen 
collection. We proposed to codify this aspect of the travel allowance 
mileage rate at Sec.  414.523(a)(2)(iii)(B) by describing that the 
travel allowance mileage rate includes an amount to cover expenses for 
a trained technician equal to the most recent median hourly rate for 
phlebotomists, as published by the BLS. As discussed in the proposed 
rule, this approach would be a clarification of and modification to 
current guidance, as CR 12593 describes that the $0.45 per mile added 
to the IRS rate is meant to address the trained personnel's time and 
travel costs based on approximately 15 minutes of labor.
---------------------------------------------------------------------------

    \182\ https://www.bls.gov/ooh/healthcare/phlebotomists.htm.
---------------------------------------------------------------------------

    Next, we discussed that we would calculate a per-mile amount to 
derive the approximate number of miles traveled by the trained 
technician each hour. To do so, we proposed to use an average driving 
speed. The average miles-per-hour driving speed would be multiplied by 
the trained technician's estimated wages, as described above, and the 
result would be an amount that represents wages per mile, which would 
be the personnel expenses associated with travel for specimen 
collection. We proposed to use an average driving speed of 40 miles per 
hour, as we believed most of the travel related to specimen collection 
would be performed in local and residential areas, as our data show 
that the median number of miles traveled for specimen collection is 
approximately 7 miles.
    Therefore, to establish the personnel expenses component of the 
travel allowance mileage rate, which would be a per-mile amount, we 
proposed that we would divide the most recent median hourly wage for 
phlebotomists, as published by the BLS, by 40 to represent an average 
miles-per-hour. We proposed to codify this aspect of the travel 
allowance mileage rate at Sec.  414.523(a)(2)(iii)(B). For CY 2023, the 
amount would be equal to the most recent BLS median hourly wage for a 
phlebotomist of $17.97 per hour (which is currently the BLS CY 2021 
rate) divided by 40, which is $0.45 per mile. We noted that this amount 
is consistent with the amount that we add to the IRS rate under our 
current travel allowance policy.
    In summary, we proposed to establish in Sec.  414.523(a)(2)(iii)(B) 
that the travel allowance mileage rate is equal to the IRS standard 
mileage rate plus an amount to cover expenses for a trained technician 
equal to the most recent median hourly wage for phlebotomists, as 
published by the BLS, divided by 40 to represent an average miles-per-
hour driving speed. We indicated in the proposed rule that the travel 
allowance mileage rate would be updated annually using the most recent 
IRS and BLS information, which we would issue in subregulatory guidance 
annually through CRs.
    We sought comment on all aspects of the proposed travel allowance 
mileage rate, including the use of the IRS standard mileage rate to 
cover transportation, the proposed use of estimated wages and average 
driving speed to cover personnel expenses, and other specific 
considerations or alternatives for establishing the rate.
    Finally, we proposed to include in Sec.  414.523(a)(2)(iii)(C) the 
travel allowance amount calculations for the flat-rate travel allowance 
basis and the per-mile travel allowance basis discussed previously in 
this section of the final rule. We stated that we believed that these 
proposed calculations would be a modification to existing guidance, 
which we noted would clarify and revise the travel allowance amount 
calculations in several respects.
    As explained in the proposed rule, in our analysis of mileage 
traveled for the purposes of specimen collection, described above, the 
results indicate that the median mileage per trip for specimen 
collection per Medicare beneficiary is approximately 7 miles; 
therefore, we noted that we believed that a reasonable approximation of 
the typical mileage required for specimen collection per beneficiary is 
about 10 miles. As such, for the flat-rate travel allowance basis, we 
proposed in Sec.  414.523(a)(2)(iii)(C)(1) that the travel allowance 
amount calculation is the travel allowance mileage rate multiplied by 
ten (10) (for CY 2023 example purposes, this amount would be $10.40) 
and divided by the number of beneficiaries for whom a specimen 
collection fee is paid. We explained that dividing by the number of 
beneficiaries for whom a specimen collection fee is paid would ensure 
that the flat-rate travel allowance amount is apportioned to each 
beneficiary receiving specimen collection services and that payment is 
calculated in an operationally feasible manner, as a laboratory must 
submit a claim for each beneficiary to receive payment for travel 
allowance; this would allow for a fixed payment amount to be 
straightforwardly apportioned to the number of beneficiaries for whom a 
specimen collection fee is paid in a single location. We noted that we 
believed this proposed flat-rate travel allowance calculation would 
simplify payment for travel to one location for specimen collection 
services requiring travel of 20 miles or less, which would ease 
administrative burden. Additionally, we stated, the proposed 
methodology would be consistent with the existing flat-rate travel 
allowance payment policy described in CR 12593 and would clarify the 
proration methodology.
    For an example of the proposed flat-rate travel allowance 
calculation, consider a situation in which a trained technician travels 
7 miles from the laboratory to a nursing home to collect blood 
specimens collected through venipuncture from five patients, four of 
whom are Medicare beneficiaries. The trained technician collects three 
specimens from Medicare beneficiaries, collects one specimen from the 
non-Medicare patient, and simply picks up a previously collected 
specimen from one Medicare beneficiary. The trained technician then 
drives 7 miles back to the laboratory to deliver the specimens without 
making any other stops. The trained technician has provided specimen 
collection services to three Medicare beneficiaries. One Medicare 
beneficiary did not require specimen

[[Page 69757]]

collection services, and therefore, a specimen collection fee would not 
be payable. In this example, the laboratory would use the flat-rate 
travel allowance basis because the trained technician traveled a total 
of 14 miles. To calculate the travel allowance mileage rate, the 
laboratory would divide flat-rate travel allowance amount of $10.40 by 
the number of beneficiaries for whom a specimen collection fee is paid 
(three beneficiaries), which equals $3.47. To bill for the travel 
allowance, the laboratory would submit one claim for each beneficiary 
for whom a specimen collection fee is paid by billing HCPCS code P9604.
    We proposed that updates to travel allowance mileage rates would be 
issued through subregulatory guidance, specifically the existing CMS 
change request process, on an annual basis. We sought comment on all 
aspects of the proposed calculation of the flat-rate travel allowance 
amount, including considerations for the proposed mileage factor of ten 
(10) and the proposed proration by the number of beneficiaries for whom 
a specimen collection fee is paid.
    We also proposed to clarify, modify, and codify in regulation the 
calculation for the per-mile travel allowance amount. Under proposed 
Sec.  414.523(a)(2)(iii)(C)(2), the per-mile travel allowance amount 
would equal the number of eligible miles multiplied by the travel 
allowance mileage rate, divided by the number of beneficiaries for whom 
a specimen collection fee is paid.
    As discussed previously, we believe that section 1833(h)(3) of the 
Act supports payment for specimen collection and travel allowance only 
for Medicare beneficiaries, and we proposed that the per-mile travel 
allowance amount calculation would only consider the number of Medicare 
beneficiaries from whom specimens are collected in the proration of the 
per-mile travel allowance. As the current policy in manual guidance and 
the CR factor are inconsistent in referring to the number of specimens 
or number of patients, we noted that the proposal would be a policy 
change to clarify that only the number of Medicare beneficiaries for 
whom a specimen collection fee is paid should be included in the 
calculation.
    We explained that, to calculate the per-mile travel allowance 
amount, the laboratory would first calculate the total number of 
eligible miles, as set forth in proposed Sec.  414.523(a)(2)(iii)(A), 
the trained technician traveled--this would be the total number of 
miles traveled by the trained technician to locations where one or more 
Medicare beneficiaries received specimen collection services and back 
to the laboratory where the technician returns the specimen(s) for 
testing. The eligible miles would be multiplied by the travel allowance 
mileage rate as set forth in proposed Sec.  414.523(a)(2)(iii)(B), then 
divided by the number of beneficiaries for whom a specimen collection 
fee is paid, which would yield a prorated travel allowance amount. 
Under this approach, the laboratory would receive payment for the total 
number of eligible miles traveled for specimen collection, apportioned 
equally to each Medicare beneficiary for whom a specimen collection fee 
is paid. The laboratory would then submit a claim billing HCPCS code 
P9603 for payment of the per-mile travel allowance amount for each 
beneficiary for whom a specimen collection fee is paid. We stated that 
we believed this calculation for the per-mile travel allowance basis 
would resolve concerns raised by the public about inconsistent 
guidance.
    For an example of the per-mile travel allowance amount calculation, 
consider a trained technician traveling 45 miles from a laboratory in a 
city to a rural SNF, collecting blood specimens through venipuncture 
from 6 Medicare beneficiaries, and then driving 45 miles to return to 
the laboratory. In this example, the laboratory would use the per-mile 
travel allowance basis because the trained technician traveled more 
than 20 eligible miles to one location for specimen collection. To 
calculate the per-mile travel allowance amount, the laboratory would 
sum the eligible miles traveled to the location of Medicare 
beneficiaries receiving specimen collection services, which, in this 
case is 45 miles from the laboratory to the SNF and 45 miles from the 
SNF returning to the laboratory, for a total of 90 eligible miles. The 
eligible miles would then be multiplied by the travel allowance mileage 
rate of $1.04, yielding a total of $93.60. This total amount would then 
be prorated by dividing by the number of Medicare beneficiaries for 
whom a specimen collection fee is paid (6), yielding a per-beneficiary 
amount of $15.60 ($93.60/6 = $15.60). To bill for the travel allowance, 
the laboratory would submit one claim for each beneficiary in the 
amount of $15.60 HCPCS code P9603.
    In another example, a trained technician travels 40 miles from a 
laboratory to the location of a Medicare beneficiary to collect a blood 
specimen through venipuncture, then travels 10 miles to the location of 
a non-Medicare patient to collect a blood specimen through 
venipuncture, then travels 20 miles to the location of two Medicare 
beneficiaries to collect urine specimens by catheterization, and then 
travels 20 miles to return to the laboratory. In this example, the 
laboratory would use the per-mile travel allowance basis because the 
trained technician traveled to more than one location for specimen 
collection. To calculate the per-mile travel allowance amount, the 
laboratory would sum the eligible miles, which would include the miles 
traveled from the laboratory to the locations of Medicare beneficiaries 
to collect specimens plus the miles back to the laboratory for specimen 
drop-off. Eligible miles would not include the 10 miles traveled to the 
location of the non-Medicare patient to collect a specimen, but would 
include the 40 miles traveled from the laboratory to the location of 
the first Medicare beneficiary, the 20 miles to the location of the two 
Medicare beneficiaries, and the return trip to the laboratory of 20 
miles, for a total of 80 eligible miles. The eligible miles would then 
be multiplied by the travel allowance mileage rate of $1.04, yielding a 
total of $83.20. This total would then be prorated by dividing by three 
(3) Medicare beneficiaries for whom a specimen collection fee is paid, 
yielding an amount of $27.73. The laboratory would then submit a claim 
using HCPCS code P9603 for travel allowance for each of the Medicare 
beneficiaries in the amount of $27.73. Again, the laboratory would 
receive payment for the eligible miles traveled by the trained 
technician, apportioned equally to each Medicare beneficiary for whom a 
specimen collection fee is paid.
    We stated that the proposed travel allowance payment policies would 
represent both modifications to and clarifications of the specimen 
collection travel allowance payment methodologies currently described 
in guidance. We noted that we believed the proposed changes and 
clarifications, if finalized, would improve and simplify the 
administration of the travel allowance payment policy. Laboratories 
would use HCPCS code P9604 to bill for the flat-rate travel allowance 
basis for shorter trips to one location, and HCPCS code P9603 to bill 
for the per-mile travel allowance basis for longer trips to one 
location and trips to multiple locations, which we believed would 
ensure payment for specimen collection services based upon eligible 
miles required for such travel and address concerns of interested 
parties about the provision of specimen collection services for 
individuals residing in remote locations.
    We sought comment on all aspects of this travel allowance proposal,

[[Page 69758]]

including the proposed general requirement, the proposed provisions 
regarding the flat-rate and the per-mile travel allowance bases and the 
utility of having both approaches, the proposed provisions regarding 
eligible miles and the travel allowance mileage rate, as well as 
considerations for the methodologies to calculate the travel allowance 
amounts. We also sought comments on possible alternative considerations 
for the CLFS travel allowance, including suggestions based on private-
payor and/or other approaches for tracking mileage and paying for 
travel allowance, including per-beneficiary per-encounter bases, or 
other approaches for providing payment for travel for specimen 
collection. We noted that our proposed regulations would not require 
MACs to calculate travel allowance payments, nor would they reflect the 
MAC flexibilities with respect to travel allowance payment that are 
currently in guidance, such as their discretion to pay the travel 
allowance in circumstances where CDLTs are needed on an emergency 
basis; we sought comment on this issue as well.
    We noted that we would make conforming changes to the Claims 
Processing Manual, Chapter 16, section 60 to reflect the proposed 
travel allowance policies, if finalized, including any changes or 
clarifications. We also stated in the proposed rule that we would 
remove sections of the manual containing policies that are no longer 
applicable.
    The following is a summary of the public comments received on the 
proposed provisions related to the travel allowance for specimen 
collection policies and our responses:
    Comment: Many commenters expressed support for the proposals to 
codify and clarify the CLFS travel allowance policies. Commenters 
appreciated the clarifications regarding all aspects of the payment 
policies related to the CLFS travel allowance, including the proposed 
general requirements, travel allowance bases, travel allowance amount, 
and travel allowance amount calculations. Several commenters 
specifically supported the general requirements including the 
requirement that travel allowance amount may be paid only when a 
specimen collection fee is also paid.
    Several commenters also expressed support for the proposed travel 
allowance bases. Commenters supported the flat-rate travel allowance 
basis as applying to travel to and from one location of 20 miles or 
less (P9604), and likewise supported the per-mile travel allowance in 
instances when the technician travels more than 20 miles to and from 
one location for specimen collection from one or more Medicare 
beneficiaries or the technician travels to more than one location for 
specimen collection from more than one Medicare beneficiary (P9603). 
One commenter appreciated that the travel allowance proposal would 
reimburse for travel of longer distances on a per-mile basis, which the 
commenter believed would help promote access to services in more remote 
or rural areas. Some commenters noted that codification and 
clarification of CLFS travel allowance policies would help promote 
continued access to CDLT services.
    Response: We believe that the modifications and clarifications to 
the travel allowance payment policies will improve and simplify the 
administration of the travel allowance payment policy. We appreciate 
the commenters' support for the proposed travel allowances bases, and 
we believe the descriptions of the two travel allowance bases will help 
clarify which travel allowance basis laboratories should use, which 
will increase the accuracy of billing the travel allowance for specimen 
collection. We are finalizing as proposed the general requirement at 
Sec.  414.523(a)(2)(i) and the travel allowance bases at Sec.  
414.523(a)(2)(ii).
    Comment: Several commenters supported the proposed description of 
eligible miles, noting specific support for excluding miles traveled 
for any purpose unrelated to specimen collection. However, several 
commenters did not agree with the proposal that eligible miles would 
begin and end at the laboratory, and suggested that eligible miles 
could instead begin at the home of the trained technician or elsewhere 
when the trained technician begins their shift at a location other than 
the laboratory. Some commenters specified that some laboratories 
strategically recruit technicians based on the location of their home 
residence to efficiently staff technicians on routes closer to the 
facilities and/or patients served to limit travel time and maximize the 
number of patients served per day. Others also mentioned that 
laboratories may ship specimen collection supplies to the technician or 
locations closer to their residence for efficiency. Additionally, 
several commenters noted that electronic ordering procedures may negate 
the necessity for technicians to begin at the laboratory because orders 
for laboratory services may now be conveyed electronically through an 
electronic medical records system to the technician before they begin 
their route, or the technician may receive the details of specific 
laboratory orders on paper requisitions when the technician arrives at 
the location of the Medicare beneficiary, like a SNF, thereby negating 
the need for the technician to travel to the physical location of the 
laboratory in order to obtain the order for laboratory services. 
Commenters further stated that the end point could include the 
laboratory itself but may also include parcel drop-off points, courier 
sites, or other locations where the specimen is transferred to the next 
entity.
    Response: We agree with the commenters that a trained technician's 
travel for specimen collection from Medicare beneficiaries may begin at 
a location other than the technician's home and therefore we are 
modifying our proposed description of eligible to miles to reflect that 
eligible miles do not necessarily have to begin at the laboratory. We 
will now specify that eligible miles begin at the laboratory or the 
starting point of the technician's travel for specimen collection. We 
believe that broadening the description of eligible miles this way will 
provide flexibility for the types of locations that could serve as the 
starting point for travel related to specimen collection.
    Additionally, as described above, commenters noted that travel for 
specimen collection could end at a location other than the laboratory 
and asserted that technicians often deliver the collected specimens to 
a drop-off location for courier or shipping services. Therefore, we are 
also modifying our proposed description of eligible miles do not 
necessarily have to end at the laboratory. We will now specify that 
eligible miles end at the laboratory or the ending point of the 
technician's travel for specimen collection. We believe that broadening 
the description of eligible miles this way will provide flexibility for 
the types of locations that could serve as the ending point for travel 
related to specimen collection.
    We reiterate that only those miles that are related to the 
technician's travel for specimen collection from a Medicare beneficiary 
will meet the requirements eligible miles for the purposes of the 
travel allowance. Miles that are not related to specimen collection, as 
described above, may not be included as eligible miles for the purposes 
of Medicare payment for travel allowance for specimen collection. As we 
discuss above, this aspect of the policy will also be codified in 
regulation at Sec.  414.523(a)(2)(iii)(A), where we describe that 
eligible miles do not include miles traveled for any purpose unrelated 
to specimen collection, such as collecting specimens from non-Medicare 
beneficiaries or for personal reasons.

[[Page 69759]]

    In summary, we are revising the description of eligible miles at 
Sec.  414.523(a)(2)(iii)(A) such that eligible miles begin at the 
laboratory or the starting point of the technician's travel for 
specimen collection and end at the laboratory or the ending point of 
the technician's travel for specimen collection.
    Furthermore, as described in section III.C.6.e. of this rule, as 
well as in the CY 2022 PFS proposed rule (86 FR 39310 through 39311) 
and CY 2022 PFS final rule (86 FR 65328), we have made permanent the 
option for laboratories to maintain electronic documentation of miles 
traveled for the purposes of covering the transportation and personnel 
expenses for trained technicians to travel to the location of an 
individual to collect a specimen sample. This option for laboratories 
to maintain electronic documentation applies to specimen collection for 
any CDLT. Laboratories should continue to utilize electronic and/or 
other documentation in order to demonstrate miles traveled for the 
purposes of specimen collection. We reiterate that laboratories will 
need to be able to produce electronic documentation in a form and 
manner that can be shared with MACs, and should continue to consult 
with their local MACs regarding the format and process for submission 
of this information if necessary. We believe that the electronic 
documentation of miles traveled will continue to reduce administrative 
burden for laboratories for the Medicare CLFS travel allowance for 
specimen collection payment policy while also serving as evidence of 
the miles traveled.
    Comment: One commenter was concerned that having to track mileage 
for travel and account for the number of Medicare beneficiaries from 
whom specimens are collected would impose administrative burden on 
laboratories seeking payment for the travel allowance.
    Response: The commenter is correct that laboratories will be 
required to track eligible miles for the travel allowance, as well 
account for the Medicare beneficiaries from whom specimen are 
collected. However, we believe that these activities are consistent 
with typical administrative activities necessary to conduct business 
and will not impose an undue burden upon laboratories. Furthermore, we 
believe laboratories that currently provide these services are already 
tracking this information. As described in above and in section 
III.C.6.e. of this final rule, laboratories may now maintain electronic 
documentation of miles traveled for the purposes of covering the 
transportation and personnel expenses for trained personnel to travel 
to the location of a Medicare beneficiary to collect a specimen sample.
    Comment: We received several comments regarding our proposed travel 
allowance mileage rate. Several commenters supported the usage of the 
IRS standard mileage rate and the usage of the median hourly wage rate 
for phlebotomists as published by the BLS. Several commenters also 
supported using the factor of 40 to represent average miles-per-hour 
driving speed.
    Response: We believe that these components of the travel allowance 
mileage rate appropriately align with the statutory requirement at 
section 1833(h)(3)(B) of the Act that the travel allowance cover both 
the ``transportation'' and ``personnel expenses'' for trained personnel 
to travel to the location of an individual to collect a sample.
    Comment: Several commenters stated that the travel allowance 
mileage rate should incorporate more expenses than wages. The 
commenters noted that the BLS wage rate definition indicates that the 
wage rate is based on total earnings before payroll deductions, 
excluding premium pay for overtime and for work on weekends and 
holidays, shift differentials, and nonproduction bonuses such as lump-
sum payments provided in lieu of wage increases. Therefore, commenters 
stated that CMS should consider including a component in the travel 
allowance mileage rate that accounts for overhead and other associated 
costs, such as taxes, contributions, and registration fees.
    Response: We recognize that utilizing the BLS median wage rate for 
a phlebotomist accounts for wages specifically related to the 
phlebotomist and would not expressly account for overhead costs for 
employing a phlebotomist. However, as we stated in the proposed rule, 
we believe that utilizing the median wages for phlebotomists is a 
reasonable proxy for estimating the personnel expenses related to CLFS 
travel allowance for the range of professionals that could be employed 
as the trained technician. As described above, we note that the term 
``trained technician'' does not specify certain educational 
requirements, and we believe that the types of professionals serving as 
``trained technicians'' for the purposes of specimen collection could 
include a variety of types of specialists with varying levels of 
training, including a phlebotomist.
    We believe that utilizing the wage amounts for a phlebotomist 
provides a reasonable proxy for accounting for the personnel expenses 
for the range of types of trained professionals traveling to the 
location of a Medicare beneficiary to collect the sample. We continue 
to believe that in this context, wages for a phlebotomist broadly 
represent the general personnel costs for the types of professionals 
serving as a trained technician and generally account for the trained 
technician's time for traveling to collect the sample and serve as a 
reasonable proxy for the personnel expense's component described in the 
statute. Therefore, we are finalizing as proposed the travel allowance 
mileage rate at Sec.  414.523(a)(2)(iii)(B) and we will update the 
Medicare Claims Processing Manual, Chapter 16, section 60 guidance 
accordingly.
    Comment: One commenter requested that we further explain what we 
mean by ``trained technician'' and that the wage rate we apply in the 
travel allowance amount methodology reflect such description.
    Response: As described above, section 1833(h)(3) of the Act refers 
to staff providing specimen collection services as ``trained 
personnel'' whereas the Medicare Claims Processing Manual, chapter 16, 
section 60.2, refers to ``the technician.'' We note that the BLS 
defines clinical laboratory technologists and technicians as workers 
who collect samples and also perform tests to analyze body fluids, 
tissue, and other substances, and, therefore, we believe that the 
category of ``laboratory technician'' may not apply to those staff that 
would generally be providing specimen collection services requiring 
travel, as the staff collecting and transporting specimens may not also 
be involved in analyzing the specimens. Therefore, for the purposes of 
our Medicare payment policies for specimen collection and travel 
allowance, we proposed to use the phrase ``trained technician'' to 
refer to those staff providing specimen collection services and related 
travel. We continue to believe this clarification would more closely 
align the regulatory text concerning specimen collection and travel 
allowance with the statute. We noted that the BLS defines a 
phlebotomist as a professional who draws blood for tests, transfusions, 
research, or blood donations.
    Additionally, we clarify that the term ``trained technician'' does 
not specify certain educational requirements, and we are not creating 
qualification requirements for those individuals providing specimen 
collection services to Medicare beneficiaries.

[[Page 69760]]

    Comment: Several commenters expressed support for the proposed 
travel allowance amount calculation. Commenters specifically 
appreciated the clarification regarding the proration by the number of 
beneficiaries for whom a specimen collection fee is paid.
    Response: We continue to believe these changes and clarifications 
will improve and simplify the administration of both the specimen 
collection and travel allowance payment policies.
    In consideration of public comments, we are finalizing the proposed 
provisions for the laboratory specimen collection fee and travel 
allowance at 42 CFR part 414, subpart G with refinements to the 
description of eligible miles such that eligible miles begin at the 
laboratory or the starting point of the technician's travel for 
specimen collection and end at the laboratory or the ending point of 
the technician's travel for specimen collection where the trained 
technician returns the specimen(s) for testing.
    We note that updates to the travel allowance mileage rate will be 
issued through subregulatory guidance, specifically the existing CMS 
change request process, on an annual basis. Updates will be made to the 
travel allowance mileage rate based upon the most recently published 
IRS standard mileage rate,\183\ as well as the most recently published 
wage rate for phlebotomist as published by the BLS.\184\ The revised 
travel allowance mileage rate will be effective for the January update 
of the clinical laboratory fee schedule file. Additionally, we note 
that we will make conforming changes to the Claims Processing Manual, 
Chapter 16, section 60 to reflect the changes to the travel allowance 
policies, including any changes and/or clarifications and will remove 
sections of the manual containing policies that are no longer 
applicable, consistent with the policies established in this final 
rule.
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    \183\ https://www.irs.gov/tax-professionals/standard-mileage-rates.
    \184\ https://www.bls.gov/ooh/healthcare/phlebotomists.htm.
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D. Expansion of Coverage for Colorectal Cancer Screening and Reducing 
Barriers

    Medicare coverage for colorectal cancer (CRC) screening tests under 
Part B are described in statutes (sections 1861(s)(2)(R), 1861(pp), 
1862(a)(1)(H) and 1834(d) of the Act), regulation (42 CFR 410.37), and 
National Coverage Determination (NCD) (Section 210.3 of the Medicare 
National Coverage Determinations Manual). The statute and regulations 
expressly authorize the Secretary to add other tests and procedures 
(and modifications to tests and procedures) for colorectal cancer 
screening with such frequency and payment limits as the Secretary finds 
appropriate based on consultation with appropriate organizations. 
(Section 1861(pp)(1)(D) of the Act; Sec.  410.37(a)(1)(v)). For a 
number of CRC screening tests, the statute at section 1834(d) of the 
Act established frequency and payment limits restricting coverage to 
individuals at least 50 years of age. In the CY 2023 PFS proposed rule 
(87 FR 45860), we proposed to expand Medicare coverage of certain CRC 
screening tests by reducing the minimum age payment limitation to 45 
years in our regulations at Sec.  410.37 and in NCD 210.3. As proposed, 
the provision would align our coverage with a recently revised 
recommendation by the United States Preventive Services Task Force 
(USPSTF) for certain CRC tests as permitted by section 1834(n) of the 
Act. Moreover, after consulting with appropriate organizations, we 
proposed to modify the payment limitation for other CRC screening tests 
identified in Sec.  410.37 and in NCD 210.3 to permit coverage for 
individuals to begin at age 45.
    In addition, we proposed to expand the regulatory definition of CRC 
screening tests to include a follow-on screening colonoscopy after a 
Medicare covered non-invasive stool-based CRC screening test returns a 
positive result. We explained that historically, CMS has viewed a 
colonoscopy after a positive non-invasive stool-based CRC screening 
test to be a diagnostic colonoscopy. In recent years, the clinical 
recommendations and guidance of medical professional societies and 
screening experts have evolved for stool-based colorectal cancer 
screening due to a number of factors including the relative number of 
false positive results, low follow-up colonoscopy rates and patient 
access barriers. For example, the positive predictive value of a FIT 
(fecal immunochemical test) (the likelihood that an individual with a 
positive FIT test result actually has colorectal cancer) reportedly 
varies widely from 8 to 21 percent depending on the test and testing 
center.\185\ Importantly, recent published evidence has again 
highlighted that individuals who did not get a follow-up colonoscopy 
were about twice as likely to die of colorectal cancer compared to 
individuals who did have one.\186\ Since the overall goal of 
programmatic cancer screening using any CRC screening test is to 
prevent cancer, allow for early detection and treatment and reduce 
cancer mortality, the follow-up colonoscopy is integral with non-
invasive stool-based CRC screening, since improvements in health 
outcomes would not be possible without the follow-up. Medical 
professional organizations and clinical experts have reached consensus 
based on the evidence on this recommendation. In May 2021, USPSTF 
revised their evidence-based recommendation to include the statement 
``Positive results on stool-based screening tests require follow-up 
colonoscopy for the screening benefits to be achieved.'' \187\ 
Accordingly, we proposed to modify CRC screening tests within our 
authority in consultation with appropriate organizations. The outcome 
of our more appropriate and complete approach to CRC screening will be 
that, in many cases, beneficiary cost sharing for both the initial 
screening stool-based test and the follow-on screening colonoscopy test 
will not apply because both tests will be paid at 100 percent (no 
applicable copayment percentage) as specified preventive screening 
services under the statute. The issue of when the follow-on screening 
colonoscopy involves the removal of tissue or other matter or other 
procedure furnished in connection with, as a result of, and in the same 
clinical encounter as the screening test will not change from current 
policy. We noted in the proposed rule that we believe the new 
understanding will encourage the wider utilization of non-invasive CRC 
screening tests and reduce barriers to screening, prevention and early 
detection of CRC.
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    \185\ Nielson CM, Petrik AF, Jacob L, et al. Positive predictive 
values of fecal immunochemical tests used in the STOP CRC pragmatic 
trial. Cancer Med. 2018;7(9):4781-4790. doi:10.1002/cam4.1727.
    \186\ Zorzi M, Battagello J, Selby K, et al. Non-compliance with 
colonoscopy after a positive faecal immunochemical test doubles the 
risk of dying from colorectal cancer. Gut. 2022;71(3):561-567. 
doi:10.1136/gutjnl-2020-322192.
    \187\ https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/colorectal-cancer-screening.
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    As proposed, our policies would update Medicare coverage and 
payment policies to align with our new understanding of CRC screening. 
We noted that we believe the proposals would expand access to quality 
care and improve health outcomes through prevention, early detection, 
more effective treatment and reduced mortality. Moreover, we noted that 
we believe they would directly advance health equity by promoting 
access and removing barriers for much needed cancer prevention and 
early detection within rural communities and

[[Page 69761]]

communities of color that are especially impacted by the incidence of 
CRC.
    We also discussed that the proposals directly supported President 
Biden's Cancer Moonshot Goal to cut age-adjusted death rate from cancer 
by at least 50 percent and addressed his recent Proclamation of March 
as National Colorectal Cancer Awareness Month. As noted in the proposed 
rule, the proclamation stated that ``early stages of colorectal cancer 
often emerge without symptoms, and it is important to begin regular 
screenings starting at the age of 45.'' It continued with ``Thanks to 
the Affordable Care Act, most health insurance plans must cover certain 
preventive services with no out-of-pocket costs. This coverage now 
includes colorectal cancer screenings for adults over the age of 45, 
making it easier to get colorectal cancer screenings and helping 
improve access to earlier treatment.'' \188\
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    \188\ https://www.whitehouse.gov/briefing-room/presidential-actions/2022/02/28/a-proclamation-on-national-colorectal-cancer-awareness-month-2022/.
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1. Background
    In CY 2019, the last year for which incidence data are available, 
CRC accounted for the 4th highest rate of new cancer cases and 4th 
highest rate of cancer deaths in the United States.\189\ The National 
Cancer Institute estimates that in 2021, 149,500 individuals will be 
newly diagnosed with CRC and 52,980 individuals will die from CRC in 
the United States.\190\ The Center for Disease Control and Prevention 
(CDC) advises, ``Colorectal cancer almost always develops from 
precancerous polyps (abnormal growths) in the colon or rectum. 
Screening tests can find precancerous polyps, so that they can be 
removed before they turn into cancer. Screening tests can also find 
colorectal cancer early, when treatment works best . . . Regular 
screening, beginning at age 45, is the key to preventing colorectal 
cancer and finding it early.'' \191\
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    \189\ https://gis.cdc.gov/Cancer/USCS/#/AtAGlance/.
    \190\ https://seer.cancer.gov/statfacts/html/colorect.html.
    \191\ https://www.cdc.gov/cancer/colorectal/basic_info/screening/.
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    Rural communities and communities of color are especially impacted 
by the incidence of CRC. A CDC study found the death rate of CRC (per 
100,000) to be 17.1 in rural nonmetropolitan counties verses 14.0 in 
metropolitan counties with populations greater than 1 million.\192\ 
African Americans experience both new cases and deaths from colorectal 
cancer at rates significantly above those of all races.\193\ An article 
in the American Journal of Pathology states African Americans also are 
often diagnosed at a younger age (median ages, 66 and 70 years for 
African American men and women compared with 72 and 77 years for white 
men and women, respectively). Moreover, African Americans are two times 
more likely to be diagnosed with CRC before the age of 50 years, which 
justified the recommendation to begin endoscopic screening at the age 
of 45 years instead of 50 years.\194\
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    \192\ Henley SJ, Anderson RN, Thomas CC, Massetti GM, Peaker B, 
Richardson LC. Invasive Cancer Incidence, 2004-2013, and Deaths, 
2006-2015, in Nonmetropolitan and Metropolitan Counties--United 
States. MMWR Surveill Summ 2017;66(No. SS-14):1-13. DOI: http://dx.doi.org/10.15585/mmwr.ss6614a1.
    \193\ https://seer.cancer.gov/statfacts/html/colorect.html.
    \194\ Augustus GJ, Ellis NA. Colorectal Cancer Disparity in 
African Americans: Risk Factors and Carcinogenic Mechanisms. Am J 
Pathol. 2018;188(2):291-303. doi:10.1016/j.ajpath.2017.07.023.
---------------------------------------------------------------------------

    In May 2021, the USPSTF issued a revised Final Recommendation 
Statement on CRC Screening. This replaced the prior USPSTF 2016 Final 
Recommendation Statement and included a number of updated policy 
recommendations based on new evidence and understandings of CRC and CRC 
Screening. In terms of health disparities in CRC and CRC screening, the 
May 2021 revised USPSTF statement reads, ``The causes for these health 
disparities are complex; recent evidence points to inequities in the 
access to and utilization and quality of colorectal cancer screening 
and treatment as the primary driver for this health disparity rather 
than genetic differences . . . Black adults across all age groups, 
including those younger than 50 years, continue to have higher 
incidence of and mortality from colorectal cancer than White adults.'' 
\195\
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    \195\ https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/colorectal-cancer-screening.
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    In addition to reducing the minimum age for Medicare payment for 
CRC screening test payment, we proposed to address a longstanding 
barrier and disincentive to CRC screening using a non-invasive stool-
based test as a first step of a complete screening. Examples of 
Medicare covered non-invasive stool-based CRC screening tests include a 
guaiac-based fecal-occult blood test (gFOBT) described in regulation at 
Sec.  410.37(a)(2)(i) and in National Coverage Determination 210.3 
Colorectal Cancer Screening Tests, as well as immunoassay-based fecal-
occult blood test (iFOBT) and the CologuardTM--Multitarget 
Stool DNA (sDNA) test described in NCD 210.3. For the best health 
outcomes from CRC prevention and early detection, it is important that 
patients receive a complete CRC screening.
    In recent years, government bodies and professional societies have 
reconsidered their understanding of a complete CRC screening and now 
consider CRC screening incomplete for individuals with a positive 
result on a stool-based test until a follow-on screening colonoscopy is 
also completed. The National Colorectal Cancer Roundtable recommends 
that the patient should only be counted as having completed the CRC 
screening process after a colonoscopy is performed.\196\ Under current 
Medicare policies, if a Medicare patient initially receives a positive 
result from a non-invasive and less burdensome screening stool-based 
CRC test, the test would be viewed as showing signs or symptoms of 
colorectal cancer. If a beneficiary received a subsequent colonoscopy, 
we viewed the test as a diagnostic procedure and normal beneficiary 
cost sharing rules for diagnostic test would apply. Our current policy, 
however, may discourage patients from seeking a follow-on colonoscopy 
because of the Medicare cost-sharing. A 2018 guideline update from the 
American Cancer Society on CRC screening for average-risk adults reads 
``Trials offering a choice between a stool test and a structural 
examination compared with either test alone have generally demonstrated 
greater uptake when a choice is offered. The best evidence in the 
United States derives from a randomized trial in a safety-net 
population comparing annual gFOBT versus colonoscopy versus choice 
between the 2 in which it was demonstrated that choice was more 
effective than offering colonoscopy alone. In the first year of the 
study, which included patient navigation (year 1 only), the screening 
completion rate was 38% for patients offered colonoscopy, 66 percent 
for those offered gFOBT, and 68 percent for those offered a choice. 
While uptake overall was similar in the gFOBT group versus the choice 
group, it is clear that a ``colonoscopy-only'' referral resulted in 
substantially lower adherence.'' \197\
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    \196\ http://nccrt.org/wp-content/uploads/0305.60-Colorectal-Cancer-Manual_FULFILL.pdf.
    \197\ https://acsjournals.onlinelibrary.wiley.com/doi/full/10.3322/caac.21457.
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    One of the goals of CRC screening is to enable the healthcare 
system to identify patients who need treatment early enough to prevent 
or treat the condition most effectively. In order to encourage patients 
to obtain a follow-on

[[Page 69762]]

colonoscopy, a number of appropriate organizations have suggested that 
we adopt a new approach that looks at colorectal cancer screening as a 
continuum in the scenario where an initial stool-based test returns a 
positive result and includes a follow-on screening colonoscopy, when 
determined appropriate by the patient and the healthcare provider. 
There currently exists a misalignment of applicable patient cost 
sharing for a follow-on screening colonoscopy after a positive non-
invasive stool-based test as Medicare coverage policies have not yet 
been updated to align to this new understanding of a complete CRC 
screening described earlier. If the patient had chosen the more 
expensive, invasive and burdensome screening colonoscopy as the first 
step in their CRC screening, there would be no applicable beneficiary 
cost sharing for the screening colonoscopy. However, under current 
policy, if the patient initially receives a positive result from a non-
invasive, less burdensome and less expensive stool-based test as the 
first step in their CRC screening, beneficiary cost sharing would not 
be applicable for the initial stool-based test, but would be applicable 
for the subsequent colonoscopy (because it would be considered a 
diagnostic testing service given the presence of signs and symptoms of 
disease based on the result of the initial stool-based test).
2. Statutory Authority
    Section 1861(s)(2)(R) of the Act includes CRC screening tests in 
the definition of medical and other health services that fall within 
the scope of Medicare Part B benefits described in section 1832(a)(1) 
of the Act. Section 1861(pp) of the Act defines ``colorectal cancer 
screening tests'' and specifically names the following tests:
     Screening fecal-occult blood test;
     Screening flexible sigmoidoscopy; and
     Screening colonoscopy.
    Section 1861(pp)(1)(D) of the Act also authorizes the Secretary to 
include in the definition of CRC screening tests other tests or 
procedures and modifications to the tests and procedures described 
under this subsection, with such frequency and payment limits as the 
Secretary determines appropriate, in consultation with appropriate 
organizations. Section 1834(d) of the Act describes limitations for 
payment of CRC screening tests, including that no payment may be made 
for CRC screening tests of screening fecal-occult blood test at section 
1834(d)(1)(B)(i) of the Act and screening flexible sigmoidoscopy at 
section 1834(d)(2)(E)(i) of the Act for patients under the age of 50. 
Section 1834(d) of the Act does not describe a minimum age limit for 
screening colonoscopy.
    Section 1834(n) of the Act, added by section 4105 of the Affordable 
Care Act, grants the Secretary the authority to modify coverage of 
certain preventive services identified in section 1861(ddd)(3) of the 
Act, which in turn cross-references section 1861(ww)(2) of the Act 
(including CRC screening tests at section 1861(ww)(2)(E) of the Act). 
The Secretary may modify coverage to the extent that such modification 
is consistent with the recommendations of the USPSTF, per section 
1834(n)(1)(A) of the Act.
3. Regulatory Authority
    Our implementing regulations for CRC screening are codified at 
Sec.  410.37. Similar to section 1834(d) of the Act, Sec.  410.37 
describes limitations on coverage and provide that payment may not be 
made for screening fecal-occult blood tests at Sec.  410.37(c) or 
screening flexible sigmoidoscopies at Sec.  410.37(e) for individuals 
under the age of 50. Also similar to section 1834(d) of the Act, Sec.  
410.37(g) does not describe a minimum age requirement for screening 
colonoscopies. Section 410.37 also establishes coverage for screening 
barium enemas at paragraph (h) and limits coverage to and individual 50 
years of age or greater for an individual who is not at high risk of 
CRC at paragraph (h). Section 410.37(h) does not describe a minimum age 
limit for coverage of screening barium enemas for individuals who are 
at high risk of CRC.
4. National Coverage Determination
    NCD 210.3 CRC Screening Tests was last revised effective January 
19, 2021, when coverage was expanded to include Blood-based Biomarker 
Tests. NCD 210.3 was previously revised effective October 9, 2014, when 
coverage was expanded to include The CologuardTM--Multi-
target Stool DNA (sDNA) Test. Prior to that, NCD 210.3 was revised 
effective January 1, 2004, when coverage was expanded to include 
immunoassay-based fecal occult blood test (iFOBT), which can be used as 
alternative to existing guaiac-based fecal occult blood test (gFOBT). 
Under NCD 210.3, the Blood-based Biomarker Tests, sDNA test, iFOBT and 
gFOBT tests all include a limitation of coverage that the patient be at 
least 50 years of age.
    In the NCD 210.3 Final Decision Memo dated January 19, 2021, we 
noted that multiple commenters provided an alert that a draft USPSTF 
revised CRC recommendation was circulating and which included a 
recommendation that CRC screening begin at age 45 instead of 50. The 
commenters on the draft NCD Decision Memo, in the course of the NCD 
process, also encouraged CMS to align screening age limitations for all 
CRC screening tests. At that time, the draft USPSTF recommendation had 
not been finalized. Therefore, we responded that we are finalizing NCD 
210.3 coverage of CRC screening tests with an age range of 50 to 85 
years of age. That said, if the draft USPSTF recommendation is 
finalized and/or other society guidelines are revised, we may 
reconsider, in consultation with appropriate professional 
organizations, the appropriate CRC screening tests limitations and 
address appropriately in an efficient manner.
5. Revisions
    In May 2021, the USPSTF issued a revised recommendation (with a 
Grade B) that adults who do not have signs or symptoms of CRC and who 
are at average risk for CRC begin screening at age 45 instead of the 
previous recommendation of age 50.\198\ Accordingly, we proposed to 
exercise our authority under section 1834(n) of the Act to modify 
coverage of certain CRC screening tests to begin when the individual is 
age 45 or older. The tests included in the May 2021 USPSTF revised 
recommendation, including stool-based tests of gFOBT, iFOBT and sDNA, 
and direct visualization test of flexible sigmoidoscopy. Screening 
colonoscopy does not have a minimum age requirement under Medicare 
coverage. We invited public comment on this proposal.
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    \198\ https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/colorectal-cancer-screening.
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    The following is a summary of the comments we received and our 
responses.
    Comment: Overall, commenters expressed support for our proposal to 
exercise our authority under section 1834(n) of the Act modify coverage 
of certain CRC screening tests described above and recommended by the 
USPSTF to begin when the individual is age 45 instead of 50.
    Response: We thank commenters for their support for our proposal to 
exercise our authority under section 1834(n) of the Act modify coverage 
of certain CRC screening tests described above and recommended by the 
USPSTF to begin when the individual is age 45 instead of 50.
    Comment: One commenter recommended that all CRC screening tests 
should have no minimum age as a condition of coverage or payment,

[[Page 69763]]

similar to screening colonoscopy described earlier in our provision.
    Response: We disagree with the commenter's recommendation that all 
CRC screening tests should have no minimum age as a condition of 
coverage or payment. Age limitations as conditions of coverage and 
payment are a common and long-established safeguard in statute, 
regulation and NCD, which protect beneficiaries from clinically 
inappropriate services and protect beneficiaries and the Medicare 
program from fraud, waste and abuse. The age limitations described in 
our provision are in alignment with clinical evidence-based 
recommendations by the USPSTF, American Cancer Society, and other 
medical specialty societies.
    After consideration of public comments, we are finalizing our 
proposal made in the CY 2023 PFS proposed rule to exercise our 
authority under section 1834(n) of the Act to modify coverage of 
certain CRC screening tests described above and recommended by the 
USPSTF to begin when the individual is age 45 instead of 50.
    We also proposed to exercise our authority under section 
1861(pp)(1)(D) of the Act to expand coverage of certain CRC screening 
tests to begin for individuals at age 45 for barium enema test 
(coverage described in Sec.  410.37(h)) and blood-based biomarker tests 
(coverage described in NCD 210.3). We discussed in the proposed rule 
that while these tests were not recommended in the earlier mentioned 
May 2021 revised USPSTF recommendation, they are Medicare covered CRC 
screening tests and would be an important alternative to the stool 
based and direct visualization tests, especially for individuals with 
medical complexity and those in rural and underserved communities. We 
noted that aligning the minimum age requirements for certain Medicare 
covered CRC screening tests described in our proposal to consistently 
begin for individuals at age 45 would avoid confusion and reduce 
barriers for beneficiaries and healthcare professionals. The proposal 
reflected our belief that consistent coverage and payment policies 
would be important in promoting CRC screening, which would result in 
expanded prevention, early detection and improved health outcomes. As 
proposed, conforming changes to reduce the minimum age for certain CRC 
screening tests would be made at Sec.  410.37 and NCD 210.3 authorities 
described earlier. We did not propose to modify existing conditions of 
coverage or payment for maximum age limitations and frequency 
limitations. We also retained the same existing frequency limitations 
except in the instance of a follow-on screening colonoscopy after a 
positive result from a non-invasive stool-based CRC screening test. We 
proposed to amend Sec.  410.37 paragraph (c)(1), by removing the phrase 
``under age 50'' and adding in its place the phrase ``under age 45'', 
amend paragraph (c)(2), by removing the phrase ``individual 50 years of 
age'' and adding in its place the phrase ``individual 45 years of 
age'', amend paragraph (e)(1), by removing the phrase ``under age 50'' 
and adding in its place the phrase ``under age 45'', amend paragraph 
(e)(2) by removing the phrase ``individual 50 years of age'' and adding 
in its place the phrase ``individual 45 years of age'', and amend 
paragraph (i)(1), by removing the phrase ``individual age 50'' and 
adding in its place the phrase ``individual age 45''. We also proposed 
to issue formal instructions that would revise the minimum age for the 
CRC screening tests described in NCD 210.3 from 50 to 45 years.
    As explained in the proposed rule, we consulted with and reviewed 
recommendations from the following appropriate organizations in our 
proposal to uniformly reduce the minimum age for certain CRC screening 
tests from 50 to 45. ACS recommended that people of average risk of CRC 
start regular screening at age 45 and recommends stool-based tests and 
visual exam-based tests.\199\ The American Society of Colon and Rectal 
Surgeons (ASCRS) recommended CRC screenings for individuals 45 years of 
age and older and identifies barium enema as one of multiple screening 
options.\200\ The U.S. Multi-Society Task Force on Colorectal Cancer, 
which represents the American College of Gastroenterology, the American 
Gastroenterological Association, and the American Society for 
Gastrointestinal Endoscopy, recently revised their recommendation that 
CRC screening for individuals of average risk of CRC begin at age 45 
instead of 50.\201\ The Centers for Disease Control and Prevention 
(CDC) website advised regular screening, beginning at age 45, as the 
key to preventing colorectal cancer and finding it early. The CDC 
website goes on to describe the earlier mentioned May 2021 revised 
USPSTF recommendations.\202\
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    \199\ https://www.cancer.org/cancer/colon-rectal-cancer/detection-diagnosis-staging/acs-recommendations.html.
    \200\ https://fascrs.org/patients/diseases-and-conditions/frequently-asked-questions-about-colorectal-cancer.
    \201\ Gastroenterology. 2022 Jan;162(1):285-299. doi: 10.1053/
j.gastro.2021.10.007. Epub 2021 Nov 15.
    \202\ https://www.cdc.gov/cancer/colorectal/basic_info/screening/.
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    We considered the importance of aligning the minimum age 
requirement for CRC screening across Medicare covered CRC screening 
tests, as well as private health plans and Medicaid impacted by the May 
2021 revised USPSTF recommendation. We noted that we believe consistent 
policy across payers in terms of minimum age limits for CRC screening 
tests is critical to the public's understanding of evolving CRC 
screening recommendations. As added by section 2713 of the ACA, 42 
U.S.C 300gg-13 requires a that group health plan and a health insurance 
issuer offering group or individual health insurance coverage shall, at 
a minimum, provide coverage for and shall not impose any cost sharing 
requirements for evidence-based items or services that have in effect a 
rating of ``A'' or ``B'' by the USPSTF. In addition, we considered that 
section 1905(a)(13) of the Act, added by section 4106 of the ACA, which 
expands Medicaid coverage to include screening services that are 
assigned a grade of A or B by the USPSTF. We noted that expanding 
coverage for barium enema and blood-based biomarker CRC screening tests 
to a minimum age of 45, in alignment with the direct visualization and 
stool-based tests recommended in the May 2021 revised USPSTF 
recommendation, would allow additional, low burden options and 
alternatives that may be preferred by some health professionals and 
patients. While the recommendations from different professional 
societies and other appropriate organizations include varying detail in 
terms of specific tests, we noted that we understood the growing 
consensus in the health care community is that the pathology of CRC now 
requires that broad preventative screening should begin for individuals 
at age 45 instead of 50. We also noted that reducing the minimum age 
for the Medicare covered CRC screening tests barium enema test 
(coverage described in Sec.  410.37(h)) and blood-based biomarker tests 
(coverage described in NCD 210.3) from 50 to 45 years of age, in 
addition to and in alignment with the direct visualization and stool-
based tests described in the 2021 USPSTF recommendation, is appropriate 
and consistent with our purpose of early detection of colorectal cancer 
described in Sec.  410.37(a)(1). We discussed that we received public 
comment broadly supportive of reducing the minimum age for certain CRC 
screening tests in

[[Page 69764]]

both the CY 2022 PFS final rule (86 FR 65179) and in the public 
comments in response to our Proposed Decisions Memo for NCD 210.3 
Screening for Colorectal Cancer--Blood-Based Biomarker Tests (Final 
Decision Memo dated January 19, 2021). We noted that we look forward to 
further consultation with the public and appropriate organizations 
through the public comment period for this proposed rule. We invited 
public comment on this proposal.
    The following is a summary of the comments we received and our 
responses on our above described proposal.
    Comment: We received numerous public comments expressing approval 
of our proposal to exercise our authority under section 1861(pp)(1)(D) 
of the Act to expand coverage of certain CRC screening tests to begin 
for individuals at age 45 for barium enema test (coverage described in 
Sec.  410.37(h)) and blood-based biomarker tests (coverage described in 
NCD 210.3). Commenters expressed agreement with our earlier expressed 
belief that our proposal would avoid confusion and reduce barriers for 
beneficiaries and healthcare professionals and that consistent coverage 
and payment policies would be important in promoting CRC screening, 
which would result in expanded prevention, early detection and improved 
health outcomes.
    Response: We thank commenters for supporting our proposal to 
exercise our authority under section 1861(pp)(1)(D) of the Act to 
expand coverage of certain CRC screening tests to begin for individuals 
at age 45 for barium enema test (coverage described in Sec.  410.37(h)) 
and blood-based biomarker tests (coverage described in NCD 210.3).
    Comment: Some commenters recommended that CMS remove barium enema 
as a covered CRC screening test for all individuals because it is not 
recommended by the USPSTF, specialty society guidelines and is rarely 
performed in current times.
    Response: The recommendation in this comment is out of scope for 
our proposals made in the CY 2023 PFS proposed rule, but we will take 
it into consideration for possible future rulemaking.
    After consideration of public comments, we are finalizing our 
proposal made in the CY 2023 PFS proposed rule to exercise our 
authority under section 1861(pp)(1)(D) of the Act to expand coverage of 
certain CRC screening tests to begin for individuals at age 45 for 
barium enema test (coverage described in Sec.  410.37(h)) and blood-
based biomarker tests (coverage described in NCD 210.3).
    We also proposed to exercise our authority under section 
1861(pp)(1)(D) of the Act to expand coverage of CRC screening tests to 
include a follow-on screening colonoscopy after a Medicare covered non-
invasive stool-based CRC screening test returns a positive result. In 
this scenario, we explained that we now understand the follow-on 
screening colonoscopy to be part of a continuum of a complete CRC 
screening and not a separate diagnostic, therapeutic or other 
procedure. Relatedly, we proposed that the frequency limitations 
described for screening colonoscopy in Sec.  410.37(g) would not apply 
in the instance of a follow-on screening colonoscopy test after a 
positive result from a Medicare covered stool-based test. We proposed 
to add new paragraph (k) to Sec.  410.37 to state that, effective 
January 1, 2023, colorectal cancer screening tests include a follow-on 
screening colonoscopy after a Medicare covered non-invasive stool-based 
colorectal cancer screening test returns a positive result. We aimed to 
avoid disruption to the existing conditions of coverage and payment for 
CRC screening for this unique scenario and include text noting the 
frequency limitations described for screening colonoscopy in paragraph 
(g) of this section shall not apply in the instance of a follow-on 
screening colonoscopy test described in this paragraph.
    We acknowledged that under current Medicare policy, a colonoscopy 
after a stool-based CRC screening test returns a positive result would 
be subject to beneficiary cost sharing because it would be considered a 
diagnostic, therapeutic or other non-screening procedure. We discussed 
that Sec.  410.32(a) describes a diagnostic test as an instance when 
the physician who furnishes a consultation or treats a beneficiary for 
a specific medical problem and who uses the results in the management 
of the beneficiary's specific medical problem. Under current policy, a 
positive result from the CRC screening stool-based test would be a sign 
of illness or disease and the subsequent colonoscopy would be for 
treatment and management of that specific medical problem. We explained 
that we now believe our current policy of CRC screening to not include 
a follow-on screening colonoscopy after a stool-based test returns a 
positive result is incomplete and not in full support of our definition 
of CRC screening test at Sec.  410.37(a)(1) for the purpose of ``early 
detection of colorectal cancer''.
    As proposed, the provision to expand the definition of CRC 
screening to include a follow-on screening colonoscopy after a stool-
based test returns a positive result would include implications for 
beneficiary cost sharing. In many cases, beneficiary cost sharing 
(coinsurance and deductible) will not be applicable for the stool-based 
test nor the follow-on colonoscopy screening tests, as described at 
section 1833(1)(W)(ii) of the Act, as added by section 4104(b) of the 
Affordable Care Act. When the follow-on screening colonoscopy requires 
additional procedures furnished in the same clinical encounter, the 
phased-in Medicare payment percentages for colorectal cancer screening 
services described in regulation at Sec.  410.152(l) and finalized in 
the CY 2022 PFS final rule (86 FR 65177 through 65179) will apply. That 
is, when the follow-on screening colonoscopy includes the removal of 
tissue or other related services during the same clinical encounter the 
beneficiary coinsurance would be reduced over time from 15 percent for 
services furnished during CY 2023 through CY 2026 to 10 percent for 
services furnished during CY 2027 through 2029 to zero percent 
beginning in CY 2030 and thereafter.
    Our goal is that the patient and their healthcare professional make 
the most appropriate choice in CRC screening, which included 
considerations of the risks, burdens and barriers presented with an 
invasive screening colonoscopy in a clinical setting as their first 
step. CRC screening presents a unique scenario where there are 
significant differences between screening stool-based tests and 
screening colonoscopy tests in terms of invasiveness and burdens to the 
patient and healthcare system. We recognized there are several 
advantages to choosing a non-invasive stool-based CRC screening test as 
a first step compared to a screening colonoscopy, including relative 
ease of administering the test and potentially reducing the experience 
of unnecessary burdensome preparation and invasive procedures. We 
discussed that it has been reported that a large proportion (46 
percent) of screening colonoscopies found no polyps \203\ so optimizing 
use of a non-invasive stool-based screening test as a first step (when 
determined appropriate by the patient and their healthcare 
professional) would benefit the patient and also the Medicare program. 
In many instances, a

[[Page 69765]]

colonoscopy is not the most appropriate first step in colorectal cancer 
screening and would represent an unnecessary burden and over-servicing 
for both the patient and healthcare system. The May 2021 revised USPSTF 
recommendation reads, ``stool-based screening requires persons to 
collect samples directly from their feces, which may be unpleasant for 
some, but the test is quick and noninvasive and can be done at home 
(the sample is mailed to the laboratory for testing), and no bowel 
preparation is needed to perform the screening test.'' \204\ The May 
2021 revised USPSTF recommendation goes on to described that direct 
visualization CRC screening tests such as screening colonoscopy and 
screening flexible sigmoidoscopy must be performed in a clinical 
setting rather than home and require bowel preparation prior to the 
test. In addition, sedation or anesthesia is usually used during 
screening colonoscopy and the patient requires additional recovery time 
and assistance with transportation home.
---------------------------------------------------------------------------

    \203\ Lieberman DA, Weiss DG, Bond JH, Ahnen DJ, Garewal H, 
Chejfec G. Use of colonoscopy to screen asymptomatic adults for 
colorectal cancer. Veterans Affairs Cooperative Study Group 380. N 
Engl J Med. 2000 Jul 20;343(3):162-8. doi: 10.1056/
NEJM200007203430301. Erratum in: N Engl J Med 2000 Oct 
19;343(16):1204. PMID: 10900274.
    \204\ https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/colorectal-cancer-screening.
---------------------------------------------------------------------------

    We discussed that we have heard from interested parties that CMS 
should consider a complete CRC screening to include a follow-on 
screening colonoscopy when a non-invasive stool-based test returns a 
positive result. We noted that we consulted with and reviewed 
recommendations from a number of professional societies in developing 
the proposal, including supportive letters and communications with 
representatives from American Gastroenterological Association, American 
Cancer Society Cancer Action Network, and Fight Colorectal Cancer. The 
proposal regarding a new understanding of a complete CRC screening 
aligns with a policy recommendation from the National Colorectal Cancer 
Roundtable, which was ``established by the American Cancer Society 
(ACS) and the Centers for Disease Control and Prevention (CDC) in 1997, 
is a national coalition of public organizations, private organizations, 
voluntary organizations, and invited individuals.'' \205\ The proposal 
also aligned to a 2018 CRC screening guideline update from the American 
Cancer Society, which read ``Implementation of the screening options 
included in this guideline is premised on the requirement that the 
appropriate follow-up to a positive (noncolonoscopic) test is a timely 
colonoscopy. The follow-up colonoscopy should not be considered a 
``diagnostic'' colonoscopy but, rather, an integral part of the 
screening process, which is not complete until the colonoscopy is 
performed. The information provided to patients to facilitate a choice 
among tests must include the importance of follow-up of a positive 
(noncolonoscopic) test with colonoscopy. Repeating a positive stool-
based test to determine whether to proceed to colonoscopy is not an 
appropriate screening strategy.'' \206\
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    \205\ https://nccrt.org/about/.
    \206\ https://acsjournals.onlinelibrary.wiley.com/doi/full/10.3322/caac.21457.
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    We also considered the May 2021 revised USPSTF recommendation, 
which includes the statement ``When stool-based tests reveal abnormal 
results, follow-up with colonoscopy is needed for further evaluation . 
. . Positive results on stool-based screening tests require follow-up 
colonoscopy for the screening benefits to be achieved.'' \207\ We also 
note that the U.S. Departments of Labor, Health and Human Services 
(HHS), and the Treasury issued a Frequently Asked Questions guidance on 
January 10, 2022 that reads, ``A [non-grandfathered group health] plan 
or [health insurance issuers offering non-grandfathered group or 
individual health insurance coverage] must cover and may not impose 
cost sharing with respect to a colonoscopy conducted after a positive 
non-invasive stool-based screening test or direct visualization 
screening test for colorectal cancer for individuals described in the 
USPSTF recommendation. As stated in the May 18, 2021 USPSTF 
recommendation, the follow-up colonoscopy is an integral part of the 
preventive screening without which the screening would not be 
complete.\208\ The follow-up colonoscopy after a positive non-invasive 
stool-based screening test or direct visualization screening test is 
therefore required to be covered without cost sharing in accordance 
with the requirements of PHS Act section 2713 and its implementing 
regulations.'' \209\
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    \207\ https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/colorectal-cancer-screening.
    \208\ The quoted text from the January 10, 2022 Frequently Asked 
Questions guidance includes a footnote to this portion of the text 
that reads, ``In addition, in its `Supporting Evidence' section, the 
USPSTF Full Recommendation Statement states: `Several comments 
requested that colonoscopy to follow up an abnormal noncolonoscopy 
screening test result be considered part of screening. The USPSTF 
recognizes that the benefits of screening can only be fully achieved 
when follow-up of abnormal screening test results is performed. The 
USPSTF added language to the Practice Considerations section to 
clarify this.' ''
    \209\ https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/FAQs-Part-51.pdf.
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    We believe that the proposal to update our regulations to align to 
our new understanding of a complete CRC screening would address the 
beneficiary cost sharing barrier that currently exists for most 
individuals for a subsequent colonoscopy after an initial stool-based 
test returns a positive result, would allow more options for healthcare 
professionals and patients, would help optimize non-invasive CRC 
screening test use, and improve health outcomes for Medicare 
beneficiaries. We received public comments supportive of the policy 
described in our proposal in both the CY 2022 PFS final rule (86 FR 
65179) and in public comments to our Proposed Decision Memo for the NCD 
210.3 Screening for Colorectal Cancer--Blood-Based Biomarker Tests 
(Final Decision Memo dated January 19, 2021).\210\ We noted that we 
look forward to further consultation with the public and appropriate 
organizations through the public comment period for this proposed rule. 
We invited public comment on the proposal.
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    \210\ https://www.cms.gov/medicare-coverage-database/view/ncacal-decision-memo.aspx?proposed=N&ncaid=299.
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    The following is a summary of the comments we received and our 
responses on our earlier described proposal.
    Comment: Overall, commenters expressed support for our proposal to 
exercise our authority under section 1861(pp)(1)(D) of the Act to 
expand coverage of CRC screening tests to include a follow-on screening 
colonoscopy after a Medicare covered non-invasive stool-based CRC 
screening test returns a positive result. Many commenters expressed 
agreement with our approach of a complete colorectal cancer screening 
that includes a follow-on screening colonoscopy along with a stool-
based test (with a positive result). In addition, many commenters 
expressed agreement with our statement that beneficiary cost sharing 
for a follow-on colonoscopy after a stool-based test returns a positive 
result is a burdensome and significant barrier to expanding screening 
for colorectal cancer and, by extension, achieving better health 
outcomes through prevention, early detection, improved treatment and 
reduced mortality.
    Response: We thank commenters for their support for our proposal to 
exercise our authority under section 1861(pp)(1)(D) of the Act to 
expand coverage of CRC screening tests to include a follow-on screening 
colonoscopy after a Medicare covered non-invasive stool-based CRC 
screening test returns a positive result.

[[Page 69766]]

    Comment: Many commenters asked that we exercise our authority under 
section 1861(pp)(1)(D) of the Act to further expand our approach of a 
complete colorectal cancer screening. Many requested that we remove the 
text ``stool-based'' from our proposed regulatory text at Sec.  
410.37(k), resulting in a complete CRC screening including a follow-on 
screening colonoscopy after a Medicare covered non-invasive screening 
test. Many commenters requested that a complete CRC screening include a 
screening colonoscopy after a positive result from a blood-based 
biomarker test, as well as a stool-based test. A few requested that we 
include a follow-on screening colonoscopy after any non-colonoscopy CRC 
screening test. Many commenters cited our earlier reasoning of 
consistency of policies across CRC screening tests to promote CRC 
screening and avoid confusion among healthcare professionals and 
beneficiaries in support their request for an expanded definition of a 
complete colorectal cancer screening.
    Response: We disagree with the commenters that requested a further 
expansion of a complete colorectal cancer screening that would include 
additional first step tests beyond a non-invasive stool-based test. We 
believe the stool-based tests are unique to other CRC screening tests 
in terms of their non-invasiveness, the fact that stool-based tests can 
be implemented by the patient at home and mailed into the lab, the 
absence of bowel preparation and anesthesia and the comparatively 
lighter burden and mitigated potential for over servicing of the 
patient and the healthcare system.
    We agree that blood-based biomarker CRC screening tests have 
significant potential and we expanded coverage to include them in the 
reconsidered NCD 210.3, effective January 2021. We also recognize that 
blood-based biomarker CRC screening tests continue to be an emerging 
and quickly evolving technology. As of September 2022, no blood-based 
biomarker tests have achieved the sensitivity and specificity 
requirements of NCD 210.3. We also note that, as of September 2022, 
blood-based biomarker screening tests are not recommended by the USPSTF 
for CRC screening. The May 2021 USPSTF revised recommendation statement 
reads, ``Because of limited available evidence, the USPSTF 
recommendation does not include serum tests, urine tests, or capsule 
endoscopy for colorectal cancer screening.'' \211\ The public comments 
have been informative and we will consider this feedback for future 
rulemaking.
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    \211\ https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/colorectal-cancer-screening.
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    Comment: A few commenters expressed concern that the narrative of 
our proposal inappropriately favors stool-based tests over 
colonoscopies and could discourage the use of colonoscopy as a first-
line CRC screening test in the Medicare population.
    Response: We clarify that our provision for a complete colorectal 
cancer screening does not change the coverage or payment requirements 
for screening colonoscopy as an optional first step in the patient 
screening process. We note that our proposal included the narrative, 
``our goal is that the patient and their healthcare professional make 
the most appropriate choice in CRC screening, which includes 
considerations of the risks, burdens and barriers presented with an 
invasive screening colonoscopy in a clinical setting as their first 
step.''
    After consideration of public comments, we are finalizing our 
proposal made in the CY 2023 PFS proposed rule to exercise our 
authority under section 1861(pp)(1)(D) of the Act to expand coverage of 
CRC screening tests to include a follow-on screening colonoscopy after 
a Medicare covered non-invasive stool-based CRC screening test returns 
a positive result.
    The scope of the proposals is limited to CRC screening tests and 
does not address the coverage or payment status of other screening 
services or tests recommended by the USPSTF or covered by Medicare.
    The following is a summary of the comments we received and our 
responses on our proposal as a whole.
    Comment: Many commenters requested that CMS provide specific coding 
instructions and educational materials for the Medicare Administrative 
Contractors (MACs), healthcare systems, providers and beneficiaries to 
inform them of the significant changes in Medicare policy on CRC 
screening coverage and payment.
    Response: We thank the commenters for the feedback and agree on the 
importance of implementation and educating stakeholders. We will 
provide implementation instructions, including coding and payment, 
through the CMS Transmittals online platform \212\ and educational 
articles through the Medicare Learning Network online platform.\213\
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    \212\ https://www.cms.gov/Regulations-and-Guidance/Guidance/Transmittals.
    \213\ https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNGenInfo.
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    Comment: We received several comments that were outside of the 
scope of the proposals made in the CY 2023 PFS proposed rule. Comments 
included requests that CMS end its national policy of non-coverage of 
Computed Tomography Colonography (CTC) for CRC screening (NCD 210.3), 
requests that CMS extend our approach of a complete colorectal cancer 
screening to breast, cervical, and lung cancer screenings, 
recommendations on coverage of anesthesia services furnished by 
anesthesia providers, and requests regarding the furnishing of 
colonoscopies by Physicians Assistants and Nurse Practitioners.
    Response: Although we are not summarizing and responding to these 
comments in the final rule, we will take them into consideration for 
possible future rulemaking.
    After considering public comments, we are finalizing the proposals 
made in the CY 2023 PFS proposed rule to expand coverage for CRC 
screening and reduce barriers to access to CRC cancer prevention, early 
detections and improved health outcomes.
6. Summary
    In summary, we are exercising our authority in sections 1834(n) and 
1861(pp)(1)(D) of the Act to expand CRC screening coverage by reducing 
the minimum age for CRC screening tests from 50 to 45 years of age for 
certain Medicare covered CRC screening tests that currently include a 
minimum age of 50 as a limitation of payment or coverage. As finalized, 
a screening colonoscopy would continue to not have a minimum age 
limitation.
    We also are exercising our authority in section 1861(pp)(1)(D) of 
the Act to expand coverage of CRC screening tests to include a follow-
on screening colonoscopy after a non-invasive stool-based test returns 
a positive result. As noted earlier in the rule, the outcome of our 
more appropriate and complete approach to CRC screening will be that, 
in many cases, beneficiary cost sharing for both the initial non-
invasive screening stool-based test and the follow-on screening 
colonoscopy test will not apply because both tests will paid at 100 
percent (no applicable copayment percentage) as specified preventive 
screening services under the statute.
    We believe the proposals will expand access to quality care and 
improve

[[Page 69767]]

health outcomes for patients through prevention, early detection, more 
effective treatment and reduced mortality. Our policies to expand 
coverage of CRC screening tests will directly advance the Biden 
Administration's health equity goals. Rural communities and communities 
of color are especially impacted by the incidence of CRC. African 
Americans experience both new cases and deaths from colorectal cancer 
at rates significantly above those of all races. As noted earlier in 
the rule, the May 2021 revised USPSTF final recommendation statement 
reads, ``The causes for these health disparities are complex; recent 
evidence points to inequities in the access to and utilization and 
quality of colorectal cancer screening and treatment as the primary 
driver for this health disparity rather than genetic differences . . . 
Black adults across all age groups, including those younger than 50 
years, continue to have higher incidence of and mortality from 
colorectal cancer than White adults.'' \214\ We believe our policies to 
expand coverage of CRC screening will make significant progress in 
reducing barriers and addressing this inequity in healthcare.
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    \214\ https://www.uspreventiveservicestaskforce.org/uspstf/recommendation/colorectal-cancer-screening.
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E. Removal of Selected National Coverage Determinations

    As discussed in the CY 2023 PFS proposed rule (87 FR 45860) on 
pages 46086 and 4087, we periodically identify and propose to remove 
National Coverage Determinations (NCDs) that no longer contain 
clinically pertinent and current information, in other words those 
items and services that no longer reflect current medical practice, or 
that involve items and services that are used infrequently by 
beneficiaries. In the proposed rule we explained that since the CY 2021 
PFS final rule (85 FR 84472), we have used notice and comment 
rulemaking to obtain public comment on removing outdated NCDs, 
replacing the prior subregulatory administrative process used on two 
occasions in 2013 and 2015. Eliminating an NCD for items and services 
means that the item or service will no longer be automatically, 
nationally covered or non-covered by Medicare (42 CFR 405.1060). 
Instead, the initial coverage determinations for those items and 
services will be made by local Medicare Administrative Contractors 
(MACs). We summarized the policy and explained the factors that we 
consider.
    In addition to the six factors listed below, we also consider the 
general age of an NCD, changes in medical practice/standard of care, 
the pace of medical technology development since the last 
determination, and availability and quality of clinical evidence and 
information to support removal of an NCD. We would consider proposing 
the removal of an NCD if any of the following factors are present:
     We believe that allowing local contractor discretion to 
make a coverage decision better serves the needs of the Medicare 
program and its beneficiaries.
     The technology is generally acknowledged to be obsolete 
and is no longer marketed.
     In the case of a noncoverage NCD based on the experimental 
status of an item or service, the item or service in the NCD is no 
longer considered experimental.
     The NCD has been superseded by subsequent Medicare policy.
     The national policy does not meet the definition of an 
``NCD'' as defined in sections 1862(l) or 1869(f) of the Act.
     The benefit category determination is no longer consistent 
with a category in the statute.
    For more detailed background information on the circumstances/
factors we consider and methods of evaluation and sources of 
information, readers can review the CY 2023 PFS proposed rule, or read 
prior NCD removal discussions in the CY 2021 PFS final rule (85 FR 
84472, December 28, 2020 on pages 84797 through 84802), and the CY 2022 
PFS final rule (86 FR 64996, November 29, 2021) on pages 65241 through 
65244.
    We proposed the following NCD for removal and provided a summary of 
the rationale for removal. The current NCD below is available in the 
Medicare National Coverage Determinations Manual located at https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/internet-Only-Manuals-IOMs-Items/CMS014961.
1. NCD 160.22 Ambulatory EEG Monitoring (06/12/1984)
     Circumstances/Factor: We believe that allowing local 
contractor discretion to make a coverage decision better serves the 
needs of the Medicare program and its beneficiaries.
     Rationale: Ambulatory, or prolonged 
electroencephalographic (EEG) monitoring is a diagnostic test that 
continuously records the brain's electrical activity during a patient's 
routine daily activities and sleep. Ambulatory EEG monitoring may be 
used to diagnose seizure disorders and metabolic, infectious, or 
inflammatory disorders that affect the brain's activity, particularly 
when a resting/routine EEG is not conclusive. The NCD currently defines 
ambulatory EEG monitoring as 24-hour EEG monitoring and provides 
coverage for patients in whom a seizure diathesis is suspected but not 
defined by history, physical or resting EEG. The NCD also provides that 
ambulatory EEG can be utilized in the differential diagnosis of syncope 
and transient ischemic attacks if not elucidated by conventional 
studies. Additionally, the NCD states that ambulatory EEG ``should 
always be preceded by a resting EEG''. External interested parties 
recommended removal of this NCD. The NCD contains outdated language 
that is inconsistent with, and contrary to current standards of care. 
For example, the NCD contains references to cassette tapes. This 
outmoded technology has been supplanted with more modern techniques 
that are more accurate and convenient for monitoring. The document uses 
the word ``ambulatory,'' implying certain sites of service whereas this 
diagnostic test is not site specific. The NCD makes mention of a 24-
hour duration of monitoring. However, the more recent coding structures 
permit monitoring in increments including 36-60 hours, 60-84 hours, and 
>84 hours. Additionally, interested parties stated that the language 
``should always be preceded by a resting EEG'' could potentially create 
waste and a burden. Interested parties indicated that in some clinical 
scenarios, a ``resting/routine'' EEG is unlikely to adequately detect 
seizure or other brain activity that would be useful for diagnostic 
purposes, but would be detected by prolonged EEG testing. Removing the 
outdated NCD will allow MACs to update guidance for this established 
diagnostic test.
    In summary, we solicited comment on the proposal to remove NCD 
160.22 Ambulatory EEG Monitoring. We outlined in the proposed rule that 
we would use the public comments to help inform our decision to take 
one of three actions on the NCD proposed for removal:
     Remove the NCD, as proposed, allowing for coverage to be 
determined by the MACs.
     Retain the current policy as an NCD.
     Reconsider the NCD by opening a National Coverage 
Analysis. Comments suggesting that the NCD should be revised, rather 
than eliminated, should include new evidence that was not previously 
available at the time of the original NCD or at the time the NCD was 
last reconsidered, in order to support a change in national coverage.

[[Page 69768]]

    The following is a summary of the public comments received on the 
Removal of Selected National Coverage Determinations and our responses:
    Comment: Four commenters supported removal of this NCD. Three of 
these were the coalition of original requestors for NCD removal.
    Response: We thank commenters for their support.
    Comment: One commenter, a beneficiary advocacy organization, 
disagreed with removing the Ambulatory EEG monitoring NCD based on the 
position that CMS should not remove any positive coverage NCDs so long 
as there are beneficiaries using that service. The commenter also 
expressed the general belief that local contractor discretion leads to 
inconsistency in coverage. The commenter requested that CMS keep and 
reconsider this NCD.
    Response: We do not agree that it would be appropriate to 
reconsider the NCD, rather than removing the prior policy. EEG 
monitoring is currently a well-established service for which there are 
also existing local coverage documents that can be updated in a more 
expeditious way than undertaking our full NCD reconsideration process. 
Additionally, the commenter did not provide new evidence that was not 
previously available at the time of the original NCD or at the time the 
NCD was last reconsidered, in order to support a reconsideration 
request.
    Comment: Two commenters noted that we did not propose to remove 
NCDs they had previously requested be removed for CY 2023 via letters 
to the Coverage and Analysis Group. One commenter noted that we did not 
propose to remove the NCDs they had recommended for removal in a 
previous rulemaking comment.
    Response: We did receive a number of NCD removal requests through 
email, letters and prior rulemaking comments. In proposing to remove 
one NCD in this rulemaking cycle, Ambulatory EEG monitoring, it is 
implicit that we did not agree that the others should be removed at 
this time. We believe the other NCDs continue to be valid and 
appropriate. We will contact interested parties directly for further 
discussion.
    Timing of request letters and emails can also be a factor, because 
of the advanced work needed to review claims data, available 
literature, gather other information, as well as the timing to prepare 
for the PFS rulemaking process. Additionally, we have recommended in 
past rulemaking discussions, that to support requests for removal, 
stakeholders should include which of the 6 circumstances/factors for 
removal justify removal of an NCD; as well as thoughtful rationale for 
that conclusion, including any available literature and/or other 
supporting information such as claims denials (with PHI redacted) to 
support their justification. We also encourage stakeholders to contact 
the Coverage and Analysis Group in CCSQ to discuss their concerns and 
their supporting information. We have found through our evaluation of 
NCD removal requests that sometimes NCD removal is a perceived cure for 
an issue unrelated to the NCD, such as coding and payment issues. Or, 
there may be a misunderstanding or misinterpretation of an NCD. Instead 
of removing the NCD, these types of issues can often be resolved 
through communication with internal CMS components and external 
parties. Also, in some instances, the underlying concerns have related 
to benefit category or benefit policy concerns, which might not be 
resolved by removing the NCD; instead, benefit category and benefit 
policy issues are better resolved by connecting stakeholders with the 
appropriate groups within CMS.
    Comment: One commenter requested that we provide clarification 
that, in appropriate circumstances, CMS would consider removing a non-
coverage or limited coverage NCD through rulemaking even if we have 
already accepted a formal request for reconsideration of the same NCD. 
The commenter noted concerns about CMS's workload of current national 
coverage analyses and reconsiderations and limited capacity for 
completing NCAs each year.
    Response: We decline the request to make an inflexible blanket 
statement on whether it would be appropriate to propose to remove an 
NCD once CMS has granted a complete formal request to reconsider that 
NCD. The situation would seem to be unusual, but we are not prepared at 
this point to announce a definitive blanket policy. This type of 
determination would need to be made on a case-by-case basis.
    Comment: Two commenters submitted comments about the wider national 
coverage analysis process, NCD reconsideration process, transparency 
and CMS's administrative workload of NCAs waiting to be opened for new 
NCDs or NCD reconsiderations.
    Response: Comments about the NCA process, transparency and NCD 
reconsideration administration are outside the scope of this 
rulemaking. This rulemaking pertains only to the removal of selected 
NCDs.
    After evaluating all of the comments, we are finalizing as 
proposed, the removal of NCD 160.22 Ambulatory EEG Monitoring. As 
explained above, we believe that for this topic, allowing local 
contractor discretion to make a coverage decision better serves the 
needs of the Medicare program and its beneficiaries.

F. Modifications Related to Medicare Coverage for Opioid Use Disorder 
(OUD) Treatment Services Furnished by Opioid Treatment Programs (OTPs)

1. Background
    Section 2005 of the Substance Use-Disorder Prevention that Promotes 
Opioid Recovery and Treatment for Patients and Communities (SUPPORT) 
Act established a new Medicare Part B benefit category for OUD 
treatment services furnished by OTPs during an episode of care 
beginning on or after January 1, 2020. In the CY 2020 PFS final rule 
(84 FR 62630 through 62677 and 84 FR 62919 through 62926), we 
implemented Medicare coverage and provider enrollment requirements and 
established a methodology for determining the bundled payments for 
episodes of care for the treatment of OUD furnished by OTPs. We 
established new codes for and finalized bundled payments for weekly 
episodes of care that include methadone, oral buprenorphine, 
implantable buprenorphine, injectable buprenorphine or naltrexone, and 
non-drug episodes of care, as well as add-on codes for intake and 
periodic assessments, take-home dosages for methadone and oral 
buprenorphine, and additional counseling. In the CY 2021 PFS final rule 
(85 FR 84683 through 84692), we adopted new add-on codes for take home 
supplies of nasal naloxone and injectable naloxone. In the CY 2022 PFS 
final rule (86 FR 65340 and 65341), we established a new add-on code 
and payment for a higher dose of nasal naloxone. We also revised the 
regulations at Sec.  410.67(b)(3) and (4) to allow OTPs to furnish 
individual and group therapy and substance use counseling using audio-
only telephone calls rather than two-way interactive audio/video 
communication technology after the conclusion of the PHE for COVID-19 
in cases where audio/video communication is not available to the 
beneficiary, provided all other applicable requirements are met (86 FR 
65342). As discussed in the CY 2023 PFS proposed rule (87 FR 46087), we 
continue to monitor Medicare enrollment by OTPs and utilization of OUD 
treatment services furnished by OTPs to ensure that Medicare 
beneficiaries have appropriate access to care, as well as monitoring 
for fraud, waste, and abuse. For CY 2023, we proposed several 
modifications to the regulations and policies governing

[[Page 69769]]

Medicare coverage and payment for OUD treatment services furnished by 
OTPs.
2. Methadone Pricing
    In the CY 2020 PFS final rule (84 FR 62667), we finalized a policy 
in Sec.  410.67(d)(2)(i) under which the payment for the drug component 
of episodes of care would be updated annually using the most recent 
data available from the applicable pricing mechanism at the time of 
ratesetting for the applicable calendar year. Under the policy 
finalized at Sec.  410.67(d)(2)(i)(B), for oral medications, if average 
sales price (ASP) data are available, the payment amount is 100 percent 
of ASP, which will be determined based on ASP data that have been 
calculated consistent with the provisions in 42 CFR part 414, subpart J 
and voluntarily-submitted by drug manufacturers. If ASP data are not 
available, the payment amount for methadone will be based on the 
TRICARE rate. Using this established method, we determined that the 
payment amount for methadone furnished by OTPs during an episode of 
care in CY 2021 was $37.38,\215\ which was 100 percent of ASP, as 
determined based on voluntarily-submitted ASP data for methadone.
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    \215\ https://www.cms.gov/files/document/otp-billing-and-payment-fact-sheet.pdf.
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    In early September 2021, while gathering available manufacturer-
reported ASP data for the annual update to the OTP drug pricing for CY 
2022, we found that the volume-weighted ASP for oral methadone had 
decreased by just over 50 percent compared to the CY 2021 rate, from 
$37.38 to $17.64.\216\ This reduction was due to inclusion of newly 
reported ASP data for methadone tablets, whereas previously the 
manufacturer-reported ASP data reflected only sales of the methadone 
oral concentrate. The ASP is volume-weighted; however, ASP reporting is 
not required for oral methadone and only a small subset of methadone 
manufacturers voluntarily submit ASP data. In September 2021, of the 
nearly 50 available NDCs for oral methadone preparations with available 
pricing in the Red Book[supreg] compendia, voluntarily-submitted ASP 
data was available for only three of these NDCs. Pricing for oral 
methadone is distinct from most other drug pricing based on ASP because 
oral methadone is not separately payable as a drug or biological under 
Medicare Part B, and manufacturers are not subject to ASP reporting 
requirements under section 1927(b)(3)(A)(iii) of the Act for those 
NDCs. Additionally, we do not have utilization data on the different 
forms of methadone that can be dispensed or administered at OTPs. That 
is, we do not have data showing whether OTPs utilize oral methadone 
concentrate or tablets more often, or if the two formulations are 
utilized equally. When we researched OTP practice patterns as we were 
preparing to implement the new benefit for OUD treatment services 
furnished by OTPs, we received anecdotal reports that several OTPs used 
the oral concentrate exclusively.
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    \216\ The TRICARE rate for the drug portion of its weekly 
bundled payment for methadone treatment is $24.04 for 2022, which 
would also have been a decrease from the CY 2021 payment rate under 
Medicare and could not be used to set the Medicare payment rate for 
methadone in CY 2022 under Sec.  410.67(d)(2)(i)(B) because ASP data 
was available for methadone.
---------------------------------------------------------------------------

    For these reasons, while performing our annual ratesetting exercise 
for CY 2022, we had concerns as to whether the ASP data available to us 
at that time, which reflected voluntarily reported data from only a 
very small subset of methadone manufacturers, was representative of 
utilization of the two forms of oral methadone by the Medicare 
beneficiaries receiving OUD treatment services in OTPs. Additionally, 
given reports regarding the effects of the public health emergency 
(PHE) for COVID-19 on individuals with substance use disorders (SUDs), 
including OUD, and the questions we had related to whether the ASP data 
we had for methadone was reflective of OTP utilization due to the 
distinct nature of methadone pricing, as described above, we believed 
it was in the public's best interest not to implement a significant 
decrease in the payment rate for methadone furnished by OTPs as part of 
OUD treatment services without first having an opportunity to review 
the issue, seek input from the OTP community regarding utilization of 
methadone oral concentrate compared to utilization of methadone 
tablets, and consider how this information should factor into the 
determination of the payment rate for methadone furnished by OTPs. We 
noted that section 1834(w)(2) of the Act allows for flexibility to 
consider the scope of services furnished, the characteristics of the 
individuals receiving services, and such other factors as the Secretary 
determines appropriate, in determining the rates paid to OTPs under 
Medicare.
    Therefore, we issued the ``Medicare Program; Opioid Treatment 
Programs: CY 2022 Methadone Payment Exception'' interim final rule with 
comment period (IFC) (hereafter referred to as ``Methadone IFC''), 
which appeared in the November 19, 2021 Federal Register (86 FR 66031 
through 66036). In the Methadone IFC, we established a limited 
exception to the methodology for determining the payment amount for the 
drug component of an episode of care in order to freeze the payment 
amount for methadone furnished during an episode of care in CY 2022 at 
the $37.38 payment amount that was determined for CY 2021. We also 
revised the regulation at Sec.  410.67(d)(2)(i)(B), which governs the 
determination of the payment amount for oral medications, to reflect 
this exception for CY 2022 and to make a conforming change to the 
reference to 42 CFR part 414, subpart J. We are finalizing these 
revisions in section V. of this final rule.
    Under this exception, the payment amount for the drug component of 
the methadone bundle described by HCPCS code G2067 (Medication assisted 
treatment, methadone; weekly bundle including dispensing and/or 
administration, substance use counseling, individual and group therapy, 
and toxicology testing, if performed (provision of the services by a 
Medicare-enrolled Opioid Treatment Program)) and the methadone add-on 
code described by HCPCS code G2078 (Take-home supply of methadone; up 
to 7 additional day supply (provision of the services by a Medicare-
enrolled Opioid Treatment Program); List separately in addition to code 
for primary procedure) was maintained at the CY 2021 rate of $37.38 for 
the duration of CY 2022. We also applied the annual update to the non-
drug component of HCPCS G2067 for CY 2022 as required under Sec.  
410.67(d)(4)(iii). We stated that we believed maintaining the payment 
amount for methadone at the CY 2021 rate during CY 2022 would allow 
time for CMS to study the issue further and, if appropriate, to develop 
an alternative payment methodology for methadone that could be proposed 
through notice-and-comment rulemaking for CY 2023 (86 FR 66033). We 
solicited comments on this exception to the payment methodology for the 
drug component of an episode of care in order to maintain the payment 
rate for methadone at the CY 2021 payment amount during CY 2022. In 
addition, we sought comments on OTP utilization patterns for methadone, 
particularly the frequency with which methadone oral concentrate is 
used compared to methadone tablets in the OTP setting, including any 
applicable data on this topic. We also stated that we would consider 
the comments received in determining how best to determine the payment 
rate for methadone in CY 2023, including

[[Page 69770]]

whether we should propose changes to the structure of OTP coding and 
payment in order to account for differences in pricing and utilization 
of the different formulations of methadone.
    We received several comments in response to the Methadone IFC from 
medical associations, national associations representing OTPs, and 
individual commenters that expressed strong support for stabilizing the 
payment rate for methadone. Please see full summary of comments on the 
Methadone IFC and our responses in section V.A. of this final rule. One 
commenter stated cutting reimbursements to providers who specialize in 
treatment for OUD in the middle of an OUD epidemic that has been 
exacerbated by the COVID-19 pandemic could have harmful consequences 
for beneficiaries and cited that the HHS Office of Inspector General 
(OIG) expressed concern that Medicare beneficiaries face challenges 
accessing OUD treatment. The commenter also stated that if Medicare 
reimbursements for methadone fall well below OTPs' costs of acquiring 
and administering the medication, OTPs may have no choice but to 
prescribe a much more expensive medication (buprenorphine or naloxone) 
as part of medication-assisted treatment (MAT)/Medications for Opioid 
Use Disorder (MOUD), which would result in higher costs for the 
Medicare program and taxpayers, while not necessarily improving care. 
For example, methadone is often more ideal for severe dependence or if 
there is a high risk of diversion, while buprenorphine may be more 
advantageous for mild to moderate dependence and when extensive 
supervision by a practitioner is not needed.\217\ Another commenter 
stated that it is possible that freezing the payment rate for methadone 
at the current level could still result in some negative outcomes, as 
supply chain and logistics issues have generally resulted in increased 
prices across the country such that a payment rate increase may be 
necessary, but thought that freezing the rate at the current level was 
a prudent solution for 2022. A commenter representing a large number of 
OTPs across the country stated that OTPs rarely dispense methadone 
tablets and instead administer the oral concentrate formulation. This 
commenter stated that methadone oral concentrate is more expensive to 
acquire and administer than the tablet form, but that it has been shown 
to lead to better clinical outcomes for their patients, which is why it 
is their doctors' formulation of choice. This commenter went on to 
state that the existing methodology to calculate the payment rate for 
the drug component of the methadone weekly bundle does not accurately 
capture the extra costs associated with administration of the oral 
concentrate, explaining that oral concentrate formulations require 
careful measurement in addition to maintaining electric pumps and 
updating computer software. The commenter also noted that it is 
expensive to employ the necessary nursing staff, and stated that a 
number of States require full-time pharmacists for the dispensing and 
administration of medication. Another commenter noted that the National 
Association of State Alcohol and Drug Abuse Directors (NASADAD), in 
conjunction with the State Opioid Treatment Authorities (SOTAs), 
conducted a survey that was distributed to the 1,800 OTPs throughout 
the United States. As of December 31, 2021, NASADAD and the SOTAs had 
collected data from 1,550 OTPs. These data include the number of 
patients being treated at OTPs as of January 1, 2021, including the 
number of patients using one of the three FDA-approved medications to 
treat opioid use disorder (methadone, buprenorphine, and extended-
release naltrexone) and the specific forms of the medication being 
used.
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    \217\ https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3271614/.
---------------------------------------------------------------------------

    As discussed in the CY 2023 PFS proposed rule (87 FR 46089 through 
46090), we appreciate the feedback received in response to the 
Methadone IFC. We agree with commenters that decreasing the payment 
amount for methadone in the middle of an OUD epidemic that has been 
exacerbated by the COVID-19 pandemic could have harmful consequences 
for beneficiaries as we discussed in the Methadone IFC (86 FR 66032). 
We also noted that we were looking forward to seeing the results of the 
survey initiated by NASADAD and the SOTA, so that we can better 
understand the utilization of methadone tablets and oral concentrate in 
OTPs.
    In light of the comments received in response to the Methadone IFC, 
we considered how best to maintain access to treatment with methadone 
in the OTP setting for Medicare beneficiaries. We considered splitting 
the methadone bundled payment code into two codes--one for oral 
concentrate and one for the tablet. This would allow us to track 
Medicare utilization of each formulation. However, because of the 
inconsistency in available ASP data for orally administered methadone 
due to the fact that manufacturer reporting of sales data for these 
dosage forms of methadone is voluntary, (that is, orally administered 
methadone is not a drug that falls under the ASP reporting requirements 
under sections 1927(b)(3)(A)(iii) or 1847A(f)(2)(A) of the Act), we did 
not believe that voluntary reporting of ASP data for either form of 
orally administered methadone (oral concentrate or tablet) currently 
provides a reliable source for pricing the methadone codes. For 
example, for the first quarter of 2022, there was no ASP data reported 
for orally administered methadone. Under the policy at Sec.  
410.67(d)(2)(i)(B)(1), when ASP data are not available for methadone, 
we would base the payment amount for methadone on the TRICARE rate. We 
found that the applicable TRICARE payment amount for methadone for CY 
2022 would be $24.04. Using the TRICARE payment amount for methadone 
for CY 2023 would result in a decrease of $13.34 compared to the rate 
that applied in CY 2021 and CY 2022. In the CY 2023 PFS proposed rule 
(87 FR 46089), we stated that this decrease would be problematic for 
all of the reasons that we expressed in the Methadone IFC (86 FR 66034 
through 66035). For these reasons, we noted that we believed that it 
would be appropriate to propose an alternate methodology for pricing 
the drug component of the methadone bundle and the methadone add-on 
code in order to maintain payment stability, and therefore, maintain 
appropriate access to OUD treatment services furnished at OTPs for 
Medicare beneficiaries.
    We referred to the CY 2020 PFS final rule (84 FR 62667), where we 
discussed the methods we had considered for providing an update each 
year to the drug component of the OTP bundled payment rates. We stated 
that we considered annually updating the pricing of the drug component 
of the OUD treatment services payment rate via an established update 
factor such as the Producer Price Index (PPI) for chemicals and allied 
products, analgesics (WPU06380202). We explained that the PPI for 
chemicals and allied products, analgesics is a subset of the PPI 
produced by the Bureau of Labor Statistics (BLS). At that time, we 
decided against proposing to update the pricing of the drug component 
of the OUD treatment services payment rate via an established update 
factor, such as the PPI, in favor of an update using the most recently 
available ASP data at the time of ratesetting for the applicable 
calendar year. We explained that we believed an ASP-based approach 
would update the pricing of the drug

[[Page 69771]]

component of the OUD treatment services payment rate in a manner that 
would be more consistent with other Medicare payments under Part B. 
However, we also solicited comments on the alternative approach of 
using the PPI for chemicals and allied products, analgesics, but did 
not receive any comments.
    In the CY 2023 PFS proposed rule, we stated that because we did not 
believe that ASP data can provide an appropriate reflection of the 
changes in methadone costs for OTPs until such a time that more 
complete and reliable ASP data are available for methadone, we had 
reconsidered the use of the PPI to update the payment rate for 
methadone. We noted that according to the U.S. BLS,\218\ the PPI 
program measures the average change over time in the selling prices 
received by domestic producers for their output. The application of an 
annual adjustment factor would be consistent with Medicare payment 
policy in other areas, such as the outpatient prospective payment 
system, which updates the conversion factor used to set payment rates 
under that payment system by applying the outpatient department fee 
schedule increase factor, which is equal to the percentage change in 
the hospital inpatient market basket (86 FR 63498 through 63500). The 
percentage change in the market basket reflects the average change in 
the price of goods and services hospitals purchase to provide inpatient 
care.
---------------------------------------------------------------------------

    \218\ https://www.bls.gov/ppi/.
---------------------------------------------------------------------------

    We explained that the PPI for Pharmaceuticals for Human Use 
(Prescription) (WPUSI07003) reflects price changes associated with the 
average mix of all pharmaceuticals in the overall economy and is both 
publicly available and regularly published. We noted our belief that 
this PPI would be an appropriate factor to adjust the payment rate for 
methadone to reflect the changes in methadone costs for OTPs over time. 
Methadone is an established drug in the drug supply chain, and we 
believe that an overall price trend that incorporates price changes for 
prescription pharmaceuticals would provide an appropriate update to 
reflect any increase in the costs incurred by OTPs in furnishing 
methadone during episodes of care.
    Accordingly, for CY 2023 and subsequent years, we proposed to 
revise our methodology for pricing the drug component of the methadone 
weekly bundle and the add-on code for take-home supplies of methadone. 
As proposed, we would base the payment amount for the drug component of 
HCPCS codes G2067 and G2078 for CY 2023 and subsequent years on the 
payment amount for methadone in CY 2021 and update this amount annually 
to account for inflation using the PPI for Pharmaceuticals for Human 
Use (Prescription). Because we froze the payment amount for methadone 
at the 2021 amount for CY 2022, we proposed to account for the 
inflation for both CY 2022 and CY 2023 in setting the payment rate for 
CY 2023. Thus, we proposed to update the methadone payment amount for 
CY 2023 based on the projected increase in the PPI for Pharmaceuticals 
for Human Use (Prescription) to reflect the forecasted price growth for 
prescription drugs for the 2-year period from CY 2021 to 2022 and from 
CY 2022 to 2023. As explained in the proposed rule, based on the 2022 
Q1 forecast from IHS Global Inc. (IGI), the CY 2023 methadone payment 
amount, as proposed, would be $39.29, which is the CY 2022 payment 
amount of $37.38 increased by a projected 5.1 percent growth in the PPI 
for Pharmaceuticals for Human Use (Prescription) from CY 2021 to CY 
2023 ($37.38 * 1.051 = $39.29). IGI is a nationally recognized economic 
and financial forecasting firm that contracts with CMS to forecast 
various price proxies used in the CMS market baskets. Additionally, we 
proposed that if more recent data became available (for example, a more 
recent estimate of the PPI), we would use such data in the final rule 
to determine the final CY 2023 methadone payment amount. For subsequent 
years, we proposed to continue to update this rate annually using the 
PPI for Pharmaceuticals for Human Use (Prescription). We noted that 
under the proposal, we would continue to monitor methadone pricing in 
order to determine whether we may need to propose additional changes to 
this methodology through future rulemaking to account for any 
significant changes in the acquisition costs for methadone. We also 
noted that we may also revisit this policy in the event that new or 
more reliable data on methadone pricing become available. We solicited 
public comment on other potential data sources that could be used to 
estimate an OTP's cost for acquiring methadone.
    Accordingly, we proposed to revise the regulation at Sec.  
410.67(d)(2)(i)(B)(2) to state that for CY 2023 and subsequent years, 
the payment amount for methadone will be based on the payment amount 
for methadone in CY 2021 as determined under Sec.  
410.67(d)(2)(i)(B)(1) and updated by the PPI for Pharmaceuticals for 
Human Use (Prescription). As proposed, the TRICARE rate would no longer 
be an alternative pricing methodology for methadone. We also proposed 
to correct an inadvertent error in the text of the current regulation 
at Sec.  410.67(d)(2)(i)(B)(2), which includes an inaccurate cross-
reference to paragraph (d)(2)(i)(B)(1).
    The following is a summary of the public comments received on the 
methadone pricing proposals and our responses:
    Comment: Many commenters supported our proposal to maintain the 
current methadone payment rate ($37.38) and update that amount by the 
Producer Price Index (PPI) for Pharmaceuticals for Human Use 
(Prescription). Commenters stated this proposal would ensure payment 
rates keep pace with increasing practice costs, thereby ensuring 
patients are able to access OUD treatment services. Additionally, 
several commenters stated that methadone oral concentrate is the 
formulation that is primarily used in the OTP setting. One commenter 
noted that the tablet formulation of methadone is ``almost non-
existent'' in the OTP setting and supported use of pricing data that 
reflects pricing for the oral concentrate. Another commenter stated 
that most OTPs in New York state routinely use oral concentrate 
methadone and all newly certified OTPs in New York administer oral 
concentrate methadone. This commenter noted that there are significant 
related costs associated with the use of methadone tablets which helps 
explains the migration over time from tablets to oral concentrate. They 
noted that methadone tablets are much more labor intensive than oral 
concentrate, as it takes longer to reconcile inventory with tablets, 
and longer to administer and dispense the tablets, which requires 
increased nursing time. The commenter stated that updating the rate 
using the PPI would avoid incentivizing use of methadone tablets. We 
did not receive any comments on other potential data sources that could 
be used to estimate an OTP's cost for acquiring methadone.
    Response: We thank the commenters for their feedback and support 
for this proposal. After consideration of the comments, for CY 2023 and 
subsequent years, we are finalizing our proposal to revise our 
methodology for pricing the drug component of the methadone weekly 
bundle and the add-on code for take-home supplies of methadone as 
proposed. Based on the 2022 Q4 forecast from IHS Global Inc. (IGI), the 
CY 2023 methadone payment amount will be

[[Page 69772]]

$39.37, which is the CY 2022 payment amount of $37.38 increased by a 
projected 5.3 percent growth in the PPI for Pharmaceuticals for Human 
Use (Prescription) from CY 2021 to CY 2023 ($37.38 * 1.053 = $39.37). 
We are also finalizing our proposal to revise the regulation at Sec.  
410.67(d)(2)(i)(B)(2) to state that for CY 2023 and subsequent years, 
the payment amount for methadone will be based on the payment amount 
for methadone in CY 2021 as determined under Sec.  
410.67(d)(2)(i)(B)(1) and updated by the PPI for Pharmaceuticals for 
Human Use (Prescription). We note that the TRICARE rate will no longer 
be an alternative pricing methodology for methadone. We also are 
finalizing our proposed correction to the text of the regulation at 
Sec.  410.67(d)(2)(i)(B)(2), to correct an error in the cross-reference 
to paragraph (d)(2)(i)(B)(1).
3. Changes to the Rate for Individual Therapy in the Bundled Rate
    In the CY 2020 PFS final rule (84 FR 62658), we finalized a payment 
rate for the non-drug component of the bundled payment for episodes of 
care that was calculated using a building block methodology in which we 
took the sum of rates for similar services paid under the PFS. The 
payment rate for individual therapy included in the non-drug component 
of the bundled payment for an episode of care is currently based on a 
crosswalk to CPT code 90832, which describes 30 minutes of 
psychotherapy.
    As we discussed in the CY 2023 PFS proposed rule (87 FR 46090 
through 46091), in its December 2021 report,\219\ titled ``Many 
Medicare Beneficiaries Are Not Receiving Medication to Treat Their 
Opioid Use Disorder,'' OIG indicated that approximately one million 
Medicare beneficiaries were diagnosed with OUD in 2020, but less than 
16 percent of those beneficiaries received medication to treat OUD (in 
any setting), raising concerns that beneficiaries face challenges 
accessing treatment. In this report, OIG also stated that in 2020, less 
than 4 percent of Medicare beneficiaries with OUD received treatment 
from OTPs. We noted that 2020 was the first year of the Medicare OTP 
benefit and that OTPs had to submit applications for enrollment with 
Medicare and have those applications approved prior to billing services 
to Medicare. As a result, we indicated that we expect these numbers to 
improve in future years. However, we also noted that CMS has been 
working to identify and track drivers of disparities in the treatment 
of OUD.
---------------------------------------------------------------------------

    \219\ https://oig.hhs.gov/oei/reports/OEI-02-20-00390.pdf.
---------------------------------------------------------------------------

    Additionally, we explained that we have received feedback from 
interested parties, including associations and groups that represent 
OTPs, indicating that the current rate for individual therapy provided 
as part of the weekly bundle may not accurately reflect the resource 
costs involved with furnishing this service in the OTP setting and that 
for the first several months of treatment, patients typically receive 
weekly 50-minute individual therapy sessions. We stated that now that 
we have 2 years of utilization data, we have reviewed how we 
implemented the OTP benefit to determine whether refinements to the 
bundled rate may be warranted to reflect more accurately the level of 
services furnished by OTPs.
    We noted that we believe that the severity of needs of the patient 
population diagnosed with OUD and receiving services in the OTP setting 
is generally greater than that of patients receiving 30-minute 
psychotherapy services paid under the PFS. For example, co-occurring 
substance use and mental health disorders are common among adults with 
OUD.\220\ Individuals with co-occurring SUD and mental health disorders 
likely have complex treatment needs and may have different patterns of 
treatment than individuals diagnosed with a single condition.\221\ 
During the first few months of treatment at an OTP, patients generally 
receive care at the OTP on a daily basis. Based on the generally 
greater severity of needs of the patient population receiving services 
at OTPs compared to patients receiving psychotherapy services billed 
under CPT code 90382 and paid under the PFS, and therefore, the greater 
intensity of the work, we explained our belief that it was appropriate 
to re-visit the rate for individual therapy that is included in the 
non-drug component of the weekly episodes of care.
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    \220\ https://www.sciencedirect.com/science/article/pii/S0376871618305209.
    \221\ https://www.sciencedirect.com/science/article/pii/S0740547218304781.
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    Accordingly, we proposed to modify the payment rate for the non-
drug component of the bundled payment for an episode of care to base 
the rate for individual therapy on a crosswalk to CPT code 90834 
(Psychotherapy, 45 minutes with patient), instead of a crosswalk to CPT 
code 90832 (Psychotherapy, 30 minutes with patient), as is our current 
policy. We noted that we believe CPT code 90834 most closely 
corresponds to a 50-minute therapy session, which interested parties 
have indicated is the typical amount of therapy received by patients in 
the first few months of treatment at an OTP. In the CY 2020 PFS final 
rule (84 FR 62658), we stated that we based the rate for individual 
therapy in the bundled payment on the 2019 non-facility payment rate 
for CPT code 90832, which was $68.47. Therefore, in order to change the 
rate for individual therapy, we proposed to substitute the 2019 rate 
for CPT code 90832 included in the non-drug component of each of the 
bundled payments for an episode of care with the 2019 PFS non-facility 
payment rate for CPT code 90834, which was $91.18, to determine an 
adjusted payment rate for CY 2020 for the non-drug component of each 
applicable HCPCS code. As described in Sec.  410.67(d)(4)(iii), we 
noted that we would then apply the Medicare Economic Index (MEI) 
updates for 2021, 2022, and 2023 to these adjusted payment rates to 
determine the CY 2023 payment amounts for the non-drug component of the 
bundled payments for an episode of care. We also noted that in section 
II.M. of the proposed rule, we had proposed to rebase and revise the 
MEI from a 2006-base year to a 2017-base year. The MEI for CY 2023 was 
projected to be 3.8 percent based on the proposed 2017-based MEI, which 
was based on the most current forecast of the percentage increase of 
the proposed 2017-based MEI for the second quarter of 2022 (4.2 
percent), and the most recent estimate of the historical productivity 
adjustment for calendar year 2021 (0.4 percent) at the time of the CY 
2023 PFS proposed rule. We stated that the MEI for CY 2023 would be 
revised for the final rule based on historical data through the second 
quarter of 2022 and the most recently available total factor 
productivity data.
    We noted that in the CY 2020 PFS final rule (84 FR 62644), we also 
finalized an adjustment to the bundled payment rates through the use of 
an add-on code to account for instances in which effective treatment 
requires additional counseling or group or individual therapy to be 
furnished for a particular patient that substantially exceeds the 
amount specified in the patient's individualized treatment plan. This 
adjustment is described by HCPCS code G2080 (Each additional 30 minutes 
of counseling or group or individual therapy in a week of medication 
assisted treatment, (provision of the services by a Medicare enrolled 
Opioid Treatment Program); List separately in addition to code for 
primary procedure.). We did not propose any changes to HCPCS code

[[Page 69773]]

G2080. We noted that we believe the proposal to update the crosswalk we 
use to calculate the individual therapy portion of the non-drug 
component of the bundled payment to reflect 45 minutes of psychotherapy 
would not duplicate the add-on code for additional counseling. Rather, 
we noted that we believe the proposal to update the crosswalk for 
individual therapy would ensure that the payment for the non-drug 
component of the bundled payment is more representative of the typical 
case in the OTP setting and better reflects the resource costs involved 
in furnishing this service in the OTP setting compared to the current 
crosswalk.
    Accordingly, we proposed to revise the regulation text at Sec.  
410.67(d)(2) to adjust the payment for the non-drug component of the 
bundled payment for an episode of care to reflect 45 minutes of 
psychotherapy beginning in CY 2023. We welcomed comments on this 
proposal.
    The following is a summary of the public comments received on the 
proposed change to the rate for individual therapy included in the 
bundled rate and our responses:
    Comment: Several commenters supported this proposal and urged CMS 
to finalize the proposed update to the rate for individual therapy in 
the non-drug component to reflect a 45-minute session. Several 
commenters agreed with CMS that the proposed update to account for 45-
minutes of therapy instead of 30-minutes better aligns with current 
behavioral health practices and keeps pace with increasing practice 
costs. A few commenters emphasized the importance of therapy and 
behavioral health services in treatment and recovery and that by 
increasing reimbursements for therapy, OTPs will be better positioned 
to retain current staff and attract new professionals.
    Response: We thank the commenters for their feedback and support 
for this proposal.
    Comment: One commenter requested that CMS clarify whether this 
update to the bundled rate would prohibit OTPs from billing for the OTP 
bundle for therapy sessions lasting less than 45 minutes in duration.
    Response: We note that in the CY 2020 PFS final rule, we finalized 
that the threshold to bill for an episode of care was that at least one 
opioid use disorder treatment service was furnished to the patient 
during the week that corresponds to the episode of care (84 FR 62641). 
As discussed above, we proposed to modify the rate for individual 
therapy included in the non-drug component to better account for the 
severity of needs of the patient population diagnosed with OUD and 
receiving treatment in the OTP setting, and therefore, the greater 
intensity of the work involved in furnishing these services. This 
crosswalk code is being used for the purposes of valuation, but we do 
not intend it to be a requirement regarding the number of minutes spent 
in an individual therapy session in order for the service to qualify as 
an OUD treatment service. Accordingly, an OTP would be able to bill for 
an episode of care, even if the only OUD treatment service furnished to 
the beneficiary during the episode of care was an individual therapy 
session lasting less than 45 minutes.
    Comment: One commenter requested clarification related to 
subregulatory guidance that specifies the health care providers that 
are eligible to furnish substance use counseling services and 
individual and group therapy under the OTP benefit. Specifically, the 
commenter noted that the SUPPORT Act states MOUD services include 
``substance use counseling by a professional to the extent authorized 
under State law to furnish such services'' and ``individual and group 
therapy with a physician or psychologist (or other mental health 
professional to the extent authorized under State law.)'' The commenter 
further stated that licensed medical and family therapists (LMFTs) are 
authorized under laws in every state to provide these services to 
individuals with an OUD. Additionally, the commenter stated that 
current subregulatory guidance does not specifically list LMFTs as 
professionals who may provide these services within an OTP, which may 
make OTPs reluctant to utilize these professionals without more 
guidance from CMS.
    Response: In the CY 2020 PFS final rule (84 FR 62633), we stated 
that under sections 1861(jjj)(1)(C) and (D) of the Act, substance use 
counseling for OUD treatment can be provided by ``a professional to the 
extent authorized under State law to furnish such services,'' while 
individual and group therapy can be ``with a physician or psychologist 
(or other mental health professional to the extent authorized under 
State law).'' Consistent with the statute, we did not limit the 
professionals that can provide these services in an OTP to physicians, 
psychologists, or other practitioners who can bill Medicare directly. 
Instead, we noted that the professionals that could provide such 
services could include licensed professional counselors, licensed 
clinical alcohol and drug counselors, and certified peer specialists 
that are permitted to furnish this type of therapy or counseling by 
state law and scope of practice. We also stated that to the extent that 
the individuals furnishing therapy or counseling services are not 
authorized under State law to furnish such services, the therapy or 
counseling services provided by these professionals would not be 
covered as OUD treatment services. In response to the comment regarding 
LMFTs, we note that the lists of examples included in the CY 2020 PFS 
final rule and associated subregulatory guidance, such as the Medicare 
Benefit Policy Manual, Chapter 17, Section 40.1.1 \222\ and in the 
Medicare Learning Network (MLN) OTP Medicare Billing and Payment Fact 
Sheet \223\ were not intended to be comprehensive, and we reiterate 
that any professional authorized by State law and scope of practice to 
furnish this type of therapy or counseling may do so as part of the 
treatment included in the bundled payments to OTPs under Medicare and 
that this includes LMFTs, where authorized by State law and consistent 
with scope of practice.
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    \222\ https://www.cms.gov/files/document/chapter-17-opioid-treatment-programs-otps.pdf.
    \223\ https://www.cms.gov/files/document/otp-billing-and-payment-fact-sheet.pdf.
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    Comment: One commenter supported this change for OTPs, but also 
urged CMS to consider adopting this modification for other bundled 
payments for SUD under the PFS, such as the bundled rate for office-
based SUD treatment (HCPCS codes G2086-G2088) and general behavioral 
health integration (CPT code 99484) in order to reflect the complexity 
of treating these patients and ensure that there is consistent and 
sufficient access to counseling for SUD across settings of treatment. 
The commenter noted that some patients who are prescribed buprenorphine 
in non-OTP settings will have similarly complex care needs requiring 
more intensive therapeutic care and that by recognizing the appropriate 
complexity and intensity of the services in rate setting, CMS can 
incentivize more office-based practices to offer these services and 
build out the treatment teams that deliver this care.
    Response: We thank the commenter for this feedback. We note that 
changes to the payment for HCPCS codes G2086-G2088 and the existing 
codes for General BHI are outside of the scope of the proposal, which 
was limited to the payment rate for OUD treatment services when 
furnished in OTPs. We may consider making similar changes to relevant 
bundled codes that include individual therapy in future rulemaking.

[[Page 69774]]

    After consideration of the comments received, we are finalizing 
without modification our proposal to modify the payment rate for the 
non-drug component of the bundled payment for an episode of care to 
base the rate for individual therapy on a crosswalk to CPT code 90834 
(Psychotherapy, 45 minutes with patient), instead of a crosswalk to CPT 
code 90832 (Psychotherapy, 30 minutes with patient). Accordingly, we 
are also finalizing our proposed revisions to the regulation text at 
Sec.  410.67(d)(2) to adjust the payment for the non-drug component of 
the bundled payment for an episode of care to reflect 45 minutes of 
psychotherapy beginning in CY 2023. We note that the final OTP payment 
rates for CY 2023 can be found in the public use files for this final 
rule on the CMS website under downloads for the CY 2023 PFS final rule 
at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.
    In the CY 2023 PFS proposed rule (87 FR 46041 through 46055), we 
proposed to rebase and revise the MEI to a 2017 base year. As discussed 
in section II.M. of this final rule, we are finalizing the 2017-based 
MEI for CY 2023, with technical modifications based on public comments. 
The CY 2023 MEI update is 3.8 percent, which is based on the latest 
available historical data through the 2nd quarter of 2022.
4. Mobile Components Operated by OTPs
    As discussed in the CY 2023 PFS proposed rule (87 FR 46091), 
effective July 28, 2021, the Drug Enforcement Administration (DEA) 
issued a final rule (86 FR 33861) that authorized OTPs to add a 
``mobile component'' to their existing registration, which eliminated a 
requirement for mobile medication units of OTPs to have a separate 
registration. Additionally, SAMHSA has issued guidance to OTP 
Directors, State Opioid Treatment Authorities (SOTAs), and State 
Directors that revised and superseded related portions of SAMHSA's 2015 
Federal Guidelines for OTPs by clarifying the range of services that 
can be provided by mobile units.\224\
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    \224\ https://www.samhsa.gov/sites/default/files/2021-letter-mobile-component.pdf.
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    In light of the new SAMHSA guidance, in the CY 2023 PFS proposed 
rule, we clarified that services furnished via OTP mobile units will be 
considered for purposes of determining payments to OTPs under the 
Medicare OTP bundled payment codes and/or add-on codes to the extent 
that the services are medically reasonable and necessary and are 
furnished in accordance with SAMHSA and DEA guidance. We noted that we 
believe allowing OTPs to bill Medicare for services furnished via 
mobile units is an opportunity to expand access to medications for 
treatment of OUD for Medicare beneficiaries by extending the reach of 
OTPs, particularly in remote or underserved areas. Because OTPs receive 
a bundled payment, we also noted that we believe it would be 
appropriate to apply locality adjustments for services furnished via 
mobile units as if the service were furnished at the OTP registered 
with DEA and certified by SAMHSA. We noted that we anticipate that for 
beneficiaries receiving OUD treatment services from a mobile unit, some 
services included in the bundle for a given week may still be provided 
at the OTP, while some may be furnished via the mobile unit, which 
would make it difficult to determine which geographic locality 
adjustment to apply to the weekly bundle if the OTP and the location 
served by the mobile unit are subject to different geographic locality 
adjustments. Additionally, we noted that when services are furnished 
from a mobile unit, the OTP still incurs the cost of rent, staffing, 
supplies, etc. at the location of the OTP; therefore, we believe it is 
appropriate to apply the geographic locality adjustment as if the 
service were furnished at the OTP. Accordingly, we proposed to amend 
the regulation at Sec.  410.67(d)(4)(ii) to clarify that, for purposes 
of the geographic adjustment, OUD treatment services furnished via an 
OTP mobile unit will be treated as if the services were furnished at 
the physical location of the OTP registered with DEA and certified by 
SAMHSA. As stated in the CY 2020 PFS final rule, because HCPCS codes 
G2067-G2075 cover episodes of care of 7 contiguous days, OTPs should 
not bill any of these codes for the same beneficiary more than once per 
7 contiguous day period, with limited exceptions (84 FR 62649), and we 
did not propose any changes to this policy, regardless of the 
location(s) at which the services are provided. We also noted that we 
will continue monitoring the benefit for OUD treatment services 
furnished by OTPs, including services furnished by mobile units, for 
fraud, waste, and abuse, and will use existing administrative 
authorities to take necessary action, as appropriate.
    The following is a summary of the public comments received on the 
discussion in the CY 2023 PFS proposed rule regarding mobile components 
operated by OTPs and our responses:
    Comment: Several commenters expressed support for this policy, 
stating this will allow OTPs to better serve Medicare beneficiaries. 
Several commenters noted that allowing Medicare payment for services 
furnished by OTP mobile units is essential to expanding lifesaving 
access and filling detrimental treatment gaps, stating that mobile 
units will increase access to care exponentially for individuals who 
lack timely access to treatment, such as individuals who are 
experiencing homelessness, who are living with a disability, who do not 
have a caregiver that can assist them to appointments, or who lack 
reliable access to transportation. Commenters stated it will further 
expand treatment access to localities experiencing high overdose rates 
or experiencing OTP workforce shortages. One commenter cited a study 
that found that the average drive time to an OTP, a trip that patients 
who are prescribed methadone must make on a daily basis for months 
until any take-home medication is allowed, is nearly 50 minutes in 
rural communities compared to 8 minutes in urban settings.\225\ The 
commenter applauded CMS's efforts to expand access to medications for 
OUD for Medicare beneficiaries, particularly in remote or underserved 
areas. Several commenters also supported applying the geographic 
locality adjustment as if the service were furnished at the OTP.
---------------------------------------------------------------------------

    \225\ https://jamanetwork.com/journals/jama/fullarticle/2752051.
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    Response: We thank the commenters for their support and feedback. 
After consideration of the comments and as noted in the proposed rule, 
we are clarifying that services furnished via OTP mobile units will be 
considered for purposes of determining payments to OTPs under the 
Medicare OTP bundled payment codes and/or add-on codes to the extent 
that the services are medically reasonable and necessary and are 
furnished in accordance with SAMHSA and DEA guidance. Additionally, we 
are finalizing without modification our proposal to amend the 
regulation at Sec.  410.67(d)(4)(ii) to clarify that for purposes of 
the geographic adjustment, OUD treatment services furnished via an OTP 
mobile unit will be treated as if the services were furnished at the 
physical location of the OTP registered with DEA and certified by 
SAMHSA.
    Comment: Several commenters stated that they support including 
payment for mobile services under the OTP bundled rate only to the 
extent that the bundled

[[Page 69775]]

rate is sufficient. Commenters expressed concern that the decreases in 
reimbursement under Medicare due to sequestration requirements will be 
detrimental to the access and availability of behavioral health care 
and are concerned these decreases will impact elevated costs associated 
with operating mobile units. They noted, for example, that mobile units 
will have costs related to obtaining transportable supplies, fuel, and 
maintenance of mobile equipment. Therefore, the commenters urged CMS to 
ensure that the OTP bundled rate includes prospective costs for OTPs to 
establish mobile units as well as the continued maintenance of existing 
and newly established mobile units.
    Response: We thank the commenters for these suggestions and may 
consider them for future rulemaking. However, we are not considering 
such changes for CY 2023 because we did not propose any changes to the 
OTP bundled rate or add-on codes to include prospective costs 
specifically associated with operating mobile units.
    Comment: One commenter stated that a guidance statement from SAMHSA 
describes the services that can be provided through non-mobile 
medication units that are also affiliated with OTPs. In this case, and 
unlike the mobile van units, these are fixed brick and mortar sites, 
which can also expand access to treatment and rural and underserved 
areas of the United States. The commenter encouraged CMS to develop the 
appropriate reimbursement models under Medicare for these non-mobile 
medication units as they are further developed.
    Response: We thank the commenter for highlighting this additional 
route of providing medication to OTP patients. We note that it is 
outside of the scope of the issues addressed in the proposed rule; 
however, we may consider this for future rulemaking.
5. Flexibilities for OTPs To Use Telecommunications for Initiation of 
Treatment With Buprenorphine
    We have finalized several flexibilities for OTPs regarding the use 
of telecommunications, both during the PHE for COVID-19 and outside of 
the PHE. In the CY 2020 PFS final rule, we finalized a policy allowing 
OTPs to furnish substance use counseling and individual and group 
therapy via two-way interactive audio-video communication technology. 
In the IFC entitled ``Medicare and Medicaid Programs: Policy and 
Regulatory Revisions in Response to the COVID-19 Public Health 
Emergency,'' which appeared in the April 6, 2020 Federal Register (85 
FR 19258), we revised Sec.  410.67(b)(3) and (4) on an interim final 
basis to allow the therapy and counseling portions of the weekly 
bundles, as well as the add-on code for additional counseling or 
therapy, to be furnished using audio-only telephone calls rather than 
via two-way interactive audio-video communication technology during the 
PHE for the COVID-19 if beneficiaries do not have access to two-way 
audio/video communications technology, provided all other applicable 
requirements are met. In the CY 2022 PFS final rule (86 FR 65341 
through 65343), we finalized that after the conclusion of the PHE for 
COVID-19, OTPs are permitted to furnish substance use counseling and 
individual and group therapy via audio-only telephone calls when the 
beneficiary cannot access or does not consent to the use of audio and 
video.
    In the IFC entitled ``Medicare and Medicaid Programs, Basic Health 
Program, and Exchanges; Additional Policy and Regulatory Revisions in 
Response to the COVID-19 Public Health Emergency and Delay of Certain 
Reporting Requirements for the Skilled Nursing Facility Quality 
Reporting Program,'' which appeared in the May 8, 2020 Federal Register 
(85 FR 27558), we revised Sec.  410.67(b)(7) on an interim final basis 
to allow periodic assessments to be furnished during the PHE for COVID-
19 via two-way interactive audio-video communication technology and, in 
cases where beneficiaries do not have access to two-way audio-video 
communication technology, to permit the periodic assessments to be 
furnished using audio-only telephone calls rather than via two-way 
interactive audio-video communication technology, provided all other 
applicable requirements are met. In the CY 2021 PFS final rule (85 FR 
84690), we finalized our proposal to revise Sec.  410.67(b)(7) to 
provide that periodic assessments (HCPCS code G2077) must be furnished 
during a face-to-face encounter, which includes services furnished via 
two-way interactive audio-video communication technology, as clinically 
appropriate, provided all other applicable requirements are met, on a 
permanent basis. However, the flexibility for OTPs to furnish periodic 
assessments via audio-only communication is limited to the duration of 
the PHE for COVID-19. There are currently no flexibilities under 
Medicare for OTPs to furnish the intake add-on code via communication 
technology.
    As discussed in the CY 2023 PFS proposed rule (87 FR 46092 through 
46093), SAMHSA regulations under 42 CFR 8.12(f)(2) require a complete 
physical evaluation before a patient begins treatment at an OTP. 
However, during the PHE, DEA and SAMHSA have allowed OTPs to initiate 
treatment with buprenorphine via audio-video and audio-only 
communication without first conducting an in-person evaluation.\226\ 
According to guidance issued by SAMHSA \227\ regarding the treatment of 
OUD during the PHE, SAMHSA made the decision to exercise its authority 
to exempt OTPs from the requirement to perform an in-person physical 
evaluation (under 42 CFR 8.12(f)(2)) for any patient who will be 
treated by the OTP with buprenorphine if a program physician, primary 
care physician, or an authorized healthcare professional under the 
supervision of a program physician, determines that an adequate 
evaluation of the patient can be accomplished via telehealth. We noted 
that this exemption applies exclusively to OTP patients treated with 
buprenorphine and does not apply to new patients treated with 
methadone. This exemption will continue only for the duration of the 
declared PHE for COVID-19 unless regulations are issued making this 
flexibility permanent.
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    \226\ https://www.deadiversion.usdoj.gov/coronavirus.html.
    \227\ https://www.samhsa.gov/sites/default/files/faqs-for-oud-prescribing-and-dispensing.pdf.
---------------------------------------------------------------------------

    We explained that for services paid under the PFS, Medicare 
telehealth services fall under the authority of section 1834(m) of the 
Act, which generally limits payment for telehealth services to those 
furnished to patients located in specified types of medical care 
settings in mostly rural locations. The codes describing new patient 
office/outpatient visits (CPT codes 99202 through 99205) are on the 
Medicare Telehealth list. As discussed in the CY 2019 PFS final rule 
(83 FR 59496), section 2001(a) of the SUPPORT Act (Pub. L. 115-271, 
October 24, 2018) amended section 1834(m) of the Act, adding a new 
paragraph (7) that removed the geographic limitations for telehealth 
services furnished on or after July 1, 2019, to individuals with a 
diagnosed SUD for the purpose of treating the SUD or a co-occurring 
mental health disorder. Section 1834(m)(7) of the Act also allows 
telehealth services for treatment of a diagnosed SUD or co-occurring 
mental health disorder to be furnished to individuals at any telehealth 
originating site (other than a renal dialysis facility), including in a 
patient's home. In addition, as discussed in the CY 2022 PFS final rule 
(86 FR 65055), section 123 of the Consolidated Appropriations

[[Page 69776]]

Act, 2021 (CAA 2021) (Pub. L. 116-260, December 27, 2020) modified the 
circumstances under which Medicare makes payment under the PFS for 
mental health services furnished via telehealth following the PHE. 
Specifically, it removed the geographic originating site restrictions 
and added the home of the individual as a permissible originating site 
for telehealth services when furnished for the purposes of diagnosis, 
evaluation, or treatment of a mental health disorder. In addition to 
the flexibilities authorized by section 2001(a) of the SUPPORT Act and 
section 123 of the CAA 2021, in the CY 2022 PFS final rule (86 FR 
65055), for services for the diagnosis, evaluation or treatment of 
mental health conditions, including SUDs, CMS revised the regulatory 
definition of an ``interactive telecommunications system'' to permit 
the use of audio-only communications technology for mental health 
telehealth services under certain conditions when provided to 
beneficiaries located in their home.
    Given these flexibilities for the treatment, diagnosis, or 
evaluation of mental health disorders, including SUDs, under the PFS, 
in the CY 2023 PFS proposed rule we proposed to allow the OTP intake 
add-on code to be furnished via two-way audio-video communications 
technology when billed for the initiation of treatment with 
buprenorphine, to the extent that the use of audio-video 
telecommunications technology to initiate treatment with buprenorphine 
is authorized by DEA and SAMHSA at the time the service is furnished. 
We also proposed to permit the use of audio-only communication 
technology to initiate treatment with buprenorphine in cases where 
audio-video technology is not available to the beneficiary. As we 
explained in the CY 2022 PFS final rule (86 FR 65342), we interpreted 
the requirement that audio/video technology is ``not available to the 
beneficiary'' to include circumstances in which the beneficiary is not 
capable of or has not consented to the use of devices that permit a 
two-way, audio/video interaction because in each of these instances 
audio/video communication technology is not able to be used in 
furnishing services to the beneficiary. We noted that under this 
proposal, the initiation of treatment with buprenorphine using 
telecommunications technology would be considered an intake activity 
for purposes of Sec.  410.67(b)(6) only to the extent that the use of 
such telecommunications technology is permitted under the applicable 
DEA and SAMHSA regulations and guidance at the time the services are 
furnished.
    Accordingly, we proposed to revise the regulation at Sec.  
410.67(b)(6) to state that services to initiate treatment with 
buprenorphine may be furnished via two-way interactive audio-video 
communication technology, as clinically appropriate, and in compliance 
with all applicable requirements. In cases where two-way audio-video 
communications technology is not available to the beneficiary, services 
to initiate treatment with buprenorphine can be furnished using audio-
only telephone calls if all other applicable requirements are met.
    Finally, we sought comment on whether we should allow periodic 
assessments to continue to be furnished using audio-only communication 
technology following the end of the PHE for COVID-19 for patients who 
are receiving treatment via buprenorphine, and if this flexibility 
should also continue to apply to patients receiving methadone or 
naltrexone.
    The following is a summary of the public comments received in 
response to our proposal to permit OTPs to use telecommunications for 
initiation of treatment with buprenorphine and our solicitation of 
comments on the use of audio-only communication technology to furnish 
periodic assessments following the end of the PHE for COVID-19 and our 
responses:
    Comment: Several commenters expressed support for our proposal to 
allow the add-on code for intake activities to be furnished via two-way 
audio-video communications technology when billed for the initiation of 
treatment with buprenorphine. Commenters noted that the ability to 
initiate treatment for OUD via telehealth modalities is of critical 
importance to individuals who have limited ability to attend in-person 
appointments or who are disincentivized to do so due to perceived 
stigma and fear. A few commenters noted support for clinicians making 
the determination as to when virtual platforms can be used and when in-
person visits are advised.
    Response: We thank the commenters for their input. After 
consideration of the comments, we are finalizing our proposal to allow 
the OTP intake add-on code to be furnished via two-way audio-video 
communications technology when billed for the initiation of treatment 
with buprenorphine, to the extent that the use of audio-video 
telecommunications technology to initiate treatment with buprenorphine 
is authorized by DEA and SAMHSA at the time the service is furnished 
and to permit the use of audio-only communication technology to 
initiate treatment with buprenorphine in cases where audio-video 
technology is not available to the beneficiary. As we explained in the 
CY 2022 PFS final rule (86 FR 65342), we interpret the requirement that 
audio/video technology is ``not available to the beneficiary'' to 
include circumstances in which the beneficiary is not capable of or has 
not consented to the use of devices that permit a two-way, audio/video 
interaction because in each of these instances audio/video 
communication technology is not able to be used in furnishing services 
to the beneficiary. Accordingly, we are finalizing our proposal to 
revise the regulation at Sec.  410.67(b)(6) to state that services to 
initiate treatment with buprenorphine may be furnished via two-way 
interactive audio-video communication technology, as clinically 
appropriate, and in compliance with all applicable requirements. In 
cases where two-way audio-video communications technology is not 
available to the beneficiary, services to initiate treatment with 
buprenorphine can be furnished using audio-only telephone calls if all 
other applicable requirements are met.
    Comment: Several commenters requested that CMS continue to allow 
periodic assessments to be furnished audio-only when video is not 
available after the end of the PHE. Commenters noted that allowing 
audio-only flexibilities would further promote equity for individuals 
who are economically disadvantaged, live in rural areas, are racial and 
ethnic minorities, lack access to reliable broadband or internet 
access, or do not possess devices with video functions. Furthermore, 
one commenter noted that this flexibility is particularly important for 
the elderly population served under Medicare. Specifically, the 
commenter cited a 2020 HHS Issue Brief showing that the proportion of 
telephonic audio-only visits increases with the age of the patient, 
with ``17% of visits delivered via audio-only interaction for patients 
41-60 years of age, 30% for patients 61-80 years of age, and 47% of 
visits for patients over 81.'' \228\ One commenter stated that these 
reassessments are no more complex than initial assessments, and thus 
are equally appropriate for audio-video and audio-only care. 
Additionally, a few commenters requested that these flexibilities be

[[Page 69777]]

extended to treatment with methadone and naltrexone, noting that if CMS 
begins to bifurcate flexibilities and coverage based solely on 
medication, CMS will indirectly steer patients towards certain 
medication. Several comments expressed support for the use of 
telecommunications in circumstances when the provider and patient have 
together determined that the patient would individually benefit from 
telehealth services and a high quality of care is maintained. The 
commenters stated that the success of flexibilities extended during the 
PHE, such as take-home methadone, along with the demand for these 
services, have illustrated that the ability to furnish SUD services via 
telecommunications modalities is within reach. They encouraged CMS to 
expand flexibilities to furnish SUD services via telecommunications to 
allow providers and patients to decide collaboratively the best 
modality for individualized care.
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    \228\ HHS ASPE Issue Brief: Medicare beneficiary use of 
telehealth visits: Early Data from the Start of the COVID-19 
Pandemic (July 27, 2020). https://aspe.hhs.gov/reports/medicare-beneficiary-use-telehealth-visits-early-data-start-covid-19-pandemic.
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    Response: We thank the commenters for this feedback. After 
consideration of the comments, we have determined that it would be 
appropriate to revise our regulations to allow periodic assessments to 
be furnished audio-only when video is not available through the end of 
CY 2023, to the extent that it is authorized by SAMHSA and DEA at the 
time the service is furnished. We believe it is important to limit this 
flexibility to situations in which the use of audio-only communications 
technology is permitted under the applicable SAMHSA and DEA 
requirements to ensure that services furnished to Medicare 
beneficiaries are furnished in a manner consistent with all applicable 
requirements. This modification will allow continued beneficiary access 
to these services for the duration of CY 2023 in the event the PHE for 
COVID-19 terminates before the end of 2023, while also allowing 
additional time for CMS to further consider this issue. Accordingly, we 
are finalizing a revision to the regulation text at Sec.  410.67(b)(7) 
to add that through the end of CY 2023, in cases where a beneficiary 
does not have access to two-way audio-video communications technology, 
periodic assessments can be furnished using audio-only telephone calls 
if all other applicable requirements are met.
    Comment: We received comments on several topics that were outside 
the scope of the proposed rule. Those topics included the following: a 
suggestion that CMS should update the non-drug component of the OTP 
bundled rate annually using the IPPS market basket update, which the 
commenters believe more accurately reflects the kind of care that is 
provided to patients in OTPs compared to the Medicare Economic Index 
(MEI), stating that OTPs are structured more like a hospital outpatient 
clinic in terms of services and staffing and additionally have to 
comply with a heightened regulatory regime compared to what physician 
offices are subject to; a recommendation that CMS create a rural-
specific add-on payment to be applied to the non-drug component of the 
bundled payment for low population density areas where it is difficult 
to find practitioners, nurses, and counselors to treat OUD; a 
recommendation that CMS allow prescribers to initiate buprenorphine 
treatment for SUDs in other settings, including hospital outpatient 
departments, offices, RHCs, FQHCs, and Rural Emergency Hospital (REH) 
outpatient departments; a recommendation that CMS coordinate with the 
DEA to create a special registration for telehealth providers under the 
DEA's existing legal authority under the Ryan Haight Act, stating that 
a special registration program for telehealth providers would continue 
to expand patient access while offering an enforcement mechanism to 
limit overprescribing; a request that CMS develop an add-on code for 
the use of Contingency Management, which is a type of behavioral 
therapy in which certain behaviors are incentivized, in OTPs in 
response to increases in overdoses involving psychostimulants 
reflecting a high level of co-use of opioids and stimulants; and a 
suggestion that CMS consider making an adjustment to the bundled 
payment for an episode of care due to the increased cost of toxicology 
testing when testing for fentanyl or that an add-on code for fentanyl 
tests should be established.
    Response: While these comments are out of scope for this final rule 
because they do not relate to the specific proposals included in the 
proposed rule, we appreciate the feedback and may consider these 
recommendations for future rulemaking.

G. Medicare Shared Savings Program

1. Executive Summary and Background
a. Purpose
    As of January 1, 2022, over 11 million people with Medicare receive 
care from one of the 528,966 health care providers in the 483 
accountable care organizations (ACOs) participating in the Medicare 
Shared Savings Program (Shared Savings Program), the largest value-
based purchasing program in the country.\229\ Eligible groups of 
providers and suppliers, including physicians, hospitals, and other 
healthcare providers, may participate in the Shared Savings Program by 
forming or joining an ACO and in so doing agree to become accountable 
for the total cost and quality of care provided under Traditional 
Medicare to an assigned population of Medicare fee-for-service (FFS) 
beneficiaries. Under the Shared Savings Program, providers and 
suppliers that participate in an ACO continue to receive traditional 
Medicare FFS payments under Parts A and B, and the ACO may be eligible 
to receive a shared savings payment if it meets specified quality and 
savings requirements, and in some instances may be required to share in 
losses if it increases health care spending. To advance Medicare's 
value-based care strategy of growth, alignment, and equity, we proposed 
changes to the Shared Savings Program as described in section III.G. of 
the CY 2023 PFS proposed rule (87 FR 46093 through 46218) and sought 
public comments which we summarize and respond to in this section of 
this final rule.
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    \229\ Refer to CMS, Shared Savings Program Fast Facts--As of 
January 1, 2022, available at https://www.cms.gov/sites/default/files/2022-01/2022_Shared_Savings_Program_Fast_Facts.pdf.
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    The Shared Savings Program offers different participation options 
(tracks) that allow ACOs to assume various levels of risk. The BASIC 
track offers a glide path for eligible ACOs to transition from a one-
sided shared savings-only model to progressively higher increments of 
financial risk and potential reward under two-sided shared savings and 
shared losses models \230\ within a single 5-year agreement 
period.\231\ ACOs that enter the ENHANCED track accept greater 
financial risk for their assigned beneficiaries in exchange for 
potentially higher financial rewards. For the performance year (PY) 
beginning on January 1, 2022, 59 percent of Shared Savings Program ACOs 
are under two-sided models. Historically, we have observed that ACOs in 
performance-

[[Page 69778]]

based risk tracks have better financial performance than ACOs in shared 
savings only tracks and that low revenue ACOs (which may tend to be 
small, physician only ACOs) have better financial performance than high 
revenue ACOs (whose composition likely includes institutional 
providers, particularly hospitals and health systems).\232\ We have 
also observed that the highest earning ACOs had a higher proportion of 
beneficiaries that were members of racial and ethnic minority 
communities and included a greater proportion of ESRD, disabled, and 
aged/dually eligible Medicare and Medicaid beneficiaries than the 
lowest earning ACOs.
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    \230\ As explained in earlier rulemaking, we have tended to use 
the terms ``two-sided model'' and ``performance-based risk'' 
interchangeably, considering them to be synonymous when describing 
payment models offered under the Shared Savings Program and Medicare 
ACO initiatives more broadly (83 FR 67827).
    \231\ As explained in earlier rulemaking (for example, 83 FR 
67844), the BASIC track's glide path includes 5 levels: a one-sided 
model available only for the first 2 consecutive performance years 
of a 5-year agreement period, each year of which is identified as a 
separate level (Levels A and B); and three levels of progressively 
higher risk and potential reward in performance years 3 through 5 of 
the agreement period (Levels C, D, and E).
    \232\ See for example, 83 FR 67820.
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    As we explained in the CY 2023 PFS proposed rule (87 FR 46093), we 
proposed changes seeking to reverse certain recent trends 
233 234 in the Shared Savings Program: in recent years 
growth in the number of beneficiaries assigned to ACOs has plateaued; 
higher spending populations are increasingly underrepresented in the 
program since the change to regionally-adjusted benchmarks; and access 
to ACOs appears inequitable as shown by data indicating that Black (or 
African American), Hispanic, Asian/Pacific Islander, and American 
Indian/Alaska Native beneficiaries are less likely to be assigned to a 
Shared Savings Program ACO than their Non-Hispanic White counterparts.
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    \233\ Refer to CMS, Shared Savings Program Fast Facts--As of 
January 1, 2022, available at https://www.cms.gov/sites/default/files/2022-01/2022_Shared_Savings_Program_Fast_Facts.pdf.
    \234\ Refer to the ``Performance Year Financial and Quality 
Results'' Public Use Files available at https://data.cms.gov/medicare-shared-savings-program/performance-year-financial-and-quality-results.
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    Several of the proposals we included in the proposed rule were 
expected to advance equity within the Shared Savings Program. Based on 
feedback from health care providers treating underserved populations 
that they require upfront capital to make the necessary investments to 
succeed in accountable care and may also need additional time under a 
one-sided model before transitioning to performance-based risk, we 
proposed to provide advance shared savings payments to low revenue ACOs 
that are inexperienced with performance-based risk Medicare ACO 
initiatives, that are new to the Shared Savings Program (that is, not a 
renewing ACO or a re-entering ACO), and that serve underserved 
populations. As proposed, these advance investment payments (AIPs) 
would increase when more beneficiaries who are dually eligible for 
Medicare and Medicaid or who live in areas with high deprivation 
(measured by the area deprivation index (ADI)), or both, are assigned 
to the ACO. Subject to certain limitations, these funds would be 
available to address the social needs of people with Medicare, as well 
as health care provider staffing and infrastructure. We also proposed 
other modifications to certain existing policies under the Shared 
Savings Program to support organizations new to accountable care by 
providing greater flexibility in the progression to performance-based 
risk, allowing these organizations more time to redesign their care 
processes to be successful under risk arrangements. We also proposed a 
health equity adjustment that would upwardly adjust ACOs' quality 
performance scores to continue encouraging high ACO quality 
performance, transition ACOs to all-payer eCQMs/MIPS CQMs, and support 
those ACOs serving a high proportion of underserved beneficiaries while 
also encouraging all ACOs to treat underserved populations. Finally, we 
proposed certain changes to our benchmarking methodologies designed to 
encourage participation by health care providers who care for 
populations that include a high percentage of beneficiaries with high 
clinical risk factors and beneficiaries dually eligible for Medicare 
and Medicaid.
    Many of the proposals outlined in the proposed rule were the result 
of our efforts to align policies under the Shared Savings Program and 
under the Innovation Center's ACO models. For example, as proposed (87 
FR 46098 through 46110), the AIPs were derived from learnings from the 
ACO Investment Model (AIM), an Innovation Center model that tested the 
effects of making advanced payments to certain ACOs participating in 
the Shared Savings Program. We proposed to incorporate AIPs into the 
Shared Savings Program payment methodology as an example of how our 
larger ACO strategy of having the Innovation Center test new payment 
and service delivery models on the Shared Savings Program ``chassis'' 
can better harmonize policies across Medicare ACO initiatives and 
enable us to scale any findings.
    We explained in the CY 2023 PFS proposed rule that the Innovation 
Center had recently announced the elimination of the ACO Track of the 
Community Health and Rural Transformation (CHART) Model, which would 
have provided advance shared savings payments to new rural ACOs 
participating in the Shared Savings Program, similar to AIM. Therefore, 
we believed the proposal to incorporate AIPs into the Shared Savings 
Program would make the Shared Savings Program attractive to 
organizations that were previously considering participation in the ACO 
Track of the CHART Model. The CHART Model ACO Track specifically 
targeted ACOs whose providers and suppliers were located in rural 
areas. We also noted our belief that the methodology to determine 
payments based upon a beneficiary's risk factors-based score, as 
proposed, would allow for greater reach to ACOs operating in under-
resourced communities and encourage providers and suppliers in rural 
areas to form ACOs.
    As we explained in the CY 2023 PFS proposed rule, as we seek to 
increase the percentage of people with Medicare in accountable care 
arrangements, we are balancing incentives and participation options to 
serve a dual purpose of sustaining participation by existing ACOs and 
increasing program growth, recognizing that ACOs vary in their 
composition of providers/suppliers, the needs of the populations they 
serve, and have varying degrees of efficiency relative to their region 
and experience with accountable care initiatives. We proposed 
modifications that would build on the existing Shared Savings Program 
benchmarking methodology by strengthening financial incentives for long 
term participation by reducing the impact of ACOs' performance on their 
benchmarks, addressing the impact of ACO market penetration on regional 
expenditures used to adjust and update benchmarks, and supporting the 
business case for ACOs serving high risk and high dually eligible 
populations to participate, which we believed would help sustain 
participation and grow the program. Additionally, we proposed 
modifications to the benchmarking methodology to mitigate bias in 
regional expenditure calculations that benefits ACOs electing 
prospective assignment. We explained that the changes we had proposed 
to the benchmarking methodology used in the Shared Savings Program 
would align with our consideration of more long-term benchmarking 
concepts that would move toward the use of administratively set 
benchmarks in order to grow and sustain long term program participation 
as discussed in the Comment Solicitation that we included in the CY 
2023 PFS proposed rule. We also proposed to expand opportunities for 
certain low revenue ACOs participating in the BASIC track to share in 
savings even if they do not meet the minimum savings rate (MSR) to 
allow for investments in care redesign and quality

[[Page 69779]]

improvement activities among less capitalized ACOs.
    We proposed changes to the Shared Savings Program quality reporting 
and the quality performance requirements that were responsive to 
interested parties' feedback, and designed to support the transition of 
ACOs to all payer quality measure reporting. These proposals included 
reinstitution of a sliding scale reflecting an ACO's quality 
performance for use in determining shared savings for ACOs, regardless 
of how they report quality data, and revisions to the approach for 
determining shared losses for ENHANCED track ACOs. We proposed to 
implement a health equity adjustment to an ACO's quality performance 
score to recognize high quality performance by ACOs with high 
underserved populations. We also proposed to extend the incentive for 
reporting eCQMs/MIPS CQMs through PY 2024 to align with the sunsetting 
of the CMS Web Interface reporting option. In addition, we solicited 
comment from interested parties to inform future rulemaking through 
requests for information addressing social determinants of health in 
ACO populations, and the addition of new Consumer Assessment of 
Healthcare Providers and Systems (CAHPS) for the Merit-based Incentive 
Payment System (MIPS) survey questions. We also proposed to resolve a 
gap in our current policy for benchmarking quality measures reported 
through the CMS Web Interface.
    We proposed changes that we believed were important for improved 
operations of the Shared Savings Program, including policies to reduce 
ACO administrative burden. Specifically, we proposed to eliminate the 
requirement for an ACO to submit marketing materials to CMS for review 
and approval prior to disseminating materials to beneficiaries and ACO 
participants, and modifications to streamline the SNF 3-day rule waiver 
application review process. We also proposed modifications to the 
beneficiary notification requirements, including to reduce the 
frequency with which beneficiary information notices are provided to 
beneficiaries from annually to a minimum of once per agreement period, 
with a proposed follow-up beneficiary communication serving to promote 
beneficiary comprehension of the standardized written notice. Further, 
we proposed to revise the data sharing requirements to recognize ACOs 
structured as organized health care arrangements (OHCAs) for data 
sharing purposes.
b. Statutory and Regulatory Background on the Shared Savings Program
    On March 23, 2010, the Patient Protection and Affordable Care Act 
(Pub. L. 111-148) was enacted, followed by enactment of the Health Care 
and Education Reconciliation Act of 2010 (Pub. L. 111-152) on March 30, 
2010, which amended certain provisions of the Patient Protection and 
Affordable Care Act (hereinafter collectively referred to as ``the 
Affordable Care Act''). Section 3022 of the Affordable Care Act amended 
Title XVIII of the Act (42 U.S.C. 1395 et seq.) by adding section 1899 
of the Act to establish the Medicare Shared Savings Program (Shared 
Savings Program) to facilitate coordination and cooperation among 
healthcare providers to improve the quality of care for Medicare FFS 
beneficiaries and reduce the rate of growth in expenditures under 
Medicare Parts A and B. (See 42 U.S.C. 1395jjj.)
    Section 1899 of the Act has been amended through subsequent 
legislation. The requirements for assignment of Medicare FFS 
beneficiaries to ACOs participating under the program were amended by 
the 21st Century Cures Act (the CURES Act) (Pub. L. 114-255, December 
13, 2016). The Bipartisan Budget Act of 2018 (Pub. L. 115-123, February 
9, 2018), further amended section 1899 of the Act to provide for the 
following: expanded use of telehealth services by physicians or 
practitioners participating in an applicable ACO to furnish services to 
prospectively assigned beneficiaries; greater flexibility in the 
assignment of Medicare FFS beneficiaries to ACOs by allowing ACOs in 
tracks under retrospective beneficiary assignment a choice of 
prospective assignment for the agreement period; permitting Medicare 
FFS beneficiaries to voluntarily identify an ACO professional as their 
primary care provider and requiring that such beneficiaries be notified 
of the ability to make and change such identification, and mandating 
that any such voluntary identification will supersede claims-based 
assignment; and allowing ACOs under certain two-sided models to 
establish CMS-approved beneficiary incentive programs.
    The Shared Savings Program regulations are codified at 42 CFR part 
425. The final rule establishing the Shared Savings Program appeared in 
the November 2, 2011 Federal Register (Medicare Program; Medicare 
Shared Savings Program: Accountable Care Organizations; final rule (76 
FR 67802) (hereinafter referred to as the ``November 2011 final 
rule'')). A subsequent major update to the program rules appeared in 
the June 9, 2015 Federal Register (Medicare Program; Medicare Shared 
Savings Program: Accountable Care Organizations; final rule (80 FR 
32692) (hereinafter referred to as the ``June 2015 final rule'')). The 
final rule entitled, ``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,'' which addressed 
changes related to the program's financial benchmark methodology, 
appeared in the June 10, 2016 Federal Register (81 FR 37950) 
(hereinafter referred to as the ``June 2016 final rule''). A final 
rule, ``Medicare Program; Revisions to Payment Policies Under the 
Physician Fee Schedule and Other Revisions to Part B for CY 2019; 
Medicare Shared Savings Program Requirements; Quality Payment Program; 
Medicaid Promoting Interoperability Program; Quality Payment Program--
Extreme and Uncontrollable Circumstance Policy for the 2019 MIPS 
Payment Year; Provisions From the Medicare Shared Savings Program--
Accountable Care Organizations--Pathways to Success; and Expanding the 
Use of Telehealth Services for the Treatment of Opioid Use Disorder 
Under the Substance Use-Disorder Prevention That Promotes Opioid 
Recovery and Treatment (SUPPORT) for Patients and Communities Act'', 
appeared in the November 23, 2018 Federal Register (83 FR 59452) 
(hereinafter referred to as the ``November 2018 final rule'' or the 
``CY 2019 PFS final rule''). In the November 2018 final rule, we 
finalized a voluntary 6-month extension for existing ACOs whose 
participation agreements would otherwise expire on December 31, 2018; 
allowed beneficiaries greater flexibility in designating their primary 
care provider and in the use of that designation for purposes of 
assigning the beneficiary to an ACO if the clinician they align with is 
participating in an ACO; revised the definition of primary care 
services used in beneficiary assignment; provided relief for ACOs and 
their clinicians impacted by extreme and uncontrollable circumstances 
in PY 2018 and subsequent years; established a new Certified Electronic 
Health Record Technology (CEHRT) use threshold requirement; and reduced 
the Shared Savings Program quality measure set from 31 to 23 measures 
(83 FR 59940 through 59990 and 59707 through 59715).

[[Page 69780]]

    A final rule redesigning the Shared Savings Program appeared in the 
December 31, 2018 Federal Register (Medicare Program: Medicare Shared 
Savings Program; Accountable Care Organizations-Pathways to Success and 
Uncontrollable Circumstances Policies for Performance Year 2017; final 
rule) (83 FR 67816) (hereinafter referred to as the ``December 2018 
final rule''). In the December 2018 final rule, we finalized a number 
of policies for the Shared Savings Program, including a redesign of the 
participation options available under the program to encourage ACOs to 
transition to two-sided models; new tools to support coordination of 
care across settings and strengthen beneficiary engagement; and 
revisions to ensure rigorous benchmarking.
    In the interim final rule with comment period (IFC) entitled 
``Medicare and Medicaid Programs; Policy and Regulatory Revisions in 
Response to the COVID-19 Public Health Emergency'', which was effective 
on the March 31, 2020 date of display and appeared in the April 6, 2020 
Federal Register (85 FR 19230) (hereinafter referred to as the ``March 
31, 2020 COVID-19 IFC''), we removed the restriction which prevented 
the application of the Shared Savings Program extreme and 
uncontrollable circumstances policy for disasters that occur during the 
quality reporting period if the reporting period is extended, to offer 
relief under the Shared Savings Program to all ACOs that may be unable 
to completely and accurately report quality data for 2019 due to the 
PHE for COVID-19 (85 FR 19267 and 19268).
    In the IFC entitled ``Medicare and Medicaid Programs; Basic Health 
Program, and Exchanges; Additional Policy and Regulatory Revisions in 
Response to the COVID-19 Public Health Emergency and Delay of Certain 
Reporting Requirements for the Skilled Nursing Facility Quality 
Reporting Program'' which was effective on May 8, 2020, and appeared in 
the May 8, 2020 Federal Register (85 FR 27573 through 27587) 
(hereinafter referred to as the ``May 8, 2020 COVID-19 IFC''), we 
modified Shared Savings Program policies to: (1) allow ACOs whose 
agreement periods expired on December 31, 2020, the option to extend 
their existing agreement period by 1-year, and allow ACOs in the BASIC 
track's glide path the option to elect to maintain their current level 
of participation for PY 2021; (2) adjust program calculations to remove 
payment amounts for episodes of care for treatment of COVID-19; and (3) 
expand the definition of primary care services for purposes of 
determining beneficiary assignment to include telehealth codes for 
virtual check-ins, e-visits, and telephonic communication. We also 
clarified the applicability of the program's extreme and uncontrollable 
circumstances policy to mitigate shared losses for the period of the 
PHE for COVID-19 starting in January 2020.
    We have also made use of the annual CY PFS rules to address quality 
reporting for the Shared Savings Program and certain other issues. 
Refer to the CY 2020 PFS proposed rule and the CY 2022 PFS final rule 
for a summary of policies finalized in prior PFS rules (84 FR 40705 and 
86 FR 65253). In the CY 2022 PFS final rule (86 FR 65253 through 
65306), we finalized changes to Shared Savings Program policies, 
including to amend the reporting requirements under the APM Performance 
Pathway (APP) for PY 2022 and subsequent performance years, to freeze 
the quality performance standard at the 30th percentile MIPS Quality 
performance category score for PY 2023, to update the definition of 
primary care services used in beneficiary assignment at Sec.  
425.400(c), to revise the repayment mechanism arrangement policy, to 
streamline the application process, and to amend the beneficiary 
notification process.
    Policies applicable to Shared Savings Program ACOs for purposes of 
reporting for other programs have also continued to evolve based on 
changes in the statute. The Medicare Access and CHIP Reauthorization 
Act of 2015 (MACRA) (Pub. L. 114-10, April 16, 2015) established the 
Quality Payment Program. In the CY 2017 Quality Payment Program final 
rule with comment period (81 FR 77008), we established regulations for 
the Merit-Based Incentive Payment System (MIPS) and Advanced APMs and 
related policies applicable to eligible clinicians who participate in 
APMs, including the Shared Savings Program. We have also made updates 
to policies under the Quality Payment Program through the annual CY PFS 
rules.
c. Summary of Shared Savings Program Provisions
    In sections III.G.2. through III.G.6. of this final rule, we 
summarize and respond to public comments received on proposed 
modifications to the Shared Savings Program's policies discussed in 
section III.G. of the CY 2023 PFS proposed rule (87 FR 46093 through 
46218). Some commenters' suggestions for modifications to Shared 
Savings Program policies went beyond the scope of the proposals 
discussed in section III.G. of the CY 2023 PFS proposed rule, and will 
not be addressed in this section of this final rule. As a general 
summary, we are finalizing the following changes to Shared Savings 
Program policies to:
     Allow low revenue ACOs, inexperienced with performance-
based risk Medicare ACO initiatives, that are new to the Shared Savings 
Program (that is, not a renewing or re-entering ACO) to receive AIPs. 
ACOs wishing to receive AIPs must submit a supplemental application and 
proposed spend plan for CMS review. If approved to receive AIPs, the 
ACO will receive a one-time fixed payment of $250,000 and per 
beneficiary quarterly payments for the first 2 years of an ACO's 5-year 
agreement period. The quarterly payment amount is based on whether the 
beneficiary is enrolled in the Medicare Part D low-income subsidy (LIS) 
or is dually eligible for Medicare and Medicaid or the ADI national 
percentile rank of the census block group in which the beneficiary 
resides (section III.G.2.a. of this final rule). We are finalizing our 
proposal regarding quarterly payments with the modification that the 
risk factors-based score for a beneficiary will be set to 100 if the 
beneficiary is enrolled in the LIS or is dually eligible for Medicare 
and Medicaid or set to the ADI national percentile rank (an integer 
between 1 and 100) of the census block group in which the beneficiary 
resides if the beneficiary is not enrolled in the LIS or dually 
eligible. ACOs will receive higher payment amounts for assigned 
beneficiaries with higher risk factors-based scores.
     Allow ACOs applying to the program that are inexperienced 
with performance-based risk to participate in one 5-year agreement 
under a one-sided shared savings model, in order to provide these ACOs 
more time to invest in infrastructure and redesigned care processes for 
high quality and efficient health care service delivery before 
transitioning to performance-based risk (section III.G.2.b.(2) of this 
final rule). These ACOs may also be eligible for a subsequent agreement 
under the BASIC track glide path.
     Revise the limitation on the number of agreement periods 
an ACO can participate in BASIC track Level E (section III.G.2.b.(3) of 
this final rule).
     Revise the policies for determining beneficiary assignment 
(section III.G.3. of this final rule).
    ++ Update the definition of primary care services used in 
beneficiary assignment at Sec.  425.400(c).
    ++ Identify how CMS certification numbers will be used in 
beneficiary assignment.

[[Page 69781]]

     Revise the quality reporting and the quality performance 
requirements for PY 2023 and subsequent performance years (section 
III.G.4. of this final rule).
    ++ Establish an alternative quality performance standard for ACOs 
that do not meet the quality performance standard to share in savings 
at the maximum rate by reinstating a sliding scale approach for 
determining shared savings for ACOs, regardless of how they report 
quality data and revise the approach for determining shared losses for 
ENHANCED track ACOs.
    ++ Establish a health equity adjustment that will upwardly adjust 
an ACO's quality performance score, to reward ACOs that report all-
payer eCQMs/MIPS CQMs, that are high performing on quality, and serve a 
high proportion of underserved beneficiaries. This adjustment will add 
up to 10 bonus points to the ACO's MIPS Quality performance category 
score. We are finalizing the proposed methodology for calculating the 
underserved multiplier with a modification to use enrollment in the 
LIS, in addition to Medicare and Medicaid dually eligibility and ADI 
score. The resulting health equity adjusted quality performance score 
will be used to determine whether the ACO meets the quality performance 
standard set at the 30th percentile (for PY 2023) or 40th percentile 
(for PY 2024 and subsequent years) across all MIPS Quality performance 
category scores; the final sharing rate for calculating shared savings 
payments under the BASIC track and the ENHANCED track for an ACO that 
meets the alternative quality performance standard we are finalizing 
that allows for application of a sliding scale based on quality 
performance; and the shared loss rate for calculating shared losses 
under the ENHANCED track under the modified approach to the scaling of 
shared losses we are also finalizing in this final rule. The health 
equity adjusted quality performance score will also be used when 
applying the extreme and uncontrollable circumstances policy for ACOs 
that report quality data via the APP and meet data completeness and 
case minimum requirements.
    ++ Extend the incentive for reporting eCQMs/MIPS CQMs through PY 
2024 to align with the sunsetting of the CMS Web Interface reporting 
option.
    ++ Change the nomenclature of the administrative claims measure 
Risk Standardized, All-Cause Unplanned Admissions for Multiple Chronic 
Conditions for MIPS to Clinician and Clinician Group Risk-standardized 
Hospital Admission Rates for Patients with Multiple Chronic Conditions 
to align with the MIPS program.
    ++ Clarify use of unweighted MIPS Quality performance category 
scores to determine the quality performance standard under the Shared 
Savings Program.
    ++ Clarify our policies on reopenings to address changes to MIPS 
quality performance category scores.
    ++ Establish policies for benchmarking quality measures reported 
through the CMS Web Interface for PY 2022 through PY 2024.
     Revise the benchmarking methodology to reduce the effect 
of ACO performance on ACO historical benchmarks, increase opportunities 
for ACOs caring for medically complex, high cost beneficiaries, and 
strengthen incentives for ACOs to enter and remain in the Shared 
Savings Program, and meet the programmatic goals of improving quality 
of care and lowering growth in FFS expenditures:
    ++ Incorporate a prospectively projected administrative growth 
factor, a variant of the United States Per Capita Cost (USPCC) referred 
to in this final rule as the Accountable Care Prospective Trend (ACPT), 
into a three-way blend with national and regional growth rates to 
update an ACO's historical benchmark and address increasing market 
saturation by ACOs in a regional service area (section III.G.5.c.(3) of 
this final rule).
    ++ Adjust benchmarks to account for prior savings, helping to 
mitigate lowering of an ACO's benchmark over time by returning to an 
ACO's benchmark an amount that reflects its success in lowering growth 
in expenditures from the previous agreement period (section 
III.G.5.c.(4) of this final rule).
    ++ Reduce the impact of negative regional adjustments on ACO 
benchmarks by reducing the cap on negative regional adjustments and 
gradually decreasing the negative regional adjustment amount as an 
ACO's weighted-average prospective HCC risk score increases, or the 
proportion of dually eligible Medicare and Medicaid beneficiaries 
increases, or both (section III.G.5.c.(5) of this final rule).
     Change how we calculate regional factors used in 
benchmarking to increase internal consistency of benchmark calculations 
for ACOs under prospective beneficiary assignment by using an 
assignment window that is consistent with an ACO's selected assignment 
methodology to identify the assignable population used to calculate 
regional FFS expenditures (section III.G.5.d. of this final rule).
     Revise how we cap positive prospective HCC risk score 
growth to better account for medically complex, high cost populations 
while continuing to guard against coding initiatives (section 
III.G.5.e. of this final rule).
     Increase opportunities for low revenue ACOs participating 
in the BASIC track to share in savings by expanding the criteria ACOs 
can meet to qualify for shared savings payments as described in Sec.  
425.605 (section III.G.5.f. of this final rule).
     Discuss ongoing considerations regarding the impact of the 
PHE for COVID-19 on ACO expenditures (section III.G.5.g. of this final 
rule), although there are no associated revisions to the regulations at 
this time.
     Exclude the new supplemental payment under the Medicare 
Hospital Inpatient Prospective Payment System (IPPS) for Indian Health 
Service (IHS)/Tribal hospitals and hospitals located in Puerto Rico 
from the determination of Medicare Parts A and B expenditures for 
purposes of calculations under the Shared Savings Program and include 
this new supplemental payment in calculations of ACO participant 
revenue for the performance year beginning January 1, 2023, and 
subsequent performance years (section III.G.5.h. of this final rule).
     Remove the requirement to submit marketing materials prior 
to use (section III.G.6.b. of this final rule). ACOs will be required 
to submit marketing materials only upon request from CMS, but we are 
retaining the requirement that an ACO must discontinue use of any 
marketing materials or activities for which CMS has issued a notice of 
disapproval.
     Amend the beneficiary notification requirements to reduce 
the frequency with which beneficiary information notices are provided 
to beneficiaries from annually to a minimum of once per agreement 
period, with a follow up beneficiary communication serving to promote 
beneficiary comprehension of the standardized written notice and 
occurring no later than 180 days following the date that the 
standardized written notice was provided to the beneficiary (section 
III.G.6.c. of this final rule).
     Amend the beneficiary notification requirements to clarify 
that ACOs and ACO participants are required to post signs in all 
facilities and make standardized written notices available upon request 
in all settings in which beneficiaries receive primary care services 
(section III.G.6.c. of this final rule).
     Remove the requirement for an ACO to submit certain 
narratives when applying for the SNF 3-day rule waiver and replace with 
a requirement that an ACO submit an attestation that it has

[[Page 69782]]

established the narratives and will make them available to CMS upon 
request (section III.G.6.d. of this final rule).
     Amend the data sharing regulations to recognize ACOs 
structured as OHCAs for data sharing purposes (section III.G.6.e. of 
this final rule).
    We also solicited comments on the following:
     On two potential social determinants of health (SDOH) 
measures for future measure development, and the addition of new 
Consumer Assessment of Healthcare Providers and Systems (CAHPS) for the 
Merit-based Incentive Payment System (MIPS) survey questions, as 
discussed in section III.G.4. of this final rule.
     On an alternative approach to calculating ACO historical 
benchmarks that would use administratively-set benchmarks that are 
decoupled from ongoing observed FFS spending, as discussed in section 
III.G.7. of this final rule.
    In combination, the policies we are adopting for the Shared Savings 
Program in this final rule are anticipated to grow participation 
particularly from ACOs serving beneficiaries with greater needs and 
higher baseline spending. The incentive for ACOs to reduce spending 
over multiple agreement periods is also expected to be bolstered, for 
example by reducing the weighting on the regional component of the 
benchmark update and by providing a prior savings adjustment at 
rebasing. A further change will prevent an assignment bias from 
inflating benchmark adjustments for ACOs electing prospective 
assignment. In summary, as described in section VII of this final rule, 
we project a $15.5 billion decrease in spending on benefits (that is, 
savings from efficiency) and $650 million in higher net shared savings 
payments to ACOs, or $14.8 billion lower overall spending compared to 
the program baseline (which would have been projected to be a $4.2 
billion net cost absent these changes).
    Certain policies, including both existing policies and the new 
policies adopted in this final rule, as described in section III.G. of 
this final rule, rely upon the authority granted in section 1899(i)(3) 
of the Act to use other payment models that the Secretary determines 
will improve the quality and efficiency of items and services furnished 
under the Medicare program, and that do not result in program 
expenditures greater than those that would result under the statutory 
payment model. The following policies require the use of our authority 
under section 1899(i) of the Act: allowing for AIPs as described in 
section III.G.2. of this final rule: the modifications to the 
calculation of the shared loss rate under the ENHANCED track to allow 
for a sliding scale based on an alternative quality performance 
standard as described in section III.G.4. of this final rule; use of 
the ACPT/national-regional three-way blended benchmark update factor as 
described in section III.G.5.c.(3) of this final rule; the expansion of 
the criteria for certain low revenue ACOs participating in the BASIC 
track to qualify for shared savings in the event the ACO does not meet 
the MSR as required under section 1899(d)(1)(B)(i) of the Act as 
described in section III.G.5.f. of this final rule; and the exclusion 
of the new supplemental payment for IHS/Tribal hospitals and Puerto 
Rico hospitals from the determination of Medicare Parts A and B 
expenditures used in certain financial calculations under the Shared 
Savings Program as described in section III.G.5.h. of this final rule. 
As described in the Regulatory Impact Analysis in section VII. of this 
final rule, the changes we are finalizing to our payment methodology 
are expected to improve the quality and efficiency of care under the 
Medicare program and are not expected to result in a situation in which 
the payment methodology under the Shared Savings Program, including all 
policies adopted under the authority of section 1899(i) of the Act, 
results in more spending under the program than would have resulted 
under the statutory payment methodology in section 1899(d) of the Act. 
We will continue to reexamine this projection in the future to ensure 
that the requirement under section 1899(i)(3)(B) of the Act that an 
alternative payment model not result in additional program expenditures 
continues to be satisfied. In the event that we later determine that 
the payment model that includes policies established under section 
1899(i)(3) of the Act no longer meets the requirements of section 
1899(i)(3) of the Act, we would undertake additional notice and comment 
rulemaking to make adjustments to the payment model to assure continued 
compliance with the statutory requirements.
2. Shared Savings Program Participation Options
a. Increasing Participation in Accountable Care Models in Underserved 
Communities by Providing an Option for Advance Investment Payments to 
Certain ACOs
(1) Background
    In the November 2011 final rule (76 FR 67969), we estimated an 
average of $0.58 million for the start-up investment costs and $1.27 
million in ongoing annual operating costs for an ACO participating in 
the Shared Savings Program. This can be a substantial investment 
particularly for a small organization or an organization caring for 
underserved or more medically complex patients. The CMS Innovation 
Center has tested two models designed to support new ACOs in joining 
and succeeding in the Shared Savings Program. The Advance Payment (AP) 
ACO Model operated from 2012 to 2015, and the AIM operated from 2015 to 
2018. The models tested whether upfront payments would increase 
participation in the Shared Savings Program by ACOs serving rural or 
underserved regions. The models also tested whether such payments would 
improve quality or reduce Medicare spending without negatively 
affecting quality.\235\ Both models operated by pre-paying shared 
savings to ACOs participating in the Shared Savings Program and later 
recouping such amounts from earned shared savings.
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    \235\ Centers for Medicare & Medicaid Services, Advance Payment 
Accountable Care Organization (ACO) Model (updated January 10, 
2013), available at https://innovation.cms.gov/files/fact-sheet/advanced-payment-aco-model-fact-sheet.pdf; Centers for Medicare & 
Medicaid Services, Accountable Care Organization Investment Model 
(AIM) Request for Applications (October 14, 2014), available at 
https://innovation.cms.gov/files/x/aim-rfa.pdf.
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    The AP ACO model tested whether the pre-payment of shared savings 
would increase participation in the Shared Savings Program by smaller 
providers and suppliers in rural and underserved areas, and whether 
these payments would allow ACOs to improve care for beneficiaries, 
generate Medicare savings more quickly, and increase the amount of 
total Medicare savings.\236\ The eligibility standards for the AP ACO 
model required that an ACO enter the Shared Savings Program in April 
2012 or July 2012. The ACO also had to meet one of the following 
standards: (1) not include any inpatient facilities and have less than 
$50 million in total annual revenue; or (2) not include any inpatient 
facilities other than critical access hospitals (CAHs) and/or Medicare 
low-volume rural hospitals and have less than $80 million in total 
annual revenue.\237\ Prepaid

[[Page 69783]]

shared savings included an upfront payment of $250,000 and a one-time 
payment of $36 per beneficiary, followed by an $8 per beneficiary per 
month payment for 2 years. AP ACOs received between $1.3-$2.7M in total 
prepaid shared savings.\238\ CMS recovered pre-paid shared savings from 
an ACO's earned shared savings only if the ACO terminated before 3 
years, in which case the ACO was required to immediately repay its 
prepaid shared savings payments in full.\239\
---------------------------------------------------------------------------

    \236\ Centers for Medicare & Medicaid Services, Advance Payment 
Accountable Care Organization (ACO) Model (updated January 10, 
2013), available at https://innovation.cms.gov/files/fact-sheet/advanced-payment-aco-model-fact-sheet.pdf.
    \237\ Centers for Medicare & Medicaid Services, Advance Payment 
Accountable Care Organization (ACO) Model Application Process 
(updated January 5, 2012), available at https://innovation.cms.gov/files/slides/advance-payment-model-aco-odf-application-process-slides.pdf.
    \238\ L&M Policy Research, Evaluation of CMMI Accountable Care 
Organization Initiatives: Advance Payment ACO Final Report 39-41 
(November 25, 2016), available at https://innovation.cms.gov/files/reports/advpayaco-fnevalrpt.pdf.
    \239\ Ibid at 14.
---------------------------------------------------------------------------

    AIM tested whether the pre-payment of shared savings helped to 
recruit and accelerated favorable outcomes for new ACOs in the Shared 
Savings Program from rural, low-penetration and underserved 
geographies.\240\ There were two cohorts of AIM, referred to as Test 1 
and Test 2. The eligibility standards to join Test 1 of AIM required 
that an ACO be: (1) new to the Shared Savings Program; (2) not include 
a hospital unless it was a critical access hospital or a small 
Inpatient Prospective Payment System (IPPS) hospital; and (3) not owned 
or operated by a health plan.\241\ The prepaid shared savings amounts 
were distributed and recouped in the same amounts and manner as the AP 
ACO model for the majority of model participants.\242\ ACOs joining 
Test 2 of AIM were not new to the Shared Savings Program and were 
required to directly repay any unrecouped prepaid shared savings at the 
end of their second Shared Savings Program agreement period. 
Conclusions from Test 2 of AIM were unable to be drawn due to low 
participation.\243\ All further references to AIM refer to Test 1 of 
the model, unless otherwise specified.
---------------------------------------------------------------------------

    \240\ Centers for Medicare & Medicaid Services, Accountable Care 
Organization Investment Model (AIM) Request for Applications 
(October 14, 2014), available at https://innovation.cms.gov/files/x/aim-rfa.pdf.
    \241\ Ibid.
    \242\ Ibid.
    \243\ Abt Associates, Evaluation of the Accountable Care 
Organization Investment Model Final Report 20 (September 2020), 
available at https://innovation.cms.gov/data-and-reports/2020/aim-final-annrpt.
---------------------------------------------------------------------------

    The results of the Innovation Center's evaluation of the AP ACO 
Model were inconclusive regarding the impact on quality or cost of 
care. While most ACOs included in the test continued to participate in 
the Shared Savings Program after the AP ACO Model ended, the Model did 
not significantly improve the quality or cost of care when compared to 
care provided outside the Shared Savings Program.\244\ The results of 
the evaluation of AIM, however, found that the model was successful in 
meeting both its goals. AIM successfully encouraged ACOs to form in 
areas where ACOs may not have otherwise formed and where other Medicare 
payment and delivery innovations were less likely to be present.\245\ 
AIM also generated an estimated net aggregate reduction in spending by 
Medicare of $381.5 million after accounting for Medicare's payment of 
AIM funds and ACOs' earned shared savings.\246\ AIM did not reduce the 
quality of care provided to beneficiaries.\247\
---------------------------------------------------------------------------

    \244\ L&M Policy Research, Evaluation of CMMI Accountable Care 
Organization Initiatives: Advance Payment ACO Final Report 39-41 
(November 25, 2016), available at https://innovation.cms.gov/files/reports/advpayaco-fnevalrpt.pdf.
    \245\ Abt Associates, Evaluation of the Accountable Care 
Organization Investment Model Final Report 20 (September 2020), 
available at https://innovation.cms.gov/data-and-reports/2020/aim-final-annrpt.
    \246\ Ibid. at 39.
    \247\ Ibid. at 57-60.
---------------------------------------------------------------------------

    We have received continued interest in the AIM and AP ACO models 
and ongoing requests to implement policies with similar upfront and 
ongoing payments for ACOs newly participating in the Shared Savings 
Program. Interested parties believe these models were valuable for 
transitioning small and rural practices into ACOs and believe there is 
ongoing need for this type of support. We agree, and we also believe 
that the Shared Savings Program should provide an entry point for all 
willing organizations that wish to move towards providing value-driven 
healthcare.
    Section 1899(i) of the Act authorizes the Secretary to use other 
payment models instead of the one-sided model described in section 
1899(d) of the Act so long as the Secretary determines that the other 
payment model would improve the quality and efficiency of items and 
services furnished to Medicare beneficiaries without additional program 
expenditures. In accordance with the authority provided to the 
Secretary by section 1899(i) of the Act, we proposed to make advance 
shared savings payments, referred to herein as advance investment 
payments (AIPs), to certain ACOs participating in the Shared Savings 
Program to improve the quality and efficiency of items and services 
furnished to Medicare beneficiaries by enhancing the accessibility of 
the Shared Savings Program (87 FR 45860). Such payments would be made 
pursuant to the standards we proposed to establish in new Sec.  
425.630.
    As discussed in the CY 2023 PFS proposed rule (87 FR 45860 at 
46450), we envision that this new payment option would distribute AIPs 
to ACOs for 2 years in order to reduce the financial barriers 
encountered by small providers and suppliers as they join the Shared 
Savings Program. These payments would be recouped from any shared 
savings the ACO earned. Funding the ACOs for 2 years would align with 
the policy in AIM. The AIPs are designed to reduce upfront costs that 
prevent providers and suppliers from forming ACOs, caring for 
beneficiaries in underserved communities, and achieving long term 
success in the Shared Savings Program.
    Section 1899(i)(3)(A) of the Act requires CMS to determine that 
AIPs would improve the quality and efficiency of items furnished to 
Medicare in order to make such payments. We believe that AIPs meet this 
standard because such payments would be modeled on the AIM payments, 
which were shown to improve the quality and efficiency of care. The AIM 
evaluation report concluded that AIM successfully encouraged ACOs to 
form in geographic areas where ACOs may not otherwise have formed, the 
upfront funding provided by CMS assisted in the formation of the ACOs, 
and there was a reduction in Medicare spending and utilization without 
a reduction in the quality of care provided or patient and caregiver 
experiences.\248\ The AIM evaluation found that, across all AIM Test 1 
ACOs, the model reduced per beneficiary per month (PBPM) total Medicare 
spending by an estimated $28.21 in PY1, $36.94 in PY2, and $38.73 in 
PY3 compared to beneficiaries in the AIM ACOs' non-ACO FFS market 
comparison group.\249\ The estimates translated to an aggregate 
Medicare spending reduction of $131.0M in 2016, $187.7M in 2017, and 
$207.7 in 2018.\250\
---------------------------------------------------------------------------

    \248\ Abt Associates, Evaluation of the Accountable Care 
Organization Investment Model Final Report 2-3 (September 2020), 
available at https://innovation.cms.gov/data-and-reports/2020/aim-final-annrpt.
    \249\ Abt Associates, Evaluation of the Accountable Care 
Organization Investment Model Final Report 2 (September 2020), 
available at https://innovation.cms.gov/data-and-reports/2020/aim-final-annrpt.
    \250\ Ibid. at 41.
---------------------------------------------------------------------------

    Section 1899(i)(3)(B) of the Act requires CMS to determine that 
AIPs, when implemented in combination with existing modifications made 
to the Shared Savings Program payment model specified in section 
1899(d) of the Act, will not result in additional program expenditures. 
The addition of AIP meets this standard. Please review section

[[Page 69784]]

VI.E.7 of this final rule for a fuller discussion of the financial 
impact of the Shared Savings Program payment model, including the 
findings necessary to demonstrate compliance with section 1899(i)(3)(B) 
of the Act.
    We intend to periodically reassess whether a payment model 
established under section 1899(i)(3) of the Act, including the payment 
of advance investments, continues to improve the quality and efficiency 
of items and services furnished to Medicare beneficiaries without 
resulting in additional program expenditures. If we determine that the 
payment model no longer satisfies the requirements of section 
1899(i)(3) of the Act, for example if the payment model results in net 
program costs, we would undertake additional notice and comment 
rulemaking to adjust our payment methodology to assure continued 
compliance with the statutory requirements.
    We received hundreds of public comments on the proposal to 
implement AIP beginning in PY 2024. The following is a summary of the 
comments we received and our responses.
    Comment: The majority of commenters supported the implementation of 
AIPs for the Shared Savings Program. Many commenters agreed that AIPs 
will enable clinical practices to partner with community-based 
organizations to identify and meet the needs of underserved 
beneficiaries.
    MedPAC supported the AIP and the approach of basing payments on 
caring for underserved beneficiaries. MedPAC cautioned, however, that 
the impacts of the AIP may not be the same as those found in AIM or the 
Advance Payment Model given the different criteria for eligibility and 
how the funds should be spent. MedPAC urged CMS to continue to monitor 
and evaluate the impact of providing these funds on program spending 
and quality of care.
    Response: We agree with commenters that AIPs are a critical step in 
enabling clinical practices to partner with community-based 
organizations when identifying and providing care to underserved 
beneficiaries, which we note may include those who are impacted by SDOH 
factors that contribute to poor health outcomes. We appreciate MedPAC's 
support for this policy, and we will monitor and evaluate the impact of 
providing AIPs to ensure the program meets the requirements under 
section 1899(i)(3) of the Act.
    Comment: One commenter supported our proposal to implement AIPs, as 
the payments would encourage provider-led ACOs to successfully 
participate in the Shared Savings Program and level the playing field 
between physician-led and hospital-led ACOs. One commenter noted that 
many independent home care medicine (HCM) practices are interested in 
engaging in value-based care but often do not have the infrastructure 
or technology needed to be able to successfully participate and report 
important data.
    Response: We appreciate the commenter noting that this proposal 
encourages participation among physician-led ACOs and agree that AIPs 
will provide important start-up funding to establish ACO provider 
networks in underserved communities. We appreciate the commenter for 
reminding CMS of the importance of HCMs in improving outcomes for 
patients when they are discharged to the community.
(2) Eligibility
    In October of 2021, CMS outlined a renewed vision and strategy for 
how the Innovation Center will drive health system transformation to 
achieve equitable outcomes through high-quality, affordable, person-
centered care for all beneficiaries.\251\ We believe accountable care 
reduces fragmentation in patient care and lowers costs by giving 
providers and suppliers the incentives and tools to deliver high-
quality, coordinated, team-based care. In partnership with the 
Innovation Center and in support of our shared goal of increasing the 
number of beneficiaries in a care relationship with accountability for 
quality and total cost of care, we proposed broad eligibility 
requirements for AIPs that will lower the barrier of entry to the 
Shared Savings Program for low revenue ACOs that are inexperienced with 
risk.
---------------------------------------------------------------------------

    \251\ https://innovation.cms.gov/strategic-direction.
---------------------------------------------------------------------------

    As discussed above, the AIPs are designed to assist ACOs that face 
difficulty funding the start-up costs for forming ACOs, caring for 
beneficiaries in underserved communities, and achieving long term 
success in the Shared Savings Program. Building upon AIM's success with 
new ACOs and ACOs inexperienced with performance-based risk Medicare 
ACO initiatives, we proposed to limit the eligibility for AIPs to these 
same groups. Our experience administering the Shared Savings Program 
suggests that re-entering and renewing ACOs have alternative payment 
model (APM) experience and would not need, or benefit as significantly 
from, the start-up funds that AIPs provide because they have already 
invested in creating an ACO. Additionally, we do not have data from our 
experience with AIM to conclude that previously established ACOs need 
or benefit from upfront shared savings. The final evaluation report for 
AIM could not draw conclusions for AIM Test 2 ACOs, which involved only 
previously established ACOs, because of the small number of AIM Test 2 
ACOs and the variation in results between them. Six AIM Test 2 ACOs 
started AIM in April 2015 or January 2016. Two AIM Test 2 ACOs ceased 
participating in the Shared Savings Program at the end of 2015, leaving 
four AIM Test 2 ACOs evaluated in each of three performance years.\252\
---------------------------------------------------------------------------

    \252\ Centers for Medicare & Medicaid Services, ACO Investment 
Model (AIM) Final Evaluation Report (September 2020) available at 
https://innovation.cms.gov/data-and-reports/2020/aim-finalannrpt-perspective.
---------------------------------------------------------------------------

    In the CY 2023 PFS proposed rule (87 FR 45860), we proposed 
eligibility criteria modified from the AIM eligibility criteria. The 
eligibility standards to join Test 1 of AIM required that an ACO be: 
(1) new to the Shared Savings Program; (2) not include a hospital 
unless it was a critical access hospital or a small IPPS hospital; and 
(3) not owned or operated by a health plan.\253\ The model also 
prioritized ACOs in rural locations and those in locations with low ACO 
penetration through the use of scoring criteria.\254\ We believe 
certain eligibility modifications are necessary to scale advance 
payments from a model to a regular component of the Shared Savings 
Program and to align with the Innovation Center's stated vision for 
health care transformation. As AIM was only available to a limited 
number of ACOs, it relied on scoring criteria in addition to its 
eligibility standards to select the highest scoring applicants. The 
Shared Savings Program does not have a similar limitation; therefore, 
we proposed more inclusive eligibility criteria.
---------------------------------------------------------------------------

    \253\ Centers for Medicare & Medicaid Services, Accountable Care 
Organization Investment Model (AIM) Request for Applications 
(October 14, 2014), available at https://innovation.cms.gov/files/x/aim-rfa.pdf.
    \254\ Ibid.
---------------------------------------------------------------------------

    We are also broadening the eligibility criteria compared to AIM to 
reflect our belief that it is important to provide an incentive for 
providers and suppliers who serve high need beneficiaries in all areas 
to form ACOs. Similar to AIM, we intend for AIPs to encourage the 
formation of new ACOs in rural areas; however, unlike AIM we also want 
to recognize that there are underserved beneficiaries who reside in 
urban areas and who can also benefit from the high-quality coordinated 
care an ACO can provide. Additionally, underserved beneficiaries may 
receive care from

[[Page 69785]]

providers and suppliers within a geographic area with high alternative 
payment model penetration. Generally, such providers and suppliers and 
the beneficiaries they serve are not or have not been part of an ACO 
previously. Therefore, as explained in the CY 2023 PFS proposed rule, 
we do not believe we should limit AIP eligibility only to ACOs in rural 
communities or in areas with low ACO penetration.
    In the CY 2023 PFS proposed rule (87 FR 45860 at 46099), we 
proposed to establish the eligibility criteria for AIPs in Sec.  
425.630(b). Specifically, we proposed that CMS must determine that an 
ACO meets all of the following criteria for the ACO to be eligible to 
begin receiving AIPs:
     The ACO is not a renewing ACO or re-entering ACO (as such 
terms are defined under Sec.  425.20).
     The ACO has applied to participate in the Shared Savings 
Program under any level of the BASIC track glide path and is eligible 
to participate in the Shared Savings Program.
     The ACO is inexperienced with performance-based risk 
Medicare ACO initiatives.
     The ACO is a low revenue ACO.
    AIM required applicants to demonstrate an exceptional need for 
prepaid shared savings. In the Shared Savings Program, the definition 
of low revenue is a similar criterion for determining ACO funding 
needs. Under Sec.  425.20, a low revenue ACO means an ACO whose total 
Medicare Parts A and B FFS revenue of its ACO participants based on 
revenue for the most recent calendar year for which 12 months of data 
are available, is less than 35 percent of the total Medicare Parts A 
and B FFS expenditures for the ACO's assigned beneficiaries based on 
expenditures for the most recent calendar year for which 12 months of 
data are available. Low revenue ACOs tend to be small, physician-led 
ACOs that are less well capitalized organizations. These ACOs may be 
encouraged to participate and remain in the program based on the 
availability of additional incentives, such as the opportunity to 
receive AIPs.
    We proposed conforming changes to Sec.  425.611(c)(4) to limit 
eligibility to low revenue ACOs (87 FR 45860 at 46100). In accordance 
with Sec.  425.611(c)(4), we adjust Shared Savings Program calculations 
to exclude all Parts A and B FFS payment amounts for a beneficiary's 
episodes of care for treatment of COVID-19 from expenditure and revenue 
calculations for purposes of identifying whether an ACO is a high 
revenue ACO or low revenue ACO and determining an ACO's eligibility for 
participation options. We proposed to revise Sec.  425.611(c)(4) to 
exclude all Parts A and B FFS payment amounts for a beneficiary's 
episodes of care for treatment of COVID-19 from expenditure and revenue 
calculations for purposes of determining an ACO's eligibility to 
receive AIPs.
    We proposed to limit eligibility to ACOs applying to participate 
under any level of the BASIC track glide path because this 
participation option is indicative of an ACO's inexperience with 
performance-based risk (87 FR 45860 at 46100). ACOs in the BASIC track 
are typically less experienced with risk and are more likely to benefit 
from upfront funding or ongoing financial assistance.
    In summary, we proposed to create a new paragraph in Sec.  
425.100(d) to establish that an ACO may receive AIPs. We also proposed 
in Sec.  425.630(b) to specify the eligibility criteria for an ACO to 
begin receiving receive AIPs, and we proposed conforming changes to 
Sec.  425.630(c)(4). We sought comments on these proposals.
    The following is a summary of the public comments received on the 
proposed eligibility criteria for an ACO to receive AIPs and our 
responses:
    Comment: Many commenters supported additional opportunities for 
ACOs to participate in AIPs, and contended that expanding eligibility 
to existing ACOs would benefit underserved beneficiaries and work to 
combat health inequities. They stated that AIPs would benefit ACO 
beneficiaries in underserved communities who lack adequate healthcare 
access as the revenue status of an ACO does not reflect these costs. 
Several commenters noted that AIP funds should be available to all ACOs 
to address SDOH and improve health outcomes by providing preventative 
and social services.
    Two commenters encouraged CMS to consider the expansion of AIP 
eligibility to those ACOs that can demonstrate need among patient 
populations. One commenter suggested CMS could require high revenue 
ACOs to provide a plan to CMS on how they would use the payments to 
address SDOH among underserved populations. Examples of appropriate 
investments could be the launch of a food as medicine program, further 
investments on affordable housing, and adopting or expanding the use of 
community health workers.
    Response: We agree with commenters that AIPs will improve ACO 
participation and assist in providing coordinated care to underserved 
populations. However, expanding AIP eligibility to all ACOs or even all 
ACOs that can demonstrate need among their patient populations is not 
consistent with the purpose of AIP and we do not believe it would be an 
appropriate use of the Trust Funds. AIP is not intended to provide 
indefinite support to ACOs or to ACOs of all sizes, but to help provide 
start-up funding needed prior to earning shared savings for those ACOs 
that face difficulty finding such funding. Historically, the Shared 
Savings Program has shown that re-entering and renewing ACOs have 
already benefited from APM experience, and therefore, would be less 
likely to need financial support to become operational or develop 
programs targeting SDOH. We expect that existing ACOs already 
participating and earning shared savings have access to more resources 
to serve their aligned beneficiaries. Additionally, we believe that 
many existing ACOs already have developed health IT infrastructures in 
place to support and coordinate quality care.
    Comment: Many commenters advocated that CMS should expand AIP 
eligibility criteria to include all ACOs regardless of an ACO's high or 
low revenue status. These commenters requested that CMS remove the low 
revenue AIP eligibility criterion. The commenters contended that the 
exclusion of high revenue ACOs from the eligibility criteria would 
preclude from participation in AIP many ACOs with key safety-net 
providers such as teaching hospitals, federally qualified health 
centers (FQHCs), rural health clinics (RHCs), and CAHs. One commenter 
noted that the distinction between high and low revenue ACOs creates a 
two-tier system for ACOs, leading to an unlevel playing field between 
physician-led and hospital-led ACOs that could reduce participation of 
hospital-led ACOs. One commenter reminded CMS that most high revenue 
ACOs include a hospital in their composition and would not be eligible 
to receive AIPs. A few commenters noted in the alternative that CMS 
should broaden the eligibility criteria to allow ACOs with safety net 
providers on their participation lists to receive AIPs, even if they 
did not otherwise meet all of the proposed eligibility criteria. 
Another commenter contended that the low revenue eligibility 
requirement would prevent some ACOs with underserved patient 
populations from receiving AIPs. Several commenters supported the low 
revenue eligibility requirement as it captures smaller ACOs with 
diverse beneficiary populations, which specifically targets safety net 
providers, those serving underserved communities, and less financially

[[Page 69786]]

resourced organizations. Several commenters supported CMS' decision not 
to limit AIPs to rural areas or areas with low ACO penetration because 
an urban area could also include ACOs with underserved populations and 
meet the AIP eligibility criteria.
    Response: We agree that safety-net providers and high revenue ACOs 
serve vulnerable communities, but we disagree with commenters that CMS 
should remove the low revenue eligibility criterion. The AIP 
eligibility requirements are intended to incentivize greater 
participation for ACOs that: (1) are inexperienced with performance-
based risk Medicare ACO initiatives; and (2) have limited capital and 
insufficient resources to fund start-up costs. The intent of the AIP 
payment is to advance shared savings in order to provide start-up 
funding for ACOs that are less well capitalized than a high revenue 
ACO. We disagree that the eligibility criteria penalizes high revenue 
ACOs, as we believe that high revenue ACOs should not need advance 
funding from CMS to increase staffing, improve health care 
infrastructure, and provide accountable care for underserved 
beneficiaries. We expect that AIPs will enable the formation of more 
ACOs with underserved beneficiaries who receive care from providers and 
suppliers that have not been ACO participants previously.
    While we agree with commenters that safety-net facilities, such as 
FQHCs, RHCs, and CAHs provide important primary care services to rural 
and underserved communities, we disagree that the AIP eligibility 
criteria should include an exception for high revenue ACOs that include 
safety-net providers as ACO participants. We believe this would result 
in many ACOs receiving AIPs that do not need access to start-up 
capital. The vast majority of FQHCs and RHCs participating in Shared 
Savings Program ACOs without a hospital are in low revenue ACOs, so CMS 
does not believe this requirement will preclude participation of FQHCs 
or RHCs. CMS plans to monitor the impact of AIP on ACO formation and 
program participation, including the impact on CAHs.
    Comment: One commenter cautioned CMS that the proposed eligibility 
criteria for low revenue ACOs may be too limited as high revenue 
facilities may also serve specific populations that have been 
historically underrepresented in value-based programs. The commenter 
encouraged CMS to reevaluate if the definition of low revenue ACO best 
captures the ACOs that lack upfront capital and sufficiently excludes 
providers that have the capital to join without AIPs.
    Response: We believe the AIP eligibility criteria will sufficiently 
limit access to AIP to those ACOs that are most likely to need start-up 
funding, including those serving underrepresented populations. CMS will 
conduct monitoring and evaluation activities to determine the impact of 
the AIP eligibility criteria on ACO participation and to ensure that 
the program meets the requirements under section 1899(i)(3) of the Act. 
Limiting the eligibility criteria to low revenue ACOs will encourage 
the formation of new ACOs that would not otherwise join the Shared 
Savings Program due to the lack of start-up funds. AIPs address 
barriers to entry by providing advance payments of shared savings.
    Comment: Several commenters encouraged CMS to consider expanding 
the types of ACOs that would be eligible to receive AIPs. Specifically, 
these commenters advocated that CMS permit ACOs entering the ENHANCED 
track to be eligible to participate in AIP. The commenters indicated 
that such a policy would encourage ACOs that have accepted downside 
risk to implement strategies that would effectively create savings for 
the program. Other commenters noted that even ACOs that are experienced 
with performance-based risk may lack resources and infrastructure to 
meaningfully address SDOH and overcome health care inequities for 
underserved beneficiaries.
    Response: We disagree that ACOs participating in the ENHANCED track 
should be eligible to apply for AIPs. Given the level of risk involved 
in the ENHANCED track, ACOs in that track are generally well 
established and confident in their ability to coordinate care for their 
beneficiary population. Moreover, with effective management and 
planning, such ACOs should not need additional advance funding from CMS 
to increase staffing, improve health care infrastructure, and provide 
accountable care for underserved beneficiaries. We note that, depending 
on the circumstances, not all AIPs will be recouped from an ACO. 
Accordingly, we prefer to finalize more limited eligibility criteria at 
this time because such a policy is more fiscally prudent.
    For the reasons discussed above, we are finalizing our proposed 
eligibility criteria without change. AIP eligibility is limited to new, 
low revenue ACOs that are inexperienced with performance-based risk and 
have applied to participate in the Shared Savings Program under any 
level of the BASIC track's glide path. Specifically, we are finalizing 
as proposed Sec.  425.630(b) to describe the eligibility criteria for 
an ACO to receive AIPs. Beginning January 1, 2024, an ACO is eligible 
to receive AIPs if CMS determines that all of the following criteria 
are met: (1) the ACO is not a renewing or a re-entering ACO; (2) the 
ACO has applied to participate in the Shared Savings Program under any 
level of the BASIC track's glide path and is eligible to participate in 
the Shared Savings Program; (3) the ACO is inexperienced with 
performance-based risk Medicare ACO initiatives; and (4) the ACO is a 
low revenue ACO.
(3) Application Procedure & Contents
    We proposed to address the process for an ACO to apply for AIPs in 
Sec.  425.630(c). Specifically, we proposed that, to obtain a 
determination regarding whether an ACO may receive AIPs, the ACO must 
submit, as part of its application to participate in the Shared Savings 
Program, complete supplemental application information in the form and 
manner and by a deadline specified by CMS. The application cycle for 
AIPs would be conducted as part of and in conjunction with the Shared 
Savings Program application process under Sec.  425.202 with 
instructions and timeline published through the Shared Savings Program 
website. We proposed that the initial application cycle to apply for 
AIPs would be for a January 1, 2024, start date. As noted in section 
III.G.2.a.(2) of the CY 2023 PFS proposed rule, ACOs currently 
participating in the Shared Savings Program or applying to renew their 
participation agreement would not be eligible to apply. We noted in the 
CY 2023 PFS proposed rule that we intended to provide further 
information regarding the process, including the application and 
specific requirements such as the deadline for submitting applications, 
through subregulatory guidance and would also provide a feedback 
process to afford an opportunity for the applicant to clarify or revise 
its application.
    We proposed in Sec.  425.630(d)(1) that an ACO must submit 
sufficient information for CMS to determine whether the ACO is eligible 
to receive such payments. We also noted that CMS would provide 
preliminary information to the applicant ACO about its eligibility to 
receive AIPs during the Phase 1 application cycle requests for 
information, and a final determination about its eligibility to receive 
AIPs at the time of final application dispositions. For example, we 
would provide preliminary information identifying whether an ACO is low 
revenue and

[[Page 69787]]

inexperienced with performance-based risk through the ACO's application 
to participate in the Shared Savings Program.
    We further proposed at Sec.  425.630(d)(1) that an ACO would be 
required to submit a spend plan as part of its application for AIPs. At 
Sec.  425.630(d)(2), we proposed content requirements for spend plans. 
We proposed that the plan must identify how the ACO will spend the AIPs 
during the agreement period to build care coordination capabilities 
(including coordination with community-based organizations, as 
appropriate), address specific health disparities, and meet other 
criteria under Sec.  425.630. In addition, we proposed that the spend 
plan must identify the categories of goods and services that will be 
purchased, the dollar amounts to be spent on the various categories, 
and such other information as may be specified by CMS. As more fully 
explained in section III.G.2.a.(4) of the CY 2023 PFS proposed rule, we 
proposed at Sec.  425.630(e)(4) to require ACOs to segregate AIPs from 
all other revenues by establishing and maintaining a separate account 
into which the ACO must immediately deposit all AIPs. Accordingly, we 
also proposed at Sec.  425.630(d)(2)(iii) that the spend plan must 
include a statement that the ACO has established a separate designated 
account for the deposit and expenditure of all AIPs in accordance with 
Sec.  425.630(e)(4).
    As explained in the CY 2023 PFS proposed rule (87 FR 45860), we did 
not intend for the spend plan requirement, as proposed, to create a 
benchmark requirement against which we would hold the ACO accountable. 
Instead, we intended it to aid CMS in tracking ACO progress toward 
implementing their spend plan and any challenges or changes in strategy 
that occur following their receipt of AIPs. We noted that we believe 
that ACOs have the flexibility to better understand their needs over 
time and evolve their spending accordingly.
    In the CY 2023 PFS proposed rule, we also explained that while we 
do not intend an ACO's spend plan to limit the ACO to specific uses of 
AIPs within the broad categories of acceptable uses, we would reserve 
the right to terminate an ACO's ability to receive AIPs if it is not in 
compliance with requirements of the Shared Savings Program (see our 
proposal described in section III.G.2.a.(7).(b) of the CY 2023 PFS 
proposed rule). In addition, by certifying its application under Sec.  
425.202(a)(2), the ACO certifies that the information contained in the 
application, including the information necessary to determine 
eligibility for AIPs, is accurate, complete, and truthful.
    We proposed at Sec.  425.630(d)(3) that we would review the 
information submitted in the ACO's application to determine whether an 
ACO meets the eligibility criteria and other requirements for AIP and 
would approve or deny the application for AIPs accordingly. We noted 
that we would review the ACO's Shared Savings Program application 
simultaneously with the supplemental information in its AIP 
application. We also noted that the denial of an AIP application would 
be subject to reconsideration review in accordance with the standards 
specified in subpart I of part 425.
    In addition, we proposed at Sec.  425.630(d)(3) that CMS may review 
the spend plan at any time and require the ACO to make changes to its 
spend plan comply with Sec.  425.630(e)(1) as a result of that review. 
Examples of permitted uses are described in section III.G.2.a.(4) of 
the CY 2023 PFS proposed rule. As proposed, if the ACO fails to provide 
a spend plan that complies with Sec.  425.630(e), CMS could terminate 
the ACO's AIPs pursuant to Sec.  425.630(h)(1)(i) and take other 
remedial action under Sec.  425.216 or Sec.  425.218.
    We also proposed to update our public reporting requirements under 
Sec.  425.308 by adding new paragraph (b)(8) to require an ACO to 
publicly report its spend plan. We proposed to require that the ACO 
post on its dedicated public reporting web page: (1) the total amount 
of AIPs received from CMS for each performance year; (2) the ACO's 
spend plan; and (3) an itemization of how the AIPs were actually spent 
during the year, including expenditure categories, the dollar amounts 
spent on the various categories, any changes to the spend plan as 
submitted under Sec.  425.630(d)(1), and such other information as may 
be specified by CMS. The public reporting template that CMS provides to 
ACOs annually would be updated to reflect the new information 
categories that an ACO must report.
    We proposed to add Sec.  425.630(c) and (d) to establish standards 
for the contents of an application to be determined eligible for AIPs, 
as well as the procedures for filing such an application. We solicited 
comments on these proposals.
    The following is a summary of the public comments received on the 
proposed application procedure and content requirements and our 
responses:
    Comment: Several commenters requested that CMS provide guidance 
(that is, FAQs, sample application, templates) for spend plans in 
preparation for application cycles. One commenter suggested that CMS 
offer technical assistance on spend plan development, inform providers 
of this opportunity, and support them through the application process 
for the program.
    Response: Prior to the start of the application process, we intend 
to provide further guidance regarding the PY 2024 application process, 
including the content of the application and specific requirements such 
as the deadline for submitting applications and the contents of spend 
plans. We would also provide a feedback process to afford an 
opportunity for the applicant to clarify or revise its application.
    Comment: Several commenters recognized that AIP would take time to 
implement, but thought that AIP funding should be available to new ACOs 
that began participating in the Shared Savings Program before January 
1, 2024. One commenter advocated that new ACOs that begin participating 
in the Shared Savings Program in 2023 (``2023 Starters'') should be 
allowed to apply for AIPs in 2024. Another commenter suggested that CMS 
provide an opportunity for 2023 Starters to submit supplemental 
application materials for AIPs during the first AIP application cycle 
and, if approved, to receive AIPs for the second and third years of 
their agreement periods (PY 2024 and PY 2025). According to commenters, 
implementing such a transitional policy would ensure that 2023 Starters 
would not delay participation in the Shared Savings Program until 2024 
when the AIPs become available.
    Multiple commenters recommended that CMS establish a process for 
inexperienced ACOs that joined prior to 2024 to apply for AIP, 
including those that began participating before 2023. These commenters 
suggested that if certain existing ACOs are permitted to apply for AIP, 
CMS could shorten the period during which funds must be used and repaid 
to align with the ACO's remaining agreement period, extend the period 
for using and repaying funds into a second agreement period, or allow 
an ACO to end its current agreement period early and enter a new 5-year 
agreement that aligns with the planned AIP timeline.
    Response: We are aware of the timing concerns expressed by 
stakeholders and strive to give ACOs ample time to make decisions that 
are in the best interest of their patients, providers and organization. 
The application cycle for AIPs will be conducted annually as part

[[Page 69788]]

of and in conjunction with the Shared Savings Program application 
process under Sec.  425.202 with instructions and timeline published 
through the Shared Savings Program website. While CMS believes that 
many ACOs currently participating in the Shared Savings Program will 
have begun to earn shared savings by the time AIP begins in 2024, and 
therefore, are less likely to need upfront funding, CMS understands the 
commenters' concerns regarding relatively new, inexperienced ACOs that 
will not have access to AIPs under this final rule. We may address this 
concern in future rulemaking.
    For the reasons discussed above, we are finalizing our proposed 
policies without change. AIP supplemental application information would 
be processed for the first time in CY 2023 for a January 1, 2024 start 
date, and annually thereafter. The AIP supplemental application 
information would be submitted as part of the Shared Savings Program 
application, and we intend to issue subregulatory guidance to support 
new applicants in completing the supplemental application information, 
including spend plan development. Specifically, we are adopting as 
proposed Sec.  425.630(c) and (d). Section 425.630(c) requires an ACO 
to submit to CMS complete supplemental information as part of its 
application to participate in the Shared Savings Program; such 
information must be submitted in the form and manner and by the 
deadline specified by CMS. Under Sec.  425.630(d)(1), the supplemental 
application information must be sufficient for CMS to determine whether 
the ACO is eligible to receive AIPs, and the ACO must submit a spend 
plan as part of the supplemental application information. Under Sec.  
425.630(d)(2), the spend plan must: (1) describe how the ACO will spend 
its AIPs during the agreement period to build care coordination 
capabilities, address specific health disparities, and meet other 
criteria specified in Sec.  425.630; (2) identify the categories of 
goods and services that will be purchased with AIPs, including the 
dollar amounts to be spent on the various categories and such other 
information a may be specified by CMS; and (3) state that the ACO has 
established a separate designated account for the deposit and 
expenditure of AIPs. Under Sec.  425.630(d)(3), CMS would review the 
supplemental application information to determine whether an ACO meets 
the eligibility criteria and other requirements for advance investment 
payments and will approve or deny the advance investment payment 
application accordingly. CMS may review an ACO's spend plan at any time 
and may require the ACO to modify its spend plan to comply with the 
requirements of Sec.  425.630.
(4) Use and Management of Payments
    Under section Sec.  425.308(b)(4), ACOs are required to publicly 
report the total proportion of shared savings invested in 
infrastructure, redesigned care processes, and other resources required 
to support the goals of better health for populations, better care for 
individuals, and lower growth in expenditures, including the proportion 
of shared savings distributed among ACO participants. Although ACOs are 
required to report this information, our regulations do not require an 
ACO to spend its shared savings in any particular way. However, given 
the purpose of AIPs, the fact that they are made before any shared 
savings are actually earned by an ACO, and our proposed limitations on 
the recovery of these funds in the absence of any earned shared 
savings, we proposed at Sec.  425.630(e) to specify how an ACO may use 
AIPs.
    Similar to our experience with AIM, AIPs are intended to provide 
the means to build the ACO's population health management capabilities, 
including the provision of accountable care for underserved 
beneficiaries. AIPs are not intended to sit idle in an investment 
account or to serve purposes unrelated to the goals of AIPs. We 
proposed at Sec.  425.630(e) that AIPs must be used to improve the 
quality and efficiency of items and services furnished to beneficiaries 
by investing in increased staffing, health care infrastructure, and the 
provision of accountable care for underserved beneficiaries, which may 
include addressing social determinants of health. However, as noted in 
the CY 2023 PFS proposed rule, we emphasized that AIP amounts are 
advance shared savings, and not payment or reimbursement for items or 
services under the three specified categories. We proposed that 
expenditures of AIPs must comply with the beneficiary incentive 
provision at Sec.  425.304 and all other applicable laws and 
regulations. The proposal was intended to provide ACOs with flexibility 
to use payments within three specified categories of allowable uses. We 
solicited comment on whether there are additional categories of 
expenses that should be permitted in light of the purposes of AIPs. We 
noted in the CY 2023 PFS proposed rule that we will monitor how ACOs 
are spending these funds and would revisit these categories in future 
rulemaking if additional flexibilities or boundaries are required.
    As discussed in the CY 2023 PFS proposed rule, we recognize that 
there are many ways to improve population health management and support 
the provision of accountable care for underserved beneficiaries. The 
most effective ways will vary by ACO. We believe ACOs know best the 
needs of their populations and how to use funds to meet program goals. 
We offered the following examples of permitted uses within the three 
categories:
    Increased staffing. Hiring nurse case managers or other relevant 
support staff to implement screening for social determinants of health; 
hiring community health workers, certified peer recovery specialists, 
other health care professionals with training in delivering culturally 
and linguistically tailored services; hiring a health equity officer; 
hiring behavioral health clinicians and case managers to integrate 
behavioral health treatment into the primary care setting; hiring oral 
health providers to integrate dental services into the primary care 
setting; or encouraging partnerships with healthcare systems and local, 
community-based organizations (such as Area Agencies on Aging, Aging 
and Disability Resource Centers, and Centers for Independent Living) to 
increase organizational capacity to identify and address SDOH and 
connect individuals with culturally and linguistically tailored, 
accessible health care services, supports, and information at an 
appropriate literacy level.
    SDOH strategies. Examples include developing or securing 
transportation services; housing-related services to address housing 
insecurity or homelessness, home or environmental modifications to 
support a healthy lifestyle, legal aid services to help patients' 
address social needs, employment-related services, food-related 
services, utilities-related supports, services to support personal 
safety, services to reduce social isolation, services to help patients 
cope with or address financial strain or poverty, patient caregiver 
supports, providing remote access technologies, telemonitoring, and 
meals; ensuring individuals are able to access culturally and 
linguistically tailored, accessible health care services and supports 
that meet their needs, partnering with community-based organizations to 
address SDOH needs; or implementing systems to provide and track 
patient referrals to available community-based social services that 
assess and address social needs, as well as enable coordination and 
measurement of health

[[Page 69789]]

and social care across the community where beneficiaries reside.
    Health Care Provider Infrastructure. Examples include investment in 
certified electronic health record technology (CEHRT) (including system 
enhancements and upgrades), connections to clinical data registries and 
networks that support health information exchange across disparate 
providers and systems involved in patient care, integration of ACO 
participant systems including tools to share and analyze operational 
and quality data, remote access technologies, telemonitoring, screening 
tools, case management or practice management systems to improve care 
coordination operations across the health and social care continuum, 
physical accessibility improvements, and tools to further integrate 
behavioral health or dental services into primary care settings.
    In the proposed rule, we elaborated on the permitted and prohibited 
uses of AIP funds. Similar to AIM, we explained that we intended for 
advance investment payments to encourage the formation of new ACOs that 
provide care to underserved beneficiaries, not simply to fund another 
business venture of an established company or to furnish items or 
services unrelated to the ACO or the beneficiaries it serves. At Sec.  
425.630(e)(2), we proposed that AIPs may not be used for any expense 
other than allowable uses under proposed Sec.  425.630(e)(1). We 
provided examples of prohibited uses of AIPs, including management 
company or parent company profit, performance bonuses, other provider 
salary augmentation, provision of medical services covered by Medicare, 
or items or activities unrelated to ACO operations that improve the 
quality and efficiency of items and services furnished to 
beneficiaries. We stated that performance bonuses could be tied to the 
successful implementation of SDOH screenings or care management 
guidelines, or ACOs could pay a higher salary as necessary to retain a 
clinician who treats underserved beneficiaries. We solicited comments 
on these examples of prohibited uses and whether there are additional 
categories of expenses that should be prohibited in light of the 
purpose of AIPs. We noted that we would monitor how ACOs are spending 
AIPs and would revisit allowable uses in future rulemaking if 
additional flexibilities or boundaries are required.
    Additionally, we proposed at Sec.  425.630(e)(2) that an ACO 
participating in Level E of the BASIC track may not use any advance 
investment payments to pay back any shared losses that it would have 
incurred as specified in a written notice from CMS under Sec.  
425.605(e)(2). Because Level E is an Advanced APM that must, under 
Sec.  414.1415(c), involve the acceptance of more than a nominal amount 
of risk, prohibiting use of AIPs to repay shared losses ensures that an 
ACO eligible to receive AIPs that is willing to take on such risk 
remains fully accountable for any shared losses it incurs. To ensure 
compliance with the standards for use of AIPs, we proposed updating the 
annual certification requirements under Sec.  425.302(a)(3) to require 
that the ACO certify that the payments were disbursed only for 
allowable uses.
    We also proposed at Sec.  425.630(e)(4) to require ACOs to 
segregate AIPs from all other revenues by establishing and maintaining 
a separate account into which the ACO must immediately deposit all 
AIPs, and from which all disbursements of such funds are made only for 
allowable uses. This would allow us to monitor whether the funds are 
used only for allowable uses and to ensure that AIPs do not pay for any 
prohibited uses under Sec.  425.630(e)(2). We noted that CMS would 
deposit AIPs into the same account used for the deposit of shared 
savings payments; that account must be specified in an ACO's Electronic 
Funds Transfer form submitted with its application. We proposed that, 
upon receipt of AIPs, the ACO must immediately deposit the funds into 
the separate account designated for maintaining AIPs.
    We also proposed that the ACO's spend plan must also include a 
statement that the ACO has established a separate account for the 
purpose of segregating AIPs. Additionally, we proposed to update our 
annual certification requirements under Sec.  425.302 by adding new 
paragraph (a)(3)(iv) to require an ACO to certify at the end of each 
performance year that it has moved all AIPs received during that 
performance year into a designated AIP account, where the funds 
remained until spent as required under Sec.  425.630(d).
    The following is a summary of the public comments received on the 
proposed provisions regarding the use and management of AIPs and our 
responses:
    Comment: A few commenters considered staffing needs as an 
appropriate use of AIP funds. One commenter suggested CMS consider 
modifying the regulatory language for AIP allowable uses (at Sec.  
425.630(e)(1)) to permit not only increased staffing, but also 
investing in training and education for existing staff. A few 
commenters explained that in healthcare workforce shortage areas, 
eligible ACOs may face challenges in recruiting additional staff and 
noted that in these cases, it may be possible for existing staff to be 
trained and educated to improve the quality and efficiency of services 
furnished to ACO beneficiaries. One commenter suggested that allowable 
uses of AIP funds include training opportunities for all staff, not 
only physicians or advanced practice clinicians, if such training 
addresses infrastructure needs such as implementation of electronic 
health records.
    Response: We believe that increased staffing may include hiring new 
staff. We also believe that providing additional training and education 
to existing staff working with the ACO would constitute an investment 
in health care provider infrastructure, and therefore, be a permissible 
use of AIP funds. AIP funding can be used for a wide variety of ACO 
staffing needs, including health equity officers, peer support 
specialists, peer recovery specialists, behavioral health clinicians, 
case managers, community health workers and other health care 
professionals with training in delivering culturally and linguistically 
tailored services.
    Comment: Many commenters requested that CMS clarify the types of 
additional staffing that would constitute an appropriate use of AIP 
funds. Specifically, in response to our preamble reference to hiring 
``certified peer recovery specialists'' (87 FR 46101), commenters noted 
that ``peer support specialists,'' as well as peer recovery support 
specialists, would benefit ACOs in treating beneficiaries with mental 
health needs. One commenter contended that States certify providers of 
peer support services for mental health and substance use conditions 
and the certifications use a variety of terms for peer support 
personnel. The commenter suggested that CMS work with Medicaid, CHIP 
and SAMHSA to ensure consistent and inclusive nomenclature that 
includes all peers who work with beneficiaries with mental health 
conditions, substance use disorders, or both conditions. Many 
commenters recommended that CMS specify that hiring both peer support 
specialists and peer recovery support specialists is a permissible use 
of AIP funds for mental health and substance use conditions. 
Additionally, the commenters suggested CMS hold all ACOs accountable 
for providing integrated behavioral health care.
    Response: We appreciate the comments providing examples of how ACOs 
may consider spending AIPs to

[[Page 69790]]

enhance staffing, to support behavioral health integration and meet the 
mental health needs of underserved communities. Our reference in 
preamble to ``certified peer recovery specialists'' was merely one 
example of a permitted use of AIP funds for increased staffing; ACOs 
can use AIP funds to improve the quality and efficiency of care 
furnished to beneficiaries by increasing staffing of peer support 
specialists or other peer support personnel regardless of nomenclature. 
We agree that behavioral health services are important to an 
individual's wellbeing and believe that the Shared Savings Program 
provides ACOs the flexibility to include behavioral health services in 
their care coordination plans and use AIP funding for these purposes. 
However, developing a specific methodology for holding all ACOs 
accountable for providing integrated behavior health care is beyond the 
scope of this rulemaking.
    Comment: A few commenters encouraged CMS to consider allowing 
physician-led ACOs to use AIPs to pay for retention bonuses of clinical 
and administrative staff. One commenter contended that independent 
practices often compete with larger provider networks and hospital 
systems in attracting and maintaining qualified staff members.
    Response: We appreciate the concerns of the commenters and 
recognize that expanding staffing to better coordinate quality care, 
especially in underserved communities, would promote program goals and 
increase ACO participation among provider types. However, after further 
consideration, we do not believe that the payment of retention bonuses 
should be an allowable use of AIP funds because of the potential for 
abuse. We may consider this issue in future rulemaking that would 
promulgate appropriate safeguards against abuse.
    Comment: Some commenters supported CMS proposals to use AIP funding 
to help close the health equity gap and contended that SDOH are primary 
drivers of health inequities. Other commenters recognized that CMS is 
working to reduce health inequalities by implementing SDOH measures in 
a regulatory program and in implementing AIPs to help support and 
develop community health partnerships. Commenters identified barriers 
to successful care coordination such as, insufficient community 
resources and capacity for care referrals in the community. Commenters 
suggested that CMS consider incentivizing (or requiring) ACOs to invest 
a portion of their AIPs in community resources where they are most 
needed, aligned with their decile (for example, ACOs in ADI decile 1-2 
must spend 5 percent on community resources, whereas those in deciles 
9-10 must spend 25 percent). One commenter requested that CMS allow AIP 
funds to be used to maintain an up-to-date community resource inventory 
and noted that clinical practices often struggle to partner with 
community-based organizations because they lack the technological, 
human, or other infrastructure required to deliver sufficient services 
or enter into contractual arrangements with ACOs. Other commenters 
contended that screening for social needs requires new workflows, 
dedicated and trained staff capable of engaging and navigating patients 
to resources, and partnerships with community-based organizations.
    Response: ACOs can use AIP funding to assist in developing new 
strategies to identify underserved beneficiaries and connect them to 
additional resources such as housing and food security. In the CY 2023 
PFS proposed rule we identified many areas for the appropriate use of 
AIP funds in addressing social needs, as well as enabling coordination 
of healthcare and social services across the community. We disagree 
with the commenters who advocated that CMS should incentivize or 
require ACOs to invest a portion of their AIPs in community resources 
where they are most needed. We prefer to establish fundamental 
parameters for the use of AIP funds and to permit ACOs to have the 
discretion to decide how the funds can be best used to improve the 
quality and efficiency of care in the communities they serve. Although 
CMS is granting ACOs discretion regarding the use of AIPs funds to meet 
the needs of underserved communities, we reserve the right to review 
any ACO SDOH strategies as part of the spend plan to determine whether 
the use of AIP funds to implement such strategies would constitute a 
prohibited use of AIP funds. If CMS finds that an ACO's planned 
spending on SDOH will not (or is unlikely to) improve the quality and 
efficiency of items and services furnished to beneficiaries, we would 
require the ACO to make changes to the strategy.
    As explained in the CY 2023 PFS proposed rule (87 FR 46102), where 
we refer to community-based organizations, we mean public or private 
not-for-profit entities that provide specific services to the community 
or targeted populations in the community to address the health and 
social needs of those populations. They may include community-action 
agencies, housing agencies, area agencies on aging, or other non-
profits that apply for grants to perform social services. They may 
receive grants from other agencies in the U.S. Department of Health and 
Human Services, including Federal grants administered by the 
Administration for Children and Families (ACF), Administration for 
Community Living (ACL), the Centers for Disease Control, or other 
State-funded grants to provide social services. Generally, we believe 
such organizations know the populations they serve and their 
communities, and may have the infrastructure or systems in place to 
help coordinate supportive services that address social determinants of 
health or serve as a source with which to share information. We 
recognize that ACOs wishing to address social needs may want to make 
investments that would enable their ACO participants and ACO providers/
suppliers to work with community-based organizations that have 
expertise in identifying and providing the types of social services 
that the ACO's beneficiary population requires.
    The Shared Savings Program does not prohibit ACOs from partnering 
with community-based organizations. Currently, if a community-based 
organization is enrolled in Medicare, it may already be an ACO 
participant or an ACO provider or supplier. We believe community-based 
organizations could play an important role in identifying and 
addressing gaps in health equity. We hope to encourage more ACOs to 
partner with community-based organizations whether they provide items 
and services reimbursed by Medicare or not. We recognize that Federal 
and other sources of grant funding for social services may be 
insufficient to fully address the demand for services within a 
community or broader geography. To meet this demand, contractual 
arrangements between the health care sector and community-based 
organizations providing social services have increased in recent years.
    Comment: One commenter recommended that CMS clarify that AIP funds 
could be used to invest in partnerships with community-based providers, 
including community pharmacies, and support beneficiary access to 
pharmacy settings where they may be connected with additional services. 
The commenter contended that 90 percent of Americans live within 5 
miles of a pharmacy and pharmacists are viewed as one of the most 
trusted providers. The commenter asserted that partnerships between 
ACOs and pharmacies/pharmacists can strengthen access to the delivery 
of patient-centered care.

[[Page 69791]]

    Response: The comment did not specifically describe the nature of 
the ``investments'' for which AIP funds might be used. We do not 
believe that it is appropriate or necessary to use AIPs--an advance 
payment of shared savings with Trust Fund dollars that should be 
repaid--to obtain an ownership or investment interest in a provider, 
supplier, or pharmacy. Depending on the circumstances, an ACO may use 
AIP funds to enable a community-based provider, supplier, or pharmacy 
to improve the quality and efficiency of care furnished to 
beneficiaries by investing in increased staffing, health care 
infrastructure, and the provision of accountable care for underserved 
beneficiaries. We note that any such arrangement must comply with all 
applicable laws and regulations, including the fraud and abuse laws.
    Comment: Many commenters encouraged CMS to revise the beneficiary 
incentive provision at Sec.  425.304(a)(2) to expressly state that 
nothing in Sec.  425.304 shall be construed as prohibiting an ACO from 
using AIPs to cover the cost of a beneficiary incentive furnished 
pursuant to Sec.  425.304(b) or (c). Section 425.304(a)(2) currently 
states that nothing in Sec.  425.304 shall be construed as prohibiting 
an ACO from using shared savings to cover the cost of a beneficiary 
incentive furnished pursuant to Sec.  425.304(b) or (c).
    Response: We recognize that beneficiary incentives can be used to 
provide accountable care for underserved beneficiaries and may thereby 
constitute an allowable use of AIPs, provided that the incentive is 
furnished in a manner that complies with the beneficiary incentive 
provision at Sec.  425.304 and other applicable laws and regulations. 
Because AIPs are advance payments of shared savings, we do not see any 
need to modify Sec.  425.304(a)(2) in the manner suggested by the 
commenter.
    Comment: Several commenters supported CMS proposals to include 
infrastructure as an appropriate use of AIPs, noting that independent 
provider practices serve rural areas and often do not have the 
infrastructure or technology needed to financially support 
transitioning to electronic health records (EHRs), and the reporting 
and sharing of health data. These commenters noted that this type of 
investment would encourage smaller practices to participate in value-
based contracting. One commenter expressed concern about how much 
funding would trickle down to the individual participating practices 
and suggested that CMS have guidelines in place to make certain funds 
are allocated properly across ACO administration, as well as individual 
practice clinical functions. One commenter contended that AIPs would 
improve health technology and standardized utilization of patient-
facing technology, and healthcare organizations and technology vendors 
would have an incentive to invest in mechanisms to track performance 
and improve over time. One commenter noted that AIPs could be leveraged 
to develop infrastructure that would enhance sociodemographic data 
collection, develop targeted interventions to reduce health 
disparities, and develop relationships with community-based 
organizations to address social needs.
    Response: We appreciate the commenters' support. We believe that 
the use of AIPs to foster connections and integration between primary 
care practices, facilities, clinical data registries will likely 
improve case management and care coordination across the continuum of 
care, and thereby improve quality care and improved health outcomes for 
beneficiaries. We decline to mandate a particular allocation of funds 
between ACO administration and individual practice clinical functions 
because we believe ACOs should have discretion to decide how the funds 
can be best for allowable purposes consistent with the parameters set 
forth in this final rule. Regarding investments in networks that 
support health information exchange, as discussed in the CY 2023 PFS 
proposed rule, we encourage ACOs to review the request for information 
in the CY 2023 PFS proposed rule regarding the recently released 
Trusted Exchange Framework and Common Agreement or TEFCA,\255\ which 
included discussion about how connecting to entities exchanging 
information under TEFCA could help to support health information 
exchange for a variety of use cases that may be relevant to ACOs.
---------------------------------------------------------------------------

    \255\ For more information, see https://www.healthit.gov/topic/interoperability/trusted-exchange-framework-and-common-agreement-tefca.
---------------------------------------------------------------------------

    Comment: Many commenters noted that the AIPs would not provide 
enough resources to help FQHC-led ACOs acquire the necessary health IT 
to build analytics and care coordination infrastructure at the ACO and 
individual health center level. The commenters noted that FQHCs 
experience different challenges from other safety-net providers when 
transitioning into value-based care models based on FQHC statutory 
reimbursement requirements under the Prospective Payment System (PPS). 
Commenters contended that health centers need flexible funding to build 
capacity at the provider level for care coordination, chronic disease 
management, and screening for social determinants of health. Commenters 
requested permitting ACOs to transfer AIPs to FQHC participants to 
support building the appropriate infrastructure and workforce to 
support sustainability.
    Response: We believe that the proposed allowable uses criteria 
provides enough flexibility for ACOs to determine the best way to 
support the needs of their beneficiaries seeking care at facilities 
participating in the ACO, which may include contributing towards health 
IT used by FQHCs if such support is structured to comply with the fraud 
and abuse laws and all other applicable laws and regulations.
    Comment: A few commenters noted that rural health centers (RHCs) 
are well-suited to lead care coordination and address social 
determinants of health on behalf of their ACOs. Commenters requested 
CMS to allow AIPs to flow into RHCs and provide essential funding for 
them to grow with the ACO. Specifically, the commenters advocated that 
CMS amend the allowable uses for AIPs to explicitly permit ACOs to use 
AIPs for costs that may be incurred by an RHC's employees, contractors, 
and participating providers.
    Response: This final rule does not prohibit ACOs from using AIP 
funds to improve care coordination for beneficiaries who receive care 
at an RHC or to enhance IT infrastructure used by RHCs. We do not 
believe it is necessary to finalize any changes to the proposed 
allowable uses provision at Sec.  425.630(e)(1). We note that any 
financial relationship between an ACO and an ACO participant that 
involves AIP funding must be structured to comply with all applicable 
laws and regulations, including the fraud and abuse laws.
    Comment: We received several supportive comments on CMS' proposal 
on the use of AIP funds to improve care for beneficiaries residing in 
underserved communities and to encourage participation from new ACOs by 
defraying the start-up costs of forming an ACO. Generally, commenters 
found that AIPs support ACOs in partnering with community healthcare 
providers and in meeting the needs of historically underserved 
beneficiaries. Commenters noted that improving provider infrastructure, 
increasing staffing, and addressing beneficiaries' social and other 
health needs would improve care quality and beneficiary outcomes.

[[Page 69792]]

    Some commenters explained that AIPs would mitigate and reduce many 
barriers to participation and encourage improvements in care delivery 
redesign, including infrastructure, staffing and social supports, to 
better address beneficiary needs. One commenter was supportive that 
AIPs may be used to cover costs associated with building new local 
networks that involve community-based-organizations and recommended 
employing a broad definition of allowable costs devoted to building 
those networks, including the transaction costs inherent in building 
new partnerships. Another commenter encouraged CMS to consider 
requiring ACOs that obtain such incentives to apply a portion of such 
incentives to help build the nursing facility health-information 
technology infrastructure interoperability capabilities.
    Response: As we stated in our CY 2023 PFS proposed rule, it is our 
intent to offer flexibility in how ACOs use AIPs to meet the greatest 
needs of their patients. We agree with commenters that investing in 
infrastructure is an appropriate use of AIPs, and any such investments 
directed to a community-based organization or a nursing facility 
operating under an ACO participant agreement would need to comply with 
all applicable laws and regulations, including the fraud and abuse 
laws.
    Comment: One commenter requested that CMS clarify the specific 
examples of allowable AIP uses and provide detailed guidance and 
additional examples of what would constitute a prohibited use of AIP.
    Response: We have provided some additional guidance on the proper 
use of AIP funds in response to other comments. We are committed to 
furnishing additional subregulatory program guidance on the allowable 
and prohibited uses of AIP, which may be informed by the experience we 
gain in reviewing and monitoring ACO spend plans and ACO use of AIP 
funds.
    After considering the public comments, we are finalizing without 
change at Sec.  425.630(e) our proposed policies for the use and 
management of AIPs. Specifically, we are finalizing as proposed new 
Sec.  425.630(e)(1), which requires an ACO to use AIPs to improve the 
quality and efficiency of items and services furnished to beneficiaries 
by investing in increased staffing, health care infrastructure, and the 
provision of accountable care for underserved beneficiaries, which may 
include addressing SDOH. Section 425.630(e)(1) further provides that an 
ACO's expenditures of AIPs must comply with the beneficiary incentive 
provision at Sec.  425.304 and all other applicable laws and 
regulations, including the provision at Sec.  425.630(e)(2) regarding 
prohibited uses of AIPs. Under Sec.  425.630(e)(2), AIPs may not be 
used for any expense other than an allowable use under Sec.  
425.630(e)(1), and in the case of an ACO participating in Level E of 
the BASIC track, AIPs may not be used for the repayment of shared 
losses by ACOs participating in Level E of the BASIC track. We are also 
finalizing at Sec.  425.630(e)(4) the requirement that ACOs segregate 
AIPs from all other revenues by establishing and maintaining a separate 
account for these funds.
(5) Advance Investment Payment Methodology
    In AIM, prepaid shared savings included an upfront payment of 
$250,000 and a one-time payment of $36 per beneficiary, followed by a 
monthly payment of $8 per beneficiary per month for the first 2 
performance years of an AIM ACO's agreement period. According to the 
AIM evaluation, AIM ACO leadership conveyed through interviews and the 
ACO Web survey that they wanted to join the Shared Savings Program to 
gain experience in delivering value-based care and remain independent, 
and that AIM funds were critical to building the infrastructure needed 
to implement their ACOs.\256\ The evaluation also found that these new 
AIM ACOs consistently demonstrated greater reductions in key Medicare 
spending categories and related utilization compared to similar non-AIM 
Shared Savings Program ACOs.\257\ Furthermore, there were greater 
reductions in all components of Medicare spending examined, including 
acute inpatient hospitalizations, outpatient visits, skilled nursing 
facility care, and home health use. The evaluation did not find 
reductions in Medicare spending and utilization to be offset by 
reductions in the quality of care provided or patient and caregiver 
experiences.
---------------------------------------------------------------------------

    \256\ Abt Associates, Evaluation of the Accountable Care 
Organization Investment Model Final Report 20 (Sep. 2020), available 
at https://innovation.cms.gov/data-and-reports/2020/aim-final-annrpt.
    \257\ Ibid.
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    We proposed to provide an ACO that CMS determines meets the 
eligibility criteria described in section III.G.2.a.(2) of the CY 2023 
PFS proposed rule (87 FR 46099 and 46100) with AIPs during the first 2 
performance years of the ACO's participation agreement. We proposed 
that AIPs are comprised of two types of payments: a one-time payment of 
$250,000 and eight quarterly payments based on the number of assigned 
beneficiaries, capped at 10,000 beneficiaries.
    The proposed $250,000 one-time payment is informed by the AIM 
payment structure, which offered a $250,000 upfront fixed payment to 
new AIM ACO participants starting in the Shared Savings Program in 2015 
and 2016. Under the model, the upfront fixed payment reflected the 
estimated upfront investment requirements to establish ACOs. We 
proposed a $250,000 one-time AIP because, as explained in the CY 2023 
PFS proposed rule (87 FR 46103), we believe that such a payment would 
similarly support an ACO in addressing the upfront investment 
requirements for a new, low revenue and inexperienced ACO to join the 
Shared Savings Program. We noted that we have experience with a fixed 
$250,000 upfront payment from AIM, which served ACOs that are similar 
in many ways to ACOs that would be served by the proposed AIPs. 
Furthermore, we believe that initial ACO start-up costs do not vary 
significantly by the size of an ACO or by the underlying level of risk 
of an assigned beneficiary population. However, we noted that we are 
considering alternative values of the one-time payment, such as 
allowing the one-time payment to vary by ACO based on the number of 
assigned beneficiaries, the risk factors of the ACO's assigned 
beneficiary population, or both. We sought comment on the proposal to 
provide ACOs with a one-time payment of $250,000, as well as these 
alternatives.
    The quarterly payments are informed by our experience in AIM where 
ACO participants had variable costs for clinical care management 
activities, such as clinical staff, which were supported by the per 
beneficiary per month payments offered to them in the model.
    We proposed to make payments on a quarterly basis to balance 
providing ACOs with predictable cash flow to participate in the Shared 
Savings Program and simplifying operations for CMS. We noted that we 
considered other options for the frequency of the payments, such as 
monthly payments as were tested in AIM, or annual payments. Making more 
frequent payments, such as on a monthly basis, would result in 
additional operational burden for CMS because we would need to 
calculate the payments more frequently. Because the Shared Savings 
Program operates on a larger scale than AIM did, the burden of 
administering monthly advance payments is not feasible. Moreover, we 
believe that monthly payments offer little additional

[[Page 69793]]

benefit to ACOs relative to quarterly payments. We did not propose a 
single annual payment as we believe the benefit to ACOs of consistent 
payments on a quarterly basis outweighs the administrative costs of 
calculating quarterly payments. We sought comment on the proposed 
schedule of the AIPs to ACOs.
    We proposed to determine the value of an ACO's upcoming quarterly 
payment amount prior to the start of the quarter based on the latest 
available assignment list for the performance year (see Table 51). We 
noted that we believe it is important to use the latest available 
assignment list because under current regulation the individual 
beneficiaries assigned to the ACO may change between annual and 
quarterly assignment runs. For ACOs under preliminary prospective 
assignment with retrospective reconciliation as described at Sec.  
425.400(a)(2), the assignment list is updated quarterly based on the 
most recent 12 months of data. For ACOs under prospective assignment as 
described at Sec.  425.400(a)(3), the assignment list is updated 
quarterly to exclude beneficiaries that meet any of the exclusion 
criteria during the performance year. Therefore, we noted that we 
believe that using the latest available assignment list to determine 
the upcoming quarterly payment will best reflect the attributes of the 
ACO's assigned population.
[GRAPHIC] [TIFF OMITTED] TR18NO22.080

    We also noted that we considered an alternative proposal for the 
timing of the quarterly payments calculation. Under this alternative, 
we would determine the ACO's quarterly payment at the start of the 
performance year based on the beneficiaries assigned to the ACO at the 
beginning of a performance year. The quarterly payment amount 
determined at the beginning of a performance year could remain fixed 
for the duration of that performance year. The total payments ACOs 
would receive over the course of a performance year would be known by 
the ACO at the start of that performance year. However, this 
alternative would also carry the risk that CMS would underpay or 
overpay an ACO relative to an approach of redetermining the quarterly 
payment amount prior to the start of each quarter. We sought comment on 
this alternative proposal.
    We proposed that the quarterly payments made to ACOs would be equal 
to the sum of per beneficiary payments for up to 10,000 beneficiaries. 
The per beneficiary payment amount would vary for each beneficiary 
based on a risk factors-based score that we would calculate for the 
beneficiary. The risk factors-based score would be informed by the 
beneficiary's dual eligibility status and the ADI national percentile 
ranking of the census block group of the beneficiary's primary address, 
described in further detail later in this section. The quarterly 
payments reflect expected variable ongoing operating costs that are 
related to the number and risk factors of the ACO's assigned 
beneficiaries.
    We proposed to add a new Sec.  425.630(f) to establish the 
frequency and payment methodology for AIPs (87 FR 46104). Specifically, 
we proposed a one-time payment for ACOs at or near the beginning of PY 
1 of the ACO's agreement period. Quarterly payments would be made each 
quarter for the first 2 performance years of the ACO's agreement 
period. As discussed in the CY 2023 PFS proposed rule, we would 
complete the following steps to calculate the ACO's quarterly payment 
amount:
     Step 1: Determine the ACO's assigned beneficiary 
population. The assigned beneficiaries used in determining the 
quarterly payment amount would be the beneficiaries most recently 
assigned to the ACO under Sec.  425.400(a)(2) (for ACOs under 
preliminary prospective assignment with retrospective reconciliation) 
or Sec.  425.400(a)(3) (for ACOs under prospective assignment), based 
on the certified ACO participant list for the relevant performance 
year.
     Step 2: Assign each beneficiary a risk factors-based 
score. For each beneficiary in the assigned population identified in 
Step 1, CMS would do the following:
    + + If the beneficiary is dually eligible for Medicare and 
Medicaid, assign a risk factors-based score of 100.\258\
---------------------------------------------------------------------------

    \258\ A beneficiary is considered dually eligible if they were 
dually eligible for Medicare and Medicaid in any of the 12 months 
that correspond with the window used for assigning beneficiaries 
under the preliminary prospective assignment methodology. The 12-
month window is described in further detail elsewhere in this 
section.
---------------------------------------------------------------------------

    + + If the beneficiary is not dually eligible, assign a risk 
factors-based score equal to the ADI national percentile rank of the 
census block group corresponding with the beneficiary's primary mailing 
address.
    + + If the beneficiary is not dually eligible but cannot be matched 
with an ADI national percentile rank due to insufficient data, impute a 
risk factors-based score of 50.\259\
---------------------------------------------------------------------------

    \259\ The imputed score of 50 is described in further detail 
elsewhere in this section.
---------------------------------------------------------------------------

     Step 3: Determine a beneficiary's payment amount. For each 
beneficiary in the assigned population, CMS would determine the payment 
amount that corresponds to the beneficiary's risk factors-based score 
according to the per beneficiary payment amounts specified by CMS 
elsewhere in this section (refer to Table 53).
     Step 4: Calculate the ACO's total quarterly payment 
amount. The ACO's quarterly payment amount would be the sum of the 
payment amounts corresponding to each assigned beneficiary's risk 
factors-based score, capped at 10,000 beneficiaries. If the ACO has 
more than 10,000 assigned beneficiaries, CMS would calculate the 
quarterly payment amount based on the 10,000 assigned beneficiaries 
with the highest risk factors-based scores.
    As described earlier, a goal of AIPs is to reduce financial 
barriers for new, low revenue and inexperienced ACOs to join the Shared 
Savings Program. In addition to bringing ACOs into the program, as part 
of the Agency's goals to advance health equity, we are interested in 
using

[[Page 69794]]

the AIPs to support ACOs in improving the care received by underserved 
beneficiaries. We believe that we will further the Agency's goal to 
advance health equity by basing the ACO's quarterly payment amount on 
the sum of per beneficiary payments that vary by a beneficiary's risk 
factors-based score, as informed by the ADI national percentile rank of 
the beneficiary's census block group and the beneficiary's dual 
eligibility status. We believe the ADI national percentile rank of the 
beneficiary's census block group and dual eligibility are good 
indicators of beneficiaries with high needs. The ADI measure is 
intended to capture local socioeconomic factors correlated with medical 
disparities and underservice, while the beneficiary level measure of 
dual eligibility is intended to capture socioeconomic challenges that 
could affect a beneficiary's ability to access care.
    The ADI was developed by researchers at the National Institutes of 
Health with the goal of quantifying and comparing social disadvantage 
across geographic neighborhoods. It is a composite measure derived 
through a combination of 17 input variables from census data. For the 
2019 ADI, the 17 input variables across four domains are shown in Table 
52.
[GRAPHIC] [TIFF OMITTED] TR18NO22.081

    The ADI is calculated at the census block group level through the 
US Census Bureau's American Community Survey. Census blocks, the 
smallest geographic area for which the Bureau of the Census collects 
and tabulates decennial census data, are formed by streets, roads, 
railroads, streams and other bodies of water, other visible physical 
and cultural features, and the legal boundaries shown on Census Bureau 
maps. A census block group is the next level above census blocks in the 
geographic hierarchy and is a combination of census blocks that is a 
subdivision of a census tract or block numbering area. The census block 
group typically contains 600 to 3,000 people and is the smallest 
geographic entity for which the decennial census tabulates and 
publishes sample data. Files containing the ADI of U.S. census block 
groups is publicly available through the Neighborhood Atlas from the 
University of Wisconsin.\260\ It is a relative measure that is reported 
at the individual block group level, typically reported by nationwide 
percentile (1-100) or Statewide decile (1-10), with a higher percentile 
indicating greater disadvantage. The relative measure reported at the 
census block group level is referred to as the ADI national percentile 
rank.
---------------------------------------------------------------------------

    \260\ The ADI data files are publicly available for download at 
https://www.neighborhoodatlas.medicine.wisc.edu/.
---------------------------------------------------------------------------

    We proposed to use the ADI national percentile rank for the census 
block group in which a beneficiary resides for that beneficiary's risk 
factors-based score if the beneficiary is not dually eligible for 
Medicare and Medicaid. Specifically, we proposed to establish the ADI 
national percentile rank of the beneficiary's census block group 
derived from the beneficiary's latest mailing address in CMS data 
systems at the time of the calculation. Furthermore, we proposed to use 
the most recently available version of the ADI. At the time of issuing 
the CY 2023 PFS proposed rule, the latest version available was the 
2019 ADI which was based on the 2015-2019 ACS Five Year Estimates. The 
ADI data files are publicly available for download at https://www.neighborhoodatlas.medicine.wisc.edu/.
    We proposed to use the beneficiary's dual eligibility status to 
inform the risk factors-based score. Specifically, we proposed that if 
a beneficiary is dually eligible, the beneficiary's risk factors-based 
score would be 100 (87 FR 46105). A score of 100 would ensure that the 
ACO receives the maximum payment amount for each beneficiary dually 
enrolled in Medicare and Medicaid, which would further the Agency's 
goal to ensure beneficiaries with dual eligibility have full access to 
seamless, high quality health care.
    To determine a beneficiary's dual eligibility status, we explained 
that we would consider the beneficiary's enrollment status in each 
month of a 12-month window (87 FR 46105). The 12-

[[Page 69795]]

month window would correspond with the assignment window used for 
preliminary prospective assignment with retrospective reconciliation 
for that particular assignment run. For example, we proposed to use PY1 
Quarter 1 assignment to inform the quarterly payment we would make to 
the ACO in July of PY1; the preliminary prospective assignment window 
for that assignment run would be April 1 of the prior calendar year 
through March 30 of the current calendar year. We explained as a result 
that we would consider the beneficiary's dual eligibility status in 
each of those 12 months. If a beneficiary had zero months of dual 
enrollment, we would consider the beneficiary not dually enrolled. If 
the beneficiary had at least one month of dual enrollment in Medicare 
and Medicaid, we would consider the beneficiary dually enrolled.
    We considered alternatives to assigning 100 points to the 
beneficiary for dual eligibility status (87 FR 46105 and 46106). One 
alternative we considered was to calculate a beneficiary's risk 
factors-based score as the sum of the ADI national percentile rank of 
the beneficiary's census block group and 25 points if the beneficiary 
is dually eligible for Medicare and Medicaid. As explained in the CY 
2023 PFS proposed rule, the maximum risk factors-based score would be 
125, and we would revise the payment amount ranges to account for a 
higher maximum score. We also explained that we considered 25 points 
for dual status because through preliminary analysis we observed that 
the median ADI score for the population that was aligned to Direct 
Contracting Entities in PY 2021 was 42 with a standard deviation of 25. 
Furthermore, given the fact that the ADI score is a variable value and 
the bonus points for dual eligibility status would be fixed at 25 
points, we noted that the relative weight of the 25 points would be 
lower for beneficiaries living in a relatively highly deprived area and 
higher for beneficiaries in a relatively advantaged area. For example, 
consider one dually eligible beneficiary and one non-dually eligible 
beneficiary, both living in a census block group with an ADI national 
percentile rank of 50 (the U.S. median). The dually eligible 
beneficiary would receive a risk factors-based score of 75 (50 plus 
25), which is 50 percent higher than the risk factors-based score of 
the non-dually eligible beneficiary. For a dually eligible beneficiary 
who lives in a census block group with an ADI national percentile rank 
of 70 (more deprived than the median), 25 points would increase their 
score by 36 percent. There are many people who do not qualify for 
Medicaid but still face systemic and structural barriers to care. 
Therefore, as discussed in the CY 2023 PFS proposed rule, we noted that 
we believe it would be reasonable to add a relatively moderate bonus to 
the beneficiary's ADI national percentile rank to calculate a combined 
risk factors-based score that values both dual status and other 
structural barriers to care that also may require upfront investments 
by an ACO to help their assigned beneficiaries overcome. We sought 
comment on an alternative proposal to calculate the beneficiary's risk 
factors-based score by taking the sum of the ADI national percentile 
rank where the beneficiary lives and 25 points if the beneficiary is 
dually eligible for Medicare and Medicaid.
    We proposed per beneficiary payment amounts that increase as a 
beneficiary's risk factors-based score increases (87 FR 46106). The per 
beneficiary payment amounts by range are shown in Table 53. A dually 
eligible beneficiary would receive a risk factors-based score of 100, 
which corresponds to a quarterly payment amount of $45. A beneficiary 
not dually eligible and residing in a census block group with an ADI in 
the 75th percentile would receive a risk factors-based score of 75 
which corresponds to a quarterly payment amount of $40.
[GRAPHIC] [TIFF OMITTED] TR18NO22.082

    We calibrated the per beneficiary payment amounts against the 
distribution of risk factors-based scores for beneficiaries assigned to 
ACOs in PY 2020, such that the average ACO participating in PY2020 
would have received approximately the same payment value across 2 
performance years as the average ACO that participated in AIM (87 FR 
46106). The payments would begin at $20 and would be scaled upward by 
increments of 4-5 dollars as the risk factors-based score increases. We 
proposed that a beneficiary with a risk factors-based score of less 
than 25 would have a corresponding payment of $0, as a goal of the AIPs 
option is to encourage formation of new ACOs that serve underserved 
beneficiaries. A beneficiary risk factors-based score of less than 25 
would indicate that the beneficiary is not dually eligible for Medicare 
and Medicaid and is residing in a census block group with low area 
deprivation. We proposed that any beneficiary with a risk factors-based 
score of 85 or higher would receive the maximum payment of $45. As 
discussed in the CY 2023 PFS proposed rule, these beneficiaries either 
have dual eligibility or reside in a census block group with high area 
deprivation; we consider beneficiaries with these factors to represent 
the highest need for upfront investments in care coordination 
interventions by ACOs. As we gain more experience with AIPs, we would 
reevaluate the effectiveness of the payment amounts in Table 53 and may 
propose modifications in future rulemaking.
    We proposed to calculate the quarterly payment as the sum of the 
per beneficiary payment amounts corresponding to each assigned 
beneficiary, capped at 10,000 beneficiaries. The proposed 10,000 
beneficiary cap is similar to what was tested in AIM. We noted that we 
believe a cap is necessary to insulate the Trust Funds from making 
extremely large quarterly payments to large ACOs. Also similar to AIM, 
we proposed that if an ACO has more than 10,000 assigned beneficiaries, 
we would calculate the quarterly payment based on the 10,000 assigned 
beneficiaries with the highest risk factors-based scores, which would 
maximize the quarterly payment for the ACO.
    We proposed under the new Sec.  425.630(f) that CMS would notify in 
writing each ACO of its determination of the amount of AIP. If CMS does 
not make any AIP, the notice would specify the reason(s) why and inform 
the ACO of its right to request reconsideration review in accordance 
with the standards

[[Page 69796]]

specified in subpart I of our regulations. Thus, with each quarterly 
payment we proposed to provide the ACO with a report that shows our 
calculation of the ACO's quarterly payment amount, including the risk 
factors-based score we assigned to each beneficiary used as part of the 
calculation, and the per beneficiary payment that corresponds to that 
score.
    We noted that we considered alternative methodologies to 
calculating an ACO's quarterly payment (87 FR 46106 and 46107). We also 
noted that we considered an approach of determining an ACO's average 
risk factors-based score based on all of the ACO's assigned 
beneficiaries. That is, we would take the sum of the risk factors-based 
scores for each of the ACO's assigned beneficiaries and divide by the 
total number of the ACO's assigned beneficiaries. In this alternative, 
ACOs with an average risk factors-based score above the median would 
have their per beneficiary payment amount scaled upward and those with 
an average risk factors-based score below the median would have their 
per beneficiary payment amount scaled downward. An ACO with an average 
risk factors-based score of the median would have their per beneficiary 
payment amount set to $30. An ACO with an average risk factors-based 
score greater than the median would have their per beneficiary payment 
amount increased by the percentage difference of the score compared to 
the median. For example, if the median is 50, an ACO with an average 
risk factors-based score of 70 would have their per beneficiary payment 
amount increased by 20 percent to $36 and an ACO with an average risk 
factors-based score of 32 would have their per beneficiary payment 
amount reduced by 18 percent to $24.60. The quarterly payment would 
equal the per beneficiary per quarter payment amount multiplied by the 
number of assigned beneficiaries, capped at 10,000 beneficiaries. This 
alternative approach would allow us to consider the risk factors-based 
scores of all of an ACO's assigned beneficiaries, not only the 10,000 
assigned beneficiaries with the highest risk factors-based scores, in 
determining the ACO's quarterly payment. We sought comment on this 
alternative methodology.
    We also noted that we considered an alternative proposal to 
identify underserved beneficiaries based on whether their mailing 
address is located in a Health Professional Shortage Area (HPSA) for 
primary care instead of the beneficiary's mailing address' ADI 
percentile rank (87 FR 46107). As part of the Health Resources and 
Services Administration's (HRSA) cooperative agreement with the State 
Primary Care Offices, the State Primary Care Offices conduct needs 
assessment in their States, determine what areas are eligible for 
designations, and submit designation applications to HRSA. HRSA reviews 
the HPSA applications submitted by the State Primary Care Offices, 
and--if they meet the designation eligibility criteria for the type of 
HPSA the application is for--designates a HPSA. HPSAs are defined under 
section 332(a) of the Public Health Service Act. HPSA designations 
identify geographic areas, population groups, or facilities within the 
United States that are experiencing a shortage of health care 
professionals. Geographic HPSAs are defined as having a shortage of 
provider services for the entire population within an established 
geographic area; population HPSAs, in which there is a shortage of 
providers services for a specific population subset within an 
established geographic area; and facility HPSAs, that include certain 
categories of facilities. HRSA is responsible for making these HPSA 
designations in accordance with section 332(a) of the Public Health 
Service Act. Under this alternative, the risk factor-based score would 
be based on the sum of points assigned based on whether an assigned 
beneficiary is residing in an area designated as a geographic HPSA, as 
determined by the beneficiary's mailing address, and whether a 
beneficiary is dually eligible for Medicare and Medicaid. As a result, 
there would be three different per beneficiary payment amounts based on 
whether an assigned beneficiary is: (1) both residing in a geographic 
HPSA and dually eligible for Medicare and Medicaid; (2) residing in a 
geographic HPSA only; or (3) dually eligible for Medicare and Medicaid 
only. Under this alternative, we discussed that we would not provide a 
per beneficiary payment amount if the assigned beneficiary is not in a 
geographic HPSA and not dually eligible for Medicare and Medicaid. As 
noted in the CY 2023 PFS proposed rule, we believe the ADI metric can 
support identification of beneficiaries who face a variety of social 
determinants to health, not only health provider shortages, we proposed 
to use ADI. We sought comment on an alternative methodology of using 
HPSA scores.
    We also discussed that we considered an alternative methodology 
that additionally considers whether a beneficiary is enrolled in the 
Medicare Part D low-income subsidy (LIS) when CMS calculates the 
quarterly payment amount.\261\ In this alternative, the risk factors-
based score would be equal to the assigned beneficiary's ADI national 
percentile or 100 points if the beneficiary is enrolled in the Medicare 
Part D LIS or is dually eligible for Medicare and Medicaid. We sought 
comment on this alternative methodology.
---------------------------------------------------------------------------

    \261\ The low-income subsidy helps people with Medicare pay for 
prescription drugs, and lowers the costs of Medicare prescription 
drug coverage. For more information about the LIS, refer to https://www.cms.gov/Medicare/Prescription-Drug-Coverage/LimitedIncomeandResources.
---------------------------------------------------------------------------

    As explained in the CY 2023 PFS proposed rule (87 FR 46107), there 
are circumstances where a beneficiary may not have an ADI national 
percentile rank. In the cases where Medicare beneficiaries have a 
missing or partial address in our database, we would not be able to 
match them with a census block group. In a preliminary review of 
Medicare beneficiary information, less than 2 percent of beneficiaries 
could not be matched to a census block group due to missing or 
insufficient mailing address data. Additionally, under the ADI 
methodology approximately 2 percent of U.S. census block groups do not 
receive an ADI national percentile rank due to data suppression 
criteria. These suppression criteria include: fewer than 100 people, 
fewer than 30 housing units, or more than 33 percent of the population 
living in group quarters or missing core component variables. In our 
preliminary review of Medicare beneficiary information, approximately 1 
percent of Medicare beneficiaries had sufficient address data, but were 
in a U.S. census block group without a national percentile rank due to 
data suppression criteria. For beneficiaries with no ADI national 
percentile rank due to missing or insufficient mailing address data or 
data suppression criteria, and are not automatically receiving a score 
of 100 for being a beneficiary who is dually eligible for Medicare and 
Medicaid, we proposed to impute a value of 50 in place of the ADI 
national percentile rank for the purposes of determining an assigned 
beneficiary's risk factors-based score and per beneficiary payment 
amount. As discussed in the CY 2023 PFS proposed rule, an imputed ADI 
ranking of 50 corresponds to the average national ADI ranking and would 
be the most neutral imputed value. This would avoid biasing an ACO's 
payments in either direction due to missing information. We sought 
comment on the proposal to impute a value in place of the ADI national 
percentile rank to

[[Page 69797]]

address missing beneficiary information when calculating the risk 
factors-based score.
    To summarize, we proposed to provide an ACO with a one-time payment 
of $250,000 prior to the start of the ACO's first performance year. We 
also proposed to calculate an ACO's upcoming quarterly payment prior to 
the start of the quarter, using the latest available assignment list. 
We noted that we would calculate an ACO's quarterly payment amount 
based on risk factors-based scores of up to 10,000 beneficiaries 
assigned to the ACO prior to the start of the performance year, and 
ACOs with more than 10,000 beneficiaries would have a quarterly payment 
calculated based on the 10,000 beneficiaries assigned to the ACO with 
the highest risk factors-based scores. We proposed to assign a risk 
factors-based score for each beneficiary using the ADI national 
percentile rank of the beneficiary's census block group or assigning 
100 points if the beneficiary is dually eligible for Medicare and 
Medicaid. We proposed to impute a value of 50 in place of an ADI 
national percentile rank if the beneficiary is not dually eligible for 
Medicare and Medicaid and cannot be matched with an ADI national 
percentile rank due to insufficient data. Finally, we proposed dollar 
value amounts that vary by risk factors-based score, in that the 
amounts gradually increase as the risk factors-based score increases. 
We sought comment on each of these proposals.
    The following is a summary of the public comments received on the 
proposed advance investment payment methodology and our responses:
    Comment: Most commenters expressed general support for and 
appreciation of the advance investment payment option.
    Response: We thank the commenters for their support.
    Comment: A number of commenters weighed in on the amount of the 
$250,000 upfront payment proposed, the amount of proposed quarterly 
payments, or total amount of advance investment payments generally. One 
commenter stated they support the proposed payment amounts for 
calculating the ACO's quarterly payment, stating the amount 
appropriately provide additional funding for ACOs treating 
beneficiaries with greater levels of need. Another commenter suggested 
that if CMS were to expand eligibility for the advance investment 
payments option to high revenue ACOs, payment rates that make up the 
ACO's quarterly payment could be halved for high revenue ACOs. MedPAC 
urged CMS to adopt CMS' alternative to calculate an ACO's average risk 
factors-based score and make the ACO's upfront $250,000 payment 
contingent upon the ACO reaching a minimum average risk factors-based 
score (such as 25). In such a scenario, an ACO with an average risk 
factors-based score of less than 25 across all its assigned 
beneficiaries would not receive upfront or quarterly payments.
    Several commenters disagreed with the amount of advance investment 
payments proposed by CMS. One commenter stated that they question the 
adequacy of the initial and quarterly payments, suggesting they may not 
be enough to meaningfully encourage participation while meeting the 
various resource needs of beneficiaries, and that the payments' benefit 
would be limited when spread over the size of the entire ACO. Several 
expressed concern that the amount is the same as the upfront payment 
made under AIM and does not account for inflation or increased health 
care costs.
    Commenters offered various suggestions for increasing the total 
amount of advance investment payments. One commenter encouraged CMS to 
increase the quarterly payments to account for at least the highest 
risk 20,000 beneficiaries rather than the proposed 10,000. A few 
commenters suggested increasing the value of the upfront payment for 
ACOs in certain areas, by using a health equity factor based on the ADI 
to determine if the ACO would be eligible for a higher upfront payment. 
One commenter suggested doubling the upfront payment amount and 
extending the duration of upfront payments to yearly for 3 to 5 years, 
indicating that this would result in a more sustainable model. Another 
commenter suggested increasing the quarterly payment per-beneficiary 
amounts by modeling the payment amounts off Innovation Center models 
that provide monthly per-beneficiary payments, such as the Primary Care 
First Model or the Maryland Total Cost of Care Model. A number of 
commenters suggested that CMS increase the amount of the upfront 
payment, with many arguing it would be a means of attracting safety net 
providers and supporting infrastructure investments. Several other 
commenters suggested that $250,000 should be the minimum upfront 
payment and CMS should increase the upfront payment amount based on the 
size and risk profile of the ACO.
    Response: We do not agree with the commenter's suggestion to 
provide half of the advance investment payments amount to high revenue 
ACOs. As we explain in III.G.2.a.(2) of this final rule, providing 
advance investment payments to high revenue ACOs would be counter to 
the purpose of advance investment payments. High revenue ACOs are 
likely to have more ready access to capital for the necessary upfront 
investments than new, low revenue ACOs.
    With respect to MedPAC's suggestion to further limit payments for 
new, low revenue ACOs inexperienced with performance-based risk that do 
not reach a minimum average risk factors-based score, while we are not 
modifying the proposed methodology in this final rule, will continue to 
consider this approach and may revisit it in future rulemaking.
    At this time, we disagree with commenters' requests that we 
increase the amount of the upfront payment or recalibrate the quarterly 
payments to increase the total amounts made available to ACOs over the 
course of the agreement period in which they are receiving advance 
investment payments. As we discussed in the CY 2023 PFS proposed rule 
(87 FR 46106), we believe it is necessary to insulate the Trust Funds 
from making extremely large quarterly payments to large ACOs. We also 
considered the ability of newly formed ACOs to spend funding in a short 
time period, drawing on lessons from AIM. We calibrated the payment 
amounts such that we expect the average ACO to receive approximately 
$2.5 million in advance investment payments over their first 2 
performance years, an amount similar to the largest amount an ACO that 
participated in AIM received. Additionally, in the first 2 years of 
AIM, we recouped about 46 percent of the total upfront amounts paid. 
Based on this prior experience, we believe the $2.5 million estimated 
average does not overburden ACOs with an overwhelming amount that could 
remain outstanding for many future years and increases the likelihood 
CMS is able to recoup the majority of the AIP provided in a relatively 
short period of time.
    We do not agree with the suggestion to modify our proposal to 
increase the value of the upfront payment for ACOs based on a health 
equity factor or based on size of the ACO. Under our proposal, the 
first payment the ACO will receive will be equal to the fixed $250,000 
upfront payment plus the first quarterly payment which itself is 
already based on such factors. Therefore, the first payments received 
by the ACO will be greater than $250,000 and will vary depending on the 
risk factors of beneficiaries initially assigned to the ACO and the 
size of the ACO.
    We also do not agree we should modify our proposal to align more

[[Page 69798]]

closely with the per beneficiary payment amounts found in other 
Innovation Center models such as Primary Care First and the Maryland 
Total Cost of Care Model. The advance investment payments option under 
the Shared Savings Program is designed for a different purpose. Unlike 
the per beneficiary amounts in those Innovation Center models, the 
advance investment payments are not intended to serve as care 
management fees for individual beneficiaries, but rather are intended 
to provide the ACO with upfront capital to make investments in systems, 
processes or interventions that are expected to yield lower cost and 
higher quality of care for their assigned beneficiary population. We 
believe that the payment amounts as proposed will serve to attract 
safety-net providers to the Shared Savings Program and will support 
infrastructure investments, however, we intend to monitor the uptake of 
this option and the ability of participating ACOs to spend the amount 
of advance investment payments availed to them through the methodology 
we are finalizing in this rule. We would consider modifications in 
future rulemaking.
    Comment: We received several comments on our proposed approach to 
provide variable, quarterly payments, and to calculate those payments 
prior to the start of the upcoming quarter using the latest assignment 
list and latest beneficiary-level risk factors data available. Several 
commenters supported the proposal to provide payments to ACOs on a 
quarterly basis, indicating that such a cadence of payment correctly 
balances CMS burden and predictability of funding for ACOs. One 
commenter agreed with calculating quarterly payment amounts at the 
start of each quarter over an alternative proposal to calculate the 
quarterly payment amount ahead of the start of the performance year, 
indicating that the alternative of calculating the quarterly payment 
annually might result in over payment or under payment. However, 
another commenter suggested calculating the quarterly payment amounts 
prior to each quarter using the latest available data for ACOs under 
preliminary prospective assignment with retrospective reconciliation, 
while separately calculating the quarterly payment amounts for ACOs 
under prospective assignment prior to the first quarter of the 
performance year. One commenter suggested that CMS provide more 
flexibility to receive funds on an annual basis rather than quarterly 
payments. Another commenter thought that CMS should allow ACOs to opt 
into CMS calculating the quarterly payments once before the start of 
the year, or recalculating payments quarterly. The commenter indicated 
that the flexibility to choose between fixed or varying payments would 
allow ACOs to best meet the needs of their individual organization.
    Response: We continue to believe that quarterly payments provide 
the best balance between consistent payments for ACOs and operational 
burden for CMS. We do not believe that allowing ACOs to have their 
quarterly payments calculated once at the beginning of the year, as 
opposed to at the beginning of each quarter, would offer significant 
benefit to ACOs nor substantially reduce burden for CMS. Calculating 
the payments at the beginning of each quarter ensures that the latest 
available assignment list is used and that the quarterly, variable 
payments to ACOs are appropriate. Fixing the quarterly payments at the 
beginning of a year creates unnecessary risk that quarterly payments 
are too high or too low relative to an ACO's assigned beneficiary 
population.
    Comment: With respect to information available to ACOs about the 
quarterly payment, one commenter expressed support for CMS' proposal to 
notify ACOs of quarterly payment amounts via a detailed report of the 
calculation. Another commenter expressed concern that the existing ADI 
mapping tools (available through Neighborhood Atlas[supreg]) are 
limited and only allow users to look up addresses one at a time. The 
commenter believes that licensing restrictions would prevent ACOs from 
partnering with other entities that could assist them in developing 
more sophisticated tools to allow them to identify their beneficiaries' 
ADI scores more readily.
    Response: We agree that providing ACOs with a report detailing the 
calculation of quarterly, variable payments will ensure both 
transparency of the process and also the accuracy of such payments. As 
explained in the CY 2023 PFS proposed rule, with each quarterly payment 
we will provide each ACO with a report that shows our calculation of 
the quarterly payment amount, including the risk factors-based score, 
ADI national percentile rank, dual eligibility status, and LIS status 
we assigned to each beneficiary used as part of the calculation and the 
per beneficiary payment that corresponds to their risk factors-based 
score. We note that such information overlaps with the information 
shared regarding the health equity adjustment, which we are finalizing 
as part of the quality performance standard. For a discussion of our 
reporting of this information to ACOs please see section 
III.G.4.b.(7).(g) of this final rule. We believe this information will 
be sufficient for ACOs to identify their beneficiaries' ADI rankings 
and that ACOs would not need to additionally identify their 
beneficiaries' rankings on their own using the mapping tools or the 
publicly available files from the Neighborhood Atlas[supreg].
    Comment: Several commenters expressed general support of the use of 
a risk factors-based score in calculating the advanced payments or 
support for particular elements of CMS' proposed methodology for 
determining beneficiaries' risk factors-based scores. A couple 
commenters expressed their preference for the use of ADI over the 
alternative proposal of using health provider shortage area (HPSA) 
data, with one such commenter citing that the ADI better represents the 
health-related social needs a beneficiary may face and leverages pre-
existing data which lowers burden on practices, and the other citing 
that living in a health provider shortage area is only one of many 
socioeconomic factors impacting health, and therefore, it is 
appropriate for CMS to use more comprehensive measures of disadvantage 
(such as the ADI) in the effort to incorporate health equity as a 
consideration in APM designs. One commenter expressed support for CMS' 
proposal to determine a beneficiary's dual eligibility status based on 
whether the beneficiary had at least one month of dual enrollment 
within the 12-month window corresponding with the assignment window 
used for preliminary prospective assignment with retrospective 
reconciliation for that particular assignment run. The commenter also 
supported CMS' proposal to impute a score of 50 out of 100 for those 
beneficiaries for which CMS does not have sufficient data to calculate 
a risk factors-based score and provide the median payment amount. One 
commenter preferred CMS' proposal to assign a score of 100 to dually 
eligible beneficiaries over the alternative considered to calculate a 
score based on the combination of the national ADI percentile rank and 
an additional 25 points for dually eligible beneficiaries, indicating 
that the alternative was overly complicated for program participants.
    Response: We appreciate the commenters' support for risk factors-
based scores and for particular elements of the proposed methodology to 
calculate those scores.
    Comment: We also received comments expressing concern with CMS' 
proposed methodology to

[[Page 69799]]

calculate beneficiary risk factors-based scores. We received a couple 
of comments expressing concern with the proposed use of dual 
eligibility status in calculation of the beneficiary's risk factors-
based score. MedPAC urged CMS to consider use of the Medicare Part D 
LIS in the risk factors-based score rather than dual eligibility, 
citing recent Commission work that found using the LIS designation 
helped to reduce the impact of variation in State Medicaid benefits on 
nationally standardized Medicare policies. The other commenter 
expressed similar concerns with using dual eligibility, stating that 
dual eligibility status is not a consistent measure of economic 
distress across States as Medicaid eligibility varies by State. The 
commenter encouraged CMS to evaluate the impacts of this variation and 
consider whether another--more uniform--measure of economic insecurity 
should be used to target AIP funds to ACOs.
    Response: We agree with the commenters that dual eligibility status 
has limitations due to variability in Medicaid eligibility across 
different States, and we are persuaded that LIS status is a preferable 
and more standardized measure of low income among the Medicare FFS 
population. However, we note that LIS also has certain limitations. For 
example, all beneficiaries with dual eligibility status or who receive 
Supplemental Security Income (SSI) automatically receive the LIS 
designation in CMS data systems. Beneficiaries who do not have dual 
eligibility status or SSI status but whose income is lower than 150 
percent of the Federal poverty level must apply for the LIS.\262\ Our 
analysis found that the vast majority of Medicare beneficiaries with 
the LIS designation are those who automatically received this 
designation rather than those who applied for the benefit and were 
approved. Nonetheless, despite this limitation, we agree that the use 
of the LIS designation, in addition to dual eligibility status, is 
preferable to using dual eligibility status alone, as doing so reduces 
variability across States while moderately expanding the number of 
beneficiaries we will identify as low income and who will automatically 
qualify for the maximum risk factors-based score of 100. Furthermore, 
we note that including LIS in the calculation provides ACOs with an 
incentive to support eligible beneficiaries who must apply for the 
benefit to make the connection.
---------------------------------------------------------------------------

    \262\ Memo: ``2021 Resource and Cost-Sharing Limits for Low-
Income Subsidy (LIS)''. October 30, 2020. Department of Health & 
Human Services. Accessed at https://www.cms.gov/files/document/2021-lis-resource-limits-memo.pdf on September 22, 2022.
---------------------------------------------------------------------------

    We note that, like beneficiary dual eligibility status, beneficiary 
LIS enrollment is a monthly indicator. Therefore, we will use similar 
logic as we proposed for dual eligibility status (87 FR 46105) to 
determine if a beneficiary has the LIS designation. We will consider 
the beneficiary's enrollment status in LIS for each month of a 12-month 
window. The 12-month window will correspond with the assignment window 
used for preliminary prospective assignment with retrospective 
reconciliation for that particular assignment run. If a beneficiary had 
zero months of LIS enrollment, we will consider the beneficiary not 
enrolled in LIS. If the beneficiary had at least one month of LIS 
enrollment, we will consider the beneficiary enrolled in LIS.
    Comment: Several commenters expressed concern with the use of the 
national ADI percentile ranks in the calculation of the risk factors-
based score. A couple of these commenters suggested that the national 
ADI was inadequate for identifying underserved populations, as the high 
cost of living for certain areas masks some disadvantaged areas, 
particularly high cost urban areas. Another commenter warned that 
relying heavily on ADI national percentile rankings to inform equity 
initiatives may further disadvantage underserved populations in urban 
areas, given that the index is not adjusted for geographic differences 
in cost of living. Another commenter shared a similar sentiment, 
suggesting that the use of ADI as proposed, would direct funds 
primarily towards rural areas again. A couple commenters noted that the 
CMS cited study from the CY 2023 PFS proposed rule on the proposed 
health equity adjustment actually uses regionally calibrated ADI 
rankings instead of the national percentiles CMS proposed to use.
    Commenters offered a variety of alternatives to the proposal to use 
the ADI national percentile rank in the risk factors-based score, 
including:
     Adjusting the ADI to reflect geographic price differences, 
as well as incorporating additional metrics such as life expectancy.
     Informing the risk factors-based scores with individual 
beneficiary-level social risk factors once adequate data sources become 
available.
     Replacing the ADI national percentile rank with the CDC's 
small area life expectancy measure.
     Replacing the ADI national percentile rank with a 
proprietary index that incorporates social determinants of health 
metrics as an alternative to the ADI.
     Exploring strategies for incorporating HPSA and other 
metrics into score calculations.
     Regionally adjust the ADI national percentile rank, or 
replace it with State-level ADI decile to more adequately capture 
geographic price differences.
     Use the ADI national percentile rank and a beneficiary's 
dual eligibility status unless an ACO is able to provide more granular 
individual social determinants of health data to adjust the scoring.
    Some commenters who found the national ADI rankings unfavorable 
suggested that CMS take more time to recalibrate the methodology to 
calculate a risk factor-based score to more sensitively identify 
underserved areas.
    Response: We thank commenters for their thoughtful input on this 
topic. After consideration and review of commenters suggestions, we 
believe that, at this time, the ADI national percentile rank remains 
the best available option for assigning a risk factors-based score to a 
beneficiary who does not have the LIS or dual eligibility status 
designation. One key strength we see with the ADI is that it is a 
comprehensive, publicly available dataset that applies a standardized 
score for all census block groups nationwide and can be updated 
periodically as new ACS Five Year Estimates become available. This also 
aligns with recent recommendations from the Office of the Assistant 
Secretary for Planning and Evaluation (ASPE). ASPE commissioned three 
environmental scans of: (1) area-level indices of social risk; (2) 
measures used in government programs that target areas, providers, or 
populations with social risk; and (3) existing payment models that 
incorporate measures of social risk. Although ASPE concluded that none 
of the existing area-level indices are ideal, for immediate policy 
development, they concluded that the ADI or the Social Deprivation 
Index (SDI) were the best available choices when selecting an index for 
addressing Health Related Social Needs or Social Determinants of 
Health.\263\
---------------------------------------------------------------------------

    \263\ Report: ``Landscape of Area-Level Deprivation Measures and 
Other Approaches to Account for Social Risk and Social Determinants 
of Health in Health Care Payments.'' Accessed at https://aspe.hhs.gov/reports/area-level-measures-account-sdoh on September 
27, 2022.
---------------------------------------------------------------------------

    We agree with the commenters who stated that certain census block 
groups in certain areas of the U.S. may have lower ADI national 
percentile ranks than they would using the ADI State decile ranks. We 
acknowledge that census block groups in areas with

[[Page 69800]]

higher cost of living (which some commenters suggest tend to be urban 
areas) are more likely to have this result than areas with lower cost 
of living. However, our analysis finds that using State decile ranks in 
lieu of national percentile ranks would actually reduce the quarterly 
payment amount for the majority of ACOs in our simulation. 
Additionally, our analysis suggests that including LIS and dual 
eligibility status in the calculation of the risk factors-based score 
assists ACOs in areas where beneficiaries have a higher State ADI than 
a national ADI. We looked at the effect of the policy to assign 100 
points for dual eligibility status among the remaining ACOs that would 
have had higher quarterly payments if we use State deciles. We found 
that when we assigned 100 points for LIS and dual eligibility status 
(as opposed to only using the beneficiary's ADI), the payment 
differences between using national versus State ADI shrunk for nearly 
all of those ACOs. We believe that switching to a State ADI decile 
would dilute the effectiveness of this option to attract ACOs to form 
or expand into more underserved areas of the country.
    We remind commenters that beneficiaries determined to be low income 
using LIS status or dual eligibility status will automatically receive 
the maximum risk factors-based score of 100 and will qualify for the 
maximum per beneficiary payment. Additionally, beneficiaries whose risk 
factors-based score instead reflects the ADI national percentile rank 
of the area in which they reside will still receive a per beneficiary 
payment amount (if the beneficiary has a score of at least 25 and is 
among the ACO's 10,000 assigned beneficiaries with the highest risk 
factors-based score). We designed the per beneficiary payment amounts 
to moderately decrease as a beneficiary's risk factors-based score 
decreases, but any beneficiary who has a risk factors-based score of 25 
or higher will be included in the calculation of the ACO's quarterly 
payment if the beneficiary is among the ACO's 10,000 beneficiaries with 
the highest risk factors-based score.
    We reiterate that we appreciate commenters' thoughtful input on 
this matter; we intend to continue exploring how we might incorporate 
such factors in a fair, standardized, comprehensive, and transparent 
manner into our future policy. We believe that the determination of a 
beneficiary risk factors-based score should be transparent, and that 
the underlying metrics should use recent data in a similar manner as 
the ADI.
    Comment: We also received a few comments related to the proposed 
methodology to calculate the quarterly payment amount based on the 
beneficiaries with the highest risk factors-based scores for up to 
10,000 beneficiaries, or an alternative to calculate an average risk 
factors-based score based on all the assigned beneficiaries in the ACO. 
A few commenters noted that the proposal to consider the 10,000 
beneficiaries with the highest risk factors-based score was preferable 
to using an average score for all assigned beneficiaries, citing that 
the latter might mask variation, dilute the scores, or result in an 
improper distribution of funds. MedPAC supported the alternative to use 
an average risk factors-based score for the entire ACO's assigned 
population, indicating that this would encourage large ACOs to continue 
to include beneficiaries with high risk factors-based scores beyond the 
first 10,000 and inducing a greater inclusion of underserved 
beneficiaries.
    Response: We continue to believe that the proposed policy, which 
determines quarterly, variable payments solely based on the 10,000 
beneficiaries with the highest risk factors-based score, is the most 
generous to participating ACOs and will best meet their needs when 
establishing operations and care in underserved areas. Calculating the 
quarterly payments based on the average risk factors-based score across 
an ACO's entire assigned beneficiary population would lead to lower 
quarterly payments for ACOs with more than 10,000 assigned 
beneficiaries and thereby reduce the ability of many participating ACOs 
to expand care to underserved populations. Based on the profile of the 
low revenue ACOs participating in the Shared Savings Program in recent 
years, we expect that a large proportion of new, low revenue ACOs have 
more than 10,000 assigned beneficiaries, and would thus receive lower 
quarterly payments if we were to adopt the alternative to calculate it 
using the ACO's average risk factors-based score. We prefer an approach 
to determine a payment based on the 10,000 beneficiaries in the ACO 
with the highest risk factors-based scores, as those are the 
beneficiaries for whom we expect could benefit the most from the 
upfront investments made by the ACO.
    After consideration of the public comments and for the reasons 
stated above and in the CY 2023 PFS proposed rule (87 FR 46103), we are 
finalizing the advance investment payment methodology at Sec.  
425.630(f) with a modification to incorporate the low-income subsidy 
designation in the calculation of the risk factors-based score at Sec.  
425.630(f)(ii). That is, the risk factors-based score will be set to 
100 if the beneficiary is enrolled in the Medicare Part D LIS or is 
dually eligible for Medicare and Medicaid. The risk factors-based score 
will be set to the ADI national percentile rank matched to the 
beneficiary's mailing address if the beneficiary is not enrolled in the 
Medicare Part D LIS or is not dually eligible for Medicare and Medicaid 
and sufficient data is available to match the beneficiary to an ADI 
national percentile rank. The risk factors-based score will be set to 
50 if the beneficiary is not enrolled in the Medicare Part D LIS or is 
not dually eligible for Medicare and Medicaid and sufficient data is 
not available to match the beneficiary to an Area Deprivation Index 
national percentile rank. We are finalizing our proposal as proposed to 
use the ADI national percentile rank, without additional modifications 
to that rank, to inform the beneficiary's risk factors-based score.
(6) Duration of Advance Investment Payment
    In AIM, ACOs in the model participated in 3-year agreements in the 
Shared Savings Program, and they received prepaid shared savings for 
the first 2 years of their participation and were allowed to spend that 
funding over their entire 3-year agreement period. In AIM, we observed 
that many ACO model participants needed the entire agreement period to 
be able to spend the prepaid shared savings they received under the 
model. Based on our experience with AIM, we proposed at Sec.  
425.630(f)(1) that the ACOs would receive AIPs (a one-time payment of 
$250,000 plus quarterly payments calculated in accordance with Sec.  
425.630(f)(2)) in the first 2 years of their participation agreement. 
We proposed at Sec.  425.630(e)(3) that an ACO would be permitted to 
spend the AIPs over its entire 5-year agreement period and must repay 
to CMS any unspent funds at the end of its agreement period. We stated 
that CMS would issue a demand letter for any such amounts. We stated 
that the requirement that funds be spent during the agreement period 
furthers our goals of supporting the establishment of ACOs and 
delivering care to beneficiaries in a prompt manner. We sought public 
comments on our proposal to provide AIPs to ACOs for the first 2 years 
of the ACO's performance period, to allow ACOs to spend those payments 
over the duration of their 5-year agreement period, and to send a 
demand letter for any unspent

[[Page 69801]]

funds at the end of the ACO's agreement period.
    Comment: We received a couple comments on the duration of advance 
investment payments. One commenter agreed with the duration as proposed 
that an ACO receive quarterly payments for 2 years and that the ACO be 
permitted to spend the AIPs over their entire 5-year agreement period. 
The commenter stated it provides ample time for ACOs to use the funds 
and invest in sustainable initiatives while ensuring the funds are used 
promptly and appropriately to impact beneficiaries' care. Another 
commenter suggested that CMS provide quarterly payments for the full 
duration of a 5-year agreement period for new, low revenue ACOs, citing 
that the extended payments would help these ACOs acclimate to the 
program.
    Response: We agree with the first commenter, that an ACO be 
permitted to spend the AIPs over their entire 5-year agreement period. 
We expect this to enable ACOs to make appropriate investments into 
quality care for underserved beneficiaries in a thoughtful manner and 
strategize how best to accomplish Shared Savings Program goals. We do 
not agree with the suggestion to extend the quarterly payments for the 
full 5-year agreement period. We have concerns that extending the 
quarterly payments would burden ACOs with larger repayment amounts. In 
the case of ACOs that do not achieve sufficient shared savings to repay 
the AIP amounts, extending the quarterly payments would increase costs 
to the program. We believe providing 2 years of quarterly payments 
appropriately balances providing sufficient start-up capital for an ACO 
with providing the ACO time to implement their care coordination 
efforts to earn shared savings in later years.
    For the reasons discussed above, we are finalizing the policies as 
proposed. Specifically, we are finalizing Sec.  425.630(e)(3), which 
permits ACOs to spend AIPs over their entire agreement period, and 
Sec.  425.630(f)(1), which establishes a single upfront fixed payment 
and quarterly, variable payments for the first 2 years of an ACO's 
agreement period.
(7) Compliance and Monitoring
(a) Public Reporting and Monitoring of Spend Plan
    We proposed to monitor the spending of AIPs to provide CMS with a 
clear indication of how ACOs intend to spend AIPs, provide adequate 
protection to the Medicare Trust Funds, and to prevent funds from being 
misdirected or appropriated for activities that do not constitute a 
permitted use of the funds. We explained in the CY 2023 PFS proposed 
rule that we would do so by comparing the anticipated spending as set 
forth in the spend plan submitted with an ACO's application against the 
actual spending as reported on the ACO's public reporting web page, 
including any expenditures not identified in the spend plan. We 
proposed that the reported annual spending must include any 
expenditures of AIPs on items not identified in the spend plan. ACOs 
would be required to annually report their actual expenditures via an 
updated spend plan on their public reporting web page.
    We noted that we believe that transparency of information in the 
health care sector facilitates more informed patient choice and offers 
incentives and feedback that help improve the quality and lower the 
cost of care and improve oversight with respect to program integrity. 
As we discussed in previous final rules, improved transparency supports 
a number of program requirements. In particular, increased transparency 
is consistent with and supports the requirement under section 
1899(b)(2)(A) of the Act for an ACO to be willing to ``become 
accountable for the quality, cost, and overall care'' of the Medicare 
beneficiaries assigned to it.
    Therefore, as discussed in the CY 2023 PFS proposed rule, we 
believe it is desirable and consistent with section 1899(b)(2)(A) of 
the Act for several aspects of an ACO's use of AIPs to be available to 
the public. Making this information available will provide both 
Medicare beneficiaries and the general public with insight into the use 
of AIP funds by an ACO. Accordingly, we proposed to modify Sec.  
425.308 to require that an ACO annually report on its public reporting 
web page information regarding AIPs. Specifically, we proposed at Sec.  
425.308(b)(8) that, for each performance year, an ACO would be required 
to report (in a standardized format specified by CMS) its spend plan, 
the total amount of AIPs received, and an itemization of how any AIPs 
were actually spent during the year, including expenditure categories, 
the dollar amounts spent on the various categories, any changes to the 
spend plan as submitted under Sec.  425.630(d)(1), and such other 
information as may be specified by CMS. We proposed that this 
itemization would include expenditures not identified or anticipated in 
the ACO's submitted spend plan, and any amounts remaining unspent. As 
proposed, if CMS determined that an ACO had disbursed AIPs for a 
prohibited use under proposed Sec.  425.630(e)(2), CMS could terminate 
the ACO's receipt of AIPs under proposed Sec.  425.630(h), as discussed 
later in this section. Any AIPs that are unspent at the end of the 
ACO's agreement period must be repaid to CMS under proposed Sec.  
425.630(e)(3), as discussed above in section III.G.2.a.(6) of this 
final rule. Additionally, CMS could take compliance action as specified 
in Sec. Sec.  425.216 and 425.218 if an ACO spent the funds on a 
prohibited use or had unspent funds at the end of the agreement period. 
We sought comment on all aspects of the proposal.
    We noted that under existing Sec.  425.314, ACOs would be required 
to retain adequate books and records to ensure that CMS has the 
information necessary to conduct appropriate monitoring and oversight 
of ACOs' use of AIPs (for example, invoices, receipts, and other 
supporting documentation of AIP disbursements). To protect the program 
and the Medicare Trust Funds, we explained that we may use our 
authority under Sec. Sec.  425.314 and 425.316 to audit ACO compliance 
with Shared Savings Program requirements and to monitor the performance 
of ACOs, respectively. We noted that we would conduct audits as 
necessary to monitor and assess an ACO's use of AIPs and compliance 
with other requirements related to such payments.
    The following is a summary of the public comments received on the 
policies we proposed regarding public reporting and monitoring of spend 
plans and our responses:
    Comment: One commenter supported the proposals concerning public 
reporting and monitoring of ACO spend plans. A few commenters supported 
leveraging the public reporting web page to include ACO spend plans. 
Several commenters requested that CMS provide guidance on reporting 
requirements to minimize ACO administrative burden. The commenters 
suggested seeking feedback from ACOs when developing standardized 
reporting formats.
    Response: We appreciate the support of the commenters. CMS will 
provide guidance for reporting AIP spend plan and usage of AIP funds on 
the ACO's public reporting web page, and we intend to develop guidance 
that will minimize administrative burden in the reporting of this 
information. To ensure program transparency and public accountability, 
CMS will require an ACO to publicly report its spend plan in a 
standardized format before and after the performance year. Before each

[[Page 69802]]

performance year, the ACO must publicly report the anticipated spend 
plan, including planned expenditure categories and percentages within 
each category. After each performance year, the ACO must publicly 
report the total amount of AIPs received and an itemization of the AIPs 
spent during the year (that is, expenditure categories and the amounts 
spent on the various categories), and any changes to the spend plan. 
CMS will also post information on the ACOs' AIP payments, spend plans, 
and actual expenditures on its Shared Savings Program data page. CMS's 
monitoring of this information will assist CMS in protecting the 
Medicare Trust Funds from being misdirected or misappropriated for 
activities that do not constitute a permitted use of AIP funds.
    We are finalizing our public reporting policy as proposed. 
Specifically, we are finalizing new Sec.  425.308(b)(8), which sets 
forth the reporting requirements for AIPs.
(b) Monitoring for Changes in ACO Experience With Risk and ACO Revenue
    As described in section III.G.2.a.(2) of this final rule, under the 
new Sec.  425.630(b), ACOs must meet the following basic criteria to be 
eligible for AIPs:
     The ACO is not a renewing or re-entering ACO, as defined 
under Sec.  425.20.
     The ACO is applying to participate under any level of the 
BASIC track glide path as specified under Sec.  425.600(a)(4)(i)(A).
     The ACO must be inexperienced with performance-based risk 
Medicare ACO initiatives, as defined by Sec.  425.20.
     The ACO must be a low revenue ACO, as defined by Sec.  
425.20.
    Based on our program experience, the inexperienced/experienced and 
low/high revenue ACO determination could be affected by changes in the 
ACO participant list that are made during the course of the agreement 
period, where the changes are not motivated by the ACO's desire to 
avoid program requirements regarding participation options. ACO 
participant list changes during the agreement period could affect the 
categorization of ACOs, particularly for ACOs close to the threshold 
percentage. As discussed in the CY 2023 PFS proposed rule, we 
considered that an ACO may change its composition of ACO participants 
each performance year. Any approach under which we would apply 
different policies to ACOs based on a determination of ACO participant 
prior experience under performance-based risk would need to recognize 
the potential for an ACO to add or remove ACO participants which could 
affect whether an ACO meets the definition of experienced with 
performance-based risk Medicare ACO initiatives. We noted our concerns 
about the possibility that an ACO may be eligible to receive AIPs and 
then quickly thereafter seek to add ACO participants experienced with 
performance-based risk, thereby avoiding the inexperience and low 
revenue eligibility requirements.
    To identify and address these circumstances, we proposed at Sec.  
425.316(e)(1) that CMS will monitor ACOs that receive AIPs to determine 
if they remain low revenue ACOs that are inexperienced with 
performance-based risk. We noted that we would monitor ACOs for changes 
in the risk experience of ACO participants that would cause an ACO to 
be considered experienced with performance-based risk or a high revenue 
ACO, and therefore, ineligible for AIPs.
    We proposed at Sec.  425.316(e)(2) to specify that if an ACO 
receiving AIPs becomes experienced with performance-based risk Medicare 
ACO initiatives or becomes a high revenue ACO during any performance 
year of the agreement period, CMS would cease paying the ACO AIPs 
starting the quarter after the ACO became experienced with performance-
based risk Medicare ACO initiatives or became a high revenue ACO and 
may take compliance action as specified in Sec. Sec.  425.216 and 
425.218.
    As proposed, Sec.  425.316(e)(3) would require that the ACO repay 
spent and unspent AIPs if CMS takes pre-termination action under Sec.  
425.216 and the ACO continues to be experienced with performance-based 
risk Medicare ACO initiatives or a high revenue ACO after a deadline 
specified by CMS pursuant to such compliance action (for example, the 
next deadline for updating the ACO participant list). We proposed that 
to retain its AIP, an ACO that CMS determines to be experienced with 
performance-based risk or a high revenue ACO would be required to 
remedy the issue by the deadline specified by CMS. For example, if the 
ACO participants' total Medicare Parts A and B FFS revenue has 
increased in relation to total Medicare Parts A and B FFS expenditures 
for the ACO's assigned beneficiaries, the ACO could remove an ACO 
participant from its ACO participant list so that the ACO could meet 
the definition of a low revenue ACO. If the ACO fails to respond to 
compliance action under Sec.  425.216 or otherwise fails to remedy the 
eligibility issue by the applicable deadline, the ACO would be required 
to repay all AIPs it had received. We proposed that CMS would provide 
written notification to the ACO of the amount due, and the ACO must pay 
such amount no later than 90 days after the receipt of notification. We 
noted that CMS may recover the amount owed by reducing the amount of 
any shared savings.
    To aid us in determining whether it would be appropriate for us to 
recoup AIP funds from an ACO, we further proposed to update the 
definitions of ``inexperienced with performance-based risk Medicare ACO 
initiatives'' and ``experienced with performance-based risk Medicare 
ACO initiatives'' under Sec.  425.20 to allow for a rolling lookback 
period of the 5 most recent performance years beginning from the 
current performance year being monitored. This would be applicable to 
both ongoing compliance determinations and the assessment of an ACO's 
application to participate under a participation option for an 
agreement period under proposed Sec.  425.600(h). We noted that we 
would provide ACOs with preliminary participation options reports 
throughout the application and ACO participant list change request 
cycles so ACOs can be fully informed of the impact of becoming 
experienced with performance-based risk or high revenue for the 
upcoming performance year.
    The following is a summary of the public comments received on these 
proposals and our responses:
    Comment: One commenter encouraged CMS to take a more nuanced 
approach when taking remedial action should an ACO become designated as 
high revenue ACO or an ACO experienced with performance-based risk 
Medicare ACO initiatives. The commenter suggested that CMS consider the 
ACO's specific circumstances. For example, if an ACO adds a CAH to its 
ACO participant list and subsequently becomes high revenue, the 
commenter suggested that CMS could cease future payments of AIPs but 
not require payback of disbursed funds to avoid penalizing the ACO for 
adding a safety net provider. The commenter also suggested that CMS 
review the spending of AIPs when determining repayment. For instance, 
if the spent funds were invested in patient care or infrastructure that 
results in an ongoing benefit for Medicare providers, suppliers, and/or 
beneficiaries, the commenter suggested CMS only require repayment of 
the unspent AIP funds.
    Response: We disagree with the commenter. As outlined in the 2018 
final rule, Pathways to Success, we believe that the total Medicare 
Parts A and B FFS revenue of the ACO

[[Page 69803]]

participants could be indicative of whether the ACO participants, and 
therefore, potentially the ACO, are more or less capitalized. We intend 
to limit AIP to ACOs that would not otherwise have access to funding, 
as some proportion of ACOs are unlikely to earn enough shared savings 
to repay AIP, and distributing AIP funding to ACOs that are 
sufficiently capitalized poses an unnecessary risk to the Trust Funds. 
However, we would continue to evaluate and employ a range of methods to 
monitor and assess the effectiveness of the eligibility requirements as 
AIP is implemented.
    We are finalizing the provisions we proposed at Sec.  425.316(e) 
regarding monitoring of ACO eligibility for AIPs, with additional 
language confirming that CMS may review eligibility during any 
performance year. This language is consistent with the preamble, but 
was inadvertently omitted from the regulation text.
(c) Termination of Advance Investment Payments
    Under Sec. Sec.  425.216 and 425.218, CMS can terminate an ACO or 
take pre-termination actions (such as requesting a corrective action 
plan) if CMS determines that an ACO is not in compliance with 
eligibility or other Shared Savings Program requirements. Accordingly, 
in the CY 2023 PFS proposed rule, we discussed that if we finalize our 
proposal to implement AIPs, CMS could take remedial action under those 
provisions if an ACO receiving such payments becomes experienced with 
performance-based risk Medicare ACO initiatives, becomes a high revenue 
ACO, spends AIPs for a prohibited use, fails to comply with other AIP 
requirements, or meets any of the grounds for ACO termination set forth 
in Sec.  425.218(b). We noted that where appropriate, we would work 
with the ACO to understand why the noncompliance with AIP requirements 
had occurred so that we could develop an effective plan of action and 
monitoring technique. We also noted that our existing pre-termination 
actions do not include the cessation of payments to an ACO. To protect 
the Trust Funds, encourage speedy resolution of noncompliance, and 
provide an added safeguard against abuse, we proposed at Sec.  
425.630(h)(1) and (2) that CMS may terminate an ACO's receipt of AIPs 
if the ACO ceases to meet the eligibility requirements specified in 
proposed Sec.  425.630(b)(3) and (4), fails to comply with other AIP 
requirements, or meets any of the grounds for termination set forth at 
Sec.  425.218(b). For the same reasons, we further proposed under Sec.  
425.630(h)(3) that CMS may immediately terminate an ACO's AIPs without 
taking any of the pre-termination actions set forth in Sec.  425.216. 
We noted that we expect that immediate termination of AIPs would be 
invoked only in cases of serious noncompliance or when the ACO's 
actions or inaction poses a risk of harm to beneficiaries or negatively 
affects access to care.
    The following is a summary of the public comments received on this 
proposal and our responses:
    Comment: One commenter supported the proposal because it ensures 
program integrity and appropriate protections for beneficiaries.
    Response: We agree with the commenter. We note that we intend to 
work with an ACO to understand why it is not compliant with AIP 
requirements and to develop an effective plan of action and monitoring 
technique to ensure future compliance.
    For the reasons discussed above, we are finalizing without change 
the policies we proposed at Sec.  425.630(h). Specifically, under Sec.  
425.630(h)(1), CMS may terminate advance investment payments if the ACO 
fails to comply with the requirements of Sec.  425.630, or meets the 
grounds for termination under Sec.  425.218(b). Under Sec.  
425.630(h)(2), CMS will terminate an ACO's AIPs in accordance with 
Sec.  425.316(e) if the no longer meets the AIP eligibility 
requirements set forth at Sec.  425.630(b)(3) and (b)(4). Under Sec.  
425.630(h)(3), CMS may immediately terminate distribution of an ACO's 
advanced investment payments without taking any pre-termination actions 
under Sec.  425.216.
(8) Recoupment
    In AIM, we recouped prepaid shared savings from any shared savings 
earned by an ACO in its current agreement period, and if necessary, 
future agreement periods. If the ACO did not achieve shared savings, 
then the prepaid shared savings were not recouped. Additionally, the 
balance of funding was not recouped if the ACO completed the agreement 
period and decided not to reenroll in a second agreement period. If the 
ACO terminated prior to the end of its 3-year agreement period, the 
remaining balance was required to be repaid in full. During the model, 
we observed that offering new small ACOs prepaid shared savings that 
they were not at risk of being forced to repay if they did not achieve 
savings was a critical incentive for small providers and suppliers to 
form ACOs to join AIM and the Shared Savings Program. Based on our 
experience in AIM, we proposed at Sec.  425.630(g) a policy for 
recoupment of AIPs from an ACO. The Shared Savings Program now has 5-
year agreement periods instead of the 3-year agreement periods that 
were in effect during AIM, so some timing adjustments to the recoupment 
policy are necessary, but the majority of the proposed policy aligned 
with AIM recoupment policy.
    We proposed at Sec.  425.630(g)(1) to recoup AIPs from any shared 
savings, as defined in Sec.  425.20, earned by the ACO in any 
performance year until CMS has recouped all AIPs. We further proposed 
that if there are insufficient shared savings to recoup the AIPs made 
to an ACO for a performance year. We further proposed that for both 
renewing and re-entering ACOs, we would carry forward any remaining 
balance owed to subsequent performance year(s) in which the ACO 
achieves shared savings, including any performance year(s) in a 
subsequent agreement period.
    At Sec.  425.630(g)(2), we proposed that in circumstances where the 
amount of shared savings earned by the ACO is revised upward by CMS for 
any reason, we would reduce the redetermined amount of shared savings 
by the amount of AIPs made to the ACO as of the date of the 
redetermination. If the amount of shared savings earned by the ACO is 
revised downward by CMS for any reason, we proposed that the ACO would 
not receive a refund of any portion of the AIPs previously recouped or 
otherwise repaid.
    We proposed under Sec.  425.630(g)(3) that for each performance 
year, we would not recoup an amount of AIPs greater than the shared 
savings earned by an ACO for that performance year (except as provided 
in Sec.  425.630(g)(4) and Sec.  425.316(e)(3)). Thus, if an ACO does 
not earn shared savings in its agreement period or a subsequent 
agreement period, we would not recoup any of the AIPs from the ACO.
    For example, if an ACO received $300,000 in AIPs and achieved 
shared savings of $500,000 for the first performance year, we would 
recoup $300,000 and pay $200,000 in shared savings to the ACO. 
Alternatively, if an ACO received $300,000 in AIPs and achieved shared 
savings of $200,000 for the first performance year, we would recoup 
only $200,000 and not pay any shared savings to the ACO. The 
outstanding balance of $100,000 would be carried forward, to be 
recouped in a future performance year in which the ACO achieves shared 
savings. Under a third scenario, if the ACO does not achieve shared 
savings in all 5 performance years of its agreement period and does not 
renew for another agreement period in the Shared Savings

[[Page 69804]]

Program, we would not recoup any AIPs made to the ACO. However, to 
protect the program from abuse, CMS would recoup any outstanding 
balance from a re-entering ACO determined to be experienced with 
performance-based risk Medicare ACO initiatives. We noted that a ``re-
entering ACO,'' as defined at Sec.  425.20, includes an ACO that is a 
new legal entity that is applying to participate in the program and 
more than 50 percent of its ACO participants were included on the ACO 
participant list of the same ACO in any of the 5 most recent 
performance years.
    At Sec.  425.630(g)(4), we proposed that if an ACO terminates its 
participation agreement during the agreement period in which it 
received an AIP, the ACO must repay all AIPs it received. In such a 
case, CMS would provide written notification to the ACO of the amount 
due and the ACO must pay such amount no later than 90 days after the 
receipt of notification. As explained in the CY 2023 PFS proposed rule, 
we noted that this proposal would ensure that AIPs are used by ACOs 
that complete their agreement period and reduces the risk of ACOs using 
termination to avoid repayment of the AIPs.
    As described in section III.G.2.a.(2) of the CY 2023 PFS proposed 
rule, we proposed that an ACO would not be eligible for AIPs unless it 
is a low revenue ACO, as defined at Sec.  425.20, and inexperienced 
with performance-based risk Medicare ACO initiatives, as defined at 
Sec.  425.20. A goal of the AIPs is to encourage the formation of ACOs, 
and based on our experience with AIM, we recognize that new, smaller 
ACOs need start-up funding to join the Shared Savings Program and to 
continue care coordination over the agreement period.
    As described in section III.G.2.a.(7)(b) of the CY 2023 PFS 
proposed rule, we proposed to monitor and notify ACOs if they become 
high revenue or experienced with performance-based risk during a 
performance year so they may choose to modify their ACO participant 
lists for the next performance year to maintain their low revenue and 
inexperienced status. As proposed at Sec.  425.316(e), if CMS 
determines that an ACO is experienced with performance-based risk 
Medicare ACO initiatives or is a high revenue ACO, CMS will cease 
payment of AIPs starting the quarter after the ACO became experienced 
with performance-based risk or became a high revenue ACO, and CMS may 
take compliance action as specified in Sec. Sec.  425.216 and 425.218. 
For example, if CMS determines that an ACO became experienced with 
performance-based risk Medicare ACO initiatives or became a high 
revenue ACO during the annual change request and assignment process for 
the second performance year of the agreement period, CMS would not pay 
to the ACO additional AIPs, effective the next quarterly payment after 
the ACO became experienced with performance-based risk Medicare ACO 
initiatives or a high revenue ACO, which would be January 1 of the 
second performance year. In addition, CMS could take compliance action 
as specified in Sec. Sec.  425.216 and 425.218. If CMS determines after 
all AIPs have been paid (for example, during the third performance year 
of the agreement period) that an ACO became experienced with 
performance-based risk Medicare ACO initiatives, CMS may take 
compliance action as specified in Sec.  425.216 and account for any 
inappropriate payments. For example, CMS could issue a request for a 
corrective action plan, and the ACO would be required to come back into 
compliance the following performance year. If an ACO remains 
noncompliant after the compliance deadline specified by CMS, we would 
provide written notification to the ACO of the amount due and the ACO 
must pay such amount no later than 90 days after the receipt of such 
notification. To achieve the goal of AIPs and ensure that the payments 
support new, smaller ACOs, we proposed at Sec.  425.316(e) that if CMS 
determines during the agreement period in which an ACO received an AIP 
that the ACO became a high revenue ACO or became experienced with 
performance-based risk Medicare ACO initiatives, the ACO may be 
required to repay all AIPs it received during the agreement period. We 
proposed to provide written notification to the ACO of the amount due 
and to require the ACO to pay such amount no later than 90 days after 
the receipt of notification.
    We proposed at Sec.  425.630(g)(5) that if an ACO that received 
AIPs enters into proceedings relating to bankruptcy, whether voluntary 
or involuntary, the ACO must provide written notice of the bankruptcy 
to CMS and to the U.S. Attorney's Office in the district where the 
bankruptcy was filed, unless final payment for the agreement period has 
been made by either CMS or the administrative or judicial review 
proceedings relating to any payments under the Shared Savings Program 
have been fully and finally resolved. We proposed that the notice of 
bankruptcy must be sent by certified mail no later than 5 days after 
the petition has been filed and must contain a copy of the filed 
bankruptcy petition (including its docket number). We proposed that the 
notice to CMS must be addressed to the CMS Office of Financial 
Management at 7500 Security Boulevard, Mailstop C3-01-24, Baltimore, MD 
21244 or such other address as may be specified on the CMS website for 
purposes of receiving such notices. We noted that our proposal was 
consistent with the AIM model participation agreement and ensures that 
CMS can recover AIPs if an ACO files for bankruptcy.
    We are sought comment on all aspects of our proposals for 
recoupment of the AIPs made to ACOs.
    The following is a summary of the public comments received on these 
proposals and our responses:
    Comment: In general, commenters advocated for a longer recoupment 
period, which they believe would encourage ACO long-term participation 
and reinvestment of funds into ACO operations and improvements. Several 
commenters suggested that CMS should allow ACOs to retain some 
percentage of their shared savings payments during each recoupment 
period. Some of these commenters suggested that CMS should recoup AIPs 
by collecting only up to 50 percent of earned shared savings per 
performance year during the agreement period and in any subsequent 
agreement period. A few of these commenters noted that they believe 
longer recoupment periods would provide continuity and sustained 
funding for these ACOs, making them more likely to continue 
participation in the program and to progress to more advanced levels of 
risk. One commenter opined that it typically takes low revenue ACOs 2 
to 3 years to achieve savings, suggesting that immediate recoupment of 
AIPs would disadvantage new entrant ACOs or those serving lower income 
or underserved populations. To increase program participation and 
reduce barriers to entry, a few commenters suggested CMS reduce AIP 
recoupment proportionally to the number of underserved beneficiaries 
served by the ACO. The commenters requested that CMS monitor the 
individual circumstances surrounding an ACO's early termination and 
consider unintended negative consequences it may have on the ACO's 
beneficiaries.
    Response: We disagree with the commenters. Regarding the comment 
that ACOs should be permitted to repay AIPs over a longer period of 
time, we note that the recoupment period begins in the first 
performance year of the agreement period in which the ACO receives AIPs 
and can continue for the remainder of that agreement period and into 
one or more agreement periods. We believe that this policy safeguards 
the Medicare Trust Funds by recouping

[[Page 69805]]

AIPs expeditiously. We do not believe that immediately recouping these 
funds from earned shared savings will disadvantage any ACOs as they 
will be receiving quarterly payments for the first 2 years. Regarding 
the commenters who advocated that ACOs should be able to retain a 
portion of their AIPs or be liable for a reduced repayment amount, we 
note that the AIPs are not intended to supplement FFS payments, but 
rather provide start-up capital out of future shared savings to be used 
by new ACOs to provide sufficient resources for staffing, providing 
accountable care for underserved beneficiaries, and investing in 
healthcare delivery infrastructure.
    Comment: One commenter advocated that CMS forgive the repayment 
requirement should an ACO complete its initial agreement period without 
achieving shared savings. Another commenter encouraged CMS not to 
recoup any remaining AIP balance owed even if an ACO terminates during 
the same agreement period in which it received AIP. One commenter 
speculated that recoupment could discourage participation because it 
would be difficult for an ACO to transition smoothly out of the Shared 
Savings Program if AIPs must be repaid upon early termination and if 
recoupment continues into the next agreement period. One commenter 
suggested recoupment of AIP funds be limited to unspent funds at the 
time of termination because early termination may be the result of an 
ACO's inability to secure operating funds or the loss of ACO 
participants through competition from other ACOs. A few commenters 
stated that, in determining the amount of AIPs to be repaid, CMS should 
consider an ACO's circumstances and timing of termination, as well as 
investments made with the funds before recoupment. The commenter 
recommended that CMS revise the proposed recoupment policies to take a 
more equitable approach.
    To encourage and support ACOs that provide care for underserved 
beneficiaries, one commenter suggested that CMS forgo AIP recoupment 
for ACOs that exceed quality and savings goals over the participation 
agreement period. Another commenter proposed eliminating the 
requirement to recoup AIPs if safety net provider-led ACOs achieve 
shared savings, invest in population health infrastructure and programs 
and select higher levels of risk. One commenter advocated that CMS 
should never recoup any AIPs paid to rural ACOs and that, in the 
alternative, AIPs should be considered an interest-free loan. By tying 
recoupment policies to equity goals, CMS could incentivize the 
expansion of ACOs into underserved communities.
    MedPAC expressed concern that significant, forgivable upfront 
payments coupled with ACOs exiting the program would preclude program 
savings. MedPAC asserted that if program exit were high and significant 
upfront payments are not recouped, several types of corrective action 
would be needed. This could involve lowering upfront payments or 
requiring repayment upon exit of the program. Based on findings from 
prior advance payment models, MedPAC stated that stringent requirements 
may be needed in the future to deter ACOs from receiving advance 
investment payments and exiting the Shared Savings Program before they 
are paid back.
    Response: We disagree with the commenters' assertions that AIP 
should not be recouped or that it should be recouped to a lesser degree 
under various circumstances. We view recoupment of AIPs as a critical 
measure necessary to ensure the adequate protection of the Medicare 
Trust Funds regardless of the characteristics of the ACO's provider 
composition, aligned beneficiary population, and financial or quality 
performance. In addition, by requiring immediate repayment of AIPs upon 
early termination, we reduce the risk that ACOs will voluntarily 
terminate their participation agreements to avoid repayment of the 
AIPs. We note that AIPs are interest free; CMS will not charge interest 
in when collecting AIPs via recoupment from shared savings. However, if 
an ACO terminates its agreement period early and fails to pay its AIP 
balance in full by the applicable due date, CMS will charge interest on 
the remaining unpaid AIP balance. We thank MedPAC for its concern for 
program oversight risks, and we will monitor the amount of AIPs that 
are not required to be repaid under the term of the program. We may 
consider addressing the issue in future rulemaking.
    For the reasons discussed above, we are finalizing without change 
at Sec.  425.630(g) our proposed policies regarding recoupment and 
recovery of AIPs and bankruptcy notices. Specifically, we are 
finalizing Sec.  425.630(g)(1) which permits CMS to recoup AIPs made to 
an ACO from any shared savings it earns. Under Sec.  425.630(g)(2), if 
the amount of shared savings earned by the ACO is revised upward by CMS 
for any reason, CMS would reduce the redetermined amount of shared 
savings by the amount of AIPs made to the ACO and if the amount of 
shared savings earned by the ACO is revised downward by CMS for any 
reason, the ACO will not receive a refund of any portion of the AIPs 
previously recouped or otherwise repaid. Under Sec.  425.630(g)(3), CMS 
will not recover an amount of AIPs greater than the shared savings 
earned by an ACO in a given performance year (except as provided in 
Sec.  425.630(g)(4) and Sec.  425.316(e)(3)). Under Sec.  
425.630(g)(4), if an ACO terminates its participation agreement during 
the agreement period in which it received an AIP, the ACO must repay 
all AIPs received. In Sec.  425.630(g)(5), an ACO that declares 
bankruptcy must notify CMS and the U.S. Attorney's Office in the 
district where the bankruptcy was filed, unless all AIPs have been 
repaid.
b. Smoothing the Transition to Performance-Based Risk
(1) Background
    Since its inception in 2012, the Shared Savings Program has 
included both one-sided financial models (shared savings only) and two-
sided financial models (shared savings and shared losses) for ACOs to 
select based on the arrangement that makes the most sense for their 
organization. Over the years, we have modified available financial 
models (participation options) providing ``on-ramps'' to attract both 
providers and suppliers that are new to value-based purchasing, as well 
as more experienced entities that are ready to accept two-sided risk. 
We have modified these participation options to adjust the maximum 
level of risk that must be assumed under two-sided models and to smooth 
the transition to two-sided models, including modifying eligibility 
criteria and adding flexibility for more advanced ACOs to transition to 
risk-based arrangements more quickly. These participation option 
modifications have been informed by lessons learned from CMS' 
experience with the program, testing through other initiatives 
conducted by the CMS Innovation Center under section 1115A of the Act 
(the Pioneer ACO Model, the Next Generation ACO Model and the Medicare 
ACO Track 1+ Model), and feedback from interested parties.
    In the November 2011 final rule (76 FR 67904), we stated our belief 
that a one-sided model would have the potential to attract a large 
number of participants to the program and broadly introduce value-based 
purchasing to providers and suppliers, many of whom may not have 
participated in a value-based purchasing initiative before. Another 
reason we included the option for a one-sided track with no downside 
risk was that this model would be

[[Page 69806]]

accessible to and likely to attract small, rural, safety net, and 
physician-only ACOs. However, we also noted that while a one-sided 
model could provide incentives for participants to improve quality, it 
might not be sufficient incentive for participants to improve the 
efficiency and cost of healthcare delivery (76 FR 67904). Thus, in the 
November 2011 final rule, we created two tracks in which ACOs could 
choose to participate. The one-sided model (Track 1) incorporated the 
statutory payment methodology under section 1899(d) of the Act, and the 
two-sided model (Track 2) was also based on the payment methodology 
under section 1899(d) of the Act but incorporated performance-based 
risk using the authority under section 1899(i)(3) of the Act to use 
other payment models. Track 1 was available for an ACO's initial 
agreement period, and all ACOs were required to transition to Track 2 
to continue participating in subsequent agreement periods. (76 FR 67904 
through 670909).
    In the June 2015 final rule (80 FR 32759), we reiterated our intent 
to continue to encourage ACOs' forward movement up the ramp from the 
one-sided model to performance-based risk. The June 2015 final rule 
discussed policy changes that would allow ACOs not yet ready to 
transition to performance-based risk a second agreement period under 
the one-sided model, while also encouraging ACOs to enter performance-
based risk models by lowering the risk under the existing Track 2 and 
offering an additional two-sided model (Track 3) that was based on the 
payment methodology under Track 2 but incorporated different elements 
intended to make it more attractive for entities to accept increased 
performance-based risk. (80 FR 32759 through 32780).
    In 2017, the Innovation Center designed an additional option for 
eligible Track 1 ACOs, referred to as the Track 1+ ACO Model, to 
facilitate ACOs' transition to performance-based risk. The Track 1+ ACO 
Model was a time-limited model that began on January 1, 2018; it was 
based on Shared Savings Program Track 1 but tested a payment design 
that incorporated more limited downside risk, as compared to Track 2 
and Track 3. Our early experience with the design of the Track 1+ ACO 
Model demonstrated that the availability of a lower-risk, two-sided 
model is an effective way to encourage ACOs in one-sided models 
(including ACOs within a current agreement period, initial program 
entrants (that is, new ACO legal entities), and renewing ACOs to 
progress more rapidly to performance-based risk.
    Most recently, in the December 2018 final rule (83 FR 67822), CMS 
redesigned the participation options available under the program to 
encourage ACOs to transition more rapidly to two-sided models under two 
tracks, a BASIC track and an ENHANCED track. Both tracks are designed 
for 5-year agreement periods. The BASIC track includes a glide path 
with 5 Levels (A through E) that allows eligible ACOs to begin under a 
one-sided model for 2 years (each year of which is identified as a 
separate level (Levels A and B)) and advance to a two-sided model that 
includes incrementally higher levels of risk and reward (Levels C, D, 
and E) for the remaining 3 years of the agreement period.\264\ We 
allowed additional flexibility for new ACO legal entities that qualify 
as low revenue ACOs inexperienced with performance-based risk Medicare 
ACO initiatives to participate for up to 3 performance years under a 
one-sided model (4 performance years in the case of ACOs entering an 
agreement period beginning on July 1, 2019) of the BASIC track's glide 
path before transitioning to the highest level of risk and potential 
reward under the BASIC track (Level E) for the final 2 years of the 
agreement period.
---------------------------------------------------------------------------

    \264\ For more information on shared savings and shared losses 
for each level, see Centers for Medicare & Medicaid Services, Shared 
Savings Program Participation Options for Performance Year 2022, 
version 4, April 2021, available at https://web.archive.org/web/20220401033547/ and https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/ssp-aco-participation-options.pdf.
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    Based on a combination of factors, CMS determines an ACO's 
eligibility for participation options in the BASIC track and ENHANCED 
track along with the number of agreement periods that the ACO may 
participate in the BASIC track. These factors include the degree to 
which the ACO's ACO participants control total Medicare Parts A and B 
FFS expenditures for the ACO's assigned beneficiaries (low revenue ACOs 
versus high revenue ACOs), and the ACO's experience and its ACO 
participants' experience with the Shared Savings Program and other 
performance-based risk Medicare ACO initiatives. As noted in the 
December 2018 final rule (83 FR 67826), these policies were designed to 
increase savings for the Medicare Trust Funds and mitigate losses, 
reduce gaming opportunities, and promote regulatory flexibility and 
free-market principles.
    An ACO's ability to participate in the BASIC track is limited, and 
all ACOs eventually must transition to participation in the ENHANCED 
track to continue in the program. High revenue ACOs are limited to, at 
most, a single agreement period under the BASIC track prior to 
transitioning to participation under the ENHANCED track. Low revenue 
ACOs are limited to, at most, 2 agreement periods for a total of 10 
performance years under the BASIC track (or 11 performance years in the 
case of an ACO that participates in an agreement period that began on 
July 1, 2019, and spans a total of 6 performance years). These 
agreement periods do not need to be sequential. The regulations at 
Sec.  425.600(e) also require that should a low revenue ACO, identified 
as experienced with performance-based risk Medicare ACO initiatives, 
have changes in the revenue of its ACO participants that would cause 
the ACO to be considered a high revenue ACO (as these terms are defined 
in Sec.  425.20) for a given performance year, the ACO must take 
corrective action or terminate its participation under the BASIC track 
by the end of the current performance year (83 FR 67877 and 67878).
    As discussed in the December 2018 final rule (83 FR 67881), many 
commenters who addressed the proposed changes to the participation 
options disagreed with the more aggressive transition of ACOs to 
performance-based risk under the proposed program redesign. Some 
commenters cautioned that although the proposed requirement that all 
ACOs undertake two-sided risk at some point during their first 
agreement period might improve the performance of the ACOs that 
continue to participate in the Shared Savings Program, it might also 
reduce ACO participation in the program. Several commenters expressed 
concern that the change in program requirements might cause ACOs to end 
their participation in the Shared Savings Program and create a barrier 
to entry for ACOs to join the program. One commenter recommended that 
CMS carefully monitor Shared Savings Program participation and change 
course if participation falls precipitously. As discussed in the 
Regulatory Impact Analysis section below, AIM participants--a subset of 
Track 1 ACOs that meaningfully outperformed peer ACOs in reducing 
spending and earning shared savings over the period from 2016 through 
2018--dropped out at an elevated frequency before even attempting to 
enter the one-sided model (upside-only) portion of the BASIC track 
glide path, where spending reductions were found to be similar 
regardless of an AIM

[[Page 69807]]

ACO's decision to continue or exit the program.\265\ This suggests both 
that, while an upside-only participation option with a lower shared 
savings rate can be a highly effective incentive for smaller, low 
revenue ACOs targeted by AIM, such ACOs also likely experience a 
correspondingly-magnified disincentive to accept exposure to even the 
limited downside risk presented by the current BASIC track glide path, 
and not even superior performance under Track 1 appears to provide 
enough confidence for such ACOs to consistently move into participation 
options leading to assumption of two-sided risk.
---------------------------------------------------------------------------

    \265\ Trombley, MJ, et al. ACO Investment Model Produced 
Savings, But the Majority of Participants Exited when Faced with 
Downside Risk. Health Affairs. 2022; 138-146. doi:10.1377/
hlthaff.2020.01819, available at https://www.healthaffairs.org/doi/epdf/10.1377/hlthaff.2020.01819.
---------------------------------------------------------------------------

    Several commenters expressed concern that requiring the rapid 
assumption of significant levels of risk by ACOs would discourage new 
participants and impede current ACOs' ability to make patient-centered 
infrastructure investments that are necessary for successful 
participation. Another commenter believed that reducing the amount of 
time permitted under the one-sided model was ill-advised and would 
jeopardize ACOs' continued participation. Our response to these 
comments included our commitment to continue to monitor program 
participation and consider further refinements to the program's 
participation options as we gained experience with implementing the 
redesigned program (83 FR 67835).
    Most commenters on the proposed participation options that were 
finalized in the December 2018 final rule recommended that CMS extend 
the time any ACO can participate in a one-sided model to 3 performance 
years, as opposed to the 2 performance years proposed for ACOs eligible 
to participate under the BASIC track with participation agreements 
beginning on or after January 1, 2020 that do not qualify for a third 
year under the one-sided model under the exception in Sec.  
425.600(a)(4)(i)(B)(2)(ii), stating that it takes longer than 2 
performance years to implement meaningful changes in a healthcare 
delivery model and among healthcare provider and patient populations. 
Other commenters believed that the progression to two-sided risk that 
we proposed and ultimately finalized was far too aggressive and would 
deter participation. These commenters generally suggested allowing for 
4 or 5 performance years (or a full agreement period) under a one-sided 
model. Some commenters suggested that rural ACOs should be allowed at 
least two, 5-year agreement periods under a one-sided model (83 FR 
67847). At the time of the December 2018 final rule, we disagreed with 
suggestions to allow ACOs to remain under the one-sided model for an 
extended time because our experience suggested that the availability of 
6 performance years of no risk under Track 1 and the ability to benefit 
from significant waivers available in the program could be leading to 
the formation of one-sided ACOs that were not making serious efforts to 
improve quality and reduce spending, potentially crowding out the 
formation of more effective ACOs.
    The design of the current Shared Savings Program participation 
options, including a BASIC track glide path incorporating more limited 
downside risk as compared to the ENHANCED track, demonstrates that the 
availability of a lower-risk, two-sided model is an effective way to 
encourage ACOs (including ACOs within a current agreement period, 
initial program entrants, re-entering ACOs, and renewing ACOs) to 
progress more rapidly to performance-based risk. For PY 2022, a 
majority of the 483 ACOs (284 (59 percent)) that currently participate 
in the Shared Savings Program, selected a two-sided model. Refer to 
Table 54.
[GRAPHIC] [TIFF OMITTED] TR18NO22.083

    While many ACOs have agreed to participate under a two-sided model, 
not all ACOs appear to be ready to take on performance-based risk. In 
2020 and 2021, due to the PHE for COVID-19, as defined in Sec.  
400.200, we provided additional participation option flexibilities, 
allowing ACOs participating in the BASIC track's glide path the option 
to elect to forgo automatic advancement and ``freeze'' their 
participation for PY 2021 and PY 2022 at their PY 2020 and 2021 levels, 
respectively. (See May 2020 Interim Final Rule with comment period 
(IFC) (85 FR 27575 and 27576), CY 2021 PFS final rule (85 FR 84767 
through 84769), and fiscal year (FY) 2022 Medicare Hospital Inpatient 
Prospective Payment Systems (IPPS)/Long-Term Care Hospital (LTCH) 
Prospective Payment System (PPS) final rule (86 FR 45502 through 
45506)). Thus, eligible ACOs may have elected to remain in the same 
level of the BASIC track's glide path in which they participated during 
PY 2020 and PY 2021 once again, for PY 2022. As specified in the FY 
2022 IPPS/LTCH PPS final rule (86 FR 45503 through 45506), for PY 2023, 
an ACO that elected one or both of these advancement deferral options 
will be automatically advanced to the level of the BASIC track's glide 
path in which it would have participated during PY 2023 if the ACO had 
advanced automatically to the required level of the BASIC track's glide 
path for PY 2021 and PY 2022, as applicable (unless the ACO elects to 
advance more quickly before the start of PY 2023). For ACOs that 
continued their participation in the

[[Page 69808]]

Shared Savings Program into the next performance year, when given the 
opportunity to freeze at the ACO's current BASIC track level on the 
glide path, most eligible ACOs under a one-side model (Level A or Level 
B) chose to remain in a one-sided model:
     140/157 (89 percent) currently participating ACOs chose to 
maintain their participation in a one-sided model rather than move to 
risk for PY 2021.
     103/140 (74 percent) chose to maintain their participation 
in a one-sided model rather than move to risk for PY 2022.
    As we have addressed several times through previous rulemakings, an 
ongoing consideration for CMS is how long ACOs should be allowed to 
participate under a one-sided model. We have to balance our goal of 
driving the greatest possible shift to high-value care delivery, which 
we believe may be incentivized most effectively under a two-sided 
model, with concern that requiring ACOs to take on too much downside 
risk too quickly will disincentivize program participation and reduce 
the program's potential to positively affect the quality and cost of 
care furnished to beneficiaries. Although we continue to believe there 
are stronger incentives for increased efficiency when ACOs are in a 
two-sided risk track, ACOs continue to report that they are constrained 
by the current participation options and need more time to invest in 
infrastructure and redesigned care processes for high quality and 
efficient health care service delivery before transitioning to 
performance-based risk. Additionally, some ACOs have reported that the 
ENHANCED track is too risky, and therefore, requiring ACOs to 
eventually move to ENHANCED may hinder continued participation. 
Therefore, we believe it would be prudent to provide greater 
flexibility for ACOs to join the program under the one-sided model and 
to remain in the program under lower levels of performance-based risk 
in order to balance our desire to see more ACOs participate under 
performance-based risk while also working towards our goal of 
increasing overall Shared Savings Program participation and improving 
outcomes for beneficiaries, including high need beneficiaries with 
complex health and social needs who may most benefit from ACOs' linked 
networks of clinicians with incentives to close inequitable gaps in 
care associated with poorer health outcomes. 266 267
---------------------------------------------------------------------------

    \266\ McWilliams JM, Landon BE, Chernew ME, Zaslavsky AM. 
Changes in patients' experiences in Medicare accountable care 
organizations. N Engl J Med. 2014;371(18):1715-1724. doi:10.1056/
NEJMsa1406552.
    \267\ Seshamani M, Jacobs DB. Leveraging Medicare to Advance 
Health Equity. JAMA. 2022;327(18):1757-1758. doi:10.1001/
jama.2022.6613.
---------------------------------------------------------------------------

    We note that the Shared Savings Program was established as, and 
remains, a voluntary program for providers and suppliers that choose to 
participate in an ACO and to become accountable for the quality and 
cost of care for an assigned population of Medicare FFS beneficiaries. 
Thus, to promote the program's goal of ACO accountability for the 
quality and cost of care furnished to assigned beneficiaries, we 
believe it would be appropriate to allow certain ACOs in their first 
agreement period in the program to maintain participation in a one-
sided model (with a lower sharing rate) for a longer period of time, 
rather than risk having those ACOs leave the program altogether to 
avoid transitioning to two-sided risk before the ACO is confident it 
has been able to implement the systemic changes necessary to deliver 
high quality, value-based care. Even if an ACO does not earn shared 
savings, ACOs have demonstrated that they are likely saving Trust Fund 
dollars by modifying their ACO participants' behavior to coordinate 
care and carry out other interventions to improve quality and financial 
performance. In particular, ACOs with average to above-average baseline 
spending may decide that a benchmark with a neutral or negative 
regional adjustment presents too much exposure to performance-based 
risk if they are also required to participate under a two-sided model, 
but they may otherwise elect to participate and begin to reduce 
spending if permitted to join and remain under a one-sided model.
    In light of these considerations, we are concerned that our current 
policy of considering an ACO's status as a high- or low revenue ACO (as 
these terms are defined in Sec.  425.20) in determining the 
participation options available to the ACO may disincentivize certain 
providers and suppliers from forming ACOs or joining existing ACOs. At 
the start of July 1, 2019, 52 percent of the participating ACOs met the 
definition of ``high revenue ACO.'' For PY 2020, 48 percent of 
participating ACOs were high revenue ACOs, for PY 2021, 46 percent of 
participating ACOs were high revenue ACOs, and for PY 2022, 44 percent 
of participating ACOs are high revenue. In all, the share of 
participating ACOs that meet the definition of high revenue ACO has 
decreased by 8 percentage points over 3 participation years in a 
consistent downward trajectory.
    It is not our intent to incentivize ACOs to exclude high cost 
providers and suppliers from their ACO participant lists to avoid 
meeting the definition of high revenue ACO. We believe participation in 
the Shared Savings Program encourages providers and suppliers to 
provide better coordinated, more efficient care for beneficiaries and 
results in savings for the Trust Funds. High revenue ACOs, which 
typically include hospitals as ACO participants, have a greater 
opportunity to control assigned beneficiaries' total Medicare Parts A 
and B FFS expenditures, as they coordinate a larger portion of the 
assigned beneficiaries' care across care settings (83 FR 41916 through 
41918). As a result, we believe it is important to provide 
participation options that will encourage more providers and suppliers, 
including those with high revenues, to participate in the Shared 
Savings Program.
    In addition, given the feedback we have received from ACOs and 
other interested parties, as well as our observation of trends in ACO 
participation, we believe ACOs inexperienced with performance-based 
risk Medicare ACO initiatives, regardless of their status as a high or 
low revenue ACO, may be more likely to participate in the program if 
they are allowed more time under a one-sided model than is currently 
allowed under the available participation options. As discussed in the 
December 2018 final rule, some commenters opposed limiting high revenue 
ACOs to one agreement period in the BASIC track. Given that high 
revenue ACOs are responsible for a greater share of Medicare Part A and 
Part B FFS spending than low revenue ACOs, one commenter agreed that it 
is reasonable to ask high revenue ACOs to assume greater levels of risk 
and/or at a faster pace than low revenue ACOs. But this commenter also 
suggested that CMS should take into account that larger health systems 
must invest in change across a much broader delivery ``footprint'' and 
so may require additional investments over multiple years to make 
transformative system changes, and also need a longer time to recoup 
investments (such as in the form of shared savings). Similarly, we 
heard from at least one interested party that high revenue ACOs need 
more of an on-ramp to meaningful levels of two-sided risk because there 
are bigger systemic policies in place that take time to modify in order 
to create changes within

[[Page 69809]]

the organization that focus on providing value-based care.
    As noted above in section III.G.2.a.(2), CMS has outlined a renewed 
vision and strategy for how the Innovation Center will drive health 
system transformation to achieve equitable outcomes through high-
quality, affordable, person-centered care for all beneficiaries. 
Further, in a January 2022 article, CMS stated our goal that 100 
percent of people with Original Medicare will be in a care relationship 
with accountability for quality and total cost of care by 2030.\268\ 
The Shared Savings Program is the largest Medicare alternative payment 
model with 483 ACOs participating in PY 2022 and 11 million assigned 
beneficiaries.\269\ As a result, the Shared Savings Program will play 
an important role in achieving the goal of creating care relationships 
with accountability for quality and costs for all Medicare FFS 
beneficiaries.
---------------------------------------------------------------------------

    \268\ Seshamani, M, Fowler E, Brooks-LaSure C. et al. Building 
On The CMS Strategic Vision: Working Together For A Stronger 
Medicare. Health Affairs. January 11, 2022. Available at https://www.healthaffairs.org/do/10.1377/forefront.20220110.198444.22 
January. doi:10.1377/forefront.20220110.198444.
    \269\ See Medicare Shared Savings Program Fast Facts (January 
2022), available at https://www.cms.gov/files/document/2022-shared-savings-program-fast-facts.pdf.
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    We believe APMs are well positioned to close gaps in health equity. 
Under the Shared Savings Program, ACOs are incentivized to provide high 
quality care while reducing unnecessary duplication of services and 
preventing medical errors. We believe it is important to encourage 
providers and suppliers who are providing care to high needs 
beneficiaries to join and/or form ACOs to help close gaps in health 
equity. We also believe flexibility with respect to the timeline for 
progression to two-sided risk is important in the Shared Savings 
Program to encourage small, rural, safety-net providers to form ACOs or 
to join larger, more urban practices to share resources. Both of these 
strategies can be utilized to help provide high need beneficiaries 
served by small, rural, safety-net providers with the resources to 
better coordinate their care and improve outcomes.
(2) 5-Year Agreement Period Under a One-Sided Model for Eligible ACOs
    In the CY 2023 PFS proposed rule, we proposed to allow certain ACOs 
more time under a one-sided model and more flexibility in transitioning 
to higher levels of risk and potential reward by modifying the 
participation options available under the Shared Savings Program. As 
discussed in the CY 2023 PFS proposed rule, while the proposal for 
currently participating ACOs to elect to maintain their participation 
at Level A or Level B for the remainder of their current agreement 
period would apply beginning January 1, 2023, we proposed to make all 
other policies outlined in this section effective for agreement periods 
starting on or after January 1, 2024, rather than January 1, 2023, 
because the majority of the application cycle for the 2023 performance 
year will occur before this rule is finalized. Establishing a January 
1, 2024 start date for these changes would allow ACOs time to 
understand the scope of the proposed changes more fully before making 
decisions related to their participation, and would allow CMS adequate 
time to update its processes and application-related guidance documents 
for the new participation options, if finalized.
    First, we proposed to add Sec.  425.600(a)(4)(i)(C)(3) to allow an 
ACO that enters the BASIC track's glide path at Level A under Sec.  
425.600(a)(4)(i)(A)(1) and is currently at Level A to elect to remain 
in Level A under Sec.  425.600(a)(4)(i)(A)(1) for all subsequent 
performance years of the agreement period, for agreement periods 
beginning on or after January 1, 2024. Per proposed Sec.  
425.600(a)(4)(i)(C)(3)(i), in order to be eligible to participate under 
Level A of the BASIC track for subsequent years of the agreement period 
as described in Sec.  425.600(a)(4)(i)(C)(3), an ACO must meet the 
following requirements: the ACO is participating in its first agreement 
period under the BASIC track under Sec.  425.600(a)(4), and is not 
participating in an agreement period under the BASIC track as a 
renewing ACO (as defined in Sec.  425.20) or a re-entering ACO (as 
defined in Sec.  425.20) that previously participated in the BASIC 
track's glide path under Sec.  425.600(a)(4); and the ACO is 
inexperienced with performance-based risk Medicare ACO initiatives (as 
defined in Sec.  425.20). We proposed to extend this participation 
option to re-entering former Track 1 ACOs, because they have not 
previously participated in the BASIC track glide path and we explained 
our desire to encourage them to begin participating in the program 
again. Eligibility for this participation option would not consider the 
ACO's revenue status.
    For eligible ACOs, prior to the automatic advancement of the ACO to 
Level B, the ACO could elect to remain in Level A for all subsequent 
performance years of the agreement period. At Sec.  
425.600(a)(4)(i)(C)(3)(ii), we proposed to require that this voluntary 
election by an ACO to remain in Level A for the entirety of its first 
agreement period be made in the form and manner and by a deadline 
established by CMS. In the case of an ACO that elects to remain in 
Level A for the entirety of its first agreement period, the ACO 
generally would be eligible to enter into a subsequent agreement period 
under the BASIC track's glide path, giving the ACO 2 additional years 
of no risk under the one-sided model. If an eligible ACO made this 
election and did not elect faster advancement to a higher level of risk 
and potential reward, the ACO would have 7 years under the one-sided 
model, whereas a new ACO entering under the BASIC track's glide path 
may be eligible for as few as 2 performance years under the one-sided 
model under the current participation options. We noted our belief that 
that allowing a maximum of 7 years under the one-sided model would 
strike a more appropriate balance within the current structure of 5 
performance year agreement periods and the BASIC track glide path, 
which provides for 2 years under the one-sided model. Currently, ACOs 
inexperienced with performance-based risk Medicare ACO initiatives 
generally are limited to 2 years under a one-sided model, which ACOs 
have informed us is not enough time before transitioning to risk. We 
noted our belief that giving ACOs longer than the proposed 7 years or 
potentially unlimited time under a one-sided model would dilute the 
program's ability to meaningfully influence expenditures and quality 
through the incentives provided by ACO risk assumption. As proposed, 
the change to extend the time eligible ACOs may remain under a one-
sided model would allow ACOs more time to make investments in care 
improvement and to capitalize on those investments, while still working 
to lower costs and improve care quality for their assigned 
beneficiaries.
    Although we proposed to increase the potential time certain ACOs 
may spend in the one-sided model, the proposal included a pathway to 
transition these ACOs into two-sided risk. We noted that we continue to 
recognize that ACOs are best able to select their participation options 
to meet the needs of their organizations, including when to time their 
transition to performance-based risk, including within an agreement 
period. We proposed to add a new Sec.  425.600(g)(1)(i) to provide that 
an ACO that is inexperienced with performance-based risk Medicare ACO 
initiatives may participate in the BASIC track glide path for a maximum 
of 2 agreement periods (once at Level A for all 5 performance years and 
a second time in

[[Page 69810]]

progression on the glide path). Furthermore, we noted that the ability 
to enter a second agreement period in the BASIC track's glide path 
would be limited by proposed Sec.  425.600(g)(1)(ii), which would 
provide that an ACO that enters an agreement at either Level A or Level 
B is deemed to have completed one agreement under the BASIC track's 
glide path and would only be eligible to enter a second agreement under 
the BASIC track's glide path if the ACO continues to meet the 
definition of inexperienced with performance-based risk Medicare ACO 
initiatives and satisfied either of the following: The ACO is the same 
legal entity as a current or previous ACO that previously entered into 
a participation agreement for participation in the BASIC track's glide 
path only one time; or for a new ACO identified as a re-entering ACO, 
the ACO in which the majority of the new ACO's participants were 
participating previously entered into a participation agreement for 
participation in the BASIC track's glide path only one time. At 
paragraph (g)(1)(iii), we proposed that an ACO that is determined to be 
inexperienced with performance-based risk Medicare ACO initiatives but 
is not eligible to enter the BASIC track's glide path may enter either 
the BASIC track Level E for all performance years of the agreement 
period, or the ENHANCED track. For example, an ACO that voluntarily 
terminates its participation agreement during its first agreement under 
Level A of the BASIC track's glide path and chooses to re-enter the 
BASIC track under proposed Sec.  425.600(g)(1)(ii) would be re-entering 
a second agreement and, if continuing to meet the definition of 
inexperienced with performance-based risk Medicare ACO initiatives, 
could progress along the BASIC track glide path for this second 
agreement period. For its third agreement, the ACO would be required to 
enter the BASIC track at Level E for all years of the agreement period, 
or the ENHANCED track. As proposed, the provisions would prevent ACOs 
from terminating their participation agreement before transitioning to 
two-sided risk in order to stay under the one-sided model, potentially 
indefinitely.
    We also proposed to add Sec.  425.600(a)(4)(i)(B)(2)(vi) to allow 
currently participating ACOs that are participating in the BASIC track 
at Level A or Level B for PY 2022 to elect to continue in their current 
level of the BASIC track glide path for PY 2023 and continuing for the 
remainder of the agreement period. If the ACO does not elect to remain 
under Level A or Level B, for PY 2023, the ACO would be automatically 
advanced to the next level of the BASIC track's glide path to which the 
ACO would have automatically advanced absent any election to maintain 
its participation level for PY 2022 and, if applicable, the election to 
maintain its participation level for PY 2021 under Sec.  
425.600(a)(4)(i)(B)(2)(iii), unless the ACO elects to transition to a 
higher level of risk and potential reward within the BASIC track's 
glide path as provided in Sec.  425.226(a)(2)(i). We proposed to modify 
Sec.  425.600(a)(4)(i)(B)(2)(iv) to account for the proposed new 
election option under paragraph (vi). We also proposed to add Sec.  
425.600(a)(4)(i)(B)(2)(vii) to extend this participation option to 
eligible ACOs that begin an agreement period in Level A or Level B on 
January 1, 2023.
    We recognized we proposed to implement participation option changes 
in the middle of an agreement period for currently participating ACOs 
in the BASIC track Level A or Level B. However, we proposed to allow 
these ACOs to elect to remain at the level in which they are currently 
participating for PY 2022 for the remainder of their current agreement 
period, and to offer a similar option to ACOs that enter an agreement 
period starting under Level A or Level B of the BASIC track glide path 
beginning on January 1, 2023, because we noted that we wished to 
encourage continuity of participation in the program and did not see 
any advantage to excluding currently participating ACOs and ACOs with 
participation agreements beginning on January 1, 2023, from the same 
participation option that we proposed to make available to newly 
participating ACOs inexperienced with performance-based risk Medicare 
ACO initiatives that begin a new agreement period on or after January 
1, 2024. We proposed that, in the case of a currently participating ACO 
that elects to remain in Level A or Level B under proposed Sec.  
425.600(a)(4)(i)(B)(2)(vi) or (vii) for the remainder of its current 
agreement period, the ACO would be eligible to enter into a subsequent 
agreement period under the BASIC track's glide path pursuant to Sec.  
425.600(g)(1)(ii), giving the ACO an opportunity to participate for up 
to 2 additional years under the one-sided model. For performance year 3 
of this subsequent agreement period, the ACO would be automatically 
advanced to Level C and to each successive level of risk and potential 
reward for each performance year thereafter, unless the ACO elects to 
transition to a higher level of risk and potential reward within the 
BASIC track's glide path as provided in Sec.  425.226(a)(2)(i). We 
proposed to require that this voluntary election by an ACO to remain in 
the one-sided model in Level A or Level B for the remainder of its 
current agreement period be made in the form and manner and by a 
deadline established by CMS.
    Consistent with the proposal to expand the participation options 
for renewing and re-entering ACOs, we proposed to make changes to the 
definition of Performance-based risk Medicare ACO initiative in Sec.  
425.20 and to the regulation at Sec.  425.224(a)(4) to allow a renewing 
or re-entering ACO that was previously under a one-sided model of the 
BASIC track's glide path (Level A or B) to reapply for participation in 
the BASIC track's glide path, provided the ACO is not identified as 
having also participated previously under a two-sided model. We 
explained that the proposed change to the definition of Performance-
based risk Medicare ACO initiative in Sec.  425.20 would be effective 
for performance years beginning on January 1, 2023 and for subsequent 
years. Specifically, we proposed to amend the definition of 
Performance-based risk Medicare ACO initiative in Sec.  425.20, 
including to add a new paragraph (1)(ii) to apply to performance years 
beginning January 1, 2023 and in subsequent years, to include only 
Levels C through E of the BASIC track, and to remove the one-sided 
Levels A and B from the definition. Similarly, in Sec.  425.224(a)(4), 
we proposed to remove the reference to ``a one-sided model of the BASIC 
track's glide path (Level A or Level B),'' so that renewing and re-
entering ACOs that previously participated in a one-sided model of the 
BASIC track's glide path but that are not identified as having 
participated in a two-sided model, are not limited to reapplying for 
participation in a two-sided model.
    Because the annual application and change request cycle began 
before the CY 2023 PFS final rule is issued, we noted that we would 
give ACOs currently participating in Level A or B of the BASIC track 
glide path the opportunity during the change request cycle to indicate 
whether they are interested in maintaining their participation at Level 
A or Level B under this proposed policy, should it be finalized. ACOs 
expressing such an interest would not be required to submit a repayment 
mechanism at that time. In the event this proposed policy were not 
finalized in the CY 2023 PFS final rule, we noted that ACOs that are 
required under Sec.  425.600(a)(4)(i)(B)(2) to advance from Level A or 
Level B to a two-sided risk model for PY 2023 would have a

[[Page 69811]]

limited opportunity to submit a repayment mechanism, resolve any 
deficiencies, and have it approved in time for the start of the 
performance year. ACOs that failed to establish a repayment mechanism 
that complies with the requirements of Sec.  425.204(f) by the deadline 
specified by CMS would be terminated as required under Sec.  
425.600(a)(4)(i)(B)(3).
    In order to determine an ACO's eligibility to participate under the 
proposed new participation options, we proposed to consider an ACO's 
experience with performance-based Medicare ACO initiatives only, rather 
than also considering the ACO's status as a high or low revenue ACO. 
Our proposal would make the ENHANCED track optional for all ACOs, 
regardless of experience with performance-based risk Medicare ACO 
initiatives. As discussed in the CY 2023 PFS proposed rule, because we 
do not wish to disincentivize the formation of ACOs that include high-
cost providers (that is, high revenue ACOs), we proposed to no longer 
use revenue status for determining ACO participation options. As 
proposed, the provision also would simplify the determination of which 
participation options are available to a particular ACO and would 
reduce burden on ACOs (in terms of ascertaining likely available 
participation options) and CMS (in terms of determining ACO eligibility 
for its selected participation option). We proposed to modify the 
regulations in Sec.  425.600(a)(4)(i)(B) and Sec.  425.600(d) to apply 
only to agreement periods beginning on or after July 1, 2019, and 
before January 1, 2024, and Sec.  425.600(e) to apply only to 
performance years beginning on or after July 1, 2019, and before 
January 1, 2024, because these complex provisions depend on the ACO's 
status as a high or low revenue ACO. The distinction that Sec.  
425.600(e) would apply to performance years, rather than to agreement 
periods, aligns with our proposal to make the ENHANCED track optional. 
With that change, it no longer would be necessary to monitor low 
revenue ACOs identified as experienced with performance-based risk 
Medicare ACO initiatives for changes in the revenue of ACO participants 
that would cause the ACO to be considered a high revenue ACO, and 
therefore, ineligible for participation in the BASIC track. For 
agreement periods beginning on or after January 1, 2024, we proposed to 
streamline the specification of the BASIC track glide path in Sec.  
425.600(a)(4)(i)(C) and eligibility for participation options in Sec.  
425.600(g), which would define an ACO's participation options based 
solely on the ACO's level of experience with performance-based risk 
Medicare ACO initiatives.
    We noted our belief that the determination of whether an ACO is 
inexperienced or experienced with performance-based risk Medicare ACO 
initiatives (as defined in Sec.  425.20) could be affected by changes 
made by an ACO to its ACO participant list during the course of an 
agreement period, particularly for ACOs that are determined to be 
inexperienced when their agreement period begins but are close to the 
threshold percentage of 40 percent of ACO participants having 
participated in a performance-based risk Medicare ACO initiative in any 
of the 5 most recent performance years prior to the agreement start 
date. Any approach under which we would apply different policies to 
ACOs based on the prior experience of an ACO's ACO participants with 
performance-based risk Medicare ACO initiatives would need to recognize 
the potential for an ACO to add or remove ACO participants during the 
course of the agreement period, which could affect whether the ACO 
meets the definition of experienced with performance-based risk 
Medicare ACO initiatives. We noted our concerns about the possibility 
that an ACO may begin participating under a one-sided, shared savings-
only level of the BASIC track based on a determination that the ACO is 
inexperienced with performance-based risk Medicare ACO initiatives, and 
then quickly thereafter seek to add ACO participants experienced with 
performance-based risk, thereby avoiding the limitations under our 
proposed participation options regarding the availability of the one-
sided model for experienced ACOs.
    To protect against this circumstance, we proposed to add Sec.  
425.600(h) to provide that for performance years beginning on or after 
January 1, 2024, CMS would monitor ACOs identified as inexperienced 
with performance-based risk Medicare ACO initiatives and participating 
in the BASIC track under a one-sided model during an agreement period 
pursuant to a voluntary election under Sec.  
425.600(a)(4)(i)(B)(2)(vi), (a)(4)(i)(B)(2)(vii), or (a)(4)(i)(C)(3) 
for changes to their ACO participant list that would cause an ACO to be 
considered experienced with performance-based risk Medicare ACO 
initiatives and ineligible for participation in a one-sided model.
    We further proposed to update the definitions of inexperienced with 
performance-based risk Medicare ACO initiatives and experienced with 
performance-based risk Medicare ACO initiatives under Sec.  425.20 to 
allow for a rolling lookback period (applicable to both the assessment 
of an ACO's application to participate under a participation option for 
an agreement period and to ongoing compliance determinations as 
proposed at Sec.  425.600(h)) of the 5 most recent performance years 
beginning from the current performance year being monitored. If an ACO 
meets the definition of experienced with performance-based risk 
Medicare ACO initiatives (as specified in Sec.  425.20), we proposed 
under the new provision at Sec.  425.600(h)(2)(i) that the ACO would be 
permitted to complete the remainder of its current performance year in 
a one-sided model of the BASIC track, but would be ineligible to 
continue participation in the one-sided model after the end of that 
performance year if it continues to meet the definition of experienced 
with performance-based risk Medicare ACO initiatives and would be 
automatically advanced to Level E of the BASIC track at the start of 
the next performance year. As specified under proposed Sec.  
425.600(h)(2)(ii), the ACO would be required to meet all requirements 
to participate under performance-based risk, including establishing an 
adequate repayment mechanism as specified under Sec.  425.204(f) and 
selecting a MSR/MLR from the options specified under Sec.  425.605(b), 
in accordance with Sec.  425.600(a)(4)(i)(B)(2)(v) or (a)(4)(i)(C)(4), 
as applicable. If the ACO fails to meet the requirements to participate 
under performance-based risk, its agreement would be terminated in 
accordance with Sec.  425.600(a)(4)(i)(B)(3) or Sec.  
425.600(a)(4)(i)(C)(5), as applicable.
    An eligible ACO that enters a new agreement period beginning on or 
after January 1, 2024, at Level A of the BASIC track would be permitted 
to elect to remain in Level A for the next performance year and remain 
at Level A for all subsequent performance years of the agreement period 
under proposed Sec.  425.600(a)(4)(i)(C)(3). We would review the ACO's 
proposed ACO participant list for each subsequent performance year and 
provide feedback to allow the ACO to assess if the proposed changes to 
its ACO participant list (if any) would yield a determination that the 
ACO qualifies as experienced with performance-based risk Medicare ACO 
initiatives based on the 5 most recent performance years prior to the 
performance year under review (for example, PY 2020 through PY 2024, if

[[Page 69812]]

PY 2025 were under review). CMS would perform the same monitoring 
activity ahead of all subsequent performance years of the agreement 
period in which the ACO elected to remain in Level A under proposed 
Sec.  425.600(a)(4)(i)(C)(3).
    If the ACO were to meet the definition of experienced with 
performance-based risk Medicare ACO initiatives based on the proposed 
ACO participant list for the performance year under review, the ACO 
would still be permitted to complete that performance year in Level A 
of the BASIC track. CMS would then reassess the proposed ACO 
participant list for the subsequent performance year. If at that point 
the ACO has made changes to its ACO participant list such that it no 
longer meets the definition of experienced with performance-based risk 
Medicare ACO initiatives, the ACO would be permitted to complete that 
subsequent performance year in Level A of the BASIC track. But if the 
ACO continues to meet the definition of performance-based risk Medicare 
ACO initiatives based on its proposed ACO participant list for the 
subsequent performance year, the ACO would be automatically advanced to 
Level E of the BASIC track for that performance year, provided the ACO 
met all requirements to participate under performance-based risk. If 
the ACO did not meet all requirements to participate under performance-
based risk, including establishment of an adequate repayment mechanism 
and selection of an available MSR/MLR, the ACO's participation 
agreement would be terminated.
    Our proposed approach to monitoring of risk experience for 
agreement periods under Level A of the BASIC track was illustrated in a 
table in the CY 2023 PFS proposed rule, which we duplicate in Table 55. 
As shown, hypothetical ACOs A and B begin a Shared Savings Program 
agreement period on January 1, 2024, and for that performance year, are 
determined to be inexperienced with performance-based risk Medicare ACO 
initiatives. Both ACOs are monitored ahead of PY 2025 as proposed, and 
both continue to meet the definition of inexperience with performance-
based risk Medicare ACO initiatives based on their proposed ACO 
participant lists for PY 2025. Consistent with their status as 
inexperienced with performance-based risk Medicare ACO initiatives, 
both ACO A and ACO B elect to maintain their participation at level A 
of the BASIC track for all years of the agreement period, as proposed 
in Sec.  425.600(a)(4)(i)(C)(3). Ahead of PY 2026, both ACOs are 
determined to be experienced with performance-based risk Medicare ACO 
initiatives based on their proposed ACO participant lists for PY 2026. 
Both ACOs are permitted to remain at Level A of the BASIC track for PY 
2026, but will continue to be monitored by CMS. Ahead of PY 2027, the 
proposed ACO participant list for ACO A for PY 2027 is reviewed and the 
ACO is determined to be inexperienced with performance-based risk 
Medicare ACO initiatives, and ACO A is thus permitted to continue its 
agreement under Level A of the BASIC track for PY 2027. However, ACO B 
is determined to continue to meet the definition of experienced with 
performance-based risk Medicare ACO initiatives based on its proposed 
ACO participant list for PY 2027, and therefore, is advanced to Level E 
of the BASIC track for PY 2027 and must remain there for the remainder 
of its agreement period.
[GRAPHIC] [TIFF OMITTED] TR18NO22.084

    Our intention in proposing these policies was to provide ACOs with 
a more gradual on-ramp to taking on two-sided risk and to allow them 
the flexibility they need to best ensure their readiness to take on 
two-sided risk. In the CY 2023 PFS proposed rule, we noted our belief 
that the proposals would encourage more ACOs to form and join the 
program, as well as encourage currently participating ACOs to remain in 
the program. Additionally, we noted our belief that the proposals would 
help to increase our participation options so that an ACO has more 
flexibility to select the option that best fits its circumstances when 
applying to participate in the Shared Savings Program.
    Increasing the participation options in the program by expanding 
the flexibilities for participation in the one-sided model would also 
be expected to promote health equity for underserved and vulnerable 
beneficiaries by providing ACOs and their ACO participants with an 
additional opportunity to close gaps in care for underserved 
populations before they are required to transition to performance-based 
risk. These additional flexibilities would also afford ACOs that serve 
high-need beneficiaries or face greater start-up costs with more time 
to prepare to take on two-sided risk, as well as allowing ACOs to 
balance their response to the COVID-19 pandemic, while also managing 
normal operations, implementing care redesigns and improving the 
quality of care provided to beneficiaries.
    The following is a summary of the public comments received on the 
proposal for a 5-year agreement period under a one-sided model for 
eligible ACOs and our responses:
    Comment: Most commenters were supportive of CMS' proposal to allow 
ACOs inexperienced with performance-based risk to remain in Level A of 
the BASIC track during their first agreement period. These commenters 
emphasized that the transition to performance-based risk under the 
current glide path often proves challenging and can deter participation 
by driving ACOs out of the program if they are forced to assume risk 
too quickly. Many commenters expressed that ACOs generate increased 
shared savings over the duration of program participation, and thus, 
these gains could be hindered by a

[[Page 69813]]

requirement to quickly transition to risk that resulted in ACOs leaving 
the program rather than taking on risk. Commenters also noted that ACOs 
that include as ACO participants FQHCs providing care in medically 
underserved areas are often more hesitant to take on risk, as these 
health centers incur unique financial risks due to their location in 
medically underserved areas and by providing care to all patients, 
regardless of ability to pay. Commenters noted that they believe that 
this proposal would encourage Shared Savings Program participation and 
emphasized that the extended on-ramp to two-sided risk, as proposed, 
would allow sufficient time for ACOs to build infrastructure and the 
processes necessary to be successful in the program by gathering data 
and funding, refining programs, designing care delivery and practice 
patterns, and developing physician leader experience.
    Many commenters praised the potential equity implications of the 
proposed change, saying it would aid ACOs that incur higher costs when 
serving vulnerable populations and enable them to allocate funds to 
address social determinants of health. Other commenters maintained that 
it would encourage diverse participation in the Shared Savings Program, 
with one commenter saying it would encourage community clinic ACO 
participation, another highlighting that the flexibility and stability 
would provide an incentive for providers and suppliers serving complex 
patients and for small non-profit organizations to form or join ACOs, 
and another pointing to how it would assist providers and suppliers in 
rural areas and safety-net organizations. Another commenter stated that 
the proposed policy would be especially beneficial for new ACOs that 
are inexperienced with performance-based risk and low revenue ACOs, 
especially when paired with the advance investment payment proposals, 
and would attract ACOs to participate in the Shared Savings Program 
that, absent these policies, would have been unable to consider 
participation. Commenters highlighted that participation in the one-
sided model can yield meaningful outcomes and savings. Multiple 
stakeholders urged CMS to place less emphasis on revenue status, which 
was reflected in our proposed shift to only using performance-based 
risk experience (not revenue status) as a determinant for participation 
options.
    Response: We agree with commenters who emphasized that the extended 
on-ramp to two-sided risk will allow ACOs more time to develop the 
healthcare delivery infrastructure to successfully manage the patient 
experience across the continuum of care and to be able to gather data, 
educate staff, and refine practice patterns that improve quality of 
care and reduce the costs of care. We appreciate the insight from 
commenters that these new flexibilities will encourage participation 
among rural area providers, safety-net providers, and providers serving 
high-need populations, which will in turn help increase the diversity 
of beneficiaries receiving accountable care.
    Comment: Several commenters argued that two-sided risk is necessary 
to drive reduction in spending and invest in transforming care 
delivery.
    Response: We agree that two-sided risk has proven to be effective 
in encouraging many ACOs to reduce spending; however, we also believe 
that allowing more time under a one-sided model will provide more ACOs 
with the time that they need to make the needed preparations, such as 
adopting new technologies and processes that will allow them to 
successfully take on two-sided risk while also achieving meaningful 
cost and quality improvements. Data have shown that ACOs can take 
between 1-3 years to become accustomed to the Shared Savings Program 
\270\ and that ACOs are more likely to leave the program when they are 
unprepared to take on two-sided risk.\271\ We note that the rapid 
progression to two-sided risk is a barrier to entry and continued 
participation by some ACOs, as noted by several ACO and provider group 
commenters in response to the CY 2023 PFS proposed rule. We acknowledge 
that two-sided risk is an effective tool to drive investment in cost-
saving measures and quality of care improvements, but we have observed 
that providers and suppliers that participate in a one-sided model are 
also able to realize shared savings while improving quality of care for 
patients. We also believe that ACOs that successfully earn shared 
savings under two-sided risk generally made the transition to risk when 
the ACO was confident that its care coordination strategies were 
sufficiently mature and well-implemented to successfully reduce 
spending. Recognizing that this point of readiness may arrive sooner 
for some ACOs than for others, we would like to provide more ACOs the 
time they need to gain that same confidence to succeed. Furthermore, we 
have received comments from many ACOs and practitioner groups that 
allowing ACOs to remain in a one-sided model would allow them to make 
the investments needed to improve quality of care and develop processes 
to manage total cost of care in anticipation of assuming two-sided 
risk. As such, it is our belief that finalizing the ability for some 
ACOs to remain in a one-sided model for an extended period of time as 
proposed will encourage new and continued participation by ACOs, 
resulting in the continued success of the Shared Savings Program.
---------------------------------------------------------------------------

    \270\ ``The Medicare Shared Savings Program In 2020: Positive 
Movement (And Uncertainty) During A Pandemic'', Health Affairs Blog, 
October 14, 2021. DOI: 10.1377/hblog20211008.785640.
    \271\ ``Why Do Accountable Care Organizations Leave The Medicare 
Shared Savings Program?'', Health Affairs Blog, May 6, 2019. DOI: 
10.1377/hlthaff.2018.05097.
---------------------------------------------------------------------------

    Comment: One commenter stated that the proposed changes may result 
in well-resourced providers and suppliers that are capable of moving to 
two-sided risk remaining in a one-sided model longer than necessary. 
Other commenters noted that there are financial incentives for ACOs 
ready to assume two-sided risk to continue forward along the BASIC 
track glide path and to the ENHANCED track, since the higher levels of 
risk are accompanied by higher levels of potential reward through 
higher available sharing rates.
    Response: We agree with the commenters that noted the significant 
financial incentives that encourage high-performing ACOs to continue 
forward along the glide path to risk, since the current and the 
proposed participation options compensate the assumption of risk (and 
higher levels of risk) with the corresponding opportunity for greater 
reward. Further, we believe that one-sided model participation provides 
incentives for providers and suppliers to manage total cost of care and 
make improvements in care quality while also providing stability, 
sustainability, and flexibility to providers and suppliers serving 
rural areas, safety-net providers, and providers and suppliers in 
underserved areas. We acknowledge that moving to two-sided risk further 
increases these incentives, and by allowing these ACOs more time in a 
one-sided model, they will have time to mature the infrastructure 
needed to confidently move into two-sided risk.
    Comment: MedPAC suggested an ACO should not be able to benefit from 
both 7 years under a one-sided model and a positive regional adjustment 
to its benchmark, as this could result in an ACO earning shared savings 
without making any demonstrable improvements in care delivery or cost 
reduction. They suggested that CMS also consider implementing criteria 
that would assess if an ACO received a positive regional adjustment to 
its

[[Page 69814]]

baseline expenditures when determining if an ACO is eligible for 
additional years in BASIC track Level A or Level B.
    Response: We acknowledge MedPAC's concern that ACOs with a positive 
regional adjustment could elect to participate for an extended time in 
the one-sided model. We note that in recent years around 90 percent of 
ACOs participating in the Shared Savings Program have received a 
positive regional adjustment, and thus implementing a restriction such 
as the one suggested by MedPAC would largely moot the proposal to allow 
ACOs inexperienced with performance-based risk Medicare ACO initiatives 
to participate for a full agreement period under Level A of the BASIC 
track, followed by a second agreement period in the BASIC track's glide 
path. We appreciate MedPAC's concerns around potential ACO behavior 
during an extended period under a one-sided model and will continue to 
analyze ACO trends and may take this suggestion into consideration in 
future rulemaking.
    Further, we acknowledge that ACOs that would benefit from a 
positive regional adjustment are incentivized to participate in the 
Shared Savings Program as their spending is already low compared to the 
region, and that selective participation by these ACOs may help to 
explain why the large majority of current ACOs receive a positive 
regional adjustment. Because we believe that the proposal to allow 
extended participation in the one-sided model will appeal especially to 
ACOs and potential ACOs that are currently reluctant to join or remain 
in the Shared Savings Program, such as those that would receive a 
negative regional adjustment, we believe that finalizing this extended 
participation in the one-sided model as proposed will increase Shared 
Savings Program participation, including by ACOs that will not receive 
a positive regional adjustment.
    We also note that there are existing guardrails on positive 
regional adjustments in place, as discussed in III.G.5.c.(5) of the CY 
2023 PFS proposed rule. For an ACO that has lower spending compared to 
its regional service area (that is, an ACO that would receive a 
positive regional adjustment), the weight applied to the regional 
adjustment is 35 percent for the first agreement period in which the 
ACO is subject to a regional adjustment and 50 percent in the ACO's 
second and subsequent agreement periods subject to a regional 
adjustment. Perhaps more importantly, we cap the per capita dollar 
amount of the regional adjustment for each Medicare enrollment type at 
a dollar amount equal to positive or negative 5 percent of national per 
capita FFS expenditures for Parts A and B services under the original 
Medicare FFS program in benchmark year (BY) 3 for assignable 
beneficiaries (as defined in Sec.  425.20) in that Medicare enrollment 
type identified for the 12-month calendar year corresponding to BY3 
(Sec.  425.601(a)(8)(ii)(C)) (sometimes referred to as the 
``symmetrical cap'' on the regional adjustment). The current schedule 
of weights described in Sec.  425.601(f)) and the symmetrical cap on 
the regional adjustment described in Sec.  425.601(a)(8)(ii)(C)) were 
designed to address a dynamic where the regional adjustment could 
provide overly inflated benchmarks for ACOs that are relatively low 
spending compared to their region (that is, ACOs that receive a 
positive regional adjustment), while ACOs with higher spending compared 
to their region (that is, ACOs that receive a negative regional 
adjustment) may find little value in remaining in the program when 
faced with a significantly reduced benchmark. As we have previously 
explained, these policies are designed to prevent windfall shared 
savings payments for ACOs that have relatively low spending levels 
relative to their region (83 FR 67822).
    Comment: Some commenters were supportive of allowing more time in a 
one-sided model, but suggested that CMS should provide more scrutiny 
and/or requirements to demonstrate improvements in care delivery when 
determining which ACOs would be allowed to continue to participate in a 
one-sided model for an extended time.
    Response: We believe that the requirements governing which ACOs may 
participate in a one-sided model for up to 7 years are sufficient to 
ensure inexperienced ACOs that will best benefit from these 
arrangements are encouraged to participate in the program, while also 
excluding from this participation option experienced ACOs that do not 
need the additional time in a one-sided model to develop the processes 
and infrastructure needed for success in the Shared Savings Program. 
Additionally, we note that ACOs are subject to measuring and reporting 
metrics relative to their performance in the Shared Savings Program, 
such as quality reporting, and that CMS routinely conducts compliance 
monitoring of ACOs. We believe that the systems and processes already 
established provide sufficient oversight into how ACOs are using the 
additional time in a one-sided model.
    Comment: Many commenters supported the proposed policy to allow new 
ACOs inexperienced with performance-based risk Medicare ACO initiatives 
up to seven years in a one-sided model of the Shared Savings Program 
and several included requests for CMS about its implementation. One 
commenter urged CMS to provide data for glide path level selection, 
such as information about our expected determination of the ACO's 
experience with performance-based risk Medicare ACO initiatives, with 
ample time before a decision on glide path level needs to be made, 
ensuring the election process is not burdensome and allows for 
transparency and sufficient information for educated decision making by 
ACOs.
    Response: We appreciate the commenters suggestion, and we plan to 
inform ACOs of these participation option changes using education and 
outreach to ACOs on the available participation options through various 
methods, including ACO coordinators, guidance documents, tip sheets, 
FAQs, and a biweekly newsletter to assist ACOs as they navigate to 
higher levels of risk and potential reward throughout their 
participation in the program. Information about an ACO's experience 
with performance-based risk Medicare ACO initiatives is also 
communicated at standardized intervals during each application/change 
request cycle.
    Comment: One commenter urged CMS to address potential gaming around 
this policy so that its implementation encourages new entity 
participation in the Shared Savings Program and does not allow 
inexperienced ACOs to enter a one-sided model, terminate its 
participation before moving to two-sided risk, and reenter another 
agreement in a one-sided model.
    Response: We note that we proposed a number of safeguards to 
prevent the situation described in the comment, including in Sec.  
425.600(g)(1)(ii) and (h), to limit ACO gaming opportunities to 
continue to enter into one-sided model agreements after terminating a 
participation agreement and to engage in ACO participant churn. Under 
Sec.  425.600(g)(1)(ii), an ACO that enters an agreement at either 
Level A or Level B is deemed to have completed one agreement under the 
BASIC track's glide path and would only be eligible to enter a second 
agreement under the BASIC track's glide path if the ACO continues to 
meet the definition of inexperienced with performance-based risk 
Medicare ACO initiatives and satisfied either of the following: The ACO 
is the same legal entity as a current or previous ACO that previously 
entered into a

[[Page 69815]]

participation agreement for participation in the BASIC track's glide 
path only one time; or for a new ACO identified as a re-entering ACO, 
the ACO in which the majority of the new ACO's participants were 
participating previously entered into a participation agreement for 
participation in the BASIC track's glide path only one time. Under 
Sec.  425.600(h), for performance years beginning on or after January 
1, 2024, CMS will monitor ACOs identified as inexperienced with 
performance-based risk Medicare ACO initiatives and participating in 
the BASIC track under a one-sided model during an agreement period 
pursuant to a voluntary election under Sec. Sec. Sec.  
425.600(a)(4)(i)(B)(2)(vi), (a)(4)(i)(B)(2)(vii), or (a)(4)(i)(C)(3) 
for changes to their ACO participant list that cause an ACO to be 
considered experienced with performance-based risk Medicare ACO 
initiatives and ineligible for participation in a one-sided model.
    Comment: Several commenters suggested adjustments to proposals 
outlined in the CY 2023 PFS proposed rule. In terms of monitoring ACOs 
for experience with performance-based risk and the proposal to move an 
ACO previously determined to be inexperienced with performance-based 
risk to Level E if its ACO participant list later causes it to qualify 
as experienced with performance-based risk, several commenters 
suggested allowing those ACOs to choose between advancing to Level C, 
Level D, or Level E. A couple commenters urged CMS to eliminate 
categorization as experienced or inexperienced with performance-based 
risk Medicare ACO initiatives for individual practitioners, as the 
commenter suggested that experience with risk does not correlate to 
greater success in lowering cost or improving quality by individual 
physician practices, and rather has more to do with leadership and 
management of the ACO. Several commenters suggested CMS should tie 
transition timelines for moving from a one-sided model to two-sided 
risk to metrics that evaluate an ACO's performance and progress.
    Response: We believe our proposals strike an appropriate balance 
between allowing additional time in one-sided models and moving ACOs 
that begin to qualify as experienced with performance-based risk 
Medicare ACO initiatives to an appropriate level of two-sided risk. Our 
performance-based risk experience monitoring proposal allows ACOs one 
full performance year to make adjustments to their ACO participant 
lists once a formerly inexperienced ACO that is participating in Level 
A of the BASIC track for the entire agreement period starts to qualify 
as experienced with performance-based risk Medicare ACO initiatives. If 
after that period, the ACO is still found to be experienced with 
performance-based risk, we believe it is reasonable for that ACO to 
move to Level E of the BASIC track in line with the participation 
options available to other ACOs that are experienced with performance-
based risk. We believe our proposal appropriately addresses how an ACO 
and/or ACO participants are determined to be experienced with 
performance-based risk Medicare ACO initiatives. Our proposal includes 
an updated definition of performance-based risk Medicare ACO 
initiatives in Sec.  425.20, including only Levels C through E of the 
BASIC track, and removing the one-sided Levels A and B from the 
definition. This change will help prevent inexperienced ACOs from 
beginning to qualify as experienced during the ACO's agreement period, 
because ACO participants (including newly added ACO participants) with 
only prior BASIC track Level A or Level B experience will not cause the 
ACO to become experienced with performance-based risk Medicare ACO 
initiatives.
    We continue to believe that risk experience and prior participation 
are relevant. The definition for experienced with performance-based 
risk Medicare ACO initiatives states that it is either the same legal 
entity or 40 percent or more of the ACO's ACO participants participated 
under performance-based risk (Sec.  425.20). A single independent 
practice is unlikely to deem an entire ACO as experienced with 
performance-based risk. However, a collection of independent practices 
that have all participated together under the same ACO, could if they 
make up at least 40 percent of the ACO participants on the ACO 
participant list. As the entities have participated together under 
performance-based risk, we do believe that experience does correlate to 
working together to lower costs and provide high quality care to 
beneficiaries.
    We do not want to force ACOs to take on two-sided risk before they 
are ready and would like ACOs to successfully participate in the Shared 
Savings Program. However, we have observed that ACOs in performance-
based risk tracks have better financial performance than ACOs in shared 
savings-only tracks, so we would like to provide ACOs adequate time to 
move towards performance-based risk and to continue under risk once 
they have move to a two-sided model. While we appreciate commenters' 
suggestion to require ACOs to meet certain performance metrics in order 
to remain in the one-sided model for an extended period of time, we 
note that we currently monitor ACOs for their compliance with quality 
performance standards under Sec.  425.316(c) and financial performance 
under Sec.  425.316(d) and we can take pre-termination actions 
identified under Sec.  425.216 if CMS concludes that termination of an 
ACO from the Shared Savings Program is warranted. We will continue to 
monitor and, if necessary, refine our approach to performance 
monitoring and determining available participation options in future 
rulemaking. We hope to find the right balance between providing strong 
incentives to deliver high quality care, while reducing spending and 
giving ACOs adequate time to implement changes that allow for 
successful participation.
    Comment: One commenter suggested shortening the lookback period in 
the definition of ``experienced with performance-based risk Medicare 
ACO initiatives'' under Sec.  425.20 to 2 years (from 5) to encourage 
continued growth of the Shared Savings Program.
    Response: We appreciate the commenter's suggestion to shorten the 
lookback period for determining whether an ACO qualifies as 
inexperienced or experienced with performance-based risk Medicare ACO 
initiatives. At this time, we are not considering making a change to 
the lookback period. We believe the longer lookback period mitigates 
the chances providers and suppliers will sit out from the Shared 
Savings Program for a relatively short time in order not to be 
considered experienced with performance-based risk Medicare ACO 
initiatives. We believe 5 years provides less incentive for entities to 
join the program, leave, and rejoin under a one-sided model after a 
relatively short time. We believe these policies balance providing 
incentives for providers and suppliers to form ACOs and limit 
opportunities for gaming.
    Comment: A few commenters suggested CMS provide additional 
technical assistance and resources to help ACOs successfully transition 
to two-sided risk.
    Response: We appreciate the commenters' suggestion that CMS provide 
additional technical assistance and resources to transition to two-
sided risk, and we will continue to develop appropriate materials and 
resources to support ACOs. We also encourage ACOs to participate in our 
learning system events to learn about successes and pitfalls other ACOs 
have experienced.

[[Page 69816]]

    Comment: While supportive of the overall policy changes proposed 
for the Shared Savings Program participation options, some commenters 
suggested that ACOs that have already transitioned to two-sided risk 
should also have additional flexibilities, including the option to 
modify existing participation agreements. For example, a few commenters 
suggested CMS consider allowing ACOs currently participating at Level C 
or Level D of the BASIC track to elect to maintain at that level for 
the remainder of their current agreement period, similar to the 
proposal for qualifying ACOs in Levels A and B of the BASIC track, 
suggesting that this option would allow ACOs that are ready to move to 
two-sided risk but not ready to go to Level E additional time to grow 
more comfortable with risk while continuing to build their 
infrastructure.
    Response: We note that some of the proposed changes would be 
available to ACOs already participating in the program, such as the 
ability for currently participating ACOs in Level A or Level B of the 
BASIC track to elect to maintain at that level for the remainder of 
their agreement period, and continue to believe that the BASIC track's 
glide path offers a gradual on-ramp to higher levels of risk and 
potential reward for ACOs when they begin to take on two-sided risk. 
Many currently participating ACOs have had the opportunity to benefit 
from the election to maintain their participation level in PYs 2021 and 
2022, allowing many to have extended time in a one-sided model, or in 
Level C or Level D of the BASIC track. Additionally, all ACOs would 
benefit from the proposal to make the ENHANCED track optional, with 
ACOs in the ENHANCED track having the new option to move back to Level 
E of the BASIC track. Therefore, we do not believe it is necessary to 
offer an option for ACOs currently participating in Level C or Level D 
of the BASIC track glide path to elect to freeze their participation at 
one of those levels for more than one performance year.
    Comment: One commenter encouraged CMS to consider the tradeoffs of 
having a program with fewer ACOs that requires ACOs to take on higher 
levels of two-sided risk, which therefore acts as a more powerful 
incentive to decrease costs while maintaining or improving quality of 
care, versus a program with more ACOs that does not require them to 
take on such high levels of risk, which therefore does not drive as 
meaningful results for the Medicare Trust Funds and quality of care. 
The commenter also suggested that CMS consider transitioning the Shared 
Savings Program to a mandatory model. This commenter suggested that 
increasing participation in models with downside risk will require 
shifting to a mandatory model, and without a mandatory model, CMS will 
need to accept lower levels of participation in two-sided risk models.
    Response: As we stated in the CY 2023 PFS proposed rule, the Shared 
Savings Program was established by statute as, and remains, a voluntary 
program for providers and suppliers that choose to participate in an 
ACO. For that reason, it is important that we implement the Shared 
Savings Program in a manner sufficiently attractive to ACOs and 
potential ACOs to encourage their participation and achievement of 
positive results for the Trust Funds and for the ACOs' assigned 
beneficiaries. Thus, we believe it is appropriate to allow certain ACOs 
in their first agreement period in the program to maintain 
participation in a one-sided model for a longer period of time, rather 
than risk having those ACOs leave the program altogether.
    Comment: One commenter suggested CMS create a payment model for 
FQHCs and Critical Access/Rural Hospitals, that would remove 
unspecified barriers to participation by providers in cost-based 
reimbursement models and would allow such entities to participate for 7 
years under a one-sided model. The commenter suggested the creation of 
a new model in order to allow FQHCs, RHCs, and CAHs to remain 
independent and not consolidate or join a convener organization. 
Another commenter suggested CMS establish a track where ACOs 
participate at full risk and could be eligible for 100 percent shared 
savings and shared losses. Another suggested a permanent upside-only 
model for physician-owned ACOs. Another commenter requested CMS 
reassess the cap on shared savings that cannot exceed 10 percent of 
updated benchmark for the BASIC track, but did not provide detail on 
how the cap should be adjusted.
    Response: We appreciate the feedback; however, these suggestions 
are out of scope of the proposed rule. We will consider these 
suggestions for possible future rulemaking and have shared them with 
the Innovation Center.
    Comment: Some commenters supported the policy for ACOs currently 
participating in Level A or Level B of the BASIC track to elect to 
maintain their participation for the remainder of the agreement period, 
but expressed concerns about the timing between the release of this 
final rule and the deadline for ACOs to select a Shared Savings Program 
track, especially if the proposals were not finalized. The commenters 
recommended that CMS allow for a renewal extension period for currently 
participating ACOs when making changes to the program's participation 
options to avoid wasting program resources if a policy change 
necessitates an ACO change their desired participation options, but did 
not elaborate on how that renewal extension period should operate. 
Another commenter shared similar sentiments about timing of this 
policy, and in the event CMS does not finalize the proposal to allow 
BASIC Track Level A or Level B ACOs to remain in their current level, 
urged CMS to allow ACOs moving to two-sided risk an opportunity to 
prepare their SNF 3-day rule waiver applications.
    Response: We proposed to allow currently participating BASIC track 
ACOs to maintain participation under the one-sided model for the 
remainder of their current agreement period to allow these ACOs an 
opportunity for one full agreement period under a one-sided model, 
which we proposed to be available for qualifying ACOs entering new 
agreement periods beginning on or after January 1, 2024. However, for 
new applicants and re-entering ACOs, we proposed for this policy to 
become effective beginning in 2024 to provide applicants and CMS 
adequate time to consider and implement the changes, as finalized, 
before the start of the application cycle to which they will apply.
    After reviewing the comments received, we are finalizing, without 
modification, the proposal to offer a 5-year agreement period under a 
one-sided model of the BASIC track for eligible ACOs. Specifically, we 
are finalizing the proposal to amend paragraph (1)(i), redesignate 
paragraphs (1)(ii) and (1)(iii) as paragraphs (1)(iii) and (1)(iv), and 
add new paragraph (1)(ii) of the definition of Performance-based risk 
Medicare ACO initiative in Sec.  425.20. We are amending paragraph 
(1)(i) to apply to performance years beginning prior to January 1, 
2023, and we are adding paragraph (1)(ii) to apply for performance 
years beginning January 1, 2023, and in subsequent years, to include 
only Levels C through E of the BASIC track, and to remove the one-sided 
Levels A and B from the definition. We are also finalizing as proposed, 
changes to the definition of ``Experienced with performance-based risk 
Medicare ACO initiatives'' and ``Inexperienced with performance-based 
risk Medicare ACO initiatives'' in Sec.  425.20 by removing the phrase 
``prior to the agreement start date''. This

[[Page 69817]]

change allows for a rolling lookback period (applicable to both the 
assessment of an ACO's application to participate under a participation 
option for an agreement period and to ongoing compliance determinations 
under proposed Sec.  425.600(h)) of the 5 most recent performance years 
beginning from the current performance year being. We are also 
finalizing the amendatory instructions for Sec.  425.20, to include 
corrections to typographical errors in punctuation. In Sec.  
425.224(a)(4), we are finalizing the proposal to remove the reference 
to ``a one-sided model of the BASIC track's glide path (Level A or 
Level B),'' so that renewing and re-entering ACOs that previously 
participated in a one-sided model of the BASIC track's glide path but 
that are not identified as having participated in a two-sided model are 
not limited to reapplying for participation in a two-sided model.
    We are also finalizing as proposed our revisions to Sec.  425.600. 
We are amending paragraph (a)(4)(i)(B) to apply to agreement periods 
beginning on or after July 1, 2019 and before January 1, 2024. We are 
finalizing as proposed the new Sec.  425.600(a)(4)(i)(B)(2)(vi) and 
(vii) to allow an ACO currently participating in Level A or Level B of 
the BASIC track to elect to remain at that level for the remainder of 
their agreement period for both performance year 2023 and performance 
year 2024, respectively, and corresponding changes to Sec.  
425.600(a)(4)(i)(B)(2)(ii) and (iv). Additionally, we are finalizing as 
proposed the streamlining of the specification of the BASIC track glide 
path in Sec.  425.600(a)(4)(i)(C) for agreement periods beginning on or 
after January 1, 2024, which includes paragraphs related to the 
following: (1) glide path entry; (2) automatic advancement; (3) the 
option for eligible ACOs to elect to remain under a one-sided model; 
(4) requirements to be met before entering performance-based risk; (5) 
agreement termination for failure to meet certain requirements; and (6) 
automatic advancement along the BASIC track's glide path in performance 
years following an ACO's election to transition to a higher level of 
risk and reward.
    Additionally, we are finalizing as proposed our revision to limit 
the monitoring of BASIC track ACOs identified as experienced with 
performance-based risk Medicare ACO initiatives, during an agreement 
period, for changes in revenue, as specified under Sec.  425.600(e) to 
apply to performance years beginning on or after July 1, 2019, and 
before January 1, 2024. We are finalizing as proposed the new paragraph 
(h) of Sec.  425.600 applicable for performance years beginning on or 
after January 1, 2024, to specify our approach for monitoring ACOs 
identified as inexperienced with performance-based risk Medicare ACO 
initiatives and participating in the BASIC track under a one-sided 
model.
    After consideration of the public comments, we are finalizing 
without modification the new Sec.  425.600(g) which defines an ACO's 
participation options based solely on the ACO's level of experience 
with performance-based risk Medicare ACO initiatives for agreement 
periods beginning on or after January 1, 2024. Therefore, we are also 
finalizing as proposed the change at Sec.  425.600(d) to limit it to 
agreement periods beginning on or after July 1, 2019, and before 
January 1, 2024.
    We also sought comment on whether to extend the proposed option for 
certain ACOs inexperienced with performance-based risk Medicare ACO 
initiatives to spend an entire 5-year agreement period under the one-
sided model of the BASIC track for an additional agreement period for 
low revenue ACOs that enter the BASIC track as a new legal entity (that 
has never before participated in the Shared Savings Program and is not 
identified as a renewing or re-entering ACO), so that these ACOs would 
be eligible for a second one-sided only agreement period followed by a 
third agreement period in the BASIC track glide path, which would 
include an additional 2 years under the one-sided model (for a total of 
12 years under the one-sided model) before progressing to two-sided 
risk. We noted that we considered extending this participation option 
only to low revenue ACOs that enter the BASIC track as a new legal 
entity because other ACOs have already had time under the one-sided 
model, and therefore, do not need a second agreement period in one-
sided only. Although, as we noted previously, using revenue status in 
determining the participation options available to ACOs may 
disincentivize certain providers and suppliers from forming ACOs or 
joining existing ACOs, we also noted that we have observed that there 
are differences in financial performance outcomes based on revenue 
status. An independent study found the first three entry cohorts of 
physician-group ACOs (ACOs whose core medical groups for beneficiary 
attribution were not associated with hospitals, which are generally low 
revenue) consistently reduced spending as their first agreement periods 
progressed such that average per beneficiary benefit spending was 
reduced by $300 in 2015 compared to only $37 lower for hospital-
integrated ACOs (ACOs whose core medical groups for beneficiary 
attribution were part of larger organizations or health systems that 
included hospitals).\272\ Therefore, we discussed that we estimated 
that this alternative could increase program retention for the type of 
ACO that, as a group, has demonstrated greater program savings under an 
upside-only incentive in the past (that is, low revenue ACOs 
inexperienced with performance-based risk Medicare ACO initiatives) and 
increase program savings (net of shared savings payments) by at least 
$1 billion.
---------------------------------------------------------------------------

    \272\ McWilliams JM, et al. Medicare Spending After 3 Years of 
the Medicare Shared Savings Program. New England Journal of 
Medicine. Sept. 2018. 379:1139-1149. DOI: 10.1056/NEJMsa1803388.
---------------------------------------------------------------------------

    As discussed in the CY 2023 PFS proposed rule, under this 
alternative, a voluntary election by a qualifying ACO to remain in 
Level A for the entirety of its second agreement period in the BASIC 
track would be made in the form and manner and by a deadline 
established by CMS. In the case of a qualifying ACO that elects to 
remain in Level A for the entirety of its second agreement period in 
the BASIC track that is determined to be low revenue at the time of 
application for renewal to a third agreement period in the BASIC track, 
the ACO generally would be eligible to enter into this subsequent 
agreement period under the BASIC track's glide path, giving the ACO 2 
additional years under the one-sided model. If an eligible ACO made 
this election and did not elect faster advancement to a higher level of 
risk and potential reward, the ACO would have a total of 12 years under 
the one-sided model in the BASIC track.
    As discussed in the CY 2023 PFS proposed rule, if we were to adopt 
this alternative, we noted our concern about the possibility that an 
ACO may be found eligible to continue for a full second agreement 
period under a one-sided model of the BASIC track because of a 
determination that it is an inexperienced, low revenue ACO at the time 
of application, and then quickly thereafter seek to add experienced 
and/or higher revenue ACO participants, thereby avoiding the 
requirement under our proposed participation options to move to the 
glide path for the second agreement period under the BASIC track if it 
did not meet the eligibility requirements to continue under the one-
sided model for the entire agreement period. To protect against these 
circumstances, we noted we would continue monitoring for experience 
with performance-based risk Medicare ACO initiatives. Furthermore, we 
discussed

[[Page 69818]]

that we would establish a monitoring policy to monitor for changes to 
revenue status during the ACO's second agreement period in the one-
sided model of the BASIC track, to ensure that the ACO continues to 
meet the definition of a low revenue ACO (as well as an ACO 
inexperienced with performance-based risk Medicare ACO initiatives). We 
discussed that we would take the following approach to ensuring 
continued compliance of ACOs with the eligibility requirements for this 
alternative participation option. When an ACO applies for a second 
agreement period entirely under the one-sided model of the BASIC track, 
we would determine whether the ACO would be a high- or low revenue ACO 
(and an ACO inexperienced or experienced with performance-based risk 
Medicare ACO initiatives) as defined under Sec.  425.20, using the 
ACO's ACO participant list for the first performance year of the new 
agreement period. Only low revenue ACOs would be eligible to elect this 
participation option to remain in Level A for the entirety of their 
second agreement period under the BASIC track, and we would continue to 
monitor for revenue status (as well as experience with performance-
based risk Medicare ACO initiatives) during the second agreement 
period. If, during the second agreement period, the ACO began to meet 
the definition of a high revenue ACO (or an ACO experienced with 
performance-based risk Medicare ACO initiatives), we proposed that the 
ACO would be permitted to complete the remainder of its current 
performance year under Level A, but the ACO would be ineligible to 
continue participation in Level A after the end of that performance 
year unless it took corrective action. For example, if the ACO 
participants' total Medicare Parts A and B FFS revenue increased in 
relation to total Medicare Parts A and B FFS expenditures for the ACO's 
assigned beneficiaries, the ACO could remove an ACO participant from 
its ACO participant list, so that the ACO could continue to meet the 
definition of low revenue ACO. In the event the ACO did not take steps 
to maintain its status as a low revenue ACO, we would take compliance 
action, up to and including termination of the participation agreement, 
as specified in Sec. Sec.  425.216 and 425.218, to ensure the ACO did 
not continue in Level A for subsequent performance years of the 
agreement period. For example, we would send the ACO a request for a 
corrective action plan to resolve their change in revenue status, which 
would allow the ACO time to modify its ACO participant list or PECOS 
enrollment data such that the ACO could continue to meet the definition 
of a low revenue ACO. If the ACO continued to meet the definition of a 
high revenue ACO at the end of the next performance year (that is, 
based on the ACO's proposed ACO participant list for the following 
performance year), we proposed that the ACO would be required to move 
to the level of the BASIC track's glide path in which the ACO would be 
participating for the following performance year if it had begun the 
agreement period in the BASIC track's glide path instead of under the 
one-sided model-only path. This includes meeting the applicable 
requirements prior to entering performance-based risk, such as 
establishing an adequate repayment mechanism as specified under Sec.  
425.204(f) and selecting an MSR/MLR from the options specified under 
Sec.  425.605(b). Under this alternative, if an ACO remained either 
high revenue or experienced with performance-based risk Medicare ACO 
initiatives based on the ACO's proposed ACO participant list for the 
following performance year, the ACO would be required to move to Level 
E, as discussed in the CY 2023 PFS proposed rule for monitoring for 
changes in risk experience.
    As discussed in the CY 2023 PFS proposed rule, when the ACO applied 
for a third agreement period under the BASIC track, we would determine 
revenue status at the time of application. Only low revenue ACOs that 
continued to be inexperienced with performance-based risk Medicare ACO 
initiatives and had entered into a participation agreement under the 
BASIC track only twice would be eligible to enter the BASIC track glide 
path. If at time of application CMS determined the ACO was a high 
revenue ACO as defined under Sec.  425.20 (or if the ACO met the 
definition of experienced with performance-based risk Medicare ACO 
initiatives), then it would be required to participate in Level E of 
the BASIC track (or the ENHANCED track) for the agreement period, 
rather than entering the BASIC track glide path. If at any time during 
the ACO's third agreement period CMS determined the ACO had begun to 
meet the definition of a high revenue ACO (or of an ACO experienced 
with performance-based risk Medicare ACO initiatives), the ACO would be 
permitted to complete the remainder of the current performance year 
under the ACO's current level of the glide path, but would be 
ineligible to continue participation in the glide path after the end of 
that performance year and would be moved to Level E of the BASIC track 
unless the ACO took corrective action to modify its ACO participant 
list as described above.
    The following is a summary of the public comments received on the 
request for comments on the alternative policy of offering new legal 
entity, low revenue, inexperienced ACOs an additional agreement period 
in Level A of the BASIC track.
    Comment: We received three comments in response to our request for 
comments on offering new legal entity, low revenue, inexperienced ACOs 
an additional agreement period in Level A, for a potential total of 12 
years in a one-sided model, prior to progressing to performance-based 
risk. One commenter expressed support, citing experience in risk-
sharing arrangements as one of the most critical variables explaining 
the success of rural ACOs. Another believed that 7 years in the one-
sided model is enough and did not believe such an extension was 
necessary. This commenter also expressed that limiting participation 
options to only one agreement period entirely in the one-sided model is 
in the best interest of the Medicare Trust Funds. A third commenter 
suggested that CMS should consider allowing all inexperienced ACOs--
regardless of revenue status--to remain in Level A of the BASIC Track 
for two full agreement periods.
    Response: We appreciate the commenters' input on offering this 
cohort of ACOs an additional agreement period in Level A, and for their 
emphasis on providing ACOs with needed flexibility while also 
protecting the Medicare Trust Funds. At this time, we are not taking 
further action on this alternative policy discussed in the CY 2023 PFS 
proposed rule, but we may consider pursuing this in future rulemaking.
(3) Remove the Limitation on the Number of Agreement Periods an ACO Can 
Participate in Level E of the BASIC Track
    We proposed to make the ENHANCED track optional by adding Sec.  
425.600(g)(2) to specify that if an ACO is determined to be experienced 
with performance-based risk Medicare ACO initiatives, the ACO may enter 
Level E of the BASIC track under Sec.  425.600(a)(4)(i)(A)(5) for all 
performance years of the agreement period, or the ENHANCED track under 
Sec.  425.600(a)(3). These options would be available without regard to 
the ACO's status as a high- or low revenue ACO. We also proposed that 
all ACOs would be permitted to participate indefinitely under the Level 
E of the BASIC track. This would include ACOs currently in the ENHANCED 
track or that participate

[[Page 69819]]

under the ENHANCED track in the future. These ACOs would be permitted 
to enter a new participation agreement under Level E of the BASIC 
track. As explained in the CY 2023 PFS proposed rule, there are current 
limitations on how long ACOs may participate in Level E of the BASIC 
track, and some ACOs have reported that they would rather leave the 
program than be required to move to the ENHANCED track. We explained 
that in our implementation of the Shared Savings Program, we intend to 
achieve larger programmatic goals by encouraging ACO participation and 
thereby promoting high quality, value-based care for Medicare FFS 
beneficiaries. We continuously seek to balance creating sufficient 
incentives for participation in a voluntary program with ensuring that 
our policies achieve program goals to increase quality of care for 
Medicare beneficiaries and reduce expenditure growth to protect the 
Trust Funds. Accordingly, in the CY 2023 PFS proposed rule, we 
discussed our belief that it would be in the best interest of the 
program and Medicare FFS beneficiaries to permit eligible ACOs to 
continue participating under Level E of the BASIC track, rather than 
risk significant numbers of experienced, successful ACOs terminating 
their participation in the program instead of progressing to the higher 
level of risk and potential reward under the ENHANCED track. Our 
experience shows that ACOs in Level E of the BASIC track and ACOs in 
the ENHANCED track have similar performance results. We noted that our 
belief that it is important to offer this option to encourage ACOs that 
may be ready to take on the higher level of risk and potential reward 
under the ENHANCED track to progress to that participation option, 
secure in the knowledge that the more moderate level of risk and 
potential reward under Level E of the BASIC track would be available to 
the ACO in the future if the ACO concludes based on experience that 
that participation option is more appropriate for the ACO than the 
ENHANCED track. We anticipated providing education and offering 
outreach to ACOs on the available participation options through various 
methods available, including ACO Coordinators, guidance documents, tip 
sheets, FAQs, and a biweekly newsletter to assist ACOs as they navigate 
to higher levels of risk and potential reward throughout their 
participation in the program. Table 56 summarizes the proposed 
participation option policies on which we sought comment.
    In conjunction with the proposed changes to the participation 
options available under the program, we proposed making several 
technical and conforming changes to the existing regulations. We 
proposed to modify Sec.  425.600(a)(4)(ii) to reference paragraph Sec.  
425.600(g)(2) in addition to the currently identified paragraph (d). We 
proposed to add Sec.  425.605(b)(2)(ii)(E) to include a provision for 
an ACO to select its MSR/MLR if it automatically transitions from Level 
A to Level E of the BASIC track's glide path under the new Sec.  
425.600(h)(2). Lastly, we proposed to modify Sec.  425.605(d)(1) and 
(d)(2) to reference paragraph (g) in addition to the current reference 
to paragraph (d). We sought comment on these proposals, as well as all 
proposals in the relevant section of the CY 2023 PFS proposed rule, and 
related issues.
BILLING CODE 4150-28-P

[[Page 69820]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.085

BILLING CODE 4150-28-C
    The following is a summary of the public comments received on the 
proposed revisions to remove the limitation on the number of agreement 
periods an ACO can participate in Level E of the BASIC track and our 
responses:
    Comment: All comments received which included mention of CMS' 
proposal to allow ACOs to remain in Level E of the BASIC track 
indefinitely and elect to not move to the ENHANCED track were 
supportive. Commenters noted that the flexibility provided by the 
proposal would encourage continued participation in the Shared Savings 
Program. Commenters mentioned that this change would help ensure the 
long-term success of the Shared Savings Program as ACOs in Level E 
would still be assuming substantial levels of risk and contributing 
greatly to protecting the Trust Funds.
    Response: We appreciate the commenters for their support of this 
proposal.
    Comment: Multiple commenters, while supportive of the proposal as 
written, offered an alternative (if the proposal were not finalized as 
proposed) for CMS to perform the check for high-revenue ACO status 60 
days

[[Page 69821]]

before the Shared Savings Program application period opens. The 
stakeholders noted this change would enable existing ACOs that move 
from low revenue to high revenue status adequate time to apply for the 
ENHANCED track when the application period opens.
    Response: We thank these commenters for their suggestion in the 
event we did not finalize this policy as proposed. As we are finalizing 
the policy as proposed, we will not incorporate these suggestions, but 
may consider them as may be relevant in future rulemaking.
    After consideration of the public comments, we are finalizing 
without modification the new Sec.  425.600(g), and the conforming 
changes to Sec.  425.600(a)(4)(ii), Sec.  425.605(b)(2)(ii)(E), and 
Sec.  425.605(d)(1) and (d)(2).
3. Determining Beneficiary Assignment Under the Shared Savings Program
    a. Proposed Revisions to the Definition of Primary Care Services 
Used in Shared Savings Program Beneficiary Assignment
(1) Background
    Section 1899(c)(1) of the Act, as amended by the CURES Act and the 
Bipartisan Budget Act of 2018, provides that for performance years 
beginning on or after January 1, 2019, the Secretary shall assign 
beneficiaries to an ACO based on their utilization of primary care 
services provided by a physician who is an ACO professional and all 
services furnished by Rural Health Clinics (RHCs) and Federally 
Qualified Health Centers (FQHCs). However, the statute does not specify 
a list of services considered to be primary care services for purposes 
of beneficiary assignment.
    In the November 2011 final rule (76 FR 67853), we established the 
initial list of services, identified by Current Procedural Terminology 
(CPT) and Healthcare Common Procedure Coding System (HCPCS) codes, that 
we considered to be primary care services. In that final rule, we 
indicated that we intended to monitor CPT and HCPCS codes and would 
consider making changes to the definition of primary care services to 
add or delete codes used to identify primary care services, if there 
were sufficient evidence that revisions were warranted. We have updated 
the list of primary care service codes in subsequent rulemaking (refer 
to 80 FR 32746 through 32748; 80 FR 71270 through 71273; 82 FR 53212 
and 53213; 83 FR 59964 through 59968; 85 FR 27582 through 27586; 85 FR 
84747 through 84756; 85 FR 84785 through 84793; 86 FR 65273 through 
65279) to reflect additions or modifications to the codes that have 
been recognized for payment under the PFS and to incorporate other 
changes to the definition of primary care services for purposes of the 
Shared Savings Program.
    For the performance year beginning on January 1, 2022, and 
subsequent performance years, we defined primary care services in Sec.  
425.400(c)(1)(vi) for purposes of assigning beneficiaries to ACOs under 
Sec.  425.402 as the set of services identified by the following HCPCS/
CPT codes:
    (A) CPT codes:
    (1) 96160 and 96161 (codes for administration of health risk 
assessment).
    (2) 99201 through 99215 (codes for office or other outpatient visit 
for the evaluation and management of a patient).
    (3) 99304 through 99318 (codes for professional services furnished 
in a nursing facility; professional services or services reported on an 
FQHC or RHC claim identified by these codes are excluded when furnished 
in a SNF).
    (4) 99319 through 99340 (codes for patient domiciliary, rest home, 
or custodial care visit).
    (5) 99341 through 99350 (codes for evaluation and management 
services furnished in a patient's home for claims identified by place 
of service modifier 12).
    (6) 99354 and 99355 (add-on codes, for prolonged evaluation and 
management or psychotherapy services beyond the typical service time of 
the primary procedure; when the base code is also a primary care 
service code under this paragraph (c)(1)(vi)).
    (7) 99421, 99422, and 99423 (codes for online digital evaluation 
and management).
    (8) 99424, 99425, 99426, and 99427 (codes for principal care 
management services).
    (9) 99437, 99487, 99489, 99490 and 99491 (codes for chronic care 
management).
    (10) 99439 (code for non-complex chronic care management).
    (11) 99483 (code for assessment of and care planning for patients 
with cognitive impairment).
    (12) 99484, 99492, 99493 and 99494 (codes for behavioral health 
integration services).
    (13) 99495 and 99496 (codes for transitional care management 
services).
    (14) 99497 and 99498 (codes for advance care planning; services 
identified by these codes furnished in an inpatient setting are 
excluded).
    (B) HCPCS codes:
    (1) G0402 (code for the Welcome to Medicare visit).
    (2) G0438 and G0439 (codes for the annual wellness visits).
    (3) G0442 (code for alcohol misuse screening service).
    (4) G0443 (code for alcohol misuse counseling service).
    (5) G0444 (code for annual depression screening service).
    (6) G0463 (code for services furnished in ETA hospitals).
    (7) G0506 (code for chronic care management).
    (8) G2010 (code for the remote evaluation of patient video/images).
    (9) G2012 and G2252 (codes for virtual check-in).
    (10) G2058 (code for non-complex chronic care management).
    (11) G2064 and G2065 (codes for principal care management 
services).
    (12) G2212 (code for prolonged office or other outpatient visit for 
the evaluation and management of a patient).
    (13) G2214 (code for psychiatric collaborative care model).
    (C) Primary care service codes include any CPT code identified by 
CMS that directly replaces a CPT code specified in paragraph 
(c)(1)(vi)(A) of this section or a HCPCS code specified in paragraph 
(c)(1)(vi)(B) of this section, when the assignment window (as defined 
in Sec.  425.20) for a benchmark or performance year includes any day 
on or after the effective date of the replacement code for payment 
purposes under FFS Medicare.
(2) Revisions
(a) HCPCS and CPT Codes Used in Assignment
    Based on feedback from ACOs and our further review of the HCPCS and 
CPT codes that are currently recognized for payment under the PFS or 
that we proposed to recognize for payment starting in CY 2023, we 
discussed in the proposed rule our belief that it would be appropriate 
to amend the definition of primary care services used in the Shared 
Savings Program assignment methodology to include certain additional 
codes and to make other technical changes to the definition of primary 
care services for use in determining beneficiary assignment for the 
performance year starting on January 1, 2023, and subsequent 
performance years in order to remain consistent with billing and coding 
guidance under the PFS.
    We proposed to revise the definition of primary care services used 
for assignment in the Shared Savings Program regulations to include the 
following additions: (1) Prolonged services HCPCS codes GXXX2 and

[[Page 69822]]

GXXX3, if finalized; and (2) Chronic Pain Management HCPCS codes GYYY1 
and GYYY2, if finalized. The following provides additional information 
about the HCPCS codes that we proposed to add to the definition of 
primary care services used in assignment:
     Prolonged Services Codes GXXX2 and GXXX3: In section II.F 
of the proposed rule, we proposed that prolonged nursing facility 
services furnished by a physician or non-physician practitioner (NPP) 
would be reportable under GXXX2, which would be used when the total 
time for the primary service is exceeded by 15 or more minutes to 
account for the additional time spent. The long descriptor would be 
GXXX2 (Prolonged nursing facility evaluation and management service(s) 
beyond the total time for the primary service (when the primary service 
has been selected using time on the date of the primary service); each 
additional 15 minutes by the physician or qualified healthcare 
professional, with or without direct patient contact (list separately 
in addition to CPT codes 99306, 99310 for nursing facility evaluation 
and management services). (Do not report GXXX2 on the same date of 
service as other prolonged services for evaluation and management 
99358, 99359, 993X0). (Do not report GXXX2 for any time unit less than 
15 minutes)). Prolonged physician or NPP nursing facility (NF) services 
would be reportable once 95 minutes are spent for initial NF visits, 
and once 85 minutes are spent for subsequent NF visits, and for each 
additional 15 minutes furnished thereafter. Because GXXX2 would be 
reportable for each additional 15-minute increment of time beyond the 
total time for CPT codes 99306 and 99310, which are included in the 
Shared Savings Program definition of primary care services for purposes 
of beneficiary assignment, we noted our belief that GXXX2 should also 
be included in the definition of primary care services under Sec.  
425.400(c) for the performance year starting on January 1, 2023, and 
subsequent performance years, if payment for the code is made permanent 
through the CY 2023 PFS rulemaking, since this code would represent the 
provision of services that are already included in the definition of 
primary care services for a longer period of time.
    Additionally, we proposed that prolonged home or residence services 
by a physician or NPP would be reportable under GXXX3 (Prolonged home 
or residence evaluation and management service(s) beyond the total time 
for the primary service (when the primary service has been selected 
using time on the date of the primary service); each additional 15 
minutes by the physician or qualified healthcare professional, with or 
without direct patient contact (list separately in addition to CPT 
codes 99345, 99350 for home or residence evaluation and management 
services). (Do not report GXXX3 on the same date of service as other 
prolonged services for evaluation and management 99358, 99359, 99417). 
(Do not report GXXX3 for any time unit less than 15 minutes)). Because 
code GXXX3 would be reportable as an add-on code to CPT codes 99345 or 
99350 once the practitioner spends 15+ minutes beyond the total time 
finalized for the primary service, and CPT codes 99345 and 99350 are 
included in the Shared Savings Program definition of primary care 
services for purposes of beneficiary assignment, we expressed our 
belief that GXXX3 should also be included in the definition of primary 
care services under Sec.  425.400(c) for the performance year starting 
on January 1, 2023, and subsequent performance years, if payment for 
the code is made permanent through the CY 2023 PFS rulemaking, since 
this code would represent the provision of services that are already 
included in the definition of primary care services for a longer period 
of time.
     Chronic Pain Management (CPM) HCPCS codes GYYY1 and GYYY2: 
In section II.E of the proposed rule, we proposed two new HCPCS codes 
for CPM services, beginning January 1, 2023. We recognized that there 
is no existing code that specifically describes the work of the 
clinician involved in performing the tasks necessary to perform 
holistic, CPM under current Medicare payment policy. These new HCPCS 
codes would be analogous to Chronic Care Management (CCM) services and 
Principal Care Management (PCM) services because GYYY1 would include 
similar care plan, medication management, unusually complex clinical 
management; care coordination between relevant practitioners furnishing 
care; and time for care provided personally by a physician or other 
qualified health care professional, as described in CPT code 99424; and 
GYYY2 would include similar activities as described in CPT code 99425, 
both of which already are included in the Shared Savings Program 
definition of primary care services used in assignment. Additionally, 
we discussed in the proposed rule our expectation that most of these 
services would be billed by primary care practitioners who are focused 
on long-term management of their patients with chronic pain and we 
expect the billing practitioner to demonstrate in the Medicare 
patient's record when there is coordination or continuity of care 
between a specialist or other relevant practitioner, such as a physical 
therapist or occupational therapist, which, we indicated, supports the 
inclusion of the services described by these HCPCS codes in our 
definition of primary care services for purposes of beneficiary 
assignment under the Shared Savings Program. Under the Shared Savings 
Program, CCM services reported using CPT codes 99437, 99439, 99487, 
99489, 99490 and 99491 and HCPCS code G2058 and PCM services reported 
using CPT Codes 99424, 99425, 99426, and 99427 and HCPCS codes G2064 
and G2065 currently are included in the definition of primary care 
services for purposes of beneficiary assignment (refer to 85 FR 84749 
and 86 FR 65274 through 65275) and as such, to remain consistent with 
updates to the scope of care management services payable under the PFS, 
we proposed to include these CPM services codes, if finalized, in the 
definition of primary care services used for beneficiary assignment. 
Accordingly, we proposed to include HCPCS code GYYY1 (Chronic pain 
management and treatment, monthly bundle including, diagnosis; 
assessment and monitoring; administration of a validated pain rating 
scale or tool; the development, implementation, revision, and 
maintenance of a person-centered care plan that includes strengths, 
goals, clinical needs, and desired outcomes; overall treatment 
management; facilitation and coordination of any necessary behavioral 
health treatment; medication management; pain and health literacy 
counseling; any necessary chronic pain related crisis care; and ongoing 
communication and care coordination between relevant practitioners 
furnishing care, e.g., physical therapy and occupational therapy, and 
community-based care, as appropriate. Required initial face-to-face 
visit at least 30 minutes provided by a physician or other qualified 
health professional; first 30 minutes personally provided by physician 
or other qualified health care professional, per calendar month. (When 
using GYYY1 30 minutes must be met or exceeded.)) and GYYY2 (Each 
additional 15 minutes of chronic pain management and treatment by a 
physician or other qualified health care professional, per calendar 
month (List separately in addition to code for GYYY1). When using GYYY2 
15 minutes must be met or exceeded.) because GYYY2 is similar in scope 
as

[[Page 69823]]

GYYY1, just for additional duration, in the definition of primary care 
services under Sec.  425.400(c) for the performance year starting on 
January 1, 2023, and subsequent performance years, if payment for these 
codes is made permanent through the CY 2023 PFS rulemaking.
(b) Technical Update to the Description of CPT Codes 99341 Through 
99350
    In the CY 2019 PFS final rule (83 FR 60093), we updated our 
regulations at Sec.  400(c)(1)(iv)(A)(4) by adding the descriptor 
``codes for evaluation and management services furnished in a patients' 
[sic] home for claims identified by place of service modifier 12'' to 
CPT codes 99341 through 99350, as used in the definition of primary 
care services used in assignment for performance years (or a 
performance period) starting during 2019 and PY 2020. This descriptor, 
slightly modified to correct a typographical error, also applied for 
the performance year starting on January 1, 2021, under Sec.  
425.400(c)(1)(v)(A)(5) and continues to apply for the performance year 
starting on January 1, 2022, and subsequent performance years, under 
Sec.  425.400(c)(1)(vi)(A)(5).
    On March 17, 2021, the AMA updated the CPT[supreg] Editorial 
summary of Panel Actions for February 2021 (https://www.ama-assn.org/system/files/2021-03/february-2021-summary-panel-actions.pdf). This 
summary describes revisions made to Home and Residence Services to 
revise the guidelines for CPT codes 99341 through 99350 to include 
services provided in assisted living facilities, group homes, custodial 
care facilities, and residential substance use treatment facilities. As 
discussed in section II.C of the proposed rule, we proposed to adopt 
these changes under Medicare FFS payment policies and as such, we 
proposed conforming changes to omit the reference to ``for claims 
identified by place of service modifier 12'' from the description for 
CPT codes 99341 through 99350. We proposed that the modification would 
be reflected in the definition of primary care services used in 
assignment for the performance year starting on January 1, 2023, and 
subsequent performance years at Sec.  425.400(c)(1)(vii)(A)(5).
    As proposed, CPT codes 99341 through 99350 would be described as 
codes for evaluation and management services furnished in a patient's 
home, without the place of service 12 identifier. The place of service 
logic is included in claims processing algorithms, and therefore, 
accounted for in paid claims used by the Shared Savings Program in 
determining beneficiary assignment. As described in Medicare Claims 
Processing Manual, Publication 100-04, Chapter 26, place of service 
codes are two-digit codes placed on health care professional claims to 
indicate the setting in which a service was provided. Claims submitted 
for services that are allowable when provided in certain settings will 
process only when the appropriate place of service is included on the 
claim. Place of service 12 is defined as ``location, other than a 
hospital or other facility, where the patient receives care in a 
private residence.'' In previous rulemaking, we updated the reference 
to CPT codes 99341 through 99350 in the definition of primary care 
services at Sec.  425.400(c) to include place of service 12 for 
clarity; however, as discussed in the proposed rule, we now believe it 
is no longer accurate as these codes have been revised to include 
multiple places of service, any of which we would consider to be the 
patient's home.
(c) Rural Emergency Hospitals
    The Consolidated Appropriations Act (CAA) of 2021, was signed into 
law on December 27, 2020. In this legislation, Congress established a 
new rural Medicare provider type: Rural Emergency Hospitals (REHs). 
These providers will furnish emergency department and observation care, 
and other specified outpatient medical and health services, if elected 
by the REH, that do not exceed an annual per patient average of 24 
hours. Hospitals that were CAHs or rural hospitals with not more than 
50 beds, participating in Medicare, as of the date of enactment of the 
CAA, are eligible to seek conversion to an REH. REHs are expected to 
help address the barriers in access to health care, particularly 
emergency services and other outpatient services that result from rural 
hospital closures, and by doing so, may help address observed 
inequities in health care in rural areas. Section 1861(kkk)(1)(A) of 
the Act defines the term ``REH services'' as emergency department and 
observation services, as well as other medical and health services 
furnished on an outpatient basis as specified by the Secretary.
    Under section 1861(k)(10) of the Act, payments will be made for REH 
services furnished on or after January 1, 2023. We expect that REHs 
will submit claims in a similar manner to hospital outpatient 
departments paid under the OPPS. As a result, we explained in the 
proposed rule our belief that we did not need to propose special 
policies regarding the treatment of services furnished in REHs for 
purposes of beneficiary assignment under the Shared Savings Program. 
Rather, we would consider services furnished in REHs in the same manner 
that we currently consider services furnished in hospital outpatient 
departments for purposes of conducting assignment under the Shared 
Savings Program. However, we noted that we would continue to monitor 
the development of payment policy for REHs to determine whether any 
adjustments to our assignment policies may be necessary to account for 
services furnished in REHs and would consider whether any findings may 
warrant changes through future notice and comment rulemaking. In 
addition, we noted that in section III.G.3.b. of the proposed rule, we 
proposed to include on an ACO's ACO provider/supplier list any CCNs 
that may be deactivated and then reactivated, or disenrolled as one 
facility type but re-enrolled as another facility type, which would 
include any CAHs that elect to re-enroll as rural emergency hospitals.
    We proposed to specify a revised definition of primary care 
services in a new provision of the Shared Savings Program regulations 
at Sec.  425.400(c)(1)(vii) to include the list of HCPCS and CPT codes 
specified in Sec.  25.400(c)(1)(vi) along with the proposed additional 
HCPCS codes GXXX2 and GXXX3, and GYYY1 and GYYY2, if these additional 
codes were finalized through the CY 2023 PFS rulemaking. We further 
proposed to omit from the description for CPT codes 99341 through 
99350, the reference to ``for claims identified by place of service 
modifier 12.'' We proposed that the new provision at Sec.  
425.400(c)(1)(vii) would be applicable for use in determining 
beneficiary assignment for the performance year starting on January 1, 
2023, and subsequent performance years. Further, we proposed technical 
modifications to the introductory text in Sec.  425.400(c)(1)(vi) to 
limit the applicability of this provision to the performance year 
starting on January 1, 2022.
    We sought comment on the proposed changes to the definition of 
primary care services used for assigning beneficiaries to Shared 
Savings Program ACOs for the performance year starting on January 1, 
2023, and subsequent performance years. We also welcomed comments on 
any other existing HCPCS or CPT codes and proposed HCPCS or CPT codes, 
that we should consider adding to the definition of primary care 
services for purposes of assignment in future rulemaking.
    The following is a summary of the public comments received on the 
proposed revisions to the HCPCS and

[[Page 69824]]

CPT codes used in assignment and our responses:
    Comment: Many commenters supported the inclusion of the CPM HCPCS 
codes GXXX2 and GXXX3 and new prolonged services codes GYYY1 and GYYY2 
in the definition of primary care services used in assignment. Some 
commenters agreed with our statement that the new prolonged services 
HCPCS codes reflect the provision of services beyond the total time for 
codes currently included in the Shared Savings Program definition of 
primary care services used in assignment. An additional commenter 
stated their belief that these additional beneficiary assignment codes 
will positively impact beneficiary assignment for ACOs providing care 
to the most serious and chronically ill patients.
    A couple of commenters did not support the addition of chronic pain 
management codes, suggesting that the management of chronic pain does 
``not routinely follow the overall health of the patient; it is often 
managed by a very specialized set of skills that are focused on 
treating a specific condition'' and that chronic pain seems to fall 
outside the definition of ``primary care services'' as intended in the 
original design of the model. Another commenter stated that they oppose 
inclusion of the proposed codes due to unspecified potential unintended 
consequences that could result in assignment of beneficiaries to ACOs 
based on care that is provided outside of the ACO's control.
    A couple of commenters recommended that CMS monitor the utilization 
of both the CPM and prolonged services codes to ensure that they are 
being furnished as primary care services. One of these commenters 
supported the inclusion of the codes with monitoring to ensure that 
they adequately reflect beneficiaries' receipt of primary care 
services, while the other did not support the use of the codes until 
after monitoring for the same. The commenters stated that if the codes 
are primarily being billed by non-primary care physicians, it would not 
be appropriate to use them in assignment.
    Response: We agree with commenters who stated that our proposal to 
revise the definition of primary care services used for assignment will 
positively impact beneficiary assignment for ACOs providing care to the 
most serious and chronically ill patients. While the commenters did not 
provide additional rationale for how beneficiary assignment would be 
positively impacted, we interpret this comment to mean that beneficiary 
assignment would be more inclusive of serious and chronically ill 
patients which could increase assigned beneficiaries for certain ACOs. 
We further agree, as explained earlier in this section of this final 
rule, that CPM services are analogous to CCM and PCM services already 
included in the definition of primary care services used in assignment, 
and that the new prolonged services HCPCS codes reflect the provision 
of services beyond the total time for codes currently included in the 
Shared Savings Program definition of primary care services used in 
assignment.
    We acknowledge the commenters that opposed or expressed concerns 
about the inclusion of these HCPCS codes in the definition of primary 
care services used in assignment and recognize that these are newly 
developed codes without historical utilization patterns. As described 
in our proposal, we expect that most of these services would be billed 
by primary care practitioners who are focused on long-term management 
of their patients with chronic pain. Commenters were not specific in 
discussing unintended consequences that could occur, should these 
services be added to the definition of primary care services used in 
beneficiary assignment, so we are not persuaded by these comments.
    Additionally, we continue to believe that CPM services are 
analogous to PCM and CCM services which are already included in the 
definition of primary care services used for beneficiary assignment, 
and we are not persuaded by commenters' feedback that chronic pain 
falls outside a reasonable definition of ``primary care services'' for 
purposes of beneficiary assignment in the Shared Savings Program. In 
section II.F of this final rule, which finalizes the payment policies 
for the new CPM codes, we reiterate our belief that most CPM services 
would be billed by primary care practitioners who are focused on long-
term management of their patients with chronic pain. As calls for 
improved pain management have increased in recent years, this has 
resulted in better education and training of primary care practitioners 
and heightened awareness of the need for pain care nationally. We 
believe the codes being finalized for CPM services will create 
appropriate payment for physicians and other practitioners (including 
but not limited to primary care practitioners) that reflects the time 
and resources involved in attending comprehensively to the needs of 
beneficiaries with chronic pain.
    As a ``pre-step'' in the claims-based assignment process, CMS 
identifies all beneficiaries who 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 specified in Sec.  425.402(c). Under 
claims-based assignment, CMS assigns beneficiaries to ACOs through 
either one of two steps. Under Step 1, CMS assigns a beneficiary to a 
Shared Savings Program ACO when the beneficiary receives more primary 
care services (measured by Medicare-allowed charges) furnished by 
primary care physicians, nurse practitioners, physician assistants and 
clinical nurse specialists in the participating ACO than from the same 
type of providers at any other Shared Savings Program ACO, non-ACO CCN, 
or non-ACO individual or group TIN. Step 2 only applies to assignable 
beneficiaries who have not had a primary care service rendered by any 
primary care physician, nurse practitioner, physician assistant, or 
clinical nurse specialist, either inside the ACO or outside the ACO and 
were therefore not assigned in assignment Step 1. CMS assigns a 
beneficiary to a Shared Savings Program ACO in this step when the 
beneficiary receives more primary care services (measured by Medicare-
allowed charges) furnished by physicians who are ACO professionals with 
specialty designations as specified in Sec.  425.402(c) in the 
participating ACO than from the same type of providers at any other 
Shared Savings Program ACO, non-ACO CCN, or non-ACO individual or group 
TIN. We expect that the assignment algorithm will ensure appropriate 
assignment to an ACO when using these CPM and prolonged services HCPCS 
codes and we will monitor the billing and utilization of these codes to 
ensure that their inclusion in the definition of primary care services 
used for beneficiary assignment is appropriate, including by monitoring 
and evaluating place of service and provider specialty associated with 
billed claims for these CPM and prolonged services HCPCS codes. If 
monitoring shows that the inclusion of these services in the definition 
of primary care services used for beneficiary assignment is not 
appropriate, we will address that concern in future notice and comment 
rulemaking.
    Comment: A few comments provided general support of our proposal to 
make conforming changes to omit the reference to ``for claims 
identified by place of service modifier 12'' from the description for 
CPT codes 99341 through 99350. One commenter indicated strong support 
because these coding changes will help bring transparency to the 
services provided in

[[Page 69825]]

those settings. These commenters believe that under current coding and 
billing conventions, ``home'' services are all lumped together and thus 
difficult to untangle and analyze productively.
    Response: We agree that our proposal to adopt technical updates to 
the Shared Savings Program beneficiary assignment regulations is 
important for determining where patients receive most of their primary 
care while also ensuring that the definition of primary care services 
used for purposes of assignment remains in alignment with HCPCS/CPT 
coding changes made under the PFS. As discussed in Section II.C of this 
final rule, for CY 2023, the home and domiciliary E/M code family will 
be revised by the CPT to include services provided in assisted living 
facilities, group homes, custodial care facilities, and residential 
substance abuse treatment facilities, as well as a patient's home. 
These changes include combining the domiciliary and rest home CPT codes 
with the home visit CPT codes, resulting in a single family of CPT 
codes that describe these types of services.
    In consideration of the public comments, we are finalizing as 
proposed a revised definition of primary care services in a new 
provision of the Shared Savings Program regulations at Sec.  
425.400(c)(1)(vii) to include the list of HCPCS and CPT codes specified 
in Sec.  425.400(c)(1)(vi) along with the following additions: (1) 
Prolonged services HCPCS codes GXXX2 and GXXX3, which are being 
finalized as G0317 ((Prolonged nursing facility evaluation and 
management service(s) beyond the total time for the primary service 
(when the primary service has been selected using time on the date of 
the primary service); each additional 15 minutes by the physician or 
qualified healthcare professional, with or without direct patient 
contact (list separately in addition to CPT codes 99306, 99310 for 
nursing facility evaluation and management services). (Do not report 
G0317 on the same date of service as other prolonged services for 
evaluation and management 99358, 99359, 993X0). (Do not report G0317 
for any time unit less than 15 minutes)) and G0318 ((Prolonged home or 
residence evaluation and management service(s) beyond the total time 
for the primary service (when the primary service has been selected 
using time on the date of the primary service); each additional 15 
minutes by the physician or qualified healthcare professional, with or 
without direct patient contact (list separately in addition to CPT 
codes 99345, 99350 for home or residence evaluation and management 
services). (Do not report G0318 on the same date of service as other 
prolonged services for evaluation and management 99358, 99359, 99417). 
(Do not report G0318 for any time unit less than 15 minutes)), 
respectively, as discussed in section II.F of this final rule; and (2) 
Chronic Pain Management HCPCS codes GYYY1 and GYYY2, which are being 
finalized with modifications to the descriptions as discussed in 
section II.E of this final rule as G3002 (Chronic pain management and 
treatment, monthly bundle including, diagnosis; assessment and 
monitoring; administration of a validated pain rating scale or tool; 
the development, implementation, revision, and/or maintenance of a 
person-centered care plan that includes strengths, goals, clinical 
needs, and desired outcomes; overall treatment management; facilitation 
and coordination of any necessary behavioral health treatment; 
medication management; pain and health literacy counseling; any 
necessary chronic pain related crisis care; and ongoing communication 
and care coordination between relevant practitioners furnishing care 
(e.g., physical therapy and occupational therapy, and complementary and 
integrative approaches, and community-based care), as appropriate. 
Required initial face-to-face visit at least 30 minutes provided by a 
physician or other qualified health professional; first 30 minutes 
personally provided by physician or other qualified health care 
professional, per calendar month. (When using G3002, 30 minutes must be 
met or exceeded.)) and G3003 (Each additional 15 minutes of chronic 
pain management and treatment by a physician or other qualified health 
care professional, per calendar month (List separately in addition to 
code for G3002). (When using G3003, 15 minutes must be met or 
exceeded.)), respectively.
    We are also finalizing as proposed the conforming changes to omit 
the reference to ``for claims identified by place of service modifier 
12'' from the description for CPT codes 99341 through 99350.
    We are additionally finalizing as proposed that the new provision 
at Sec.  425.400(c)(1)(vii) would be applicable for use in determining 
beneficiary assignment for the performance year starting on January 1, 
2023, and subsequent performance years. Further, we are finalizing as 
proposed technical modifications to the introductory text in Sec.  
425.400(c)(1)(vi) to limit the applicability of this previous provision 
to the performance year starting on January 1, 2022.
    We did not receive any feedback on the discussion of how REHs would 
be treated for purposes of beneficiary assignment. We affirm that we 
will continue to monitor the development of payment policy for REHs to 
determine whether any adjustments to our assignment policies may be 
necessary to account for services furnished in REHs and will consider 
whether any findings may warrant changes through future notice and 
comment rulemaking.
b. Identifying How CMS Certification Numbers Will Be Included and Used 
in Beneficiary Assignment
(1) Background
    Under the Shared Savings Program, ACOs are accountable for the 
quality, cost, and overall care of the Medicare FFS beneficiaries that 
are assigned to the ACO (Sec.  425.100(a)). ACOs are formed by one or 
more ``ACO participants,'' which are responsible for managing and 
coordinating care for the assigned beneficiary population. The Shared 
Savings Program regulations define ``ACO participant'' at Sec.  425.20 
as an entity identified by a Medicare-enrolled billing Taxpayer 
Identification Number (TIN) through which one or more ``ACO providers/
suppliers'' bill Medicare, that alone or together with one or more 
other ACO participants compose an ACO, and that is included on the list 
of ACO participants that is required under Sec.  425.118 (herein ``ACO 
participant list''). An ``ACO provider/supplier'' is an individual or 
entity that: (1) is a provider (as defined at Sec.  400.202) or 
supplier (as defined at Sec.  400.202); (2) is enrolled in Medicare; 
(3) bills for items and services furnished to Medicare FFS 
beneficiaries during the agreement period under a Medicare billing 
number assigned to the TIN of an ACO participant in accordance with 
applicable Medicare regulations; and (4) is included on the list of ACO 
providers/suppliers that is required under Sec.  425.118 (herein ``ACO 
provider/supplier list''). CMS requires each ACO to execute contractual 
agreements with each of its ACO participants (``ACO participant 
agreements''), to ensure that the ACO participant and each ACO 
provider/supplier billing through the TIN of the ACO participant agree 
to the requirements of the Shared Savings Program.
    Under Sec.  425.118(a), an ACO must maintain, update, and submit to 
CMS an accurate and complete list identifying each ACO participant 
(including its Medicare-enrolled TIN) and each ACO provider/supplier 
(including its

[[Page 69826]]

National Provider Identifier (NPI), CCN, or other identifier). All 
Medicare-enrolled individuals and entities that have reassigned their 
right to receive Medicare payment to the TIN of an ACO participant must 
be included on the ACO provider/supplier list (Sec.  425.118(a)(4)).
(a) Development and Maintenance of the ACO Participant List
    An ACO must submit a draft ACO participant list before the start of 
an agreement period and before each performance year thereafter. CMS 
reviews the draft list, conducts a program integrity screening on the 
individuals and entities identified on the list, approves or rejects 
each entry on the list, and informs the ACO of the contents of the 
resulting ACO participant list. In accordance with Sec.  425.118(a)(3), 
the ACO must certify the accuracy of its ACO participant list before 
the start of its agreement period and before each performance year 
thereafter.
    An ACO must maintain and periodically update its ACO participant 
list. An ACO is required to notify CMS no later than 30 days after an 
entity ceases to be an ACO participant. The entity is deleted from the 
ACO participant list as of the termination date of the entity's ACO 
participant agreement. Absent unusual circumstances, the ACO 
participant's data will continue to be utilized for certain operational 
purposes. CMS does not make adjustments during the performance year to 
the ACO's assignment, historical benchmark, performance year financial 
calculations, or the obligation of the ACO to report on behalf of 
eligible clinicians who bill under the TIN of an ACO participant for 
certain CMS quality initiatives, to reflect the deletion of entities 
from the ACO participant list that become effective during the 
performance year.
    If the ACO wishes to add an entity to its ACO participant list, it 
must submit a request to CMS. If CMS approves the request, the addition 
becomes effective on January 1 of the next performance year. ACO 
participants may not be added during a performance year.
    The ACO participant list is critical to Shared Savings Program 
operations. CMS uses the ACO participant list to identify which 
entities are in the ACO, generate the ACO provider/supplier list, 
determine which Medicare FFS beneficiaries will be assigned to an ACO, 
establish the historical benchmark, perform financial calculations, and 
coordinate among CMS quality reporting initiatives.
(b) Development and Maintenance of the ACO Provider/Supplier List
    In accordance with Sec.  425.118, ACOs must submit to CMS before 
the start of an agreement period and before each performance year 
thereafter an accurate and complete list identifying each ACO provider/
supplier (including its NPI, CCN, or other identifier). In accordance 
with Sec.  425.118(a)(3), the ACO must certify the accuracy of its ACO 
provider/supplier list. In addition, ACOs are required to notify CMS of 
any changes in their ACO provider/supplier list in accordance with 
Sec.  425.118(c). Specifically, an ACO must notify CMS within 30 days 
after an individual or entity becomes or ceases to be a Medicare-
enrolled provider or supplier that bills for items and services it 
furnishes to Medicare FFS beneficiaries under a billing number assigned 
to the TIN of an ACO participant (Sec.  425.118(c)).
    For performance years starting on January 1, 2019, and subsequent 
performance years, CMS creates the initial ACO provider/supplier list 
for a performance year by using the Provider Enrollment, Chain, and 
Ownership System (PECOS) to identify by CCN and NPI all of the 
providers and suppliers, respectively, that have reassigned their right 
to receive Medicare payment to the TIN of an ACO participant. As with 
its ACO participant list, each ACO must review that initial list, make 
any necessary corrections, and certify the resulting ACO provider/
supplier list prior to the start of a performance year and at such 
other times as specified by CMS.
(c) Use of Lists in Beneficiary Assignment
    For PYs 2012 through 2018, ACOs were required to identify on their 
ACO participant list the CCNs for certain provider types (FQHCs, RHCs, 
Electing Teaching Amendment (ETA) hospitals, and Method II Critical 
Access Hospitals (CAHs)), as well as the ACO participant TIN under 
which the CCN was enrolled in Medicare. CMS required ACOs to identify 
CCNs and their associated TIN information because otherwise it would 
not be possible to identify the institutional claims billed by those 
providers for purposes of beneficiary assignment since TINs are not 
retained in the CMS Integrated Data Repository (IDR) for the claims 
submitted by FQHCs, RHCs, ETA hospitals, and Method II CAHs.
    Additionally, ACOs that included FQHCs and/or RHCs on their ACO 
participant list were also required to identify, through an 
attestation, a list of physicians who directly provided primary care 
services in each FQHC or RHC (herein ``attestation list'') in 
accordance with Sec.  425.404(a). The linkage of the physicians to the 
FQHCs and RHCs provided via the attestation list was necessary because 
physicians and other individual practitioners cannot reassign their 
Medicare billing rights to an FQHC or RHC CCN. Therefore, although 
FQHCs, RHCs, physicians, and other individual practitioners are all 
listed in PECOS, the PECOS reassignment data used to generate the ACO 
provider/supplier list could not have linked the NPI of a physician or 
other practitioner to the CCN of an FQHC or RHC and, in turn, to an ACO 
participant TIN. This attestation list was collected through the ACO's 
application to the Shared Savings Program and could be updated annually 
with changes, if any, which would take effect January 1 of the next 
performance year.
    In accordance with Sec.  425.404(b), for performance years starting 
on January 1, 2019, and subsequent years, under the assignment 
methodology in Sec.  425.402, CMS treats a service reported on an FQHC/
RHC claim, identified using the CCN as a unique identifier for an 
individual FQHC/RHC, as a primary care service performed by a primary 
care physician. For performance years starting on January 1, 2019, and 
subsequent performance years, CMS uses PECOS to identify the CCN or NPI 
of each ACO provider/supplier enrolled under an ACO participant TIN. 
Specifically, CMS uses PECOS data to identify the following: (i) all 
Medicare enrolled entities (as identified by a CCN) that have enrolled 
under the TIN of an ACO participant; and (ii) all individual 
practitioners (as identified by an NPI) who have reassigned their right 
to receive Medicare payment to the TIN of an ACO participant. The 
resulting initial ACO provider/supplier list reflects PECOS enrollment 
information at a single point in time. An ACO may need to add or remove 
a provider or supplier who has reassigned his or her right to receive 
Medicare payment to the TIN of an ACO participant after the ACO 
certified its ACO provider/supplier list for the performance year. An 
ACO that needs to make a change to its certified ACO provider/supplier 
list must notify CMS within 30 days of the change.
    For purposes of beneficiary assignment, we identify claims for 
services furnished by Method II CAHs, ETA hospitals, FQHCs, and RHCs 
using the CCN assigned to the facility. In general, ACO participants 
are identified by TINs. However, the TINs for Method

[[Page 69827]]

II CAHs, FQHCs, RHCs, and ETA hospitals are not included in the 
National Claims History and IDR claims files, so we use the CCN as the 
unique identifier to identify services furnished by these entities. 
Thus, for these providers, we use TINs from the certified ACO 
participant list and the associated CCNs sourced from PECOS as the 
basis for beneficiary assignment. We also use claims from participant 
TINs on the certified ACO participant list and the CCNs from the 
initial ACO provider/supplier list in the determination of whether an 
ACO is a high revenue ACO or low revenue ACO, as defined at Sec.  
425.20, and in the determination of beneficiary assignment upon which 
benchmark and performance year expenditure calculations are determined.
    This approach allows CMS to identify ACO participant TINs and 
associated CCNs for the downstream operations necessary to prepare for 
the start of the performance year on January 1, including producing the 
ACO's list of prospectively assigned or preliminarily prospectively 
assigned beneficiaries, as applicable, at the start of each performance 
year.
    Although the CCNs enrolled under a TIN may change during the course 
of an ACO's performance year, CMS' current operational process 
identifies any related CCN changes, through use of PECOS, only during 
the application process or the annual change request cycle. As with the 
certified ACO participant list, the CCNs used for purposes of 
beneficiary assignment and other operations are those that appear on 
the initial ACO provider/supplier list that is developed before the 
start of a performance year, and those CCNs remain applicable for the 
duration of the performance year. Any new CCNs that are established 
during a performance year are not used for purposes of beneficiary 
assignment and other operations until the start of the next performance 
year. The same applies to CCNs that become deactivated or change their 
TIN affiliation (that is, enroll under a different TIN) in PECOS during 
a performance year; those changes are not reflected in beneficiary 
assignment and other operations until the start of the next performance 
year. In PECOS, a ``deactivated'' enrollment status includes providers 
or suppliers whose Medicare billing privileges have been deactivated 
under Sec.  424.540, as well as providers and suppliers that have 
voluntarily terminated their enrollment.
(2) Revisions
    As discussed in the proposed rule, in order to administer the 
Shared Savings Program, we need to accurately identify all ACO 
participant TINs and ACO providers/suppliers that participate in the 
program. An accurate identification of the ACO participants and the 
CCNs that are ACO providers/suppliers in an ACO is critical for 
assignment of beneficiaries to the ACO, as well as for assessing the 
quality of care provided by the ACO to its assigned beneficiaries. An 
accurate identification of the individuals and entities participating 
in the ACO is also critical for ensuring compliance with program rules 
and equally important for the ACO and its own operational and 
compliance purposes. Thus, both CMS and the ACO need to have a common 
understanding of the individuals and entities that compose the ACO. We 
obtain this common understanding by requiring per Sec.  425.118 that 
the ACO certify the accuracy of its ACO participant and ACO provider/
supplier lists prior to the start of each performance year. In 
addition, we require the ACO to notify CMS of any changes to its ACO 
participant list and ACO provider/supplier list throughout the 
performance year. Because we rely on these lists for operational 
purposes, we must have a transparent process that results in the 
accurate identification of all ACO participants and ACO providers/
suppliers, including CCNs, that compose each ACO in the Shared Savings 
Program.
    Based on our operational experience, we have determined that our 
current process, wherein we use an ACO's certified ACO participant list 
and data from PECOS to generate the initial ACO provider/supplier list 
prior to the start of the performance year and to identify the CCNs 
used for purposes of beneficiary assignment and other operations, may 
not capture all changes to providers and suppliers that participate in 
an ACO during the performance year. Specifically, our current processes 
do not capture: (a) new CCNs that are enrolled in Medicare under ACO 
participant TINs after the initial ACO provider/supplier list for a 
performance year is generated; or (b) CCNs that are in a deactivated 
status as listed in PECOS at the time the initial ACO provider/supplier 
list for a performance year is generated.
    A CCN enrollment can become active or be deactivated in PECOS at 
any time, and a CCN can change TIN affiliations over time, including 
during the course of an ACO's performance year. Developing the initial 
ACO provider/supplier list, including the CCNs used for purposes of 
beneficiary assignment and other operations, before the start of a new 
performance year, and having that list remain applicable for the 
duration of the performance year, prevents us from later capturing 
during the performance year any newly-enrolled CCNs affiliated with ACO 
participant TINs.
    Not recognizing new CCNs that enroll under an ACO participant TIN 
after the initial ACO provider/supplier list is generated impacts the 
determination of beneficiary assignment, expenditure and revenue 
calculations, and coordination among CMS quality reporting initiatives. 
Analysis based on PY 2019, 2019A, 2020, and 2021 data has shown that 
considering only the CCNs on the ACO provider/supplier list that is 
established prior to the start of the performance year, has a 
significant impact on assignment for some ACOs that include FQHCs, 
RHCs, ETA hospitals, and Method II CAHs. We found that 555 CCNs newly 
enrolled or re-enrolled during the course of PY 2020. CCNs were added 
across 143 (28 percent) of the 517 participating ACOs. Among the 344 
ACOs under preliminary prospective assignment with retrospective 
reconciliation, 96 ACOs (28 percent) would have been impacted if the 
newly-enrolled CCNs were added to the ACO's ACO provider/supplier list 
during the 2020 performance year. An estimated 42,000 additional 
beneficiaries could have been assigned based on primary care services 
provided by CCNs enrolled during the performance year. Over 80 percent 
(that is, approximately 28,000) of these additional beneficiaries would 
have been concentrated among 12 ACOs under preliminary prospective 
assignment with retrospective reconciliation.
    Accordingly, we proposed in the CY 2023 PFS proposed rule to add a 
new provision at Sec.  425.402(f) to reflect how CCNs are used in 
assignment. As proposed Sec.  425.402(f)(1), prior to the start of the 
performance year and periodically during the performance year, CMS 
would determine the CCNs for all FQHCs, RHCs, Method II CAHs, and ETA 
hospitals enrolled under the TIN of an ACO participant, including all 
CCNs with an active enrollment in Medicare and all CCNs with a 
deactivated enrollment status. Under proposed Sec.  425.402(f)(2), we 
would use those CCNs in determining assignment for the performance 
year.
    Under proposed Sec.  425.402(f)(3), we set forth how we would 
account for changes in CCN enrollment status during a performance year. 
Under the proposal, CCNs that enroll under an ACO participant TIN 
during the performance year would be reflected in program operations, 
including but not

[[Page 69828]]

limited to: beneficiary assignment and revenue and expenditure 
calculations performed quarterly and during financial reconciliation 
for ACOs under preliminary prospective assignment with retrospective 
reconciliation. Specifically, if a new CCN with no prior Medicare 
claims experience enrolls under the TIN of an ACO participant after the 
ACO certifies its ACO participant list for a performance year as 
required under Sec.  425.118(a)(3), we would consider services 
furnished by that CCN in determining assignment to the ACO for the 
applicable performance year if the ACO has selected preliminary 
prospective assignment with retrospective reconciliation. As discussed 
in the proposed rule, we believe it would be important to limit these 
updates to newly-enrolled CCNs during the performance year in order to 
ensure equivalency between historical benchmark expenditures and 
performance year expenditures. We proposed to codify this change in the 
regulations at Sec.  425.402(f)(3)(i).
    We further proposed that services furnished by a CCN with a 
deactivated enrollment status prior to that CCN becoming deactivated 
that is enrolled under the TIN of an ACO participant at the start of a 
performance year will be considered in determining beneficiary 
assignment to the ACO for the applicable performance year or benchmark 
year. For purposes of this policy, we noted that we would use PECOS 
data to determine whether a CCN has a deactivated enrollment status. In 
the case of a CCN with a deactivated enrollment status that had 
multiple TIN affiliations prior to its deactivation, we proposed to use 
the TIN with which the CCN was most recently enrolled to identify the 
appropriate ACO participant, if any, to which services furnished by the 
CCN should be attributed. We believe that the inclusion of CCNs with a 
deactivated enrollment status in PECOS is consistent with our policy on 
the consideration of claims billed by merged/acquired TINs as discussed 
in the June 2015 final rule (80 FR 32715). We noted in the proposed 
rule that we believe that our rationale for the merged/acquired TIN 
policy also applies to CCNs with a deactivated enrollment status--
namely, that (a) it is likely that the physicians and other 
practitioners furnishing primary care services billed via the CCN will 
continue to serve the same patient population that they served before 
the CCN deactivated its enrollment and (b) their patients may appear on 
the ACO's list of assigned beneficiaries at the end of the performance 
year. We discussed that we believe the proposed change would be 
important to maintain accuracy and comparability with regard to 
historical benchmark and performance year expenditure calculations. We 
proposed to codify this change in the regulations at Sec.  
425.402(f)(3)(ii).
    The policy under proposed Sec.  425.402(f)(3)(ii) would apply to 
CCNs that are deactivated but later reactivated, or that are 
disenrolled as one facility type but later re-enrolled as another type 
of ACO provider/supplier. For example, if a CCN for a Method II CAH was 
deactivated during PY 2022 and later re-enrolled as another facility 
type during PY2023, the services furnished by the deactivated CCN would 
be considered in determining the ACO's assigned beneficiary population 
and historical benchmark expenditures for PY 2023, which is not the 
case under current policy. Similarly, if a CCN for a Method II CAH was 
deactivated during PY 2022 and later re-enrolled as an REH with a new 
CCN in CY 2023, the services furnished by the deactivated CCN would be 
considered in determining the ACO's assigned beneficiary population and 
historical benchmark expenditures for PY 2023, which is not the case 
under current policy. By considering both the deactivated CCN and the 
new REH CCN in determining the ACO's assigned beneficiary population, 
we would ensure parity between historical benchmark expenditures and 
performance year expenditures.
    We noted in the proposed rule that while we proposed a specific 
policy to include deactivated CCNs in assignment, a similar policy is 
not needed for deactivated NPIs. During the performance and benchmark 
years, deactivated NPIs are included in assignment by default if they 
are included on a claim during the applicable assignment window.
    As discussed in the proposed rule, we believe it is necessary to 
continue our current operational process, to not allow CCNs to switch 
between ACOs during the performance year. That is, if a CCN that was 
enrolled under the TIN of one ACO participant enrolls under a different 
TIN during a performance year, we would continue to treat services 
billed by the CCN as services furnished by the original ACO participant 
TIN under which the CCN was enrolled. We believe it is most appropriate 
to continue our current process and operationally treat CCNs in a 
similar fashion to ACO participant TINs and not allow a CCN to switch 
between ACOs during the performance year, rather than treating them in 
a similar fashion to an NPI that would be allowed to switch between 
ACOs during a performance year due to the relative magnitude of 
services provided by and assignment associated with a CCN, as compared 
to a much smaller amount of services and assignment associated with a 
single NPI, as described above. This operational approach would limit 
the potential for large impacts on performance year expenditure 
calculations and reduce the potential for gaming opportunities. 
Including services billed by the CCN as services furnished by the ACO 
participant is consistent with our policy on the treatment of ACO 
participant TINs included on the ACO participant list, wherein an 
entity is deleted from the ACO participant list as of the termination 
of its ACO participant agreement but claims billed under the ACO 
participant TIN continue to be included in program operations until the 
end of the performance year. We proposed to codify this approach for 
CCNs in the regulations at Sec.  425.402(f)(3)(iii).
    We proposed to identify all CCNs associated with ACO participant 
TINs as determined by the methodology described in the preceding 
paragraphs for use in assignment and other operations prior to 
determining historical benchmarks, running quarterly assignment, and 
financial reconciliation. We noted that we also intend to develop a 
mechanism for reporting to ACOs all CCNs used in assignment and for 
purposes of program operations to provide for a transparent process. 
This CCN information would be provided to ACOs on a periodic basis for 
informational purposes, and this information will not need to be 
certified by the ACO.
    We proposed that this revised approach to the treatment of CCNs 
would be applicable for purposes of all program operations for the 
performance year starting on January 1, 2023, and subsequent 
performance years. We sought comment on all aspects of this proposal.
    The following is a summary of the public comments received on the 
proposed revisions to identifying how CMS certification numbers will be 
included and used in beneficiary assignment and our responses:
    Comment: We received a few comments on this proposal and all were 
supportive of our proposed approach.
    A couple of commenters stated that this approach would create a 
more accurate assignment list for ACOs that have participant providers 
that are FQHCs, RHCs, ETA hospitals, and CAHs. These commenters also

[[Page 69829]]

encouraged CMS to monitor the impacts of this new policy for unintended 
consequences, such as penalizing ACOs for bringing more safety net 
providers into the program. Other input included recommendations that 
CMS solicit feedback from ACOs on the reporting mechanism to ensure 
that ACOs affected by these policies have a clear understanding of 
assignment list changes during the performance year and how those 
changes affect program operations.
    Response: We agree that finalizing this proposal will create a more 
accurate assignment list for ACOs that have FQHCs, RHCs, ETA hospitals 
and CAHs on their participant list as it will capture changes to CCN 
enrollment status that occur during the performance year. With regard 
to the suggestion to monitor the impacts of the use of CCNs in 
assignment for unintended consequences, such as penalizing ACOs for 
bringing more safety net providers into the Shared Savings Program, we 
will include analysis of this as part of our on-going monitoring. We 
appreciate the recommendation that CMS solicit feedback to ensure that 
ACOs affected by these policies have a clear understanding of 
assignment list changes during the performance year and how these 
changes impact program operations. As stated in our proposal, we intend 
to develop a mechanism for reporting to ACOs all CCNs used in 
assignment for the purposes of program operations to provide for a 
transparent process. This information will be provided to ACOs on a 
periodic basis throughout the performance year and will be in addition 
to the feedback provided on beneficiary and provider overlaps that is 
provided before the participant lists are finalized.
    As a result of the public comments, we are finalizing our proposal 
to add a new provision at Sec.  425.402(f) to reflect how CCNs will be 
used in assignment for PY 2023 and subsequent performance years. Under 
Sec.  425.402(f)(1), prior to the start of the performance year and 
periodically during the performance year, CMS will determine the CCNs 
for all FQHCs, RHCs, Method II CAHs, and ETA hospitals enrolled under 
the TIN of an ACO participant, including all CCNs with an active 
enrollment in Medicare and all CCNs with a deactivated enrollment 
status. Under Sec.  425.402(f)(2), we will use those CCNs in 
determining assignment for the performance year. Finally, under Sec.  
425.402(f)(3), we specify how changes in CCN enrollment status during 
the performance year will be reflected in program operations, including 
but not limited to beneficiary assignment and revenue and expenditure 
calculations performed quarterly and during financial reconciliation 
for ACOs under preliminary prospective assignment with retrospective 
reconciliation. Specifically, under Sec.  425.402(f)(3)(i), if a CCN 
with no prior Medicare claims experience enrolls under the TIN of an 
ACO participant after the ACO certifies its ACO participant list for a 
performance year as required under Sec.  425.118(a)(3), CMS will 
consider services furnished by that CCN in determining beneficiary 
assignment to the ACO for the applicable performance year for ACOs 
under preliminary prospective assignment with retrospective 
reconciliation. Under Sec.  425.402(f)(3)(ii), services furnished by a 
CCN with a deactivated enrollment status that is enrolled under an ACO 
participant at the start of a performance year will be considered in 
determining beneficiary assignment to the ACO for the applicable 
performance year or benchmark year. Finally, under Sec.  
425.402(f)(3)(iii), if a CCN enrolled under the TIN of an ACO 
participant at the start of the performance year enrolls under a 
different TIN during a performance year, CMS will continue to treat 
services billed by the CCN as services furnished by the ACO participant 
it was enrolled under at the start of the performance year for purposes 
of determining beneficiary assignment to the ACO for the applicable 
performance year.
    These provisions are being finalized as applicable for purposes of 
all program operations for the performance year starting on January 1, 
2023, and subsequent performance years.
4. Quality Performance Standard and Reporting
a. 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 
for purposes of assessing such quality of care. As we stated in the 
November 2011 final rule establishing the Shared Savings Program (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. In the November 
2011 final rule, we established a quality measure set spanning four 
domains: patient experience of care, care coordination/patient safety, 
preventive health, and at-risk population (76 FR 67872 through 67891). 
We have subsequently updated the measures that comprise the quality 
performance measure set for the Shared Savings Program through 
rulemaking in the CY 2015, 2016, 2017, and 2019 PFS final rules (79 FR 
67907 through 67920, 80 FR 71263 through 71268, 81 FR 80484 through 
80489, 83 FR 59707 through 59715 respectively).
b. Revising the Shared Savings Program Quality Performance Standard
    In the CY 2023 PFS proposed rule (87 FR 46127), we proposed to 
further refine the quality performance standard for PY 2023 and 
subsequent performance years through a combination of modifications. 
Specifically, we noted that we have concerns that the current structure 
of the quality performance standard creates a cliff of ``all-or-
nothing'' scoring where an ACO may be ineligible to share in savings 
due to a minor difference between its MIPS Quality performance category 
score and the quality performance standard required to share in savings 
at the maximum sharing rate for the applicable performance year. We 
proposed to adopt an alternative quality performance standard that 
incorporates a sliding scale to avoid this cliff. This flexibility 
would be even more important as ACOs transition to eCQM/MIPS CQM 
reporting and when the quality performance standard under the Shared 
Savings Program increases to the 40th percentile across all MIPS 
Quality performance category scores starting in PY 2024. Additionally, 
we proposed to modify our approach for determining shared losses for 
ACOs in the ENHANCED track that would allow more ACOs to receive a 
shared loss rate based on a sliding scale rather than automatically 
being subject to the maximum loss rate of 75 percent. We did not 
propose to change the current requirements for ACOs to be eligible to 
share in savings at the maximum sharing rate.
    Second, we proposed to extend the incentive for reporting eCQMs/
MIPS CQMs through PY 2024 to align with the sunsetting of the CMS Web 
Interface reporting option.
    Third, we proposed to establish a health equity adjustment that 
would upwardly adjust an ACO's quality performance score when it 
delivers high quality care to underserved populations in order to 
support those ACOs serving a high proportion of underserved 
individuals, while also encouraging all ACOs to treat underserved 
populations.

[[Page 69830]]

(1) Current Policy
    In the CY 2021 PFS final rule, we finalized new Shared Savings 
Program quality reporting requirements that align with the Alternative 
Payment Model (APM) Performance Pathway (APP) under the Quality Payment 
Program and revised the quality performance standard under the Shared 
Savings Program for performance years beginning on or after January 1, 
2021, to reduce reporting burden and focus on patient outcomes. We also 
finalized a gradual phase-in of the increase in the level of quality 
performance that would be required for all ACOs to meet the Shared 
Savings Program quality performance standard. Specifically, for PYs 
2021 and 2022, an ACO would be required to achieve a quality 
performance score that is equivalent to or higher than the 30th 
percentile across all MIPS Quality performance category scores to be 
eligible to share in any savings generated, and for 2023 and subsequent 
performance years, an ACO would be required to achieve a quality 
performance score that is equivalent to or higher than the 40th 
percentile across all MIPS Quality performance category scores to be 
eligible to share in savings (85 FR 84719 through 84736).
    We also finalized modifications to the Shared Savings Program 
regulations on the use of ACO quality performance in determining shared 
savings and shared losses (85 FR 84736 through 84740). We explained 
that section 1899(d)(1)(A) of the Act specifies that an ACO is eligible 
to receive a shared savings payment for a portion of the savings 
generated for Medicare, provided that the ACO meets both the quality 
performance standards established by the Secretary and achieves the 
required level of savings against its historical benchmark. Section 
1899(d)(2) of the Act authorizes payments of shared savings under the 
Shared Savings Program. Specifically, if an ACO meets the quality 
performance standards established by the Secretary (according to 
section 1899(b)(3) of the Act) and meets the savings requirements, a 
percent (as determined appropriate by the Secretary) of the difference 
between the estimated average per capita Medicare expenditures in the 
year, adjusted for beneficiary characteristics, and the benchmark for 
the ACO, may be paid to the ACO as shared savings and the remainder of 
the difference shall be retained by the Medicare program. Section 
1899(d)(2) of the Act also requires the Secretary to establish limits 
on the total amount of shared savings paid to an ACO. We have also 
incorporated performance-based risk in the form of shared losses into 
certain financial models under the Shared Savings Program using the 
authority under section 1899(i)(3) of the Act to use other payment 
models.
    In the CY 2021 PFS final rule, we finalized an approach to 
incorporating ACO quality performance in determining shared savings 
that would allow ACOs to maximize the potential shared savings they 
could earn across the Shared Savings Program's financial models. 
Specifically, we replaced the previous sliding scale approach with an 
all-or-nothing approach to determining shared savings based on quality 
performance (85 FR 84735).\273\ Thus, under the current regulations, 
for performance years beginning on or after January 1, 2021, if an ACO 
that is otherwise eligible to share in savings meets the quality 
performance standard established under Sec.  425.512, the ACO will 
share in any savings generated at the maximum sharing rate according to 
the applicable financial model, up to the performance payment limit. If 
the ACO fails to meet the quality performance standard, the ACO will be 
ineligible to share in savings. Further, we finalized an approach that 
continued to allow CMS to take into consideration an ACO's quality 
performance score in calculating the amount of shared losses for 
certain two-sided models (85 FR 84740).\274\ We finalized the following 
approach to determining the shared loss rate for ACOs participating in 
the ENHANCED track for performance years beginning on or after January 
1, 2021, as specified under Sec.  425.610(f)(2). If the ACO meets the 
quality performance standard established in Sec.  425.512, CMS 
determines the shared loss rate as follows:
---------------------------------------------------------------------------

    \273\ We finalized modifications to the regulations to reflect 
this approach for Track 1 (under Sec.  425.604), Levels A through E 
of the BASIC track (under Sec.  425.605), Track 2 (under Sec.  
425.606), and the ENHANCED track (under Sec.  425.610). The 
modifications to the regulations under Sec.  425.604(d) governing 
the determination of the final sharing rate for Track 1 ACOs also 
applied to Track 1+ Model ACOs (85 FR 84763). We note that 
participation in Track 1, Track 2 and the Track 1+ Model concluded 
at the end of PY 2021.
    \274\ This approach continued to allow use of the ACO's quality 
score in determining the shared loss rate under Track 2 (Sec.  
425.606) and the ENHANCED track (Sec.  425.610). ACOs participating 
in the Track 1+ Model, and Level C, D, or E of the BASIC track 
continued to be subject to a fixed shared loss rate of 30 percent 
regardless of quality performance. As noted previously, 
participation in Track 2 and the Track 1+ Model concluded at the end 
of PY 2021.
---------------------------------------------------------------------------

     Step 1: Calculate the quotient of the MIPS 
Quality performance category points earned divided by the total MIPS 
Quality performance category points available.
     Step 2: Calculate the product of the quotient 
described in step 1 and the sharing rate of 75 percent under the 
ENHANCED track.
     Step 3: Calculate the shared loss rate as 1 
minus the product determined in step 2. The shared loss rate may not 
exceed 75 percent and may not be less than 40 percent.
    If the ACO fails to meet the quality performance standard, the 
shared loss rate will be 75 percent.
    In the CY 2022 PFS final rule, we finalized an extended phase-in of 
the modified quality performance standard under the Shared Savings 
Program. Specifically, we extended the phase-in of the quality 
performance standard for an additional performance year (30th 
percentile for PYs 2021, 2022, and 2023). We also finalized that, for 
PYs 2022 and 2023, ACOs choosing to report on the 3 eCQMs/MIPS CQMs 
(meeting data completeness and case minimum requirements for all 3 
measures) would meet the quality performance standard if they achieve a 
Quality performance category score equivalent to or higher than the 
10th percentile of the performance benchmark on at least 1 of the 4 
outcome measures in the APP measure set and achieve a Quality 
performance category score equivalent to or higher than the 30th 
percentile of the performance benchmark on at least 1 of the remaining 
5 measures in the APP measure set (86 FR 65253 through 65272).
    In summary, pursuant to the policies finalized in the CY 2022 PFS 
final rule (86 FR 65266 through 65270), a Shared Savings Program ACO, 
with the exception of an ACO in the first performance year of its first 
agreement period, will be eligible to share in savings at the maximum 
sharing rate if it:
     For PY 2023:
    ++ Achieves a quality performance score that is equivalent to or 
higher than the 30th percentile across all MIPS Quality performance 
category scores, excluding entities/providers eligible for facility-
based scoring, or
    ++ If the ACO reports the three eCQMs/MIPS CQMs, meeting the data 
completeness requirement at Sec.  414.1340 and the case minimum 
requirement at Sec.  414.1380 for all three measures, and achieves a 
quality performance score equivalent to or higher than the 10th 
percentile of the performance benchmark on at least one of the four 
outcome measures in the APP measure set and a quality performance score 
equivalent to or higher than the 30th percentile of the performance 
benchmark on at least one of the remaining five measures in the APP 
measure set. Consequently, the ACO would be required to meet the

[[Page 69831]]

performance benchmark on either 2 outcome measures (one measure at the 
10th percentile and the other at the 30th percentile), or 1 outcome 
measure at the 10th percentile and any other measure in the APP measure 
set at the 30th percentile. The outcome measures in the APP measure set 
are listed in Table 63.
     For PY 2024 and subsequent performance years: Achieves a 
quality performance score that is equivalent to or higher than the 40th 
percentile across all MIPS Quality performance category scores, 
excluding entities/providers eligible for facility-based scoring.
    We noted in the CY 2022 PFS final rule that we had received several 
comments suggesting that we revert to the previous sliding scale 
methodology used prior to the alignment with the APP for determining if 
an ACO has met the quality performance standard (86 FR 65268 and 
65269). We stated in the CY 2022 PFS final rule in response to these 
comments that we would consider proposing to reinstate the sliding 
scale methodology for determining shared savings and shared losses in 
the CY 2023 PFS proposed rule for ACOs that report on the three eCQMs/
MIPS CQMs. We stated that under such a proposed sliding scale 
methodology, we would multiply the ACO's MIPS Quality performance 
category score, based on the ACO's performance on the three eCQMs/MIPS 
CQMs as reported by the ACO, the two claims-based measures calculated 
by CMS, and the CAHPS for MIPS survey, by the sharing rate for the 
ACO's track (or payment model within a track) to determine the ACO's 
shared savings (86 FR 65269).
(2) Scale Shared Savings Based on Quality Performance
    In light of the comments received during the public comment period 
for the CY 2022 PFS proposed rule, we proposed in the CY 2023 PFS 
proposed rule to reinstate a modified sliding scale approach for 
determining shared savings for all ACOs regardless of how they report 
quality data. In particular, commenters shared their concern that ACOs 
are now shifting from being compared against other ACOs to broadening 
this comparison to include all MIPS eligible clinicians (86 FR 65260). 
We also continue to hear this same concern from a number of interested 
parties. In addition, as discussed in the proposed rule, if the 
proposal were limited to eCQM/MIPS CQM reporting, it would require 
additional complexity specific to the requirements for scaled shared 
savings and scaled shared losses of the ENHANCED track. We refer 
readers to the proposed rule (87 FR 46131) for additional rationale for 
the proposal to apply the sliding scale approach to all ACOs regardless 
of how they report quality data.
    We proposed in Sec.  425.512(a)(4)(ii) and (a)(5)(ii) that, 
beginning with PY 2023 and for subsequent performance years, if an ACO 
fails to meet the existing criteria under the quality performance 
standard to qualify for the maximum sharing rate but the ACO achieves a 
quality performance score equivalent to or higher than the 10th 
percentile of the performance benchmark on at least one of the four 
outcome measures in the APP measure set then the ACO would share in 
savings (if otherwise eligible) at a lower rate that reflects the ACO's 
quality performance score (87 FR 46129). Specifically, the ACO's final 
sharing rate would be a scaled rate that is calculated by multiplying 
the maximum sharing rate for the ACO's track (or payment model within a 
track) by the ACO's quality performance score. The ACO's quality 
performance score used in this calculation would reflect the ACO's MIPS 
Quality performance category score plus any health equity adjustment 
bonus points the ACO is eligible to receive (referred to as the health 
equity adjusted quality performance score) based on the proposal 
described in section III.G.4.b.(7) of the proposed rule (87 FR 46132).
    For an example of the proposed sliding scale approach for 
determining shared savings, consider a hypothetical ACO in Level B of 
the BASIC track in PY 2023 that met the MSR to qualify for shared 
savings and achieved a health equity adjusted quality performance score 
of 45 which is less than the 30th percentile MIPS Quality performance 
category score based on the unweighted distribution. However, the ACO 
achieved a quality performance score equivalent to or higher than the 
10th percentile of the performance benchmark on one of the four outcome 
measures in the APP measure set. In this example, the ACO would share 
in savings (if otherwise eligible) at a lower rate that is scaled by 
the ACO's health equity adjusted quality performance score. We would 
calculate the scaled final sharing rate for this ACO by multiplying the 
maximum sharing rate for an ACO in Level B of the BASIC track of 40 
percent by the ACO's health equity adjusted quality performance score 
of 45 (expressed as a percentage) (that is, 40 percent x 45 percent) to 
obtain a final sharing rate of 18 percent. We would then multiply the 
final sharing rate by the ACO's total savings (measured on a first 
dollar basis) to calculate the ACO's shared savings amount before 
considering the performance payment limit.
    We believe the proposed sliding scale approach meets the statutory 
requirements of section 1899(b)(3)(C) of the Act, which 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 purposes of assessing such quality of care. As 
proposed, ACOs would still transition to a higher quality performance 
standard equivalent to or higher than the 40th percentile to share in 
savings at the maximum savings rate for their track beginning with PY 
2024. Still, the proposal to reinstate a sliding scale approach for 
determining shared savings for ACOs would allow for flexibility in 
order to avoid the all-or-nothing approach as the Shared Savings 
Program transitions to required reporting of eCQMs/MIPS CQMs beginning 
with PY 2025 after the sunsetting of the CMS Web Interface measure set. 
As recently as PY 2021, only 12 ACOs reported eCQMs/MIPS CQMs, 
indicating that most ACOs are still developing their strategy and 
workflows to combine data across their EHR systems in advance of the 
requirement to report eCQM/MIPS CQMs beginning in PY 2025. We noted 
that we believe that the sunsetting of the CMS Web Interface 
collection, the requirement to report eCQMs/MIPS CQMs beginning in PY 
2025, and the increase in the quality performance standard to share in 
savings at the maximum savings rate starting in PY 2024 will increase 
the stringency of the quality performance requirements under the Shared 
Savings Program as contemplated under section 1899(b)(3)(C) of the Act 
(87 FR 46129).
    We believe a scaled approach to the quality performance standard, 
and thus to the determination of shared savings, would be beneficial 
because small differences in the distribution of ACOs' MIPS Quality 
performance category scores and other MIPS reporters' scores for a 
performance year may result in a large difference in the number of ACOs 
that fail to meet the quality performance standard as currently 
defined. Moving away from an all-or-nothing approach to a sliding scale 
approach to determine shared savings based on ACO quality performance 
would help to minimize the impact of these fluctuations by allowing 
ACOs that are close to, but do not achieve the health equity adjusted 
quality performance score required to share in savings at the maximum

[[Page 69832]]

sharing rate under their track, to receive some shared savings.
    In summary, we proposed in the CY 2023 PFS proposed rule to revise 
the provisions governing the quality performance standard at Sec.  
425.512(a)(4) and (5) to reflect the alternative quality performance 
standard (87 FR 46129). Specifically, we proposed to revise Sec.  
425.512(a)(4) and (5) to provide for a quality performance standard 
that an ACO must meet in order to share in savings at the maximum 
sharing rate under its track (or payment model within a track) and an 
alternative quality performance standard that an ACO would be required 
to meet in order to share in savings on a sliding scale. We also 
proposed to make conforming changes to the methodologies for 
calculating shared savings under the BASIC track and the ENHANCED 
track, as specified in Sec.  425.605 and Sec.  425.610, respectively to 
reflect the proposed sliding scale approach.
    In the CY 2023 proposed rule (87 FR 46130), we reiterated our 
statement in the CY 2022 PFS final rule that for PYs 2022, 2023 and 
2024 if an ACO: (1) does not report any of the 10 CMS Web Interface 
measures or any of the 3 eCQMs/MIPS CQMs; and (2) does not administer a 
CAHPS for MIPS survey under the APP, the ACO will not meet the quality 
performance standard (86 FR 65261). We proposed that, for PYs 2023 and 
2024, an ACO that does not meet these requirements would also not meet 
the proposed alternative quality performance standard. For PY 2025 and 
subsequent performance years, we finalized in the CY 2022 PFS final 
rule that if an ACO does not report any of the 3 eCQMs/MIPS CQMs and 
does not administer a CAHPS for MIPS survey under the APP, the ACO will 
not meet the quality performance standard (86 FR 65262). In the CY 2023 
PFS proposed rule, we proposed that, for PY 2025 and subsequent 
performance years, an ACO that does not meet these requirements would 
also not meet the proposed alternative quality performance standard (87 
FR 46129). The proposals were reflected in the proposed revisions to 
Sec.  425.512(a)(4) and (5).
    The following is a summary of the public comments we received on 
the proposal and our responses:
    Comment: Many commenters supported our proposal to reinstate a 
modified sliding scale approach for determining shared savings for all 
ACOs based on quality performance. Many commenters stated that the 
current structure of the quality performance standard creates a cliff 
of ``all-or-nothing'' scoring where an ACO may be ineligible to share 
in savings due to a minor difference between its MIPS Quality 
performance category score and the quality performance standard 
required to share in savings at the maximum sharing rate for the 
applicable performance year.
    Two commenters supported the proposal and stated that the current 
all-or-nothing scoring is overly punitive and could cause a large 
portion of ACOs to miss out on shared savings. A few commenters noted 
that scaling shared savings based on quality performance would 
encourage ACOs to continue to participate in the program. Another 
stated that the approach is more supportive of attracting new providers 
to the ACO program and in helping CMS meet its goal of having all 
Medicare Parts A and B beneficiaries in accountable care relationships 
by 2030.
    One commenter stated that scaling savings based on quality 
performance would maintain a focus on achieving quality, while ensuring 
that ACOs that have opportunities for improvement are not deprived of 
the financial resources to do so. Two commenters mentioned that scaling 
shared savings based on quality performance would support providers who 
furnish care in underserved areas to patients with high unmet health 
care needs. Another commenter specifically supported the use of the 
proposed health equity adjusted quality performance score in the 
sliding shared savings. Several commenters explicitly supported tying 
the alternative quality performance standard to individual measure 
benchmarks. Some commenters noted that such an approach would provide 
more predictability, as these benchmarks are known in advance of the 
performance period.
    Response: We appreciate the commenters' support of our proposal. We 
note that in section IV.A.3.f of this final rule, we are finalizing 
that beginning with the CY 2023 performance period/2025 MIPS payment 
year, we will score administrative claims measures using benchmarks 
calculated using performance period benchmarks under MIPS. Due to the 
Shared Savings Program's adoption of the APP beginning in performance 
year 2021, the benchmark methodology used by MIPS would also be 
applicable to ACOs. Thus, the two outcome measures in the APP measure 
set that are administrative claims measures would have performance 
period benchmarks, which would not be known in advance.
    Comment: One commenter noted that a high quality standard is 
essential to the continued success of the Shared Savings Program and 
suggested that the sliding scale should only apply to new ACOs for a 
maximum of 3 performance years as they establish their operations.
    Response: We agree that meaningful quality performance standards 
that assess the quality of care furnished by ACOs and seek to improve 
such care over time are essential to the continued success of the 
Shared Savings Program. We refer the commenter to our prior statements 
regarding achieving such goals through the adoption of higher 
performance standards over time (see, for example, 85 FR 84734), and we 
note that we have historically raised the quality performance standard 
both through the adoption of higher percentile ranking requirements and 
through the transition to eCQMs/MIPS CQMs (Id.).
    We believe that both new and existing ACOs would benefit from the 
application of the sliding scale approach to determining their shared 
savings throughout their agreement period. In the CY 2023 PFS proposed 
rule (87 FR 46129), we stated that our proposal to implement the 
sliding scale methodology would allow ACOs that otherwise would not 
have received any shared savings, but perform well on quality to share 
in a portion of the savings they achieve at a lower rate. We also 
stated that the sliding scale approach meets the statutory requirements 
of section 1899(b)(3)(C) of the Act, which 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 purposes of assessing such quality of care. This policy would also 
avoid a cliff of ``all-or-nothing'' scoring where an ACO may be 
ineligible to share in savings due to a minor difference between its 
MIPS Quality performance category score and the quality performance 
standard required to share in savings at the maximum sharing rate for 
the applicable performance year. Additionally, this policy would 
provide higher rewards for higher performance potentially allow ACOs to 
make a greater investment in the infrastructure necessary for 
transitioning to eCQM/MIPS CQM reporting in performance year 2025 or 
earlier by enabling certain ACOs to receive shared savings that they 
otherwise would not have received under the current quality performance 
standard policies. We believe that the opportunities to make this 
investment should be available to all ACOs.
    Comment: One commenter requested clarification on whether the 
sliding scale for shared savings would apply to

[[Page 69833]]

ACOs reporting via the CMS Web Interface while it remains active.
    Response: We proposed to apply the sliding scale approach to all 
ACOs regardless of how they report quality data and are finalizing this 
policy as proposed. Therefore, for PYs 2023 and 2024, the sliding scale 
will apply to ACOs reporting quality via the CMS Web Interface.
    Comment: We received one comment requesting clarification on how 
scaling shared savings based on quality performance would operate in 
practice. The commenter requested that CMS confirm whether, for 
purposes of determining shared savings, if an ACO reaches the 40th 
percentile across all MIPS Quality performance category scores or 
above, then the ACO would receive 100 percent of savings; and below the 
40 percent mark, a sliding scale would be applied.
    Response: An example of the sliding scale approach for determining 
shared savings was included in the CY 2023 PFS proposed rule (86 FR 
46129) and is restated above. We did not propose to change the current 
requirements for ACOs to be eligible to share in savings at the maximum 
sharing rate nor did this proposal modify the maximum sharing 
rate.\275\ Therefore, an ACO that reports quality data via the APP 
according to the method of submission established by CMS and achieves a 
quality performance score that is equivalent to or higher than the 30th 
percentile (for PY 2023) or 40th percentile (for PY 2024 and subsequent 
performance years) across all MIPS Quality performance category scores, 
excluding entities/providers eligible for facility-based scoring, would 
be eligible to share in savings at the maximum savings rate under its 
track (or payment model within a track) up to the performance payment 
limit (so long as they are not otherwise ineligible to receive shared 
savings) (See Sec.  425.512(a)(4)(i) and (a)(5)(i); see also Sec.  
425.610(d)(3)). The sliding scale approach will be applied to those 
ACOs that do not meet the threshold for the applicable performance 
year.
---------------------------------------------------------------------------

    \275\ We note for clarity that the maximum savings rate under 
the ENHANCED track is 75 percent, not 100 percent (Sec.  
425.610(d)(3)).
---------------------------------------------------------------------------

    Comment: Some commenters expressed concerns about issues that were 
not related to the proposals included in this section of the proposed 
rule. The issues were related to: sunsetting of the CMS Web Interface 
in PY 2024 and the requirement to report eCQMs/MIPS CQMs beginning PY 
2025; use of the MIPS Quality performance category scores to determine 
ACO performance; use of primary care-focused measures in the APP 
measure set; setting the threshold at the 30th and 40th percentile 
across all MIPS Quality performance category score to share in savings 
at the maximum savings rate.
    Response: We note that we did not propose any changes to these 
previously finalized policies in the proposed rule, and therefore, 
these comments are considered to be out of scope. However, we are 
continuing to monitor the impact of these policies as we gain more 
experience with ACOs reporting eCQMs/MIPS CQMs. We are exploring how to 
address some of the concerns related to data aggregation and the all 
payer requirement and may revisit these and related issues in future 
rulemaking based on lessons learned. We have reviewed the public 
comments, and for the reasons stated above and in the proposed rule, we 
are finalizing our proposals as proposed to scale shared savings based 
on quality performance and will reinstate a modified sliding scale 
approach for determining shared savings for all ACOs regardless of how 
they report quality data. Specifically, we are finalizing the proposed 
revisions to the quality performance standard at Sec.  
425.512(a)(4)(ii) and (a)(5)(ii) to reflect the alternative quality 
performance standard that an ACO will be required to meet in order to 
share in savings on a sliding scale. We also are finalizing proposed 
revisions to make conforming changes to the methodologies for 
calculating shared savings under the BASIC track and the ENHANCED 
track, as specified in Sec.  425.605 and Sec.  425.610, respectively to 
reflect the sliding scale approach.
(3) Modify Methodology for Determining Scaled Shared Losses for the 
ENHANCED Track Based on Quality Performance
    We proposed in the CY 2023 PFS proposed rule to modify the 
methodology used to determine shared losses for ACOs in the ENHANCED 
track (87 FR 46130). Under our current regulations at Sec.  
425.610(f)(2), for performance years beginning on or after January 1, 
2021, an ACO in the ENHANCED track must meet the quality performance 
standard in order to have its shared losses scaled based on its quality 
performance and avoid automatically facing the maximum shared loss rate 
of 75 percent. We proposed that for PY 2023, and subsequent performance 
years, we would determine the ACO's shared loss rate using a sliding 
scale approach for an ACO that has losses that exceed its minimum loss 
rate and either meets the existing quality performance standard 
applicable for the performance year (that is, an ACO that would 
currently be eligible for shared losses scaled based on quality 
performance) or that does not meet that standard but achieves a quality 
performance score equivalent to or higher than the 10th percentile of 
the performance benchmark on at least one of the four outcome measures 
in the APP measure set (87 FR 46130). As proposed, an ACO that meets 
the existing quality performance standard or that meets the new 
alternative standard would be subject to a scaled shared loss rate 
equal to 1 minus the product of the maximum sharing rate for the 
ENHANCED track (75 percent) and the ACO's quality performance score. 
The ACO's quality performance score used in this calculation would 
reflect the ACO's MIPS Quality performance category score plus any 
health equity adjustment bonus points the ACO is eligible to receive 
(referred to as the health equity adjusted quality performance score) 
based on the proposal described in section III.G.4.b.(7) of the 
proposed rule. The scaled shared loss rate would be subject to a 
minimum of 40 percent and a maximum of 75 percent. An ACO that fails to 
achieve a quality performance score equivalent to or higher than the 
10th percentile of the performance benchmark on at least one of the 
four outcome measures in the APP measure set would continue to 
automatically share in losses at the maximum shared loss rate of 75 
percent. Likewise, as proposed, an ACO that fails to achieve the 
proposed alternative quality performance standard because it (1) does 
not report any of the ten CMS Web Interface Measures (for PY 2023 or PY 
2024) or any of the three eCQMs/MIPS CQMs (for PY 2025 or subsequent 
performance year) and (2) does not administer a CAHPS for MIPS survey 
under the APP as described in section III.G.4.b.(2) of the proposed 
rule would also automatically share in losses at the maximum rate.
    As explained in the CY 2023 PFS proposed rule (87 FR 46130), the 
above proposal, by itself, would not materially change the current 
methodology for determining shared losses for ENHANCED track ACOs that 
meet the existing quality performance standard (or would meet the 
criteria for the eCQM/MIPS CQM incentive), but would newly allow for 
the application of a scaled shared loss rate for ENHANCED track ACOs 
that achieve a quality performance score equivalent to or higher than 
the 10th percentile of the performance benchmark on at least one of the 
four outcome measures in the

[[Page 69834]]

APP measure set, as opposed to these ACOs automatically receiving the 
maximum shared loss rate under the ENHANCED track of 75 percent as 
required under the current regulations at Sec.  425.610(f)(2)(ii). That 
is, more ACOs would have the opportunity to lower their shared loss 
rate below the maximum rate based on their quality performance.
    In practice, an ACO would need to achieve a health equity adjusted 
quality performance score of higher than 33 and one-third in order to 
have a shared loss rate below 75 percent under the proposed approach. 
That is, a score greater than 33\1/3\ is needed for the scaled shared 
loss rate formula to yield a value less than 75 percent. For an ACO 
with a score of exactly 33 and one-third, the shared loss rate 
calculated by the formula would equal 75 percent. For an ACO with a 
score below 33 and one-third, the calculated rate would be greater than 
75 percent, triggering the application of the maximum shared loss rate 
of 75 percent.
    We noted that the proposal to determine the shared loss rate using 
the ACO's health equity adjusted quality performance score uses 
language that is different from the phrasing used in the current 
regulation at Sec.  425.610(f)(2), which describes the shared loss rate 
as being calculated using ``the quotient of the MIPS Quality 
performance category points earned divided by the total MIPS Quality 
performance category points available'' (87 FR 46130). As indicated in 
the CY 2021 PFS final rule, this approach allowed CMS to continue to 
scale shared losses by the ACO's quality score under the Shared Savings 
Program's two-sided models with the highest levels of risk and 
potential reward, the ENHANCED track and the Track 2 (although PY 2021 
was last year in which ACOs participated under this financial model) 
(85 FR 84736 through 84740). The phrasing ``the quotient of the MIPS 
Quality performance category points earned divided by the total MIPS 
Quality performance category points available'' represents a mechanical 
description of how the score is calculated to clarify that the scaling 
factor represented a value between 0 and 1 which, in turn, would ensure 
that the shared loss rate falls between 0 and 100 percent (before the 
application of the minimum or maximum shared loss rate). However, upon 
further consideration, we noted that we believe that this phrasing may 
cause unnecessary confusion (87 FR 46130). For example, it does not 
clarify whether or how applicable MIPS bonus points or quality 
improvement points would be incorporated or how the calculation would 
be impacted if the ACO is subject to the extreme and uncontrollable 
circumstances policy described in Sec.  425.512(b). Furthermore, as 
discussed in the proposed rule, it would not address the treatment of 
health equity adjustment bonus points, if the proposed health equity 
adjustment described in the CY 2023 PFS proposed rule (87 FR 46132) was 
finalized. As we have described in prior rulemaking (85 FR 84735), the 
ACO's MIPS Quality performance category score accounts for any MIPS 
bonus points and quality improvement points and the extreme and 
uncontrollable circumstances policy in Sec.  425.512(b), which we 
proposed in the CY 2023 PFS proposed rule to redesignate as Sec.  
425.512(c), indicates how an ACO's quality performance score will be 
determined if the ACO is affected by an extreme and uncontrollable 
circumstance. Furthermore, an ACO's health equity adjusted quality 
performance score would always take on a value between 0 and 100 as the 
MIPS Quality performance category score itself will always fall between 
0 and 100 and the application of the proposed health equity adjustment, 
if finalized, would be restricted from raising the health equity 
adjusted quality performance score above 100. As a result, an ACO's 
health equity adjusted quality performance score could be expressed as 
a percentage that would also ensure that the scaled shared loss rate 
falls between 0 and 100 percent (before the application of the minimum 
or maximum shared loss rate). Therefore, we explained in the CY 2023 
PFS proposed rule that we favor using the phrasing ``health equity 
adjusted quality performance score'' in describing our proposed 
methodology for determining the shared loss rate for ENHANCED track 
ACOs for PY 2023 onward, and we also noted that this phrasing would 
align with the terminology used in the description of the proposed 
sliding scale approach for determining shared savings (87 FR 46129).
    For an example of the sliding scale approach for determining shared 
losses, consider a hypothetical ACO participating in the ENHANCED track 
in PY 2023 that had total losses above its minimum loss rate and 
achieved a health equity adjusted quality performance score of 45, 
which is less than the 30th percentile MIPS Quality performance 
category score based on the unweighted distribution. If the ACO 
achieves a quality performance score equivalent to or higher than the 
10th percentile of the performance benchmark on at least one of the 
four outcome measures in the APP measure set, it would share in losses 
at a rate that is scaled by the ACO's quality performance score. We 
explained that we would calculate the scaled shared loss rate for this 
ACO as 1 minus the maximum shared loss rate for the ENHANCED track of 
75 percent multiplied by the ACO's health equity adjusted quality 
performance score of 45 (expressed as a percentage) [1-(45 percent x 75 
percent)] to obtain a shared loss rate of 66.25 percent. We would then 
multiply this shared loss rate by the ACO's total losses (measured on a 
first dollar basis) to calculate the ACO's shared losses before 
consideration of the loss recoupment limit.
    We proposed to revise Sec.  425.610(f) to provide for this scaled 
approach to the determination of shared losses.
    The following is a summary of the public comments we received on 
the proposal and our responses:
    Comment: Several commenters supported the proposal to modify the 
methodology for calculating scaled shared losses under the ENHANCED 
track using the sliding scale approach. Some of the commenters stated 
that the proposal will provide a more balanced loss sharing rate to 
ACOs and prevent ACOs in the ENHANCED track from becoming automatically 
subject to the 75 percent loss rate.
    Response: We appreciate commenters' support for our proposal.
    After reviewing the comments that we received on this proposal, and 
for the reasons stated above and in the proposed rule, we are 
finalizing our proposal as proposed to revise Sec.  425.610(f) to scale 
shared savings starting in CY 2023 based on quality performance 
consistent with our final policy described above to reinstate a 
modified sliding scale approach for determining shared savings and 
shared losses for all ACOs regardless of how they report quality data.
(4) Additional Considerations Related to Proposed Modifications to 
Advanced APM Criteria
    Section 414.1415(b)(1) through (3) requires that to be an Advanced 
APM, an APM must include quality measure performance as a factor when 
determining payment to Advanced APM participants. Specifically, Sec.  
414.1415(b)(1) through (3) require, in relevant part, that two quality 
measures, one of which is an outcome measure, be a factor when 
determining payment to Advanced APM participants. In the Shared Savings 
Program, the ENHANCED track and Level E of the BASIC track are 
currently Advanced APMs, and we expect them to be

[[Page 69835]]

Advanced APMs in the future. As part of our proposal in the CY 2023 PFS 
proposed rule to permit ACOs that fail to meet the existing criteria 
under the quality performance standard to share in savings at a lower 
rate (if otherwise eligible) (87 FR 46129), we proposed that an ACO 
must achieve a quality performance score equivalent to or higher than 
the 10th percentile of the performance benchmark on at least one of the 
four outcome measures in the APP measure set. We noted that this 
approach would not meet the current requirements for an Advanced APM at 
Sec.  414.1415(b)(2) and (b)(3). We explained that this is because the 
proposal permits the use of a single outcome measure as a factor when 
determining payment. We noted that in section IV.A.4.a of the proposed 
rule (87 FR 46131), we also proposed to modify the Advanced APM 
criteria to allow for a single quality measure to be used to meet both 
quality measure criteria at Sec.  414.1415(b)(2) and (b)(3). We 
proposed to align the proposal with the proposed modifications to Sec.  
414.1415(b)(2) and (b)(3). As such, we proposed in Sec.  
425.512(a)(4)(ii) and (a)(5)(ii) to require that an ACO meet only one 
of the four outcome measures for the ACO to be eligible to share in 
savings at a lower rate.
    As discussed in the CY 2023 PFS proposed rule (87 FR 46131), if the 
proposal to revise Sec.  414.1415(b)(2) and (b)(3) were not finalized, 
we would consider finalizing the following alternate policy based on 
comments received. Beginning with PY 2023 and for subsequent 
performance years, if an ACO fails to meet the existing criteria under 
the quality performance standard to qualify for the maximum sharing 
rate, but the ACO achieves a quality performance score equivalent to or 
higher than the 10th percentile of the performance benchmark on at 
least one of the four outcome measures in the APP measure set and a 
quality performance score equivalent to or higher than the 30th 
percentile of the performance benchmark on at least one of the 
remaining measures in the APP measure set, then the ACO would share in 
savings (if otherwise eligible) at a lower rate that reflects the ACO's 
health equity adjusted quality performance score (87 FR 46131). The ACO 
would consequently be required to meet the performance benchmark on 
either 2 outcome measures (one outcome measure at the 10th percentile 
and another measure at the 30th percentile), or 1 outcome measure at 
the 10th percentile and any other measure in the APP measure set at the 
30th percentile to maintain consistency with the requirements of Sec.  
414.1415(b)(1) through (3) (87 FR 46131).
    We also stated that with respect to shared losses for ACOs in the 
ENHANCED track, we would consider finalizing a parallel approach that 
would allow for application of a scaled shared loss rate for ENHANCED 
track ACOs that achieve a quality performance score equivalent to or 
higher than the 10th percentile of the performance benchmark on at 
least one of the four outcome measures in the APP measure set and a 
quality performance score equivalent to or higher than the 30th 
percentile of the performance benchmark on at least one of the 
remaining measures in the APP measure set (87 FR 46131).
    We solicited comment on the alternative to our proposed revisions 
to Sec.  425.512(a) and (b) adopted above, which would have required 
that, in order to meet the alternative performance standard and share 
in savings at a reduced rate, an ACO must achieve a quality performance 
score equivalent to or higher than the 10th percentile of the 
performance benchmark on at least one of the four outcome measures in 
the APP measure set and a quality performance score equivalent to or 
higher than the 30th percentile of the performance benchmark on at 
least one of the remaining measures in the APP measure set.
    We did not receive any comments on this alternative approach.
    We note that in section IV.A.4.a of this final rule, we are also 
finalizing the proposal to modify the Advanced APM criteria to allow 
for a single quality measure to be used to meet both quality measure 
criteria at Sec.  414.1415(b)(2) and (b)(3). Our final policy, 
described in section III.G.4.b.(2) above, aligns with the final 
modifications to Sec.  414.1415(b)(2) and (b)(3). As such, we are not 
finalizing the alternative discussed in this section.
(5) Broad Applicability of the Final Policy To Apply the Sliding Scale 
Approach To Determining Shared Savings for ACOs
    We proposed to apply the sliding scale approach to determine shared 
savings for all qualifying ACOs and to determine shared losses for 
ENHANCED track ACOs regardless of how they report quality data to CMS 
in order to maintain consistency in the treatment of quality 
performance across all ACOs (87 FR 46131). We noted that we believe 
inclusion of all qualifying ACOs in this proposal regardless of 
reporting method would be responsive to the concerns expressed by 
interested parties regarding the perceived inequality in comparing MIPS 
quality scores between the Shared Savings Program and the traditional 
MIPS program. Specifically, as discussed in the proposed rule, ACOs 
have indicated they are limited to reporting the measures included 
under the APP, whereas traditional MIPS participants have a broader 
range of measures to select and report (86 FR 65268). We discussed that 
the proposal to implement the sliding scale methodology would allow 
ACOs that otherwise would not have received any shared savings, but 
perform well on quality to share in a portion of the savings they 
achieve, but at a lower rate. This policy would also potentially allow 
ACOs to make a greater investment in the infrastructure necessary for 
transitioning to eCQM/MIPS CQM reporting in PY 2025 or earlier by 
enabling certain ACOs to receive shared savings that they otherwise 
would not have received under the current quality performance standard 
policies. Furthermore, we noted that if we were to finalize the 
proposal, these ACOs would have additional funds available that they 
could choose to invest in advancing health equity.
    We sought comments on all aspects of the proposals to scale shared 
savings and shared losses discussed in sections III.G.4.b.(2) through 
(5) of the proposed rule, including the alternative approach if the 
proposed changes to Sec.  414.1415(b)(2) and (b)(3) are not finalized.
    Our responses to the comments received on the proposals to scale 
shared savings and shared losses along with a description of our final 
policies can be found in sections III.G.4.b.(2) through (4) of this 
final rule.
    In summary, we are finalizing as proposed our proposals to revise 
Sec.  425.512(a)(4) and (a)(5) to apply a sliding scale approach to 
determine shared savings for all qualifying ACOs and to determine 
shared losses for ENHANCED track ACOs regardless of how they report 
quality data to CMS in order to maintain consistency in the treatment 
of quality performance across all ACOs.
(6) Extension of eCQM/MIPS CQM Incentive
    We separately proposed to revise Sec.  425.512(a)(4) and (5) to 
extend the incentive for reporting eCQMs/MIPS CQMs through PY 2024 to 
align with the timeline for sunsetting of the CMS Web Interface 
reporting option and to allow ACOs an additional year to gauge their 
performance on the eCQM/MIPS CQMs before full reporting of the measures 
are

[[Page 69836]]

required beginning in PY 2025 (87 FR 46132). We originally adopted this 
incentive in the CY 2022 PFS final rule to encourage ACOs to begin the 
transition to eCQM/MIPS CQM reporting in PYs 2022 and 2023 (86 FR 
65269). Under the current incentive:
     If an ACO reports the three eCQMs/MIPS CQMs, meets the 
data completeness requirement at Sec.  414.1340 and the case minimum 
requirement at Sec.  414.1380 for all three eCQMs/MIPS CQMs, and;
     Achieves a quality performance score equivalent to or 
higher than the 10th percentile of the performance benchmark on at 
least one of the four outcome measures in the APP measure set and;
     A quality performance score equivalent to or higher than 
the 30th percentile of the performance benchmark on at least one of the 
remaining five measures in the APP measure set, the ACO will meet the 
quality performance standard used to determine eligibility for shared 
savings and to avoid maximum shared losses, if applicable.
    In the CY 2022 PFS final rule, we finalized our proposal to freeze 
the quality performance standard at the 30th percentile across all MIPS 
Quality performance category scores for PY 2023 (86 FR 65269). 
Therefore, under the current regulations, beginning with PY 2024 and 
subsequent performance years, an ACO must achieve a quality performance 
score that is equivalent to or higher than the 40th percentile across 
all MIPS Quality performance category scores, excluding entities/
providers eligible for facility-based scoring (86 FR 65270). To align 
with the finalized policy from the CY 2022 PFS final rule, we proposed 
to update the eCQM/MIPS CQM incentive for PY 2024 to include this 
requirement. Under the proposed update to the incentive for PY 2024:
     If an ACO reports the three eCQMs/MIPS CQMs, meets the 
data completeness requirement at Sec.  414.1340 and the case minimum 
requirement at Sec.  414.1380 for all three eCQMs/MIPS CQMs, and;
     Achieves a quality performance score equivalent to or 
higher than the 10th percentile of the performance benchmark on at 
least one of the four outcome measures in the APP measure set and;
     A quality performance score equivalent to or higher than 
the 40th percentile of the performance benchmark on at least one of the 
remaining five measures in the APP measure set, the ACO will meet the 
quality performance standard used to determine eligibility for shared 
savings and to avoid maximum shared losses, if applicable. (87 FR 
46132)
    We sought comment on this proposal.
    In addition, we sought comment on whether CMS should incorporate 
the proposed amendments to Sec.  414.1415(b)(2) and (b)(3) described in 
section IV.A.4.a. of the proposed rule into the eCQM/MIPS CQM 
incentive. As explained in the proposed rule (87 FR 46132), 
incorporating the proposal would result in an ACO only having to 
achieve a quality performance score equivalent to or higher than the 
10th percentile of the performance benchmark on at least one of the 
four outcome measures to qualify for the incentive in PY 2023 and PY 
2024.
    We also explained that if we were to modify the eCQM/MIPS CQM 
incentive to align with the proposed modifications to Sec.  
414.1415(b)(2) and (b)(3), we would make corresponding changes to the 
proposed regulatory text at Sec.  425.512(a)(5)(i)(A)(2) by removing 
the requirement that an ACO achieve a quality performance score 
equivalent to or higher than the 30th percentile of the performance 
benchmark on at least one of the remaining five measures in the APP 
measure set in order to meet the quality performance standard used to 
determine eligibility for shared savings and to avoid maximum shared 
losses, if applicable. In addition, we would make corresponding changes 
to the regulatory text governing the eCQM/MIPS CQM incentive for PY 
2023 at Sec.  425.512(a)(4)(i)(B). We noted that the requirements to 
qualify for the eCQM/MIPS CQM incentive for PY 2022 would not be 
affected by the proposed modifications to Sec.  414.1415(b)(2) and 
(b)(3).
    The following is a summary of the public comments received on the 
proposed extension of the eCQM/MIPS CQM incentive and our responses:
    Comment: Many commenters supported the proposal to extend the 
incentive for reporting eCQMs/MIPS CQMs through PY 2024. Some 
commenters mentioned that the incentive may help to ease the transition 
to eCQM/MIPS CQM reporting. One commenter suggested that we extend the 
incentive beyond 2024 to facilitate the national shift towards eCQM. 
One commenter indicated if the incentive proves to be effective in 
getting more ACOs to submit eCQMs, then it suggests that we extend the 
incentive beyond 2024 to facilitate the national shift towards eCQMs.
    Response: We appreciate commenters' support for the proposal. We 
are not extending the incentive beyond performance year 2024 at this 
time because this policy is intended to align with the timeline for 
sunsetting of the CMS Web Interface reporting option at the end of 
performance year 2024. We will continue to monitor the impact of this 
policy as we gain more experience with ACOs reporting eCQMs/MIPS CQMs 
and may revisit the policy in future rulemaking.
    Comment: Several commenters suggested that CMS provide greater 
incentives to offset the financial and operational investments needed 
for ACOs transitioning to eCQM/MIPS CQM reporting before PY 2025. Some 
commenters urged CMS to provide ACOs reporting eCQMs/MIPS CQMs prior to 
2025 with pay-for-reporting status for all three measures included in 
the APP measure set or, alternatively, to provide upfront funding and/
or adjustments to financial benchmarks, or an increased savings rate to 
provide funding and incentives for ACOs to report eCQMs/MIPS CQMs prior 
to 2025.
    Response: In this final rule, we are finalizing a number of 
policies that would strengthen incentives for ACOs to report eCQMs/MIPS 
CQMs, and thereby, making available funds for ACOs to make appropriate 
investments needed to transition to reporting eCQMs/MIPS CQMs prior to 
PY 2025. Additionally, beginning in PY 2021, ACOs that meet the quality 
performance standard detailed in Sec.  425.512 are eligible to share in 
savings at the maximum rate allowable by track. Prior to the 
implementation of this standard, only ACOs in the first year of their 
first agreement period with the Shared Savings Program or ACOs with a 
perfect quality score were eligible to share in savings at the maximum 
rate. This policy enables ACOs to share in savings at a rate higher 
than was previously permitted under the sliding scale approach. For 
example, prior to PY 2021, an ACO in Level B of the BASIC track 
(otherwise eligible to share in savings) with a quality performance 
score equal to 90 percent would have earned a sharing rate of 36 
percent, which is the product of the maximum sharing rate for an ACO in 
Level B of the BASIC track (40 percent) multiplied by the ACO's quality 
performance score of 90 (expressed as a percentage) (that is, 40 
percent x 90 percent, or 36 percent). Under the current policy, an ACO 
in Level B of the BASIC track (otherwise eligible to share in savings) 
with a quality performance score at or above the standard established 
in Sec.  425.512 would share in savings at the maximum rate. In this 
example, the ACO's sharing rate would have increased from 36 percent to 
40 percent. We believe that this increased sharing rate is another

[[Page 69837]]

opportunity for ACOs to use additional funds for reinvestment. In 
section III.G.4.b.2 of this final rule, we are finalizing the proposal 
to implement the sliding scale methodology to allow ACOs that otherwise 
would not have received any shared savings, but perform well on quality 
to share in a portion of the savings they achieve, but at a lower rate. 
This policy would also potentially allow ACOs to make a greater 
investment in the infrastructure necessary for transitioning to eCQM/
MIPS CQM reporting in PY 2025 or earlier by enabling certain ACOs to 
receive shared savings that they otherwise would not have received 
under the current quality performance standard policies. In section 
III.G.4.b.7 of this final rule, we are finalizing the application of 
health equity adjustment for ACOs that report eCQMs/MIPS CQMs. Through 
the health equity adjustment, ACOs that perform well on the three 
eCQMs/MIPS CQMs in the APP measure set and serve a large proportion of 
underserved individuals within their assigned beneficiary population 
may receive up to 10 bonus points. These ACOs could see the largest 
increases in their quality performance score and would have the most 
significant impact on determining the rate at which the ACO shares in 
savings, or for ACOs under the ENHANCED track, the rate at which the 
ACO shares in losses.
    To support ACOs in rural and other underserved areas in building 
the infrastructure needed to succeed in the program, in section 
III.G.2.a of this final rule, we are finalizing policies to implement 
advance investment payments for qualifying ACOs, which include a one-
time fixed payment of $250,000 and quarterly payments for the first 2 
years of an ACO's 5-year agreement period. In section III.G.5.c.(4) of 
this final rule, we are finalizing revisions to the benchmarking 
methodology to reduce the effect of ACO performance on ACO historical 
benchmarks. We expect these policies will strengthen the incentives for 
ACOs, including ACOs caring for medically complex, high cost 
beneficiaries, and/or underserved populations to enter and remain in 
the Shared Savings Program.
    We believe that these policies, coupled with the extension of the 
eCQM/MIPS incentive that we are finalizing, may provide ACOs with 
additional resources needed to invest in the infrastructure necessary 
to transition to reporting eCQMs/MIPS CQMs.
    Comment: Commenters supported the idea of modifying the eCQM/MIPS 
CQM incentive to permit an ACO to meet the quality performance standard 
when achieving a quality performance score equivalent to or higher than 
the 10th percentile of the performance benchmark on at least one of the 
four outcome measures consistent with the proposed amendments to Sec.  
414.1415(b)(2) and (b)(3) as described in section IV.A.4.a. of the CY 
2023 PFS proposed rule.
    Response: With the finalization of the alternative quality 
performance standard discussed in section III.G.4.b.2 of this final 
rule, which would qualify an ACO to share in savings but at a lower 
rate that is scaled based on the ACO's quality performance, we believe 
that it is appropriate for the eCQM/MIPS CQM reporting incentive to 
have a higher standard such that ACOs that qualify for the eCQM/MIPS 
CQM incentive would be eligible to share in savings at the maximum 
sharing rate.
    Comment: Several commenters requested clarification of whether 
FQHC-only ACOs are required to report MIPS CQMs starting in PY 2025. 
These commenters noted that currently FQHCs are exempt from MIPS 
reporting, and they would need technical assistance from CMS on how 
utilize existing reporting requirements to satisfy MIPS reporting as an 
ACO.
    Response: We note that the reference to ``MIPS CQMs'' refers not to 
participation in the Merit-based Incentive Payment System (MIPS) but to 
a particular quality measure collection type and means of submitting 
quality data used by both MIPS and the Shared Savings Program.\276\ In 
the CY 2021 PFS final rule (85 FR 84720-34), we finalized that Shared 
Savings Program ACOs are required to report quality data under the 
Advanced Payment Model (APM) Performance Pathway (APP), which permits 
the reporting of both eCQMs and MIPS CQMs for the purposes of the 
Shared Savings Program. In the CY 2022 PFS final rule (86 FR 65262), we 
finalized that in order to meet the quality reporting requirements 
under the Shared Savings Program for PY 2025 and subsequent performance 
years, an ACO must report the three eCQMs or three MIPS CQMs, 
administer a CAHPS for MIPS survey and CMS will calculate the two 
claims-based measures included under the APP. If an ACO does not report 
any of the three eCQMs/MIPS CQMs and does not administer a CAHPS for 
MIPS survey under the APP, the ACO will not meet the Shared Savings 
Program's quality performance standard. The policies discussed in this 
section and the corresponding proposal do not change the applicability 
of Merit-based Incentive Program to FQHCs. We refer interested parties 
to review the resources available on the QPP website on https://qpp.cms.gov/resources/resource-library regarding how to report under 
the APP.
---------------------------------------------------------------------------

    \276\ See Centers for Medicare & Medicaid Services, MIPS 
Participating in the Quality Performance Category in the 2022 
Performance Year: Traditional MIPS 20-31 (Aug. 22, 2022), available 
at https://qpp-cm-prod-content.s3.amazonaws.com/uploads/1971/2022%20Quality%20User%20Guide.pdf.
---------------------------------------------------------------------------

    Comment: Some commenters expressed concerns about issues that were 
not related to the proposal included in this section of the proposed 
rule. For example, commenters expressed multiple concerns regarding the 
requirement to report eCQMs/MIPS CQMs beginning PY 2025, such as issues 
related to meeting all-payer data requirements, data completeness 
requirements, data aggregation and deduplication issues, and 
interoperability issues among different EHRs. A few commenters 
suggested that a pilot study of eCQM reporting be done first for a 
subset of ACOs before making it a program-wide requirement. Other 
commenters were concerned about the use of the MIPS Quality performance 
category scores to determine ACO performance and raising the threshold 
to the 40th percentile across all MIPS Quality performance category 
scores to share in savings at the maximum savings rate in PY 2024.
    Response: We note that we did not propose any changes to these 
previously finalized policies, and therefore, these comments are 
considered to be out of scope. We note that the sliding scale 
methodology that we are finalizing in this final rule would alleviate 
concerns related to the increase in the threshold for sharing in 
savings at the maximum rate to 40th percentile of all MIPS Quality 
performance category scores, excluding entities/providers eligible for 
facility-based scoring, beginning in PY 2024 since it would allow ACOs 
that otherwise would have not received any shared savings, but perform 
well on quality to share in a portion of the savings they achieve, but 
at a lower rate. We are exploring how to address some concerns related 
to data aggregation, de-duplication of patient data, and the all payer 
requirement and may revisit these and related issues in future 
rulemaking based on lessons learned. After consideration of the public 
comments and for the reasons stated above and in the proposed rule (87 
FR 46132), we are finalizing our proposed revisions to Sec.  
425.512(a)(4) and (5) to extend the incentive for reporting eCQMs/MIPS 
CQMs through PY 2024 to align with the timeline for sunsetting of the 
CMS Web Interface reporting option and to allow ACOs an additional year 
to gauge their

[[Page 69838]]

performance on the eCQM/MIPS CQMs before full reporting of the measures 
are required beginning in PY 2025. Specifically, we are finalizing an 
update to the incentive for PY 2024 such that:
     If an ACO reports the three eCQMs/MIPS CQMs, meets the 
data completeness requirement at Sec.  414.1340 and the case minimum 
requirement at Sec.  414.1380 for all three eCQMs/MIPS CQMs, and:
     Achieves a quality performance score equivalent to or 
higher than the 10th percentile of the performance benchmark on at 
least one of the four outcome measures in the APP measure set and;
     A quality performance score equivalent to or higher than 
the 40th percentile of the performance benchmark on at least one of the 
remaining five measures in the APP measure set, the ACO will meet the 
quality performance standard used to determine eligibility for shared 
savings and to avoid maximum shared losses, if applicable.
    Performance benchmarks used to determine the 10th and 40th 
percentiles will be posted on the Quality Payment Program Resource 
Library website at https://qpp.cms.gov/resources/resource-library. 
Performance benchmarks differ by collection type (that is, eCQM, MIPS 
CQM) and are updated for each performance year.
(7) Health Equity Adjustment for ACOs That Report All-Payer eCQMs/MIPS 
CQMs, and Are High Performing on Quality, and Serve a High Proportion 
of Underserved Beneficiaries
(a) Background and Overview
    Health care outcome inequalities exist among patients throughout 
the United States, and empirical research has found that certain 
patient characteristics are associated with worse health outcomes. 
Patients experiencing worse health outcomes often face barriers to 
accessing health care services and have access to fewer health care 
providers. This research also provides evidence of the relationships 
between socioeconomic status/social risk factors and health care 
outcomes. Section 2(d) of the Improving Medicare Post-Acute Care 
Transformation (IMPACT) Act of 2014 (Pub. L. 113-185) called for the 
Secretary of Health and Human Services (HHS) to conduct a study 
evaluating the effect of individuals' socioeconomic status (SES) on 
quality measures and measures of resource use under the Medicare 
program. The Office of the Assistant Secretary for Planning and 
Education's (ASPE) March 2020 Report to Congress: Social Risk Factors 
and Performance in Medicare's Value-Based Purchasing (VBP) Program, 
provides insight into whether and how value-based programs should 
account for beneficiaries' social risk factors such as income, housing, 
transportation, and nutrition that might adversely affect their access 
to health care services or health outcomes. A key finding is that dual 
enrollment status is a strong predictor of poorer health care quality 
measure outcomes in Medicare's VBP programs, even when accounting for 
other social and functional risk factors.\277\ In addition, several 
peer-reviewed research studies demonstrate that neighborhood-level 
factors for those residing in disadvantaged neighborhoods also have a 
relationship to worse health outcomes for these residents. Living in an 
area with an ADI score of 85 or above, a validated measure of 
neighborhood disadvantage, is shown to be a predictor of 30-day 
readmission rates, lower rates of cancer survival, poor end of life 
care for patients with heart failure, and longer lengths of stay and 
fewer home discharges post-knee surgery even after accounting for 
individual social and economic risk 
factors.278 279 280 281 282 Many rural areas also have 
relatively high levels of neighborhood disadvantage and high ADI 
levels. We believe dual Medicare and Medicaid eligibility and ADI score 
are good indicators of beneficiaries with high needs. Dual eligibility, 
an indicator at the beneficiary level, is intended to capture 
socioeconomic challenges that could affect a beneficiary's ability to 
access care, while ADI, a neighborhood-level indicator, is intended to 
capture local socioeconomic factors correlated with medical disparities 
and underservice. We refer readers to the CY 2022 PFS final rule (86 FR 
65382 through 65384) for a detailed review of the literature on health 
care outcome inequalities. The information included in these articles 
and reports informed our decision to propose and finalize with 
modification a health equity adjustment in connection with ACO quality 
performance and our consideration of the appropriate criteria for 
determining ACO eligibility for the adjustment.
---------------------------------------------------------------------------

    \277\ U.S. Department of Health & Human Services, ``Executive 
Summary: Report to Congress: Social Risk Factors and Performance in 
Medicare's Value-Based Purchasing Program,'' Office of the Assistant 
Secretary for Planning and Evaluation, March 2020. Available at 
https://aspe.hhs.gov/sites/default/files/migrated_legacy_files//195046/Social-Risk-in-Medicare%E2%80%99s-VBP-2nd-Report-Executive-Summary.pdf.
    \278\ Kind AJ, et al., ``Neighborhood socioeconomic disadvantage 
and 30-day rehospitalization: a retrospective cohort study.'' Annals 
of Internal Medicine. No. 161(11), pp 765-74, doi: 10.7326/M13-2946 
(December 2, 2014), available at https://www.acpjournals.org/doi/epdf/10.7326/M13-2946.
    \279\ Jencks SF, et al., ``Safety-Net Hospitals, Neighborhood 
Disadvantage, and Readmissions Under Maryland's All-Payer Program.'' 
Annals of Internal Medicine. No. 171, pp 91-98, doi:10.7326/M16-2671 
(July 16, 2019), available at https://www.acpjournals.org/doi/epdf/10.7326/M16-2671.
    \280\ Cheng E, et al., ``Neighborhood and Individual 
Socioeconomic Disadvantage and Survival Among Patients With 
Nonmetastatic Common Cancers.'' JAMA Network Open Oncology. No. 
4(12), pp 1-17, doi: 10.1001/jamanetworkopen.2021.39593 (December 
17, 2021), available at https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2787244.
    \281\ Hutchinson RN, et al., ``Rural disparities in end-of-life 
care for patients with heart failure: Are they due to geography or 
socioeconomic disparity?'' The Journal of Rural Health. No. 38, pp 
457-463, doi: 10.1111/jrh.12597 (2022), available at https://onlinelibrary.wiley.com/doi/epdf/10.1111/jrh.12597.
    \282\ Khlopas A, et al., ``Neighborhood Socioeconomic 
Disadvantages Associated With Prolonged Lengths of Stay, Nonhome 
Discharges, and 90-Day Readmissions After Total Knee Arthroplasty.'' 
The Journal of Arthroplasty. No. 37(6), pp S37-S43, doi: 10.1016/
j.arth.2022.01.032 (June 2022), available at https://www.sciencedirect.com/science/article/pii/S0883540322000493.
---------------------------------------------------------------------------

    As discussed in section III.G.4.f. of the proposed rule (87 FR 
46154 and 46155), health equity, addressing health disparities, and 
closing the performance gap on the quality of care provided to 
underserved populations continue to be high priorities for the Agency 
through inclusion of health equity initiatives in CMS programs, and 
better addressing the social needs of people with Medicare is an 
important part of this strategy. As discussed in the proposed rule, we 
are committed to achieving health equity for Medicare beneficiaries by 
supporting ACOs in quality improvement activities to reduce health 
disparities, enabling Medicare beneficiaries to make more informed 
decisions, and promoting provider accountability for health care 
disparities.283 284 Further, we have set forth a goal that 
100 percent of people with Original Medicare will be in a care 
relationship with accountability for quality and total cost of care by 
2030, and are focused on expanding the reach of ACOs into rural and 
other underserved communities. Among other considerations for reaching 
this goal, CMS is examining the use of incentives to close gaps in 
outcomes for Medicare beneficiaries.\285\ In section III.G.2.a. of

[[Page 69839]]

the proposed rule (87 FR 46098 through 46110), we proposed to provide 
advance shared savings in the form of AIPs to certain ACOs 
participating in the Shared Savings Program using beneficiary dual 
eligibility status and ADI data to determine the amount of quarterly 
payments. To align with these goals, we proposed a health equity 
adjustment that would upwardly adjust quality performance scores for 
ACOs that serve a high proportion of underserved individuals and 
achieve high quality performance.
---------------------------------------------------------------------------

    \283\ CMS website, ``What is the CMS National Quality 
Strategy?'' https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Legacy-Quality-Strategy (last accessed June 10, 2022).
    \284\ CMS Fact Sheet, ``CMS National Quality Strategy,'' April 
2022, available at https://www.cms.gov/files/document/cms-national-quality-strategy-fact-sheet-april-2022.pdf.
    \285\ Jacobs D, Rawal P, Fowler L, Seshamani M, ``Perspective: 
Expanding Accountable Care's Reach among Medicare Beneficiaries.'' 
New England Journal of Medicine (April 27, 2022), https://www.nejm.org/doi/full/10.1056/NEJMp2202991.
---------------------------------------------------------------------------

    As discussed in section III.G.4.a. of the proposed rule (87 FR 
46127 through 46129), 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, while section 1899(b)(3)(A) of the 
Act provides that that the Secretary shall determine appropriate 
measures to assess the quality of care furnished by the ACO. We stated 
that we have concerns that our current quality performance standard and 
the quality performance measures we have adopted do not adequately 
assess the quality of care provided by ACOs with clinicians who serve a 
high proportion of underserved individuals. We also stated that we have 
similar concerns that the current quality performance standard and 
quality measures set do not adequately incentivize all ACOs to provide 
high quality care to underserved beneficiaries nor do we want to create 
an incentive for ACOs to avoid underserved populations as we transition 
to all payer eCQMs/MIPS CQMs because patients with social risk factors 
tend to have worse quality scores overall. The concern about lower 
quality scores for underserved populations is magnified in eCQMs 
compared to reporting via the CMS Web Interface, because all-payer 
reporting in eCQMs includes quality scores for people with Medicaid 
(correlating with low levels of income and increased prevalence social 
risk factors when compared to people with Medicare); whereas, 
historical reporting via the CMS Web Interface has only included those 
quality scores for people with Medicare. Therefore, ACOs that serve a 
higher proportion of Medicaid enrollees may receive lower quality 
scores during the switch to eCQMs without an adjustment. In turn, 
without an adjustment during the switch to eCQMs, ACOs that serve a 
higher proportion of people with Medicaid or other underserved 
populations outside of Medicare could be incentivized to avoid 
underserved populations, delay switching to eCQMs for as long as 
possible, or even cease participation in the Shared Savings Program 
altogether. We stated that this concern has been raised by interested 
parties serving large proportions of underserved populations.
    We have previously been urged to adopt risk-adjusted quality 
measures that account for beneficiary characteristics such as 
geographic location, socioeconomic status, education, race, ethnicity, 
gender, preferred language, disability status, or health literacy (76 
FR 67873). A number of our measures do adjust for certain beneficiary 
characteristics, such as age and gender; however, we do not broadly 
adjust measure performance on the numerous demographic characteristics 
listed. Quality performance approaches that incorporate risk 
adjustment, while intended to promote equity, can mask real differences 
in quality and make it more difficult to identify and address 
disparities where they exist. Risk adjustment for social risk factors 
may also have the unintended effect of setting lower quality standards 
for underserved populations, rather than ensuring high quality 
standards for all populations receiving care that is established in the 
move to eCQM/MIPS CQM all payer quality measures.
    In considering how to modify the existing quality performance 
requirements under the Shared Savings Program to more fully assess the 
quality of care furnished by ACOs that serve a high proportion of 
underserved individuals, we believe that rather than risk adjusting for 
disparities in the health status of underserved populations, it would 
be more appropriate to adopt an approach that rewards high quality 
performance across all populations served by an ACO. For this reason, 
we proposed in the CY 2023 PFS proposed rule to revise how we assess 
the quality of care furnished by ACOs through the creation of a health 
equity adjustment designed to support those ACOs serving a high 
proportion of underserved individuals while also mitigating disparities 
in health care by encouraging all ACOs to treat underserved populations 
(87 FR 46127 through 46142). We noted that we believe the approach, as 
proposed, would also continue encouraging high ACO quality performance, 
reinforce ACOs' transition to reporting all-payer eCQMs/MIPS CQMs, and 
provide an incentive for ACOs to provide high quality care to all of 
the populations they serve. Additionally, because every year a greater 
proportion of ACOs are making the switch to eCQMs, instituting a health 
equity adjustment for those ACOs making the switch to eCQMs will allow 
us to study the impacts and make refinements during subsequent 
rulemaking.
    As described in the proposed rule (87 FR 46132 through 46142), we 
proposed that the health equity adjustment would be available for PY 
2023 and for subsequent performance years to an ACO that reports the 
three eCQMs/MIPS CQMs in the APP measure set, meeting the data 
completeness requirement at Sec.  414.1340 for all three eCQMs/MIPS 
CQMs, and administers the CAHPS for MIPS survey. We proposed such ACOs 
may receive up to a maximum of 10 additional points added to their MIPS 
Quality performance category score. The level of the adjustment would 
be determined based on the joint consideration of an ACO's performance 
on quality measures and the population served by the ACO, such that 
ACOs that perform well on quality measures and serve a higher 
proportion of beneficiaries who are from underserved neighborhoods 
(residing in census block group with an ADI national percentile rank of 
85 or higher) or are dually eligible for Medicare and Medicaid would 
receive a higher number of bonus points.
    The following is a summary of the general public comments we 
received on the overall proposal to add a health equity adjustment to 
the MIPS Quality performance category score for ACOs that report all-
payer eCQMs/MIPS CQMs, are high performing on quality, and serve a high 
proportion of underserved beneficiaries and our responses:
    Comment: Numerous commenters shared their support for our health 
equity adjustment proposal. Many commenters specifically supported the 
proposal to incorporate a health equity adjustment to an ACO's MIPS 
quality performance category score. Several commenters agreed that this 
adjustment will reward and incentivize ACOs for providing high-quality 
care to underserved populations, will help achieve the goal of greater 
health equity, and that ACOs are uniquely positioned to improve and 
innovate on population health efforts. One commenter also appreciated 
that the heath equity adjustment is designed to increase ACO 
performance and not decrease scores; another commenter appreciated that 
this approach did not set lower quality standards. Another commenter 
appreciated CMS's review of its own regulations to identify and 
remediate those that reinforce or fail to mitigate health inequities. 
One commenter supported the use of the health equity

[[Page 69840]]

adjustment among providers who report eCQMs, asserting that eCQMs are 
the future of quality reporting and these providers should not be left 
behind. Another commenter agreed that this aspect of the proposal will 
negate concerns that the transition to all-payer measures would impact 
savings for providers who treat a higher proportion of underserved 
populations.
    Some commenters supported the proposal and agreed with CMS that the 
proposed health equity adjustment is better than a risk adjustment 
approach. One commenter applauded CMS for not masking health 
disparities through risk adjustment. A few commenters generally 
supported a policy to improve health equity in the Shared Savings 
Program, but noted it should be pilot tested first to ensure that it 
does not have unintended consequences. Additional commenters urged us 
to carefully monitor the health equity adjustment after implementation.
    While these commenters were all supportive of the health equity 
adjustment proposal and recognized the importance of supporting health 
equity in the Shared Savings Program, many shared additional feedback 
on specific aspects of this proposal which is summarized below in each 
subsection of the proposal.
    Response: We appreciate the comments in support of the proposed 
health equity adjustment. Regarding the use of the health equity 
adjustment instead of risk adjustment, we appreciate commenters' 
support for the approach. We agree with commenters who supported the 
use of the health equity adjustment among ACOs that report all-payer 
eCQMs/MIPS CQMs.
    Regarding the need to pilot test the health equity adjustment, we 
expect the early years of this policy to effectively serve this purpose 
given that the adjustment will only be applicable to ACOs that report 
eCQMs/MIPS CQMs, which currently represent a small portion of all ACOs. 
We note that we do intend to monitor the impact of the adjustment and 
may, as necessary, consider modifications to the design of the 
adjustment through future notice and comment rulemaking.
    Comment: Several commenters voiced general concerns about the 
overall health equity adjustment proposal rather than specific concerns 
about the methodology being proposed. One commenter voiced concerns 
about ``Advanced APMs'' not receiving the health equity adjustment 
bonus points because the commenter believed the adjustment would be 
added to MIPS. Another commenter had concerns that the methodology for 
the adjustment could potentially worsen disparities in care. A couple 
of commenters encouraged CMS to take a simpler approach and risk adjust 
the Shared Savings Program quality measures for demographic and social 
risk factors. One commenter supported the goal of health equity, but 
recommended generally that CMS modify programs so that they better 
address different aspects of health equity, rather than just 
encouraging ACOs to serve underserved populations. Another commenter 
was concerned that this policy could negatively impact rural providers, 
citing that they see fewer patients overall than their urban 
counterparts due to population density.
    A few commenters supported rewarding ACOs that perform highly on 
quality and serve underserved beneficiaries, but believed that the 
proposal does not create enough incentives for treating this 
population. One commenter further noted that the only ACOs that would 
benefit from the proposed adjustments are those ACOs that are below the 
minimum quality standard, and that ACOs with a high proportion of 
disadvantaged patients will have to provide additional services that 
would not be recouped. This commenter noted additional services would 
likely be needed for those patients to achieve the same quality 
performance as an ACO that has fewer such patients. Another commenter 
noted that the health equity adjustment as currently designed, which 
gives a maximum of 10 bonus points, is not a sufficient incentive to 
drive smaller, independent practices to prioritize and make investments 
to increase services to currently underserved populations. This 
commenter also cited the lag time between the time of an investment and 
the time at which the practice realizes any financial return, and had 
concerns that the return would not cover the cost of the investment in 
these communities, particularly given the medical complexity of 
patients in many underserved areas.
    Response: We clarify that we interpret the comment raising concerns 
about Advanced APMs to refer to MIPS eligible clinicians and APM 
entities, because ``Advanced APMs'' are a type of payment model, not a 
type of entity participating in the Quality Payment Program. Advanced 
APM Shared Savings Program ACOs have to report the APP under Shared 
Savings Program requirements and would be eligible for the health 
equity adjustment added to their ACO quality performance score for 
purposes of determining shared savings and losses if they report eCQM/
MIPS CQM all payer measures and have a proportion of assigned 
beneficiaries that are underserved based on the underserved multiplier 
definition as described in section III.G.4.b.(7)(d) of this final rule. 
As we noted in the proposed rule (87 FR 46141), the health equity 
adjustment would not impact a MIPS eligible clinician's final scores 
because the health equity adjusted quality performance score would be 
limited to the Shared Savings Program, where it would be used at the 
ACO level to determine an ACO's shared savings or losses. While the 
Shared Savings Program has made efforts to align some quality standards 
with MIPS (see for example, Sec.  425.510(b)), extending the health 
equity adjustment to MIPS eligible clinicians would require separate 
rulemaking specific to MIPS and would be outside the scope of this 
proposal.
    As we stated in the proposed rule (87 FR 46133 and 46134), we have 
received suggestions from stakeholders to consider risk adjusting 
quality measures to account for various beneficiary characteristics 
that are tied to health disparities (76 FR 67873) and expressed our 
concern that this approach may have unintended consequences such as 
masking real differences in quality or setting lower quality standards 
for underserved populations. We believe it is more appropriate to 
reward high quality performance across all populations served by an ACO 
and apply an adjustment for those serving a high proportion of 
underserved individuals. Program modifications that address other 
aspects of health equity may be considered in the future.
    We disagree with the commenters that do not believe the health 
equity adjustment provides incentives for treating underserved 
populations or voiced concern about the methodology of the health 
equity adjustment worsening disparities. We also disagree that ACOs 
that may benefit from the adjustment will not benefit financially from 
the additional bonus points. The proposed bonus points will reward 
existing high quality care to underserved populations immediately 
(without any lag), and these bonus points could increase in the future 
as ACOs improve their inclusion in care and care quality to underserved 
populations. While it is possible that there could be a lag between 
future investments to improve quality and quality score improvements, 
we believe this would depends on what investments the ACO makes and how 
those are prioritized. Furthermore, it is also not expected that these 
bonus points represent the sole motivation for ACOs seeking to improve 
quality and

[[Page 69841]]

health equity, though as outlined in the proposed rule (87 FR 46134 and 
46135) bonus points will increase the ACO's quality score used for 
financial reconciliation, and so could potentially impact shared 
savings or losses.
    As we stated in the CY 2013 proposed rule (87 FR 46139 through 
46141), we believe that a health equity adjustment would upwardly 
adjust quality performance scores for ACOs that serve a high proportion 
of underserved individuals and achieve high quality performance and 
would encourage all ACOs to treat underserved populations. We believe 
this because we have observed that many ACOs serving underserved 
beneficiaries are performing well on quality, and that serving a large 
proportion of underserved patients does not necessarily mean that the 
ACO performs worse on quality than ACOs with fewer such patients. 
Furthermore, when examining performance for the 12 ACOs reporting via 
eCQMs/MIPS CQMS, we observed that quality performance varied on 
different measures such that an ACO was not in the top third for all 
measures or the bottom third for all measures. With the move to eCQMs/
MIPS CQMs and our understanding of the concern voiced by the commenter, 
underserved populations may result in lower quality scores and this 
could be magnified by eCQM or MIPS CQM reporting due to all-payer data. 
Therefore, we believe this is a tangible incentive for ACOs to continue 
serving these populations and avoid delaying the switch to eCQMs or 
MIPS CQMs.
    Small differences in quality scores can have a noticeable financial 
impact on an ACO. The health equity adjustment can provide ACOs up to 
an additional 10 points on their MIPS quality performance category 
score, which, when coupled with our adoption of a sliding policy for 
shared savings as described in section III.G.4.b.(5) of this rule, may 
not only assist ACOs in qualifying to earn shared savings but also 
enhance the rate at which ACOs qualify to share savings. We believe 
that limiting the health equity adjustment bonus to a maximum of 10 
points creates a balanced incentive through increasing an ACO's quality 
performance score without dominating the score creating unintended 
incentives while also aligning with the scoring of the required 
measures under the APP, as previous bonuses within the MIPS program 
have not exceeded 10 points. Improving care to underserved populations 
will not only increase an ACO's health equity adjustment bonus points 
but also their overall quality score which in turn will help with 
shared savings and shared losses. We intend to closely monitor the 
impacts of the health equity adjustment and make refinements as needed 
during subsequent rulemaking; however, we remind readers that the heath 
equity adjustment as it is currently being finalized does not decrease 
ACOs' quality performance scores and that ACOs can only benefit from 
the adjustment.
    Regarding the concern that this policy could negatively impact 
rural providers, we believe our final decision in response to 
commenters to modify the underserved multiplier calculation and use 
National ADI, dual eligibility, and LIS in the health equity 
adjustment, as described in section III.G.4.b.(7)(d) of this final 
rule, provides opportunity for all providers, whether located in rural 
or urban areas. In the CY 2023 PFS proposed rule (87 FR 46138), we 
requested comment on the addition of LIS in calculating the underserved 
multiplier and received many comments in support of this modification. 
We will be closely monitoring the impacts of the policy in rural areas 
and make refinements as needed in future rulemaking.
    Comment: Many commenters recommended that CMS apply the health 
equity adjustment to all ACOs, including those that report via the CMS 
Web Interface, rather than only those reporting eCQMs/MIPS CQMs. A 
couple of these commenters noted this would ensure the proposal has the 
intended effects of encouraging participation in the Shared Savings 
Program and advancing health equity. A few others noted that all ACOs 
could benefit from this proposal given that quality performance 
includes two claim-based measures which are all-Medicare populations. 
One commenter mentioned that some ACOs may be working toward improving 
health equity in their attributed population, but will not be 
recognized or rewarded for this work until they are reporting eCQMs/
MIPS CQMs. Another commenter stated that the adjustment being available 
to all ACOs would boost CMS's goal of 100 percent of all Medicare 
patients to eventually be in an ``accountable relationship''.
    Many commenters voiced concerns that restricting the policy to just 
those ACOs that report via eCQMs/MIPS CQMs does not align with the 
intent of the proposal and will limit who qualifies for the adjustment, 
noting that ACO populations do not differ based on reporting mechanism 
and some ACOs that could benefit most may be excluded. One commenter 
believed that incentivizing caring for structurally marginalized 
communities does not and should not depend on the data reporting 
mechanism and another commenter suggested that this conditional 
approach to the adjustment may result in unintended consequences 
because the bonus will not fall equally across participants in the ACO 
program. Many commenters were concerned that it is difficult for ACOs 
that serve areas of high disadvantage to participate in existing more 
sustainable payment models thus creating a gap between those who can 
and cannot transition out of FFS.
    Several commenters understood that we want to find ways to 
incentivize ACOs to adopt eCQM/MIPS CQM reporting before it becomes 
mandatory in PY 2025, but believed tying this to the health equity 
adjustment was inappropriate and misguided. Commenters noted that ACOs 
continue to face challenges with the new quality reporting requirement, 
including challenges with upgrading systems, and that ACOs that serve a 
high proportion of underserved beneficiaries may have higher costs 
caring for these patients and thus may be additionally challenged to 
devote resources to invest in their health IT infrastructure. Many 
commenters were concerned that few ACOs will qualify for the 
adjustment, at least in the early years, thus limiting its usefulness 
and urged us to remove the eCQM/MIPS CQM reporting requirement and 
consider policies in which all types of practices and ACOs have viable 
opportunities to transition to a more sustainable payment model to 
promoting a more equitable health system.
    Response: We understand the concerns raised by commenters regarding 
the eCQMs/MIPS CQMs reporting criteria for being eligible to receive a 
health equity adjustment. However, we reiterate what we stated in the 
proposed rule, that the health equity adjustment is designed to 
upwardly adjust the ACO's quality performance score and will not 
financially penalize ACOs that are not eligible for the adjustment such 
as those who do not report using eCQMs/MIPS CQMs. Furthermore, the 
proposal had several goals and while commenters noted the goal of 
rewarding ACOs serving a high proportion of underserved individuals 
when high quality is achieved, another goal of the proposal design was 
to support these ACOs during the transition to eCQMs/MIPS CQMs. ACOs 
that serve a higher proportion of Medicaid enrollees may receive lower 
quality scores during the switch to all-payer eCQMs/MIPS CQMs without 
an adjustment or could be incentivized to

[[Page 69842]]

avoid underserved populations, delay switching to eCQMs/MIPS CQMs for 
as long as possible, or even cease participation in the Shared Savings 
Program altogether.
    As the transition to reporting all-payer eCQMs/MIPS CQMs continues, 
with this reporting mechanism becoming mandatory starting in PY 2025, 
this proposal would reinforce the timeline while supporting ACOs that 
may be experiencing challenges with the new quality reporting 
requirement and providing an incentive for ACOs not to seek to avoid 
underserved populations during the transition to reporting eCQMs/MIPS 
CQMs. Based on the all-payer quality data reported via eCQMs/MIPS CQMs 
in PY 2021, we observed that, as an example, one ACO would have 
received 6 out of the 10 maximum bonus points which would have 
increased its final quality performance category score to a level that 
would be comparable to the scores of ACOs reporting via the CMS Web 
Interface. We believe this demonstrates that the health equity 
adjustment can assist with the transition to all-payer eCQMs/MIPS CQMs 
and want to reinforce that this adjustment is a development opportunity 
for ACOs to serve a higher proportion of underserved beneficiaries, to 
improve on quality measures, and to move to all-payer eCQMs/MIPS CQMs. 
Therefore, we will not modify our proposal and apply the health equity 
adjustment to ACOs that report via the CMS Web Interface. When all ACOs 
have transitioned to eCQMs/MIPS CQMs by PY 2025, all ACOs will receive 
a health equity adjustment to their MIPS quality performance category 
score if they meet the other eligibility criteria.
(b) Application of the Adjustment
    We proposed to apply the health equity adjustment in the form of 
bonus points added to the ACO's MIPS Quality performance category 
score. Under the proposed approach, the ACO's health equity adjusted 
quality performance score would be the sum of the ACO's MIPS Quality 
performance category score for all measures in the APP measure set and 
the ACO's health equity adjustment bonus points, if applicable (87 FR 
46134 and 46135). The proposal would not change the current policy for 
determining and calculating an ACO's MIPS Quality performance category 
score.
    Under the existing regulations at Sec.  425.512 and under the 
proposed modifications to the quality performance standard described in 
the proposed rule, there are specific programmatic uses of the ACO's 
MIPS Quality performance category score. In applying the proposed 
health equity adjustment to the ACO's MIPS Quality performance category 
score, which constitutes the ACO's aggregate, or overall score, across 
the APP measure set, we proposed to limit the application of the health 
equity adjustment to certain specified Shared Savings Program 
determinations and calculations. The use of the ACO's health equity 
adjusted quality performance score in these calculations would allow 
ACOs that report the eCQMs/MIPS CQMs and provide high quality care to 
underserved beneficiaries to share in savings at relatively higher 
sharing rates, or in the case of ENHANCED track ACOs that owe shared 
losses, to reduce the shared loss rate used to calculate the amount of 
shared losses owed to CMS. We noted in the proposed rule that we 
believe this approach would serve as a means to incentivize ACOs by 
offering a financial reward for providing high quality care to 
underserved beneficiaries, further financially support ACOs that serve 
underserved beneficiaries, encourage ACOs to add ACO participants in 
underserved areas, and avoid creating adverse incentives for ACOs to 
avoid underserved populations or the health care providers serving 
those populations.
    We proposed to apply an ACO's health equity adjusted quality 
performance score in determining whether the ACO met the quality 
performance standard set at the 30th percentile for PY 2023 as 
specified under Sec.  425.512(a)(4)(i)(A), or the 40th percentile for 
PY 2024 and subsequent performance years, as specified in the proposed 
revised regulations at Sec.  425.512(a)(5)(i)(A)(1) and (a)(5)(i)(B), 
respectively (87 FR 46448). Use of the ACO's health equity adjusted 
quality performance score in making this determination would 
potentially allow more ACOs that provide high quality care to 
underserved beneficiaries to meet the quality performance standard. 
Under the Shared Savings Program's current policies, ACOs that meet 
this quality performance standard share in any savings generated at the 
maximum sharing rate under their track (or payment model within a 
track), up to the performance payment limit. For ENHANCED track ACOs 
that meet the quality performance standard, the ACO's shared losses are 
scaled based on its quality performance.
    We further proposed to apply an ACO's health equity adjusted 
quality performance score in the determining shared savings and losses 
as specified in certain existing provisions of the Shared Savings 
Program regulations and under proposed modifications to the regulations 
as described elsewhere within the proposed rule (87 FR 46439).
    We proposed to use an ACO's health equity adjusted quality 
performance score to determine the final sharing rate for calculating 
shared savings payments under the BASIC track (under Sec.  425.605(d)) 
and the ENHANCED track (under Sec.  425.610(d)) for an ACO that meets 
the proposed alternative quality performance standard allowing for 
application of a sliding scale based on quality performance, as 
specified in proposed modifications to Sec.  425.512(a)(4)(ii) and 
(a)(5)(ii) (87 FR 46448). Among ACOs whose shared savings would be 
determined according to the sliding scale approach (described in 
sections III.G.4.b.(2) and (3) of the CY 2023 PFS proposed rule (87 FR 
46129 through 46131)), the application of the proposed health equity 
adjustment would allow for relatively higher quality performance scores 
in calculating the final sharing rate and make it possible for an ACO 
to share in savings at a relatively higher final sharing rate under its 
track (or payment model within a track).
    For ENHANCED track ACOs that owe shared losses, we proposed to 
apply the health equity adjustment to the ACO's quality performance 
score used in calculating the ACO's shared loss rate, to allow the ACO 
to share in losses at a relatively lower rate, based on its quality 
performance. Specifically, we proposed to use an ENHANCED track ACO's 
health equity adjusted quality performance score in calculating shared 
losses under Sec.  425.610(f) when the ACO meets the quality 
performance standard specified under Sec.  425.512(a)(4)(i) or 
(a)(5)(i) (which includes the incentive for reporting eCQMs/MIPS CQMs 
for PY 2023 and the extension of the incentive for PY 2024, as 
proposed) or meets the proposed alternative quality performance 
standard under Sec.  425.512(a)(4)(ii) and (a)(5)(ii) allowing for the 
application of a sliding scale based on quality performance (87 FR 
46448). For an ENHANCED track ACO in the first performance year of its 
first agreement period that meets the quality performance standard by 
reporting data via the APP and meeting the data completeness and case 
minimum requirements in accordance with Sec.  425.512(a)(2), the ACO's 
quality performance score is utilized in calculating any shared losses 
under Sec.  425.610(f). Therefore, we also proposed to use the ACO's 
health equity adjusted quality performance score to determine the 
shared loss rate for such ACOs.

[[Page 69843]]

    Further, we proposed to apply the health equity adjustment in 
calculating the ACO's quality performance score for an ACO affected by 
extreme and uncontrollable circumstances if the ACO is able to report 
quality data via the APP and meet data completeness and case minimum 
requirements, as provided in Sec.  425.512(b)(3) in the current 
regulations. As discussed in section III.G.4.b.(8) of the proposed rule 
(87 FR 46142 through 46143), the proposed approach of using an ACO's 
health equity adjusted quality performance score to determine the 
``higher of'' score under the extreme and uncontrollable circumstances 
policy would have no practical impact on the sharing rate for an ACO 
that is eligible to share in savings. For an ACO participating in the 
ENHANCED track that is liable for shared losses, the proposed 
application of the health equity adjustment could increase the ACO's 
quality performance score used to determine the ACO's shared loss rate, 
and thus potentially reduce the amount of shared losses owed to CMS.
    We received one public comment on the proposed application of the 
health equity adjustment to the ACO's MIPS Quality performance category 
score and provide this comment and our response below.
    Comment: One commenter supported our proposed approach to apply the 
health equity adjustment bonus points to ACOs' MIPS Quality performance 
category scores, and specifically stated they support maintaining the 
original score and then transparently adding the points awarded from 
the health equity adjustment.
    Response: We agree that transparency is important for any bonus 
points or other adjustments to an ACO's MIPS Quality performance 
category score because this provides information to support ACOs' 
ability to improve on the adjustment such as whether they received the 
health equity adjustment bonus and how many bonus points were applied. 
We are finalizing as proposed our approach to apply any bonus points an 
ACO received for a given performance year to the ACO's MIPS quality 
performance category score.
(c) Identifying Top Quality Performance Among ACOs Reporting eCQMs/MIPS 
CQMs; Determining the Measure Performance Scaler
    We proposed the health equity adjustment would be available to an 
ACO that reports the three eCQMs/MIPS CQMs in the APP measure set and 
meets the data completeness requirement at Sec.  414.1340 for all three 
eCQMs/MIPS CQMs and administers the CAHPS for MIPS survey.
    We noted that we believe that limiting the proposed health equity 
adjustment to ACOs reporting all-payer measures (eCQMs/MIPS CQMs) would 
further encourage ACOs to report all-payer measures in PY 2023 (while 
the Web Interface is still an available reporting option) (87 FR 46132 
through 46134). ACOs may opt to report eCQMs/MIPS CQMs in order to have 
the benefit of the application of the health equity adjustment. As 
stated previously, the concern about lower quality scores for 
underserved populations is magnified in eCQMs/MIPS CQMs compared to 
reporting via the CMS Web Interface, because all-payer reporting in 
eCQMs/MIPS CQMs includes quality scores for people with Medicaid 
(correlating with low levels of income and increased prevalence social 
risk factors when compared to people with Medicare). In addition, 
offering a health equity adjustment to ACOs that report all three 
eCQMs/MIPS CQMs would support ACOs that are serving greater proportions 
of underserved populations as the shift to all-payer reporting takes 
place. ACOs not yet familiar with their performance on these measures 
or how they may be impacted by the change to all-payer populations may 
be incentivized by the proposal to begin reporting these measures 
before the full transition occurs.
    The proposal takes into account interested parties' concerns 
regarding challenges in improving quality of care for underserved 
populations, while recognizing ACOs that provide high quality of care 
for this population. The proposal also helps address the concerns that 
we have heard from ACOs that serve higher proportions of people with 
Medicaid and other underserved populations with regards to all-payer 
quality reporting during the switch to eCQMs/MIPS CQMs. As we also 
noted in the proposed rule, social risk factors may adversely affect 
access to health care services or preferred health outcomes, and dual-
enrollment status is a strong predictor of poorer health care quality 
measure outcomes in Medicare's VBP programs. We acknowledged that using 
the all-payer quality measures, as well as outcome measures may make it 
even more difficult for ACOs that serve underserved populations to 
achieve the quality performance standard, since all-payer reporting 
will newly include people with Medicaid as part of quality reporting, 
and people with Medicaid tend to have a higher amount of social risk 
factors and lower quality scores. As we discussed in section 
III.G.4.b(2) of the proposed rule (87 FR 46129 through 46130), most 
ACOs are still developing strategies and workflows to combine data 
across EHR systems in advance of requirements to report eCQMs/MIPS 
CQMs. Adding health equity adjustment bonus points to the ACO's MIPS 
Quality performance category score could allow more ACOs that care for 
underserved populations to potentially meet the quality performance 
standard set at the 30th percentile (for PY 2023) or 40th percentile 
(for PY 2024 and subsequent performance years) across all MIPS Quality 
performance category scores, and therefore, support these ACOs 
reporting eCQMs/MIPS CQMs.
    We proposed to consider the ACO's performance on all measures in 
the APP measure set in calculating the health equity adjustment (87 FR 
46135 and 46136). Table 63 outlines the APP measure set for eCQM/MIPS 
CQM reporting for PY 2023. To determine an ACO's performance on quality 
for the purpose of calculating health equity adjustment bonus points, 
we proposed to create three groups based on measure performance (or 
``performance groups''): (1) a group comprised of the top third 
performing ACOs; (2) a group comprised of the middle third performing 
ACOs; and (3) a group comprised of the bottom third performing ACOs. 
These groups would be created for each of the six measures 
independently such that an ACO in the top group based on performance on 
one measure may be in the bottom group based on performance on another 
measure. Consistent with current implementation of eCQMs and MIPS CQMs, 
the three groups would be created by reporting mechanism so that ACOs 
that report eCQMs would have each measure grouped into a top, middle, 
and bottom third based on the performance of other ACOs that also 
report eCQMs. The same methodology would be used for ACOs that report 
the MIPS CQMs. For the CAHPS for MIPS survey and claims-based measures, 
ACOs would be compared to all ACOs with data on those measures 
(including those that reported via the Web Interface, eCQMs, or MIPS 
CQMs).
    We proposed to assign to an ACO a value of 4 for each measure for 
which its performance places it in the top performance group, a value 
of 2 for each measure for which its performance places it in the middle 
performance group, and a value of 0 for each measure for which its 
performance places it in the bottom performance group. We would sum the 
values assigned to each measure in the APP measure set to determine an 
ACO's total assigned value, which we refer to as the ACO's ``measure 
performance scaler.'' Under this approach, an ACO could have a

[[Page 69844]]

measure performance scaler of up to 24 if it is among the top 
performance group for each measure and thereby received a value of 4 
for each of six measures.
    As discussed in the CY 2023 PFS proposed rule (87 FR 46136), we 
would assign a value of 0 to a measure in certain cases when we would 
not evaluate the ACO's performance on a measure. For purposes of 
calculating the health equity adjustment, an ACO would receive 0 for a 
claims-based measure or an eCQM/MIPS CQM for which the ACO does not 
meet the case minimum requirements at Sec.  414.1380. Similarly, an ACO 
would receive 0 for the CAHPS for MIPS survey in the event it does not 
meet the minimum sample size requirements. An ACO that cannot meet case 
minimum requirements or does not have a sufficient sample size to 
administer the CAHPS for MIPS survey would still qualify to receive the 
health equity adjustment bonus for those measures that were accurately 
and completely reported and provided the ACO met the data completeness 
requirement at Sec.  414.1340 for all three eCQMs/MIPS CQMs.
    We also considered and analyzed scaling quality performance for the 
bottom, middle, and top third of measure performance by different 
values to evaluate how these values interact with the underserved 
multiplier (described in detail below) to calculate ACOs' health equity 
adjustment bonus points. Specifically, we also analyzed assigning a 
value of 0, 1, and 2 for the bottom, middle, and top third of measure 
performance, respectively, and decided on proposing 0, 2, and 4 
instead. As proposed, the scaling would allow ACOs that have high 
levels of an underserved multiplier and high quality performance on 
most or all measures to receive near or at the maximum of 10 health 
equity adjustment bonus points. That is, an ACO with an underserved 
multiplier of 0.45 (or 45 percent) that achieved a measure performance 
scalar of 24 would receive the maximum of 10 health equity adjustment 
bonus points. With the alternate scaling approach, this ACO would 
achieve a measure performance scalar of 12 (that is, a value of 2 for 
each measure in the top third x 6 measures) but would not receive the 
maximum of 10 health equity adjustment bonus points even though the ACO 
would have achieved high-quality while caring for a large proportion of 
underserved beneficiaries (that is, measure performance scalar of 12 x 
an underserved multiplier of 0.45 = 5.4 points). Thus, the proposed 
scaling is consistent with CMS' goal to incentivize greater inclusion 
of underserved populations and the delivery of high quality care.
    We received several public comments on our proposal to use the 
measure performance scaler to identifying top quality performance among 
ACOs reporting eCQMs/MIPS CQMs. The following is a summary of the 
comments received and our responses.
    Comment: Several commenters noted concern on our proposal to use a 
measure performance scaler in the calculation of the health equity 
adjustment. A few commenters had concerns about determining an ACO's 
performance on quality among their underserved population using the 
measure performance scaler. Specifically, these commenters stated that 
the measure performance scaler did not achieve the goals of this 
proposal because using the ACO's overall quality score may not provide 
insight into whether the ACO provides high-quality care to underserved 
populations, and that an ACO may still have large disparities in its 
quality performance for certain groups. One commenter supported a 
policy where ACOs serving the highest proportion of underserved 
beneficiaries would receive a health equity adjustment regardless of 
performance, and referenced the complex patient bonus in MIPS as a 
similar concept.
    Response: We appreciate the commenters' sharing their concerns and 
recommendations. However, we believe the measure performance scaler 
does achieve the goals of this proposal because in order for an ACO to 
be eligible for the health equity adjustment, at minimum 20 percent of 
the ACO's assigned beneficiaries must be classified as underserved as 
proposed in the CY 2023 PFS proposed rule (87 FR 46136 through 46138). 
If a large proportion of an ACO's population is classified as 
underserved and if this subset is receiving low quality of care, then 
the health equity adjustment will appropriately decrease. The health 
equity adjustment was purposefully designed to not reward poor quality. 
Likewise, if the quality of care received by an ACO's underserved 
beneficiaries is high and if these underserved beneficiaries represent 
only a small proportion of an ACO's total population, then the health 
equity adjustment will be lower (all else being equal) as the 
adjustment was not designed to reward ACOs that serve a low number of 
underserved beneficiaries. However, we note that the adjustment does 
not penalize poor quality or having a low underserved population. While 
ACOs with an underserved beneficiary population that is less than 20 
percent are not eligible for the health equity adjustment bonus, they 
also are not penalized by this policy. The health equity adjustment 
instead incentivizes ACOs to increase the number of underserved 
beneficiaries they serve and to improve quality of care as these are 
the two ways to receive more bonus points on their MIPS Quality 
performance category score. As we continue to examine additional data 
it is possible that the incorporation of beneficiary-level quality data 
is something we would consider for this adjustment in the future.
    Comment: A few commenters were concerned about the three-tiered 
approach used in determining the measure performance scaler and the 
number of ACOs that would be awarded the maximum bonus points based on 
the way the scaler is designed. One commenter noted that the tiered 
performance category groups may create a small numbers issue, with only 
a few ACOs in each tier, if these groups are based on an ACO's 
reporting mechanism and not many ACOs are currently reporting through 
eCQMs. An additional commenter was concerned that ACOs serving a large 
proportion of underserved population may end up in the bottom third for 
all or most of the quality measures and earn a 0 or very low measure 
performance scaler. This commenter recommended we consider an approach 
that will support these ACOs such as providing additional guardrails to 
help ACOs that serve higher proportions of underserved populations 
avoid a score of 0 and stay motivated to continue to participate in the 
Shared Savings Program and encourage other Medicare providers in 
underserved areas to join the Shared Savings Program. Another commenter 
was concerned we have not provided information on the number of ACOs 
that would reach the maximum 10 bonus points and suggested we calibrate 
the measure performance scaler in such a way that results in awarding 
10 bonus points to those ACOs that have a health equity adjustment in 
the 90th percentile among all eligible ACOs, even if they are below 10 
bonus points based on the health equity adjustment calculation steps 
provided in the proposed rule (87 FR 46139 through 46141).
    Response: We wish to re-emphasize that the goal of the proposal is 
to incentivize high quality care by ACOs serving a greater proportion 
of underserved populations. Correspondingly, the health equity 
adjustment bonus points are designed to award higher points for ACOs 
that (1) serve greater percentages of underserved populations, and (2) 
have higher quality

[[Page 69845]]

performance, rather than being designed to guarantee that a certain 
percent of ACOs will receive the maximum number of bonus points. Based 
on PY 2019 Web Interface quality data, ACOs that serve a higher 
proportion of underserved beneficiaries have generally had similar 
quality performance to other ACOs, although with slightly lower scores 
on average. We also have observed variation across quality measures in 
the APP measure set within ACOs serving both high and low proportions 
of underserved populations, such that ACOs tend to not perform in the 
top or bottom across all quality measures but perform differently 
across quality measures. For example, we have observed that an ACO that 
performs well on measures related to hospitalization may or may not 
perform well on measures related to preventive care. While there were 
not many ACOs reporting eCQMs in 2021, we believe this number will 
increase each year and that the health equity adjustment will further 
incentivize ACOs to report eCQMs. We note that the tiered approach uses 
the entire population of ACOs for determining the top, middle, and 
bottom third based on performance for the CAHPS for MIPS survey and the 
claims-based measures avoiding small numbers issues for those measures.
    Comment: A couple commenters voiced concerns specific to the 
complexity of the Measure Performance Scaler, noting that the Measure 
Performance Scaler was unnecessarily complicated and recommended 
simplification by using the ACO's MIPS quality performance score rather 
than creating a new measure of quality performance. One of these 
commenters requested a rationale for why the proposed approach used a 
new and different methodology than what is used in calculating the 
ACO's quality performance score. This commenter was concerned that the 
proposed approach could result in large changes in the ACO's scaler 
based on small changes in relative performance or in no change in an 
ACO's scaler based on large quality performance changes. As an example, 
the commenter noted that the tiered approach makes no distinction 
between an ACO with a quality score in the 67th percentile and an ACO 
with a quality score in the 99th percentile; both would receive 4 
points on the relevant measure. Another commenter requested CMS clarify 
what happens when an ACO does not receive a score for a claims-based 
measure (for example, ACOs did not receive a score on Measure 479 
because they are FQHC-only ACOs and do not have an eligible MIPS 
participating clinician group).
    Response: While we appreciate the suggestion related to using the 
ACO's Quality performance category score, our goal is to focus on 
quality performance among ACOs, whereas the Quality performance 
category score incorporates other factors, such as bonus points and 
other scoring factors. We disagree that the Measure Performance Scaler 
is unnecessarily complicated and furthermore note that the Scaler is 
designed to consider each quality measure individually when determining 
the value an ACO will receive for their performance on that measure. 
These values are then summed to create the total Measure Performance 
Scaler used in the health equity adjustment calculation. This allows 
ACOs that perform well on some measures but not all measures to still 
receive bonus points if the ACO meets the criteria of having an 
underserved population that is 20 percent or greater (see 
III.G.4.b.(7)(e) of this final rule). The scaler is also designed to 
assess an ACO's measure performance on each quality measure against 
other ACOs, such that an ACO's efforts in quality performance 
improvement may make a difference in their tier for a given measure 
relative to other ACOs. The Quality performance category score, in 
contrast, involves comparisons to non-ACOs, whereas the health equity 
adjustment bonus points are meant to reward ACOs that achieve high 
quality performance relative to other ACOs (rather than smaller 
individual providers). We note that by design the health equity 
adjustment bonus points do not adversely impact ACOs such as they are 
not awarded until after the calculation of the quality performance 
standard, and therefore, do not raise the quality performance standard.
    Finally, we note that, as described in the CY 2023 PFS proposed 
rule (87 FR 46135 and 46136), unscored measures are removed from the 
calculation of the health equity adjustment, effectively receiving a 
performance scaler of 0 for that measure. As mentioned in the CY 2023 
PFS proposed rule, we reserve the right to refine the methodology used 
to calculate the measure performance scaler or any other aspects of the 
health equity adjustment over time.
    After reviewing the public comments and for the reasons described 
above and in the proposed rule (87 FR 46135 and 46136), we are 
finalizing the methodology of calculating the measure performance 
scaler as proposed.
(d) Identifying ACOs Serving High Proportions of Underserved 
Beneficiaries; Determining the Underserved Multiplier
    Through the proposed health equity adjustment we seek to improve 
health equity outcomes by providing incentives to ACOs and their ACO 
participants and ACO providers/suppliers to achieve high levels of 
performance on all-payer and outcome focused Medicare quality measures 
for underserved populations, given the concerns we have heard regarding 
reporting eCQMs/MIPS CQMs, which require reporting of data on all 
patients and are considered all-payer measures. We proposed to award 
higher positive adjustments to ACOs providing higher quality of care to 
underserved populations, with the amount of the adjustment increasing 
as an ACO's proportion of underserved beneficiaries increases. Such an 
approach would support ACOs currently serving a high proportion of 
underserved individuals while also encouraging all ACOs to treat 
underserved populations.
    We proposed to identify ACOs serving larger proportions of 
underserved beneficiaries, by considering the proportion of dually 
eligible Medicare and Medicaid beneficiaries and the proportion of 
beneficiaries residing in areas of high socioeconomic disadvantage 
within the ACO's performance year assigned beneficiary population. We 
proposed to calculate an ``underserved multiplier'' for each ACO that 
would be determined using the higher value of either the proportion of 
an ACO's assigned beneficiary population that is considered underserved 
based on beneficiaries who are from underserved neighborhoods, 
identified using ADI data, or the proportion of an ACO's assigned 
beneficiary population that are dually eligible for Medicare and 
Medicaid. As noted above, dual eligibility status and ADI are good 
indicators of socioeconomical disadvantages, with ADI associated with 
medical disparities and underservice and dual eligibility associated 
with beneficiary's inability to access care. We would then multiply 
this underserved multiplier by the aforementioned measure performance 
scaler to determine the ACO's health equity adjustment bonus points.
    We referred readers to the discussion in section III.G.2.a. of the 
proposed rule (87 FR 46098 through 46110) for a general description of 
the ADI data, including the 17 input variables from census data that 
make up the ADI composite measure. Each census block group's ADI score 
is ranked nationally,

[[Page 69846]]

with higher national percentile ranks corresponding to more 
socioeconomically disadvantaged areas. Census block groups have been 
found to have stronger associations with hospitalization rates than 
larger areas used to create ADIs.\286\ For each ACO, we explained that 
we would create an underserved multiplier that ranges from zero to one 
and is based on the higher value of either the proportion of the ACO's 
performance year assigned beneficiary population residing in a census 
block group with an ADI national percentile rank of at least 85 or the 
proportion of the ACO's performance year assigned beneficiaries that 
are dually eligible for Medicare and Medicaid (including dually 
eligible ESRD, disabled, and aged beneficiaries).\287\ An ADI national 
percentile rank of at least 85 or above is being used as a cutoff 
because this is the value at which some empiric studies have 
demonstrated worse outcomes. In particular, one study demonstrated that 
30-day rehospitalization rates did not vary significantly across the 
least disadvantaged 85 percent of neighborhoods, but hospitalizations 
within the most disadvantaged 15 percent persons increased with 
worsening ADI, with a pattern that was similar amongst individuals with 
congestive heart failure, acute myocardial infarction, and 
pneumonia.\288\ As proposed, an ACO serving mostly beneficiaries 
residing in areas of high socioeconomic disadvantage or serving a 
larger proportion of dually eligible Medicare and Medicaid 
beneficiaries would receive a multiplier value closer to one and a 
larger health equity adjustment to its quality performance score, all 
else equal. An ACO serving mostly beneficiaries from areas that are not 
considered to be of low socioeconomic disadvantages and serving a 
smaller proportion of dually eligible Medicare and Medicaid 
beneficiaries would not likely receive an underserved multiplier value 
that meets the proposed floor of 20 percent (described in section 
III.G.4.b.(7)(e) of the CY 2023 PFS proposed rule), and therefore, 
would not receive health equity adjustment bonus points. Thus, the 
result of the underserved multiplier would be that ACOs serving a 
higher proportion of underserved beneficiaries would be eligible for a 
greater number of bonus points, assuming they achieve high quality 
performance. Therefore, the use of the underserved multiplier, combined 
with the proposed floor to receive any bonus points, is consistent with 
our goal of rewarding ACOs that include a higher proportion of 
underserved beneficiaries while delivering high quality care.
---------------------------------------------------------------------------

    \286\ Maroko AR, et al., ``Integrating Social Determinants of 
Health With Treatment and Prevention: A New Tool to Assess Local 
Area Deprivation.'' Preventing Chronic Disease, No. 13(E128), pp.1-
5, doi: 10.5888/pcd13.160221 (September 2016), available at https://www.cdc.gov/pcd/issues/2016/16_0221.htm.
    \287\ In computing this proportion, we would use for each 
beneficiary the fraction of the year (referred to as person years) 
in which they were eligible for the aged/dual eligible enrollment 
type or for which they were eligible for the ESRD or disabled 
enrollment type and dually eligible for Medicare and Medicaid.
    \288\ Kind AJ, et al., ``Neighborhood socioeconomic disadvantage 
and 30-day rehospitalization: a retrospective cohort study.'' Annals 
of Internal Medicine. No. 161(11), pp 765-74, doi: 10.7326/M13-2946 
(December 2, 2014), available at https://www.acpjournals.org/doi/epdf/10.7326/M13-2946.
---------------------------------------------------------------------------

    The proposed use of ADI and Medicare and Medicaid dual eligibility 
status to assess underserved populations in the health equity 
adjustment allows CMS to consider both broader neighborhood level 
characteristics and individual characteristics among CMS beneficiaries. 
As discussed in the proposed rule, we proposed to use ADI and dual 
eligibility status to determine levels of quarterly AIPs for eligible 
Shared Savings Program ACOs (see section III.G.2.a. of the proposed 
rule (87 FR 46098 through 46110)). These two factors reflect different 
types of characteristics, which may relate to patient populations 
differently. An ADI is a multidimensional evaluation of the 
socioeconomic characteristics of the neighborhoods the beneficiaries 
live in, and incorporates domains such as education, income, 
employment, housing, and household characteristics. It also reflects 
neighborhood factors that may influence health, health care, and care 
delivery regardless of individual circumstance. Dual Medicare and 
Medicaid eligibility status is a direct measure of the beneficiary, 
reflecting their individual income status, and has been shown to be a 
predictor of worse health outcomes. While there is some overlap between 
ADI and dual eligibility, we proposed to utilize both because they can 
be used to identify complementary populations that may not be fully 
recognized using only one of the factors, by taking the higher of the 
ACO's proportion of assigned beneficiaries residing in a census block 
group with an ADI national percentile rank of at least 85 or the ACO's 
proportion assigned beneficiaries that are dually eligible for Medicare 
and Medicaid, to determine an ACO's underserved multiplier for 
calculating health equity adjustment bonus points. Our proposal for the 
underserved multiplier used for calculating the health equity 
adjustment and our proposal for calculating quarterly AIPs are 
directionally aligned in that they both seek to provide greater benefit 
to ACOs that are serving underserved populations. For the health equity 
adjustment, we noted that we believe use of ACO-level indicators (that 
is, the proportion of the ACO's performance year assigned beneficiaries 
residing in a census block group with an ADI national percentile rank 
of at least 85 or the proportion that are dually eligible for Medicare 
and Medicaid) to measure the extent to which an ACO serves underserved 
populations is preferred to an approach that would establish an 
underserved multiplier at the beneficiary-level. We also noted that we 
believe it would be appropriate to apply an ACO-level underserved 
multiplier to the measure performance scaler, which would be determined 
based on ACO-level performance on the measures in the APP measure set. 
This would allow for alignment between the underserved multiplier and 
the measure performance scaler to which it is being applied.
    Our proposal to use a ``higher of'' either the proportion of an 
ACO's assigned population residing in census block groups \289\ with 
high ADI or the proportion of the ACO's assigned beneficiaries that are 
dually eligible for Medicare and Medicaid to calculate the underserved 
multiplier is intended to avoid double-counting overlapping 
beneficiaries (as could happen when taking the sum of the two 
proportions), while also allowing an ACO alternate ways to achieve a 
higher multiplier value, recognizing that no single value would fully 
represent its population.
---------------------------------------------------------------------------

    \289\ We note that in the proposed rule we inadvertently 
referred to census blocks rather than census block groups when 
describing this proposal at 87 FR 46137.
---------------------------------------------------------------------------

    We also noted that this approach to determining the underserved 
multiplier based on the ACO's assigned population is a means of 
approximating the extent to which the ACO and its ACO participants and 
ACO providers/suppliers are serving underserved beneficiaries. The ADI 
component of the underserved multiplier would be based on the 
neighborhood level characteristics among ACO assigned beneficiaries, 
and these characteristics may generally reflect the social determinants 
of health in the communities served by the ACO and thus serve as a 
proxy for the all payer population characteristics and their 
neighborhoods. The use of dual Medicare and Medicaid eligibility is 
based on the status of beneficiaries attributed to the ACO.

[[Page 69847]]

    Although we proposed to determine the underserved multiplier as the 
higher of two characteristics--the proportion of assigned beneficiaries 
residing in areas of high socioeconomic disadvantage or the proportion 
of dually eligible Medicare and Medicaid assigned beneficiaries--we 
explained that we considered an alternative approach that would use a 
combination of these characteristics in calculating the underserved 
multiplier (87 FR 46136 through 46138). Together these characteristics 
may be complementary in identifying an ACO's underserved populations, 
one based on neighborhood characteristics and the other based on dual 
eligibility status among the ACO's assigned beneficiaries. However, 
while the two characteristics allow for recognition of the ACO's 
underserved population at the neighborhood and beneficiary levels, 
there is potential overlap and thus double-counting with the approach 
to combine (sum) these characteristics. We sought comment on this 
alternative approach to calculating the underserved multiplier as the 
sum of an ACO's proportion of assigned beneficiaries residing in areas 
of high socioeconomic disadvantage and an ACO's proportion of dually 
eligible Medicare and Medicaid assigned beneficiaries. We noted that 
such an approach would result in a potentially higher underserved 
multiplier for ACOs, and thereby higher total health equity adjustment 
bonus points compared to the proposed approach. As a result, under this 
alternative calculation of the underserved multiplier, more ACOs would 
likely achieve the maximum of 10 bonus points.
    More generally, we noted that CMS is considering similar 
methodologies for determining underserved populations outside of the 
Shared Savings Program. For example, as discussed in the Announcement 
of Calendar Year (CY) 2023 Medicare Advantage (MA) Capitation Rates and 
Part C and Part D Payment Policies,\290\ we noted that we are 
developing a health equity index as a potential methodological 
enhancement to the Part C and Part D Star Ratings that would summarize 
performance among groups with social risk factors across multiple 
measures into a single score. The goal of this health equity index 
would be to advance equity and support underserved communities by 
incentivizing contracts to perform well serving enrollees with social 
risk factors such as low-income subsidy (LIS)/dual eligibility and 
disability.
---------------------------------------------------------------------------

    \290\ Available at https://www.cms.gov/files/document/2023-announcement.pdf. See for example the discussion of Health Equity 
Index (Part C and D) on pages 101-103.
---------------------------------------------------------------------------

    As discussed in the proposed rule, we also considered alternative 
approaches for calculating the underserved multiplier that would 
additionally consider whether an ACO's assigned beneficiaries receive 
the LIS available under the Medicare Part D prescription drug program. 
LIS, as an indicator, may capture a different group of low-income 
beneficiaries than dual eligibility status and the eligibility criteria 
for LIS does not vary by State. Specifically, we explained that we 
considered alternatives under which we would use the LIS indicator in 
place of, or in addition to, a beneficiary's dual Medicare and Medicaid 
enrollment status. We also considered using the higher of three factors 
based on the ACO's performance year assigned beneficiary population: 
(1) the proportion of the ACO's assigned beneficiary population 
residing in a census block group with an ADI national percentile rank 
of at least 85; (2) the proportion of the ACO's assigned beneficiaries 
that are dually eligible for Medicare and Medicaid; or (3) the 
proportion of the ACO's assigned beneficiaries receiving LIS. We sought 
comment on these alternative approaches, or other approaches, to 
incorporating assigned beneficiaries' LIS status into the underserved 
multiplier.
    The following is a summary of the public comments received on the 
proposal to create an underserved multiplier to identifying ACOs 
serving high proportions of underserved beneficiaries and our 
responses.
    Comment: Many commenters supported the underserved multiplier which 
will be used to identify ACOs serving a high proportion of underserved 
beneficiaries and including how the proportion is calculated for the 
purpose of the health equity adjustment calculation. Supportive 
commenters stated that the underserved multiplier should 
comprehensively represent the underserved assigned beneficiaries for 
each ACO, appreciated the inclusion of dual eligibility, valued that 
the multiplier used neighborhood-level metrics in assessing social 
risk, and stated it was ``a step in the right direction.'' One 
commenter also agreed that the program should account for differences 
in the providers' patient populations to counter the disadvantages they 
could face in achieving good outcomes. One commenter specifically asked 
us to define the criteria for ``providing care for a higher proportion 
of underserved or dually eligible beneficiaries.''
    Numerous commenters voiced their support for adding the Part D low-
income subsidy to the calculation of the underserved multiplier and 
stated that they support a national eligibility criterion being 
included and that multiple approaches in capturing risk are more 
sensitive and appropriate. One commenter supported our proposal to use 
the higher of either dual eligibility or ADI 85 and above approach in 
calculating an ACO's underserved multiplier. One commenter supported 
our proposal to use a threshold of 85th percentile of ADI, stating this 
approach is consistent with the literature reporting that health 
systems caring for the most vulnerable beneficiary populations were 
more likely to be financially penalized under prior programs.
    Response: We agree that dual eligibility and neighborhood-level 
deprivation are valuable measures for capturing an ACO's underserved 
population. We appreciate support for the proposal as outlined in the 
proposed rule, specifically backing the use of ADI, a threshold of 85th 
percentile, and using the higher of approach when calculating the 
underserved multiplier. In response to the commenters who requested 
additional details about the calculation of the health equity 
adjustment, we refer these commenters to the details provided in the 
proposed rule (87 FR 46139 through 46141), which included an outline of 
the steps involved in the calculation and provided several examples.
    Comment: A couple commenters suggested we consider criteria beyond 
those we listed in the proposed rule, such as defining essential 
hospitals, and including this status when calculating the underserved 
multiplier or considering a factor that would account for serving 
beneficiaries in noncore rural areas. Other commenters in support of 
the proposal recommended CMS consider the underserved multiplier being 
a combination of the criteria we finalize (that is, dual eligibility, 
ADI 85 and above, and LIS) to allow for the most sensitive capture of 
high social risk and to allow more ACOs to qualify for the adjustment. 
Other commenters supported using ADI but recommended we evaluate 
whether ADI is the appropriate measurement to differentiate by regional 
populations; they recommended we incorporate both national and State 
percentiles in the ADI definition, and assess whether the 85th 
percentile nationally is too high for ACOs to meaningfully benefit from 
the adjustment. Another supportive commenter recommended a blended 
approach to ADI that incorporated the

[[Page 69848]]

CDC's Social Vulnerability Index (SVI) into a single composite value of 
social need at the census block group level to generate a more accurate 
approach to the regional aspect of the underserved multiplier.
    Response: We understand that some commenters prefer we combine the 
different criteria for defining underserved, rather than taking the 
higher of, to be more sensitive to capturing high social risk and allow 
for more ACOs to qualify for the adjustment. We appreciate these 
comments; however, our proposal to use the higher of approach, which 
uses either the proportion of an ACO's assigned population residing in 
census block groups with high ADI or the proportion of an ACO's 
assigned population that are dually eligible for Medicare and Medicaid, 
is intended to avoid double-counting overlapping beneficiaries which 
can happen when taking the sum of two proportions. This higher of 
approach, however, allows ACOs an alternate way to achieve a higher 
multiplier value while being more accurate since it does not duplicate 
beneficiaries in the calculation of the proportion of an ACO's assigned 
population who are underserved. The addition of LIS in the calculation 
of the underserved multiplier, which has high overlap with dual 
eligibility, further supports our using the higher of approach rather 
than summing the proportions.
    We acknowledge that a few commenters in support of our using ADI in 
the calculation of the underserved multiplier still provided 
recommendations including that we perform additional evaluations on 
this metric, consider both national and State percentiles, and assess 
the threshold of 85th percentile of ADI. We confirm that we considered 
and assessed different methods of ADI including both national and State 
percentiles and various thresholds, and we believe these analyses 
supported our proposed approach to use national ADI percentages and an 
85th percentile threshold. Additional discussion of this decision is 
described in the next comment summary and responses in this section of 
the final rule. Regarding the commenter who requested us to define the 
criteria for providing care for a higher proportion of underserved or 
dually eligible beneficiaries, we refer this commenter to section 
III.G.4.b.7.d of the CY 2023 PFS proposed rule (87 FR 46136 through 
46138) that outlines how we plan to identify ACOs serving high 
proportions of underserved beneficiaries and determine the underserved 
multiplier used to calculate the health equity adjustment. Furthermore, 
given the overwhelming support and feedback we received from commenters 
on the inclusion of the Part D LIS in the underserved multiplier, we 
are finalizing the proposal with modification to incorporate LIS in the 
calculation of the health equity adjustment. Thus, the underserved 
multiplier will be determined based on the higher of: (1) the 
proportion of the ACO's assigned beneficiaries residing in a census 
block group with an ADI national percentile rank of at least 85; or (2) 
the proportion of the ACO's assigned beneficiaries that are enrolled in 
LIS or are dually eligible for Medicare and Medicaid. As commenters 
noted, LIS is a national measure and capturing individuals receiving a 
Part D LIS subsidy who are at risk of being underserved and, combined 
with the other measures of underserved, will be a more sensitive 
approach.
    We appreciate commenters recommendations for other underserved 
criteria such as developing ways to capture essential hospitals or 
noncore rural areas, or to incorporate the CDC's Social Vulnerability 
Index (SVI) with ADI into a single composite measure. We will take 
these into consideration as we work to refine the health equity 
adjustment over time.
    Comment: Many commenters had concerns about the approach we 
proposed for the underserved multiplier which defined the ACO's 
underserved population for the purposes of the health equity 
adjustment. Most of these commenters' concerns were regarding the use 
of ADI to identify areas of disadvantage among different geographic 
regions of the country and did not support our proposal to use ADI. 
Concerns included how ADI may not consistently identify disadvantaged 
areas for all types of communities, that we should consider ADI 
rankings at the regional or local levels instead of national rankings 
or develop a blend of a national and State ADI, and that ADI is heavily 
weighted toward factors that related to income and home values and not 
other variables that impact disadvantage. Rationales for these concerns 
included the differences in cost of living throughout the country, that 
ADI underestimates the vulnerabilities of neighborhoods with the 
highest burden of chronic disease and lowest life expectancy, and that 
studies have found higher correlations between disadvantage and health 
outcomes when using the most local ADI metrics.
    One commenter noted that there may not be a single metric to 
accurately identify underserved communities given the variability in 
different areas of the country, and several commenters believed the 
current calculation poorly represents rural communities. These 
commenters requested we consider a different metric be used 
specifically for rural versus urban areas. Two commenters recommended 
that the cutoff of the 85th or higher percentile for ADI should be 
modified by summing the ADI percentiles for the neighborhoods of each 
patient assigned to the ACO, with one of these commenters further 
suggesting that cutoffs should not be set until there is evidence to 
demonstrate this would accurately capture individuals residing in 
disadvantaged neighborhoods.
    Other comments around the underserved multiplier included concern 
that an ACO's underserved community was being based only on the ACO's 
attributed Medicare population and not the broader population served by 
the ACO, and that dual eligibility will vary across states. Several 
commenters suggested we use an alternative such as life expectancy when 
calculating the underserved multiplier. Other commenters requested we 
utilize publicly available data sets since ACOs may have limited 
capacity in data analytic capabilities and being able to identify which 
of their beneficiaries are underserved. A couple commenters requested 
we continue refining and testing ADI along with alternative measures of 
high deprivation areas before settling on a definition of the 
underserved multiplier.
    Though the commenters summarized here were generally opposed to our 
approach to the underserved multiplier, several agreed with the use of 
Part D LIS data as either a replacement or a supplement for the dual 
eligibility status and ADI given LIS eligibility is uniform nationwide. 
A couple commenters supported the idea to combine dual eligibility 
status and ADI rather than only taking the higher of the two 
proportions when calculating the underserved multiplier.
    Response: We agree with the commenters that low-income subsidy 
status is a more standardized measure of low income among the Medicare 
FFS population. We note that the Part D LIS has certain limitations. 
For example, all beneficiaries with dual eligibility status or who 
receive Supplemental Security Income (SSI) automatically receive the 
LIS designation in CMS data systems. LIS designation means that the 
beneficiary is enrolled in the Medicare Part D low-income subsidy. 
Beneficiaries who do not have dual eligibility status or SSI status but 
whose income is lower than 150 percent of the

[[Page 69849]]

Federal poverty level must apply for LIS. Our analysis finds that the 
vast majority of Medicare beneficiaries with the LIS designation are 
those who automatically receive this designation, rather than those who 
applied for the benefit and were approved. Nonetheless, despite this 
limitation we agree that the use of the LIS designation, in addition to 
dual eligibility status, is preferable to using dually eligible status 
alone, as doing so reduces variability across States while moderately 
expanding the number of beneficiaries we will identify as low income. 
Furthermore, we note that including LIS in the calculation of the 
underserved multiplier provides ACOs with an incentive to support 
eligible beneficiaries who must apply for the benefit to make the 
connection.
    We also acknowledge commenters' concerns that ADI may not 
accurately identify areas of disadvantage among different geographic 
regions of the country. As noted in the Advance Investment Payment, 
III.G.2.a.(5), section of this final rule, ASPE recently conducted an 
environmental scan and concluded that none of the existing area-level 
indices are ideal; they concluded that the ADI or Social Deprivation 
Index (SDI) were the best available choices when selecting an index for 
addressing Health Related Social Needs or Social Determinants of Health 
for immediate policy development.\291\ After additional consideration 
and review, we believe the ADI national percentile rank remains one of 
the best available options to assess underserved populations in the 
health equity adjustment because it was developed with the goal of 
quantifying and comparing social disadvantage across geographic 
neighborhoods and uses a combination of 17 different input variables 
from census data in the calculation. One key strength we see with ADI 
is that it is a comprehensive, publicly available dataset that applies 
a standardized score for all census block groups nationwide. Details 
about the ADI score and its calculation can be found in section 
III.G.2.a.(5) of the proposed rule.
---------------------------------------------------------------------------

    \291\ Report: ``Landscape of Area-Level Deprivation Measures and 
Other Approaches to Account for Social Risk and Social Determinants 
of Health in Health Care Payments.'' Accessed at https://aspe.hhs.gov/reports/area-level-measures-account-sdoh on September 
27, 2022.
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    Regarding comments that suggested we continue to refine and test 
ADI before establishing cutoffs and settling on a definition of the 
underserved multiplier, as we stated in the proposed rule (87 FR 46135 
through 46138) we believe the current approach supports our preliminary 
efforts to address health disparities and close the performance gap on 
the quality of care provided to underserved populations served by ACOs 
through incentives and upwardly adjusts an ACO's quality performance 
score with no penalties to those ACOs that do not qualify for the 
adjustment. We wish to remind commenters of our intent to monitor the 
impact of the adjustment as necessary and consider modifications to the 
design of the health equity adjustment through future notice and 
comment rulemaking. We also appreciate commenters recommendations for 
incorporating other underserved criteria such as life expectancy and 
rural versus urban indicators. We will take these into consideration as 
we work to refine the health equity adjustment over time.
    After consideration of the public comments, including their support 
for the use of Part D LIS in the calculation of the underserved 
multiplier, and for the reasons stated earlier in this section and in 
the proposed rule (87 FR 46136 through 46138), we are finalizing our 
proposal with a modification to use enrollment in the LIS in addition 
to dual eligibility and ADI in the calculation of the underserved 
multiplier. As commenters noted, the criteria for LIS enrollment are 
consistent nationwide and including multiple factors when capturing 
individuals at risk of being underserved will be a more sensitive 
approach. We believe the addition of LIS will establish criteria that 
are more uniform nationwide such that eligibility for the subsidy is 
the same regardless of geographic differences.
(e) Determining the Health Equity Adjustment Bonus Points an ACO Is 
Eligible To Receive Based on the ACO's Measure Performance Scaler and 
Underserved Multiplier
    We proposed the ACO's health equity adjustment bonus points would 
be calculated by multiplying the measure performance scaler and the 
ACO's underserved multiplier. However, we also proposed to impose a 
number of limitations on the availability of and the amount of the 
health equity adjustment bonus points.
    We proposed that ACOs would be ineligible to receive any bonus 
points if their underserved multiplier is less than 20 percent, thereby 
establishing a ``floor'' on the size of the ACO's underserved 
population under the health equity adjustment. Imposing a floor of 20 
percent for the underserved multiplier, for an ACO to be eligible to 
receive bonus points, reinforces that the health equity adjustment is 
intended to reward ACOs that are serving higher proportions of 
underserved beneficiaries while also achieving high levels of quality 
performance. We explained that we believe this approach is necessary to 
remain consistent with the goal to reward and incentivize care for 
these populations. Absent such a floor, ACOs that perform well on 
quality measures but serve relatively small populations of underserved 
beneficiaries would be further rewarded, which could create incentives 
that are inconsistent with the purpose of the health equity adjustment. 
We anticipate the percent of ACOs meeting the 20 percent floor for the 
underserved multiplier would increase over time, as existing ACOs seek 
to expand their reach into underserved communities, and as a result of 
the proposed new participation options that are designed to foster 
greater entry into the Shared Savings Program by ACOs that serve 
underserved communities. For example, among ACOs receiving the proposed 
AIPs, the amount of the quarterly payments would increase as 
beneficiaries' risk factors-based scores increase (set to 100 if the 
beneficiary is dually eligible for Medicare and Medicaid, or set to the 
ADI national percentile rank of the beneficiary's census block group if 
the beneficiary is not dually eligible). ACOs receiving AIPs that 
expand the size of their underserved populations would thereby receive 
higher amounts of quarterly AIPs to build their care coordination 
capabilities (including coordination with community-based 
organizations, as appropriate), address specific health disparities, 
and meet other proposed criteria for use of the funds (as described in 
section III.G.2.a. of the proposed rule (87 FR 46098 through 46110)). 
Under the proposed health equity adjustment, these ACOs would have a 
further incentive to deliver high quality of care and thereby perform 
well on the APP measure set for eCQM/MIPS CQM reporting.
    We proposed the number of health equity adjustment bonus points to 
be awarded would not exceed a maximum of 10 points. We explained that 
we believe that limiting the health equity adjustment bonus to a 
maximum of 10 points strikes a balance between creating an incentive 
for ACOs to report eCQM/MIPS CQM measures and rewarding ACOs that are 
high performing on quality and serve higher proportions of underserved 
beneficiaries, while not overly inflating an ACO's quality performance 
score. Further, allocating a maximum of 10 points for this bonus would 
align with

[[Page 69850]]

the scoring of the required measures under the APP. Previous bonuses 
within the MIPS program have not exceeded 10 points or been higher than 
10 percent of the score the bonus aligns with.292 293
---------------------------------------------------------------------------

    \292\ Centers for Medicare & Medicaid Services (CMS), ``Merit-
based Incentive Payment System (MIPS) Scoring Guide for the 2020 
Performance Year,'' Quality Payment Program, Updated May 20, 2021, 
https://qpp-cm-prod-content.s3.amazonaws.com/uploads/1201/2020%20MIPS%20Scoring%20User%20Guide.pdf.
    \293\ Centers for Medicare & Medicaid Services (CMS), ``Merit-
based Incentive Payment System (MIPS) Traditional MIPS Scoring Guide 
for the 2021 Performance Year,'' Quality Payment Program, Updated 
April 25, 2022, https://qpp-cm-prod-content.s3.amazonaws.com/uploads/1527/2021%20Traditional%20MIP%20Scoring%20SGuide.pdf.
---------------------------------------------------------------------------

    We further proposed that the bonus points would be added to the 
ACO's MIPS Quality performance category score, with the sum capped at 
100 percent. As proposed, the cap at 100 percent would ensure that the 
application of the health equity adjustment does not cause the ACO's 
quality performance score to exceed the maximum possible quality 
performance score an ACO could achieve absent the adjustment. Thus, the 
proposed cap would align with the current practice which sets the 
maximum quality performance score at 100 percent.
    The health equity adjustment bonus points would be added to the 
ACO's MIPS Quality performance category score for the purpose of 
determining whether the ACO meets the quality performance standard for 
a given performance year by meeting or exceeding the applicable MIPS 
Quality performance category score percentile and, if applicable, in 
determining the ACO's final sharing rate or shared loss rate. We noted 
that this proposal to adopt a health equity adjustment would not impact 
the calculation of the quality performance standard itself. That is, 
the required percentile (30th for PY 2023 and 40th for subsequent 
performance years) would continue to be determined across all MIPS 
Quality performance category scores, excluding entities/providers 
eligible for facility-based scoring, and would not reflect any health 
equity bonus points earned by Shared Savings Program ACOs.
    Further, as described in section III.G.4.b.(2) of the CY 2023 PFS 
proposed rule (87 FR 46129 through 46130), under the proposed sliding 
scale approach for determining shared savings, we would calculate an 
ACO's final sharing rate as the product of the maximum sharing rate 
under the ACO's track (or payment model within a track) and the ACO's 
quality performance score (inclusive of any applicable health equity 
adjustment bonus points). Similarly, as described in section 
III.G.4.b.(3) of the CY 2023 PFS proposed rule (87 FR 46130 through 
46131), under the proposed modifications to the approach to calculating 
scaled shared losses for ENHANCED track ACOs, we would calculate an 
ACO's shared loss rate as 1 minus the product of 75 percent and the 
ACO's quality performance score (inclusive of any applicable health 
equity adjustment bonus points), not to exceed 75 percent and not to be 
less than 40 percent. The proposed cap of 100 percent on the sum of the 
ACO's MIPS quality performance category score and health equity 
adjustment bonus points would allow for clarity and consistency in the 
calculation of the final sharing rates under the proposed sliding scale 
approach, and for the calculation of the shared loss rate for ENHANCED 
track ACOs.
    Accordingly, as proposed, the health equity adjustment would enable 
more ACOs that serve underserved populations and provide high quality 
care to share in a portion of the savings that they generate as the 
addition of the proposed health equity adjustment bonus points should 
allow more ACOs to meet the quality performance standard by meeting or 
exceeding the applicable MIPS quality performance category score 
percentile for a given performance year (that is, 30th percentile for 
PY 2023, and 40th percentile thereafter). For ACOs that meet the 
proposed alternative quality performance standard described in section 
III.G.4.b. of the CY 2023 PFS proposed rule, the addition of health 
equity adjustment bonus points to the ACO's quality performance score 
could increase the final sharing rate used to calculate the ACO's 
shared savings payment. Finally, for ACOs participating in the ENHANCED 
track that owe shared losses, the addition of health equity adjustment 
bonus points could reduce the shared loss rate used to calculate the 
amount of shared losses owed to CMS.
    The combination of the measure performance scaler, based on an 
ACO's performance on different quality measures, and the underserved 
multiplier, based on an ACO's unique assigned beneficiary population, 
results in a range of possible health equity adjustment bonus points 
that is designed to give the highest rewards to ACOs caring for a 
disproportionate share of underserved individuals and delivering high 
quality care. Through the proposed health equity adjustment, ACOs that 
perform well on measures in the APP measure set for eCQM/MIPS CQM 
reporting and serve a large proportion of underserved individuals 
within their assigned beneficiary population would be more likely to 
receive the maximum number of 10 bonus points, and in turn could see 
the largest increases in their quality performance score, which in 
turn, would have the most significant impact on determining the rate at 
which the ACO shares in savings, or for ACOs under the ENHANCED track, 
the rate at which the ACO shares in losses. We refer readers to 
mathematical examples for the steps in the calculation of the health 
equity adjustment, described in section III.G.4.b.(7)(f) of the CY 2023 
PFS proposed rule (87 FR 46139 through 46141).
    Based on initial modeling, approximately 30 percent of ACOs 
participating in PY 2020 would have had an underserved multiplier above 
the 20 percent floor necessary to qualify for the proposed health 
equity adjustment. Therefore, we noted that we believe the proposed 
approach could result in a significant number of ACOs earning health 
equity adjustment bonus points, which in turn would support these ACOs 
in caring for underserved populations.
    Furthermore, by rewarding ACOs when high quality is achieved, the 
health equity adjustment could create incentives for ACOs to improve 
care for those who have been historically underserved. As proposed, the 
approach, which is designed to upwardly adjust the ACO's quality 
performance score, lacks additional financial penalties for ACOs that 
are not meeting high standards of care, which we believe is important 
as such a downward adjustment could worsen disparities and further 
jeopardize the ability of these ACOs to care for the populations they 
serve. We believe the proposal aligns with the broader CMS health 
equity goals and serves as an important step forward in advancing 
health equity by providing an incentive for ACOs to care for 
underserved populations and to provide high quality care to all of the 
populations they serve, rather than merely adjusting measure 
performance for patient risk factors.
    We received several public comments on the provisions to 
determining the health equity adjustment bonus points an ACO is 
eligible to receive based on the proposed calculation. The following is 
a summary of the public comments and our responses.
    Comment: A few commenters supported the proposed method of 
determining whether and how many health equity adjustment bonus points 
ACOs are eligible to receive, and some

[[Page 69851]]

of these commenters had additional feedback for consideration. Two 
supportive commenters recommended that we consider a potential increase 
to the health equity adjustment bonus points to have greater and faster 
impact on the lives of the most at-risk beneficiaries. Another 
commenter in support of the proposal recommended that we delay 
incorporating health equity adjustment bonus points in the ACO's MIPS 
Quality performance category score until all providers have their EHR 
build complete.
    Several commenters opposed the maximum health equity adjustment 
bonus points ACOs can receive. A few commenters were concerned about 
the maximum being capped at 10 health equity adjustment bonus points 
for ACOs. Commenters noted that 10 points is not enough of a tangible 
incentive for ACOs. These commenters noted that the benefit of health 
equity adjustment bonus points would not cover the cost of investment 
in underserved communities, given the medical complexity of many 
underserved patients. Another commenter noted that the bonus points 
would not appropriately adjust for the quality score differences that 
could occur between reporting quality measures via CMS Web Interface 
and eCQM/MIPS CQMs when ACOs transition to all-payer eCQM/MIPS CQM 
reporting. One commenter noted that 10 points was not enough to make up 
for regional benchmarks in which ACOs tend to compete with themselves. 
This commenter noted that FQHCs have a Medicare population that is not 
representative of their overall patient or community population, and 
therefore, the bonus points awarded may not account for an ACO's sub-
population differences. Another commenter recommended that we offer 
opportunities like the Medicare Advantage program's approach of 5 
percent and 10 percent benchmark bonuses, and suggested Community 
Health Benchmark Bonuses (CHBB) for ACO's operating in high ADI 
communities of 5 percent more for 70-85 ADI score and 10 percent more 
for ADI 85-100 rather than the current bonus point design. Another 
commenter noted that 10 points should be the minimum, not the maximum, 
since they opined the proposal will drive ACOs to onboard more 
underserved beneficiaries but that this individual will be new to the 
health care system and the adjustments should counter-balance higher 
costs associated with care for this patient population.
    Response: Regarding an increase in the 10-point maximum, we 
designed the health equity adjustment to strike a balance between 
incentivizing ACOs to report eCQM/MIPS CQM measures, rewarding ACOs 
that are high performing on quality and serve higher proportions of 
underserved beneficiaries, and avoiding overly inflating an ACO's 
quality performance score. Adding additional bonus points would upset 
this balance because it may disproportionately increase an ACO's 
quality performance score. Allocating a maximum of 10 points for this 
bonus would align with the scoring of the required measures under the 
APP, as previous bonuses within the MIPS program have not exceeded 10 
points or been higher than 10 percent of the score the bonus aligns 
with.
    Regarding delaying implementation of the health equity adjustment 
until all ACOs have completed their switch to eCQMs/MIPS CQMS, we note 
that ACOs that serve a higher proportion of Medicaid enrollees may 
receive lower quality scores during the switch to eCQMs without an 
adjustment because eCQMs/MIPS CQMs are all-payer measures. As we stated 
in the proposed rule, the incorporation of health equity adjustment 
bonus points in the MIPS Quality Performance category score is 
consistent with our goal to support ACOs in making the transition to 
eCQMs/MIPS CQMs. In particular, the health equity adjustment may offset 
some or all of the reduction in quality scores experienced by ACOs as 
they switch to eCQMs/MIPS CQMs. Furthermore, though only 12 ACOs 
reported via eCQMs/MIPS CQMs in PY 2021, we observed that, had the 
health equity adjustment been available these ACOs would have received 
a range of bonus points including one ACO receiving the maximum 10 
bonus points added to their MIPS Quality performance category score if 
the health equity adjustment was already implemented. Since ACOs can 
only increase their MIPS Quality performance category score through the 
health equity adjustment and ACOs have the potential to receive a high 
number of bonus points, we believe this supports ACOs as they switch to 
all-payer reporting and will not delay implementation.
    Regarding a quality differential between reporting structures for 
ACOs, the incorporation of health equity adjustment bonus points in the 
MIPS Quality Performance category score is consistent with our goal to 
support ACOs in making the transition to eCQMs/MIPS CQMs. There is 
concern that an ACO may receive lower quality scores for underserved 
populations and that this is magnified in eCQMs/MIPS CQMs compared to 
reporting via the CMS Web Interface because all-payer reporting in 
eCQMs/MIPS CQMs includes quality scores for all people with Medicaid 
whereas historical reporting via the CMS Web Interface has only 
included those quality scores for people with Medicare and who are 
dually eligible for Medicare and Medicaid. Indeed, we did observe 
variation in reporting between the CMS Web Interface and eCQMs/MIP CQMs 
across the different measures for those 12 ACOs that reported all payer 
data in PY 2021. Therefore, without an adjustment during the switch to 
eCQMs/MIPS CQMs, ACOs that serve a higher proportion of people with 
Medicaid or other underserved populations outside of Medicare could be 
incentivized to avoid underserved populations, delay switching to 
eCQMs/MIPS CQMs for as long as possible, or even cease participation in 
the Shared Savings Program altogether.
    Comment: Several commenters opposed our approach for determining 
whether an ACO is eligible for the health equity adjustment. 
Specifically, several commenters expressed concern that few ACOs will 
be able to meet the 20 percent floor since the percentage of dually 
eligible beneficiaries varies across States. Commenters noted issues 
with geographic differences such that that some regional populations 
may not appear underserved when comparing ACOs to the ADI national 
percentile rank and recommended we use LIS data as a substitute or 
supplement for ADI since LIS eligibility is uniform nationwide. These 
commenters requested that we share additional data and analysis to 
compare LIS and ADI by geographic region, which we discuss in section 
III.G.4.b.(7)(d) of this final rule.
    A few commenters requested that we revise the eligibility 
requirements for health equity adjustment bonus points, with a couple 
specifically recommending that we remove the 20 percent floor 
requirement for the underserved multiplier. One of these commenters 
noted that the 20 percent floor was arbitrary such that ACOs with high 
quality performance but an underserved population that is 19 percent of 
its assigned beneficiaries would be ineligible for any health equity 
adjustment bonus points. This commenter suggested that the floor 
discourages ACOs from expanding underserved population because the 
shared savings payments do not cover the cost of providing high quality 
care to those patients. Another commenter noted that unconditional 
eligibility for ACOs would reduce concerns regarding the transition to 
eCQM reporting and

[[Page 69852]]

provide additional resources to address unmet social needs for a Shared 
Savings Program participating practice's clients. A different commenter 
noted that the threshold for qualifying for the adjustment is slightly 
too high and suggested an alternative solution to increase the number 
of eligible ACOs: one is to lower the underserved multiplier threshold 
to 15 percent, which would increase the number of eligible ACOs.
    Response: We appreciate the commenters' concerns and 
recommendations. Regarding eligibility requirements for health equity 
adjustment bonus points, as stated in the proposed rule (87 FR 46138 
and 46139) the establishment of a ``floor'' for the underserved 
multiplier reinforces that the adjustment is intended to reward ACOs 
that serve higher proportions of underserved beneficiaries. We believe 
the proposed approach would result in a significant number of ACOs 
earning health equity adjustment bonus points. Based on data from PY 
2021, approximately 34 percent of ACOs would have had an underserved 
multiplier above the 20 percent floor necessary to qualify. Therefore, 
we believe the proposed approach would result in a significant number 
of ACOs earning health equity adjustment bonus points, which in turn 
would support these ACOs in caring for underserved populations and 
support these ACOs as they transition to report eCQM/MIPS CQM measures. 
We also anticipate that meeting the 20 percent floor for the 
underserved multiplier would increase over time, as existing ACOs seek 
to expand their reach into underserved communities.
    We address any comments about ADI, dually eligible beneficiaries, 
LIS or the underserved multiplier that extend beyond the 20 percent 
floor in section III.G.4.b.(7)(d) of this final rule.
    After consideration of the public comments and for the reasons 
stated above and in the proposed rule (87 FR 46138 and 46139), we are 
finalizing as proposed the eligibility criteria for the health equity 
adjustment and the limits on how many bonus points can be received by 
any ACOs in a given performance year. Specifically, we are finalizing 
that an ACO will be ineligible for the health equity adjustment and 
subsequent bonus points if their underserved multiplier is less than 20 
percent of their assigned beneficiaries. We are finalizing that the 
number of health equity adjustment bonus points will not exceed a 
maximum of 10 points. Though we did not receive comment on it, we are 
also finalizing that the health equity adjustment bonus points will be 
added to an ACOs MIPS Quality performance category score, with the sum 
capped at 100 points.
(f) Calculation Steps and Examples
    In this section, we outline the calculation steps and provide 
examples of the determination of health equity adjustment bonus points 
and the application of these bonus points (for eligible ACOs) to an 
ACO's MIPS Quality performance category score. These example 
calculations illustrate the variability in the health equity adjustment 
bonus points resulting from the proposed approach, which accounts for 
both an ACO's quality performance and the ACO's proportion of 
underserved beneficiaries among its assigned beneficiary population.
    Step 1: Calculate the ACO's measure performance scaler.
    In the example calculation of the ACO's measure performance scaler, 
as shown in Table 57, ACOs with ``high'' measure performance have been 
assigned a value of four for each of the six measures in the APP 
measure set for having achieved performance on these measures in the 
top performance group (top third). ACOs with ``middle'' measure 
performance have a mix of performance in the top performance group (top 
third, assigned a value of four per measure) and middle performance 
group (middle third, assigned a value of two per measure) on the six 
quality measures. ACOs with ``low'' measure performance have a mix of 
performance in the middle performance group (middle third, assigned a 
value of two per measure), and bottom performance group (bottom third, 
assigned a value of zero per measure) on the six quality measures.
[GRAPHIC] [TIFF OMITTED] TR18NO22.086

    Step 2: Calculate the ACO's underserved multiplier.
    Under the approach presented in the proposed rule and illustrated 
in Table 58, the underserved multiplier (column [C]) would be 
calculated as the higher of the proportion of the ACO's performance 
year assigned beneficiary population residing in a census block group 
with an ADI national percentile rank of at least 85 (column [A]) or the 
proportion of the ACO's performance year assigned beneficiaries that 
are dually eligible for Medicare and Medicaid (column [B]). In line 
with our

[[Page 69853]]

modification to the proposed rule, we will consider the proportion of 
an ACO's assigned beneficiaries that are dually eligible for Medicare 
and Medicaid or are enrolled in Part D LIS, or both. To be eligible for 
the health equity adjustment bonus points, an ACO would need to have an 
underserved multiplier of 20 percent (0.2) or higher.
[GRAPHIC] [TIFF OMITTED] TR18NO22.087

    Step 3: Calculate the ACO's health equity adjustment bonus points.
    As shown in Table 59, to calculate the number of health equity 
adjustment bonus points awarded to an ACO (column [C]), CMS would 
multiply an ACO's measure performance scaler (Step 1, column [A]) by 
the ACO's underserved multiplier (Step 2, column [B]).
[GRAPHIC] [TIFF OMITTED] TR18NO22.088

    Step 4: Add the health equity adjustment bonus points to the ACO's 
MIPS Quality performance category score to calculate the ACO's health 
equity adjusted quality performance score.
    As shown in Table 60, up to 10 health equity adjustment bonus 
points (Step 3, column [B]) would be added to the ACO's MIPS Quality 
performance category score (column [A]), with a maximum health equity 
adjusted quality performance score (column [C]) of 100 percent (that 
is, the sum is capped at 100).

[[Page 69854]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.089

    We did not receive any comments specific to the steps involved in 
calculating the health equity adjustment bonus points or the examples 
provided in the proposed rule (87 FR 46139 through 46141). Any comments 
related to factors involved in the health equity adjustment, including 
the measure performance scaler, the underserved multiplier, the 
eligibility criteria or bonus point maximum we have summarized and 
responded to elsewhere in this final rule where those factors are 
described and defined.
(g) Incorporating the Health Equity Adjustment Into Shared Savings 
Program Quality Performance Reports
    In the event an ACO reports both the Web Interface measure set and 
the eCQM/MIPS CQM measure set, the ACO will be assigned the higher of 
the two quality performance scores for purposes of the MIPS quality 
performance category (86 FR 65259). If the addition of health equity 
adjustment bonus points results in the ACO's eCQM/MIPS CQM quality 
performance score becoming higher than the ACO's Web Interface score 
(even though it was initially lower), the Shared Savings Program would 
use the health equity adjusted eCQM/MIPS CQM quality performance score 
as the ACO's quality performance score. The health equity adjustment 
would not impact a MIPS eligible clinician's final scores because the 
health equity adjusted quality performance score would be limited to 
the Shared Savings Program, where it would be used at the ACO level to 
determine an ACO's shared savings or losses. Under MIPS, eligible 
clinicians in ACOs that report both the CMS Web Interface measures and 
the three eCQMs/MIPS CQMs would receive the higher of either the CMS 
Web interface or the three eCQMs/MIPS CQMs based on their ACO's MIPS 
Quality performance category score.
    As stated in the proposed rule, we plan to show the calculation of 
the health equity adjustment for all ACOs that report on eCQMs/MIPS CQM 
measures, even if the adjustment would not affect the determination of 
shared savings or shared losses for the ACO. These calculations would 
be provided to ACOs in their reconciliation reports package. For 
example, under Sec.  425.512(a)(2)(ii), an ACO in the BASIC track that 
is participating in the first performance year of its first agreement 
period meets the quality performance standard if it reports quality 
data via the APP and meets data completeness and case minimum 
requirements specified for the performance year. An ACO meeting these 
criteria would qualify for the maximum sharing rate under the level of 
the BASIC track under which it is participating, regardless of the 
health equity adjustment. Likewise, if such an ACO was participating in 
a two-sided model under the BASIC track and was liable for shared 
losses, the ACO would be subject to a fixed 30 percent shared loss rate 
that would also be unaffected by the health equity adjustment. For such 
an ACO, the calculation and reporting of the health equity adjustment 
would be for purely informational purposes. This information would 
provide ACOs with an understanding of the proportion of underserved 
individuals they care for and give ACOs additional insight into this 
population and opportunities for improvement as they transition to all 
payer quality measure reporting and develop associated quality 
improvement strategies and initiatives.
    While we received no comments explicitly addressing our proposal to 
include information on the health equity adjustment in the 
reconciliation reports package provided to ACOs, several commenters 
recommended that we provide more information overall to ACOs related to 
the adjustment. The following is a summary of the public comments and 
our responses.
    Comment: A few commenters recommended that CMS share additional 
data and analysis with ACOs regarding dual eligibility status, ADI, and 
Part D LIS data sources, as well as the number of beneficiaries who 
would qualify under each metric by geographic regions. One commenter 
recommended that CMS work with ACOs toward quality reporting that is 
disaggregated across sub-populations so that implementation of any 
adjustment would not shield disparities and outcomes. Another commenter 
encouraged CMS to report ACO quality measure results that are 
stratified by subgroups of the underserved population. One commenter 
noted that quality data reporting will be essential when identifying 
whether the adjustment is achieving its intended aims and helping the 
relevant populations. A different commenter urged us to consider 
segmenting patient outcomes to the extent feasible by beneficiary 
characteristics such as race/ethnicity in addition to implementing the 
health equity adjustment. A final commenter recommended that CMS 
provide ADI data for every beneficiary when available as part of the 
quarterly attribution files ACOs receive.
    Response: As we stated in the proposed rule (87 FR 46141 and 46142) 
and previously in this section of the final rule, we plan to provide 
ACOs with data related to their health equity adjustment. Specifically, 
we plan to show the calculation of the health equity adjustment in the 
reconciliation reports for all ACOs that report on eCQMs/MIPS CQM 
measures, even if the adjustment does not impact the determination of 
shared savings or shared losses for the ACO. Regarding the requests for 
additional data beyond the calculation of the health equity

[[Page 69855]]

adjustment, we appreciate commenters' feedback and want to confirm that 
CMS will make available certain additional information on dual 
eligibility status, Part D LIS, and ADI to all ACOs on their assigned 
beneficiary populations under our existing data sharing regulations at 
42 CFR part 425, subpart H. Specifically, in quarterly and annual 
reports such as the assignment list report, we will include beneficiary 
identifiable information on dual eligibility, ADI, and LIS status. We 
will also provide aggregate data, such as the proportion of the ACO's 
assigned beneficiaries that are dually eligible or enrolled in the LIS, 
and the proportion of the ACO's assigned beneficiaries with an ADI 
national percentile rank of 85 or above in the quarterly and annual 
reports. As set forth in our regulations at Sec.  425.702(a), 
(c)(1)(ii)(B)(1) and (c)(1)(ii)(C), CMS shares certain aggregate 
reports with ACOs under specific conditions, and this information 
includes demographic data that represents the minimum data necessary 
for ACOs to conduct health care operations work, which could encompass 
the dual eligibility, LIS, and ADI information. We understand ACOs may 
need this dual eligibility, LIS, and ADI information for quality 
assessments and population-based activities related to improving health 
and coordinating care. We also believe ACOs may need this information 
to conduct other health care operations activities described in 
paragraph (1) or (2) of the definition of ``health care operations'' in 
45 CFR 164.501, such as population-based activities relating to 
improving health or reducing health care costs, protocol development, 
case management and care coordination, and quality assessment and 
improvement activities. Therefore, we believe this dual eligibility, 
LIS, and ADI information may be made available under our existing data 
sharing regulations and processes. We will take commenters feedback on 
other types of beneficiary-level data or data stratification into 
consideration.
    After considering the public comments, we are finalizing as 
proposed our proposal to provide ACOs with information on the 
calculation of the health equity adjustment in their reconciliation 
reports if they report on eCQMs/MIPS CQM measures. We also plan to make 
available to ACOs on a quarterly and annual basis certain beneficiary-
identifiable data on dual eligibility, LIS, and ADI national percentile 
rank. This will enable greater transparency into the calculation of the 
health equity adjustment and provide ACOs with data necessary to 
improve quality and coordinate care, promoting high quality care for 
underserved populations.
(h) Modifications to the Regulations
    We proposed to amend the regulation at Sec.  425.512, which 
establishes the ACO quality performance standard for performance years 
beginning on or after January 1, 2021, to include a new paragraph (b) 
to govern the calculation of an ACO's health equity adjusted quality 
performance score for PY 2023 and subsequent performance years, 
including the policies governing calculation of health equity 
adjustment bonus points (87 FR 46142). We also proposed to make 
additional conforming changes to Sec.  425.512 to incorporate 
references to the health equity adjusted quality performance score, 
through proposed modifications to Sec.  425.512(a)(4)(i)(A), and within 
proposed revisions to Sec.  425.512(a)(5)(i)(A)(1) and (a)(5)(i)(B) (87 
FR 46142).\294\
---------------------------------------------------------------------------

    \294\ We note that we proposed to use the term ``health equity 
adjusted quality performance score'' uniformly in the regulation 
provisions enumerated in this section of the proposed rule, even in 
cases where an ACO's MIPS Quality performance category score is 
based on its reporting of the Web Interface measure set. For such 
ACOs, the health equity adjustment is assumed to be zero.
---------------------------------------------------------------------------

    We proposed further technical and conforming changes to Sec.  
425.512 to redesignate existing paragraph (b) specifying the 
alternative approach to calculating the quality performance score for 
ACOs affected by extreme and uncontrollable circumstances, as a new 
paragraph (c). We also proposed a modification to update a cross-
reference within the newly redesignated Sec.  425.512(c) for accuracy 
and to revise newly redesignated Sec.  425.512(c)(3) to specify that we 
would use the health equity adjusted quality performance score in 
determining the quality performance score for ACOs affected by extreme 
and uncontrollable circumstances that report quality data under the APP 
and meet data completeness and case minimum requirements for PY 2023 
and subsequent performance years (refer to section III.G.4.b.(8) of the 
proposed rule).
    In addition, as described in the proposed rule, we proposed to 
revise Sec.  425.605 and 425.610 to specify use of the ACO's health 
equity adjusted quality performance score determined in accordance with 
Sec.  425.512(b) for purposes of calculating an ACO's final sharing 
rate based on a sliding scale. Similarly, as proposed, the 
modifications to Sec.  425.610 specify use of the ACO's health equity 
adjusted quality performance score determined in accordance with Sec.  
425.512(b) for purposes of calculating the ACO's shared loss rate based 
on a sliding scale.
    As discussed in the proposed rule (87 FR 46142), we believe the 
health equity adjustment proposal would support ACOs transitioning to 
all-payer quality measure reporting, incentivize ACOs to report eCQMs/
MIPS CQMs, provide stronger incentives for quality improvement, and 
recognize high performing ACOs serving underserved populations. We 
sought comment on all aspects of the proposed methodology.
    Given that the proposed approach, if finalized, would be the 
initial implementation of a health equity adjustment under the Shared 
Savings Program, we noted our intent to monitor the impact of the 
adjustment to ensure it achieves the goal of rewarding ACOs for high 
quality performance while caring for larger proportions of underserved 
beneficiaries (87 FR 46142). We stated that we would consider 
modifications as necessary to the design of the health equity 
adjustment through future notice and comment rulemaking.
    The following is a summary of the remaining public comments 
received on the health equity adjustment proposal.
    Comment: Some commenters noted the importance of quality data 
reporting to identify health inequity and support relevant populations. 
Some of these commenters encouraged CMS to provide incentives for 
consistent collection of data that can better identify disparities. 
Others recommended we identify a subset of ACO quality measures that 
could be stratified using this race, ethnicity and social risk factors. 
These commenters stated that stratifying subpopulations and 
incentivizing improvement based on this data could help ACOs invest in 
resources to make improvements.
    Another commenter stated that more administrative support to ACOs 
in identifying and tracking performance would be needed in order for 
ACOs to benefit from the health equity adjustment.
    One commenter also recommended we reimburse ACOs for social 
determinant of health screenings and utilizing z-codes. A commenter 
recommended that we continue to explore a full range of approaches to 
accounting for social needs in quality measurement, including direct 
risk adjustment when necessary.
    One commenter suggested that we develop a longer-term equity-
specific plan and explore how community

[[Page 69856]]

organizations can also be included within broadened ACOs.
    A commenter recommended that we consider requiring ACOs to apply a 
portion of the incentive to help build the nursing facility health-
information technology infrastructure interoperability capabilities.
    Response: We appreciate commenters' input on the heath equity 
adjustment and will take them into consideration as we continue to 
consider efforts to integrate health equity into the Shared Savings 
Program. At this time, we decline commenters' suggestions to provide 
additional incentives for data collection as the purpose of the health 
equity adjustment was not to collect additional data regarding health 
inequity but to reward ACOs serving a higher proportion of underserved 
beneficiaries while delivering high quality care. We also note that 
many of the commenters' alternative suggestions on how to advance 
health equity and account for social needs go beyond the scope of the 
health equity adjustment proposed in CY 2023 PFS proposed rule and we 
will not be addressing them in the final rule, but may be considered in 
future rulemaking.
    In conclusion, after review of the public comments received related 
to the health equity adjustment and for the reasons stated above and in 
the proposed rule (87 FR 46132 through 46143), we are finalizing at 
Sec.  425.512(b) our proposal to create the health equity adjustment 
with a modification to the calculation of the underserved multiplier to 
incorporate information on Part D LIS enrollment. Specifically, the 
underserved multiplier will be determined based on the higher of the 
proportion of assigned beneficiaries enrolled in LIS or dually eligible 
for Medicare and Medicaid, or the proportion of the ACO's beneficiaries 
residing in census block groups with an ADI national percentile rank of 
at least 85. ACOs will be ineligible to receive any bonus points if 
their underserved multiplier is less than the ``floor'' of 20 percent.
    We are also finalizing the creation of three groups based on 
measure performance to determine an ACO's performance on quality for 
the purpose of calculating health equity adjustment bonus points: (1) a 
group comprised of the top third performing ACOs; (2) a group comprised 
of the middle third performing ACOs; and (3) a group comprised of the 
bottom third performing ACOs. These groups will be created for each of 
the six measures independently such that an ACO in the top group based 
on performance on one measure may be in the bottom group based on 
performance on another measure. The three groups will be created by 
reporting mechanism so that ACOs that report eCQMs/MIPS CQMs will have 
each measure grouped into a top, middle, and bottom third based on the 
performance of other ACOs that also report eCQMs. For the CAHPS for 
MIPS survey and claims-based measures, ACOs will be compared to all 
ACOs with data on those measures.
    We are also finalizing that ACOs will receive a value of four for 
each measure for which its performance places it in the top performance 
group, a value of two for each measure for which its performance places 
it in the middle performance group, and a value of zero for each 
measure for which its performance places it in the bottom performance 
group. The values assigned to each measure in the APP measure set will 
be summed to determine an ACO's total assigned value, which we refer to 
as the ACO's ``measure performance scaler.'' We are finalizing that the 
ACO's health equity adjustment bonus points will be calculated by 
multiplying this measure performance scaler and the ACO's underserved 
multiplier.
    We will assign a value of zero to a measure in certain cases when 
we would not evaluate the ACO's performance on a measure. For purposes 
of calculating the health equity adjustment, an ACO will receive zero 
for a claims-based measure or an eCQM/MIPS CQM for which the ACO does 
not meet the case minimum requirements at Sec.  414.1380. Similarly, an 
ACO will receive zero for the CAHPS for MIPS survey in the event it 
does not meet the minimum sample size requirements. An ACO that cannot 
meet case minimum requirements or does not have a sufficient sample 
size to administer the CAHPS for MIPS survey would still qualify to 
receive the health equity adjustment bonus for those measures that were 
accurately and completely reported and provided the ACO met the data 
completeness requirement at Sec.  414.1340 for all three eCQMs/MIPS 
CQMs.
    We are finalizing that the health equity adjustment will be 
available for PY 2023 and for subsequent performance years to an ACO 
that reports the three eCQMs/MIPS CQMs in the APP measure set, meeting 
the data completeness requirement at Sec.  414.1340 for all three 
eCQMs/MIPS CQMs, and administers the CAHPS for MIPS survey. Such ACOs 
may receive up to a maximum of 10 additional points added to their MIPS 
Quality performance category score.
    We are also finalizing that an ACO's health equity adjusted quality 
performance score will be applied in determining whether the ACO met 
the quality performance standard set at the 30th percentile for PY 2023 
as specified under Sec.  425.512(a)(4)(i)(A), or the 40th percentile 
for PY 2024 and subsequent performance years, as specified in the 
revised regulations at Sec.  425.512(a)(5)(i)(A)(1) and (a)(5)(i)(B), 
respectively.
    We are finalizing our proposal to apply an ACO's health equity 
adjusted quality performance score in determining shared savings and 
losses. Specifically, we will use an ACO's health equity adjusted 
quality performance score to determine the final sharing rate for 
calculating shared savings payments under the BASIC track (under Sec.  
425.605(d)) and the ENHANCED track (under Sec.  425.610(d)) for an ACO 
that meets the alternative quality performance standard allowing for 
application of a sliding scale based on quality performance, as 
specified in the revisions to Sec.  425.512(a)(4)(ii) and (a)(5)(ii). 
For ENHANCED track ACOs that owe shared losses, we will apply the 
health equity adjustment to the ACO's quality performance score used in 
calculating the ACO's shared loss rate to allow the ACO to share in 
losses at a relatively lower rate, based on its quality performance. We 
will use an ENHANCED track ACO's health equity adjusted quality 
performance score in calculating shared losses under Sec.  425.610(f) 
when the ACO meets the quality performance standard specified under 
Sec.  425.512(a)(4)(i) or (a)(5)(i) or meets the alternative quality 
performance standard under Sec.  425.512(a)(4)(ii) and (a)(5)(ii) 
allowing for the application of a sliding scale based on quality 
performance.
    We are finalizing that the health equity adjustment be applied in 
calculating the ACO's quality performance score for an ACO affected by 
extreme and uncontrollable circumstances if the ACO is able to report 
quality data via the APP and meet data completeness and case minimum 
requirements, as provided in redesignated Sec.  425.512(c)(3).
    Finally, we are finalizing our proposal to incorporate the health 
equity adjustment into the Shared Savings Program quality performance 
reports. If the addition of health equity adjustment bonus points 
results in the ACO's eCQM/MIPS CQM quality performance score becoming 
higher than the ACO's Web Interface score, the Shared Savings Program 
will use the health equity adjusted eCQM/MIPS CQM quality performance 
score as the ACO's quality performance score. We plan to show the 
calculation of the health equity

[[Page 69857]]

adjustment including dual eligibility, LIS, and ADI data for all ACOs 
that report on eCQMs/MIPS CQM measures, even if the adjustment would 
not affect the determination of shared savings or shared losses for the 
ACO. These calculations will be provided to ACOs in their 
reconciliation reports package.
(8) Application of Extreme and Uncontrollable Circumstances Policy
    The approach used to calculate the quality score for ACOs affected 
by extreme and uncontrollable circumstances (EUC) is described in Sec.  
425.512(b)(2) and (3) of the current regulations, which we proposed to 
redesignate as Sec.  425.512(c)(2) and (3) (refer to section 
III.G.4.b.(7)(h) of the proposed rule) (87 FR 46142). In summary, under 
the current EUC policy, for an ACO that fails to report quality data 
via the APP or that reports quality data but fails to meet the data 
completeness or case minimum requirements applicable for the 
performance year, we will set the ACO's quality performance score to 
the equivalent of the 30th percentile (for PY 2023) or 40th percentile 
(for PY 2024 and subsequent performance years) across all MIPS Quality 
performance category scores for the relevant performance year, as 
described in Sec.  425.512(b)(2). For an ACO that reports quality data 
via the APP and successfully meets data completeness and case minimum 
requirements, we will use the higher of the ACO's own health equity 
adjusted quality performance score or the equivalent of the 30th 
percentile (for PY 2023) or 40th percentile (for PY 2024 and subsequent 
performance years) across all MIPS Quality performance category scores 
as described in Sec.  425.512(b)(3).
    By design, any ACO that is deemed to be affected by an extreme and 
uncontrollable circumstance will receive a score that is at least as 
high as the 30th percentile (for PY 2023) or 40th percentile (for PY 
2024 and subsequent performance years) across all MIPS Quality 
performance category scores, thus aligning with the quality performance 
standard applicable for the performance year as described under Sec.  
425.512(a) in the current regulations. An ACO affected by an extreme 
and uncontrollable circumstance that is eligible for shared savings (by 
virtue of having savings that meet or exceed its MSR) will thus receive 
a final sharing rate equal to the maximum sharing rate for the ACO's 
track (or payment model within a track) in the calculation of its 
shared savings amount, as described in Sec.  425.605(d) (for ACOs 
participating in the BASIC track) or Sec.  425.610(d) (for ACOs 
participating in the ENHANCED track). An ACO affected by an extreme and 
uncontrollable circumstance participating in the ENHANCED track that is 
liable for shared losses (by virtue of having losses that meet or 
exceed its minimum loss rate) will face a shared loss rate that 
considers the ACO's quality performance as described in Sec.  
425.610(f).
    An ACO that is determined to have been affected by an extreme and 
uncontrollable circumstance and is eligible for shared savings would 
already receive the maximum possible sharing rate for its track (or 
payment model within a track) under the current extreme and 
uncontrollable circumstances policy. The sharing rate for such an ACO 
would not be affected by our proposal to re-institute scaled shared 
savings as described in section III.G.4.b.(2) of the proposed rule. 
That is, an ACO affected by an extreme and uncontrollable circumstance 
that meets the proposed alternative quality performance standard, if 
finalized, would continue to qualify for the maximum sharing rate for 
its track (or payment model within a track) rather than receiving a 
sharing rate scaled based on the ACO's quality performance.
    An ACO participating in the ENHANCED track that is affected by an 
extreme and uncontrollable circumstance and is liable for shared losses 
already receives a shared loss rate that is scaled by the ACO's quality 
performance under the current extreme and uncontrollable circumstances 
policy. If such an ACO meets the proposed alternative quality 
performance standard, if finalized, it would continue to receive a 
shared loss rate that is scaled by its quality performance. Thus, our 
proposal to extend scaled shared losses to ENHANCED track ACOs that 
meet the alternate quality performance as described in section 
III.G.4.b.(3) of the proposed rule would not, by itself, have a 
practical impact on the shared loss rate for an ACOs affected by an 
extreme and uncontrollable circumstance.
    With regard to the proposed health equity adjustment, for an ACO 
affected by an extreme and uncontrollable circumstance that reports 
eCQMs/MIPS CQMs via the APP, and successfully meets the data 
completeness requirement at Sec.  414.1340 and case minimum requirement 
at Sec.  414.1380, we proposed to apply the health equity adjustment 
bonus points to the ACO's MIPS Quality performance category score, as 
described in section III.G.4.b.(7) of the proposed rule (87 FR 46134 
and 46135), before determining the ``higher of'' score under the 
extreme and controllable circumstances policy. That is, the ACO would 
receive the higher of the quality performance score equal to the sum of 
the ACO's MIPS Quality performance category score and the ACO's health 
equity adjustment bonus points (that is, the health equity adjusted 
quality performance score) or a score equivalent to the 30th percentile 
(for PY 2023) or 40th percentile (for PY 2024 and subsequent 
performance years) across all MIPS Quality performance category scores. 
We proposed to specify the use of the health equity adjusted quality 
performance score in determining the quality performance score for an 
ACO affected by extreme and uncontrollable circumstances within the 
proposed new provision at Sec.  425.512(b) and in determining the 
``higher of'' score under the redesignated provisions at Sec.  
425.512(c)(3)(ii) and (iii).
    As explained in the proposed rule (87 FR 46134 and 46135), the 
proposed approach of applying the health equity adjustment before 
determining the ``higher of'' score under the extreme and 
uncontrollable circumstances policy would have no practical impact on 
the sharing rate for an ACO that is eligible to share in savings. By 
design, such an ACO would meet or exceed the 30th percentile (for PY 
2023) or 40th percentile (for PY 2024 and subsequent performance years) 
MIPS Quality performance category score, and qualify for the maximum 
sharing rate for its track (or payment model within a track). However, 
for an ACO participating in the ENHANCED track that is liable for 
shared losses, the application of the health equity adjustment could 
increase the ACO's quality performance score used to determine the 
ACO's shared loss rate, and thus potentially reduce the amount of 
shared losses owed to CMS.
    For an ACO affected by an extreme and uncontrollable circumstance 
that fails to report quality data via the APP or that reports but fails 
to the meet data completeness or case minimum requirements, we would 
continue to set the ACO's quality performance score to the equivalent 
of the 30th percentile (for PY 2023) or 40th percentile (for PY 2024 
and subsequent performance years) MIPS Quality performance category 
score. Such an ACO would not meet the proposed requirements for the 
health equity adjustment with respect to reporting and measure 
performance.
    We did not receive any comments on the proposed revisions to the 
application of the extreme and uncontrollable circumstances policy, and 
for the reasons stated above and in the proposed rule (87 FR 46142 and

[[Page 69858]]

46143), we are finalizing the revisions as proposed.
(9) Summary of the Final Policies
    The following provides an overview of the quality performance 
standards that apply to future performance years for the purpose of 
determining the rate at which an ACO may share in savings.
Performance Year 2023
     PY 2023, to share in savings at the maximum savings rate 
under its track (or payment model within a track), an ACO must:
    ++ Report the 10 CMS Web Interface measures in the APP measure set, 
administer a CAHPS for MIPS survey, while we would calculate the two 
claims-based measures included under the APP, and achieve a health 
equity adjusted quality performance score that is equivalent to or 
higher than the 30th percentile across all MIPS Quality performance 
category scores, excluding entities/providers eligible for facility 
based-scoring, or
    ++ Report the three eCQMs/MIPS CQMs in the APP measure set, 
administer a CAHPS for MIPS survey, while we would calculate the two 
claims-based measures included under the APP. If an ACO selects this 
option, meets the data completeness requirement at Sec.  414.1340 of 
this subchapter and the case minimum requirement at Sec.  414.1380 of 
this subchapter for all three eCQMs/MIPS CQMs, the ACO must achieve a 
quality performance score equivalent to or higher than the 10th 
percentile of the performance benchmark on at least one of the four 
outcome measures in the APP measure set and a quality performance score 
equivalent to or higher than the 30th percentile of the performance 
benchmark on at least one of the remaining five measures in the APP 
measure set.
     An ACO that fails to meet the criteria above may qualify 
to share in savings on a sliding scale based on its performance on any 
of the 10 CMS Web Interface measures or three eCQMs/MIPS CQMs, CAHPS 
for MIPS survey, and CMS' calculation of the two claims-based measures 
in the APP measure set that are reported by the ACO. The ACO must 
achieve a quality performance score equivalent to or higher than the 
10th percentile of the performance benchmark on at least one of the 
four outcome measures in the APP measure set to share in savings (if 
otherwise eligible) at a lower rate that is scaled by the ACO's health 
equity adjusted quality performance score.
     If an ACO (1) does not report any of the ten CMS Web 
Interface measures or any of the three eCQMs/MIPS CQMs and (2) does not 
administer a CAHPS for MIPS survey under the APP, the ACO will not meet 
the quality performance standard or the alternative quality performance 
standard.
Performance Year 2024
     PY 2024, to share in the savings at the maximum rate under 
its track (or payment model within a track) an ACO must:
    ++ Report the 10 CMS Web Interface measures in the APP measure set, 
administer a CAHPS for MIPS survey, while we would calculate the two 
claims-based measures included under the APP, and achieve a health 
equity adjusted quality performance score that is equivalent to or 
higher than the 40th percentile across all MIPS Quality performance 
category scores, excluding entities/providers eligible for facility 
based-scoring, or
    ++ Report the three eCQMs/MIPS CQMs in the APP measure set and 
administer a CAHPS for MIPS survey, while we would calculate the two 
claims-based measures included under the APP. If an ACO selects this 
option, meets the data completeness requirement at Sec.  414.1340 of 
this subchapter and the case minimum requirement at Sec.  414.1380 of 
this subchapter for all three eCQMs/MIPS CQMs, the ACO must achieve a 
quality performance score equivalent to or higher than the 10th 
percentile of the performance benchmark on at least one of the four 
outcome measures in the APP measure set and a quality performance score 
equivalent to or higher than the 40th percentile of the performance 
benchmark on at least one of the remaining five measures in the APP 
measure set.
     An ACO that fails to meet the criteria above may share in 
savings on a sliding scale based on its performance on any of the 10 
CMS Web Interface measures or three eCQMs/MIPS CQMs, CAHPS for MIPS 
survey, and CMS' calculation of the two claims-based measures in the 
APP measure set that are reported by the ACO. The ACO must achieve a 
quality performance score equivalent to or higher than the 10th 
percentile of the performance benchmark on at least one of the four 
outcome measures in the APP measure set to share in savings (if 
otherwise eligible) at a lower rate that is scaled by the ACO's health 
equity adjusted quality performance score.
     If an ACO (1) does not report any of the 10 CMS Web 
Interface measures or any of the 3 eCQMs/MIPS CQMs and (2) does not 
administer a CAHPS for MIPS survey under the APP, the ACO will not meet 
the quality performance standard or the alternative quality performance 
standard.
Performance Year 2025 and Subsequent Performance Years
     PY 2025 and subsequent performance years, to share in 
savings at the maximum savings rate under its track (or payment model 
within a track), an ACO must: report quality data via the APP 
established under Sec.  414.1367 of this subchapter, according to the 
method of submission established by CMS and achieve a health equity 
adjusted quality performance score that is equivalent to or higher than 
the 40th percentile across all MIPS Quality performance category 
scores, excluding entities/providers eligible for facility-based 
scoring.
     An ACO that fails to meet the criteria above may share in 
savings on a sliding scale based on its performance on any of the three 
eCQMs/MIPS CQMs, CAHPS for MIPS survey, and CMS's calculation of the 
two claims-based measures in the APP measure set that are reported by 
the ACO. The ACO must achieve a quality performance score equivalent to 
or higher than the 10th percentile of the performance benchmark on at 
least one of the four outcome measures in the APP measure set to share 
in savings (if otherwise eligible) at a lower rate that is scaled by 
the ACO's health equity adjusted quality performance score.
     If an ACO does not report any of the 3 eCQMs/MIPS CQMs and 
does not administer a CAHPS for MIPS survey under the APP, the ACO will 
not meet the quality performance standard or the alternative quality 
performance standard.
    Similarly, we are adopting a methodology for calculating shared 
losses under the ENHANCED track to account for the sliding scale 
approach, which would remove the ``cliff'' from the all-or-nothing 
approach instituted in the CY 2021 PFS final rule (85 FR 84734 through 
84736) whereby an ACO that does not meet the quality performance 
standard would automatically face the maximum shared loss rate of 75 
percent. For PY 2023 and subsequent performance years, an ACO that has 
losses that exceed its minimum loss rate and either meets the quality 
performance standard or does not meet that standard but meets the 
proposed alternative quality performance standard by achieving a 
quality performance score equivalent to or higher than the 10th 
percentile of the performance benchmark on at least one of the four 
outcome measures in the APP measure set would have a shared

[[Page 69859]]

loss rate that is 1 minus the product of the maximum sharing rate for 
the ACO's track (75 percent) and the ACO's health equity adjusted 
quality performance score. The shared loss rate would be subject to a 
minimum of 40 percent and a maximum of 75 percent.
    An ACO that reports the three eCQMs/MIPS CQMs in the APP measure 
set, meeting the data completeness requirement at Sec.  414.1340 for 
all three eCQMs/MIPS CQMs, and administers the CAHPS for MIPS survey, 
may receive up to a maximum of 10 points added to its MIPS Quality 
performance category score. This combined score would be the ACO's 
health equity adjusted quality performance score and would be used in 
determining whether the ACO met the quality performance standard and in 
determining scaled shared savings and shared losses, as applicable, as 
summarized in this section of the proposed rule. This health equity 
adjusted quality performance score will also be used when applying the 
extreme and uncontrollable circumstances policy for ACOs that report 
quality data via the APP and meet data completeness and case minimum 
requirements.
    In addition, we clarify that any requirements that are based on 
achieving a specified quality performance score on outcome measures are 
limited to outcome measures that are scored. For example, please refer 
to Table 62 in section III.G.4.c.(1) of this final rule, which 
indicates the CMS Web Interface measure Depression Remission at Twelve 
months is an outcome measure that is not scored.
    We reiterate our statement in the CY 2022 PFS final rule that for 
PYs 2022, 2023 and 2024 if an ACO: (1) does not report any of the 10 
CMS Web Interface measures or any of the 3 eCQMs/MIPS CQMs; and (2) 
does not administer a CAHPS for MIPS survey under the APP, the ACO will 
not meet the quality performance standard (86 FR 65261). In addition, 
we are adopting that, for PYs 2023 and 2024, an ACO that does not meet 
these requirements would also fail to meet the alternative quality 
performance standard. Such an ACO would not be eligible to share in 
savings and, if in the ENHANCED track, would automatically face the 
maximum shared loss rate.
    Additionally, as finalized in the CY 2022 PFS final rule, beginning 
with PY 2025, ACOs will be required to report eCQMs/MIPS CQMS, as the 
Web Interface reporting option sunsets after PY 2024 (86 FR 65261).
    As discussed in section III.G.5.f. of this final rule, we are 
finalizing our proposal to allow certain ACOs in the BASIC track that 
do not meet their MSR to receive reduced shared savings. Accordingly, 
ACOs that meet the requirements of that policy will share in savings at 
a rate equal to one half of the final sharing rate determined based on 
the ACO's quality performance, as described in this section.
    In Table 61 in section III.G.4.b.(9) of this final rule, we 
summarized the proposed changes to the regulation at Sec.  
425.512(a)(4) and (5) to reflect these proposed changes to the quality 
reporting requirements for PY 2023 and subsequent performance years.
    We are finalizing the proposed health equity adjustment calculation 
of an underserved multiplier at Sec.  425.512(b)(2)(iv)(A) with a 
modification to use enrollment in the Part D LIS, in addition to 
Medicare and Medicaid dual eligibility and ADI score to determine the 
underserved multiplier. Specifically, the underserved multiplier will 
be determined based on the higher of the proportion of an ACO's 
assigned beneficiaries who are enrolled in LIS or dually eligible for 
Medicare and Medicaid and the proportion of the ACO's assigned 
beneficiaries who reside in a census blocks with high ADI. We are also 
finalizing a revision to Sec.  425.512(b)(3)(iii) which provides that 
the health equity adjusted quality performance score is used for 
determining the shared loss rate for calculating shared losses under 
the ENHANCED track with a modification to correct the citation to the 
applicable performance standard. The language contained in the CY 2023 
PFS proposed rule inadvertently omitted any reference to paragraph 
(a)(5)(ii), which includes the performance standard for PY 2024 and 
subsequent years.
    We note that the quality performance standard policies we finalized 
in the CY 2022 PFS final rule (86 FR 65270) for the first performance 
year of an ACO's first agreement period under the Shared Savings 
Program will continue to remain applicable in addition to the quality 
performance standard policies we are finalizing in this final rule.
    In Table 61 of this final rule, we summarize the final changes to 
the regulation at Sec.  425.512(a)(4) and (5) to reflect these final 
changes to the quality reporting requirements and quality performance 
standard for PY 2023 and subsequent performance years. Performance 
benchmarks used to determine the 10th, 30th, and 40th percentiles will 
be posted on the Quality Payment Program Resource Library website at 
https://qpp.cms.gov/resources/resource-library. Performance benchmarks 
differ by collection type (that is, eCQM, MIPS CQM, CMS Web Interface) 
and are updated for each performance year.
BILLING CODE 4150-28-P

[[Page 69860]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.090

c. Quality Measures
(1) Final APP Measure Set
    We refer readers to Table 62, which lists the measures included in 
the final APP measure set that will be reported by Shared Savings 
Program ACOs for PY 2022 and subsequent performance years. These are 
the same measures finalized in the CY 2022 PFS final rule (86 FR 65264 
through 65266); however, we note that the Meaningful Measures 2.0 area 
for each measure has been updated to be consistent with the latest 
information available on the Meaningful Measures website and a measure 
number has been added for the Risk Standardized, All-Cause Unplanned 
Admissions for Multiple Chronic Conditions for MIPS measure.\295\ We 
proposed to change the nomenclature of this measure to align with the 
MIPS program. There are no other changes to this measure except for the 
name and the addition of a measure number. The measure title we 
proposed to use moving forward is Measure 484: Clinician and Clinician 
Group Risk-standardized Hospital Admission Rates for Patients with 
Multiple Chronic Conditions. In addition, we have included the measure 
type in Table 62, for each measure in the measure set. We are including 
this information to

[[Page 69861]]

provide ACOs a list of the outcome measures for purposes of meeting the 
quality performance incentive for reporting eCQMs/MIPS CQMs. This 
information is also relevant to our proposal to establish an 
alternative quality performance standard under which ACOs that fail to 
meet the quality performance standard to qualify for the maximum 
sharing rate, but that achieve a quality performance score at the 10th 
percentile on 1 of the 4 outcome measures in the APP measure set, may 
be eligible to share in savings on a sliding scale. We noted inclusion 
of this information does not change any of the measures in the measure 
set.
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    \295\ Centers for Medicare & Medicaid Services, Meaningful 
Measures 2.0: Moving from Measure Reduction to Modernization, 
(2022), available at https://www.cms.gov/meaningful-measures-20-moving-measure-reduction-modernization.

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[[Page 69862]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.091

    Table 63 includes the proposed eCQM/MIPS CQM measure set for the 
Shared Savings Program and outlines the measure types, especially for 
ACOs that may elect to report on eCQM/MIPS CQMs for PY2023 in order to 
qualify for the incentive under Sec.  425.512(a)(4)(i)(B).

[[Page 69863]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.092

BILLING CODE 4150-28-C
    The CMS Web Interface collection type under traditional MIPS and 
the APP includes 10 measures. One of the 10 measures included in the 
CMS Web Interface collection type is measure Q110: Preventive Care and 
Screening: Influenza Immunization (also referred to PREV-7 under the 
CMS Web Interface collection type). Table Group CC of Appendix 1 of the 
proposed rule includes a proposal to remove measure Q110: Preventive 
Care and Screening: Influenza Immunization from traditional MIPS for 
the Medicare Part B Claims, eCQM, and MIPS CQM collection types 
starting with the 2023 performance period and a proposal to retain the 
measure for use in relevant MVPs and as a measure in the CMS Web 
Interface collection type under the APP for purposes of APM Entity-
level reporting applicable to Medicare Shared Savings Program ACOs. 
Because Shared Savings Program ACOs report under the APP, this measure 
would still be available as a measure under the CMS Web Interface 
collection type. Please refer to Table Group CC of Appendix 1 where we 
discuss this proposal further. We also proposed to make changes to 
measure specifications for the CMS Web Interface starting in PY 2023. 
As proposed, the changes would update measures and align these measures 
with the CQM practice workflows and for consistency with clinical 
guidelines.
    We did not receive any comments on the proposed change to the name 
and addition of a measure number to one of the administrative claims-
based measures (Measure 484: Clinician and Clinician Group Risk-
standardized Hospital Admission Rates for Patients with Multiple 
Chronic Conditions) to align with the MIPS program.
    For the reasons stated above and in the CY 2023 PFS proposed rule 
(87 FR 46097), we are finalizing the proposal to change the name and 
add a measure number to the administrative claims-based measure, 
Measure 484: Clinician and Clinician Group Risk-standardized Hospital 
Admission Rates for Patients with Multiple Chronic Conditions, to align 
this measure with the MIPS program for PY 2022 and subsequent 
performance years.
(2) Benchmarking Policies for CMS Web Interface Measures for 
Performance Years 2022, 2023, and 2024
    In the CY 2021 PFS final rule, we finalized a change to the quality 
reporting requirements for purposes of the Shared Savings Program (85 
FR 84720 through 84734). Effective for PY 2021 and subsequent 
performance years, Shared Savings Program ACOs are required to report 
quality data via the APP. Under this new approach, ACOs only need to 
report one set of quality metrics via the APP to satisfy the quality 
reporting requirements under both the Shared Savings Program and the 
MIPS. In the CY 2021 PFS final rule (85 FR 84720), we explained that 
the APP measure set would address the highest priorities for quality 
measurement and improvement, while also reducing reporting burden, 
promoting alignment of measures and consolidation of reporting 
requirements across CMS programs, moving payment toward value, and 
identifying consumers' key quality performance metrics. We also stated 
that, under the APP, the quality performance score for an ACO will be 
calculated using the same benchmarks that are established for quality 
measures available under MIPS (85 FR 84724). Measure benchmarks 
established under MIPS are based on performance by collection type 
(that is, eCQM or MIPS CQM) using data from all available sources, 
including MIPS eligible clinicians and APM Entities, to the extent 
feasible, during the applicable baseline or performance period (Sec.  
414.1380(b)(1)). Under Sec.  414.1380(b)(1)(ii)(A), the benchmarks from 
the corresponding reporting year of the Shared Savings Program are used 
to score CMS Web Interface measures for purposes of the MIPS Quality 
performance category. Accordingly, in the preamble to the CY 2021 PFS 
we indicated that for PY 2021, we would continue to use the Shared 
Savings Program benchmarks developed for the CMS Web Interface measures 
for PY 2020, which were based on data reported by ACOs, MIPS eligible 
clinicians, and groups through the CMS Web Interface, and/or a registry 
from 2016, 2017 and 2018, which would allow us to be consistent with 
the approach that had been used for scoring CMS Web Interface measures 
in the Shared Savings Program under Sec.  425.502(b) (85 FR 84724). 
Furthermore, consistent with the final policy to require ACOs to report 
quality data via the APP and to score those measures using the MIPS 
benchmarks, in the CY 2021 PFS final rule, we

[[Page 69864]]

revised Sec.  425.502 to apply only to performance years beginning on 
or before January 1, 2020.
    Under the policies adopted in the CY 2021 PFS final rule, PY 2021 
would have been the final year in which ACOs would have the option to 
report either the 10 CMS Web Interface measures or the 3 eCQMs/MIPs 
CQMs under the APP, and starting in PY 2022 all ACOs would be required 
to report the 3 eCQMs/MIPS CQMs (85 FR 84722 and 84723). However, as 
explained in the proposed rule, in response to concerns raised by 
commenters regarding the timeline for implementing eCQM/MIPS CQM 
reporting requirements under the APP for Shared Savings Program ACOs in 
the CY 2022 PFS final rule, we further extended the CMS Web Interface 
as a collection type under the Quality Payment Program for PYs 2022, 
2023, and 2024 for Shared Savings Program ACOs reporting under the APP 
(85 FR 65261).
    When we finalized the extension of the CMS Web Interface as a 
collection type for the Shared Savings Program, we failed to consider 
the policies that would apply for purposes of establishing the 
performance benchmark and minimum attainment level for the CMS Web 
Interface measures for PYs 2022, 2023, and 2024. As noted previously, 
when we adopted the requirement that ACOs report quality for purposes 
of the Shared Savings Program using the APP, our intent was to use the 
measure benchmarks established under MIPS to score the measures in the 
APP measure set. However, under Sec.  414.1380(b)(1)(ii)(A), we use the 
benchmarks from the corresponding reporting year of the Shared Savings 
Program to score CMS Web Interface measures for purposes of the MIPS 
Quality performance category. Thus, because the benchmarking policies 
under Sec.  425.502(b) that were used to establish quality measure 
benchmarks in the Shared Savings Program prior to the development and 
implementation of the APP were sunset with the 2020 performance year, 
there are no policies currently in place that can be used to establish 
benchmarks for the CMS Web Interface measures in the APP measure set 
for purposes of determining quality performance under the Shared 
Savings Program for PYs 2022, 2023, and 2024. Additionally, the absence 
of benchmarking policies under the Shared Savings Program also impacts 
MIPS because MIPS uses the CMS Web Interface measure benchmarks 
established by the Shared Savings Program (Sec.  
414.1380(b)(1)(ii)(B)).
    Under the regulation at Sec.  425.502(b)(4)(i), CMS updated the 
quality performance benchmarks every 2 years. The last set of CMS Web 
Interface measure benchmarks were established for PY 2020 and were also 
used to score the Web Interface measures for PY 2021 as explained in 
the CY 2021 PFS final rule (85 FR 84724). In light of the decision to 
extend the availability of the CMS Web Interface measures under the 
APP, we now need to establish benchmarks under the Shared Savings 
Program for these measures for PYs 2022, 2023, and 2024. We noted in 
the CY 2023 PFS proposed rule (87 FR 46150) that we believe that the 
previously established benchmark policies at Sec.  425.502(b) continue 
to be appropriate for purposes of establishing the quality measure 
benchmarks and minimum attainment levels and establishing a point scale 
for the CMS Web Interface measures under the Shared Savings Program for 
PYs 2022, 2023, and 2024. In the 2015 PFS final rule (79 FR 67927), we 
finalized the benchmarking proposal to set benchmarks for 2 years for 
stability in quality improvement targets while also maintaining 
reasonable current practices. We proposed in the 2023 PFS proposed rule 
to use this approach for PYs 2022, 2023 and 2024, using available data 
for PYs 2022 and 2023 and establishing benchmarks for PY 2024 which is 
the last year of Web Interface reporting (87 FR 46150). We noted that 
we believe the policies are still appropriate as it would provide 
stability during the transition to all-payer reporting and sunsetting 
of the Web Interface reporting option, as well as prevent potential 
variations that could unintentionally create provider burden. In 
addition, this would allow CMS to score as many of the Web Interface 
measures as possible, providing stronger incentives for improving and 
delivering high quality care. Furthermore, using the same policies to 
establish the benchmarks for the CMS Web Interface measures for PYs 
2022, 2023, 2024, would maintain consistency in the development of CMS 
Web Interface measure benchmarks. Therefore, we proposed to amend the 
regulation at Sec.  425.512, which governs the ACO quality performance 
standard for performance years beginning on or after January 1, 2021, 
to include a new paragraph (a)(6), which will provide that for PYs 
2022, 2023, and 2024, CMS designates a performance benchmark and 
minimum attainment level for each CMS Web Interface measure and 
establishes a point scale for the measure as described in Sec.  
425.502(b) (87 FR 46150).
    We acknowledged that to the extent we proposed to apply these 
benchmark policies to determine performance benchmarks for the Web 
Interface measures for PY 2022, the proposal would be retroactive and 
would require the use of our authority under section 1871(e)(1)(A) of 
the Act, which permits the retroactive application of a substantive 
change in the regulations when the failure to do so would be ``contrary 
to the public interest.'' We stated our belief that this proposal meets 
the standard for retroactive rulemaking as absent retroactive 
application of the proposed benchmarking policies the CMS Web Interface 
measures could not be scored in PY 2022 for use under the Shared 
Savings Program in determining shared savings and losses or under MIPS 
for purposes of the MIPS payment adjustments (87 FR 46150). We also 
note that by establishing policies that will allow us to adopt 
benchmarks for these measures, we will ensure that we can determine the 
ACOs' quality performance score. If we did not have the authority to 
establish benchmarks, we would be unable to score ACO quality 
performance which is used to calculate shared savings and losses 
inhibiting our ability to successfully implement the Shared Savings 
Program and recognize and reward ACOs for better care coordination and 
quality improvement. At the same time, the lack of benchmarks to score 
quality measures submitted by ACOs would prevent their MIPS eligible 
clinicians from receiving any MIPS payment adjustment they may be 
eligible for and could subject them to negative MIPS payment 
adjustments if they are determined to have poor performance due to the 
inability to benchmark performance and score the measures submitted by 
the ACO. In addition, as mentioned above it is in the public interest 
to establish benchmarks as it should strengthen the incentive for ACOs 
to deliver high quality and coordinated care consistent with the goals 
of the Shared Savings Program. We believe there are advantages in 
having a greater number of scored measures in the CMS Web Interface, 
including the ability for Shared Savings Program ACOs to report on a 
larger number of measures to have a potentially higher score, as well 
as collecting data on measures that can be used for ACOs' quality 
improvement. An ACO's performance on each measure is assessed against 
its benchmark to determine points and the overall Quality performance 
category score. Additionally, when CMS determines

[[Page 69865]]

that a benchmark cannot be provided for a Web Interface measure, the 
measure will not be scored for Shared Savings Program ACOs. However, 
ACOs would still be required to report on any measure that is not 
scored in order to complete the CMS Web Interface dataset.
    We also need to make a correction from the CY 2022 PFS final rule 
(86 FR 65266) in which we inadvertently indicated that a benchmark 
would not be created for the Preventive Care and Screening: Tobacco 
Use: Screening and Cessation Intervention (Quality ID# 226). In the CY 
2022 PFS final rule (86 FR 65262), we noted three of the CMS Web 
Interface measures (Statin Therapy for the Prevention and Treatment of 
Cardiovascular Disease (Quality ID# 438); Depression Remission at 
Twelve Months (Quality ID# 370), and Preventive Care and Screening: 
Tobacco Cessation: Screening and Cessation Intervention (Quality ID# 
226)) did not have benchmarks for PY 2022 and would not be scored, 
however, the measures were required to be reported in order to complete 
the CMS Web Interface dataset (87 FR 46150). We refer to Table 62 for a 
listing of the measures that would not have benchmarks, and therefore, 
would not be scored for PY 2022.
    We have determined that we do not have adequate historical data 
available for benchmarking for the Preventive Care and Screening: 
Screening for Depression and Follow-up Plan (Quality ID# 134) measure 
for the 2022 performance year. Therefore, we proposed pursuant to Sec.  
425.512(b)(6) to set flat percentage benchmarks for the Preventive Care 
and Screening: Screening for Depression and Follow-up Plan (Quality ID# 
134) measure (87 FR 46150). Since we stated in the CY 2022 PFS final 
rule (86 FR 65266) that a benchmark would be created for Preventive 
Care and Screening: Screening for Depression and Follow-up Plan 
(Quality ID# 134), we find it suitable to use flat percentage 
benchmarks to measure performance on the measure.
    We proposed in the CY 2023 PFS proposed rule to score the 
Preventive Care and Screening: Tobacco Use: Screening and Cessation 
Intervention (Quality ID# 226) measure using flat percentage benchmarks 
under the approach we proposed to amend the regulation at Sec.  425.512 
(87 FR 46151). The Preventive Care and Screening: Tobacco Use: 
Screening and Cessation Intervention (Quality ID# 226) measure 
triggered flat percentage benchmarks by the policies described at Sec.  
425.502(b)(2)(ii) in the previous benchmarking update for the 2020 and 
2021 performance years. Therefore, as noted in the proposed rule, we 
believe it would be advantageous for the measure to keep its flat 
percentage benchmarks for the 2022 performance year for continuity and 
that having another scored measure can be beneficial to an ACO's 
overall quality performance.
    As we proposed for Preventive Care and Screening: Tobacco Use: 
Screening and Cessation Intervention (Quality ID# 226) and the 
Preventive Care and Screening: Screening for Depression and Follow-up 
Plan (Quality ID# 134) to be scored using flat percentage benchmarks 
for the 2022 performance year, ACOs would be scored on eight out of ten 
CMS Web Interface measures. We also noted that we believe ACOs might 
prefer to be scored under a greater number of measures which may 
improve their overall score and performance for purposes of Shared 
Savings Program quality assessment. Lastly, use of flat percentages 
allows ACOs with high scores to earn maximum or near maximum 
achievement points while allowing room for improvement and rewarding 
that improvement in subsequent years. Use of flat percentages also 
helps to ensure that ACOs with high performance on a measure are not 
penalized as low performers. For the 2023 performance year, we expect 
to apply flat percentages for the Preventive Care and Screening: 
Tobacco Use: Screening and Cessation Intervention (Quality ID# 226) and 
the Preventive Care and Screening: Screening for Depression and Follow-
up Plan (Quality ID# 134) as the Medicare data may not be unavailable 
or may be inadequate.
    We sought comment on this proposal.
    The following is a summary of the public comments received on the 
proposed revisions to the benchmarking policies for CMS Web Interface 
measures for PYs 2022, 2023, and 2024 and our responses:
    Comment: A few commenters supported the proposal to set flat 
percentage benchmarks for the Preventive Care and Screening: Tobacco 
Use: Screening and Cessation Intervention (Quality ID# 226) Preventive 
Care and Screening: Screening for Depression and Follow-up Plan 
(Quality ID# 134) measures.
    One commenter stated that this policy change may allow some ACOs 
with high performance to earn maximum achievement points but noted that 
it could be difficult for ACOs to adjust their performance unless the 
flat benchmarks are provided in advance. The commenter recommended that 
a flat benchmark of 75 percent of the average score of all ACOs in the 
prior year be utilized for both measures.
    Response: We note that use of flat percentages allows ACOs with 
high scores to earn maximum or near maximum achievement points while 
allowing room for improvement and rewarding that improvement in 
subsequent years. Use of flat percentages also helps to ensure that 
ACOs with high performance on a measure are not penalized as low 
performers.
    Comment: Most of the commenters opposed the proposal to use flat 
percentage benchmarks to score these two quality measures for PY 2022. 
The commenters stated that this proposed policy change would mean that 
ACOs would be scored on eight out of 10 Web Interface measures versus 7 
measures for PY 2022 which diverges from the policy previously 
finalized for CY 2022. The commenters requested that CMS maintain the 
previous finalized policy, especially because the change was proposed 
after the start of the performance year and would apply retroactively.
    Response: As stated in the proposed rule, we acknowledge that we 
inadvertently indicated in the CY 2022 PFS final rule (86 FR 65266) 
that a benchmark would not be created for the Preventive Care and 
Screening: Tobacco Use: Screening and Cessation Intervention (Quality 
ID# 226). We note, however, that in the CY 2022 PFS final rule (86 FR 
65266), the Preventive Care and Screening: Screening for Depression and 
Follow-up Plan (Quality ID# 134) measure was included in the final APP 
measure set that must be reported by Shared Savings Program ACOs for PY 
2022 and subsequent performance years.
    In the CY 2023 proposed rule, we proposed to score the Preventative 
Care and Screening: Tobacco Use: Screening and Cessation Intervention 
(Quality ID# 226) measure using flat percentage benchmarks under the 
approach we proposed at Sec.  425.512(a)(6). During the previous 
benchmarking update for the 2020 and 2021 performance years, this 
measure was subject to a flat percentage benchmark pursuant to Sec.  
425.502(b)(2)(ii). Correcting our inadvertent statement in the CY 2022 
PFS final rule that this measure would not have a benchmark does not 
result in a departure from our long-standing benchmark methodology for 
the measure. Accordingly, we believe that correcting this inadvertent 
error is in the public interest because it provides continuity of 
policy and having another scored measure allows for a more accurate 
measure of an ACO's overall

[[Page 69866]]

quality performance. More broadly, flat percentage benchmarks allow 
ACOs with high scores to earn maximum or near maximum achievement 
points while allowing room for improvement for ACOs with lower scores 
and rewarding that improvement in subsequent years. Furthermore, use of 
flat percentages also helps to ensure that ACOs with high performance 
on a measure are not penalized as low performers.
    Comment: One commenter supported the previous finalized policy for 
establishing benchmarks for the Web Interface measures but did not 
support switching from pay for reporting to pay for performance for the 
Preventive Care and Screening: Tobacco Use: Screening and Cessation 
Intervention (Quality ID# 226) measure stating that changing whether a 
measure will be scored or not this late within the reporting period is 
unreasonable and will likely require additional data collection effort 
and burden on ACOs while they are still operating under the COVID-19 
PHE. The commenter noted that this change sets an unreasonable 
precedent and CMS should not make these kinds of significant revisions 
this late in the reporting period. Another commenter also stated that 
making changes to the policy during the performance year is unfair and 
ignores how quality improvement efforts are operationalized in ACOs. 
The commenter urged CMS to continue making these measures pay-for-
reporting for 2022, as was finalized in the 2022 MPFS rule. In 
addition, one commenter suggested that CMS treat the Preventive Care 
and Screening: Tobacco Use: Screening and Cessation Intervention 
(Quality ID# 226) as a new measure for PY 2022 and giving it a 7-point 
scoring floor since ACOs were not expecting to be scored on this 
measure for PY 2022. The commenters requested that CMS maintain the 
previous finalized policy, especially when the retroactive application 
would apply during a performance year.
    One commenter stated that if CMS uses data submitted during CY 
2023, that ACO eligible clinicians will not have a clear understanding 
of their performance and areas for improvement if benchmarks are not 
set in advance. The commenter encouraged CMS to continue using 
historical benchmarks for quality reporting.
    Response: As stated in the proposed rule (87 FR 46150), we 
acknowledge that to the extent we proposed to apply these benchmark 
policies to determine performance benchmarks for the Web Interface 
measures for PY 2022, our proposal was retroactive and would require 
the use of our authority under section 1871(e)(1)(A) of the Act. We 
continue to believe that applying these benchmark policies to assess 
ACOs' quality performance for PY2022 is in the public interest for the 
reasons stated in the proposed rule and above.
    We appreciate that some commenters believe that correcting our 
inadvertent designation of the Preventative Care and Screening: Tobacco 
Use: Screening and Cessation Intervention (Quality ID# 226) measure as 
``pay for reporting'' may require changes in processes for some ACOs; 
however, we note that prior to this correction, ACOs were still 
obligated to collect data and report on this measure. There is thus no 
new reporting burden on ACOs resulting from this correction. 
Additionally, we note that this correction does not introduce 
requirements related to or the scoring of a novel measure with which 
ACO providers/suppliers may be unfamiliar; the measure has been used in 
the Shared Savings Program for over four years. We also note that based 
on measure scores in prior performance years, most ACOs would score 
sufficiently well on this measure that scoring this measure would not 
negatively affect their overall quality performance score. Lastly, we 
note that the Shared Savings Program's extreme and uncontrollable 
circumstances policy is applicable for the duration of the COVID-19 
Public Health Emergency.\296\ For the months this policy is applicable, 
an ACO's minimum quality performance score is set to the equivalent of 
the 30th percentile MIPS Quality performance category performance score 
across all MIPS Quality performance category scores, excluding 
entities/providers eligible for facility-based scoring, for the 
relevant performance year (42 CFR 425.512(b)(2)(i)). The application of 
this policy thus mitigates potential negative effects of an ACO's poor 
Quality performance score on this measure that might arise from CMS 
correcting its error at this time. For these reasons, the benefits to 
the Shared Savings Program, ACOs, and the public justify correcting 
this error now.
---------------------------------------------------------------------------

    \296\ https://www.cms.gov/files/document/medicare-shared-savings-program-cms-flexibilities-fight-covid-19.pdf.
---------------------------------------------------------------------------

    We separately note that there are not ``pay for reporting'' 
measures under the APP. A measure that is not benchmarked is excluded 
from the quality performance category score. Prior to adoption of the 
APP, if an ACO satisfactorily reported a ``pay for reporting'' measure, 
they would receive full points for the measure (Sec.  425.502(c)(5)). 
If a measure without a benchmark is not reported or does not meet data 
completeness, a score of zero will be added to the measure calculation.
    After consideration of the public comments and for the reasons 
stated above and in the proposed rule (87 FR 46148 through 46150), we 
are finalizing the proposal to add new Sec.  425.512(a)(6), which 
provides that for performance years 2022, 2023, and 2024, CMS 
designates a performance benchmark and minimum attainment level for 
each CMS Web Interface measure and establishes a point scale for the 
measure as described in Sec.  425.502(b). We anticipate providing flat 
percentage benchmarks for the Preventative Care and Screening: Tobacco 
Use: Screening and Cessation Intervention (Quality ID# 226) and the 
Preventive Care and Screening: Screening for Depression and Follow-up 
Plan (Quality ID# 134) measures will not create additional burden for 
or adversely affect the Quality performance scores of ACOs and will 
likely have a positive impact to ACO quality performance scores. 
Additionally, we are finalizing the proposal to establish and use flat 
benchmarks to score the following CMS Web Interface measures during PY 
2022 and subsequent performance years: Preventive Care and Screening: 
Screening for Depression and Follow-up Plan (Quality ID#: 134) and 
Preventive Care and Screening: Tobacco Use: Screening and Cessation 
Intervention (Quality ID#: 226).
d. Clarifying the Use of Unweighted MIPS Quality Performance Category 
Scores for Quality Performance Standard Determinations Under the Shared 
Savings Program
    In the CY 2022 PFS proposed and final rules (86 FR 39274 and 86 FR 
65271), we stated that the PY 2018 MIPS Quality performance category 
score at the 30th percentile was equivalent to 83.9 and the MIPS 
Quality performance category score at the 40th percentile was 
equivalent to 93.3. For PY 2019, the MIPS Quality performance category 
score at 30th percentile was equivalent to 87.9 and the MIPS Quality 
performance category score at the 40th percentile was equivalent to 
95.7. We also stated that, for a given performance year, the 30th or 
40th percentile across all MIPS Quality performance category scores 
would be calculated after MIPS final scoring is complete based on the 
distribution across all MIPS Quality performance category scores, 
excluding entities/providers eligible for scoring for facility-based 
scoring. Therefore, we are not able to provide performance rate 
information prior to or during the

[[Page 69867]]

performance year. Nevertheless, we stated that we believe that publicly 
displaying prior year performance scores that equate to the 30th and 
40th percentile across all MIPS Quality performance category scores for 
the applicable performance year would still provide helpful information 
for ACOs to determine what level of quality performance they would need 
to meet in order to satisfy the quality performance standard under the 
Shared Savings Program. We stated that we would release this historical 
information on the Shared Savings Program website as soon as it becomes 
available.
    While conducting analysis on the MIPS Quality performance category 
score data files after the publication of the CY 2022 PFS final rule, 
we determined that we erroneously used the weighted distribution of 
Quality performance category scores, rather than an unweighted 
distribution of Quality performance category scores, to calculate the 
30th and 40th percentile MIPS Quality performance category scores 
provided in the CY 2022 PFS proposed and final rules for 2018 and 2019. 
The weighted distribution of Quality performance category scores is 
used in MIPS for final payment calculations. The unweighted 
distribution of Quality performance category scores submitted by ACOs, 
groups, and individuals has historically been used to calculate 
benchmarks for quality measure performance under MIPS and the Shared 
Savings Program.
    In the proposed rule, we clarified that, despite the publication 
error, we used the submission level MIPS Quality performance category 
scores (unweighted distribution of scores) to determine the 30th 
percentile and 40th percentile MIPS Quality performance category scores 
for purposes of establishing the applicable quality performance 
standard under the Shared Savings Program. We also clarified that we 
use an ACO's submission, which is considered the unweighted 
distribution of Quality performance category scores, to calculate its 
MIPS Quality performance category score for purposes of determining 
whether the ACO meets the quality performance standard under the Shared 
Savings Program in PY 2021 and subsequent performance years. As noted 
in the proposed rule (87 FR 46148), the policy aligns with the MIPS and 
Shared Savings Program benchmarking policies and is consistent with our 
original intended methodology of using the unweighted distribution 
based on submission data to calculate the MIPS Quality performance 
category scores for ACOs as we did to calculate the impacts of the 
Shared Savings Program quality performance standard proposals in the CY 
2021 PFS proposed rule (85 FR 50380).
    Based on the use of the unweighted distribution of the Quality 
performance category scores, for PY 2018, the MIPS Quality performance 
category score at the 30th percentile is equivalent to 59.30 and the 
MIPS Quality performance category score at the 40th percentile is 
equivalent to 70.80. For PY 2019, the MIPS Quality performance category 
score at 30th percentile is equivalent to 58.00 and the MIPS Quality 
performance category score at the 40th percentile is equivalent to 
70.82. For PY 2020, the MIPS Quality performance category score at 30th 
percentile is equivalent to 63.90 and the MIPS Quality performance 
category score at the 40th percentile is equivalent to 75.59. See Table 
54 of the CY 2023 PFS proposed rule (87 FR 46151) outlining the 
historical unweighted MIPS Quality performance category scores for PYs 
2018-2020.
    The following is a summary of the public comments received on our 
clarification of the use of unweighted MIPS Quality performance 
category scores for quality performance standard determinations under 
the Shared Savings Program and our responses:
    Comment: One commenter supported the clarification regarding the 
use of the unweighted distribution of MIPS Quality performance category 
scores to determine the 30th percentile and 40th percentile MIPS 
Quality performance category scores for purposes of establishing the 
quality performance standard under the Shared Savings Program.
    Response: We appreciate the commenter's support of the 
clarification.
    Comment: Several commenters requested that CMS clarify what is 
meant by ``unweighted'' and ``weighted'' distribution of MIPS Quality 
performance category scores.
    Response: In response to comments, we are clarifying what is meant 
by the ``unweighted'' and ``weighted'' distribution of MIPS Quality 
performance category scores. The weighted distribution of Quality 
performance category scores is used in MIPS for final payment 
calculations and applies the Quality performance category scores to 
individual providers (rather than to the submitting entity, which can 
be an ACO, other APM entity, group, or individual provider). The 
unweighted distribution of Quality performance category scores is based 
on the Quality performance category scores of the submitting entity 
(for example, ACOs, other APM entities, groups, and individual 
providers), and each submission contributes one score to the 
distribution. The submission-level quality data has historically been 
used to calculate benchmarks for quality measure performance under MIPS 
and the Shared Savings Program. The MIPS Quality performance category 
score values do not change from the unweighted to weighted 
distribution. The only difference between the two distributions is the 
number of data points observed with a given score.
    For illustrative purposes, we are providing an example using the 
average (instead of the 30th or 40th percentile) for the quality 
performance standard. In this example, there are three submitting 
entities: an ACO, a MIPS group, and an individual MIPS provider. The 
MIPS Quality performance category scores for these submitting entities 
are 90 for the ACO, 70 for the MIPS Group, and 50 for the individual 
MIPS provider. The average of the unweighted distribution of scores is 
(90 + 70 + 50)/3 = 70 where each submitting entity contributes one 
score. The weighted distribution of scores takes into account the 
number of individual providers from each submitting entity. The ACO has 
10 providers, the MIPS Group has four providers, and the individual 
MIPS provider has one provider. The average of the weighted 
distribution is ((90 x 10) + (70 x 4) + (50 x 1))/15 = 82.
    As clarified in the CY 2023 PFS proposed rule (87 FR 46148), we use 
the submission-level MIPS Quality performance category scores 
(unweighted distribution of scores) to determine the 30th percentile 
and 40th percentile MIPS Quality performance category scores for 
purposes of establishing the applicable quality performance standard 
under the Shared Savings Program. As noted in the proposed rule (87 FR 
46148), the policy aligns with the MIPS and Shared Savings Program 
benchmarking policies and is consistent with our original intended 
methodology of using the unweighted distribution based on submission-
level data to calculate the MIPS Quality performance category scores 
for ACOs and other entities/providers, as we did to calculate the 
impacts of the Shared Savings Program quality performance standard 
proposals in the CY 2021 PFS proposed rule (85 FR 50380).
    Comment: A few commenters requested more transparency in the 
application of MIPS Quality performance scores to the Shared Savings 
Program and recommended that CMS publish MIPS Quality performance 
category scores in the Public Use Files (PUF) annually so that ACOs and 
other

[[Page 69868]]

stakeholders can reproduce the calculations and have more transparency 
around how the performance standard is established.
    Response: We appreciate the commenters' feedback. In the Medicare 
Shared Savings Program Performance Year Financial and Quality Results 
PUF, we provided several ACO-specific variables related to quality 
performance results including the ACO's quality score, an indicator for 
if the ACO met the quality performance standard, indicators for each of 
the three measure reporting options (that is, Web Interface, eCQM, MIPS 
CQM), and an indicator if the ACO did not completely report quality for 
any of the reporting options. We may consider adding additional ACO-
specific variables in future years. ACOs can review their measure-
specific performance used to calculate their MIPS Quality performance 
category score in their MIPS performance feedback. For PY 2021, the 
quality performance score was based on the ACO's performance on the 
quality measures reported under the Alternative Payment Model (APM) 
Performance Pathway (APP), any applicable MIPS bonus points, and 
quality improvement points. For ACOs determined to have been affected 
by an extreme and uncontrollable circumstance, the quality score was 
the higher of the ACO's MIPS Quality performance category score or the 
30th percentile across all MIPS Quality percentile category scores, 
excluding entities/providers eligible for facility-based scoring. We 
also provide quality measure benchmarks for the current performance 
year on the Shared Savings Program website at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/program-guidance-and-specifications.
    Since the publication of the CY 2023 PFS proposed rule, we have 
calculated that, for PY 2021, the MIPS Quality performance category 
score at the 30th percentile is equivalent to 61.73 and the MIPS 
Quality performance category score at the 40th percentile is equivalent 
to 77.83. See Table 64 outlining the historical unweighted MIPS Quality 
performance category scores for PYs 2018-2021.
[GRAPHIC] [TIFF OMITTED] TR18NO22.093

e. Addressing MIPS Quality Performance Category Score Corrections in 
the Shared Savings Program's Reopening Authority
    As finalized in the CY 2021 PFS final rule, beginning with PY 2021, 
the Shared Savings Program will use an ACO's MIPS Quality performance 
category score under the APP to determine whether the ACO has met the 
Shared Savings Program's quality performance standard. In turn, the 
ACO's quality performance informs the amount of shared savings earned 
or shared losses owed. There are interactions between the Shared 
Savings Program's financial reconciliation timeline and the Merit-Based 
Incentive Payment System (MIPS) targeted review process and other MIPS 
Quality performance category score-related corrections, and as a 
result, CMS may learn of errors in the calculation of MIPS Quality 
performance category scores after the issuance of an initial 
determination of financial performance under the Shared Savings 
Program.
    CMS has sole discretion over when to reopen determinations of ACO 
shared savings and shared losses to correct errors for good cause. As 
discussed in the CY 2023 PFS proposed rule (87 FR 46151 through 46154), 
we believe that it would be appropriate to clarify the circumstances in 
which we would exercise our discretion to reopen the initial 
determination of an ACO's financial performance for good cause to 
correct errors in the determination of MIPS Quality performance 
category scores that affect the determination of whether an ACO is 
eligible for shared savings, the amount of shared savings due to the 
ACO, or the amount of shared losses owed by the ACO. In this section, 
we discuss these circumstances and explain how we will approach such 
reopenings, the process by which we would make any corrections, and the 
manner in which we will adjust shared savings payments to the ACO or 
shared loss recoupments from the ACO, if applicable.
    Under Sec.  425.315, CMS may reopen the initial determination or a 
final agency determination under 42 CFR part 425 subpart I and issue a 
revised initial determination: (1) at any time in the case of fraud or 
similar fault as defined in Sec.  405.902; or (2) not later than 4 
years after the date of the notification to the ACO of the initial 
determination of savings or losses for the relevant performance year, 
for good cause. Good cause may be established when: (1) there is new 
and material evidence that was not available or known at the time of 
the payment determination and may result in a different conclusion; or 
(2) the evidence that was considered in making the payment 
determination clearly shows on its face that an obvious error was made 
at the time of the payment determination.
    In the June 2016 Medicare Shared Savings Program final rule, we 
noted in response to comments, that in order to provide an opportunity 
for CMS to consider updated information and make other adjustments to 
payment determinations across all ACOs, and to minimize program 
disruptions for ACOs resulting from multiple reopenings, we would, to 
the extent feasible, use a unified reopening (as opposed to multiple 
reopenings) to correct errors for a given performance year (81 FR 
38001). In addition, we indicated that we would consider other ways to 
reduce operational burdens for both ACOs and CMS that could result from 
making payment adjustments to correct errors for good cause under the 
reopening provisions. For example, we explained that if, during the 4-
year time period following notification of the initial payment 
determination, we determine that a correction needs to be made to a 
prior performance year's results for good cause, we would seek to 
potentially adjust the shared savings payment to the ACO or the shared 
loss recoupment from the ACO for a subsequent performance year (81 FR 
38001). To illustrate, we stated that if an ACO that

[[Page 69869]]

generated shared savings for the second performance year of its 
agreement period owed CMS money based on a correction made to the 
payment determination for the prior performance year, we might be able 
to deduct the amount owed prior to making the shared savings payment 
for the current year (subject to the general Shared Savings Program 
requirement for ACOs to repay monies owed to CMS within 90 days of 
notification of the obligation). We also explained that ACOs would not 
be able to delay recoupment of any payments owed by notifying us of a 
possible error that could merit reopening (81 FR 38002). Instead, we 
stated that if we later determine that a correction should be made, we 
would subsequently combine, if feasible, the revised calculation of 
shared savings or shared losses for the affected performance year with 
the financial reconciliation for the most recent performance year. For 
example, we indicated that we would add any amount owed to the ACO as a 
result of a reopening, to any shared savings payment for which the ACO 
is eligible for the most recent performance year. We indicated that we 
expected to be able to provide ACOs with sufficient details regarding 
these corrections that they would be able to attribute the additional 
payment or recoupment arising from the reopening internally and, as 
applicable, distribute additional funds to or collect amounts from the 
appropriate ACO participants from the prior PY.
    Further, we explained that in considering when to reopen an error 
for good cause, we intend to strike a careful balance between important 
Medicare program integrity concerns that payments be made timely and 
accurately under the Shared Savings Program with our desire to minimize 
unnecessary operational burdens for ACOs and CMS, and to support the 
ACOs' ability to invest in additional improvements to increase quality 
and efficiency of care (81 FR 38001). To achieve this careful balance 
in objectives, for reopenings to address CMS technical errors, we 
indicated that we may consider whether an error satisfies a materiality 
threshold, such as when it affects 3 percent of the total amount of net 
shared savings and shared losses for all ACOs for the applicable 
performance year. This was a threshold based on guidance from the 
Government Accountability Office (GAO) for financial audits of Federal 
entities.\297\ We explained that although ACOs are not Federal 
entities, we believed it would be reasonable to consider the GAO 
guidance in determining when a technical error has a material effect 
across all ACOs, such that we should use our discretion to reopen for 
good cause.
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    \297\ GAO updated the guidance in 2020 and the recommended 
materiality threshold remains 3 percent. See Financial Audit Manual, 
Volume 1, Updated April 2020, 230-4, available at https://www.gao.gov/assets/gao-18-601g.pdf.
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    As finalized in the CY 2021 PFS final rule, beginning with PY 2021, 
Shared Savings Program ACOs are required to report quality data for 
purposes of the Shared Savings Program via the APP under the Quality 
Payment Program (85 FR 84720 through 84736). An ACO will meet the 
Shared Savings Program quality performance standard if the ACO achieves 
a quality performance score that is equivalent to or higher than the 
percentile specified for the relevant performance year, across all MIPS 
Quality performance category scores (Sec.  425.512(a)(3) and (4)). In 
the CY 2022 PFS final rule, we finalized an extended phase-in of the 
quality performance standard under the Shared Savings Program (Sec.  
425.512(a)(3) through (5); 86 FR 65266), which we discussed in detail 
in section III.G.4.b. of the proposed rule. In the proposed rule, we 
also explained that because ACOs are now reporting quality data via the 
APP and receiving MIPS Quality performance category scores, we are 
concerned that CMS may learn of errors in the calculation of MIPS 
Quality performance category scores after the Shared Savings Program 
has issued financial reconciliation reports (which are initial 
determinations of an ACO's financial performance for the applicable 
performance year). For this reason, we stated our belief that it would 
be appropriate to clarify the circumstances in which we would exercise 
our discretion to reopen the initial determination of an ACO's 
financial performance for good cause to correct errors in the 
determination of MIPS Quality performance category scores that affect 
the determination of whether an ACO is eligible for shared savings, the 
amount of shared savings due to the ACO, or the amount of shared losses 
owed by the ACO.
    We issue (typically in the summer) MIPS performance feedback 
reports for the previous performance year to MIPS eligible clinicians, 
eligible practices that submitted data as a group, virtual groups, and 
APM entities. For ACOs, the MIPS performance feedback report includes 
data on ACO quality performance, but does not indicate whether the ACO 
has met the Shared Savings Program's quality performance standard. Each 
ACO's MIPS Quality performance category score is calculated using the 
ACO's performance on the measures reported under the APP (ACO-reported 
measures, CAHPS for MIPS survey measure, claims-based measures), any 
applicable MIPS bonus points, and quality improvement points.\298\
---------------------------------------------------------------------------

    \298\ See 2021 APP Toolkit, 2021 APM Performance Pathway for 
Shared Savings Program Accountable Care Organizations (ACOs) Guide, 
slide 15, available at https://qpp-cm-prod-content.s3.amazonaws.com/uploads/1495/2021%20APM%20Performance%20Pathway%20(APP)%20Toolkit.zip.
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    MIPS eligible clinicians, groups and APM entities (such as ACOs) 
may request a targeted review of the calculation of the MIPS payment 
adjustment factor pursuant to Sec.  414.1385. The MIPS targeted review 
submission period starts once the MIPS performance feedback report is 
issued and remains open for 60 days with the reviews concluding on a 
rolling basis and may extend into October or November (Sec.  
414.1385(a)(2)). If a request for a targeted review is approved, CMS 
may recalculate, to the extent feasible and applicable, the scores with 
regard to measures, activities, performance categories (including the 
quality performance category), and the final score, as well as the MIPS 
payment adjustment factors (Sec.  414.1385(a)(6)). For Shared Savings 
Program ACOs, changes to MIPS Quality performance category scores could 
affect the quality performance standard and have an impact on the 
amount of shared savings earned or shared losses owed by the ACOs. 
Further, because we were proposing to incorporate a sliding scale 
approach as part of the quality performance standard, we also 
acknowledged that a change to an ACO's own MIPS Quality performance 
category score could have an impact on the amount of shared savings 
earned by the ACO or the amount of shared losses owed to CMS under the 
ENHANCED track.
    CMS aims to deliver the Shared Savings Program financial 
reconciliation reports that incorporate MIPS Quality performance 
category scores for the previous year to ACOs in August on an embargoed 
basis (that is, ACOs may not publicly release the information in these 
reports), and typically 2-3 weeks later an unembargoed basis, at which 
point ACOs can publicly share the information in the reports. Unlike 
the MIPS performance feedback reports, these reports indicate whether 
an ACO has met the Shared Savings Program's quality performance 
standard. In the proposed rule, we explained that under the proposed 
policies, an ACO's health

[[Page 69870]]

equity adjusted quality performance score for a performance year and 
the determination of whether the ACO met the Shared Savings Program 
quality performance standard would affect the determination of shared 
savings for that performance year and, for ACOs participating in the 
ENHANCED track, the amount of any shared losses owed. The unembargoed 
financial reconciliation reports constitute an initial determination of 
the ACO's financial performance for the applicable performance year. 
With the initial determination, we also send demand letters to ACOs 
that indicate the amount of shared losses that must be paid in full to 
CMS within 90 days of receipt. CMS initiates payments to ACOs that have 
earned shared savings for a performance year in September of the year 
following the applicable performance year in order to pay with the 
correct fiscal year funds. Given that the timeline for conducting a 
MIPS targeted review of the MIPS performance feedback report may extend 
past the date that we issue unembargoed financial reconciliation 
reports, we may learn of errors in the calculation of MIPS Quality 
performance category scores after the issuance of initial 
determinations of financial performance under the Shared Savings 
Program.
    In the CY 2023 PFS proposed rule, we explained our belief that it 
would be appropriate to clarify how we would exercise our discretion to 
reopen for good cause in the event of errors in the MIPS Quality 
performance category scores, such as those identified through the MIPS 
targeted review process, that affect the determination of whether an 
ACO is eligible for shared savings, the amount of shared savings due to 
the ACO, or the amount of shared losses owed by the ACO. We explained 
that we are contemplating an approach under which we would reopen 
initial determinations of ACO financial performance to account for any 
corrections that have been made to MIPS Quality performance category 
scores that affect the determination of whether an ACO is eligible for 
shared savings \299\ or the amount of shared savings or shared losses, 
with no restrictions on the magnitude of the error or the number of 
ACOs affected. Under this approach, the determination of whether there 
has been an error in the determination of a MIPS Quality performance 
category score that affects the determination of whether an ACO is 
eligible for shared savings, the amount of shared savings due to the 
ACO, or the amount of shared losses owed by the ACO; whether a 
correction would be warranted; and the timing of any correction would 
be within the sole discretion of CMS as provided in Sec.  
425.315(a)(4).
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    \299\ Unlike shared savings, the determination of whether an ACO 
is eligible for shared losses is not dependent upon whether the ACO 
meets the quality performance standard. If an ACO meets or exceeds 
the minimum loss rate, it will be responsible for sharing losses. 
See, for example, Sec.  425.610(b)(3).
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    For illustrative purposes, we described how a correction to a MIPS 
Quality performance category score, based on a targeted review or other 
changes to the MIPS Quality performance category score, could affect 
the determination of whether an ACO is eligible for shared savings. In 
this example, an ACO participating under the BASIC track received an 
initial determination indicating that it met the MSR requirement and 
that it met the quality performance standard because it achieved a MIPS 
Quality performance category score that is equivalent to or higher than 
the percentile specified as the quality performance standard for that 
performance year. Because the ACO was otherwise eligible to share in 
savings for the performance year, CMS issued an initial determination 
that the ACO was eligible to share in savings at the maximum sharing 
rate under its track (or payment model within a track). Several weeks 
after that initial determination is issued, CMS learns of an error in 
the calculation of the MIPS Quality performance category scores that 
caused the ACO's health equity adjusted quality performance score to be 
higher than it would have been absent the error. As a result, the ACO's 
actual health equity adjusted quality performance score was less than 
the percentile specified as the quality performance standard for that 
performance year. In this example, we would exercise our discretion to 
reopen the determination of the ACO's financial performance for good 
cause to correct the ACO's MIPS Quality performance category score. As 
a result of this correction, the ACO would no longer have a health 
equity adjusted quality performance score that is equivalent to or 
higher than the percentile specified as the quality performance 
standard for that performance year. Accordingly, the ACO would no 
longer meet the quality performance standard and thus would be 
ineligible for shared savings or alternatively might be eligible to 
receive a reduced shared savings payment in the event we finalize the 
proposed sliding scale approach.
    Alternatively, a correction to a MIPS Quality performance category 
score could affect the amount of shared savings or shared losses owed 
to an ACO. For example, an ACO under the ENHANCED track might receive 
an initial determination indicating that it owes shared losses to CMS 
calculated at the maximum shared loss rate because it: (1) exceeded the 
minimum loss rate; and (2) it failed to meet the quality performance 
standard for that performance year.\300\ Several months after that 
initial determination is issued, as a result of a MIPS targeted review, 
we learn of an error in the calculation of the ACO's MIPS Quality 
performance category score that caused the ACO's health equity adjusted 
quality performance score to be lower than it would have been without 
the error. In this case, we would exercise our discretion to reopen the 
determination of the ACO's financial performance for good cause to 
correct the ACO's MIPS Quality performance category score. In making 
this correction, the ACO now achieves a health equity adjusted quality 
performance score that causes it to meet the quality performance 
standard. While the ACO would still owe shared losses because it 
exceeded the minimum loss rate, the amount of shared losses it owes 
could be reduced based on the ACO's corrected health equity adjusted 
quality performance score as we would now determine the ACO's shared 
loss rate using a sliding scale approach.
---------------------------------------------------------------------------

    \300\ Section 425.610(f)(2)(ii). Under the current regulations, 
an ENHANCED track ACO that is liable for losses and fails to meet 
the quality performance standard automatically faces the maximum 
shared loss rate of 75 percent, whereas an ACO that meets the 
quality performance standard would face a shared loss rate that is 
scaled by the ACO's quality performance (subject to a minimum and 
maximum rate). We note that in the event we finalize our proposal to 
extend the sliding scale approach to determining shared losses to 
ENHANCED track ACOs that achieve a quality performance score 
equivalent to or higher than the 10th percentile of the performance 
benchmark on at least one of the four outcome measures in the APP 
measure set, a larger number of ACOs could potentially have their 
shared losses reduced as the result of a MIPS targeted review.
---------------------------------------------------------------------------

    As we explained in the proposed rule, in the event that we learn of 
errors in the calculation of MIPS Quality performance category scores 
(from a MIPS targeted review or some other MIPS Quality performance 
category score-related corrections) that change the percentile score an 
ACO must achieve in order to meet the quality performance standard, we 
would exercise our discretion to reopen the initial determination of an 
ACO's financial performance for good cause to correct errors in the 
determination of whether an ACO is eligible for shared savings, the 
amount of shared savings due to the ACO, or the amount of shared losses 
owed by the ACO due to the miscalculation of MIPS Quality

[[Page 69871]]

performance category scores. Moreover, as noted previously, if we 
determine that there is good cause to make a correction to a prior 
performance year's determination of ACO financial results as a result 
of corrections made to MIPS Quality performance category scores, we 
would seek to potentially adjust the shared savings payment to the ACO 
or any shared loss recoupment from the ACO for a subsequent performance 
year. This approach would not alter the current requirement that ACOs 
repay shared losses within 90 days after notification of the initial 
determination of shared losses.
    As we stated in the proposed rule, we believe this approach is 
flexible and balanced and would allow us to exercise our discretion to 
reopen initial determinations of ACO financial performance for good 
cause to account for any corrections that have been made to MIPS 
Quality performance category scores that affect the determination of 
whether an ACO is eligible for shared savings, the amount of shared 
savings due to the ACO, or the amount of shared losses owed by the ACO. 
We also acknowledged that from year to year, corrections could 
sometimes advantage individual ACOs and sometimes disadvantage 
individual ACOs.
    We sought comment on this clarification of the circumstances in 
which we would exercise our discretion to reopen for good cause when 
either an initial determination or a final agency determination 
regarding an ACO's financial performance needs to be corrected as a 
result of any corrections made to MIPS Quality performance category 
scores that affect the determination of whether an ACO is eligible for 
shared savings, the amount of shared savings due to the ACO, or the 
amount of shared losses owed by the ACO.
    The following is a summary of the public comments received on this 
clarification and our responses:
    Comment: Two commenters supported our clarification of the Shared 
Savings Program's authority to reopen for good cause an initial 
determination of an ACO's financial performance to correct errors in 
the determination of whether an ACO is eligible for shared savings, the 
amount of shared savings due to the ACO, or the amount of shared losses 
owed by the ACO due to the miscalculation of MIPS Quality performance 
category scores. Many commenters encouraged CMS to reconsider the 
approach discussed in the clarification and expressed concerns about 
the feasibility of returning savings to CMS and the disincentive that 
this would create for Shared Savings Program participation. These 
commenters recommended that if CMS continues with this approach, CMS 
should only reopen ACO financial determinations if the MIPS Quality 
performance category score error would result in a change that holds 
the ACO harmless (we understand this to refer to changes that do not 
result in the ACO returning funds to CMS or changes that do not reduce 
the amount of shared savings owed by CMS to the ACO), because it is 
unreasonable and not practical to expect ACOs to claw back savings from 
ACO participants after the funds have been distributed. One commenter 
explained that ACOs should not be penalized for errors that are 
discovered with MIPS Quality performance category scores after ACOs 
have already received initial financial reconciliation report 
calculations. Another commenter stated that while they understood the 
purpose of the approach discussed in the clarification, it creates 
uncertainty and instability in the program, which is counter to CMS' 
objectives to grow the program to include 100 percent of beneficiaries 
with original Medicare in a value-based care program by 2030.
    Response: We acknowledge the concerns raised by commenters about 
the challenges that could arise if a correction to a MIPS Quality 
performance category score either reduces the amount of shared savings 
previously calculated for an ACO or increases the amount of shared 
losses owed to CMS by an ACO. As we discussed in the proposed rule, 
however, where possible we would seek to adjust the shared savings 
payment to the ACO or any shared loss recoupment from the ACO as part 
of the reconciliation for a subsequent performance year. For example, 
if an ACO that generated shared savings for the second performance year 
of its agreement period owed CMS money based on a correction made to 
the payment determination for the prior performance year, we might be 
able to deduct the amount owed prior to making the shared savings 
payment for the current year (subject to the general Shared Savings 
Program requirement for ACOs to repay monies owed to CMS within 90 days 
of notification of the obligation). We also explained that ACOs would 
not be able to delay recoupment of any payments owed by notifying us of 
a possible error that could merit reopening. Instead, we stated that if 
we later determine that a correction should be made, we would 
subsequently combine, if feasible, the revised calculation of shared 
savings or shared losses for the affected performance year with the 
financial reconciliation for the most recent performance year. We 
indicated that we expected to be able to provide ACOs with sufficient 
details regarding these corrections that they would be able to 
attribute the additional payment or recoupment arising from the 
reopening internally and, as applicable, distribute additional funds to 
or collect amounts from the appropriate ACO participants from the prior 
PY.
    We believe this approach strikes an appropriate balance between 
important Medicare program integrity concerns that payments be made 
timely and accurately under the Shared Savings Program with our desire 
to minimize unnecessary operational burdens for ACOs and CMS, and to 
support the ACOs' ability to invest in additional improvements to 
increase quality and efficiency of care. Moreover, as discussed earlier 
in this section and in the proposed rule, the QPP issues MIPS 
performance feedback reports for the previous performance year prior to 
the release of the Shared Savings Program financial reconciliation 
reports (that incorporate MIPS Quality performance category scores). We 
intend to work with the QPP to identify potential errors to MIPS 
Quality performance category scores (through the MIPS targeted review 
process and other MIPS Quality performance category score-related 
corrections), so that we can resolve most, if not all, discrepancies or 
systemic issues prior to issuing the Shared Savings Program unembargoed 
financial reconciliation reports, which constitute the initial 
determination of the ACO's financial performance for the applicable 
performance year. Accordingly, we decline to adopt commenters' 
suggestions to reconsider the approach we discussed in the proposed 
rule.
    Comment: Several commenters recommended that CMS place a limit on 
the length of time that can pass between the initial determination of 
an ACO's financial performance and any reopening to retroactively 
change ACO financial determinations. Most of these commenters suggested 
this time limit be 12 months, and one commenter suggested 60 days. One 
commenter stated that it is not feasible for CMS to reopen the 
determination of an ACO's financial performance two or more years after 
the performance year, which often happens with MIPS adjustments. The 
commenter explained that CMS already delays shared savings payments to 
ACOs by up to 10 months after the end of the performance year, so it 
would be highly impractical for CMS to hold

[[Page 69872]]

ACOs accountable for MIPS errors that happen after the performance year 
reconciliation has occurred. The commenter emphasized that reopening 
financial determinations after the distribution of shared savings to 
participating physicians presents a very difficult operational issue 
for ACOs.
    Response: We acknowledge the concerns raised by commenters and the 
recommendations to impose a limit on the timeframe within which CMS 
would be able reopen initial determinations of ACO financial 
performance to account for any corrections that have been made to MIPS 
Quality performance category scores that affect the determination of 
whether an ACO is eligible for shared savings, or the amount of shared 
savings or shared losses. As we explained in the proposed rule, 
however, under Sec.  425.315, CMS may reopen the initial determination 
or a final agency determination under 42 CFR part 425 subpart I and 
issue a revised initial determination: (1) at any time in the case of 
fraud or similar fault as defined in Sec.  405.902; or (2) not later 
than 4 years after the date of the notification to the ACO of the 
initial determination of savings or losses for the relevant performance 
year, for good cause. Moreover, the determination of whether there is 
good cause to reopen a payment determination is within the sole 
discretion of CMS as provided in Sec.  425.315(a)(4) and any instances 
where it would be necessary to reopen an initial determination of an 
ACO's financial determination to correct MIPS Quality performance 
category scores would occur not later than 4 years after the date of 
the notification to the ACO of the initial determination, consistent 
with Sec.  425.315(a)(1)(ii). Therefore, we decline commenters' 
suggestions to further limit the length of time that can pass between 
financial reconciliation and a reopening of the initial determinations 
of an ACO's financial determination. We may revisit our approach in 
future notice and comment rulemaking, after we gain additional 
experience with the interactions between MIPS and Shared Savings 
Program calculations and the timing and frequency of any reopenings.
    Comment: Several commenters expressed concern that tying ACO 
quality performance thresholds to MIPS scores is inappropriate and 
makes unfair comparisons. These commenters urged CMS to adopt a 
different approach that does not tie Shared Savings Program quality 
performance determinations to MIPS quality performance category scores. 
Other commenters urged CMS to work closely with stakeholders in 
exploring alternative ways to align the timelines of MIPS errors 
reporting and ACO quality performance. One commenter mentioned that the 
MIPS program's error correction process under the QPP has not gone 
smoothly and the problems with that process should not be imported into 
financial reconciliation under the Shared Savings Program. Another 
commenter stated that it seems that either more alignment between the 
programs is needed to allow more time to complete the MIPS targeted 
review for MIPS before the Shared Savings Program issues initial 
determinations for financial reconciliation or there needs to be a 
separation between the programs for scoring purposes to resolve the 
issue of timing.
    Response: We note this clarification is limited to the approach we 
will follow in using our discretion to reopen under the Shared Savings 
Program to revise the initial determination of an ACO's financial 
performance to reflect updated MIPS scoring information. We appreciate 
the commenters' suggestions that we explore alternative ways to align 
the timelines of MIPS errors reporting and ACO quality performance and 
to improve alignment between the programs. We may consider these 
suggestions in the development of policies for future notice and 
comment rulemaking.
f. Screening for Social Drivers of Health and Screen Positive Rate for 
Social Drivers of Health Measures and Future Measure Development--
Request for Information (RFI)
    In the CY 2022 PFS proposed rule, we solicited comments on 
addressing health disparities and promoting health equity (86 FR 39269 
and 39270). We indicated our belief that assessing Shared Savings 
Program ACOs' quality performance on a broader population can have a 
positive impact on the quality of care for all groups, including 
Medicare beneficiaries (86 FR 39270). Additionally, we affirmed our 
expectation that the transition to all-payer eCQM/MIPS CQMs would help 
to address disparities and promote health equity by promoting a single 
standard of care across all patients receiving care from practices 
participating in Shared Savings Program ACOs regardless of location or 
racial/ethnic group (86 FR 39270). We sought comment and 
recommendations on how ACOs could utilize their resources to ensure all 
patients have access to equal care and how to improve the quality of 
care provided to certain communities, while addressing the disparities 
that currently exist in healthcare (86 FR 39270). Furthermore, we 
sought comment on how we could encourage health care providers serving 
vulnerable populations to participate in ACOs and other value-based 
care initiatives, including whether any adjustments should be made to 
quality measure benchmarks to take into account ACOs serving vulnerable 
populations (86 FR 39270).
    We received many comments in support of CMS' commitment to 
advancing health equity and addressing health disparities within the 
Shared Savings Program, including several comments supporting 
stratification of data and quality measures by social risk factors such 
as race and ethnicity and inclusion of health equity measures in the 
program. In addition, we received some feedback expressing concerns 
that eCQM/MIPS CQM measures would divert resources into electronic 
systems instead of focusing on health equity. Commenters also noted 
that changes to the payment structure under the Shared Savings Program 
could help ACOs improve infrastructure to address health equity and 
disparities. As we stated in the November 2011 final rule (76 FR 
67872), our principal goal in selecting quality measures for the Shared 
Savings Program 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.
    Health equity and addressing health disparities continue to be high 
priorities for the agency through inclusion of health equity 
initiatives in CMS programs, and better addressing the social needs of 
people with Medicare is an important part of this strategy. Communities 
experiencing persistent poverty or inequality tend to 
disproportionately experience unmet social needs.\301\ According to the 
U.S. Department of Health and Human Services Office of Disease 
Prevention and Health Promotion's Healthy People 2030, which has a 
strong focus on eliminating health disparities and creating equitable 
opportunities for people to live healthy lives, social determinants of 
health have a major impact on people's health, well-being, and quality 
of life. This report cites safe housing, transportation, neighborhoods 
and access to nutritious foods as examples of social determinants of 
health.\302\ For health care providers to

[[Page 69873]]

help improve health outcomes by addressing these needs for people with 
Medicare, there is growing evidence to support screening patients for 
social needs, referring patients who screen positive to local 
community-based organizations that can help patients address these 
needs, and finally ensuring that follow-up is obtained and the social 
needs are addressed. In addition, screening patients for social needs 
would allow clinicians to develop treatment plans, if needed, which 
would better capture a patient's unique needs and priorities.\303\
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    \301\ Centers for Medicare & Medicaid Services, Office of 
Minority Health, CMS Framework for Health Equity 2022-2032 (April 
2022), available at https://www.cms.gov/files/document/cms-framework-health-equity.pdf.
    \302\ U.S. Department of Health and Human Services Office of 
Disease Prevention and Health Promotion, Healthy People 2030, refer 
to website https://health.gov/healthypeople/priority-areas/social-determinants-health.
    \303\ AHRQ.gov, Identifying and Addressing Social Needs in 
Primary Care Settings, (2021), refer to https://www.ahrq.gov/sites/default/files/wysiwyg/evidencenow/tools-and-materials/social-needs-tool.pdf.
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    In the proposed rule, we sought comment on the potential future 
inclusion of two new structural measures in the APP measure set: 
Screening for Social Drivers of Health and Screen Positive Rate for 
Social Drivers of Health. The National Quality Forum (NQF) provided 
conditional support for these two measures during the 2021-2022 cycle 
and indicated the measures would be appropriate for consideration in 
the Shared Savings Program.\304\ The measure Screening for Social 
Drivers of Health assesses the percentage at which providers screen 
their adult patients for food insecurity, housing instability, 
transportation problems, utility help needs, and interpersonal safety. 
This screening for health-related social needs is consistent with the 
priorities of the agency and the Shared Savings Program, including 
Meaningful Measures 2.0 priority areas specific to equity. Meaningful 
Measures 2.0 includes addressing measurement gaps such as development 
and implementation of measures that reflect social and economic 
determinants.\305\
---------------------------------------------------------------------------

    \304\ National Quality Forum, Measure Applications Partnership 
(MAP), 2021-2022 Considerations for Implementing Measures in Federal 
Programs: Clinician, Hospital, and Post-Acute Care Long-Term Care, 
final report (March 3, 2022), available at website https://www.qualityforum.org/Publications/2022/03/MAP_2021-2022_Considerations_for_Implementing_Measures_Final_Report_-_Clinicians,_Hospitals,_and_PAC-LTC.aspx.
    \305\ Centers for Medicare & Medicaid Services, Meaningful 
Measures 2.0: Moving from Measure Reduction to Modernization, 
(2021), available at website https://www.cms.gov/meaningful-measures-20-moving-measure-reduction-modernization.
---------------------------------------------------------------------------

    The measure Screening for Social Drivers of Health assesses the 
rate at which providers screen beneficiaries 18 years and older for 
food insecurity, housing instability, transportation problems, utility 
help needs, and interpersonal safety.
    Below are the numerator and denominator for the measure:
     Numerator: The number of beneficiaries 18 and older 
screened for food insecurity, housing instability, transportation 
needs, utility assistance, and interpersonal violence.
     Denominator: The number of beneficiaries 18 and older in 
practice (or population).
    We refer readers to IV.A.10.c.(1)(c)(i) of the proposed rule and 
Table Group A of Appendix 1 of the proposed rule, where we discuss the 
proposed health equity measure for purposes of MIPS, ``Screening for 
Social Drivers of Health.'' We refer readers to section 
IV.A.10.c.(1)(d) of the proposed rule for the request for information 
regarding measure development related to health equity under MIPS.
    If the measure is adopted in the traditional MIPS program, we noted 
that we will consider proposing, in future rulemaking, the addition of 
this measure as an eCQM/MIPS CQM under the APP beginning in PY 2025, 
once the Web Interface reporting option sunsets and the transition to 
reporting eCQMs/MIPS CQMs is complete. It is important to note that the 
measure specifications are not being developed for electronic health 
record (EHR) reporting at this time, but would be considered for 
purposes of any future rulemaking.
    Per the Measure Applications Partnership 2021-2022 Considerations 
for Implementing Measures in Federal Programs: Clinician, Hospital, and 
Post-Acute Care Long-Term Care final report,\306\ this measure would 
also address a significant performance gap ``in which 84 percent of 
physician offices do not screen for all five needs, even though 
approximately one-third of patients would screen positive for one or 
more social needs.'' We believe the potential inclusion of this measure 
in the APP measure set reported by Shared Savings Program ACOs could 
advance health equity by ensuring ACO participants better understand 
the needs of the patients that they serve. We expect that, by screening 
for these social determinants of health, the ACO would accomplish the 
first step in helping people with Medicare address their social needs--
understanding their needs. This screening would also enable clinicians 
to develop treatment plans, if needed, that are focused on 
beneficiaries' unique needs and priorities. We may consider including 
additional quality measures in the future that would assess how well 
ACOs address the social needs of Medicare beneficiaries more directly. 
We noted that any changes to the measures included in the APP measure 
set, including the addition of new measures, would be proposed through 
future rulemaking.
---------------------------------------------------------------------------

    \306\ National Quality Forum, Measure Applications Partnership 
(MAP), 2021-2022 Considerations for Implementing Measures in Federal 
Programs: Clinician, Hospital, and Post-Acute Care Long-Term Care, 
final report (March 3, 2022), available at website https://www.qualityforum.org/Publications/2022/03/MAP_2021-2022_Considerations_for_Implementing_Measures_Final_Report_-_Clinicians,_Hospitals,_and_PAC-LTC.aspx.
---------------------------------------------------------------------------

    We sought input on Screen Positive Rate for Social Drivers of 
Health, which assesses the percentage of patients who screened positive 
for health-related social needs. We also sought feedback from ACOs and 
other interested parties on the value of implementing a quality measure 
that indicates a patient's social needs as a part of the quality of 
care provided to them.
    We solicited comments on the potential addition of these two social 
determinant of health measures to the APP measure set reported under 
the Shared Savings Program if these measures are adopted for the 
traditional MIPS program and other ways to incorporate health equity 
into public reporting. We also sought comment on the following:
     How to best implement the measures and how they could 
further drive health equity and health outcomes under the Shared 
Savings Program?
     What are the possible barriers to implementation of the 
measures in the Shared Savings Program?
     What impact would the implementation of these measures in 
the Shared Savings Program have on the quality of care provided for 
underserved populations?
     What type of flexibility with respect to the social 
screening tools should be considered should the measures be 
implemented? While supporting flexibility, how can we advance the use 
of standardized, coded health data within screening tools?
     Should the measures, if implemented in the future, be 
considered pay-for-reporting measures?
    In the CY 2023 PFS proposed rule (87 FR 45860), we solicited 
comments on the inclusion of the Screening for Social Drivers of Health 
and Screen Positive Rate for Social Drivers of Health Measures in the 
APP measure set for ACOs. We also solicited comments on implementation 
best practices, barriers to implementation, impact of implementation, 
flexibilities that should be considered, and if the measures should be 
considered pay-for-reporting.

[[Page 69874]]

    We appreciate the feedback we received in response to this comment 
solicitation. We may consider this information to inform future 
rulemaking.
g. Addition of New Consumer Assessment of Healthcare Providers and 
Systems (CAHPS) for the Merit-Based Incentive Payment System (MIPS) 
Survey Questions--Request for Information (RFI)
    We sought to gather ACOs and other interested parties input on the 
potential and modified questions in the CAHPS for MIPS Survey 
pertaining to health disparities and price transparency, which would 
support implementation of the No Surprises Act. The No Surprises Act 
includes provisions specific to improvements in transparency and 
greater oversight of prescription drug and medical costs.
    The CAHPS for MIPS Survey measures 10 key domains of patients' 
experience of care that are referred to as summary survey measures 
(SSMs) and include the following:

 Getting Timely Care, Appointments, and Information
 How Well Providers Communicate
 Patient's Rating of Provider
 Access to Specialists
 Health Promotion and Education
 Shared Decision Making
 Courteous and Helpful Office Staff
 Care Coordination
 Stewardship of Patient Resources
 Health Status and Functional Status

    CAHPS surveys are an integral part of the Shared Savings Program's 
efforts to meaningfully assess patient experience and have been a 
requirement of the program since the November 2011 final rule 
establishing the Shared Savings Program (76 FR 67872). We stated in 
that final rule that we believe there is evidence that the CAHPS survey 
assesses important aspects of provider-patient interaction that can be 
influenced by an ACO's level of organizational support, training and 
incentive structure (76 FR 67874). In the CY 2021 PFS final rule (85 FR 
84722), we finalized that beginning in PY 2021, Shared Savings Program 
Accountable Care Organizations (ACOs) are required to report quality 
data via the APP. As part of the APP, Shared Savings Program ACOs are 
required to administer the CAHPS for MIPS survey (85 FR 84730 through 
84732).
    The No Surprises Act,\307\ which took effect on January 1, 2022, 
includes provisions such as billing protections for consumers covered 
under group and individual health plans, as well as certain 
improvements to transparency and oversight of prescription drug and 
medical costs (86 FR 36872). The No Surprises Act aligns with President 
Biden's goals of increased transparency, competition, and fairness 
across healthcare systems.\308\ We are firmly committed to the 
advancement of the President's vision for health care and the resulting 
benefits, which include empowerment of consumers in making more 
informed and value-based health care decisions. We believe certain 
provisions of the No Surprises Act are relevant in consideration of the 
questions we are seeking input on for the CAHPS for MIPS survey. The 
Office of Personnel Management, the Internal Revenue Service, the 
Department of Labor, and CMS issued an interim final rule with comment 
period entitled ``Requirements Related to Surprise Billing; Part 1'', 
which appeared in the July 13, 2021 Federal Register (86 FR 36872). 
This interim final rule notes that regulations promulgated under the No 
Surprises Act should ensure that all individuals, particularly those 
from underserved and minority communities, trust and believe 
information they receive related to healthcare costs and coverage (86 
FR 36875). The agencies also note that regulations issued pursuant to 
the No Surprises Act should encourage regulated entities to address 
barriers to access of care, including trust concerns with the health 
care system, and to communicate with individuals in a language they can 
understand, in a respectful way that addresses cultural differences, 
and at an appropriate level of literacy (86 FR 36875).
---------------------------------------------------------------------------

    \307\ Title I of Division BB of the Consolidated Appropriations 
Act, 2021, Public Law 116-260.
    \308\ Centers for Medicare & Medicaid Services, HHS Kicks Off 
New Year with New Protections from Surprise Medical Bills, (2022), 
available at website https://www.cms.gov/newsroom/press-releases/hhs-kicks-new-year-new-protections-surprise-medical-bills.
---------------------------------------------------------------------------

    As previously described in this section of the proposed rule, in 
developing policies for the Shared Savings Program, we are also 
committed to prioritizing the advancement of health equity through 
program initiatives with a focus on underserved populations, improving 
data collection and analysis on health disparities, and incorporating 
actionable measures addressing health disparities in future notice and 
comment rulemaking.
    An article in the Journal of the American Medical Association 
titled Patient-Reported Experiences of Discrimination in the US Health 
Care System describes a cross-sectional national survey conducted in 
2019 that included 3,253 US adults. This survey was designed to 
determine the prevalence, frequency and main types of discrimination 
experienced in the health care system.\309\ Of the 2,137 survey 
respondents, 458 (21.4 percent) indicated they had experienced 
discrimination in the health care system, and 330 (72 percent) of those 
who had experienced discrimination reported experiencing it on more 
than one occasion. The most frequently reported type of discrimination 
experienced in the health care system was racial/ethnic discrimination, 
followed by educational or income level discrimination, weight, sex and 
age. According to the authors, the survey results suggested that health 
care discrimination experiences were more prevalent than previously 
recognized and a need existed for additional analysis of how 
discrimination related to structural inequities and social determinants 
of health.
---------------------------------------------------------------------------

    \309\ Nong P, Raj M, Creary M, Patient-Reported Experiences of 
Discrimination in the US Health Care System, JAMA Network, (2020), 
available at https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2774166.
---------------------------------------------------------------------------

    One of the additional questions that we are considering adding to 
the CAHPS survey would be specific to health disparities and focuses on 
the patient's experience with discrimination based on the 
characteristics of the patient. We sought input on the following 
question: ``In the last 6 months, did anyone from a clinic, emergency 
room, or doctor's office where you got care treat you in an unfair or 
insensitive way because of any of the following things about you? '' We 
noted the potential responses include; health condition, disability, 
age, culture, sex (including sexual orientation and gender identity) 
and income. We sought feedback on additional or modified potential 
response categories for this health disparities question. We noted that 
feedback received through the RFI, along with analysis and findings 
from the testing of the survey question in other programs and future 
testing in this program would be used to inform future rulemaking.
    We also noted that we believe that the question aligns with the 
goals of the quality performance standard under the Shared Savings 
Program. Section 1899(b)(3)(C) of the Act provides that the Secretary 
shall establish quality performance standards to assess the quality of 
care furnished by ACOs, and the Secretary shall seek to improve the 
quality of care furnished by ACOs over time, in part, by specifying new 
measures. Inclusion of this question to the CAHPS for MIPS Survey would 
allow CMS to better understand the extent to which patients perceive

[[Page 69875]]

discrimination in their health care, in alignment with HHS efforts to 
provide culturally and linguistically appropriate services (CLAS). The 
National CLAS Standards, were developed by the HHS Office of Minority 
Health and provide a blueprint for individuals and healthcare 
organizations to implement services that are respectful of health 
beliefs, practices and needs of diverse patients with the goal to 
advance health equity, improve quality of services and assist with 
elimination of disparities.\310\ In addition, the Behavioral Health 
Implementation Guide for the National Standards for Culturally and 
Linguistically Appropriate Services in Health and Health Care 
(Behavioral Health Guide) underscores the ways in which the National 
CLAS Standards can improve access to behavioral health care, promote 
quality behavioral health programs and practice, and ultimately reduce 
persistent disparities in mental health and substance use treatment for 
underserved minority communities.\311\
---------------------------------------------------------------------------

    \310\ U.S. Department of Health and Human Services Office of 
Minority Health, Cultural and Linguistic Competency, National CLAS 
Standards, (2021), available at website https://www.minorityhealth.hhs.gov/omh/browse.aspx?lvl=1&lvlid=6.
    \311\ U.S. Department of Health and Human Services Office of 
Minority Health, Behavioral Health Implementation Guide for the 
National Standards for Culturally and Linguistically Appropriate 
Services in Health and Health Care, available at https://www.minorityhealth.hhs.gov/Assets/PDF/clas%20standards%20doc_v06.28.21.pdf.
---------------------------------------------------------------------------

    In addition, inclusion of a health disparities question in the 
CAHPS for MIPS survey would align with the five priorities outlined in 
the CMS Framework for Health Equity 2022-2032.\312\ The priorities 
include both system and community level approaches for achievement of 
equity in Medicare and include:
---------------------------------------------------------------------------

    \312\ Centers for Medicare & Medicaid Services, CMS Framework 
for Health Equity, available at website https://www.cms.gov/About-CMS/Agency-Information/OMH/equity-initiatives/framework-for-health-equity. See also, Centers for Medicare & Medicaid Services, Office 
of Minority Health, CMS Framework for Health Equity 2022-2032 (April 
2022), available at https://www.cms.gov/files/document/cms-framework-health-equity.pdf.
---------------------------------------------------------------------------

     Priority 1: Expand the Collection, Reporting and Analysis 
of Standardized Data;
     Priority 2: Assess Causes of Disparities Within CMS 
Programs and Address Inequities in Policies and Operations to Close 
Gaps;
     Priority 3: Build Capacity of Health Care Organizations 
and the Workforce to Reduce Health and Health Care Disparities;
     Priority 4: Advance Language Access, Health Literacy, and 
the Provision of Culturally Tailored Services; and
     Priority 5: Increase All Forms of Accessibility to Health 
Care Services and Coverage.
    In addition, we noted that we believe that the inclusion of a 
health disparity question in the CAHPS for MIPS Survey would assist CMS 
in understanding the patient's perspective of their treatment during 
health care visits, as well as provide insight for health care 
providers on how to improve upon patient interactions, promotion of 
health equity and delivery of care. In addition, this question is 
already being tested in the Medicare Advantage program and based on the 
findings from this testing in the Medicare Advantage program, we may 
consider including this question in the CAHPS for MIPS survey through 
future rulemaking. Including the question in the CAHPS for MIPS survey 
would provide consistency across CMS programs in learning more about 
patient experiences with discrimination from various health care 
providers.
    We also sought input on the addition of questions to the CAHPS for 
MIPS survey specific to price transparency. These questions would build 
upon the goals of the No Surprises Act to improve transparency and 
oversight of drug and medical costs, allowing patients to have more 
information on which to base their healthcare decisions. We also noted 
that the questions under consideration are patient focused, which is 
one of the goals of the CAHPS for MIPS survey. Currently, the CAHPS for 
MIPS survey includes the question ``In the last 6 months, did you and 
anyone on your health care team talk about how much your prescription 
medicines cost?'' \313\ We considered adding a question that would be 
more general in nature and encompass additional areas of a patient's 
care, such as whether the patient talked with anyone on their health 
care team about the cost of health care services and equipment. An 
additional question or questions encompassing a patient's health care 
costs would allow us to better understand how extensively health care 
providers are considering and discussing costs with their patients, so 
they are more able to make informed health care decisions. We noted 
that we believe the inclusion of such questions would also support the 
goals of the Shared Savings Program which include promotion of 
accountability for patient populations and fostering coordination of 
items and services under Medicare Parts A and B. The program also 
encourages investment in infrastructure and redesigned care processes 
for high quality and efficient health care service delivery. ACOs work 
to reduce fragmentation in patient care and cost by giving their ACO 
participants and ACO providers/suppliers the incentives and tools to 
deliver high-quality, coordinated, team-based care that proactively 
promotes improved health for all patients.\314\
---------------------------------------------------------------------------

    \313\ Centers for Medicare & Medicaid Services, 2022 CAHPS for 
MIPS Survey Sample Copy, (2022), available at QPP Resource Library 
website https://qpp-cm-prod-content.s3.amazonaws.com/uploads/1894/2022%20CAHPS%20for%20MIPS%20Survey%20Sample%20Copy.pdf.
    \314\ Centers for Medicare & Medicaid Services, Affordable Care 
Act's Shared Savings Program Continues to Improve Quality of Care 
While Saving Medicare Money During COVID-19 Pandemic, (2021), 
available at website https://www.cms.gov/newsroom/press-releases/affordable-care-acts-shared-savings-program-continues-improve-quality-care-while-saving-medicare.
---------------------------------------------------------------------------

    We also noted that we considered revisions to the CAHPS for MIPS 
Survey measure in order to make it more broadly applicable to specialty 
groups in addition to primary care groups. In particular, we solicited 
public comment on shortening the survey to remove survey items that are 
relevant only to primary care providers. Alternately, we noted that we 
may create an alternate shortened survey version for specialty groups 
while maintaining the existing survey questions for primary care 
groups.
    In summary, we sought information and feedback from commenters on: 
(1) the potential future inclusion of health disparities and price 
transparency questions and whether there are other questions that 
should also be considered for potential future inclusion in the CAHPS 
for MIPS survey; and (2) whether they have any input on creating a 
shortened version of the CAHPS for MIPS Survey measure such that it is 
more applicable to specialty groups. Feedback received through this 
RFI, along with analysis and findings from the testing of the survey 
questions in other programs and future testing in this program would be 
considered to inform future rulemaking, as previously indicated.
    We appreciate the feedback we received in response to this comment 
solicitation. We may consider this information to inform future 
rulemaking.
5. Financial Methodology
a. Overview
    In the CY 2023 PFS proposed rule (87 FR 46157 through 46202), we 
proposed modifications to the financial methodologies used under the 
Shared Savings Program. We proposed a combination of modifications to 
the

[[Page 69876]]

Shared Savings Program's benchmarking methodology and financial models 
to encourage sustained participation by ACOs in the program and remove 
barriers for ACOs serving medically complex and low-income populations. 
Specifically, we proposed to revise the benchmarking methodology by: 
incorporating a prospective, external factor for updating the benchmark 
(section III.G.5.c.(3) of the proposed rule); adjusting rebased 
benchmarks to account for an ACO's prior savings (section III.G.5.c.(4) 
of the proposed rule); and reducing the impact of negative regional 
adjustments on ACO benchmarks (section III.G.5.c.(5) of the proposed 
rule). We also sought comment on alternatives to the combination of 
policies in sections III.G.5.c.(3) through (5) which would be aimed at 
addressing concerns about the effect of an ACO's assigned beneficiaries 
on regional FFS expenditures used in establishing, adjusting, updating, 
and resetting an ACO's historical benchmark (section III.G.5.c.(6) of 
the proposed rule). We also proposed changes to how we calculate 
regional factors used in benchmarking to reflect differences in 
prospective and preliminary prospective assignment (section III.G.5.d. 
of the proposed rule), how we conduct annual risk adjustment to better 
account for medically complex, high cost populations and to guard 
against coding initiatives (section III.G.5.e. of the proposed rule), 
and we proposed a methodology to increase opportunities for low revenue 
ACOs participating in the BASIC track to share in savings (section 
III.G.5.f. of the proposed rule). We discussed ongoing considerations 
of the impact of the PHE for COVID-19 on ACO expenditures (section 
III.G.5.g. of the proposed rule), and we proposed to exclude from the 
determination of Medicare Parts A and B expenditures for purposes of 
calculations under the Shared Savings Program a proposed new 
supplemental payment under the IPPS for IHS/Tribal Hospitals and 
hospitals located in Puerto Rico (section III.G.5.h. of the proposed 
rule). We concluded with a discussion of the proposed modifications to 
42 CFR part 425, subpart G (section III.G.5.i. of the proposed rule), 
to incorporate the related proposed changes discussed throughout 
section III.G.5 of the proposed rule, as well as certain technical and 
conforming changes, and corrections. Within this section of this final 
rule we summarize and respond to public comments on these topics.
    Comment: Some commenters expressed concern that several of the 
proposed changes to the financial methodology would only go into effect 
for ACOs entering a new agreement period in 2024 or a subsequent year. 
Many of these commenters suggested that CMS allow ACOs the option of 
opting into the proposed changes without having to complete the early 
renewal process or wait until they enter a new agreement period.
    Response: We decline the commenters' suggestions. ACOs will be 
subject to the changes we are finalizing to the Shared Savings 
Program's financial methodology on an agreement period basis, unless 
specified otherwise. Specifically, the changes in the benchmarking 
methodology (as discussed in sections III.G.5.c-e of this final rule) 
and to allow for increased opportunities for low revenue ACOs 
participating in the BASIC track to share in savings (as discussed in 
section III.G.5.f of this final rule) will be applicable to ACOs 
entering a new agreement period beginning on or after January 1, 2024. 
However, as discussed in section III.G.5.h of this final rule, the 
policies we are finalizing to account for supplemental payment to IHS/
Tribal hospitals and hospitals located in Puerto Rico in expenditure 
and revenue calculations under the Shared Savings Program will be 
applicable to all ACOs for the performance year beginning January 1, 
2023, and subsequent performance years.
    We believe the timing of applicability for the benchmarking changes 
will allow sufficient time for current ACOs to decide whether to renew 
for a new agreement period under the Shared Savings Program, for 
providers/suppliers to consider the business case for forming or 
joining a Shared Savings Program ACO, and for CMS to prepare to 
implement these changes.
    Further, we do not believe it is desirable to implement an approach 
that would allow each ACO to select from a menu of options for 
customizing the benchmark methodology that would apply in any given 
performance year during an agreement period. An approach that allows an 
ACO to choose the more favorable of several methodologies for 
establishing its cost target would exacerbate our concerns about the 
potential for benchmarks to become overly inflated to the point where 
ACOs need to do little to maintain or change their care practices to 
generate savings. We are concerned that this flexibility could lead to 
opportunities for arbitrage and may dull incentives for ACOs to improve 
their performance under the Shared Savings Program. Further, doing so 
would introduce considerable operational complexity into the program's 
benchmarking methodology.
    As the commenters point out, ACOs have the option to ``early 
renew'', meaning to terminate their current participation agreement 
under Sec.  425.220 and immediately enter a new agreement period to 
continue participation in the Shared Savings Program. (See paragraph 
(2) of the definition of ``renewing ACO'' in Sec.  425.20, and 83 FR 
67885 through 67890, and the application procedures set forth in Sec.  
425.224.) Early renewal would allow a currently participating ACO to be 
subject to the modified financial methodology policies applicable to 
agreement periods beginning on January 1, 2024, and in subsequent 
years, sooner than if the ACO were to wait to renew to continue its 
participation in the Shared Savings Program after completing its 
current agreement period of at least 5 years. We note that early 
renewing, like renewing upon completion of an agreement period, will 
result in rebasing of the ACO's historical benchmark, and will affect 
the ACO's eligibility for certain participation options (refer to 
section III.G.2. of this final rule), as well as the agreement period 
the ACO is entering for purposes of applying program requirements that 
phase-in over multiple agreement periods (refer to Sec.  425.600(f)).
    Comment: One commenter supported several of the proposed changes to 
the financial methodology, but expressed concern over the Shared 
Savings Program becoming increasingly complex and changing frequently. 
The commenter expressed concern that this could create a barrier to 
participation in the Shared Savings Program as sophisticated modeling 
is necessary to determine if an ACO has a chance for success in the 
program.
    Response: The financial methodology changes we proposed primarily 
build on the current Shared Savings Program policies. We do not believe 
that the changes to the financial methodology we are finalizing in this 
final rule create additional complexity that will create barriers to 
participation in the Shared Savings Program, and we remain committed to 
updating our specifications documents, programmatic resources, and 
other materials to support ACOs in understanding the financial 
methodology that is applicable to their agreement period, and to 
provide ACOs with aggregate reports and beneficiary-identifiable claims 
data, in accordance with the requirements specified in 42 CFR part 425 
subpart H, to support ACOs participating in the Shared Savings Program.

[[Page 69877]]

    Further, as explained in section III.G.1.a of this final rule, we 
are balancing incentives and participation options to serve a dual 
purpose of sustaining participation by existing ACOs and increasing 
program growth, recognizing that ACOs vary in their composition of 
providers/suppliers, the needs of the populations they serve, and have 
varying degrees of efficiency relative to their region and experience 
with accountable care initiatives. We proposed modifications to 
strengthen financial incentives for long term participation in the 
Shared Savings Program by reducing the impact of ACOs' performance and 
market penetration on their benchmarks, and to support the business 
case for ACOs serving high risk and high dually eligible populations to 
participate. We continue to believe that such policies will help 
sustain current participation and grow the Shared Savings Program, 
which in turn will outweigh any potential drawbacks of making these 
changes, such as additional programmatic complexity.
b. Statutory and Regulatory Background on Establishing and Updating the 
Benchmark and Determining Savings
    Section 1899(d)(1)(B)(i) of the Act specifies that, in each year of 
the agreement period, an ACO is eligible to receive payment for shared 
savings only if the estimated average per capita Medicare expenditures 
under the ACO for Medicare FFS beneficiaries for Parts A and B 
services, adjusted for beneficiary characteristics, is at least the 
percent specified by the Secretary below the applicable benchmark under 
section 1899(d)(1)(B)(ii) of the Act. Section 1899(d)(1)(B)(ii) of the 
Act addresses how ACO benchmarks are to be established and updated 
under the Shared Savings Program. This provision specifies that the 
Secretary shall estimate a benchmark for each agreement period for each 
ACO using the most recent available 3 years of per beneficiary 
expenditures for Parts A and B services for Medicare FFS beneficiaries 
assigned to the ACO. This benchmark shall be adjusted for beneficiary 
characteristics and such other factors as the Secretary determines 
appropriate and updated by the projected absolute amount of growth in 
national per capita expenditures for Parts A and B services under the 
original Medicare FFS program, as estimated by the Secretary. The 
benchmark shall be reset at the start of each agreement period. In 
addition to the statutory benchmarking and savings determination 
methodology established in section 1899(d) of the Act, section 
1899(i)(3) of the Act grants the Secretary the authority to use other 
payment models, including payment models that would use alternative 
benchmarking and savings determination methodologies, if the Secretary 
determines that doing so would improve the quality and efficiency of 
items and services furnished under the Medicare program and that the 
alternative methodology would result in program expenditures equal to 
or lower than those that would result under the statutory payment 
model.
    The rules governing the benchmarking calculations and determination 
of shared savings and losses are set forth in the regulations at 42 CFR 
part 425, subpart G. In the November 2011 final rule establishing the 
Shared Savings Program, we adopted policies for establishing, updating, 
and resetting the benchmark at Sec.  425.602. The Shared Savings 
Program's regulations have since evolved to include different 
benchmarking methodologies, including modifications to Sec.  425.602, 
and the addition of separate benchmarking policies for ACOs entering a 
second or subsequent agreement period at Sec.  425.603. Benchmarking 
policies applicable to all ACOs in agreement periods beginning on July 
1, 2019, and in subsequent years, are specified in Sec.  425.601. We 
refer readers to discussions of the benchmark calculations in earlier 
rulemaking for details on the development of the current policies (see 
November 2011 final rule, 76 FR 67909 through 67927; June 2015 final 
rule, 80 FR 32785 through 32796; June 2016 final rule, 81 FR 37953 
through 37991; and December 2018 final rule, 83 FR 68005 through 
68030).
    Calculations related to determination of shared savings and shared 
losses are specified in Sec.  425.605 for ACOs participating under the 
BASIC track, and Sec.  425.610 for ACOs participating under the 
ENHANCED track (formerly referred to as Track 3). In the June 2015 
final rule, CMS established Track 3, constituting the program's highest 
level of risk and potential reward (80 FR 32771 through 32781). In the 
December 2018 final rule, CMS renamed Track 3 the ENHANCED track (see, 
for example, 83 FR 67841), and established the BASIC track, which 
includes a glide path with five Levels (A through E) (83 FR 67841 
through 67857). The BASIC track's glide path allows eligible ACOs to 
begin under a one-sided model and incrementally advance to higher 
levels of risk and reward. We refer the reader to earlier rules for 
details on the development of the current policies for determining 
shared savings and losses under the BASIC track and ENHANCED track.
    In the May 8, 2020, COVID-19 IFC (85 FR 27578 through 27582), we 
established adjustments to benchmark and performance year expenditure 
calculations to address the COVID-19 pandemic as specified under Sec.  
425.611. In the CY 2021 PFS final rule (85 FR 84771 through 84785), we 
summarized and responded to public comments received on these 
adjustments, and finalized the regulation at Sec.  425.611 with 
modifications.
    Details on the Shared Savings Program's financial methodology are 
included in Specifications documents. Refer to the Medicare Shared 
Savings Program, Shared Savings and Losses and Assignment Methodology 
Specifications (version #10, January 2022), available at https://www.cms.gov/files/document/medicare-shared-savings-program-shared-savings-and-losses-and-assignment-methodology-specifications.pdf-1. For 
details on Shared Savings Program policies to address the impact of the 
COVID-19 pandemic and the resulting public health emergency (PHE), 
refer to the Medicare Shared Savings Program, Shared Savings and Losses 
and Assignment Methodology, Specifications of Policies to Address the 
Public Health Emergency for COVID-19 (December 2020), available at 
https://www.cms.gov/files/document/medicare-shared-savings-program-shared-savings-and-losses-and-assignment-methodology-specifications.pdf.
c. Strengthening Participation by Reducing the Effect of ACO 
Performance on Historical Benchmarks, Addressing Market Penetration, 
and Strengthening Incentives for ACOs Serving Medically Complex and 
High Cost of Care Populations
(1) Regulatory Background
    To establish an ACO's historical benchmark for an agreement period, 
CMS uses ACO historical expenditures for beneficiaries that would have 
been assigned to the ACO in the 3 most recent years prior to the start 
of the agreement period. As the statute requires the use of historical 
expenditures to establish an ACO's benchmark, the per capita costs for 
each benchmark year must be trended forward to current year dollars and 
then a weighted average is used to obtain the ACO's historical 
benchmark. Section 1899(d)(1)(B)(ii) of the Act also requires that the 
benchmark shall be updated by the projected absolute amount of growth 
in national per capita expenditures for

[[Page 69878]]

Parts A and B services under the original Medicare FFS program. 
Therefore, in the November 2011 final rule establishing the Shared 
Savings Program, we adopted policies for trending forward expenditures 
for benchmark year (BY) 1 and BY2 to BY3 dollars (76 FR 67924 and 
67925), and for updating the benchmark for each performance year during 
the ACO's agreement period (76 FR 67925 through 67927).
    Over the 10 years since the Shared Savings Program was first 
established, we have used a variety of approaches for determining the 
trend and update factors to make an ACO's cost target more independent 
of its own expenditures, including using factors based on national 
expenditures, regional expenditures, or both. With these approaches, we 
have maintained a degree of parity between the factors used to trend 
and update the benchmark, either based on national FFS expenditures, 
regional FFS expenditures, or a blend of national and regional FFS 
expenditures.
    In the November 2011 final rule establishing the Shared Savings 
Program, we adopted policies at Sec.  425.602 establishing trend and 
update factors based on national FFS expenditures (76 FR 67924 through 
67927). We finalized use of a national growth rate in Medicare Parts A 
and B expenditures for FFS beneficiaries for trending forward BY1 and 
BY2 to BY3 dollars. We also finalized use of a flat dollar equivalent 
of the projected absolute amount of growth in national per capita 
expenditures for Parts A and B services under the Original Medicare FFS 
program to update the benchmark for each performance year of the 
agreement period. We described our belief that using a trend factor 
based on a national growth rate in Medicare Parts A and B expenditures 
and an update factor calculated as a flat dollar amount equivalent of 
the projected absolute amount of growth in national FFS expenditures 
provides a relatively higher expenditure benchmark for low growth/low 
spending ACOs and a relatively lower benchmark for high growth/high 
spending ACOs. ACOs in high cost high growth areas would therefore have 
an incentive to reduce their rate of growth to bring their costs more 
in line with the national average; while ACOs in low cost low growth 
areas would have an incentive to maintain or improve their overall 
lower spending levels (76 FR 67924 through 67927).
    In the June 2015 final rule, we adopted policies for resetting the 
benchmark for ACOs entering a second agreement period in 2016 at Sec.  
425.603(b) (80 FR 32786 through 32796). These policies addressed 
concerns about the use of an ACO's prior performance years as benchmark 
years in second and subsequent agreement periods \315\ by weighting 
each benchmark year equally and incorporating an adjustment to account 
for the average per capita amount of savings generated during the ACO's 
prior agreement period. We refer to this adjustment as a ``prior 
savings adjustment.'' We believed that incorporating a prior savings 
adjustment into the benchmarking methodology for renewing ACOs entering 
a second agreement period in 2016 would encourage ongoing program 
participation by ACOs that had lowered expenditures during their first 
agreement period. We noted that absent this adjustment, an ACO that 
previously achieved success in the program may elect to terminate its 
participation in the program rather than face a lower benchmark that 
reflects the lower costs for its patient population during the 
performance years of its prior agreement period (80 FR 32788 through 
32791). When proposing this policy in the December 2014 proposed rule 
(79 FR 72838 and 72839), we highlighted the advantages of the prior 
savings adjustment, including increasing incentives for ACOs to remain 
in the program and continue generating shared savings and improving 
quality due to the prospect of a higher benchmark in future agreement 
periods. Furthermore, we hypothesized that adjusting benchmarks for 
prior performance would increase the likelihood of ACOs entering two-
sided risk models. The prior savings adjustment adopted in the June 
2015 final rule applied only to ACOs entering a second agreement period 
beginning in 2016 because we subsequently finalized an alternative 
methodology incorporating factors based on regional FFS expenditures to 
establish, adjust and update the benchmark for ACOs beginning a second 
or subsequent agreement period in 2017 and later years.
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    \315\ 79 FR 72835 and 72836.
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    In the June 2016 final rule (81 FR 37953 through 37991), we 
modified the benchmarking methodology to finalize an approach that 
incorporated factors based on regional FFS expenditures when resetting 
(or rebasing) and updating ACO historical benchmarks, as specified in 
Sec.  425.603(c) through (f). We replaced the national trend factor 
used in the rebasing methodology with a methodology incorporating 
regional trend factors. This revised rebasing methodology applied 
beginning in 2017 to determine rebased historical benchmarks for ACOs 
renewing for a second or subsequent agreement period under the Shared 
Savings Program. We also adopted a phased approach to adjusting the 
rebased benchmark to reflect a percentage of the difference between an 
ACO's historical expenditures and FFS expenditures in the ACO's 
regional service area. A higher percentage would be used in calculating 
this regional adjustment to the ACO's rebased historical benchmark for 
the ACO's third agreement period (or fourth agreement period for ACOs 
that entered a second agreement period in 2016) and all subsequent 
agreement periods. The finalized methodology also included an annual 
update to the rebased benchmark to account for changes in regional FFS 
spending, replacing the update based solely on the absolute amount of 
projected growth in national FFS spending. We finalized an approach to 
calculate regional FFS expenditures, which included defining an ACO's 
regional service area to include all counties where one or more 
beneficiaries assigned to the ACO reside, calculating risk-adjusted 
county FFS expenditures for the ACO's regional service area using the 
assignable beneficiary population residing in each of the counties 
included in the ACO's regional service area, and weighting county-level 
FFS costs by the proportion of the ACO's assigned beneficiaries in the 
county. The approach adopted in the June 2016 final rule was designed 
to address concerns about an ACO's influence on its historical 
benchmark by making the ACO's cost target more independent of its 
historical expenditures and more reflective of FFS spending in its 
region by incorporating regional expenditures into the determination of 
an ACO's historical benchmark and applying a methodology for risk 
adjustment that accounted for the health status of the ACO's assigned 
population in relation to FFS beneficiaries in the ACO's regional 
service area. This approach, which was sunset through subsequent 
rulemaking that was finalized in December 2018, applied to determine 
the rebased historical benchmark for ACOs that renewed their 
participation agreement for a second agreement period beginning on 
January 1, 2017, January 1, 2018, or January 1, 2019.
    In the December 2018 final rule (83 FR 68005 through 68030), we 
adopted policies at Sec.  425.601 that expanded the use of regional 
factors in establishing, adjusting, and resetting historical benchmarks 
to all ACOs, including ACOs in a first agreement period, for

[[Page 69879]]

agreement periods beginning on July 1, 2019, or in subsequent years. 
These policies sought to address concerns about ACOs influencing their 
own regional trends by using a blend of national and regional trend 
factors to trend forward BY1 and BY2 to BY3 when determining the 
historical benchmark under Sec.  425.601(a)(5) and a blend of national 
and regional update factors to update the historical benchmark to the 
performance year under Sec.  425.601(b) (83 FR 68024 through 68030). 
Under this approach, the weight applied to the national component of 
the blended trend and update factors increases with an ACO's 
penetration in its regional service area. We also finalized changes to 
limit the magnitude of the regional adjustment to address CMS' concerns 
about windfall gains for low-spending ACOs and to reduce disincentives 
for ACOs serving medically complex patients (83 FR 68017 through 
68024). Specifically, we established a symmetrical cap on the regional 
adjustment to the historical benchmark equal to positive or negative 5 
percent of the national per capita FFS expenditures for assignable 
beneficiaries for each enrollment type. We also modified the schedule 
of weights used to phase in the regional adjustment at Sec.  
425.601(f), to reduce the maximum weight from 70 to 50 percent for all 
ACOs and to slow the phase-in of weights for ACOs with higher spending 
than their regional service area.
    In earlier rulemaking, we have acknowledged that the use of factors 
based on regional FFS expenditures in calculating benchmarks will have 
varying effects on ACOs depending on each organization's individual 
circumstances (see, for example, 81 FR 37954 through 37957, and 81 FR 
37975 through 37977; also 83 FR 68017 and 68026).
(2) Overview of Considerations for Modification to the Benchmarking 
Methodology
    In the CY 2022 PFS proposed rule (86 FR 39291 through 39295), we 
summarized select aspects of the Shared Savings Program's benchmarking 
methodology and related concerns that have been expressed by ACOs and 
other interested parties and solicited comments. We discussed some of 
our considerations based on our initial analyses of these concerns 
about the methodology for calculating regional FFS expenditures used in 
certain benchmark calculations, specifically the regional adjustment 
and the blended national-regional growth rates used in trending and 
updating the benchmark. We sought comment on possible approaches for 
removing an ACO's assigned beneficiaries from the assignable 
beneficiary population used in the regional expenditure calculations to 
address concerns raised by ACOs and other interested parties that the 
current approach results in relatively lower benchmarks for ACOs, 
particularly ACOs with high market penetration in their regional 
service area, which they suggest may tend to be rural ACOs (86 FR 
39292). In the CY 2022 PFS proposed rule (86 FR 39293), we noted the 
potential, based on initial simulations, for mixed effects on ACOs from 
modifications to the benchmark methodology to remove the ACO's assigned 
beneficiaries from the calculation of regional FFS expenditures. We 
also specified that it would be important to consider the extent to 
which market penetration should be considered in benchmark 
calculations, noting that relatively few ACOs have high market shares 
(86 FR 39293). We also sought comment on alternative benchmarking 
methodologies that may incorporate data sources other than Medicare FFS 
expenditure trends, such as by incorporating factors based on Medicare 
Advantage rates, or other published trends (86 FR 39294). We sought 
comment on alternate approaches to updating the historical benchmark, 
noting that in order for us to use our authority under section 
1899(i)(3) of the Act to implement payment methodologies that diverge 
from the requirements of section 1899(d)(1)(B)(ii) of the Act, those 
payment methodologies must be determined to improve the quality and 
efficiency of items and services furnished to Medicare beneficiaries 
without resulting in additional program expenditures (86 FR 39294).
    In the section of the CY 2022 PFS final rule entitled ``Comments on 
Considerations Related to the Use of Regional FFS Expenditures and the 
Risk Adjustment Methodology in Establishing, Adjusting, Updating, and 
Resetting the ACO's Historical Benchmark'' (86 FR 65295 through 65306), 
we summarized comments received, and noted that we would take these 
comments into consideration as we contemplate additional refinements to 
the Shared Savings Program's benchmarking methodologies. We noted that 
we would propose any specific policy changes, if deemed appropriate, in 
future notice and comment rulemaking. In the CY 2023 PFS proposed rule, 
we included select information on the comments received in response to 
the discussion in the CY 2022 PFS proposed rule and previously 
summarized, and referred readers to the aforementioned section of the 
CY 2022 PFS final rule for more complete summaries of commenters' 
suggestions.
    Several commenters, including MedPAC, did not support removing ACO 
assigned beneficiaries from the regional FFS expenditure calculations 
(86 FR 65298). MedPAC expressed concern this would reward historically 
low spending ACOs without improving their efficiency of care while at 
the same time further reducing participation incentives among high 
spending ACOs that were likely to have the greatest opportunity for 
efficiency improvements.\316\ Many commenters favored removing ACO 
assigned beneficiaries from the regional reference population (86 FR 
65298 through 65302), with some commenters suggesting this approach in 
combination with other modifications to the benchmarking methodology, 
such as to expand the definition of regional service area, or to modify 
the blended national-regional growth factors used in trending and 
updating the ACO's historical benchmark. Some commenters sought clarity 
on the approach that would be used to remove an ACO's assigned 
beneficiaries from the assignable population of beneficiaries used to 
determine regional FFS expenditures given anticipated mixed effects on 
ACOs, including the impact on ACOs serving patients with high costs of 
care (86 FR 65298). Commenters offered differing perspectives on 
unintended consequences that could result from removing ACO assigned 
beneficiaries from regional FFS expenditures, with some commenters 
suggesting that this could also inadvertently increase incentives for 
patient selection and market consolidation (86 FR 65300 and 65301). 
Commenters offered a variety of alternative approaches (86 FR 65301 and 
65302). For example, MedPAC suggested that ACOs selecting prospective 
assignment be offered a trend factor that is set prospectively prior to 
the start of the performance year and developed utilizing local and 
national estimates as is already done for benchmarking under the Global 
and Professional Direct Contracting Model (to be redesigned and renamed 
as the ACO Realizing Equity, Access, and

[[Page 69880]]

Community Health (REACH) Model beginning January 1, 2023).\317\
---------------------------------------------------------------------------

    \316\ Letter from MedPAC to Chiquita Brooks-LaSure, 
Administrator, CMS (September 9, 2021), regarding File code CMS-
1751-P, available at https://www.regulations.gov/comment/CMS-2021-0119-26001.
    \317\ We note that the Global and Professional Direct 
Contracting Model has gained experience using a prospectively set 
trend factor utilizing local and national estimates as part of 
benchmarking; this element of the benchmarking methodology will 
continue when the model transitions to the redesigned ACO REACH 
Model on January 1, 2023.
---------------------------------------------------------------------------

    As we explained in the CY 2023 PFS proposed rule (87 FR 46160), we 
have continued to investigate the commenters' concerns and consider 
their suggestions, and have performed additional modeling and analysis. 
We take seriously ACOs' and other interested parties' concerns about 
the Shared Savings Program's benchmarking methodology. In the CY 2023 
PFS proposed rule, we proposed modifications to the Shared Savings 
Program's benchmarking methodology to address three core concerns (or 
dynamics):
     How to ensure rebased benchmarks remain accurate and serve 
as a reasonable baseline, when benchmark years correspond to 
performance years of the ACO's preceding agreement period, requiring 
ACOs to continually beat their own performance (also referred to as a 
``ratchet effect'').
     How to address a single ACO's or multiple ACOs' collective 
effects on their own regional expenditures, which are used to calculate 
the regional adjustment and the regional portion of the trend and 
update factors.
     How to ensure the benchmarking methodology results in 
benchmarks of sufficient value to encourage program entry and continued 
participation by ACOs, ACO participants, and ACO providers/suppliers 
serving medically complex, high cost populations, and to address 
selective participation in the program by ACOs, ACO participants, and 
ACO providers/suppliers resulting from the program's benchmarking 
methodology.
    As indicated in the regulatory background in section III.G.5.c.(1) 
of this final rule, we have taken incremental steps to address these 
dynamics through previous rulemaking, such as: using factors based on 
regional FFS expenditures to trend and update the ACO's rebased 
historical benchmark instead of a prior savings adjustment, followed by 
modifications to use blended national-regional growth factors in 
trending and updating the ACO's historical benchmark beginning with the 
ACO's first agreement period; incorporating a regional adjustment to 
the benchmark in the rebasing methodology, followed by modifications to 
apply the regional adjustment beginning with the ACO's first agreement 
period, and to adjust the phase-in of weights used in determining the 
regional adjustment over time; and modifying the risk adjustment 
methodology to account for changes in severity and case mix of the 
ACO's assigned beneficiaries during the performance year. While these 
approaches have made some progress to address the aforementioned 
dynamics, as discussed in the CY 2023 PFS proposed rule, we continue to 
receive feedback from ACOs and other interested parties that additional 
modifications to the benchmarking methodology are needed to further 
reduce impacts from rebasing and the regional effects of increasing 
market penetration by ACOs, and to support ACOs, and in particular ACOs 
serving medically complex, high cost populations, as they work to 
achieve the program's goal of lowering growth in Medicare FFS 
expenditures.
    In the CY 2023 PFS proposed rule (87 FR 46161), we explained that 
there is some evidence that certain aspects of the program's 
benchmarking methodology, notably the regional adjustment to the 
benchmark, may already deter participation among ACOs with spending 
above their regional benchmark and those serving medically complex, 
high cost populations. For example, in PYs 2017 through 2019, just over 
80 percent of ACOs subject to a regional adjustment received a positive 
adjustment, indicating their spending was lower than spending in their 
regional service area. More recently, the share of ACOs receiving a 
positive regional adjustment is closer to 90 percent. This pattern 
suggests selective participation behavior, where ACOs that have already 
achieved efficiency or that are serving beneficiaries with lower health 
risks are more likely to participate. Providers with the greatest 
opportunity to reduce spending (those that are inefficient and high 
spending relative to their region and that would receive a negative 
regional adjustment if they formed an ACO) are less likely to 
participate under the current methodology, limiting savings for the 
Medicare program. Additional analysis has suggested that ACOs receiving 
the largest negative regional adjustments tend to be those serving 
beneficiaries with high average risk scores and/or high proportions of 
beneficiaries dually eligible for Medicare and Medicaid. This further 
suggests that these ACOs may be higher cost relative to their regions 
as a result of caring for the highest needs populations rather than 
being inefficient, and that ACOs serving medically complex, high cost 
populations may have more difficulty participating in the Shared 
Savings Program.
    In the CY 2023 PFS proposed rule (87 FR 46161), we explained our 
belief that addressing the concerning dynamics in the benchmarking 
methodology, combined with modifications to the risk adjustment 
methodology and to participation options targeted at improving 
participation by ACOs serving medically complex, high cost 
populations,\318\ would further CMS' goal that 100 percent of people 
with Original Medicare will be in a care relationship with 
accountability for quality and total cost of care by 2030.\319\ This 
goal informed our consideration of how to approach potential 
modifications to the benchmarking methodology, and in particular 
motivated us to consider approaches that would allow for a potentially 
significant increase in participation in the Shared Savings Program.
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    \318\ The proposed modifications to the risk adjustment 
methodology targeted at supporting ACOs serving medically complex, 
high cost populations are described in section III.G.5.e of this 
final rule. Our proposed modifications to participation options 
targeted at ACOs serving underserved populations, and providing a 
longer on-ramp to performance-based risk for certain ACOs are 
described in section III.G.2 of this final rule.
    \319\ Seshamani M, Fowler E, Brooks-LaSure C. Building On The 
CMS Strategic Vision: Working Together For A Stronger Medicare. 
Health Affairs. January 11, 2022. Available at https://www.healthaffairs.org/do/10.1377/forefront.20220110.198444.
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    We also noted our consideration of additional modifications to the 
Shared Savings Program benchmarking methodology that may be needed to 
ensure the program's longer-term sustainability. MedPAC discussed 
ratchet effects from rebasing and ACOs' affecting their own regional 
expenditures in its November 2021 public meetingthnsp;\320\ and January 
2022 public meeting.\321\ Many of the commissioners appeared to support 
a longer-term approach under which CMS would update ACOs' benchmarks 
annually using ``exogenous'' factors, meaning factors not impacted by 
the individual or collective performance of ACOs. This approach, which 
has been referred to as ``administratively set benchmarks'', would use 
a combination of administratively determined factors

[[Page 69881]]

and projected growth in volume and intensity of FFS services, to 
account for whether an ACO is high or low spending relative to its 
region. However, at least one commissioner questioned using a projected 
trend when the actual trend is available and, in their view, has served 
the program well.\322\ In its June 2022 Report to the Congress, MedPAC 
formally recommended the administratively set benchmarks approach.\323\ 
In section III.G.7. of the CY 2023 PFS proposed rule (87 FR 46208 
through 46218), we described and sought comment on a potential longer-
term approach for use of administratively set benchmarks that are 
decoupled from ongoing observed FFS spending.
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    \320\ Serna L and Stensland J. MedPAC. Presentation on benchmark 
incentives for accountable care organizations (November 8, 2021), 
available at https://www.medpac.gov/wp-content/uploads/2021/09/aco-benchmarks-medpac-nov-2021.pdf.
    \321\ Burton R et al. MedPAC. Presentation on developing a 
multi-track population-based payment model with administratively 
updated benchmarks (January 14, 2022), available at https://www.medpac.gov/wp-content/uploads/2021/10/APM-MedPAC-Jan22.pdf.
    \322\ See, for example, Medicare Payment Advisory Commission, 
Public Meeting, Friday, January 14, 2022, transcript of proceedings 
starting at 10:02 a.m., available at https://www.medpac.gov/wp-content/uploads/2021/10/Jan22_MedPAC_Meeting_Transcript_SEC.pdf 
(refer to pages 166-246, enumerated pages 3-83).
    \323\ Medicare Payment Advisory Commission. June 2022 Report to 
the Congress: Medicare and the Health Care Delivery System (June 15, 
2022), available at https://www.medpac.gov/document/june-2022-report-to-the-congress-medicare-and-the-health-care-delivery-system/ 
(Chapter 1, pages 3-22).
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    In the CY 2023 PFS proposed rule, we proposed a combination of 
policies to ensure a robust benchmarking methodology that would reduce 
the effect of ACO performance on ACO historical benchmarks and increase 
options for ACOs caring for high-risk populations. Specifically, we 
proposed to modify the methodology for updating the historical 
benchmark (section III.G.5.c.(3) of the proposed rule), incorporate a 
prior savings adjustment in historical benchmarks for renewing and re-
entering ACOs (section III.G.5.c.(4) of the proposed rule), and modify 
the negative regional adjustment (section III.G.5.c.(5) of the proposed 
rule). We also noted our belief that these proposed modifications could 
serve as ``stepping stones'' to a potential longer-term approach to the 
benchmarking methodology, and indicated that they were designed to be 
consistent with the potential approach for incorporating a methodology 
for administratively set benchmarks, which was described in the request 
for information in section III.G.7. of the proposed rule. In section 
III.G.5.c.(6) of the proposed rule, we also sought comment on two 
potential alternatives to the package of policies we proposed in 
sections III.G.5.c.(3) through (5). As explained in the proposed rule, 
both alternatives would seek to limit the impact of an ACO's own 
assigned beneficiaries on the regional factors used in benchmarking 
calculations. While these alternatives would address concerns raised by 
some interested parties, we noted that we believed they would be less 
effective than our proposed policies at addressing the full set of core 
concerns we articulated in section III.G.5.c of the proposed rule.
(3) Incorporating a Prospective, External Factor in Growth Rates Used 
To Update the Historical Benchmark
(a) Background
    As described in the December 2018 final rule (83 FR 68024 through 
68030), we used our statutory authority under section 1899(i)(3) of the 
Act to adopt the policy under which we update the historical benchmark 
using a blend of national and regional growth rates, rather than the 
projected absolute amount of growth in national per capita expenditures 
for Parts A and B services under the original Medicare FFS program as 
required under section 1899(d)(1)(B)(ii) of the Act. In accordance with 
Sec.  425.601(b), for agreement periods beginning on July 1, 2019, and 
in subsequent years, we update the historical benchmark for an ACO for 
each performance year using a blend of national and regional growth 
rates between BY3 and the performance year. To update the benchmark, we 
make separate calculations for expenditure categories for each of the 
following populations of beneficiaries based on Medicare enrollment 
type: ESRD, disabled, aged/dual eligible for Medicare and Medicaid, 
aged/non-dual eligible for Medicare and Medicaid.
    The national-regional blend is a weighted average of national FFS 
and regional growth rates between BY3 and the performance year for the 
applicable Medicare enrollment type. The national growth rates are 
computed using CMS OACT national Medicare expenditure data for BY3 and 
the performance year for assignable beneficiaries (as defined at Sec.  
425.20) identified for the 12-month calendar year corresponding to each 
year. Regional growth rates are computed using expenditures for the 
ACO's regional service area for BY3 and the performance year. To 
calculate regional expenditures, we determine the counties included in 
the ACO's regional service area based on the ACO's assigned beneficiary 
population for the year, and determine the ACO's regional expenditures 
as specified under Sec.  425.601(c) and (d).
    The national and regional growth rates are blended together by 
taking a weighted average of the two. The weight assigned to the 
national component of the national-regional blend for a given Medicare 
enrollment type is calculated as the share of assignable beneficiaries 
in the ACO's regional service area that are assigned to the ACO for the 
applicable performance year, calculated by taking a weighted average of 
county-level shares as specified in Sec.  425.601(a)(5)(v). To 
calculate this share, we first calculate the county-level share of 
assignable beneficiaries that are assigned to the ACO for each county 
in the ACO's regional service area for that Medicare enrollment type. 
We then weight the county-level shares according to the ACO's 
proportion of assigned beneficiaries in the county, determined by the 
number of the ACO's assigned beneficiaries residing in the county in 
relation to the ACO's total number of assigned beneficiaries for that 
Medicare enrollment type. Next, we sum these weighted county-level 
shares for all counties in the ACO's regional service area for each 
Medicare enrollment type.
    As an ACO's penetration in its region increases, a higher weight is 
placed on the national component of the national-regional blend and a 
lower weight on the regional component. The national and regional 
growth rates are blended together by taking a weighted average of the 
two. Specifically, for each Medicare enrollment type, the national-
regional blended growth rate is equal to the sum of the following: (1) 
the growth rate for national assignable FFS expenditures for BY3 to the 
performance year multiplied by the weight assigned to the national 
component; and (2) the average growth rate for regional FFS 
expenditures for BY3 to the performance year based on the ACO's 
regional service area multiplied by the weight assigned to the regional 
component. In accordance with Sec.  425.601(a)(5), we also use blended 
national-regional growth rates to trend forward expenditures for each 
benchmark year (BY1 and BY2) to BY3 dollars, making separate 
calculations for each Medicare enrollment type.
    We summarized concerns with the current benchmarking approach in 
section III.G.5.c.(2) of the proposed rule (87 FR 46159 through 46162). 
Specifically, ACOs and other interested parties have expressed concerns 
regarding the dynamic under which an ACO that reduces costs for its own 
assigned beneficiaries also reduces its average regional costs, 
resulting in a relatively lower benchmark for the ACO under the blended 
national-regional growth rates used to trend and update the ACO's 
historical benchmark. As echoed in public comments, ACOs and other 
interested parties have suggested that this dynamic particularly

[[Page 69882]]

disadvantages ACOs with high market penetration in their regional 
service areas, which may tend to be ACOs operating in rural areas (see, 
for example, 86 FR 65296 through 65299).
(b) Revisions
    In the CY 2023 PFS proposed rule (87 FR 46162 through 46169), we 
proposed to incorporate a prospectively projected administrative growth 
factor, a variant of the United States Per Capita Cost (USPCC) that we 
refer to as the Accountable Care Prospective Trend (ACPT), into a 
three-way blend with national and regional growth rates to update an 
ACO's historical benchmark for each performance year in the ACO's 
agreement period. Incorporating this prospective trend in the update to 
the benchmark would insulate a portion of the annual update from any 
savings occurring as a result of the actions of ACOs participating in 
the Shared Savings Program and address the impact of increasing market 
penetration by ACOs in a regional service area on the existing blended 
national-regional growth factor. Because the ACPT would be 
prospectively set at the outset of an agreement period, any savings 
generated by ACOs during the agreement period would not be reflected in 
the ACPT. Accordingly, incorporation of the ACPT would allow for 
benchmarks to increase beyond actual spending growth rates as ACOs slow 
spending growth. By limiting the negative feedback of efforts by ACOs 
to slow spending growth on their own benchmarks, we noted that we 
believed the use of this three-way blend to update ACOs' benchmarks 
would incentivize both greater savings by ACOs and greater program 
participation. Because incorporating the ACPT into the update would 
reduce the degree to which an ACO's savings negatively impact its 
benchmark through the regional trend component of the update, we also 
believed that the proposed change to the update methodology would help 
to address the concerns discussed in section III.G.5.c.(2) of this 
final rule regarding the disproportionate impact of an ACO's savings on 
the benchmark update for ACOs with high market share.
    We did not propose to revise the methodology used to trend forward 
per capita expenditures from BY1 and BY2 to BY3, but indicated our 
intent to maintain the current two-way blend used in calculating the 
ACO's benchmark. We acknowledged that modifying the methodology for 
determining the update factor but not the trend factor would mean there 
would no longer be parity between these factors, but noted that we 
believed this would be an appropriate departure from the approach we 
have maintained since the start of the program. The two-way blend used 
for trend factors would continue to reflect actual growth rates, which 
we believed would still be appropriate for purposes of determining the 
historical benchmark because the benchmark is intended to reflect 
historical spending prior to any savings achieved during the agreement 
period for which the benchmark will be used. In contrast, we explained 
that the proposal to use a three-way blend to update the benchmark 
would incorporate a projected growth rate, the ACPT, which would 
reflect increases in spending independent of any savings achieved by 
the ACO, or ACOs collectively, during the agreement period, thus 
limiting the extent to which ACOs' success in reducing expenditures for 
their assigned beneficiaries over the course of an agreement period 
negatively impacts their ability to share in savings during that 
agreement period. We also explained that we believed this proposed 
change to the update factor would incent ACOs to reduce expenditures 
during the agreement period because there would be less risk of those 
reductions negatively impacting their benchmark updates. This, in turn, 
could lead to greater savings generated and increased shared savings 
payments to ACOs.
    Under the proposed approach, a three-way blend would be calculated 
as the weighted average of the ACPT (one-third) and the existing 
national-regional blend (two-thirds) for use in updating an ACO's 
historical benchmark between BY3 and the performance year (PY). The 
ACPT component of the blend would be an external factor, meaning it 
would not be impacted by the individual or collective performance of 
ACOs. The reference to a ``two-way blend'' is synonymous with the 
existing blended national-regional growth rates under Sec.  425.601.
    The CMS Office of the Actuary (OACT) provides projections of 
Medicare program spending for various recurring deliverables, including 
the Medicare Trustees Report and the Advance Notice and Announcement of 
Medicare Advantage capitation rates and Part C and Part D payment 
policies. These publications include both historical and projected 
future Medicare spending amounts expressed on a per capita basis 
(differences in ESRD and non-ESRD calculations, are described in 
further detail in this section). These amounts published in the Advance 
Notice and the Announcement are labeled the FFS USPCCs. We proposed to 
calculate the ACPT component of the blended annual update using an 
annualized growth rate based on 5-year-projections in per capita 
spending as of the start of an ACO's agreement period. We explained in 
the proposed rule that we selected this projection horizon to align 
with the 5-year agreement periods used under the Shared Savings 
Program. The ACPT would be projected by OACT and would be a 
modification of the existing FFS USPCC growth trend projections used 
annually for establishing Medicare Advantage rates. The modifications 
to the FFS USPCC, aimed at making the trends more consistent with the 
Shared Savings Program's existing expenditure calculations, would 
reflect the following:
     Exclusion of payments for indirect medical education 
(IME), disproportionate share hospitals (DSH), including both 
empirically justified DSH payments and uncompensated care payments, and 
the new proposed supplemental payment for IHS/Tribal Hospitals and 
hospitals located in Puerto Rico that was subsequently finalized in the 
FY 2023 IPPS/LTCH PPS final rule.
     Inclusion of payments associated with hospice claims.
    OACT currently produces separate FFS USPCCs for ESRD (dialysis-
only, including aged/ESRD, disabled/ESRD and ESRD-only) and non-ESRD 
aged/disabled populations. Likewise, OACT would also calculate the ACPT 
separately for these two populations. Currently, most Shared Savings 
Program benchmarking calculations are performed separately for four 
separate Medicare enrollment types: ESRD, disabled, aged/dual eligible 
for Medicare and Medicaid, and aged/non-dual eligible for Medicare and 
Medicaid. The Shared Savings Program identifies enrollment type status 
on a monthly basis. A beneficiary month is classified as an ESRD month 
if the beneficiary was in long-term dialysis or transplant status for 
that month (including up to 3 months post-graft). All non-ESRD months 
are then classified as one of the other three categories based on age 
(under 65 for disabled) and dual eligibility status (for beneficiaries 
65 and over only).\324\ We proposed to use the ESRD ACPT in calculating 
update factors for the ESRD population and to use the combined Aged/
Disabled ACPT in calculating

[[Page 69883]]

update factors for the remaining three enrollment types (disabled, 
aged/dual eligible, aged/non-dual eligible). We explained that using 
ACPTs based on the existing populations for which FFS USPCCs are 
calculated would allow us to leverage existing OACT models which do not 
currently differentiate among categories within the aged/disabled 
population. We noted that we did not believe that there would be 
significant precision gained from revising these existing models to 
incorporate assumptions regarding these distinctions. Furthermore, we 
noted that outside of the unforeseen impact of the PHE for COVID-19, 
national assignable per capita spending growth rates were reasonably 
consistent across the three non-ESRD enrollment types from 2013-2019 
and noted that we anticipated that pattern continuing during the period 
in which the ACPT would be incorporated into ACO calculations.
---------------------------------------------------------------------------

    \324\ Refer to Medicare Shared Savings Program, Shared Savings 
and Losses and Assignment Methodology Specifications (January 2022, 
Version #10), available at https://www.cms.gov/files/document/medicare-shared-savings-program-shared-savings-and-losses-and-assignment-methodology-specifications.pdf-1 (Appendix E).
---------------------------------------------------------------------------

    We proposed to set the ACPT growth factors for an ACO's entire 5-
year agreement period near the start of the agreement period. The ACPT 
factors would remain unchanged throughout the ACO's agreement period, 
providing a degree of certainty to ACOs. We noted that we anticipated 
that we would publish finalized ACPT values in the Spring of the first 
performance year of an ACO's agreement period, and that earlier years' 
trends would be available for reference prior to the start of an ACO's 
agreement period. We acknowledged that, under an approach that sets the 
value of the ACPT at the start of an ACO's agreement period, ACOs 
entering agreement periods in different years could be subject to 
higher or lower updates depending on how projections change from year 
to year. This could lead ACOs to try to time their entry (or renewal) 
in the program to try to maximize the fixed portion of their update. 
However, we noted that this concern would be mitigated because the ACPT 
would represent only one-third of the three-way blend used to update an 
ACO's benchmark.
    We further proposed that the annualized growth rate(s) would be 
calculated as either a uniform annualized projected growth rate over 
each of the 5 performance years of the 5-year agreement period, or as 
two or more annualized growth rates during the 5 performance years 
comprising the 5-year agreement period. Two or more annualized growth 
rates would be used if OACT determines that a uniform annualized 
projected rate of growth does not reasonably fit the anticipated growth 
curve--for example, if growth is expected to be above- or below-average 
in the short-run and return to more typical levels later in the 
agreement period.
    We noted that we considered whether the ACPT component of the blend 
should express projected growth on a relative basis (as the current 
two-way national-regional blend operates) or on an absolute (flat) 
dollar basis. Applying the new portion of the update as an absolute 
dollar growth amount would more closely adhere to the approach 
stipulated in section 1899(d)(1)(B)(ii) of the Act for the benchmark to 
be updated by the projected absolute amount of growth in national per 
capita expenditures for Parts A and B services under the original 
Medicare FFS program. However, under the proposed approach, the ACPT 
would be weighted together with the two-way national-regional blend.
    We explained that based on retrospective modeling (described 
elsewhere in this section), both the relative basis and flat dollar 
approaches to calculating the ACPT are anticipated to improve the 
incentive to participate compared with the current two-way blend for 
both ACOs with higher market penetration within their regional service 
area (the ACO's assigned beneficiaries constitute at least 30 percent 
of the assignable beneficiary population within the ACO's regional 
service area) and ACOs operating in a regional service area with higher 
ACO market penetration (at least 50 percent of the assignable 
beneficiaries within an ACO's regional service area are assigned to any 
Shared Savings Program ACO). During the period examined, ACO benchmarks 
increased an average of $19 per capita, with an average of 62 percent 
of all ACOs across all years modeled receiving a larger benchmark 
increase compared with the current two-way blend. An average of 65 
percent of ACOs operating in a regional service area with higher Shared 
Savings Program market penetration were better off under the three-way 
blended update factor compared with the current two-way blend. 
Additional results comparing the benefits of the three-way blend to the 
current two-way blend are described elsewhere in this section. We also 
anticipated that introducing the ACPT as part of a three-way blend may 
incentivize ACOs to achieve additional savings by providing a known 
prospective trend that allows for improved planning and provides a 
target for ACOs to compare their performance against. Because the 
prospective trend would allow ACOs to improve planning, we also noted 
that a higher percentage of ACOs may benefit from the three-way blend 
than was reflected in the simulations. In addition, we noted that we 
expected the three-way blend would further insulate a portion of the 
benchmark update from the impact of an ACO's own savings, as actual 
spending trends downward from initial projections.
    We explained that while both approaches are, on average, favorable 
for ACOs, the risk-adjusted flat dollar approach is anticipated to be 
more beneficial to ACOs because the flat dollar amount would be based 
on per capita expenditures among the national assignable population, 
which tend to be higher than per capita expenditures among ACO-assigned 
beneficiaries. That is, if national per capita expenditures are 
projected to increase by 3 percent per year, a flat dollar amount 
representing 3 percent of per capita expenditures from the national 
assignable population would be greater than 3 percent of a typical 
ACO's own benchmark amount; thus, the flat dollar ACPT would result in 
a larger overall increase to the ACO's benchmark amount each year. 
Another potential advantage of calculating flat dollar amounts based on 
the national per capita FFS expenditures for the assignable population 
(rather than simply calculating flat dollar amounts from OACT's 
original projected dollar values for the ACPT), is that it would allow 
us to generate separate values for each of the four Medicare enrollment 
types. This approach would also align projections with actual per 
capita expenditures of the assignable population, minimizing the degree 
to which the projections may systematically differ in how they are 
calculated.
    Therefore, we proposed to calculate flat dollar amounts (separately 
for each Medicare enrollment type) by applying the relevant projected 
growth rate to truncated national per capita FFS expenditures for 
assignable beneficiaries for BY3 for the given Medicare enrollment 
type. The assignable population for this calculation would be 
identified using the assignment window for the 12-month calendar year 
corresponding to BY3. Truncation would be done in the same manner as is 
done when calculating the ACO's own per capita expenditures to draw an 
equivalent comparison. That is, we would truncate national per capita 
FFS expenditures for assignable beneficiaries for BY3 for a given 
Medicare enrollment type, for purposes of calculating the ACPT flat 
dollar amounts, at the 99th percentile of national Medicare FFS 
expenditures for assignable beneficiaries identified for the 12-month 
calendar year corresponding to BY3. This

[[Page 69884]]

approach would be consistent with the approach to truncating an 
assigned beneficiary's expenditures in calculating the ACO's benchmark 
year expenditures as currently specified in Sec.  425.601(a)(4), and in 
the proposed new provision at Sec.  425.652(a)(4), and performance year 
expenditures as specified under Sec.  425.605(a)(3) (BASIC track) and 
Sec.  425.610(a)(4)(ii) (ENHANCED track). This approach to truncation 
to establish the ACPT flat dollar amounts would also align with the 
approach to truncating assignable beneficiary expenditures in 
calculating county expenditures (refer to Sec.  425.601(c)(3), and 
proposed Sec.  425.654(a)(3)) used in determining factors based on 
regional FFS expenditures, including the regional component of the two-
way blend.
    We also proposed to risk adjust these flat dollar amounts to 
account for differences in severity and case mix between the ACO's 
assigned beneficiaries and the national assignable FFS population for 
each Medicare enrollment type. We noted that we had concerns that flat 
dollar amounts that are not risk adjusted could generate a relatively 
lower update for higher spending ACOs caring for medically complex 
populations because the amount of the update would be set based on per 
capita expenditures for the national assignable population (which are 
likely to be lower) instead of the ACO's own assigned beneficiary 
population. Risk adjusting the flat dollar amounts would provide a 
higher flat dollar amounts for ACOs serving medically complex 
populations. We did not propose to adjust the ACPT flat dollar amounts 
for geographic differences in costs or prices, as we believed that such 
an adjustment may inadvertently reward higher spending, less efficient 
ACOs with a high market share in their regional service area.
    In the CY 2023 PFS proposed rule, we explained that in order to 
blend the risk-adjusted flat dollar amounts with the corresponding two-
way blend for each enrollment type, which would continue to operate on 
a relative basis, we would first need to re-express the risk-adjusted 
flat dollar amounts on a relative basis by dividing by the ACO's 
historical benchmark expenditure amount. This would be done separately 
for each Medicare enrollment type.
    Using hypothetical values, the steps below illustrate how we would 
set the annualized growth rate(s) and calculate the ACPT flat dollar 
amount(s) (re-expressed as a relative value) that would be included in 
the three-way blend.
    Step 1: Calculate annualized growth rate(s) for agreement period.
    For step 1, OACT would calculate one or more annualized growth 
rates for the ESRD population (the ESRD ACPT) and one or more 
annualized growth rates for the aged/disabled population (the Aged/
Disabled ACPT). Specifically, for each population OACT would project 
per capita spending growth for Parts A and B Medicare FFS spending as 
described earlier in this section between BY3 and each performance year 
of the agreement period. These annualized growth rates may either be 
calculated as a uniform annualized projected rate of growth over each 
of the 5 performance years of the 5-year agreement period, or as two or 
more annualized growth rates reflecting the projected rates of growth 
during the 5 performance years comprising the 5-year agreement period 
if CMS determines that a uniform annualized projected rate of growth 
does not reasonably fit the anticipated growth curve.
    Step 2: Express the growth rate(s) for each performance year as 
flat dollar amounts (the ACPT).
    For step 2, we would multiply BY3 truncated national per capita FFS 
expenditures calculated by OACT for the assignable FFS population for a 
given enrollment type (ESRD, disabled, aged/dual eligible Medicare and 
Medicaid beneficiaries, and aged/non-dual eligible Medicare and 
Medicaid beneficiaries), by the applicable growth rate to calculate the 
flat dollar amount of growth for each performance year. As previously 
described in this section, we would use ESRD growth rate(s) for the 
ESRD population and non-ESRD aged/disabled growth rate(s) for the 
disabled, aged/dual eligible, and aged/non-dual eligible populations. 
Thus, for example, if the truncated national assignable per capita 
expenditures for a given enrollment type were $13,000, and the 
projected growth rate for that enrollment type in that year was 5 
percent per year,\325\ the flat dollar amounts would be:
---------------------------------------------------------------------------

    \325\ Although not specified in the CY 2023 PFS proposed rule, 
we wish to clarify that for this illustration the ACPT was assumed 
to roughly match the annual growth rate projected for FFS USPCC Non-
ESRD Part A + Part B spending from 2024 to 2025 in table II-2 of the 
CY 2023 Medicare Advantage (MA) Rate Announcement. The ratio of 
$1,186.14 divided by $1,132.07 rounds to five percent growth in 
spending currently expected for the first year that the ACPT would 
be incorporated into ACO benchmarks under our proposal. In practice, 
the ACPT may differ from the USPCC because of adjustments to exclude 
IME and DSH payments, and the supplemental payment for IHS/Tribal 
hospitals and Puerto Rico hospitals, and include payments associated 
with hospice claims, and because it accounts for an extended 5-year 
performance period. Refer to Announcement of CY 2023 MA Capitation 
Rates and Part C and Part D Payment policies, available at https://www.cms.gov/files/document/2023-announcement.pdf.

PY1 flat dollar amount = $13,000 x (1.050-1) = $650, and
PY5 flat dollar amount = $13,000 x (1.276-1) = $3,588 \326\
---------------------------------------------------------------------------

    \326\ For a given performance year ``X'' in an agreement period, 
the growth rate is calculated by raising the annual growth rate to 
the power of X (that is, multiplying the annual growth rate by 
itself X times). Thus, for PY5 in this example, the annual growth 
rate of 1.276 is computed by raising 1.05 to the power of 5 (that 
is, multiplying the single year growth rate of 1.05 by itself 5 
times).

    Step 3: Risk adjust the flat dollar amounts.
    In step 3, we would multiply the flat dollar amounts for each 
performance year, for each enrollment type, by the ACO's mean BY3 
prospective HCC risk score \327\ for that enrollment type. For 
consistency with other Shared Savings Program risk adjustment 
calculations, the risk score used would first be renormalized by 
dividing by the national mean risk score for the assignable FFS 
population for that enrollment type identified for the calendar year 
corresponding to BY3. Risk adjusting the flat dollar amounts would 
allow for a higher update for ACOs serving a population that is more 
medically complex than the national average. If the ACO's BY3 risk 
score was 1.025, the risk-adjusted flat dollar amounts would be:
---------------------------------------------------------------------------

    \327\ We have also used the terms ``CMS-HCC prospective risk 
scores'' and ``CMS-HCC risk scores'' (see, for example, the December 
2018 final rule, 83 FR 68007 through 68013) to refer to such risk 
scores. While we choose to use the term ``prospective HCC risk 
scores'' within this section of this final rule for consistency with 
the terminology used in the regulations (see, for example, 
Sec. Sec.  425.601, 425.605, and 425.610), we consider these terms 
to be interchangeable.

PY1 flat dollar amount = $650 x 1.025 = $666, and
PY5 flat dollar amount = $3,588 x 1.025 =$3,678

    Step 4: Re-express risk-adjusted flat dollar amounts as relative 
factors.
    The fourth and final step before calculating the three-way blended 
update factor would be to re-express the risk-adjusted flat dollar 
amount for each enrollment type on a relative basis such that it can be 
combined in a weighted average with the current two-way blend. We would 
do this by dividing the risk-adjusted flat dollar amounts computed in 
Step 3 for a given enrollment type by the ACO's historical benchmark 
expenditures for that enrollment type. The resulting amount would 
represent the final ACPT portion of the blended update factor for that 
enrollment type. If the historical benchmark expenditures for the 
enrollment type were $12,000, the final ACPT portion of the blended 
update factors for this enrollment type would be:


[[Page 69885]]


PY1 final ACPT portion of the blended update factor = ($666/$12,000) + 
1 = 1.056, and
PY5 final ACPT portion of the blended update factor = ($3,678/$12,000) 
+ 1 = 1.306

    The values in this step would then be combined with the two-way 
blend to compute the three-way blended update factor. The ACPT would 
constitute one-third of the total blend, while the remaining two-thirds 
would consist of the existing two-way blend.
    To illustrate how we would compute the three-way blend, and how it 
would compare with the two-way blend, we assumed for the same 
hypothetical ACO for a given enrollment type that the regional 
expenditure growth between BY3 and PY1 is 2.5 percent, that national 
assignable FFS expenditure growth is 3 percent and that the ACO's 
assigned beneficiaries represent 20 percent of the assignable 
population in the ACO's regional service area. For simplicity, we 
assumed the ACO faces a risk ratio of 1.0. The current two-way blended 
update factor would be calculated as:
    Two-way blend = (National Update Factor x National Weight) \328\ + 
(Regional Update Factor x (1-National Weight)); or
---------------------------------------------------------------------------

    \328\ Weight for the national growth rate is calculated as the 
share of assignable beneficiaries in the ACO's regional service area 
for BY3 that are assigned to the ACO in BY3 (refer to Sec.  
425.601(a)(5)(iv)(A)).
---------------------------------------------------------------------------

    Two-way blend = (1.030 x 20 percent) + (1.025 x 80 percent) = 
1.026.
    Updating the ACO's benchmark with the two-way blended update factor 
alone would yield a value of $12,312 (that is, $12,000 x 1.026 = 
$12,312).
    To calculate the three-way blend by incorporating the PY1 ACPT 
factor of 1.056 (from earlier in the example) we would use the 
following weighted average:
    Three-way blend = [PY1 ACPT x (\1/3\)] + [PY1 Two-Way Blend x (\2/
3\)]; or
    Three-way blend = [1.056 x (\1/3\)] + [1.026 x (\2/3\)] = 1.036.
    Applying the three-way blended update factor to the historical 
benchmark would yield an updated benchmark of $12,432 for the 
enrollment type (that is, $12,000 x 1.036 = $12,432). In this example, 
the ACO's benchmark update factor increases by 1.0 percentage point, 
corresponding to an increase of $120 per capita, which increases the 
ACO's potential for shared savings and reduces the potential for shared 
losses, if applicable.
    In the CY 2023 PFS proposed rule, we stated that including the ACPT 
as a component of a three-way blend could provide a degree of certainty 
that benchmarks would not be lowered as a result of ACOs reducing FFS 
spending growth, and thereby increase the incentive for such savings 
and strengthen incentives for ACOs to enter and remain in the Shared 
Savings Program. However, we also acknowledged that incorporating the 
ACPT into a three-way blended update factor would have the potential 
for mixed effects. For example, it may also lower an ACO's benchmark 
relative to the current approach if external factors lead to higher 
program spending growth than originally projected at the start of an 
ACO's agreement period. This could, for example, cause an ACO in a two-
sided model that would not have been responsible for shared losses 
under the two-way blend to owe shared losses under the three-way blend 
or cause an ACO that would have owed shared losses under the two-way 
blend to owe a larger amount of shared losses under the three-way 
blend.
    Additionally, we noted that the three-way blend could potentially 
have negative implications for an ACO based on the Shared Savings 
Program's policy regarding monitoring of ACO financial performance 
described in Sec.  425.316(d). Under this policy, if an ACO's 
performance year expenditures exceed its updated benchmark by an amount 
equal to or exceeding either the ACO's negative MSR under a one-sided 
model or the minimum loss rate (MLR) under a two-sided model, CMS may 
take pre-termination actions against the ACO. For a subsequent 
occurrence for another performance year in the same agreement period, 
CMS may immediately or with advance notice terminate the ACO's 
participation agreement.
    Consequently, we explained our belief that a guardrail would be 
needed to ensure the use of the three-way blend would not result in 
lower benchmarks than the current national-regional blend in a way that 
poses higher financial risk for ACOs under two-sided models, or that 
could jeopardize an ACO's continued participation in the Shared Savings 
Program under the financial performance monitoring policy described in 
Sec.  425.316(d), or both.
    We proposed to institute this guardrail as follows: if an ACO 
generates losses for a performance year that meet or exceed its minimum 
loss rate (MLR) (for two-sided model ACOs) or negative MSR (for one-
sided model ACOs) under the three-way blend, we would recalculate the 
ACO's updated benchmark using the national-regional blended update 
factor (two-way blend). If the ACO generates a smaller amount of losses 
using the two-way blend, we would use this smaller amount to determine 
the ACO's responsibility for shared losses, if applicable, and in 
determining the ACO's financial performance for monitoring purposes 
under Sec.  425.316(d). If the ACO generates saving using the two-way 
blend to update its benchmark but does not generate savings under the 
three-way blend, the ACO would neither be responsible for shared losses 
(if in a two-sided model) nor eligible for shared savings for the 
applicable performance year, even if the savings generated exceed the 
ACO's MSR. ACOs in these scenarios would publicly report their 
performance in accordance with Sec.  425.308(b)(4) based on the 
recalculated amounts determined using the two-way blend. However, an 
ACO that generated savings under the two-way blend, but was not 
eligible to earn a shared savings payment, would be required to report 
zero shared savings for the performance year. We noted that we believed 
this guardrail would protect ACOs from the most negative potential 
outcomes of the proposed three-way blend, while still insulating the 
Trust Funds.
    To illustrate how the guardrail would be applied, we considered a 
second hypothetical ACO participating at Level E of the BASIC track for 
which the updated benchmark calculated using the three-way blend was 
$12,760. We assumed that the ACO's per capita performance year 
expenditures were $12,980 and that the ACO had selected a symmetrical 
MSR/MLR of 1.5 percent. Using the three-way blend, the ACO would have 
per capita losses of -$220, or -1.7 percent of its updated benchmark 
which would be above ACO's selected MLR of -1.5 percent. Applying the 
fixed shared loss rate of 30 percent under Level E, the ACO would, in 
absence of the guardrail, be liable for shared losses (on a per capita 
basis) of -$66 and would face potential pre-termination actions or 
involuntary termination (depending on the ACO's financial performance 
in prior years of its agreement period). However, with the guardrail in 
place, we would re-assess the ACO's performance using the two-way 
blend. If the two-way blend produced an updated benchmark of $12,804, 
the ACO's new per capita losses amount would be -$176, or -1.4 percent 
of its updated benchmark which would be within the ACO's selected MLR 
of -1.5 percent. This ACO would therefore not be responsible for shared 
losses for the performance year and would not face any negative 
consequences under the financial performance monitoring policy. If the

[[Page 69886]]

two-way blend instead produced an updated benchmark of $13,183, the ACO 
would have measured per capita savings of $203, or 1.54 percent of its 
updated benchmark. As previously explained, under the proposed 
approach, the ACO would no longer be responsible for shared losses nor 
face pre-termination action or termination based on its financial 
performance. However, although the savings amount would exceed the 
ACO's MSR of 1.5 percent, the ACO would not be eligible for shared 
savings under the proposed policy.
    Under the proposal to set the ACPT for the duration of the ACO's 
agreement period, we explained that we would not adjust the ACPT due to 
external factors such as geographic price changes, efficiency 
discounts, or other retrospective updates occurring during the 
performance years throughout the agreement period. However, we 
acknowledged that a variety of circumstances could cause actual 
expenditure trends to significantly deviate from projections. Thus, we 
noted that we believed there would be circumstances that may warrant 
reducing the weight placed on the ACPT on an ad hoc basis. In 
particular, we noted that if we determine that expenditure growth has 
differed significantly from projections made at the start of the 
agreement period due to unforeseen circumstances, such as an economic 
recession, pandemic, or other factors, a reduction in the weight placed 
on the ACPT may be considered. For example, based on a review of 
projections detailed in the 2009 Medicare Trustees Report, an ACPT 
projected in 2009 (amidst the great recession and before passage of the 
ACA) would have ultimately overstated per capita spending growth from 
2008 to 2013 by roughly 9 percentage points (which would have 
corresponded to a 3 percent upward bias to benchmarks when weighted as 
one-third of the blended update). We also noted that we were especially 
concerned that such unforeseen circumstances could result in an update 
factor that significantly differs from actual expenditure trends, and 
in turn could result in ACOs owing excessive shared losses or the 
Medicare Trust Funds paying out windfall shared savings. While we noted 
that the guardrail discussed previously would offer protection against 
some unexpected variances between the projected amount and actual 
expenditures to protect against shared losses, we also noted that we 
believed it would also be important for CMS to retain flexibility to 
reduce the impact of the prospectively determined ACPT portion of the 
three-way blend if unforeseen circumstances occur during an ACO's 
agreement period.
    When determining an approach for adjusting the three-way blend if 
unforeseen circumstances occur, we considered CMS' experience with use 
of a prospective trend, calculated by OACT based on an adjusted USPCC 
amount, in the Next Generation ACO (NGACO) Model.\329\ In the NGACO 
Model, CMS maintained the sole discretion to retrospectively modify the 
projected trend used in calculating the performance year benchmark 
(aggregate expenditure target) if CMS determined that exogenous 
factors, such as a natural disaster, epidemiological event, legislative 
change and/or other similarly unforeseen circumstance during the 
performance year, rendered the projected trend invalid. CMS used this 
discretion for the NGACO Model in response to the COVID-19 pandemic in 
PYs 2020 and 2021. For PY 2020, instead of applying the prospective 
trend, CMS offered NGACOs the choice between use of a retrospective 
national trend or a retrospective regional trend. For PY 2021, CMS 
applied a retrospective national trend to all NGACOs instead of a 
prospective trend.\330\
---------------------------------------------------------------------------

    \329\ CMS, ``Next Generation ACO Model, Calculation of the 
Performance Year Benchmark: Performance Year 2021'' (Section 2.1.7, 
``Prospective Base Year Trend''), available at https://innovation.cms.gov/media/document/ngaco-py6-bnechmark-meth.
    \330\ CMS, ``Next Generation ACO Model: Frequently Asked 
Questions'' (May 2021), available at https://innovation.cms.gov/media/document/ngaco-2021-faqs. Refer to question 18.
---------------------------------------------------------------------------

    Based on the experience in the NGACO Model, we explained that we 
believed it would be appropriate, when unforeseen circumstances occur, 
to adjust the three-way blend to prevent drastic differences between 
actual and projected expenditure trends. Accordingly, we proposed that 
if unforeseen circumstances occur, we would retain discretion to 
decrease the weight applied to the ACPT in the three-way blend. Absent 
unforeseen circumstances, we would weight the two-way blend as two-
thirds and the ACPT as one-third in calculating the three-way blend. 
However, if CMS determines an unforeseen circumstance has occurred that 
would warrant adjustments to these weights, then CMS would modify the 
three-way blend to reduce the weight that will apply to the ACPT and 
increase the weight of the two-way blend. We further proposed that CMS 
would have sole discretion to determine whether unforeseen 
circumstances exist that would warrant adjustments to these weights, as 
well as the extent to which the components of the three-way blend would 
be re-weighted. However, given that external factors that cause 
deviations from projected trends would continue to be reflected in the 
two-way blend component of the update factor, the impacts from 
unforeseen circumstances that either increase or decrease the two-way 
blend component would also then increase or decrease the three-way 
blend. We noted that this would likely mitigate the need to adjust the 
weight of the ACPT used in the three-way blend.
    Based on initial modeling, we explained our belief that the 
proposed three-way blended update factor with the associated guardrail, 
in combination with the other benchmarking changes discussed in the 
proposed rule, including to apply a prior savings adjustment and 
mitigate the impact of negative regional adjustments on ACOs, would 
serve as a mid-term solution to ensuring the sustainability of ACOs' 
historical benchmarks as we consider moving toward an administrative 
benchmarking methodology, as discussed in section III.G.7. of the 
proposed rule.
    To simulate the potential impact of the three-way blend, we 
examined ACO spending over a 5-year period (2014 to 2019) using ACO 
participant lists in effect for all 12- or 6-month performance years or 
performance periods beginning on January 1, 2019, and existing Medicare 
Part A and Part B USPCC projections published in the 2014 Medicare 
Trustees report.\331\ We also adjusted the Part A projections to remove 
IME, DSH, and uncompensated care payments, to better reflect how the 
proposed ACPT would be calculated in practice. For the purposes of this 
simulation, we used 2014 per capita spending as the historical 
benchmark for each ACO in lieu of a 3-year base period. We then 
simulated updating each ACO's historical benchmark for each of the 5 
subsequent years using the existing two-way blended update factor 
methodology (in accordance with Sec.  425.601(b)) and incorporating the 
simulated flat dollar ACPT amounts into a three-way blended updated 
factor. We compared the simulated benchmark updates determined using 
this three-

[[Page 69887]]

way blend to updates simulated using the existing two-way blend. These 
simulations showed that, on average, ACOs were better off over the 
course of the 5-year agreement period using the three-way blend than 
using the current two-way blend. That is, in a given year, an ACO's 
benchmark on average increased more when the annual update was 
calculated using the proposed three-way blend. Incorporating the ACPT 
into a three-way blended update factor during the model period resulted 
in an average benchmark increase of $19 per capita, with an average of 
62 percent of all ACOs across all years modeled receiving a larger 
benchmark increase compared with the current two-way blend. ACOs with 
high market penetration within their regional service area (ACOs whose 
assigned beneficiaries constitute at least 30 percent of the assignable 
beneficiary population within the ACO's regional service area) had 
similar results to those with lower market penetration (61 percent vs 
63 percent, respectively), with both groups receiving larger benchmark 
increases from the three-way blend. ACOs operating in markets where the 
Shared Savings Program as a whole has higher penetration (at least 50 
percent of the assignable beneficiaries in an ACO's regional service 
area are assigned to any Shared Savings Program ACO) were, on average, 
better off under the three-way blend. We observed that, on average over 
the 5-year period used in our modeling, approximately 65 percent of 
ACOs operating in markets with high Shared Savings Program penetration 
had a larger benchmark increase under the three-way blend compared with 
the two-way blend. Additionally, an average of 50 percent of ACOs with 
at least 25 percent of assigned beneficiaries being dually eligible for 
Medicare and Medicaid received a higher benchmark update under the 
three-way blend, as well as 65 percent of ACOs with at least 20 percent 
of assigned beneficiaries being disabled and 55 percent of ACOs 
operating in rural areas. As discussed in the CY 2023 PFS proposed 
rule, these results simulate a change in how the benchmark update is 
calculated holding everything else constant. That is, these results do 
not reflect any additional savings that may have materialized had a 
three-way blend that includes the ACPT been in place during the 5-year 
period included in our modeling. However, we also explained that 
introducing the ACPT into a three-way blend may incentivize ACOs to 
achieve additional savings, and that the three-way blend would then 
insulate a portion of the benchmark update from the impact of those 
savings as actual spending trends downward from initial projections. As 
a result, a higher percentage of ACOs may benefit from the three-way 
blend than is reflected in these simulations.
---------------------------------------------------------------------------

    \331\ The Boards of Trustees, Federal Hospital Insurance and 
Federal Supplementary Medical Insurance Trust Funds, ``2014 Annual 
Report of the Boards of Trustees of the Federal Hospital Insurance 
and Federal Supplementary Medical Insurance Trust Funds'', available 
at https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/downloads/tr2014.pdf.
---------------------------------------------------------------------------

    In the proposed rule, we noted our belief that incorporating the 
prospective trend into the benchmarking methodology by including the 
ACPT in a three-way blended update factor would be an important step 
towards an administrative benchmarking approach. ACOs may have a 
greater incentive to enter and continue participation in the Shared 
Savings Program when their benchmarks are further decoupled from their 
ongoing observed FFS spending while continuing to reflect a measure of 
the ACO's efficiency relative to its region. This approach may also 
serve to anchor and stabilize benchmarks to the extent that the ACPT 
projected growth component is an effective counterbalance when there 
are changes in an ACO's penetration in its regional service area that 
affect the weights given to the national and regional expenditure 
components of the current two-way blended update factor. However, we 
recognized that some interested parties may still have concerns and 
prefer a different approach to address impacts that may result from ACO 
market penetration. In section III.G.5.c.(6) of the proposed rule (87 
FR 46183 through 46186), we sought comment on two potential 
alternatives to the package of benchmarking policies we were proposing 
to adopt. We explained that both of the alternatives presented in 
section III.G.5.c.(6) would attempt to limit the impact of an ACO's own 
assigned beneficiaries on regional factors used in the benchmarking 
methodology.
    Because the proposed three-way blended update factor would be used 
in place of an update factor based on the projected absolute amount of 
growth in national per capita expenditures for Parts A and B services 
under the original FFS program as called for in section 
1899(d)(1)(B)(ii) of the Act, we explained that this proposal would 
require us to continue to use our authority under section 1899(i)(3) of 
the Act. That provision grants the Secretary the authority to use other 
payment models, including payment models that use alternative 
benchmarking methodologies, if the Secretary determines that doing so 
would improve the quality and efficiency of items and services 
furnished under the Medicare program and program expenditures under the 
alternative methodology would be equal to or lower than those that 
would result under the statutory payment model.
    In the proposed rule, we explained our belief that by combining an 
external, prospective factor calculated based on the USPCC, as a 
component in the benchmark update, the proposed ACPT/national-regional 
three-way blended update factor would decouple an ACO's benchmark to a 
certain degree from ongoing observed FFS spending which is currently 
reflected in ACO benchmarks under the methodology specified under Sec.  
425.601. We noted that this approach may serve to anchor and stabilize 
benchmarks to the extent that the ACPT projected growth component is an 
effective counterbalance to the savings achieved by ACOs participating 
in the Shared Savings Program, which reduce the update factor under the 
current two-way national-regional blended update, including as a result 
of increasing market penetration by efficient ACOs in their regional 
service area. The proposed guardrail would protect ACOs from larger 
shared losses (or potentially from the negative implications of 
financial monitoring) but would not allow ACOs to move to a position of 
sharing in savings. Additionally, the proposal that CMS would retain 
discretion to reweight the components of the three-way blend to adjust 
the weight applied to the ACPT and the two-way blend in the event of 
unforeseen circumstances that result in drastic differences between the 
ACPT and actual national per capita FFS expenditure growth for 
assignable beneficiaries for a given performance year, would protect 
against ACOs owing excessive shared losses or the Medicare Trust Funds 
paying out windfall shared savings. We explained our belief that this 
combination of additional incentives and safeguards may encourage ACOs 
to enter and continue participation in the Shared Savings Program.
    As discussed in section III.G.5.d. of the proposed rule (87 FR 
46186 through 46188), we also proposed to determine the assignable 
population of beneficiaries used in calculating county-level FFS 
expenditures, and in other factors based on the assignable population 
in the ACO's regional service area, using the assignment window that 
corresponds to the ACO's selected assignment methodology to improve the 
precision of the calculations. As we explained in the CY 2023 PFS 
proposed rule, this modification would address a favorable bias in 
calculations for ACOs under prospective assignment, resulting in an 
estimated decrease in regionally

[[Page 69888]]

adjusted historical benchmarks for these ACOs estimated to range from 
0.2 percent-1.9 percent based on modeling using historical benchmarks 
for ACOs participating in the 6-month performance year from July 1, 
2019, through December 31, 2019 (compared to leaving the bias 
uncorrected). If left uncorrected, the bias could potentially grow over 
time as more ACOs are subject to higher weights in the calculation of 
the regional adjustment. The proposed change in methodology for 
identifying the assignable beneficiaries used in calculating factors 
based on regional FFS expenditures would also improve the precision of 
the calculation of the blended national-regional growth rates within 
the benchmark update.
    Considering the combination of these factors, in the proposed rule 
we explained our belief that the changes to the methodology for 
updating the benchmark that we proposed pursuant to section 1899(i)(3) 
of the Act would improve the quality and efficiency of items and 
services furnished under the Medicare Program. More specifically, we 
noted that we believed the introduction of the prospectively set ACPT 
into the blended benchmark update factor would increase the incentive 
for ACOs to achieve savings by partially insulating ACOs from the 
impact of those savings on future benchmark updates. We also noted that 
our belief that this change would encourage ACOs to enter and remain in 
the Shared Savings Program, which would lead to improvement in the 
quality of care furnished to Medicare FFS beneficiaries because 
participating ACOs have an incentive to perform well on quality 
measures in order to maximize the shared savings they may receive, and 
in the case of ACOs participating under the ENHANCED track to minimize 
any shared losses owed (as described in section III.G.4. of the 
proposed rule). In addition, as discussed in the Regulatory Impact 
Analysis for the proposed rule (87 FR 46427), we projected that this 
proposed approach for use of an ACPT/national-regional three-way 
blended update factor, in combination with other proposed changes to 
the statutory payment model in the CY 2023 PFS proposed rule, as well 
as current policies established using the authority of section 
1899(i)(3) of the Act, would not increase program expenditures relative 
to those under the statutory payment model. We explained that we would 
continue to reexamine this projection in the future to ensure that the 
requirement under section 1899(i)(3)(B) of the Act that an alternative 
payment model not result in additional program expenditures continues 
to be satisfied. In the event that we later determine that the payment 
model established under section 1899(i)(3) of the Act no longer meets 
this requirement, we would undertake additional notice and comment 
rulemaking to make adjustments to the payment model to assure continued 
compliance with the statutory requirements.
    We proposed that the update factor based on a three-way blend of 
the ACPT and blended national-regional growth rates and the associated 
guardrail would be applicable to agreement periods beginning on January 
1, 2024, and in subsequent years. We proposed to specify the use of the 
three-way blend, the associated guardrail, and the discretion for CMS 
to adjust the weight of the ACPT in the three-way blend in the event of 
unforeseen circumstances in paragraph (b) of a proposed new provision 
at Sec.  425.652, which would govern the process for establishing, 
adjusting, and updating the benchmark for agreement periods beginning 
on January 1, 2024, and in subsequent years. We also proposed to 
specify within Sec.  425.652(b) the other components of the update 
factor, namely the calculation of the national and regional components 
of the blend which would follow the same approach currently specified 
under Sec.  425.601(b), although with conforming changes to reflect the 
use of a three-way blend. Further, we proposed to specify the 
calculation of the ACPT in a new provision at Sec.  425.660.
    We sought comment on the proposal to use a three-way blend that 
incorporates the ACPT to update an ACO's historical benchmark for 
agreement periods beginning on January 1, 2024, and in subsequent 
years. We also sought comment on the specific elements of the approach, 
including our proposal to calculate the ACPT on a risk-adjusted flat 
dollar basis, to institute a guardrail to protect ACOs, and to retain 
discretion to adjust the weight applied to the ACPT and the two-way 
blend in the event of unforeseen circumstances.
    The following is a summary of the public comments received in 
response to our proposal to incorporate a prospective, external factor 
in the growth rates used to update the historical benchmark and our 
responses:
    Comment: Commenters addressing our proposal to use a three-way 
blend that incorporates the ACPT to update an ACO's historical 
benchmark for agreement periods beginning on January 1, 2024, and in 
subsequent years, generally favored an approach that would attempt to 
insulate a portion of the annual update from the cost efficiencies 
resulting from the ACO's historical performance and thereby mitigate 
the ratchet effect. However, commenters offered varying perspectives on 
whether the proposed approach or an alternative approach would best 
achieve these objectives.
    Many commenters generally supported an approach under which CMS 
would prospectively set a component of the ACO's updated historical 
benchmarks. Some commenters expressed support for the proposed approach 
to use a three-way blended update factor. One commenter explained that 
the proposed ACPT would positively impact the patient mix ACOs serve by 
offsetting regional factors that make it difficult for ACOs to achieve 
shared savings and serve to disincentivize ACOs from providing care to 
certain beneficiary populations. Commenters also explained that the 
approach would provide greater stability to the benchmark value and 
allow ACOs to better predict their benchmarks and have greater 
visibility into the benchmark calculation (although as discussed 
elsewhere within this section of this final rule, some commenters urged 
for increased transparency on the calculation of the ACPT). Another 
commenter explained that the proposed ACPT would enable ACOs to 
effectively operate in under-resourced communities, close gaps in 
health equity and address social determinants of health. Yet another 
commenter explained that an ACPT would help maintain fairness within 
the Shared Savings Program, from which both ACOs and the government 
benefit.
    More generally, some commenters believed that use of a prospective, 
external factor in the benchmarking methodology would be a step toward 
a longer-term administrative benchmarking approach, as discussed 
further in section III.G.7 of this final rule. Several commenters 
explained that the ratchet effect, and CMS' goal of having all Medicare 
FFS beneficiaries in an accountable care arrangement by 2030 make the 
current benchmarking strategies untenable. These commenters explained 
that the ACPT would serve as a positive short-term step to ameliorating 
these issues while CMS works to refine its administrative benchmarking 
strategy.
    Response: We appreciate the commenters' support for the proposal 
under which we would place one-third weight on the ACPT and two-thirds 
weight on the existing two-way

[[Page 69889]]

national-regional blend used to update the ACO's historical benchmark. 
We are finalizing this proposal, which we believe will address dynamics 
under which savings achieved by ACOs participating in the Shared 
Savings Program reduce the two-way national-regional blended update, 
including as a result of increasing market penetration by efficient 
ACOs in their regional service area. We believe use of the ACPT, 
calculated as a risk-adjusted flat dollar amount set near the start of 
the ACO's 5-year agreement period, will decouple an ACO's benchmark to 
a certain degree from ongoing observed FFS spending currently reflected 
in ACO benchmarks and will thereby serve to anchor and stabilize 
benchmarks. We continue to believe the national-regional blend, 
comprising two-thirds of the update factor (with the majority of the 
two-way blend consisting of the regional trend for most ACOs, since 
most ACOs have relatively low market penetration), plays an important 
role in the update factor by ensuring benchmarks account for 
expenditure growth in the ACO's regional service area.
    Further, we believe that finalizing the proposed three-way blended 
update factor, and other changes to the Shared Savings Program 
benchmarking methodology and participation options (including to make 
AIPs available to eligible ACOs, and to smooth the transition to 
performance-based risk) that we are finalizing as described in sections 
III.G.5 and III.G.2 of this final rule (respectively), are important 
steps forward in advancing Medicare's value-based care strategy of 
growth, alignment, and equity. A key component of this strategy is to 
address the underlying dynamics of the current benchmarking 
methodology, including the existing two-way national-regional blend, 
and ensure there is sufficient incentive for participation among ACOs 
serving underserved communities, or high-cost, medically complex 
populations.
    Comment: A few commenters urged CMS not to finalize use of a 
prospective, external factor in updating ACO historical benchmarks. 
Several commenters urged CMS to take additional time to evaluate or 
pilot test the potential impact of the proposed approach before fully 
implementing it within the Shared Savings Program.
    Many commenters expressed concerns about the proposed approach and 
recommended modifications to the approach if CMS were to move forward 
with incorporating a prospective, external factor in updating 
historical benchmarks, or provided alternative suggestions for 
modifying the benchmarking methodology. Commenters' concerns tended to 
center on the unknown accuracy of the projected amount, the potential 
for mixed effects of the approach under which ACOs may receive lower 
benchmarks under the three-way blend compared to the existing two-way 
blend, and a preference among some commenters for use of regional FFS 
trends in benchmark calculations. Some commenters urged CMS to adopt an 
alternative approach to calculating regional FFS expenditures, in 
addition to or instead of use of a prospective, external factor in 
updating the ACO's historical benchmark. We summarize and respond to 
these commenters' concerns and suggestions elsewhere within this 
section of this final rule.
    Response: We decline commenters' suggestions to forgo finalization 
of the proposed approach to incorporate a prospective, external factor 
in the growth rates used in updating the benchmark, and we are 
finalizing the proposal to apply this approach to update ACO benchmarks 
for agreement periods beginning on January 1, 2024, and in subsequent 
years. We believe the three-way blended update factor is one of several 
timely and appropriate changes to the Shared Savings Program's 
benchmarking methodology designed to ensure the availability of robust 
benchmarks that create sufficient incentives to encourage ACOs to enter 
and remain in the Shared Savings Program. We believe that finalizing 
the three-way blended update factor in this final rule, as part of a 
package of benchmark changes, is crucial to supporting the agency's 
goal of having all Medicare FFS beneficiaries in an accountable care 
arrangement by 2030. These important changes will help ensure that 
ACOs' past success does not limit opportunities to achieve and sustain 
success over time, thus strengthening participation incentives and 
ultimately expanding the Shared Savings Program's reach. We further 
believe that incorporating the ACPT into the update factor could 
maintain accurate benchmarks in light of rapid growth in the number of 
Shared Savings Program ACOs and the percentage of Medicare FFS 
beneficiaries assigned to ACOs. Based on modeling in the Regulatory 
Impact Analysis (section VII of this final rule) that showed 
significant expected growth in benchmark spending under the program, we 
project, on average, up to 4 million additional beneficiaries could be 
assigned to Shared Savings Program ACOs in the 10 years between 2024-
2034, as a result of the changes we are finalizing to the Shared 
Savings Program's policies with this final rule, representing a 
significant increase in market penetration by ACOs. We believe the 
three-way blended update factor, which decouples one-third of an ACO's 
benchmark from ongoing observed FFS spending, will provide for a more 
sustainable update methodology than the two-way blend alone, 
particularly as market penetration by Shared Savings Program ACOs 
increases.
    We decline to delay implementation of the ACPT as part of the 
three-way blended update factor, and we decline to allow for additional 
time to test the approach, as suggested by commenters. The timing of 
implementing the three-way blended update factor, among other changes 
to Shared Savings Program policies we are finalizing with this final 
rule, is consequential. ACOs entering and continuing their 
participation in the Shared Savings Program under 5-year agreement 
periods beginning in upcoming years, such as for the agreement periods 
spanning 2024-2028, 2025-2029, and 2026-2030, will be pivotal to 
ensuring Medicare FFS beneficiaries are in a care relationship with 
accountability for quality and total cost of care in order to meet the 
agency's 2030 goal.
    Moreover, as described elsewhere in this section of this final 
rule, our proposals were informed by consideration of suggested 
modifications to the benchmarking methodology from ACOs and other 
interested parties, and by our experience with Innovation Center ACO 
Models. The development of our proposal to use the ACPT as part of a 
three-way blended update factor was informed by consideration of 
commenters' suggestions from earlier rulemaking, including suggestions 
received in response to comment solicitations on the Shared Savings 
Program benchmarking methodology in the CY 2022 PFS proposed rule (86 
FR 65295 through 65306). The development of our proposed approach was 
also informed by our experience with the NGACO Model and with the 
Global and Professional Direct Contracting Model (to be redesigned and 
renamed as the ACO REACH Model beginning January 1, 2023) which uses a 
prospective trend calculated by OACT based on an adjusted USPCC amount. 
However, we anticipate evaluating and monitoring the impact of the ACPT 
on ACO historical benchmarks, and would address any necessary 
refinements to the approach through future notice and comment 
rulemaking.
    Comment: Some commenters that expressed concerns about the proposed

[[Page 69890]]

approach encouraged CMS to engage with ACOs and other interested 
parties to further develop and evaluate the ACPT.
    Response: We welcome and encourage an ongoing dialogue between CMS, 
ACOs and other interested parties about approaches to improving the 
Shared Savings Program's benchmarking methodology, including the 
policies we are establishing in this final rule.
    Comment: The progression of the Shared Savings Program's 
benchmarking policies was an important backdrop for commenters' 
consideration of the adequacy of the proposed three-way blended update 
factor. A few commenters recounted the initial use of factors based on 
national FFS expenditures to update the benchmark, followed by use of 
factors based on regional FFS expenditures, and most recently the use 
of a factor that is a blend of national expenditure and regional 
expenditure components, with some commenters noting that the current 
two-way blended update factor does not adequately account for the 
influence of an ACO's savings in relation to its own benchmark or the 
influence of other ACOs in its region on its regional expenditures.
    Commenters took opposing positions on the best approach to address 
concerns with the current benchmarking approach, with some favoring 
incorporating an external factor based on projected national cost 
trends and others urging CMS to maintain or increase the role of a 
regional component in the benchmark update. Many commenters urged CMS 
to put in place safeguards to mitigate the potential for negative 
impacts of the benchmarking methodology on ACOs. Commenters' concerns 
centered on the potential negative impact of the proposed three-way 
blend on ACOs' ability to generate shared savings and the amount of 
savings, as compared to the existing two-way blend, as well as concerns 
about whether the existing two-way blend offers sufficient incentive 
for ACOs to participate in the program and generate savings. A few 
commenters urged CMS to pace the phase-in of changes to the 
benchmarking methodology in a way that safeguards against negative 
impacts on ACOs that could create disincentives for ACOs to enter or 
remain in the Shared Savings Program.
    Commenters opposed to increasing the relative weight of national 
spending growth in the benchmark update, thereby reducing the relative 
weight on regional spending trends, cited concerns that the proposed 
ACPT and three-way blend would not adequately account for geographic 
variation in spending growth that is outside of an ACO's control. As 
one commenter explained, echoing concerns raised by others, the 
proposed three-way blend would constitute a ``step backward'' from 
accounting for regional variation in ACO benchmarks.
    Some commenters explained their belief that comparing an ACO to its 
region is a fairer and more accurate approach to assessing performance 
than comparing to national growth rates. Several commenters specified 
that regional spending trends help account for local changes or shocks 
to spending growth for which ACOs should not be held accountable.
    Several commenters noted that because there are persistent and 
significant variations in regional spending trends compared to national 
trends, regional trends would serve as a more accurate measure of how 
spending would have changed absent the ACO's response to Shared Savings 
Program incentives. Some commenters explained that using a national 
trend factor would result in higher benchmarks and thereby benefit ACOs 
in regions with comparatively slower spending growth, and result in 
lower benchmarks and thereby harm ACOs in regions with comparatively 
faster spending growth, leading to selective participation. For 
example, commenters explained that efficient, low-cost providers, 
including ACOs, that operate in regions where spending exceeds the ACPT 
would be harmed by having their already low spending targets further 
reduced over time. Another commenter also stated more generally that 
such selective participation could arise as ACOs observe projection 
errors that reveal the ACPT to be higher relative to actual spending 
trends. Although perhaps indicative of an inadvertent error, we note 
that several commenters also suggested (to the contrary), that if an 
ACO is in a region where spending growth falls below that of the USPCC, 
it would receive smaller update factors under CMS's proposed use of the 
ACPT. Some of these commenters cited their own analyses to support this 
notion that regional trends vary substantially and are persistent over 
time. One commenter expressed concern that ACOs with higher market 
penetration may tend to have faster regional growth rates and thus 
receive lower benchmarks under the three-way blend compared to the 
current two-way blend, and ACOs under these circumstances may be 
hesitant to enter the Shared Savings Program.
    Given the aforementioned concerns, commenters requested various 
modifications to the proposed approach to incorporating an externally 
set prospective trend, or suggested CMS use alternative approaches to 
update the historical benchmark, including the following.
     Several commenters suggested keeping the current two-way 
blend weighting approach and substituting the historical national 
spending trend component with the proposed ACPT. For example, one 
commenter cited their belief that spending growth rates vary 
substantially and systematically across geographic areas and expressed 
concern that adding the ACPT would effectively reduce the weight given 
to regional spending growth in the annual benchmark updates. The 
commenter provided an analysis of risk-adjusted spending trend 
variations at the CBSA and county levels from 2015 through 2020 to 
support these conclusions. Their results suggested that the variation 
in the difference between county and national cumulative growth rates 
increases as the performance year grows farther from the baseline year, 
and they concluded from these and related findings that ACOs in some 
regions would experience sustained differences in annual expenditure 
growth from the national average growth rate. The commenter stated that 
basing the ACPT on the national trend and reducing the weight on the 
regional trend would then create winners and losers solely based on 
geography and create greater incentives for selective participation and 
provider consolidation.
     Several commenters suggested that the ACPT project 
regional rather than national spending growth.
     One commenter suggested CMS consider additional 
adjustments to mitigate the impact of regional spending variation in 
the three-way blend, for example by using case mix and geographic 
adjustments, but did not specify what these approaches could entail.
     A few commenters expressed their preference for use of 
only regional spending trends in benchmarking instead of either the 
current two-way blend or the proposed three-way blend.
    Response: One common thread throughout many commenters' concerns 
was that observed regional spending trends are persistent over time and 
vary substantially across geographic regions, and so reducing the 
relative weight assigned to regional spending trends in the proposed 
three-way blend might disadvantage ACOs in areas with a faster spending 
growth rate compared with the current two-way blend.
    To assess commenters' concerns, CMS analyzed whether ACO regional 
service

[[Page 69891]]

area per capita spending growth rates were predictably above or below 
national spending growth over an extended historical period. The 
analysis used FFS per capita spending published by CMS over the 2007 to 
2016 time series broken down by Hospital Referral Region (HRR) 
geographic level.\332\ HRRs provide a reasonable approximation of how 
counties can be weighted together to produce various ACO service areas. 
Comparing individual HRR excess growth in per capita spending relative 
to the national average for a base period covering 2007 to 2010 
compared to a quasi-performance period of 2011 to 2016 indicated that 
about 47 percent of HRRs flipped from positive excess growth in the 
first period to negative excess growth in the second period or vice-
versa. Among the 53 percent of HRRs that remained above or below 
national average growth in both periods the cause was likely related to 
relative spending at baseline. For 173 HRRs with positive excess 
relative growth in both periods the average starting per capita 
spending level was on average 13 percent below the national average, 
whereas for the 133 HRRs with below-national average growth in both 
periods the average starting per capita spending level was on average 7 
percent above the national average. For comparison, the average 
starting per capita spending level was on average only 3 percent below 
the national average for the 47 percent of ACOs that flipped from one 
side of national growth to the other across the two periods. By 
utilizing a risk-adjusted flat-dollar method, the ACPT contribution to 
the three-way update is therefore expected to be reasonably equitable 
by providing a higher relative update for ACOs with (or in regions 
with) low spending at baseline (the type of HRR that tended to show 
excess growth historically). Modifying the analysis above using risk-
adjusted absolute growth in per capita expenditures confirmed that the 
average starting per capita spending levels converged to within 4 
percentage points for all three categories of HRRs described above 
(that is, HRRs that stayed higher than average growth over both 
periods, HRRs that remained below-average growth over both periods, and 
all remaining HRRs that flipped from one side of national average 
growth to the other from the first period to the next). Furthermore, 
the correlation in HRRs' average excess growth between the 2 multi-year 
periods (after employing risk adjustment and using absolute growth) was 
0.18 when including all HRRs and only 0.05 after excluding three 
outliers with very high starting spending levels (McAllen and 
Harlingen, both in Texas, and Miami, Florida), effectively implying no 
relationship between an HRR's excess trend in the first period to the 
second. Importantly the use of the ACPT in a three-way blended update 
factor will also provide an update component that will be protected 
from ratcheting downward as the Shared Savings Program is expected to 
grow and protected from ACOs' impacting spending at the regional and 
national levels.
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    \332\ Data, Medicare Geographic Variation--by National, State & 
County, downloaded from https://data.cms.gov/summary-statistics-on-use-and-payments/medicare-geographic-comparisons/medicare-geographic-variation-by-national-state-county.
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    Over a 5-year agreement period, we recognize some ACOs may be 
disadvantaged or advantaged in the short term by benchmark updates that 
give greater weight to a national update factor. However, we believe 
that the net impact of these deviations will be modest in the context 
of offsetting considerations, for example: the three-way blend only 
incorporates the ACPT at a one-third weight and maintains the current 
two-way blend for the majority weight of the benchmark trend 
calculation, allowing for a significant proportion of the benchmark 
update to reflect expenditure growth in an ACO's regional service area, 
particularly as many ACOs have a relatively small amount of penetration 
within their market; the ACPT itself is expected to project spending 
above realized spending as ACOs generate savings, thereby providing a 
stable, predictable component of the update factor that will be 
beneficial for ACOs; a guardrail will protect ACOs from experiencing 
additional shared losses due to the three-way blend; and positive 
regional adjustments will continue to provide a benchmarking advantage 
for more efficient ACOs. Further, in light of these offsetting factors, 
we also believe that overall the benefits of use of the ACPT in 
updating the benchmark, for attracting and retaining ACOs in the Shared 
Savings Program and in turn savings potential, outweigh the potential 
negative impact on some ACOs' update amount as a result of this 
approach. We appreciate commenters' concerns about potential 
detrimental effects of this policy and will monitor how the three-way 
blend affects ACOs' benchmarks as it is implemented, and would address 
the need for any potential modifications to the approach through future 
notice and comment rulemaking.
    We decline to adopt commenters' suggestions to maintain the current 
two-way blend and replace the current national component with the 
proposed ACPT, or to use only regional trends to calculate ACO 
benchmarks. We continue to believe that the existing two-way national-
regional blend serves an important role in reducing the influence of 
the ACO's assigned beneficiaries on the benchmark update, and serves as 
an alternative to removing the ACO's assigned beneficiaries from the 
assignable population,\333\ which we believe is an untenable solution. 
(Refer to section III.G.5.c.(6) of this final rule for additional 
discussion of the alternative option under which the ACO's assigned 
beneficiaries would be removed from the assignable population used to 
calculate regional FFS expenditures.)
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    \333\ For example, in establishing this approach we explained 
that it could serve as an alternative option to excluding an ACO's 
own assigned beneficiaries from the population used to compute 
regional expenditures. See for example, 83 FR 68024.
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    Continued use of the two-way blend as a component of the three-way 
blended update factor maintains a degree of symmetry with the two-way 
blend used to trend forward expenditures for BY1 and BY2 to BY3 in 
establishing the ACO's historical benchmark. Furthermore, maintaining 
the current national-regional two-way blend remains an important 
safeguard during this initial introduction of the ACPT as part of the 
three-way blend. We will utilize the current two-way blend as the basis 
for the ACO's update factor as part of the guardrail to protect ACOs 
against higher financial risk under the three-way blend, and it is also 
integral to our approach to addressing unforeseen circumstances that 
impact the accuracy of the ACPT, by reducing the weight on the ACPT 
within the three-way blend and increasing the weight on the two-way 
blend. However, CMS will continue to monitor the application of the 
ACPT in benchmark updates and in the future may explore potential 
modifications to how the external projected growth rate is 
incorporated. Any such modifications would be made through notice and 
comment rulemaking.
    We decline to adopt commenters' various suggestions to have the 
ACPT project regional instead of national trends. Calculating ACO 
region-specific ACPTs would require projecting spending growth at the 
county level, based on our current approach to defining an ACO's 
regional service area according to Sec.  425.20, which is infeasible 
because assumptions for multi-year spending growth are made on a 
population level (that is, on a national

[[Page 69892]]

basis, Medicare-wide) and not on a geographic basis.
    We also decline at this time to adopt the commenter's suggestion 
that we make geographic adjustments to the ACPT because we believe the 
commenters' concerns are at least partly mitigated by the three-way 
blend maintaining the existing two-way blend, which incorporates 
regional trends. However, we note that in the request for information 
on administratively set benchmarks in section III.G.7 of the CY 2023 
PFS proposed rule, we discussed our consideration of an approach under 
which we would incorporate adjustments into the ACPT to account for 
changes in relative price levels across counties.
    Regarding the commenter's suggestion that we apply case mix 
adjustments to the ACPT, we note that the approach we proposed, and are 
finalizing, to calculate the ACPT as a risk-adjusted flat dollar amount 
will account for differences in severity and case mix between the ACO's 
assigned beneficiaries and the national assignable FFS population for 
each Medicare enrollment type. As we explained in the CY 2023 PFS 
proposed rule, risk adjusting the flat dollar amount will provide 
higher flat dollar amounts for ACOs serving medically complex 
populations.
    Comment: Some commenters addressed more specifically the potential 
role of the proposed three-way blend in addressing concerns about 
ratchet effects on benchmark update factors resulting from high ACO 
market penetration.
    Some commenters expressed their belief that the proposed three-way 
blended update factor was an incomplete solution to addressing the 
impact of ACO market penetration on historical benchmark expenditures, 
and suggested that CMS address these impacts by making additional 
adjustments to Shared Savings Program's benchmarking methodology. Some 
commenters, mostly commenters that also expressed a preference for use 
of regional spending trends in benchmarking, suggested removing ACOs' 
assigned beneficiaries from regional FFS expenditures used in 
calculating benchmarks. Commenters varied in whether they suggested 
these changes in addition to or instead of the proposed three-way 
blended update factor, or in addition to suggested alternative 
approaches. A few commenters also suggested that CMS use a broader 
geographic region to determine regional FFS expenditures as part of 
alternative suggestions, which included maintaining the existing 
national-regional blended update factor instead of implementing the 
proposed three-way blend. We refer readers to section III.G.5.c.(6) of 
this final rule, where we summarize and respond to comments on related 
alternatives. Further, some commenters believed the three-way blend 
would provide an inadequate solution when savings generated by ACOs 
with higher market shares subsequently ratchet down these ACOs' 
regional benchmarks.
    Several commenters indicated there may not be an urgent need for 
the proposed three-way blend, for example pointing to ACO market share 
being at or below 40 percent of the national FFS population and that 
few ACOs are heavily penetrated in their regional service area. Another 
commenter made a more general statement that using a prospective trend 
factor dilutes the impact of ACO market share on the benchmark but 
fails to address the root cause of the ratchet effect and is therefore 
an inadequate solution. A few of these commenters pointed to these 
factors as reasons for CMS to delay implementation of the three-way 
blend within the Shared Savings Program, or to consider alternative 
approaches to address the underlying issue.
    Response: While we agree with commenters that many ACOs have 
relatively small penetration in their regional market area, we disagree 
that this would be a reason to forestall addressing ratchet effects 
within the Shared Savings Program's benchmarking methodology through 
use of the three-way blended update factor. As discussed elsewhere 
within section III.G.5 of this final rule, ACOs and other interested 
parties have continued to raise concerns about benchmarking dynamics 
under which ACOs compete against themselves as their spending 
reductions are reflected in the regional spending trends that determine 
a portion of their benchmarks. Additionally, even in areas where a 
single ACO may represent a small portion of the assignable 
beneficiaries in its regional service area, the collective effects of 
other ACOs within the regional service area may also influence regional 
trends. We believe the use of the three-way blended update factor is an 
important step towards a more sustainable benchmarking methodology that 
offers sufficient incentives to encourage entry into and continued 
participation by ACOs in the Shared Savings Program, accounting for 
variation in ACOs' market share and the level of penetration of the 
ACOs collectively within a region. Furthermore, we anticipate 
participation in the Shared Savings Program will grow as CMS makes 
strides towards its goal of having all Medicare FFS beneficiaries in an 
accountable care arrangement by 2030.
    Comment: A few commenters addressed the potential impact of the 
benchmarking policies on health care market dynamics. One commenter 
generally suggested that regional benchmarks help drive competition 
within regions. Several commenters indicated that emphasizing national 
spending trends in a three-way blended update factor would create a 
stronger incentive for ACOs to consolidate within regional markets as 
ACOs seek greater influence on their region's spending to help them 
remain under the national trend. The commenters indicated that these 
incentives exist because ACOs that have higher market penetration would 
face benchmarks where national spending trends, observed and projected, 
account for more than a one-third weight. Another commenter explained 
that the proposed three-way blended update factor could create a 
significant financial disincentive for independent practices and 
physicians in certain regions to move into and stay in the Shared 
Savings Program. This commenter urged CMS not to finalize the proposal, 
but instead to work with stakeholders to assess benchmarking changes 
that would better achieve CMS' goals and be more equitably applied.
    Response: We are not persuaded by commenters' concerns that the use 
of an ACPT within a three-way blended update factor could create 
consolidation incentives within regional markets. As we have described 
in earlier rulemaking (see for example, 83 FR 68049), overall payment 
reform has been associated with little acceleration in consolidation of 
health care providers that surpasses trends already underway, although 
there is some evidence of potential defensive consolidation in response 
to new payment models.\334\ Anecdotally, ACOs provide physician 
practices with a way to stay independent and offer a viable alternative 
to merging with a hospital.\335\ We believe the three-way blend would 
likely do little to substantially increase any existing incentives for 
provider consolidation as

[[Page 69893]]

compared to the two-way blended update factor. To the contrary, we 
believe the changes to the Shared Savings Program's participation 
options and financial methodology we are finalizing with this final 
rule have the potential to attract and retain ACOs that vary in their 
composition of providers/suppliers, their efficiency relative to their 
region, their experience with accountable care initiatives, and in the 
needs of the populations they serve. In particular, participation by 
new, low revenue ACOs may be fostered by the availability of advance 
investment payments to eligible ACOs (discussed in section III.G.2.a of 
this final rule), a smoother transition to two-sided risk (discussed in 
section III.G.2.b of this final rule), and the increased opportunities 
for low revenue ACOs participating in the BASIC track to earn shared 
savings (discussed in section III.G.5.f of this final rule). 
Additionally, combining with another ACO or adding new providers/
suppliers to the ACO will not necessarily increase an ACO's market 
share in a localized geographic area, as these actions may actually 
grow the ACO's defined regional service area. Lastly, the one-third 
weighting given to the ACPT may reduce incentives for ACOs to 
consolidate compared to the current two-way blend because consolidation 
would have limited to no impacts on an external, national prospectively 
set update factor.
---------------------------------------------------------------------------

    \334\ See, for example, Neprash HT, Chernew ME & McWilliams JM. 
Little Evidence Exists to Support the Expectation That Providers 
Will Consolidate to Enter New Payment Models. Health Affairs. 2017; 
36(2): 346-354. doi:10.1377/hlthaff.2016.0840. Available at https://www.healthaffairs.org/doi/10.1377/hlthaff.2016.0840.
    \335\ See for example, Mostashari, F. The Paradox of Size: How 
Small, Independent Practices Can Thrive in Value-Based Care. Ann Fam 
Med. 2016; 14(1):5-7. doi:10.1370/afm.1899. Available at https://www.annfammed.org/content/14/1/5.long.
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    Comment: One commenter explained its belief that the proposed fixed 
weight of one-third applied to the ACPT component of the three-way 
blended update factor is not appropriate when there are great 
variations in expenditures between counties that ACOs serve and in the 
level of an ACO's market penetration in its respective region. This 
commenter instead suggested that CMS consider applying a ``dynamic'' 
weight for the ACPT, such as the approach used to calculate the weights 
within the national-regional blended growth rate, or another, 
statistically sound formula.
    Response: We decline at this time to adopt the commenter's 
suggestion to adjust the weight given to the ACPT component of the 
three-way blend based on each ACO's level of market penetration, as is 
done for the national component of the current two-way blend. As we 
discuss elsewhere in this section of this final rule, a key aim of 
incorporating a prospectively projected growth factor into the annual 
benchmark update is to provide ACOs with a degree of certainty 
regarding these updates for the duration of their agreement period, 
while simultaneously insulating a portion of the benchmark update from 
the impact of any savings achieved by ACOs participating in the Shared 
Savings Program. The ``dynamic'' weight suggested by the commenter 
would reduce the level of certainty the ACPT would provide to ACOs 
because the weight applied to that portion of the three-way blend could 
fluctuate on an annual basis, and ACOs would not find out the final 
weight applied to a given performance year until several months after 
that performance year ended. Additionally, we continue to believe that 
a variable weight similar to what is applied in the current two-way 
blend is not necessary for the ACPT portion of the three-way blend 
because the growth factor used for the ACPT is projected at the 
beginning of the agreement period and would not be impacted by an ACO's 
performance, unlike impacts that could occur on the regional portion of 
the two-way blend for ACOs with high market penetration. CMS will 
continue to monitor the three-way blend and may explore potential 
modifications in the future to how the external projected growth rate 
is incorporated. Any such modifications would be made through notice 
and comment rulemaking.
    Comment: MedPAC was generally supportive of the proposed three-way 
blend but had reservations about the potential for USPCC projections to 
overestimate growth in national per capita spending, which MedPAC 
explained could result in benchmarks that fail to adequately 
incentivize ACOs to provide care efficiently and lead to shared savings 
payments that are larger than warranted. MedPAC suggested that the 
benchmark growth rate should be lower than the USPCC. MedPAC noted 
another concern with basing part of the benchmark growth rate on USPCC 
is that the spending measure includes several types of spending that 
are not under the control of ACOs and should not be included in 
benchmark growth rates, such as IME and DSH payments. Further, MedPAC 
recommended excluding shared savings payments and other value-based 
payments made to ACOs or providers from the ACPT. MedPAC explained that 
including those payments in the benchmark growth rate would act to 
increase benchmarks by essentially ``double counting'' those savings, 
which would result in less pressure on ACOs to reduce spending growth. 
According to MedPAC, not only would this undermine the goals of the 
Shared Savings Program, but the higher spending in FFS would carry 
through to Medicare Advantage benchmarks, resulting in less pressure on 
private plans to bring down spending growth in that part of the 
Medicare program.
    Another commenter raised concerns that the three-way blend would 
not allow benchmarks to increase beyond actual spending growth rates if 
the ACPT takes into account expected spending reductions from ACOs over 
the projection period. Instead of implementing the three-way blend, the 
commenter suggested that CMS broaden the geographic regions used to 
compute the regional component of the existing national-regional blend 
and consider increasing that growth rate by a fixed percentage-point 
amount (such as 0.25 percentage points).
    Response: We appreciate the commenters' concerns regarding the 
incorporation of expected savings from ACO participation in calculating 
the ACPT. The FFS USPCCs, long-running annual projections, are highly 
analogous to the ACPT. To the extent that ACO participation in the 
Shared Savings Program has impacted spending in the past, these net 
savings are implicitly incorporated into the baseline claims data used 
to generate Medicare spending projections for purposes of the USPCC on 
a net basis (after accounting for additional outlays such as shared 
savings payments). This is because, unlike the current two-way blend 
that measures growth in claims-based spending alone, the USPCC is (and 
the ACPT in the future will be) sourced from Medicare spending (and 
expected growth in spending) encompassing total FFS Medicare outlays 
which include non-claims-based payments such as shared savings 
payments. As the MedPAC comment letter pointed out, Medicare spending 
projections tended to be higher than actual growth over the period 
since the Shared Savings Program was first implemented, a track record 
suggesting that future ACPT projections are unlikely to be specifically 
biased against ACOs if they did not show evidence of such bias during 
the period the program was initially ramped up. To the extent that OACT 
identifies a need for a direct adjustment to the USPCC for net Shared 
Savings Program savings, we would revisit the calculation of the ACPT 
and such potential adjustment in future notice and comment rulemaking.
    Comment: A few commenters suggested that CMS protect ACOs from 
potential forecasting deviations that might arise with the ACPT due 
specifically to high-cost technological, therapeutic or pharmaceutical 
advancements over the course of an agreement period.
    Response: Medicare USPCC spending projections explicitly account 
for known

[[Page 69894]]

new technologies, for example when coverage determinations are 
announced for treatments undergoing clinical trials. In the longer run 
projections that are necessary for creating the ACPT (which includes 
five performance years) there is generally an assumption made for a 
component of trend related to new technologies that are not yet 
known.\336\ This assumption may be informed by the average impact of 
such activity over the historical period prior to the creation of the 
projection. To the extent that specific high-cost therapeutics are 
introduced during an agreement period but after the ACPT was 
established, the generic assumption for growth in new technologies 
would in theory account for associated new spending. In addition, as 
described elsewhere in this section of this final rule, we believe that 
the proposed guardrail protecting ACOs from incurring additional shared 
losses under the three-way blend and the proposal to reduce the weight 
of the ACPT component of the three-way blend if projections diverge 
from actual expenditure growth due to unforeseen circumstances will 
effectively mitigate any remaining concerns about projection error 
impacting the benchmark updates, including as a result of spending for 
new technologies or high-cost therapeutics that go beyond the 
projection assumptions.
---------------------------------------------------------------------------

    \336\ For example, 2022 Medicare Trustees Report describes new 
technology contributing to hospital case mix growth in the 10-year 
projections on page 122 and contributing to the volume and intensity 
growth assumption for the long-range projections on page 169. The 
Boards of Trustees, Federal Hospital Insurance and Federal 
Supplementary Medical Insurance Trust Funds, ``2022 Annual Report of 
the Boards of Trustees of the Federal Hospital Insurance and Federal 
Supplementary Medical Insurance Trust Funds'', available at https://www.cms.gov/files/document/2022-medicare-trustees-report.pdf.
---------------------------------------------------------------------------

    Comment: One commenter asked whether the financial impacts of the 
COVID-19 pandemic would be reflected in the ACPT for 2019 and beyond.
    Response: The first ACPT release will be published in 2024 for 
agreement periods beginning on January 1, 2024, and will provide a 
projected annualized growth rate (or rates) relative to the 2023 
benchmark year, which will be BY3 for agreement periods starting in 
2024. To the extent that Medicare projections made at that time 
anticipate lingering effects from the COVID-19 pandemic then they would 
be reflected in the ACPT as well.
    Comment: One commenter questioned whether the inputs into the ACPT 
consider the rapid increase in Medicare Advantage enrollment.
    Response: The ACPT will reflect any expected changes in the average 
demographics of the Medicare FFS population, which would include the 
effect of any growth that may be expected in the overall proportion of 
beneficiaries electing enrollment in Medicare Advantage.
    Comment: Some commenters expressed concerns about the accuracy of 
the ACPT, particularly over the proposed 5-year timeframe. A few 
commenters suggested that CMS initially use a shorter projection window 
to gain experience with the three-way blend, such as a 1-year, 2-year 
or 3-year projection. Commenters cited a number of reasons for updating 
the prospective calculation more frequently than every 5 years.
    Some commenters referenced the significant impact of the COVID-19 
pandemic on healthcare utilization and how patients interact with the 
healthcare system, and indicated it may be challenging to accurately 
project trends over the next several years. Most of these commenters 
encouraged CMS to evaluate the impacts of the pandemic on healthcare 
spending and service utilization and work with ACOs and other 
interested parties to develop a methodology that sufficiently addresses 
these concerns. These commenters tended to suggest CMS initially use a 
short-term trend of 1 to 2 years rather than 5 years to allow CMS time 
to evaluate and to refine its methodology without locking ACOs into a 
5-year trend factor, which several commenters indicated may 
significantly under- or overpredict spending growth and changes in 
utilization over the agreement period. Several of these commenters 
suggested that CMS could consider gradually lengthening the amount of 
time over which the trend factor is applied as it refines its 
methodology.
    Commenters offered a variety of other reasons for suggesting use of 
a projection window of less than 5 years. One commenter recommended 
that CMS update the ACPT annually, similar to the methodology used in 
the ACO REACH Model. Another commenter recommended that CMS start with 
a 3-year projection because that is the evidence base for the USPCC. 
One commenter noted that a 5-year projection period is unprecedentedly 
long for a prospective trend in the insurance industry. Another 
commenter expressed concern that the projection may be less accurate in 
the later years of a 5-year agreement period, and it may make sense for 
CMS to review the projection annually to adjust for unforeseen changes.
    One commenter recommended that the proposed ACPT be piloted before 
use and prospectively set for 1 year rather than 5, with only positive 
retrospective adjustments to account for clinical developments such as 
broad coverage of a new high-cost drug.
    More generally, one commenter explained that health care spending 
trends are affected by many factors that are outside of ACOs' control 
and hard to predict in advance, including: the emergence of new medical 
technologies and practice patterns; changes in population health, such 
as those due to changes in health behaviors or the emergence of new 
diseases; and macroeconomic developments, which may, for example, 
affect trends in provider input costs and thus Medicare's payment 
updates.
    Response: As we described in section III.G.5.c.(3) of the proposed 
rule (87 FR 46163), we selected a 5-year projection horizon to align 
with the 5-year agreement periods used under the Shared Savings 
Program. The ACPT factors would remain unchanged throughout the ACO's 
agreement period in order to provide ACOs with a degree of certainty 
surrounding a portion of their benchmark updates, while simultaneously 
insulating a portion of the benchmark update from any potential impacts 
of their own savings. Updating the projections over the course of the 
agreement period or using shorter projection windows would remove the 
benefit of certainty. Indeed, many commenters expressed appreciation 
that the approach would provide greater stability to the benchmark 
value and allow ACOs to better predict their benchmarks and have 
greater visibility into the benchmark calculation.
    We disagree with the commenters' suggestion that a 5-year 
projection window is unprecedented, as OACT routinely projects 
expenditures for this length of time (and longer) as part of the 
Medicare Trustees Report. We also note the USPCCs announced in the 
first quarter of a given year include projections for a total of 4 
years (including the year of the announcement), not 3 years.
    We recognize that some commenters prefer shorter projection windows 
because they have concerns about the potential inaccuracies of a longer 
projection due to the possibility of unforeseen events, such as was 
experienced with the COVID-19 PHE. We agree with commenters that the 
COVID-19 PHE has had important implications for utilization patterns 
and costs of care for Medicare beneficiaries. In the March 31, 2020 
COVID-19 IFC (85 FR 19267 and 19268) and the May 8, 2020 COVID-19 IFC 
(85 FR 27573 through 27587) we adopted several

[[Page 69895]]

modifications to policies under the Shared Savings Program in response 
to the PHE, including excluding all Parts A and B FFS payment amounts 
for an episode of care for treatment of COVID-19 from certain Shared 
Savings Program calculations (for more information about the program 
changes in response to the COVID-19 PHE, refer to 87 FR 46198 and 
46199). We note that we have proposed to first implement the ACPT and 
the three-way blend for agreement periods beginning in 2024, which 
would potentially allow for post-pandemic trends to inform the 
projections.
    We also acknowledge and appreciate commenters' concerns that 
emergence of new, high-cost technologies can be difficult to predict. 
As we have discussed elsewhere in this section, Medicare spending 
projections explicitly account for known new technologies, such as when 
coverage determinations are announced for treatments undergoing 
clinical trials. Similarly, in the longer run Medicare spending 
projections that are necessary for creating the ACPT (which includes 5 
performance years) there is generally an assumption made for a 
component of trend related to new technologies that are not yet known.
    In addition, we believe that the proposed guardrail protecting ACOs 
from incurring additional shared losses under the three-way blend and 
the proposal to reduce the weight of the ACPT component of the three-
way blend if projections diverge from actual expenditure growth due to 
unforeseen circumstances will effectively mitigate the commenters' 
concerns about projection error impacting the benchmark updates. Given 
these considerations, we are finalizing the 5-year projection window as 
proposed. However, we will continue to monitor the degree to which 
national expenditures differ from the projections following each 
performance year over the course of a 5-year projection window to 
determine whether any changes to the ACPT and the three-way blend are 
needed. Any such changes would be made through notice and comment 
rulemaking.
    Comment: Of the commenters that addressed the proposal to express 
the ACPT as a flat dollar amount rather than on a relative basis, one 
commenter supported the proposed flat dollar approach. One commenter 
opposed the flat dollar approach to incorporating the ACPT into the 
three-way blend because it would not take into account regional 
differences in Medicare prices and spending, citing concerns that the 
approach would disadvantage ACOs in regions with higher costs and 
disincentivize participation in those areas.
    Another commenter suggested that the projected national growth 
rates be used directly in the three-way blend rather than the proposed 
flat dollar amount, arguing that ACOs with high cost populations (such 
as a higher percentage of dually eligible beneficiaries) would be 
unfairly disadvantaged by the three-way blend. The commenter pointed to 
concerns that the proposed methodology under which CMS would divide the 
risk-adjusted flat dollar amounts by the ACO's historical benchmark 
expenditures for that enrollment type to express the flat dollar amount 
as a relative factor that can be combined with the current two-way 
blend to compute the three-way blended update would cause the risk-
adjusted flat dollar amount to be divided by a disproportionately 
higher dollar amount for such ACOs, resulting in a lower final ACPT 
rates. To remedy these concerns, the commenter suggested alternative 
approaches that would all incorporate the ACPT on a relative rather 
than flat-dollar basis. Under the commenter's suggested approaches, the 
projected update would be similar for ACOs with otherwise higher or 
lower baseline spending.
    Response: We appreciate the commenter's suggestions for alternative 
approaches to incorporating the ACPT into the three-way blend. In the 
proposed rule (87 FR 46164), we described retrospective modeling we had 
conducted to examine whether the ACPT should be included in the three-
way blend on a relative or flat dollar basis. We found that the risk-
adjusted flat dollar amount, on average, resulted in the most favorable 
benchmark update across ACOs because it was calculated using national 
per capita expenditures for the assignable population, which typically 
exceeds per capita expenditures for an ACO's own assigned 
beneficiaries. In contrast, the alternative options proposed by the 
commenter would result in a relatively smaller growth rate, on average, 
being incorporated into the three-way blend, which would lead to 
smaller benchmark increases on average across ACOs.
    We disagree with the commenter's suggestion that ACOs with higher 
costs would necessarily receive a lower benchmark update under the 
flat-dollar approach. As proposed, the flat dollar amount used in the 
one-third ACPT portion of the three-way blend would be risk adjusted to 
account for differences in severity and case-mix of beneficiaries 
assigned to each ACO, and the other two-thirds of the three-way blend 
would still be a percentage reflecting the two-way blend of the 
national and regional update factors that would tend (all other things 
equal) to benefit high spending groups.
    Comment: Many commenters requested that CMS implement a guardrail 
to protect ACOs from reductions in shared savings in addition to the 
proposed guardrail to protect against increases in shared losses under 
the three-way blend compared to the two-way blended update factor. 
(Herein, for ease of reference, we refer to such an approach as a 
``two-sided guardrail.'') Commenters believed it would be necessary to 
protect ACOs from reductions in shared savings under the three-way 
blend for a number of reasons.
    Several commenters emphasized the importance of shared savings as a 
source of revenue for ACOs, which (for instance) ACOs use to reinvest 
and sustain important initiatives. One commenter explained that given 
the significant investments that ACOs make in staffing, care 
coordination, infrastructure, and new workflows, it is not sufficient 
to have the guardrail simply protect against shared losses when an ACO 
would have earned shared savings under the current update methodology. 
One commenter specified that ACOs may be hesitant to invest in new 
initiatives or expand existing initiatives under a benchmark update 
approach where an ACO is ineligible for shared savings that it would 
have otherwise received under the two-way blend.
    Some commenters noted it would be necessary to guard against 
reduced shared savings, as well as greater shared losses resulting from 
downward effects on the benchmark through use of the three-way blend in 
cases where the ACPT differs from observed national or regional trends. 
For example, some commenters indicated that a two-sided guardrail would 
ensure that ACOs are not penalized by unforeseen results or unintended 
consequences from use of the ACPT under the three-way blend. A few 
commenters explained that a two-sided guardrail would help to avoid 
penalizing ACOs in regions with high spending growth with lower 
benchmarks, since high regional growth rates can be caused by a host of 
local market factors (for example, opening of new tertiary services) 
beyond an ACO's control.
    Some commenters pointed to the need to ensure no ACOs are 
negatively impacted by the use of a three-way blend in light of 
unknowns about the accuracy of a 5-year prospective trend. More 
specifically, a few commenters indicated that a two-sided guardrail

[[Page 69896]]

would be needed until CMS and the ACO community are confident that the 
ACPT and the three-way blend is the most appropriate way to update the 
benchmark. One commenter suggested implementing a two-sided guardrail 
for at least the first agreement period under the new policy. One 
commenter, expressing concern that ACOs with high-cost populations 
(such as a higher percentage of dually eligible beneficiaries) would be 
disadvantaged under the ACPT calculation as proposed, urged that CMS 
protect ACOs against receiving lower benchmarks by updating the 
benchmark using the higher of the proposed three-way blend or the 
current two-way blend.
    Commenters recommended that CMS allow ACOs to, either automatically 
or by choice, receive the higher of the two benchmarks calculated under 
the current two-way blend and the proposed three-way blend, enabling 
them to avoid both additional shared losses and any lost shared savings 
they might observe under the proposed changes. Several commenters 
indicated there would be minimal additional burden placed on CMS under 
such an approach because CMS would already calculate the two-way trend 
as a component of the three-way trend.
    Response: We appreciate commenters' support for the proposal to 
establish a guardrail on shared losses. We continue to believe this 
approach is necessary to safeguard ACOs from incurring additional 
shared losses purely as a result of the transition to the three-way 
blend, and we are finalizing this guardrail as proposed.
    We decline commenters' suggestions to provide ACOs with the higher 
of the three-way blended update factor or the two-way national-regional 
blended update factor, to allow ACOs to maximize savings under their 
benchmark. We believe that such a two-sided guardrail would create 
multiple opportunities for individual ACOs to earn additional shared 
savings payments, rewarding ACOs in circumstances when they may not 
have improved care or efficiency, which would inflate shared savings 
payments from the Trust Funds when ACPT projection error favors ACOs. 
Because a two-sided guardrail would increase total shared savings 
payments for ACOs participating in the Shared Savings Program without 
corresponding reductions in spending, including one would jeopardize 
CMS' ability to satisfy the requirements of section 1899(i)(3) of the 
Act for use of other payment models. We also decline commenters' 
suggestion to allow ACOs to choose between the two-way or three-way 
blend. While we acknowledge commenters' point that both the two-way and 
three-way blend must be calculated as part of determining the three-way 
blend, we are concerned that allowing ACOs such a choice could result 
in increased shared savings payments based on selective participation 
under more generous benchmarks rather than from ACOs redesigning their 
care processes to lead to improved care for their assigned 
beneficiaries and lower growth in expenditures.
    Comment: A few commenters recommended limiting the degree to which 
the benchmark increase could be impacted by the transition to the 
three-way blend from the current two-way blend. Specifically, one 
commenter indicated that a two-sided guardrail would defeat the purpose 
of the proposed methodology, and that a different alternative approach 
was needed to account for variation between regional and national 
trends beyond the ACO's influence under the three-way blended update 
factor. The commenter suggested using the two-way blended update factor 
if the three-way blend deviated from the two-way blend by more than 20 
percent of an ACO's savings rate. Several other commenters made a more 
general suggestion to establish a maximum downward adjustment to ACO 
benchmarks due to switch to the three-way blend.
    Response: We appreciate commenters' concerns that ACOs benchmark 
updates may be adversely impacted by the transition to the three-way 
blend. However, we believe that when taken together, the policies 
already included in the proposal for the ACPT and the three-way blend 
described in the proposed rule, which we are finalizing as proposed, 
offer sufficient protection against significant impacts arising from 
the shift to a three-way blended update factor. As discussed, the ACPT 
accounts for one-third of the three-way blend. A majority of the blend 
will continue to be based on actual expenditure growth, and CMS will 
have discretion to reduce the weight given to the ACPT if unforeseen 
circumstances cause the national growth to deviate substantially from 
the projected growth rates. A guardrail will also protect ACOs from 
incurring additional shared losses as a result of the use of the three-
way blend. We believe these policies, when paired with the changes to 
the regional adjustment and the addition of a prior savings adjustment, 
as described elsewhere in this final rule, will offer ACOs sufficient 
protection against any negative impacts to their benchmark updates 
associated with the transition to the three-way blend.
    Comment: Commenters generally supported including a framework to 
adjust the ACPT in the event of unforeseen circumstances that cause 
growth rates to diverge substantially from projected trends. However, 
several commenters suggested that CMS define what constitutes an 
``unforeseen circumstance'' and what situation might require notice and 
comment rulemaking to adjust the weight of the ACPT in the three-way 
blend. Some commenters pointed to potential uncertainty for ACOs 
regarding when an adjustment for unforeseen circumstances might occur, 
as well as the potential magnitude of such an adjustment. Another 
commenter explained that CMS would likely face considerable resistance 
from ACOs if it attempted to reduce the weight on an overly generous 
ACPT after the fact. However, the commenter further noted that if CMS 
failed to reduce that weight, the fiscal cost of this proposal would 
remain large.
    More generally, one commenter encouraged CMS to have a mechanism in 
place to adjust the ACPT growth rate projections when the actual growth 
rate differs from the projections, but did not specify whether this was 
in reference to the proposed approach to adjusting the weight placed on 
the ACPT as a result of unforeseen circumstances, or another approach. 
Several commenters encouraged CMS not to retrospectively adjust the 
ACPT downwards.
    Response: We are finalizing our proposal that CMS would retain 
discretion to determine whether an unforeseen circumstance exists that 
warrants a reduction to the weight of the that would apply to the ACPT 
in the three-way blend. In the proposed rule, we acknowledged that a 
variety of circumstances could cause actual expenditure trends to 
significantly deviate from projections made at the start of the 
agreement period, which could result in an update factor that 
significantly differs from actual expenditure trends, and in turn 
result in ACOs owing excessive shared losses or the Medicare Trust 
Funds paying out windfall shared savings. As discussed in the CY 2023 
PFS proposed rule, we anticipate that the types of events that could 
result in the need for CMS to exercise its discretion to reduce the 
weight placed on the ACPT could include an economic recession, 
pandemic, or other factors. We believe that it is important to maintain 
a degree of flexibility to best respond to the unforeseen circumstances 
as they may arise. Therefore, we decline at this time to adopt 
commenters' suggestions to

[[Page 69897]]

codify specific criteria for determining when an unforeseen 
circumstance occurs, such as through establishing a definition for 
unforeseen circumstances.
    However, we clarify that we anticipate determining whether an 
unforeseen circumstance warrants adjustment of the weight placed on the 
ACPT component of the three-way blend by considering whether it has a 
material impact across the entire Shared Savings Program. In reducing 
weight on an overly generous ACPT, we appreciate the need, as reflected 
in the commenter's concern, to balance the interests of ACOs and 
protecting the Trust Funds from related costs. We may consider whether 
it would be appropriate to develop a materiality threshold to provide 
further clarity for ACOs and CMS of the magnitude of the change that 
would warrant reduction of the weight placed on the ACPT, and may 
revisit this issue in future notice and comment rulemaking.
    In response to commenters' concerns that we may adjust the amount 
of the ACPT downward during an ACO's agreement period, we note that we 
are finalizing our proposal to establish the ACPT at the outset of an 
agreement period, based on one or more annualized growth rates. Under 
this approach we would not adjust the ACPT projections over the course 
of the agreement period. Rather, we would only reduce the weight that 
would be given to the ACPT in the three-way blend when necessary to 
mitigate unforeseen circumstances.
    Comment: Some commenters urged CMS to provide transparency into the 
calculation of the ACPT. One commenter encouraged CMS to provide ACOs 
with guidance and education about the new benchmarking approach before 
implementing it in 2024. Another commenter explained that there are 
many unknowns with the prospective trend proposal that potentially 
impact ACO financial stability and predictability. To help mitigate 
unforeseen impacts of this new blend, the commenter requested that CMS 
provide greater detail and transparency regarding the national, 
regional, and ACPT calculations, as well as the definition of region. 
One commenter requested that CMS provide additional details of modeling 
or other analyses of the ACPT and three-way blended update factor.
    Response: We will consider these suggestions as we develop future 
education and outreach plans. We anticipate including the amount of the 
ACPT for an ACO's agreement period in the ACO's final historical 
benchmark report, which is made available to ACOs approximately 6 
months into the first performance year of the ACO's agreement period. 
We note this is a somewhat more protracted timeline than we originally 
anticipated for publicizing the final ACPT value, as described in the 
CY 2023 PFS proposed rule. However, this will allow time for three 
months of claims run-out and for final HCC risk scores for benchmark 
year 3 and other inputs needed for ACPT production to be available. We 
also anticipate updating the Shared Savings Program's publicly 
available specifications documents, programmatic resources and 
materials, and the aggregate reports provided to ACOs to include 
information about how we calculate and apply the ACPT.
    Comment: Commenters suggested alternatives to the proposed 
implementation timeline for transitioning to the use a three-way blend 
that incorporates the ACPT to update an ACO's historical benchmark for 
agreement periods beginning on January 1, 2024, and in subsequent 
years. Some commenters recommended that CMS allow currently 
participating ACOs, including ACOs entering an agreement period 
beginning on January 1, 2023, to elect for the three-way blended update 
factor to apply beginning in PY 2024, so that the ACOs do not have to 
enter a new agreement period for the revised approach to apply. Several 
commenters noted that 2023 starters that complete a 5-year agreement 
period and renew to continue their participation in the Shared Savings 
Program would not be under the revised benchmark update methodology 
until 2028. A few commenters expressed concern that ACOs interested in 
entering the Shared Savings Program for a 2023 start date may look to 
defer their entry to 2024 in order to benefit from these policies. One 
commenter, suggesting ACOs be allowed to opt in to use of the three-way 
blend, recommended that CMS provide ACOs with the ACPT prior to the 
start of the agreement period.
    A few commenters suggested that CMS apply the three-way blended 
update factor to all ACOs, including those within existing agreement 
periods, beginning with PY 2024. These commenters also indicated that 
such an approach would avoid certain administrative burdens on ACOs and 
CMS, resulting from applying differing methodologies to distinct groups 
of ACOs or from ACOs terminating their current agreements and entering 
into new agreements for 2024 in order to benefit from the proposed 
changes.
    In contrast, a few commenters suggested that CMS implement a more 
gradual phased transition to the three-way blend. For example, one 
commenter recommended allowing ACOs, whose final performance year of 
their current agreement period is PY 2023, to defer the transition to 
the three-way blend for up to one full agreement period to allow these 
ACOs to better understand the financial impact of the use of the ACPT.
    Response: We believe commenters' suggested approaches to allow ACOs 
to opt in to the application of the three-way blend during an agreement 
period with a start date before 2024, or to allow ACOs with start dates 
on or after 2024 to delay adoption of the approach, could lead to 
selective participation, and prove operationally challenging to 
implement. Accordingly, we decline commenters' various suggestions for 
alternative approaches to the timing of applicability of the ACPT, and 
we are finalizing as proposed that the three-way blended update factor 
will apply to ACOs entering agreement periods beginning on January 1, 
2024, and in subsequent years.
    The three-way blended update factor is one of multiple changes we 
are finalizing to the Shared Savings Program's financial methodology 
and participation options, to be applicable for agreement periods 
beginning on January 1, 2024, and in subsequent years. We believe this 
timing will provide ACOs with sufficient time to consider the policies 
we are finalizing in this final rule, and prepare to apply to enter or 
continue their participation in the Shared Savings Program, as well as 
for CMS to prepare to implement these significant changes. Given the 
voluntary nature of participation in the Shared Savings Program, we 
agree with commenters that ACOs will likely carefully weigh the timing 
of their program entry, or renewal (in the case of currently 
participating ACOs), relative to the timing of applicability of the 
Shared Savings Program's requirements, including the modifications to 
the benchmarking methodology we are finalizing in this final rule.
    We acknowledge that ACOs in the process of completing the 
application cycle for the 2023 start date, which concludes in early 
December 2022, will have limited time to evaluate the final policies 
adopted in this final rule prior to deciding whether to enter the 
Shared Savings Program (if eligible) for an agreement period starting 
on January 1, 2023. Further, we recognize that 2023 starters, and 
currently participating ACOs that entered an agreement period in 
earlier years, may wish to pursue the option to early renew for a new

[[Page 69898]]

agreement period beginning on January 1, 2024, by terminating their 
current agreement and immediately entering a new agreement period, so 
that they would have the opportunity to participate under the revised 
benchmarking methodology. (Refer to paragraph (2) of the definition of 
``renewing ACO'' in Sec.  425.20, and the application procedures set 
forth in Sec.  425.224.) We note that early renewing, like renewing 
upon completion of an agreement period, will result in rebasing of the 
ACO's historical benchmark, and will affect the ACO's eligibility for 
certain participation options (refer to section III.G.2. of this final 
rule), as well as the agreement period the ACO is entering for purposes 
of applying program requirements that phase-in over multiple agreement 
periods (refer to Sec.  425.600(f)).
    Lastly, in response to the commenter that suggested we allow ACOs 
whose final performance year of their current agreement period is PY 
2023 to defer transition to the three-way blend for an agreement 
period, we note, as an initial matter, that under the policy adopted in 
the December 2018 final rule, which extended the length of the 
agreement periods to 5 performance years (or 6 performance years for 
ACOs that started an agreement period on July 1, 2019), there are 
currently no ACOs participating in the Shared Savings Program whose 
agreement period would conclude on December 31, 2023, unless the ACO's 
agreement is terminated early. Furthermore, we do not believe it would 
be appropriate to allow ACOs to defer transition to the three-way blend 
as such an approach would create perverse incentives for ACOs to game 
benchmarking policies we are phasing-out (namely use of the two-way 
blend instead of the three-way blend) in combination with other 
modified benchmarking policies and participation options that would be 
applicable to ACOs entering agreement periods beginning on January 1, 
2024, and in subsequent years.
    After consideration of the public comments, we are finalizing 
without modification our proposal to update an ACO's historical 
benchmark based on a three-way blend of the ACPT and blended national-
regional growth rates, for agreement periods beginning on January 1, 
2024, and in subsequent years. We are also finalizing as proposed the 
modifications to our regulations to incorporate the use of the three-
way blend. The use of the three-way blend, the associated guardrail, 
and the discretion for CMS to adjust the weight of the ACPT in the 
three-way blend in the event of unforeseen circumstances are specified 
in paragraph (b) of a new provision at Sec.  425.652, which would 
govern the process for establishing, adjusting, and updating the 
benchmark for agreement periods beginning on January 1, 2024, and in 
subsequent years. We also specify within Sec.  425.652(b) the other 
components of the update factor, namely the calculation of the national 
and regional components of the blend, which follows the same approach 
specified under Sec.  425.601(b), with conforming changes to reflect 
the use within a three-way blend. Further, we specify the calculation 
of the ACPT in a new provision at Sec.  425.660. We anticipate 
evaluating and monitoring the impact of the ACPT on ACO historical 
benchmarks, and would address any necessary refinements to the approach 
through future notice and comment rulemaking.
(4) Adjusting ACO Benchmarks To Account for Prior Savings
(a) Background
    Under section 1899(d)(1)(B)(ii) of the Act, an ACO's benchmark must 
be reset at the start of each agreement period. Section 
1899(d)(1)(B)(ii) of the Act provides the Secretary with discretion to 
adjust the historical benchmark by ``such other factors as the 
Secretary determines appropriate.'' Pursuant to this authority, as 
described in the June 2015 final rule (80 FR 32785 through 32791), we 
established a prior savings adjustment that applied when establishing 
the benchmark for ACOs entering a second agreement period beginning on 
January 1, 2016, to account for the average per capita amount of 
savings generated during the ACO's prior agreement period.\337\
---------------------------------------------------------------------------

    \337\ The relevant provision was originally finalized at Sec.  
425.602(c) in the June 2015 final rule (80 FR 32842). In the June 
2016 final rule, we removed paragraph (c) from Sec.  425.602 and 
included this provision within paragraph (b) of Sec.  425.603 (81 FR 
37968, 38014).
---------------------------------------------------------------------------

    The prior savings adjustment adopted in the June 2015 final rule 
(80 FR 32788 through 32791) was designed to adjust an ACO's benchmark 
for its second agreement period to account for the average per capita 
amount of savings generated by the ACO across the 3 performance years 
of its first agreement period. This average per capita amount also 
accounted for the ACO's quality performance in each performance year 
under its first agreement period. We limited the adjustment to the 
benchmark for the second agreement period to the average number of 
assigned beneficiaries (expressed as person years) \338\ under the 
ACO's first agreement period in order to help ensure that the 
adjustment did not exceed the amount of net savings generated by the 
ACO during the first agreement period due to ACO participant list 
changes that may increase the number of assigned beneficiaries in the 
second agreement period (80 FR 32789). In calculating the adjustment, 
we used data from the ACO's finalized financial reconciliation reports 
for the performance years which corresponded to the benchmark years for 
the ACO's second agreement period. As described in the June 2015 final 
rule, the calculation included the following steps (80 FR 32789):
---------------------------------------------------------------------------

    \338\ To calculate person years: We sum the number of Shared 
Savings Program-eligible months for each assigned beneficiary for 
each Medicare enrollment type; we then divide this number by 12 (the 
number of months in a calendar year). Refer to the Medicare Shared 
Savings Program, Shared Savings and Losses and Assignment 
Methodology Specifications (version #10, January 2022), available at 
https://www.cms.gov/files/document/medicare-shared-savings-program-shared-savings-and-losses-and-assignment-methodology-specifications.pdf-1 (Section 3.1 Calculating ACO-Assigned 
Beneficiary Expenditures).
---------------------------------------------------------------------------

     Step 1: Determine whether the ACO generated net savings. 
For each performance year we determined an average per capita amount 
reflecting the quotient of the ACO's total updated benchmark 
expenditures minus total performance year expenditures divided by 
performance year assigned beneficiary person years. However, the ACO's 
total updated benchmark expenditures minus total performance year 
expenditures could not exceed the performance payment limit for the 
relevant track. If the sum of the per capita amounts for the 3 
performance years was positive, the ACO would be determined to have net 
savings and we would proceed with Steps 2 and 3. If the sum of the per 
capita amounts for the 3 performance years was zero or negative, we did 
not make any adjustment to the ACO's rebased benchmark to account for 
any savings the ACO may have generated under its prior agreement 
period.
     Step 2: Calculate an average per capita amount of savings 
reflecting the ACO's final sharing rates based on quality performance. 
We averaged the performance year per capita amounts determined in Step 
1 to determine the average per capita amount for the agreement period. 
We also determined the ACO's average final sharing rate, based on an 
average of the ACO's quality performance in each performance year of 
the agreement period. Therefore, the average per capita amount of 
savings would account for

[[Page 69899]]

those situations where an ACO's sharing rate for a performance year was 
set equal to zero (based on the ACO's failure to meet the quality 
performance requirements in that year). We then calculated an average 
per capita amount of savings which was the product of the average 
performance year per capita amount and the average sharing rate based 
on quality performance.
     Step 3: Add the average per capita amount of savings 
determined in Step 2 to the ACO's rebased historical benchmark. The 
additional per capita amount was applied to the ACO's rebased 
historical benchmark for a number of assigned beneficiaries (expressed 
as person years) not to exceed the average number of assigned 
beneficiaries (expressed as person years) under the ACO's first 
agreement period.
    As we explained in the CY 2023 PFS proposed rule (87 FR 46169), 
reinstituting a prior savings adjustment would be broadly in line with 
our interest in addressing dynamics to ensure sustainability of the 
benchmarking methodology. Specifically, such an adjustment would help 
to mitigate the rebasing ratchet effect on an ACO's benchmark by 
returning to an ACO's benchmark an amount that reflects its success in 
lowering growth in expenditures while meeting the program's quality 
performance standard in the performance years corresponding to the 
benchmark years for the ACO's new agreement period. Furthermore, we 
explained our belief that returning dollar value to benchmarks through 
a prior savings adjustment could help address an ACO's effects on 
expenditures in its regional service area that result in reducing the 
regional adjustment added to the historical benchmark. We also noted 
that when applying two adjustments in establishing the benchmark--a 
prior savings adjustment and a regional adjustment--there are number of 
considerations related to the potential interactions between these 
adjustments. We proposed that these interactions would determine the 
extent to which efficient ACOs would receive positive regional 
adjustments to their benchmark and the extent to which less efficient 
ACOs could use their savings from a prior agreement period to offset a 
negative regional adjustment, which could help foster their continued 
participation in the Shared Savings Program.
(b) Revisions
    In section III.G.5.c.(4).(b) of the CY 2023 PFS proposed rule (87 
FR 46169 through 46179), we proposed to incorporate an adjustment for 
prior savings that would apply in the establishment of benchmarks for 
renewing ACOs and re-entering ACOs entering an agreement period 
beginning on January 1, 2024, and in subsequent years and that were 
reconciled for one or more of the 3 performance years immediately 
preceding the start of their agreement period. We considered a variety 
of approaches to calculating the prior savings adjustment and preferred 
an approach that would resemble the policy implemented for renewing 
ACOs entering a second agreement period in 2016 but that included 
additional steps to account for subsequent changes in Shared Savings 
Program policies. Specifically, these steps would account for the 
impact of the regional adjustment on the ACO's benchmark and attribute 
prior savings to re-entering ACOs.\339\
---------------------------------------------------------------------------

    \339\ According to Sec.  425.20, re-entering ACO means an ACO 
that does not meet the definition of a renewing ACO and meets either 
of the following conditions: (1) Is the same legal entity as an ACO, 
as defined according to Sec.  425.20, that previously participated 
in the program and is applying to participate in the program after a 
break in participation, because it is either--(i) An ACO whose 
participation agreement expired without having been renewed; or (ii) 
An ACO whose participation agreement was terminated under Sec. Sec.  
425.218 or 425.220. (2) Is a new legal entity that has never 
participated in the Shared Savings Program and is applying to 
participate in the program and more than 50 percent of its ACO 
participants were included on the ACO participant list under Sec.  
425.118, of the same ACO in any of the 5 most recent performance 
years prior to the agreement start date.
---------------------------------------------------------------------------

    In the June 2016 final rule (81 FR 37962 through 37965), we 
explained our belief that it was important to forgo the adjustment to 
account for shared savings generated by the ACO under its prior 
agreement period when transitioning to a benchmark rebasing methodology 
that incorporates an adjustment for regional FFS expenditures. We 
anticipated that for ACOs generating savings, a rebasing methodology 
that accounts for regional FFS expenditures would generally leave a 
similar or slightly greater share of measured savings in an ACO's 
rebased benchmark for its subsequent agreement period. At the time, we 
disagreed with comments suggesting that we either maintain the 
adjustment for prior savings or broaden its scope to make it more 
generous because we believed that maintaining an adjustment for prior 
savings alongside a regional adjustment could allow benchmarks to 
become overly inflated for some ACOs (particularly those benefiting 
from the regional adjustment). We also believed that continued 
application of the adjustment for prior savings would further tie an 
ACO's benchmark to its past performance rather than making it more 
reflective of FFS spending in the ACO's region, which was an important 
aim of revisions to the rebasing methodology in the June 2016 final 
rule (81 FR 37965).
    In the CY 2023 PFS proposed rule, we explained our belief that 
based on our experience with rebasing under the current benchmarking 
methodology, it would be timely to re-introduce a prior savings 
adjustment to ensure rebased benchmarks continue to serve as a 
reasonable baseline when benchmark years correspond to performance 
years of the ACO's preceding agreement period. However, we explained 
our belief that the rebased benchmarks of ACOs that are lower spending 
compared to their regional service area and that generated savings in 
their benchmark years could become overinflated if we were to allow for 
both a prior savings adjustment and a positive regional adjustment. To 
prevent this from occurring, we believed that adjusting an ACO's 
benchmark based on the higher of either the prior savings adjustment or 
the ACO's positive regional adjustment would be appropriate.
    Additionally, we believed it would be appropriate to use a prior 
savings adjustment to offset negative regional adjustments for ACOs 
that are higher spending compared to their regional service area. This 
would permit ACOs that have generated savings in prior years to receive 
a relatively higher benchmark than under the current approach, which 
would incorporate a negative regional adjustment. We recognized that 
there are interactions between this proposed approach and the proposal 
to reduce the amount of the negative regional adjustment described in 
section III.G.5.c.(5) of the proposed rule. We accounted for these 
interactions in developing the proposed methodology for determining the 
prior savings adjustment.
    In order to calculate the prior savings adjustment, we proposed to 
calculate the simple average of per capita savings or losses generated 
by the ACO during the 3 performance years that immediately precede the 
start of the ACO's current agreement period, and therefore, constitute 
the benchmark years of the current agreement period. The per capita 
savings for each performance year would be determined as the quotient 
of the ACO's total updated benchmark expenditures minus total 
performance year expenditures divided by performance year assigned 
beneficiary person years. We noted that we would use all savings 
generated during each of the prior 3 performance

[[Page 69900]]

years in the prior savings adjustment, not just savings that met or 
exceeded the ACO's MSR for that prior performance year. This would 
include savings generated by ACOs that were participating in an 
agreement period under the BASIC track that did not meet the MSR but 
would meet the expanded criteria to qualify for shared savings as 
proposed in section III.G.5.f. of the proposed rule. An ACO would be 
eligible for the prior savings adjustment if the ACO generates positive 
average prior savings across the 3 performance years immediately 
preceding the start of its current agreement period. If an ACO is not 
eligible to receive a prior savings adjustment, the ACO would receive 
the regional adjustment to its benchmark.
    In calculating an ACO's average per capita prior savings over the 3 
performance years immediately preceding the start of its agreement 
period, we believed a safeguard would be needed to ensure that ACOs 
that achieved savings for a performance year that serves as a benchmark 
year for the current agreement period, but were ineligible to receive a 
shared savings payment due to noncompliance with Shared Savings Program 
requirements, are not subsequently eligible to have a portion of those 
savings included in their historical benchmark. Without such a 
safeguard, we would be rewarding an ACO, despite its noncompliance, 
through a higher benchmark in its subsequent agreement period. This 
would conflict with the sanction imposed on the ACO for its 
noncompliance during the performance year(s) of its prior agreement 
period. Accordingly, we proposed that if an ACO was ineligible to share 
in savings for any performance year in the 3 performance years 
immediately preceding the start of its agreement period due to 
noncompliance with Shared Savings Program requirements, we would set at 
zero the per capita amount of savings for the affected performance 
year(s) when calculating the prior savings adjustment.
    There are a variety of reasons that could result in an ACO's 
ineligibility to receive a shared savings payment due to noncompliance. 
In accordance with Sec. Sec.  425.605(c)(2), and 425.610(c)(2), an ACO 
does not qualify to receive shared savings for a performance year if it 
failed to meet the quality performance standard as specified under 
Sec.  425.512 (also refer to section III.G.4.b. of this final rule for 
modifications to the use of quality performance in determining shared 
savings and shared losses) or otherwise did not maintain its 
eligibility to participate in the Shared Savings Program. Furthermore, 
and to clarify the related explanation from the proposed rule, an ACO 
will not receive any shared savings payments during the time it is 
under a corrective action plan (CAP) for avoidance of at-risk 
beneficiaries, and is not eligible to receive shared savings for the 
performance year attributable to the time that necessitated the CAP 
(the time period during which the ACO avoided at risk beneficiaries) 
(Sec.  425.316(b)(2)(ii)).
    We proposed to apply a prior savings adjustment in establishing the 
historical benchmark for re-entering ACOs that meet the eligibility 
criteria for the adjustment. Under Sec.  425.20, a re-entering ACO 
means an ACO that is not a renewing ACO and that is either the same 
legal entity as an ACO that previously participated in the program or a 
new legal entity that has never participated in the program and more 
than 50 percent of its ACO participants were included on the ACO 
participant list under Sec.  425.118 of the same ACO in any of the 5 
most recent performance years prior to the agreement start date. For 
new ACOs that are identified as a re-entering ACO, we proposed to 
calculate the average per capita prior savings based on the prior 
performance of the ACO in which 50 percent or more of the ACO 
participants previously participated. We attribute various aspects of 
this prior ACO to the re-entering ACO for purposes of determining its 
eligibility to participate in the Shared Savings Program (Sec.  
425.224), and to determine the agreement period the ACO is entering for 
purposes of applying program requirements that phase-in over multiple 
agreement periods (Sec.  425.600(f)). We noted that we believed it 
would also be appropriate to attribute to the re-entering ACO the prior 
savings of this prior ACO. Therefore, in calculating the average per 
capita prior savings for ACOs identified as re-entering ACOs, we would 
include the per capita savings or losses of the prior ACO in the 3 
performance years immediately preceding the start of the re-entering 
ACO's agreement period. This calculation would exclude from the prior 
savings adjustment any savings generated for performance years in which 
the prior ACO was ineligible to share in savings because of 
noncompliance with Shared Savings Program requirements. This safeguard 
would help to ensure that we would not reward ACOs for circumstances 
that may have led to their termination from the program, including 
circumstances that may have led to the formation of a new ACO.
    We proposed to apply a proration factor to the prior savings 
adjustment to account for situations where an ACO's assigned 
beneficiary population is larger in the benchmark years when calculated 
using the ACO's certified ACO participant list and assignment 
methodology for the current performance year, than the ACO's assigned 
beneficiary population was when the ACO was reconciled for the 3 
performance years preceding the start of its current agreement period. 
Although this proration approach was not described with much 
specificity in the earlier rulemaking, we explained that this proration 
factor would be calculated and implemented in a manner that would be 
mathematically equivalent to the cap on the prior savings adjustment 
that was adopted in the June 2015 final rule (80 FR 32789).
    Mathematically, to apply this proration factor we would calculate a 
ratio between: (1) the ACO's average person years for the 3 performance 
years that constitute the benchmark years for the ACO's current 
agreement period (regardless of whether these performance years 
occurred over one or multiple prior agreement periods) and (2) the 
average person years in the 3 benchmark years for the ACO's current 
agreement period calculated using the ACO's certified ACO participant 
list and assignment methodology for the current performance year. 
Increases in beneficiary assignment would therefore result in a ratio 
less than 1, while decreases in assignment would result in a ratio 
greater than 1. This ratio would be capped at 1 to avoid increasing the 
per capita prior savings adjustment if the average number of 
beneficiaries assigned to the ACO across the 3 benchmark years of its 
current agreement period is lower than the average number of 
beneficiaries assigned during the 3 performance years immediately 
preceding the start of the ACO's current agreement period. This 
proration factor would be multiplied by the average positive per capita 
prior savings for the 3 performance years immediately preceding the 
start of the ACO's current agreement period to produce the pro-rated 
average per capita prior savings. We explained that prorating for 
growth in assignment would ensure that the prior savings adjustment 
does not exceed the amount of cumulative savings generated by the ACO 
during the performance years that constitute the benchmark years for 
its current agreement period.
    We noted that there are a number of factors affecting the size of 
the ACO's assigned population between when CMS determined assignment 
for the performance year under the prior agreement period, and when CMS

[[Page 69901]]

determines assignment for the corresponding benchmark year of the ACO's 
current agreement period, thereby necessitating the calculation of the 
proration factor at the start of the ACO's new agreement period. 
Specifically, changes in the size of the ACO's assigned beneficiary 
population could be due to the addition and removal of ACO participants 
or ACO providers/suppliers in accordance with Sec.  425.118(b), a 
change to the ACO's beneficiary assignment methodology selection under 
Sec.  425.400(a)(4)(ii), or changes to the beneficiary assignment 
methodology specified in 42 CFR part 425, subpart E. These 
circumstances also could arise during the course of an ACO's agreement 
period, and thereby also affect benchmark year assignment. Therefore, 
we proposed that for the second and each subsequent performance year 
during the term of the current agreement period, we would redetermine 
this proration factor under Sec.  425.652(a)(9)(iv) to account for 
changes in the ACO's assigned beneficiary population in the benchmark 
years of the ACO's current agreement period, for the aforementioned 
reasons.
    We further proposed to account for circumstances when an ACO was 
not reconciled for one or more of the 3 performance years immediately 
preceding the start of its current agreement period in the calculation 
of average per capita prior savings and the proration factor. ACOs that 
renew their agreement periods early or are a re-entering ACO may not be 
reconciled for one or more of the 3 years preceding the start of their 
current agreement period depending upon the timing of the expiration or 
termination of their prior agreement period and the start of their new 
agreement period. We proposed that if an ACO (or the prior ACO, if the 
ACO is identified as a re-entering ACO) was not reconciled during any 
of the 3 performance years immediately preceding the start of its 
current agreement period, the ACO would receive zero savings or losses 
in the calculation of average per capita prior savings for the relevant 
year(s). We noted that we believed this would be appropriate because 
the purpose of the prior savings adjustment is to return to an ACO's 
benchmark a portion of the savings experienced by beneficiaries 
assigned to the ACO during the 3 performance years immediately 
preceding the start of its current agreement period and CMS has no way 
to determine whether the ACO would have generated savings or losses 
during performance years it was not reconciled for. Excluding these 
years entirely from the calculation of average per capita prior savings 
would unduly increase the weight on the other year(s) included in the 
prior savings adjustment calculation for which the ACO received 
financial reconciliation results.
    In contrast, we believed it would be appropriate to exclude years 
for which the ACO (or the prior ACO, if the ACO is identified as a re-
entering ACO) was not reconciled when calculating the proration factor. 
The purpose of the proration factor is to account for situations where 
an ACO's assigned beneficiary population calculated at financial 
reconciliation in the 3 years preceding the start of the ACO's 
agreement period (numerator) is smaller than the ACO's assigned 
beneficiary population identified for those same years using the ACO's 
certified ACO participant list and assignment methodology for the 
current performance year (denominator).
    If an ACO was not reconciled for one or more of the 3 performance 
years immediately preceding the start of its current agreement period, 
it would naturally have zero assigned beneficiaries determined at 
financial reconciliation for such years, which would factor into the 
numerator of the proration factor if such years were considered. 
However, the ACO would have positive beneficiary counts in the 3 years 
preceding the start of its current agreement period generated using the 
ACO's certified ACO participant list and assignment methodology for the 
current performance year, which would factor into the denominator of 
the proration factor if such years were considered. Thus, if the 
numerator and the denominator were both calculated as averages over 3 
years, incorporating years for which the ACO was not reconciled in the 
calculation of the proration factor would artificially decrease the 
proration factor and lead to a smaller pro-rated average per capita 
prior savings for the ACO. Alternatively, if the numerator were 
calculated as an average that excludes performance years for which the 
ACO was not reconciled (that is, as an average across less than 3 
years, including only those years an ACO was reconciled for) and the 
denominator was calculated as an average that included all 3 years 
preceding the beginning of the ACO's agreement period, the direction of 
the impact on the proration factor would depend on whether the number 
of assigned beneficiaries calculated using an ACO's current certified 
ACO participant list and assignment methodology in the benchmark years 
for which the ACO was not reconciled exceeds the number of assigned 
beneficiaries in the other benchmark years, and by how much. Therefore, 
we saw no compelling reason to include any of the 3 performance years 
immediately preceding the start of an ACO's agreement period for which 
the ACO was not reconciled in the numerator or the denominator of the 
proration factor and proposed to remove such years from the calculation 
of the proration factor. This would ensure that the proration factor 
compares average person years determined for prior performance years at 
financial reconciliation (numerator) to average person years determined 
using the ACO's current certified ACO participant list and assignment 
methodology (denominator) across a consistent set of years preceding 
the start of the ACO's agreement period.
    For instance, if an ACO were only reconciled in 2 of the 3 
performance years immediately preceding the start of its current 
agreement period, the proration factor would be calculated as a ratio 
between: (1) the ACO's average person years for the 2 performance years 
for which the ACO was reconciled (regardless of whether these 
performance years occurred over one or multiple prior agreement 
periods); and (2) the average person years in the 2 benchmark years of 
the ACO's current agreement period which correspond to these same 2 
performance years, calculated using the ACO's certified ACO participant 
list and assignment methodology for the current performance year. 
Tables 65 and 66 provide examples of the proration factor calculation 
when an ACO was not reconciled for one of the 3 performance years 
preceding the start of its agreement period. We did not propose 
parallel adjustments to the calculation of the proration factor if an 
ACO was ineligible to share in savings for any performance year in the 
3 performance years immediately preceding the start of its agreement 
period due to noncompliance with Shared Savings Program requirements. 
We noted that we believed this would be appropriate because if an ACO 
was ineligible to share in savings in one of these years due to a 
noncompliance issue, we could still use the ACO's assigned beneficiary 
person years calculated at financial reconciliation in each of the 3 
years preceding the start of the ACO's agreement period in the 
numerator of the proration factor, and could calculate the proration 
factor using the same method we would use for other ACOs that were 
reconciled in each of the 3 performance years immediately

[[Page 69902]]

preceding the beginning of the agreement period.
    We proposed to calculate the final prior savings adjustment 
separately depending on whether an ACO is higher or lower spending 
relative to its regional service area. In order to avoid overinflating 
the benchmarks of ACOs that are lower spending relative to their 
regional service area by granting them both a prior savings adjustment 
and a positive regional adjustment, we believed it would be appropriate 
to apply the higher of the prior savings adjustment and the regional 
adjustment. In contrast, for ACOs that are higher spending relative to 
their region, we believed it would be appropriate to apply the prior 
savings adjustment to offset their negative regional adjustments 
partially or in full.
    For an ACO that is lower spending than its regional service area, 
we proposed that the ACO would receive an adjustment equal to the 
higher of the following: (1) its positive regional adjustment; and (2) 
a prior savings adjustment equal to the lesser of--(i) 50 percent of 
its pro-rated positive average per capita prior savings and (ii) 5 
percent of national per capita FFS expenditures for assignable 
beneficiaries. The national assignable per capita FFS expenditure cap 
used in this calculation would be expressed as a single per capita 
value by weighting the national per capita FFS expenditure averages for 
assignable beneficiaries of each Medicare enrollment type according to 
the ACO's person-year based enrollment proportions. The regional 
adjustment used in this calculation would be the ACO's regional 
adjustment determined as specified in the proposed new provision at 
Sec.  425.656 (which would include the proposed modifications to the 
methodology for determining the regional adjustment as outlined in 
section III.G.5.c.(5) of the proposed rule) and expressed as a single 
value by taking a person-year weighted average of the Medicare 
enrollment type-specific regional adjustment values. We believed that 
the cap on the prior savings adjustment at 5 percent of national per 
capita FFS expenditures for assignable beneficiaries would be necessary 
to ensure the amount of the prior savings adjustment does not inflate 
an ACO's benchmark to the point where the ACO is likely to generate 
shared savings without decreasing expenditures. The cap at 5 percent of 
national per capita FFS expenditures for assignable beneficiaries would 
align with the existing cap on positive regional adjustments (see Sec.  
425.601(a)(8)(ii)(C)). Further, we noted that the existing 5 percent 
cap on regional adjustments is adjusted to exclude episodes of care for 
treatment of COVID-19 in accordance with Sec.  425.611(c)(2)(iii). 
Consistent with this current approach, we proposed to adjust the cap on 
prior savings adjustments to exclude episodes of care for treatment of 
COVID-19, and to specify this adjustment through modifications to the 
regulation at Sec.  425.611(c)(2)(iii).
    We proposed to apply the 50 percent scaling factor to the pro-rated 
positive average per capita prior savings because we believed it would 
be important to consider a measure of the sharing rate used in 
determining the shared savings payment the ACO earned in the applicable 
performance years under its prior agreement period(s). We noted that 
the earlier version of the prior savings adjustment adopted in the June 
2015 final rule also included a provision to scale the average per 
capita prior savings by a factor related to the sharing rate. Under 
this former policy, the ACO's average per capita prior savings were 
multiplied against its average final sharing rate across the prior 
agreement period. The average final sharing rate was determined using 
an average of the ACO's quality performance in each performance year of 
the prior agreement period (80 FR 32789). As proposed, the policy of 
applying a 50 percent scaling factor to the pro-rated positive average 
per capita prior savings would be a simplification of the older 
approach. The sharing rates vary within the Shared Savings Program's 
tracks/levels. Within an ACO's agreement period under the BASIC track's 
glide path, differing sharing rates will apply depending on the ACO's 
level of participation. Under the BASIC track, the maximum sharing rate 
is 40 percent under one-sided model Levels A and B, and 50 percent 
under two-sided model Levels C, D, and E (Sec.  425.605(d)). Under the 
ENHANCED track the maximum sharing rate is 75 percent (Sec.  
425.610(d)). We also noted several proposals described in the proposed 
rule would affect the sharing rates: the proposal to apply sharing 
rates not to exceed one-half of the maximum amount within each Level of 
the BASIC track for eligible low revenue ACOs (section III.G.5.f. of 
the proposed rule); and the proposal to use a sliding scale in 
determining shared savings based on the ACO's quality performance for 
ACOs that meet the proposed alternative quality performance standard 
(section III.G.4.b. of the proposed rule). For simplicity, we believed 
it would be appropriate to apply a consistent scaling factor in 
calculating the prior savings adjustment when an ACO is lower spending 
relative to its regional service area. We believed that a 50 percent 
scaling factor would be appropriate because it represents a middle 
ground between the maximum sharing rate of 75 percent under the 
ENHANCED track and the lower sharing rates available under the BASIC 
track, and also takes into account the opportunity for ACOs to earn 
shared savings on a sliding scale under the proposed alternative 
quality performance standard.
    For ACOs that are higher spending relative to their regional 
service area, we proposed to calculate the final adjustment to the 
benchmark by adding the pro-rated average per capita prior savings to 
the ACO's negative regional adjustment calculated as proposed in 
section III.G.5.c.(5) of the proposed rule and in the proposed new 
regulation at Sec.  425.656. If this sum is positive, we proposed that 
the ACO would receive a prior savings adjustment in place of the 
negative regional adjustment equal to the lesser of 50 percent of the 
positive sum and 5 percent of national per capita FFS expenditures for 
assignable beneficiaries. We proposed to apply the 50 percent scaling 
factor to the positive sum of the ACO's regional adjustment and the 
pro-rated average per capita prior savings instead of to the total pro-
rated average per capita savings in order to strengthen incentives for 
ACOs to remain in the program by increasing the portion of the pro-
rated average per capita savings that would be added to the negative 
regional adjustment in determining the final adjustment to the 
benchmark. The cap on the adjustment at 5 percent of national per 
capita FFS expenditures for assignable beneficiaries would mirror the 
proposed methodology described previously for determining the prior 
savings adjustment for ACOs with a positive regional adjustment. If the 
sum of the ACO's negative regional adjustment and its pro-rated average 
per capita prior savings is negative, the ACO would receive a reduced 
negative regional adjustment equal to the negative sum. In this case, 
the prior savings adjustment would not be subject to a 50 percent 
scaling factor because we believed that it would be appropriate to give 
the ACO the full benefit of generated prior savings when doing so would 
still not result in an overall positive adjustment to the benchmark 
that would be likely to inflate the ACO's benchmark. We believed this 
approach would also strengthen the incentive for ACOs that are higher 
spending than their regional service area to remain in the program and 
continue generating savings. We noted that we were also proposing to

[[Page 69903]]

reduce the current 5 percent cap on negative regional adjustments to 
1.5 percent (as specified in section III.G.5.c.(5) of the proposed 
rule). We explained that if that proposal was finalized, the sum of the 
pro-rated average per capita prior savings and the negative regional 
adjustment would, necessarily, be less than 1.5 percent of national per 
capita FFS expenditures for assignable beneficiaries.
    We proposed to use the following steps to calculate the prior 
savings adjustment:
     Step 1: Calculate total per capita savings or losses in 
each performance year that constitutes a benchmark year for the current 
agreement period. For each performance year we would determine an 
average per capita amount reflecting the quotient of the ACO's total 
updated benchmark expenditures minus total performance year 
expenditures divided by performance year assigned beneficiary person 
years. CMS would apply the following requirements in determining the 
amount of per capita savings or losses for each performance year:
    ++ The per capita savings or losses would be set to zero for a 
performance year if the ACO was not reconciled for the performance 
year.
    ++ If an ACO generated savings for a performance year but was not 
eligible to receive a shared savings payment for that year due to 
noncompliance with Shared Savings Program requirements, the per capita 
savings for that year would be set to zero.
    ++ For a new ACO that is identified as a re-entering ACO, per 
capita savings or losses would be determined based on the per capita 
savings or losses of the ACO in which the majority of the ACO 
participants in the re-entering ACO were participating.
     Step 2: Calculate average per capita savings. Calculate an 
average per capita amount of savings by taking a simple average of the 
values for each of the 3 performance years as determined in Step 1, 
including values of zero, if applicable. CMS would use the average per 
capita amount of savings to determine the ACO's eligibility for the 
prior savings adjustment as follows:
    ++ If the average per capita value is less than or equal to zero, 
the ACO would not be eligible for a prior savings adjustment. The ACO 
would receive the regional adjustment to its benchmark.
    ++ If the average per capita value is positive, the ACO would be 
eligible for a prior savings adjustment.
     Step 3: Apply a proration factor to the per capita savings 
calculated in Step 2 equal to the ratio of the average person years for 
the 3 performance years that immediately precede the start of the ACO's 
current agreement period (regardless of whether these 3 performance 
years fall in one or more prior agreement periods), and the average 
person years in benchmark years for the ACO's current agreement period, 
capped at 1. If the ACO was not reconciled for one or more of the 3 
years preceding the start of the ACO's current agreement period, the 
person years from that year (or years) would be excluded from the 
averages in the numerator and the denominator of this ratio. For a new 
ACO that is identified as a re-entering ACO, the person years of the 
ACO in which the majority of the ACO participants of the re-entering 
ACO were participating would be used in the numerator of the 
calculation. This ratio would be redetermined for each performance year 
during the agreement period in the event of any changes to the number 
of average person years in the benchmark years as a result of changes 
to the ACO's certified ACO participant list, a change to the ACO's 
beneficiary assignment methodology selection under Sec.  
425.400(a)(4)(ii), or changes to the beneficiary assignment 
methodology.
     Step 4: Determine final adjustment to benchmark. Compare 
the pro-rated positive average per capita savings from Step 3 with the 
ACO's regional adjustment, determined as specified in the proposed new 
regulation at Sec.  425.656, expressed as a single per capita value by 
taking a person-year weighted average of the Medicare enrollment type-
specific regional adjustment values.
    ++ If the regional adjustment, expressed as a single value, is 
negative or zero, calculate the sum of the regional adjustment value 
and the pro-rated positive average per capita savings value and 
determine the final adjustment as follows:

--If the sum is positive, the ACO would receive a prior savings 
adjustment in place of the negative regional adjustment equal to the 
lesser of 50 percent of the sum of the pro-rated average per capita 
savings and the regional adjustment and 5 percent of national per 
capita FFS expenditures for Parts A and B services under the original 
Medicare FFS program in BY3 for assignable beneficiaries identified for 
the 12-month calendar year corresponding to BY3. The adjustment would 
be applied as a flat dollar amount \340\ to the historical benchmark 
expenditures for each of the following populations of beneficiaries: 
ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, 
and aged/non-dual eligible Medicare and Medicaid beneficiaries.
---------------------------------------------------------------------------

    \340\ In the CY 2023 PFS proposed rule, we referred to use of a 
``flat rate'' in this description. However, for clarity and 
consistency with the proposed regulatory text at Sec.  
425.652(a)(8)(iii)(A)(1), we believe it is more appropriate to refer 
to this quantity as a ``flat dollar amount,'' a term that is also 
used in certain descriptions of the application of the prior savings 
adjustment to historical benchmark expenditures by Medicare 
enrollment type in this section of this final rule. This 
clarification of terminology does not reflect a methodological 
change.
---------------------------------------------------------------------------

--If this sum is negative, this would constitute the amount of the 
negative regional adjustment applied to the ACO's historical benchmark. 
The adjustment would be applied as a flat dollar amount to the 
historical benchmark expenditures for the following populations of 
beneficiaries: ESRD, disabled, aged/dual eligible Medicare and Medicaid 
beneficiaries, and aged/non-dual eligible Medicare and Medicaid 
beneficiaries.

    ++ If the regional adjustment, expressed as a single value, is 
positive, the ACO would receive an adjustment to the benchmark equal to 
the higher of the following:

--The positive regional adjustment amount. The adjustment would be 
applied separately to the historical benchmark expenditures for each of 
the following populations of beneficiaries according to the methodology 
for calculating the regional adjustment (as proposed under Sec.  
425.656(c)): ESRD, disabled, aged/dual eligible Medicare and Medicaid 
beneficiaries, and aged/non-dual eligible Medicare and Medicaid 
beneficiaries.
--A prior savings adjustment equal to the lesser of 50 percent of the 
pro-rated positive average per capita savings value and 5 percent of 
national per capita FFS expenditures for Parts A and B services in BY3 
for assignable beneficiaries identified for the 12-month calendar year 
corresponding to BY3. The adjustment would be applied as a flat dollar 
amount to the historical benchmark expenditures for each of the 
following populations of beneficiaries: ESRD, disabled, aged/dual 
eligible Medicare and Medicaid beneficiaries, and aged/non-dual 
eligible Medicare and Medicaid beneficiaries.

    In the CY 2023 PFS proposed rule, we noted that an implication of 
using an ACO's prior performance to calculate the prior savings 
adjustment is that at

[[Page 69904]]

the time we determine the preliminary historical benchmarks, an ACO 
entering a new agreement period that completed a performance year that 
corresponds to BY3 of its new agreement period will not have prior 
savings data yet available for that year. In this case, we would 
anticipate completing financial reconciliation for that performance 
year midway through the first performance year of the ACO's new 
agreement period. Accordingly, to determine the preliminary historical 
benchmark for the first year of the ACO's new agreement period, we 
would calculate the prior savings adjustment using zero savings in BY3. 
We would then update the calculation at the time when we calculate the 
ACO's final historical benchmark to incorporate any applicable BY3 
savings. As a result, we acknowledged that production and release of 
final historical benchmarks may need to be delayed until after the 
calculation and release of financial reconciliation results for the 
preceding performance year.
    Tables 65 through 68 present hypothetical examples to demonstrate 
how the adjustment for prior savings would work in practice. For 
purposes of this final rule, we have made minor updates to the versions 
of these tables that appeared in the CY 2023 PFS proposed rule for 
clarity and specificity. Numerically and conceptually the tables in 
this final rule are equivalent to the corresponding tables in the CY 
2023 PFS proposed rule (87 FR 46175 through 46178, Tables 55-58).
BILLING CODE 4150-28-P
[GRAPHIC] [TIFF OMITTED] TR18NO22.094


[[Page 69905]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.095


[[Page 69906]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.096


[[Page 69907]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.097

BILLING CODE 4150-28-C
    In the CY 2023 PFS proposed rule, we explained our belief that 
incorporating an adjustment for prior savings, when the adjustment for 
prior savings would be more advantageous for ACOs than the regional 
adjustment, would limit the negative ratchet effects of benchmark 
rebasing. Under the existing benchmarking methodology, the savings an 
ACO achieves in one agreement period can reduce its rebased benchmark 
for the subsequent agreement period either directly by reducing the 
historical spending that forms the basis for its rebased benchmark or 
indirectly by reducing regional expenditures in the ACO's regional 
service area leading to negative (or smaller positive) regional 
adjustments. Under the proposal to incorporate an adjustment for prior 
savings, ACOs that have demonstrated savings in the 3 years preceding 
the start of the agreement period would receive higher benchmarks under 
the following scenarios:

[[Page 69908]]

     ACOs with a negative regional adjustment would receive 
either a smaller negative regional adjustment or a positive adjustment 
for prior savings, depending on the relative size of the negative 
regional adjustment and their pro-rated average prior savings.
     ACOs with a positive regional adjustment whose pro-rated 
average prior savings multiplied by 50 percent are higher than their 
regional adjustment would receive a prior savings adjustment that is 
larger than their regional adjustment would have been under current 
policy. In contrast, ACOs whose positive regional adjustment is greater 
than 50 percent of their pro-rated average prior savings would not be 
impacted by the proposed adjustment for prior savings, and would 
continue to receive the (larger) regional adjustment.
    We stated that we believed the proposal to take the greater of the 
regional adjustment and the adjustment for prior savings when the 
regional adjustment is positive, and to net out a negative regional 
adjustment with the prior savings adjustment when the regional 
adjustment is negative, would prevent the proposed policy from 
resulting in unduly large benchmarks. While no ACOs would receive a 
lower benchmark as a result of this policy, numerical modeling of the 
proposed policy performed for the proposed rule using data from ACOs 
beginning an agreement period in PY 2020 suggested that approximately 
22 percent of all ACOs reconciled in one or more of their benchmark 
years would receive a higher benchmark under this policy. Among ACOs 
that would receive a higher benchmark, the average net effect on per 
capita benchmark expenditures would be approximately $130 applied as a 
flat dollar amount to the ACO's historical benchmark expenditures 
across each of the four Medicare enrollment types (ESRD, disabled, 
aged/dual eligible Medicare and Medicaid beneficiaries, aged/non-dual 
eligible Medicare and Medicaid beneficiaries).
    Since the issuance of the CY 2023 PFS proposed rule, we have 
performed additional modeling on the proposed prior savings adjustment 
using data from ACOs beginning an agreement period in PY 2022. The 
modeling methodology used for ACOs starting an agreement period in PY 
2022 was equivalent to the methodology employed for PY 2020 starters. 
Table 69 summarizes the impact of the prior savings adjustment on ACOs 
beginning agreement periods on January 1, 2020 and January 1, 2022, and 
includes a greater level of detail than was included in the CY 2023 PFS 
proposed rule.
    Table 69 is divided into several sections that correspond to the 
various criteria ACOs would be required to meet to receive the proposed 
prior savings adjustment. The first segment of the Table (rows [A] and 
[B]) identifies the total number of ACOs entering a new agreement 
period in the respective performance year (PY 2020 or PY 2022) and what 
proportion of all ACOs starting an agreement period in that performance 
year were reconciled in one or more benchmark years. Under our 
proposal, this is the first eligibility criterion ACOs must meet to 
receive the prior savings adjustment. The second segment of the Table 
(row [C]) identifies the proportion of ACOs, among those reconciled in 
one or more benchmark years, that had positive prorated average prior 
savings among the ACOs that were reconciled in one or more of their 
benchmark years, which is the second criterion under our proposed 
methodology. As proposed, the third criterion that ACOs must meet to 
receive the prior savings adjustment after identification as being 
reconciled for one or more benchmark years and having generated 
positive prorated average prior savings involves comparing the prior 
savings adjustment with the ACO's aggregate regional adjustment. All 
ACOs that receive a negative aggregate regional adjustment and have 
positive prorated average prior savings would receive some benefit from 
the prior savings adjustment. However, ACOs that receive a positive 
aggregate regional adjustment and have positive prorated average prior 
savings would only receive a benefit if the prior savings adjustment is 
greater than the positive aggregate regional adjustment the ACO 
otherwise would have received. The third section in Table 69 (row [D]) 
identifies the proportion of ACOs that were simulated to actually 
receive the prior savings adjustment among ACOs that were reconciled in 
one or more benchmark years. The fourth segment in Table 69 (row [E]) 
summarizes the positive impact of the prior savings adjustment relative 
to the aggregate regional adjustment the ACO would otherwise have 
received for ACOs that were simulated to receive the prior savings 
adjustment.

[[Page 69909]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.098

    In the CY 2023 PFS proposed rule, we explained that when the 
historical benchmark is adjusted for changes in severity and case mix 
between BY3 and the performance year as proposed under Sec.  
425.652(a)(10) and updated for growth in expenditures between BY3 and 
the performance year as proposed under Sec.  425.652(b), the portion of 
the historical benchmark attributable to the prior savings adjustment 
would also be updated for changes in severity and case mix and growth 
in expenditures at the enrollment type level. This is consistent with 
the way in which the regional adjustment that is currently calculated 
under Sec.  425.601(a)(8) (and would be calculated under proposed Sec.  
425.656), is updated at the time of financial reconciliation to reflect 
changes in severity and case mix and growth in expenditures. If the 
portion of the benchmark attributable to prior savings were not updated 
for changes in severity and case mix and growth in expenditures, this 
could result in smaller benchmarks if the updates for severity and case 
mix and growth in expenditures are positive (which is typical in past 
experience). Thus, including the prior savings adjustment in these 
updates would tend to result in larger benchmarks for those ACOs that 
receive a prior savings adjustment to their benchmark. In the proposed 
rule, we explained that we believed this would be appropriate because 
the prior savings adjustment is based on reductions in expenditures in 
previous performance years. To the extent that updates to the benchmark 
for changes in severity and case mix and growth in expenditures suggest 
that the benchmark should be increased, we believed that it would be 
appropriate to increase the size of the prior savings adjustment 
proportionally. Similarly, in the less likely scenario that updates for 
severity and case mix and growth in expenditures are negative, we 
believed it would be appropriate to commensurately decrease the size of 
the prior savings adjustment.
    We proposed that the methodology for calculating the average per 
capita prior savings amount, including the use of a proration factor to 
account for any upward growth in the ACO's assigned population in the 
benchmark years of the current agreement as compared to the size of the 
assigned population when the ACO was reconciled for the corresponding 
performance years in its prior agreement period(s), would be specified 
in a new provision at Sec.  425.658 applicable for agreement periods 
beginning on January 1, 2024, and in subsequent years. As proposed, 
this section would also specify the approach to determining an ACO's 
eligibility for the prior savings adjustment. Further, we proposed to 
specify in Sec.  425.652(a)(8) the approach for comparing the pro-rated 
average prior savings amount calculated under Sec.  425.658 with the 
ACO's regional adjustment amount described in the proposed new 
provision at Sec.  425.656(c), to determine the applicability of the 
prior savings adjustment, the regional adjustment, or a combination of 
these two adjustments. We also proposed to specify at Sec.  
425.652(a)(9) that for the second and each subsequent performance year 
during the term of the ACO's agreement period, we would redetermine the 
proration factor used in calculating the prior savings adjustment under 
Sec.  425.658 to account for any changes in the ACO's assigned 
beneficiary population in the benchmark years due to the addition and 
removal of ACO participants or

[[Page 69910]]

ACO providers/suppliers in accordance with Sec.  425.118(b), a change 
to the ACO's beneficiary assignment methodology selection under Sec.  
425.400(a)(4)(ii), or changes to the beneficiary assignment 
methodology.
    We sought comment on this proposal to adjust the ACO's historical 
benchmark for savings generated in the ACO's prior agreement period.
    The following is a summary of the public comments received on the 
proposal to adjust ACO benchmarks to account for prior savings and our 
responses:
    Comment: Commenters generally supported our proposal to adjust ACO 
benchmarks for prior savings, although some commenters described 
certain concerns about or suggested modifications to the calculation 
methodology, which we summarize elsewhere within this section of this 
final rule. More specifically, several commenters explained that high 
performing ACOs would no longer be penalized with lowered benchmarks 
for past savings and success if this proposal were implemented. Some of 
these commenters agreed with CMS's proposition that the proposal would 
provide an incentive for high performing ACOs to remain in the Shared 
Savings Program. Several commenters supported CMS's acknowledgement of 
the ``ratchet effect'' that occurs when ACOs that have generated prior 
savings receive rebased benchmarks and the introduction of proposals to 
minimize this effect. These commenters agreed that the prior savings 
adjustment would help to allow successful ACOs to continue to implement 
and refine existing programs that lower the cost of care and improve 
quality instead of finding additional ways to lower cost. One commenter 
also suggested that the proposal would help offset the related issue of 
ACOs in rural areas being disproportionately penalized for reducing 
spending due to having a high regional market share.
    Response: We appreciate commenters' support for the proposal to 
adjust benchmarks to account for savings generated in prior agreement 
periods.
    Comment: Many commenters that supported the proposal to introduce a 
prior savings adjustment also offered a variety of suggestions to 
broaden the policy's impact to make it more favorable to ACOs. These 
suggestions included making the scaling factor used to calculate the 
adjustment more generous, applying the average savings rate from an 
ACO's prior agreement period as an upward adjustment to the historical 
benchmark, increasing the cap on the prior savings adjustment, and 
including savings earned in other alternative payment models in the 
calculation of the prior savings adjustment. We summarize and respond 
to these commenters' suggestions elsewhere within this section of this 
final rule. One commenter also supported the prior savings adjustment 
but indicated that they are actively considering dropping out of the 
Shared Savings Program due to insufficient incentives to remain in the 
program. This commenter did not share specific suggestions to increase 
the scope of the prior savings adjustment.
    Response: We appreciate these commenters' support of CMS's efforts 
to implement the prior savings adjustment and their recommendations to 
make the prior savings adjustment more favorable for ACOs, particularly 
for ACOs serving high-risk populations.
    We believe that the proposed approach strikes an appropriate 
balance by mitigating the rebasing ratchet effect on an ACO's benchmark 
through returning to an ACO's benchmark an amount that reflects its 
success in lowering growth in expenditures while safeguarding the 
Medicare Trust Funds from excessive shared savings payments that could 
result from overly inflated benchmarks. As discussed previously in this 
section, following the publication of the proposed rule we conducted 
additional modeling on the anticipated impact of the prior savings 
adjustment. Using data from ACOs beginning agreement periods in PY 2020 
to model the impact of the prior savings adjustment suggests that had 
the prior savings adjustment been in place as proposed in PY 2020, 22.0 
percent of the ACOs reconciled in one or more benchmark year would have 
received a higher benchmark (see Table 69). Across all ACOs receiving a 
higher benchmark due to the prior savings adjustment, the median 
benchmark increase would have been approximately $76. For ACOs 
beginning agreement periods in PY 2022, CMS' modeling suggests that the 
prior savings adjustment, if implemented as proposed, would have been 
slightly more advantageous to ACOs. Modeling for PY 2022 suggests that 
28.1 percent of ACOs reconciled in one or more benchmark year would 
have received a higher benchmark, while the median benchmark increase 
would have been approximately $86.
    In light of these findings, we do not believe there is a compelling 
justification at this time to alter the proposed policy in order to 
make the prior savings adjustment more generous to ACOs.
    Comment: Several commenters suggested that instead of using a 50 
percent scaling factor to calculate the prior savings adjustment, CMS 
should consider using a higher scaling factor that may more closely 
match the maximum shared savings rate from an ACO's prior agreement 
period.
    Response: We decline the commenters' suggestion to use a scaling 
factor that more closely matches the maximum shared savings rate from 
an ACO's prior agreement period. We continue to believe, as stated in 
the CY 2023 PFS proposed rule, that a 50 percent scaling factor would 
be appropriate because it represents a middle ground between the 
maximum sharing rate of 75 percent under the ENHANCED track and the 
lower sharing rates available under the BASIC track. Additionally, 
using a 50 percent scaling factor considers the opportunity for ACOs to 
earn shared savings on a sliding scale under the proposed alternative 
quality performance standard (also refer to section III.G.4.b. of this 
final rule for a discussion of modifications to the use of quality 
performance in determining shared savings and shared losses). If CMS 
were to use the maximum shared savings rate from an ACO's previous 
agreement period in calculating the prior savings adjustment, this 
scaling factor may be inflated relative to the shared savings rate ACOs 
actually receive using the sliding scale approach based on ACO quality 
performance under the alternative quality performance standard that we 
are adopting in this final rule.
    Comment: One commenter noted that CMS should apply the actual 
average savings rate over the previous 3 years as the upward adjustment 
factor to the benchmark instead of implementing the prior savings 
adjustment as proposed, which involves multiplying per capita average 
prior savings by a scaling factor. The commenter noted that this 
alternative approach would be particularly beneficial for low cost 
ACOs.
    Response: We decline the commenter's suggestion to use the actual 
average savings rate from an ACO's prior agreement period as the upward 
adjustment factor to the historical benchmark. We continue to believe, 
as stated in section III.G.5.c.(4) of the proposed rule, that as part 
of any adjustment for prior savings it is important to consider a 
measure of the sharing rate used in determining the shared savings 
payment the ACO earned in the applicable performance years under its 
prior agreement period(s). Using the actual average savings rate as the 
upward adjustment factor to the historical benchmark would not

[[Page 69911]]

incorporate a measure of the sharing rate in computing the prior 
savings adjustment to the benchmark, and we believe that such an 
approach could contribute to overinflating benchmarks. If CMS were to 
return 100 percent of an ACO's per capita savings to its historical 
benchmark in subsequent agreement periods, ACOs would have minimal 
incentives to continue lowering spending after generating shared 
savings in a single agreement period. Additionally, the sharing rates 
vary within the Shared Savings Program's tracks/levels. Under the BASIC 
track, the maximum sharing rate is 40 percent under the one-sided model 
Levels A and B, and 50 percent under the two-sided model Levels C, D, 
and E (Sec.  425.605(d)). Under the ENHANCED track the maximum sharing 
rate is 75 percent (Sec.  425.610(d)). As we explained in the proposed 
rule (87 FR 46173), we believe it is most straightforward to apply a 
consistent scaling factor in calculating the prior savings adjustment 
and we believe that a 50 percent scaling factor is appropriate because 
it represents a middle ground between the maximum sharing rate of 75 
percent under the ENHANCED track and the lower sharing rates available 
under the BASIC track.
    Comment: Several commenters suggested that CMS modify the cap on 
the prior savings adjustment, which was proposed to be set at 5 percent 
of national per capita FFS expenditures for Parts A and B services in 
BY3 for assignable beneficiaries identified for the 12-month calendar 
year corresponding to BY3. Commenters provided a variety of 
suggestions, including to risk adjust the 5 percent national FFS 
spending cap to make it a more accurate reflection of the complexity of 
an ACO's patient population. Many of these commenters also suggested 
that CMS should increase the cap by allowing ACOs to receive the 
greater of the 5 percent of national per capita FFS expenditures in BY3 
for assignable beneficiaries or 50 percent of the pro-rated average per 
capita savings net of any negative regional adjustments. Some of these 
same commenters preferred an alternative approach to capping the prior 
savings adjustment wherein the cap would be adjusted according to an 
ACO's spending relative to its region. One commenter that was 
particularly concerned that the value of the prior savings adjustment 
may be relatively lower (we assume the commenter means as a proportion 
of the ACO's own historical benchmark expenditures) for ACOs serving 
medically complex populations specifically suggested that CMS use one 
of the following approaches to adjust the cap on the prior savings 
adjustment: (1) risk adjust the national per capita FFS expenditures 
for assignable beneficiaries used to determine the cap on the prior 
savings adjustment; (2) allow ACOs with higher percentages of 
underserved, high-risk populations to receive the greater of a 
percentage of their prior average per capita savings or a percentage of 
national FFS expenditures for the assignable population; or (3) replace 
the proposed cap based on national per capita FFS expenditures for 
assignable beneficiaries with a percentage of an ACO's most recent per 
capita benchmark from the prior agreement period (BY3). Within each of 
these options, this commenter suggested using a sliding scale to allow 
ACOs with larger average final sharing rates in their previous 
agreement period to receive a larger cap on the prior savings 
adjustment to encourage ACOs to assume greater risk over time. The 
commenter suggested that these alternatives would not meaningfully 
increase costs for the Shared Savings Program and would ``offset large 
adjustments to ACOs with higher than average benchmarks that would 
otherwise discourage these ACOs from continued participation in the 
program.'' Although the precise meaning of this statement is unclear, 
we believe that the commenter may have been suggesting that these 
proposed changes would compensate for large negative regional 
adjustments received by ACOs with high risk or medically complex 
beneficiary populations that are higher spending than their regional 
service areas.
    Response: We appreciate commenters' concerns that the cap on the 
prior savings adjustment at 5 percent of national per capita FFS 
expenditures could be disadvantageous to some ACOs, particularly those 
with a large proportion of high-risk patients. However, we decline to 
adopt their suggestions for modifying the cap on the prior savings 
adjustment to make it more generous to ACOs, or for a subset of ACOs 
including ACOs serving a high proportion of high risk or medically 
complex beneficiaries, either through risk adjustment or other methods. 
Based on CMS's additional modeling of the prior savings adjustment 
conducted with ACOs beginning an agreement period in PY 2020 and PY 
2022, less than 5 percent of ACOs receiving the prior savings 
adjustment would be impacted by the cap on the prior savings 
adjustment. In PY 2020, among ACOs that would have benefited from the 
prior savings adjustment but that would also have seen the prior 
savings adjustment limited by the cap, the mean reduction would have 
been 2.1 percent of their total historical benchmark. In PY 2022 the 
equivalent figure would have been 0.61 percent. Further, given that few 
ACOs were subject to the cap in our modeling, our modeling does not 
conclusively suggest whether ACOs with a large proportion of high risk 
beneficiaries would be disproportionately impacted by the cap. Based on 
this analysis, we believe that the proposed cap on the prior savings 
adjustment adequately prevents against over inflating benchmarks and 
would not disproportionately impact ACOs with a high proportion of high 
risk beneficiaries. However, we do intend to monitor the application of 
the prior savings adjustment and may adjust the cap in future 
rulemaking if evidence emerges that ACOs with relatively large high 
risk or medically complex patient populations are disadvantaged by the 
capping methodology.
    Additionally, we interpret the commenters' suggestion that CMS 
should increase the cap by allowing ACOs to receive the greater of 5 
percent of the national per capita FFS expenditures in BY3 for 
assignable beneficiaries or 50 percent of the pro-rated average per 
capita savings net of any negative regional adjustments to imply that 
all ACOs would receive a prior savings adjustment of 5 percent of 
national per capita FFS expenditures in BY3 for assignable 
beneficiaries. We decline to adopt this suggestion because doing so 
would result in a large prior savings adjustment for all ACOs 
regardless of their past performance. If commenters instead intended to 
imply that CMS should raise the cap on the prior savings adjustment to 
be the greater of 5 percent of national per capita FFS expenditures in 
BY3 and 50 percent of the pro-rated average per capita savings net of 
any negative regional adjustments, we decline to adopt this alternative 
for the same reasons we previously explained for declining to alter the 
cap on the prior savings adjustment, namely that our modeling of the 
proposed approach suggests that only a small percentage ACOs would have 
their prior savings adjustment capped and because this alternative 
approach may over inflate benchmarks.
    We also decline to adopt the commenter's suggestion to modify the 
cap on the prior savings adjustment to further mitigate large negative 
regional adjustments received by ACOs because we believe the proposed 
approach already provides sufficient flexibility

[[Page 69912]]

with respect to the use of the prior savings adjustment to offset a 
negative regional adjustment. Under the proposed approach, for ACOs 
with negative aggregate regional adjustments, the cap of 5 percent of 
national per capita FFS expenditures for Parts A and B services under 
the original Medicare FFS program in BY3 for assignable beneficiaries 
identified for the 12-month calendar year corresponding to BY3 would 
apply only when 50 percent of the sum of the pro-rated average per 
capita savings and the regional adjustment is not only positive but 
also exceeds 5 percent of national per capita FFS expenditures. As a 
result, because the prior savings adjustment could not only fully 
offset a negative aggregate regional adjustment but also yield a 
positive adjustment up to the 5 percent of national per capita FFS 
expenditures cap, ACOs with negative aggregate regional adjustments 
could receive a net benefit from the proposed policy significantly 
greater than 5 percent of national per capita FFS expenditures relative 
to the benchmark they would have received in the absence of the 
proposed policy.
    We also decline to adopt the commenter's suggestion to tie the cap 
on the prior savings adjustment to an ACO's final sharing rate from the 
previous agreement period. We believe this approach could selectively 
ameliorate ratchet effects for a subset of ACOs while providing little 
benefit for other ACOs, depending on their track in their prior 
agreement period. Accordingly, we believe that this alternative 
approach, when compared to the proposed approach of applying the same 
cap on the prior savings adjustment for all ACOs regardless of their 
previous agreement period track(s), would less equitably addresses the 
dynamics we set out to address through our proposal, as described in 
section III.G.5.c.(2) of this final rule, including ensuring accurate 
and reasonable benchmarks and addressing the effect of an ACO's prior 
success in the Shared Savings Program on its benchmark.
    Comment: Several commenters encouraged CMS to expand the prior 
savings adjustment to include savings achieved through past and future 
CMS ACO initiatives, such as the NGACO Model and the Global and 
Professional Direct Contracting Model, including the redesign of that 
model as the ACO REACH Model.
    Response: We decline the commenters' suggestion because we do not 
believe it would be appropriate or feasible to incorporate savings 
generated in other shared savings models within a prior savings 
adjustment under the Shared Savings Program at this time. There are 
significant methodological differences across models that would make 
blending savings estimates across models logistically infeasible and 
could produce inequities between cohorts of ACO that did or did not 
participate in other models previously. Additionally, pursuing this 
suggestion would entail developing a methodology for how to account for 
such savings based on an ACO's participation in other CMS ACO 
initiatives, which was not contemplated within our proposed approach.
    Comment: Several commenters suggested that because the prior 
savings adjustment as proposed would only apply to renewing ACOs and 
re-entering ACOs entering a new agreement period beginning on January 
1, 2024, and in subsequent years, CMS should make this methodology 
change available to all ACOs in existing agreement periods beginning in 
PY 2024. These commenters expressed concern that, in order to benefit 
from the adjustment for prior savings, ACOs within existing agreement 
periods would have to terminate their current agreements and enter into 
a new agreement period starting in 2024, causing undue administrative 
burden.
    Response: We appreciate these commenters' concern that ACOs 
continuing in existing agreement periods with start dates prior to 2024 
would not operate under a benchmark methodology that includes an 
adjustment for prior savings until they enter a new agreement period 
beginning on or after January 1, 2024. However, we do not believe it 
would be appropriate to institute the prior savings adjustment for such 
ACOs until they enter a new agreement period because doing so would 
disrupt the consistency of an ACO's benchmarking methodology within a 
single agreement period. These ACOs would be eligible to receive a 
prior savings adjustment for an agreement period beginning on January 
1, 2024, and in subsequent years, upon renewing (including early 
renewing) to continue their participation in the Shared Savings Program 
or re-entering the Shared Savings Program after the termination or 
expiration of their prior participation agreement.
    Additionally, a key aspect of applying the prior savings adjustment 
for future agreement periods is that an ACO's benchmark would be 
rebased upon the beginning of a new agreement period. We believe that 
making the prior savings adjustment available to ACOs without the 
requirement of beginning a new agreement period could create a 
selective gaming opportunity. ACOs could take advantage of the prior 
savings adjustment without receiving a rebased historical benchmark 
that incorporates the spending reductions from the performance years 
used to calculate the prior savings adjustment. Further, as we 
indicated in earlier rulemaking, while ACOs may early renew in order to 
opt into new Shared Savings Program methodologies, the accompanying 
requirement of receiving a rebased historical benchmark at the start of 
each new agreement period, among other factors, mitigates the concern 
that ACOs could selectively take advantage of new policies (83 FR 
67906).
    Comment: One commenter encouraged CMS to explore calculating the 
prior savings adjustment at the TIN-level as opposed to the ACO-level. 
While the commenter did not specify a methodology for calculating a 
TIN-level prior savings adjustment, the commenter suggested that a TIN-
level adjustment would ensure that the prior savings adjustment 
accounts for changes in ACO participant lists between agreement periods 
and captures the full scope of savings generated by an ACO's 
participant TINs. This commenter noted that by not applying the 
previous savings adjustment at the TIN-level, ACO participants, and 
potentially any ACO that they join, could be negatively impacted by 
changes to ACO participant lists.
    Response: At this time, we decline the commenter's suggestion to 
establish a TIN-level prior savings adjustment. This alternative goes 
beyond the scope of the proposed prior savings adjustment. 
Additionally, we have some concerns about a TIN-level prior savings 
adjustment. Our primary concern with instituting a TIN-level prior 
savings adjustment is that an ACO could receive benefits from prior 
savings generated by other ACOs that are unconnected to the ACO's 
actual prior performance. Such a methodology could reward ACOs for 
savings generated by another ACO if the ACO gains an ACO participant 
TIN that previously participated with another ACO. Such churn in ACO 
participant lists is allowable and anticipated under existing Shared 
Savings Program methodology. We note that under the proposal, for new 
ACOs that are identified as re-entering ACOs, we would calculate the 
prior savings adjustment based on the prior performance of the ACO in 
which 50 percent or more of the ACO participants previously 
participated. In this scenario an ACO would receive credit for savings 
generated by another ACO. However, we believe that the requirement that 
we would only consider the prior savings of the ACO in which 50 or more 
percent

[[Page 69913]]

of an ACO's ACO participants previously participated makes it 
reasonable, in this circumstance, to utilize the prior savings 
generated by a different ACO to calculate an ACO's prior savings 
adjustment. Additionally, instituting a TIN-level prior savings 
adjustment would involve significant additional complexity that is 
outside the scope of the proposal.
    Related to the proposal to utilize the prior savings of another ACO 
to calculate the prior savings adjustment for re-entering ACOs, we note 
that as proposed, we would only identify the ACO in which 50 or more 
percent of the ACO's ACO participants previously participated at the 
beginning of an ACO's agreement period, consistent with our regulation 
at Sec.  425.20. We intend to monitor ACOs identified as re-entering 
ACOs to determine how ACO participant list changes that occur during 
performance years within an agreement period may change the composition 
of the ACO relative to the initial composition that established the ACO 
as a re-entering ACO. As we continue to monitor the effects of this 
policy, we may revisit the applicability of the prior savings 
adjustment for re-entering ACOs in future rulemaking to ensure that the 
prior savings adjustment is calculated appropriately for re-entering 
ACOs.
    Comment: MedPAC supported the proposed prior savings adjustment 
because it would provide a strong incentive for ACOs to improve 
efficiencies in care delivery, particularly among ACOs that serve 
beneficiaries with higher spending than their regional averages. MedPAC 
stated that a prior savings adjustment is a reasonable policy for 
mitigating ratchet effects until CMS can phase in a fixed 
administrative growth rate with a regional efficiency discount.
    However, MedPAC raised several concerns about implementing 
proposals designed to combat ratcheting effects--specifically the prior 
savings adjustment and the ACPT--alongside the regional adjustment. 
Most of these concerns were rooted in a belief that the existing 
regional adjustment is too generous to ACOs. MedPAC explained that the 
regional adjustment, which allows ACOs to receive higher benchmarks 
without demonstrating efficiency gains during their Shared Savings 
Program participation, has coincided with an elevated level of 
selective participation into the Shared Savings Program that has put it 
at risk of being a net cost to the Medicare program. MedPAC stated that 
the regional adjustment used under the existing benchmarking 
methodology creates selective participation pressures by benefiting 
low-spending providers/suppliers and disadvantaging high-spending 
providers/suppliers, and presented evidence that positive regional 
adjustments have contributed to ACOs receiving inflated benchmarks and 
substantial shared savings payments without decreasing costs relative 
to what spending levels would have been in the absence of the Shared 
Savings Program. MedPAC included recommendations for alternatives to 
the positive regional adjustment for consideration by CMS. These 
include higher shared savings rates, protection from shared losses up 
to an amount equivalent to the regional adjustment, and prospective 
trend factors that could be slightly higher relative to an ACO's 
regional spending.
    Given their criticism that the regional adjustment has generated 
``illusory savings'' in the Shared Savings Program, MedPAC urged CMS to 
use the prior savings adjustment as a means of phasing out the regional 
adjustment. MedPAC expressed a belief that while the prior savings 
adjustment is a reasonable policy for mitigating ratcheting effects, 
implementing both policies together would be duplicative. MedPAC also 
expressed concern that the prior savings adjustment and the regional 
adjustment could interact in a way that would perpetuate a programmatic 
bias towards ACOs receiving a positive regional adjustment. In MedPAC's 
view, many ACOs would receive an inflated prior savings adjustment 
because the prior savings adjustment would be based on savings achieved 
using benchmarks already inflated by the regional adjustment. MedPAC's 
comments regarding interactions between the ACPT and the regional 
adjustment contain a similar concern. MedPAC asserted that without a 
downward adjustment to the positive regional adjustments currently 
received by the majority of ACOs, the ACPT would further subsidize 
these ACOs without generating real efficiency gains for the Medicare 
program.
    Response: We appreciate the perspective that the regional 
adjustment has increased savings for certain ACOs, has coincided with 
increased selective participation in the Shared Savings Program, and 
could contribute to the over inflation of historical benchmarks if left 
in place alongside other policies designed to combat ratcheting like 
the prior savings adjustment and the ACPT. We decline to adopt MedPAC's 
specific proposed alternatives to the positive regional adjustment 
because they go beyond the scope of the policies proposed. With respect 
to the interaction between the prior savings adjustment and the 
regional adjustment, the design of the proposed approach includes 
guardrails that we believe will be sufficient to prevent ACO historical 
benchmarks from becoming overly inflated and enabling ACOs to earn 
shared savings payments without decreasing spending. Specifically, ACOs 
could only receive the greater of the prior savings adjustment and the 
regional adjustment under the proposed policy, we would apply a 
proration factor to help ensure that the prior savings adjustment does 
not exceed the amount of cumulative savings generated by the ACO during 
the performance years that constitute the benchmark years for its 
current agreement period due to growth in assigned beneficiaries, and 
the size of the final adjustment would be capped. With respect to 
interactions between the ACPT, the prior savings adjustment, and the 
regional adjustment more broadly, we note that each of these policies 
is designed to address different dynamics within the benchmark. 
However, we intend to monitor the collective impacts of these 
approaches on ACO benchmarks for evidence of over-inflation or negative 
impacts to the Trust Fund. We may address these issues in future 
rulemaking if necessary.
    Comment: One commenter suggested that CMS provide additional 
modeling and/or analytical results on the impacts of the prior savings 
adjustment because the proposed calculations are complex. This 
commenter preferred removing an ACO's assigned beneficiaries from 
regional expenditures or expanding the regional service area to the 
more complicated prior savings adjustment.
    Response: Since the issuance of the proposed rule we have conducted 
additional modeling of the impact of the prior savings adjustment that 
we believe clearly shows the potential for ACOs to benefit from the 
proposed policy. We refer readers to Table 69 and the related 
description of this modeling within this section of this final rule. We 
have provided detailed descriptions and examples in the proposed rule 
and this final rule on how the prior savings adjustment will be 
calculated, and we also anticipate updating the Shared Savings 
Program's publicly available specifications documents, programmatic 
resources and materials, and the aggregate reports provided to ACOs to 
include information about how we calculate and apply the prior savings 
adjustment. In section III.G.5.c.(6) of this final rule, we summarize 
and respond to comments on the alternative options we considered to 
address concerns about the effect of an ACO's assigned beneficiaries on 
regional FFS

[[Page 69914]]

expenditures in establishing, adjusting, updating, and resetting the 
ACO's historical benchmark.
    Comment: One commenter supported our proposed prior savings 
adjustment because they believe it would tend to set persistently 
higher benchmarks for ACOs that decreased spending during prior 
participation in the Shared Savings Program. In the commenter's view, 
the prior savings adjustment would increase the attractiveness of 
Shared Savings Program participation for such ACOs. However, the 
commenter expressed concern that, as proposed, the prior savings 
adjustment may phase out across agreement periods too quickly to combat 
long-run ratchet effects. The commenter pointed out that, due to the 
use of a scaling factor to calculate the prior savings adjustment, if 
an ACO generates savings during an agreement period, a progressively 
smaller share of those savings would be returned to the benchmark in 
each successive agreement period. The result, in the commenter's view, 
is that although the prior savings adjustment would mitigate selective 
participation concerns in the short-run, in the long-run some ACOs will 
once again begin to face benchmarks that are too low to allow them to 
participate, recreating similar ratchet effects that exist under the 
current benchmarking methodology. The commenter offered an alternative 
approach under which, in any agreement period that follows an agreement 
period during which the ACO received a prior savings adjustment, a 
portion of the earlier prior savings adjustment would be retained 
regardless of how the ACO performed relative to its benchmark during 
the agreement period in which it received the prior savings adjustment. 
This fraction of the ACO's earlier prior savings adjustment, plus any 
additional prior savings from the ACO's previous agreement period, 
subject to a discount factor, would constitute the prior savings 
adjustment for the ACO's new agreement period.
    The commenter also urged CMS to consider additional modifications 
to the Shared Savings Program financial methodology that would 
encourage efficient ACOs to serve more patients and inefficient ACOs to 
either become more efficient or serve fewer patients. In particular, 
the commenter urged CMS to consider modifications that would increase 
the financial costs to providers and suppliers of opting out of the 
Shared Savings Program such as reducing the FFS payment rates for non-
participating providers and suppliers (which the commenter acknowledges 
would require legislative action). In the commenter's view, introducing 
financial penalties for opting out of the Shared Savings Program would 
enable CMS to move towards an ideal historical benchmarking methodology 
that places ACOs on a level playing field and reduces reliance on 
incentives like the prior savings adjustment which increase benchmarks 
for high cost ACOs.
    Response: We appreciate this commenter's support for the proposed 
prior savings adjustment and their comments on the potential for the 
effect of the prior savings adjustment to phase out over the course of 
multiple agreement periods. However, we believe it is appropriate for 
the prior savings adjustment to fade out over time if the ACO maintains 
steady spending levels over subsequent agreement periods in order to 
retain an incentive for ACOs to become more efficient over time. 
Additionally, ACOs will still be eligible for the positive regional 
adjustment if they maintain or increase their efficiency relative to 
their region. The commenter's suggestion that CMS increase the 
financial costs to providers and suppliers for opting out of 
participating in the Shared Savings Program, such as by reducing FFS 
payment rates for non-participating providers and suppliers, is outside 
the scope of the proposal and would, as the commenter notes, require 
legislative action.
    Comment: One commenter supported our proposal to calculate the 
final adjustment to an ACO's benchmark as the higher of the positive 
aggregate regional adjustment and the prior savings adjustment but 
noted that the policy did not sufficiently account for the impact of an 
ACO's prior success on future benchmarks. This commenter offered 
several alternative benchmarking proposals that would involve 
significant alterations to the regional adjustment and the proposed 
prior savings adjustment which the commenter claims would ``address the 
concerns of all new and renewing ACOs, regardless of regional 
efficiency.'' Under this commenter's suggestions, benchmark options 
would be flexible. New ACOs and those that are less efficient than 
their regions would receive purely historical benchmarks until becoming 
more efficient than their regions, and would receive positive regional 
adjustments thereafter. ACOs in a second or subsequent agreement period 
would receive the higher of a purely regional benchmark, a benchmark 
with 50 percent of prior gross savings added back in, and a benchmark 
based solely on historical expenditures.
    Response: We are unsure how to interpret the commenter's 
alternative benchmarking proposals. However, we note that they go 
beyond the scope of the proposed prior savings adjustment and the other 
modifications we proposed to the Shared Savings Program's benchmarking 
methodology in the CY 2023 PFS proposed rule. Additionally, relating to 
the portion of the commenter's recommendations that we understand to 
recommend more generous alternatives, we believe that the commenter's 
suggested approach could result in overly generous benchmarks and 
additional costs to the Shared Savings Program.
    After consideration of the public comments, we are finalizing as 
proposed the methodology for instituting a prior savings adjustment. 
This new policy will be specified in a new provision at Sec.  425.658 
applicable for agreement periods beginning on January 1, 2024, and in 
subsequent years. This provision also specifies the approach to 
determining an ACO's eligibility for the prior savings adjustment.
    We received no comments directly addressing the proposed proration 
factor component of the prior savings adjustment calculation, as 
described in this section of this final rule. We are finalizing without 
modification our proposal to specify at Sec.  425.658(b)(3)(ii) the 
application of a proration factor in the calculation of the prior 
savings adjustment to account for any upward growth in the ACO's 
assigned population in the benchmark years of the current agreement 
period calculated using the ACO's certified ACO participant list and 
assignment methodology for the current performance year as compared to 
the size of the assigned population when the ACO was reconciled for the 
corresponding performance years in its prior agreement period(s). We 
are also specifying at Sec.  425.652(a)(9) that for the second and each 
subsequent performance year during the term of the ACO's agreement 
period, we will redetermine the proration factor used in calculating 
the prior savings adjustment under Sec.  425.658 to account for any 
changes in the ACO's assigned beneficiary population in the benchmark 
years due to the addition and removal of ACO participants or ACO 
providers/suppliers in accordance with Sec.  425.118(b), a change to 
the ACO's beneficiary assignment methodology selection under Sec.  
425.400(a)(4)(ii), or changes to the beneficiary assignment 
methodology. We clarify, more generally, that we anticipate applying 
the provisions in Sec.  425.652(a)(9) in a

[[Page 69915]]

manner that is consistent with how we have previously applied the 
existing provision at Sec.  425.601(a)(9), which provides for the 
redetermination of certain benchmark calculations for the second and 
each subsequent performance year during the term of the ACO's agreement 
period to account for changes in the ACO's assigned beneficiary 
population in the benchmark years. Consistent with this approach, we 
would only redetermine the proration factor used in the prior savings 
adjustment calculation, as necessary, to account for the addition and 
removal of ACO participants or ACO providers/suppliers in accordance 
with Sec.  425.118(b), a change to the ACO's beneficiary assignment 
methodology selection under Sec.  425.400(a)(4)(ii), or changes to the 
beneficiary assignment methodology. If none of these circumstances 
apply for the second or subsequent performance year, we would not 
redetermine the proration factor.
    Further, we are finalizing in Sec.  425.652(a)(8) the approach for 
comparing the pro-rated average prior savings amount calculated under 
Sec.  425.658 with the ACO's regional adjustment amount described in 
the new provision at Sec.  425.656(c), to determine the applicability 
of the prior savings adjustment, the regional adjustment, or a 
combination of these two adjustments.
(5) Reducing the Impact of the Negative Regional Adjustment
(a) Background
    In earlier rulemaking we have discussed our use of the Secretary's 
discretion under section 1899(d)(1)(B)(ii) of the Act to adjust the 
historical benchmark by ``such other factors as the Secretary 
determines appropriate'' in order to adjust ACO historical benchmarks 
to reflect FFS expenditures in the ACO's regional service area (81 FR 
37962). We initially established a regional adjustment in a benchmark 
rebasing methodology that applied to ACOs entering a second agreement 
period beginning on January 1, 2017, January 1, 2018, or January 1, 
2019 (Sec.  425.603(c) through (g)), before modifying our policy to 
apply this adjustment program wide beginning with agreement periods 
starting on July 1, 2019, and in subsequent years (Sec.  
425.601(a)(8)).
    In accordance with Sec.  425.601(a)(8), for ACOs in agreement 
periods beginning on or after July 1, 2019, we adjust historical 
benchmark expenditures by Medicare enrollment type (ESRD, disabled, 
aged/dual eligible Medicare and Medicaid beneficiaries, aged/non-dual 
eligible Medicare and Medicaid beneficiaries) by a percentage of the 
difference between the average per capita expenditure amount for the 
ACO's regional service area and the average per capita amount of the 
ACO's historical benchmark (referred to herein as the ``regional 
adjustment''). As we explained in the CY 2023 PFS proposed rule, the 
percentage that is applied in calculating the regional adjustment is 
currently determined in accordance with Sec.  425.601(f) and depends on 
whether the ACO has lower or higher spending compared to the ACO's 
regional service area and the agreement period for which the ACO is 
subject to the regional adjustment, according to the phase-in schedule 
of the applicable weights. For an ACO that has lower spending compared 
to its regional service area, the weight applied to the regional 
adjustment is 35 percent for the first agreement period in which the 
ACO is subject to a regional adjustment and 50 percent in the ACO's 
second and subsequent agreement periods subject to a regional 
adjustment. For an ACO that has higher spending compared to its 
regional service area, the weight is 15 percent for the first agreement 
period in which the ACO is subject to a regional adjustment, increasing 
to 25 percent, 35 percent, and 50 percent, for the second, third, and 
fourth and subsequent agreement periods that an ACO is subject to a 
regional adjustment, respectively.
    As discussed in the proposed rule, we cap the per capita dollar 
amount of the regional adjustment for each Medicare enrollment type at 
a dollar amount equal to positive or negative 5 percent of national per 
capita FFS expenditures for Parts A and B services under the original 
Medicare FFS program in benchmark year (BY) 3 for assignable 
beneficiaries (as defined in Sec.  425.20) in that Medicare enrollment 
type identified for the 12-month calendar year corresponding to BY3 
(Sec.  425.601(a)(8)(ii)(C)) (referred to herein as positive or 
negative 5 percent of national per capita FFS expenditures for 
assignable beneficiaries, and as the ``symmetrical cap;'' terms which 
we consider to be synonymous).
    Table 70 illustrates how the regional adjustment is calculated 
under the current policy. For this hypothetical ACO, assumed to be in 
its first agreement period subject to a regional adjustment, the ACO 
has lower spending than its regional service area for the ESRD and 
aged/dual eligible populations (that is, the difference between the 
ACO's average per capita regional expenditures and the ACO's average 
per capita historical benchmark expenditures is positive) and higher 
spending for its disabled and aged/non-dual eligible populations (that 
is, the difference between the ACO's average per capita regional 
expenditures and the ACO's average per capita historical benchmark 
expenditures is negative). The weighted average difference between the 
region and the ACO, which is used to calculate the ACO's regional 
adjustment, is determined first by multiplying the difference between 
average per capita FFS expenditures for the ACO's regional service area 
and the ACO's average per capita historical benchmark expenditures for 
each Medicare enrollment type by its respective enrollment type 
proportion and then summing across the four enrollment types. In this 
example, because the weighted average is negative (-$495), the ACO is 
considered to have higher (overall) spending than its regional service 
area. Thus, the weight used to calculate the regional adjustment for 
this ACO based on the schedule of weights described in Sec.  425.601(f) 
is 15 percent. This regional adjustment percentage weight is applied to 
the difference between the ACO's average per capita regional 
expenditures and the ACO's average per capita historical benchmark 
expenditures for each enrollment type (whether positive or negative) to 
obtain the uncapped regional adjustment for each enrollment type. When 
comparing these uncapped values to the symmetrical cap of 5 percent of 
national per capita FFS expenditures for assignable beneficiaries, only 
the ACO's positive ESRD adjustment is constrained by the cap. The 
ultimate impact of the symmetrical cap is to increase the ACO's overall 
weighted average regional adjustment from -$74 to -$77.

[[Page 69916]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.099

    In the CY 2023 PFS proposed rule, we explained that the current 
schedule of weights described in Sec.  425.601(f)) and the positive or 
negative 5 percent cap on the regional adjustment described in Sec.  
425.601(a)(8)(ii)(C)) were finalized in the December 2018 final rule 
(83 FR 68017 through 68024). These policies were designed to address a 
dynamic where the regional adjustment could provide overly inflated 
benchmarks for ACOs that are relatively low spending compared to their 
region, while ACOs with higher spending compared to their region may 
find little value in remaining in the program when faced with a 
significantly reduced benchmark. We also explained our belief that 
these policies would make the benchmark more achievable for ACOs that 
care for medically complex patients and are high spending compared to 
their region, thereby encouraging their continued participation, while 
at the same time preventing windfall shared savings payments for ACOs 
that have relatively low spending levels relative to their region (83 
FR 67822).
    As discussed in the section entitled ``Overview of Considerations 
for Modification to the Benchmarking Methodology'' (section 
III.G.5.c.(2) of this final rule), we now believe that the existing 
negative 5 percent cap may not limit the negative regional adjustment 
enough to provide sufficient incentive for participation among ACOs 
serving high cost, medically complex populations. In the proposed rule, 
we noted that we have concerns that setting the cap on negative 
regional adjustments at negative 5 percent may limit opportunities for 
these beneficiaries, who arguably have the greatest need to receive 
coordinated care, as well as potential savings for the Trust Funds. 
Therefore, we noted that we believe it is important to further reduce 
the impact of negative regional adjustments, particularly for ACOs 
caring for high cost populations, including high-risk patients and 
beneficiaries dually eligible for Medicare and Medicaid, beyond what is 
allowed under the current regulation at Sec.  425.601(a)(8)(ii)(C).
(b) Revisions
    We proposed to institute two policy changes designed to limit the 
impact of negative regional adjustments on ACO historical benchmarks 
and further incentivize program participation among ACOs serving high 
cost beneficiaries:
     Reduce the cap on negative regional adjustments from 
negative 5 percent of national per capita expenditures for Parts A and 
B services under the original Medicare FFS program in BY3 for 
assignable beneficiaries to negative 1.5 percent.
     After the cap is applied to the regional adjustment, 
gradually decrease the negative regional adjustment amount as an ACO's 
proportion of dually eligible Medicare and Medicaid beneficiaries 
increases or its weighted average prospective HCC risk score increases.
    The choice of a negative 1.5 percent cap was informed by CMS' 
experience with use of a 2 percent cap on negative regional expenditure 
adjustments under the Global and Professional Direct Contracting Model 
(to be redesigned and renamed as the ACO Realizing Equity, Access, and 
Community Health (REACH) Model beginning January 1, 2023), as well as 
considerations related to the potential longer-term vision for use of 
an administratively set benchmark under which a negative discount for 
less efficient ACOs could be approximately 1.6 percent over the ACO's 
agreement period as described in the comment solicitation on 
Incorporating an Administrative Benchmarking Approach into the Shared 
Savings Program in section III.G.7. of the proposed rule.
    Under this proposal, we would continue to apply a cap equal to 
positive 5 percent of national per capita expenditures for assignable 
beneficiaries to positive regional adjustments for each enrollment 
type. Table 71 illustrates how the cap would be applied asymmetrically 
to positive and negative regional adjustments under this proposal.

[[Page 69917]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.100

    The hypothetical ACO in this example had a mix of positive and 
negative regional adjustments across the four enrollment types. The 
ACO's uncapped ESRD adjustment is positive and above the positive 5 
percent cap. Therefore, it falls from $4,450 to $4,299 when the cap is 
applied. The ACO's uncapped aged/non-dual eligible adjustment is 
outside the new negative 1.5 percent cap and thus falls from -$259 to -
$158 when the cap is applied. The ACO's disabled and aged/dual eligible 
adjustments are both under the applicable caps and are unaffected. The 
ACO's overall weighted average regional adjustment (calculated by 
multiplying the adjustment for each enrollment type by the 
corresponding enrollment type proportion and then summing across the 
four enrollment types) falls from -$74 to -$7 when the cap is applied. 
Note that under the current policy with a symmetrical cap equal to 5 
percent of national per capita expenditures for Parts A and B services 
for assignable beneficiaries, only the ACO's ESRD adjustment would be 
constrained. The ACO's aged/non-dual eligible adjustment would remain 
at -$259 and the ACO's overall adjustment would actually become more 
negative (-$77) after capping (as shown in Table 71).
    For negative regional adjustments, we also proposed to apply an 
offset factor based on the following: [A] the ACO's overall proportion 
of BY3 assigned beneficiaries that are dually eligible for Medicare and 
Medicaid (including dually eligible ESRD, disabled, and aged 
beneficiaries) \341\ and [B] the ACO's weighted average prospective HCC 
risk score for BY3 taken across the four Medicare enrollment types. 
Before taking this weighted average, the risk score for each enrollment 
type would first be renormalized by dividing by the national mean risk 
score for the assignable FFS population for that enrollment type 
identified for the calendar year corresponding to BY3. Specifically, 
the offset factor would be calculated as:
---------------------------------------------------------------------------

    \341\ In computing this proportion, we would use for each 
beneficiary the fraction of the year (referred to as person years) 
in which they were eligible for the aged/dual eligible enrollment 
type or for which they were eligible for the ESRD or disabled 
enrollment type and dually eligible for Medicare and Medicaid.

---------------------------------------------------------------------------
Offset factor = [A] + ([B]-1)

    This offset factor would be applied to negative regional 
adjustments after the negative 1.5 percent cap is applied. The offset 
factor would be subject to a minimum of zero and a maximum of one. We 
would apply the offset factor by subtracting its value from 1 and 
multiplying this difference by the negative regional adjustment for 
each Medicare enrollment type, calculated as:

Final regional adjustment = Negative regional adjustment x (1-Offset 
factor)

    The higher an ACO's proportion of dually eligible beneficiaries or 
the higher its risk score, the larger the offset factor would be and 
the larger the reduction to the overall negative regional adjustment. 
If the offset factor is equal to the maximum value of one, the ACO 
would not receive a negative regional adjustment (that is, the negative 
weighted average regional adjustment would be fully offset). If the 
offset factor is equal to the minimum value of zero, the ACO would 
receive no benefit from the offset factor.
    To illustrate how the offset would be calculated and applied, 
assume that the hypothetical ACO from Table 72 had a proportion of 
dually eligible beneficiaries of 0.220 and a weighted average 
prospective HCC risk score for BY3 of 1.389. The offset factor for this 
ACO would be calculated as:

Offset factor = 0.220 + (1.389-1) = 0.609

    This factor would be applied as illustrated in Table 72 by 
multiplying the negative regional adjustment for each applicable 
Medicare enrollment type by 1 minus the offset factor or 0.391.

[[Page 69918]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.101

    Here, the offset factor would be applied to the regional 
adjustments for the disabled and aged/non-dual eligible populations, as 
both are negative, but not to the regional adjustments for the ESRD and 
aged/dual eligible populations, which are both positive. Taking the 
weighted average across the enrollment types following application of 
the offset factor shows that the ACO's overall weighted regional 
adjustment goes from -$7 before the offset to $78 after the offset, a 
positive per capita impact of $85.
    In the proposed rule, we noted that it would be possible for an ACO 
to benefit from one aspect of the proposed policy, but not the other. 
For example, ACOs that have negative regional adjustments that are 
below the negative 1.5 percent cap will not be affected by the proposed 
reduction to the cap but could still benefit from the proposed offset 
factor. Alternatively, an ACO whose negative adjustment is reduced by 
the negative 1.5 percent cap would receive no further benefit from the 
offset factor if it has a low proportion of dually eligible 
beneficiaries or a low risk score such that the offset factor equals 1.
    We simulated the combined impact of the policy proposals using data 
from PY 2020 historical benchmarks for ACOs in agreement periods 
starting on or after July 1, 2019. The results of this simulation are 
summarized in Table 73.
[GRAPHIC] [TIFF OMITTED] TR18NO22.102

    Under the policy proposals, the negative regional adjustment for 
almost every ACO that had a negative regional adjustment in PY 2020 
under current policy (40 out of 43 ACOs) would have been reduced (or 
eliminated), with an average per capita impact of approximately $114. 
ACOs with higher weighted average BY3 prospective HCC risk scores and 
higher proportions of dually eligible Medicare and Medicaid 
beneficiaries had overall greater reductions in their negative regional 
adjustments. Four ACOs in the simulation had an offset factor of 1, 
meaning they received a full offset to their negative regional 
adjustments. An additional 170 ACOs that had a positive weighted 
average regional adjustment under the current policy but that had at 
least one enrollment type with a negative regional adjustment would 
also have benefitted from the combined policy. The average per capita 
impact among these ACOs was smaller at around $5. We believe that the 
impacts observed in our simulation are likely to grow larger as more 
ACOs progress further in the program and are subject to higher weights 
in the calculation of the regional adjustment, and as more ACOs that 
serve high cost and medically complex populations join the program.
    We considered whether to make the changes applicable only to ACOs 
that would have had a negative weighted average regional adjustment 
under the current policy (that is, ACOs for which the regional 
adjustment has an overall negative impact on the per capita historical 
benchmark). However, we explained our belief that applying the lower 
cap and the offset factor at the enrollment type level would be more 
straightforward and would have the

[[Page 69919]]

opportunity to benefit ACOs that may be serving high risk populations 
in at least one, but not all Medicare enrollment types.
    We sought comment on the proposed changes to the calculation of the 
regional adjustment for agreement periods beginning on January 1, 2024, 
and in subsequent years. The proposed changes would be reflected in a 
proposed new provision at Sec.  425.656. We also proposed to specify in 
paragraph (a)(8) of the proposed new provision at Sec.  425.652, also 
applicable for agreement periods beginning on January 1, 2024, and in 
subsequent years, the approach for comparing the pro-rated average 
prior savings amount (described in proposed Sec.  425.658(b)(3)(ii)) 
with the ACO's regional adjustment amount (described in proposed Sec.  
425.656(c)), to determine the applicability of the prior savings 
adjustment, the regional adjustment, or a combination of these two 
adjustments.
    The following is a summary of the public comments received on our 
proposals to reduce the impact of the negative regional adjustment and 
our responses:
    Comment: Many commenters supported the proposal to: (1) reduce the 
cap on negative regional adjustments from negative 5 percent of 
national per capita expenditures for Parts A and B services under the 
original Medicare FFS program in BY3 for assignable beneficiaries to 
negative 1.5 percent, and (2) after the cap is applied to the regional 
adjustment, gradually decrease the negative regional adjustment amount 
as an ACO's proportion of dually eligible Medicare and Medicaid 
beneficiaries increases or its weighted average prospective HCC risk 
score increases.
    Many commenters explained their support for the proposal, noting it 
will incentivize certain ACOs to join the program, such as those that 
are higher spending or care for underserved, complex, dually eligible, 
or high-cost beneficiaries. Several commenters supported the proposal 
stating that it will further incentivize higher spending ACOs to join 
the program, as well as increase participation from providers and 
suppliers who care for underserved and complex populations, which they 
stated addresses existing equity concerns. Several commenters noted 
that the policy will incentivize participation of ACOs that serve high-
cost beneficiaries. One commenter agreed with CMS' concern that ACOs 
may be higher cost relative to their regions as a result of caring for 
the highest needs populations rather than being inefficient, and that 
the current negative regional adjustment policy impacts ACOs serving 
medically-complex, high-cost populations by creating barriers for 
existing ACOs to continue their participation in the Shared Savings 
Program, and for non-participating Medicare providers/suppliers caring 
for similar populations to join the Shared Savings Program. Another 
commenter stated that they support CMS' effort to ``tailor'' 
adjustments based on the specific population served by an ACO, such as 
through the population's average risk score or proportion of dually 
eligible beneficiaries, and recommended that CMS utilize the 
methodology which best advantages ACOs serving those acute, complex, 
and/or vulnerable populations.
    A few commenters indicated that they believe the proposed 
modifications to limit the impact of the negative regional adjustment 
will help their ACO(s) specifically, stating they serve high-cost or 
medically complex populations. One commenter noted that their benchmark 
was ``penalized'' in their initial agreement period because they serve 
medically complex patients which resulted in their ACO having higher 
spending relative to its region. The commenter stated and that the 
proposed policy would help to mitigate this effect.
    One commenter, who was supportive of the proposed policy, explained 
how they believe the current policy disincentivizes higher cost ACOs 
from joining the Shared Savings Program. The commenter noted that under 
the current benchmarking methodology CMS calculates an ACO's historical 
spending and then makes an adjustment based on the spending in the 
ACO's region. For ACOs that have spending that is higher than their 
region, the regional adjustment reduces their benchmark below their 
historical spending level, which the commenter states makes it more 
difficult for the ACO to achieve shared savings. As a result, the 
commenter noted ACOs with higher spending relative to their region are 
less likely to join the Shared Savings Program. The commenter added 
that more high spending ACOs exited the program than low spending ACOs 
when the regional adjustment was initially introduced. The commenter 
noted that current policy has led to selection bias against high 
spending ACOs, which may result in missed opportunities for generating 
savings to Medicare and constraining overall spending because these 
ACOs have the ``greatest potential'' for savings.
    A few commenters cited their findings that the proposed policy 
would positively benefit 11 percent of currently participating ACOs. 
Another commenter cited CMS's estimate that the policy would benefit 
nearly all ACOs. One commenter stated their support for reducing the 
cap on negative regional adjustments to 1.5 percent, but noted that 
there is an argument that completely removing the negative adjustment 
would help maximize growth. The commenter did not indicate the type of 
growth they were referring to. However, the commenter noted that growth 
is not the only consideration and so agreed that the 1.5 percent cap 
balances growth with other considerations. Another supportive commenter 
recommended that CMS monitor the effects of the proposed policy on 
ACOs, especially ACOs that care for high cost or medically complex 
patients.
    Response: We agree with commenters that the proposed policy would 
incentivize certain ACOs either to continue their participation in or 
to join the Shared Savings Program, and we are finalizing the proposal 
to modify the calculation of the negative regional adjustment with a 
modification to correct the description of the calculation.
    For the reasons we provided in the CY 2023 PFS proposed rule, and 
as reflected in commenters' support for the proposed approach, we 
continue to believe reducing the impact of the negative regional 
adjustment will facilitate participation of ACOs in the Shared Savings 
Program, in particular ACOs with spending above their regional 
benchmark and those serving medically complex, high cost populations. 
Further, we have continued to evaluate our proposal since issuance of 
the CY 2023 PFS proposed rule, including performing additional modeling 
with benchmark data for ACOs with an agreement period beginning on 
January 1, 2022. This additional modeling yielded similar results to 
the PY 2020 modeling discussed earlier in this section with results 
presented in Table 73.
    In the CY 2023 PFS proposed rule (87 FR 46161 and 46180), we noted 
that we had concerns that setting the cap on negative regional 
adjustments at negative 5 percent may limit opportunities for high 
cost, medically complex beneficiaries, who arguably have the greatest 
need to receive coordinated care, as well as potential savings for the 
Trust Funds. For example, in PYs 2017 through 2019, just over 80 
percent of ACOs subject to a regional adjustment received a positive 
adjustment, indicating their spending was lower than spending in their 
regional service area. More recently, the

[[Page 69920]]

share of ACOs receiving a positive regional adjustment is closer to 90 
percent. This pattern also holds true in our analysis of PY 2022 
historical benchmarks, with 87 percent of ACOs starting an agreement 
period on January 1, 2022 receiving a positive regional adjustment. 
This pattern suggests selective participation behavior, where ACOs that 
have already achieved efficiency or that are serving beneficiaries with 
lower health risks are more likely to participate in the Shared Savings 
Program. Providers and suppliers with the greatest opportunity to 
reduce spending (those that are inefficient and high spending relative 
to their region and that would receive a negative regional adjustment 
if they formed an ACO) are less likely to participate under the current 
methodology, limiting savings for the Medicare program. In the proposed 
rule, we also noted that additional analysis has suggested that ACOs 
receiving the largest negative regional adjustments tend to be those 
serving beneficiaries with high average risk scores and/or high 
proportions of beneficiaries dually eligible for Medicare and Medicaid. 
This pattern was also observed in our more recent analysis of PY 2022 
historical benchmarks among ACOs starting an agreement period on 
January 1, 2022. These findings suggest that these ACOs may be higher 
cost relative to their regions as a result of caring for high needs 
populations rather than being inefficient, and that ACOs serving 
medically complex, high cost populations may have more difficulty 
participating in the Shared Savings Program. However, we also note 
that, similar to the findings discussed in section III.G.1.a of this 
final rule, we have observed that the highest earning ACOs are those 
ACOs providing care for a higher proportion of aged/dual eligible 
Medicare and Medicaid beneficiaries and higher average risk scores than 
the lowest earning ACOs, further supporting the rationale for reducing 
the negative regional adjustment.
    We believe the modifications to the calculation of the negative 
regional adjustment that we are finalizing in this final rule will 
generate higher benchmarks among ACOs with spending above their 
regional benchmark and those serving medically complex, high cost 
populations and will provide more achievable benchmarks to measure the 
performance of these ACOs. Additionally, because we decided not to 
limit the proposal only to those ACOs that have a negative weighted 
average regional adjustment, as discussed earlier in this section of 
the final rule, we believe this policy will also generate higher 
benchmarks for many ACOs with overall lower spending than their region, 
but that may have higher spending for one or more Medicare enrollment 
types. In section III.G.5.c.(5).(b) of the proposed rule, we discussed 
our simulation of the impact of the proposals to limit the impact of 
the negative regional adjustment using data from PY 2020 historical 
benchmarks for ACOs in agreement periods starting on or after July 1, 
2019 (summarized in Table 73 of this final rule). Based on this 
simulation, a majority of ACOs would have seen increased historical 
benchmarks in PY 2020 under this proposed policy compared to current 
policy. This was also observed in more recent simulations using data 
from PY 2022 historical benchmarks among ACOs starting a new agreement 
period on January 1, 2022.
    We need to provide a correction to the methodology for the 
calculation of the offset factor that was described in the proposed 
rule, and update the values related to the PY 2020 simulation 
summarized in Table 73 of this final rule to reflect this correction. 
In the CY 2023 PFS proposed rule, we proposed to apply an offset factor 
based on the following: [A] the ACO's overall proportion of BY3 
assigned beneficiaries that are dually eligible for Medicare and 
Medicaid (including dually eligible ESRD, disabled, and aged 
beneficiaries) \342\ and [B] the ACO's weighted average prospective HCC 
risk score for BY3 taken across the four Medicare enrollment types (87 
FR 46181). The offset factor was specified in the proposed new 
regulation at Sec.  425.656(c)(4) as the sum of the proportion of the 
ACO's BY3 assigned beneficiaries that are dual eligible for Medicare 
and Medicaid and the difference between the ACO's weighted average 
prospective HCC risk score for BY3 taken across the four Medicare 
enrollment types and 1. However, we need to correct this definition to 
address how the weight for each Medicare enrollment type would be 
calculated for purposes of determining the weighted average prospective 
HCC risk score for BY3 taken across the four Medicare enrollment types. 
Accordingly, we are modifying the text of Sec.  425.656(c)(4)(ii) in 
this final rule for consistency with this corrected approach. In 
calculating the weighted average prospective HCC risk score for BY3, 
the weight applied to the prospective HCC risk score for BY3 for each 
enrollment type would be equal to the product of the BY3 per capita 
expenditures for that enrollment type and the BY3 person years for that 
enrollment type. We note that the use of these weights to determine 
weighted average prospective HCC risk scores is similar to the proposal 
to use a weighted average risk ratio in setting the 3 percent cap on 
risk score growth as discussed in section III.G.5.e.(2) of this final 
rule. The correction we are making to the methodology used to calculate 
the offset factor is to ensure consistency between these two policies. 
We believe that weighting prospective HCC risk scores for BY3 using 
both BY3 per capita expenditures and BY3 person years is warranted to 
account for both the proportion of beneficiaries in each enrollment 
type, which is typically highest for the aged/non-dual eligible 
enrollment type, and per capita expenditures for each enrollment type, 
which tend to be highest in the ESRD and aged/dual eligible Medicare 
enrollment types. Additionally, we are modifying the text of Sec.  
425.656(c)(4)(i) in this final rule to say ``dually eligible for 
Medicare and Medicaid'' instead of ``dual eligible for Medicare and 
Medicaid'' for consistency of terminology used in this final rule and 
elsewhere in the regulations. This is not a substantive modification to 
the proposals included in the proposed rule.
---------------------------------------------------------------------------

    \342\ We note that in simulations of this policy proposal, when 
calculating ``[A] the ACO's overall proportion of BY3 assigned 
beneficiaries that are dually eligible for Medicare and Medicaid 
(including dually eligible ESRD, disabled, and aged 
beneficiaries)'', we used, for each beneficiary, the fraction of the 
year (referred to as person years) in which they were eligible for 
the aged/dual eligible enrollment type or for which they were 
eligible for the ESRD or disabled enrollment type and dually 
eligible for Medicare and Medicaid. This fraction of the year 
included months associated with episodes of care for the treatment 
of COVID-19. In operationalizing this proposal when finalized, this 
fraction would not include months associated with episodes of care 
for the treatment of COVID-19 (refer to Sec.  425.611).
---------------------------------------------------------------------------

    In the simulation results presented in Table 62 of the proposed 
rule (87 FR 46182), and restated in Table 73 of this final rule, we 
calculated a weighted average prospective HCC risk score for BY3 where 
the weight applied to the prospective HCC risk score for BY3 for each 
enrollment type was equal only to the BY3 person years for that 
enrollment type, instead of the product of BY3 per capita expenditures 
for that enrollment type and the BY3 person years for that enrollment 
type. For this final rule, we have rerun this simulation to recalculate 
the weighted average prospective HCC risk score for BY3 across the four 
Medicare enrollment types after weighting each enrollment type by the 
product of BY3 per capita expenditures for that enrollment type and the 
BY3

[[Page 69921]]

person years for that enrollment type. The updated results are reported 
in Table 74 of this final rule. The numbers of ACOs remain the same in 
the table; however, there are very small changes in dollar amounts 
provided in the ``Per Capita Impact among Impacted ACOs'' section of 
the table (all less than a dollar). The overall impact of this change 
to the methodology used to determine the offset factor was relatively 
small for all ACOs in the simulation, and led to changes in the impact 
of the simulation on the historical benchmark in both positive and 
negative directions (average change -$0.07, minimum -$6.13, and maximum 
$3.48).
[GRAPHIC] [TIFF OMITTED] TR18NO22.103

    In addition, since the issuance of the CY 2023 PFS proposed rule, 
we have simulated the impact of the proposed modifications to the 
negative regional adjustment using data from PY 2022 historical 
benchmarks among ACOs starting a new agreement period on January 1, 
2022, and using the corrected weights to determine the weighted average 
prospective HCC risk score for BY3. Results of this simulation are 
provided in Table 75.
[GRAPHIC] [TIFF OMITTED] TR18NO22.104

    In these PY 2022 simulation results (Table 75), the negative 
regional adjustment for almost every ACO that had a negative regional 
adjustment under current policy (26 out of 27 ACOs) would have been 
reduced (or eliminated). This is very similar to the PY 2020 simulation 
results (Table 74).
    In the PY 2022 simulation, similar to the PY 2020 simulation, ACOs 
with higher weighted average BY3 prospective HCC risk scores and higher 
proportions of dually eligible Medicare and Medicaid beneficiaries had 
overall greater reductions in their negative regional adjustments. 
These results also show that in both our PY 2020 and PY 2022 
simulations, these policies generated higher benchmarks than the 
current policy for a majority of ACOs,

[[Page 69922]]

whether or not they had higher spending than their region. However, as 
shown in the PY 2022 simulations, among ACOs with a positive weighted 
average regional adjustment, the average impact on benchmarks was only 
around $3, or about 1 percent of the average positive regional 
adjustment of about $268. In comparison, among ACOs with a negative 
weighted average regional adjustment, the average impact on benchmarks 
was around $48, or about 52 percent of the average negative regional 
adjustment of about -$92. As discussed elsewhere in this final rule, we 
decided not to limit the proposal only to those ACOs that have a 
negative weighted average regional adjustment in order to provide the 
opportunity to benefit ACOs that may be serving high risk populations 
in at least one, but not all Medicare enrollment types. However, we 
note that those ACOs with a positive weighted average regional 
adjustment would likely receive only a minor benefit from this policy 
based on the aforementioned simulation results.
    Comment: One commenter urged CMS to allow ACOs that are in the 
middle of an agreement period on January 1, 2024, the flexibility to 
opt into the proposed negative regional adjustment policy without 
having to early renew, a process which the commenter described as being 
onerous. Another commenter also asked CMS to expand the negative 
regional adjustment policy to apply to ACOs currently participating in 
the Shared Savings Program.
    Response: We decline the commenters' suggestion and are maintaining 
our proposal that ACOs would be subject to the changes we are 
finalizing to the negative regional adjustment on an agreement period 
basis. The modified approach we are finalizing to the calculation of 
the negative regional adjustment will apply to ACOs entering a new 
agreement period beginning on or after January 1, 2024. Elsewhere in 
section III.G.5 of this final rule, we explain our concerns regarding 
applying benchmarking changes to ACOs within an agreement period in 
responding to similar suggestions. Among other reasons, such an 
approach would introduce considerable operational complexity into the 
program's benchmarking methodology, particularly as the modified 
approach to calculation of the negative regional adjustment is one of a 
package of changes we are finalizing to the benchmarking methodology to 
be applicable for agreement periods beginning on January 1, 2024, and 
in subsequent years.
    We recognize that currently participating ACOs that entered an 
agreement period prior to January 1, 2024, may wish to pursue the 
option to early renew for a new agreement period beginning on January 
1, 2024, by terminating their current agreement and immediately 
entering a new agreement period, so that they would have the 
opportunity to participate under the revised benchmarking methodology. 
(Refer to paragraph (2) of the definition of ``renewing ACO'' in Sec.  
425.20, and the application procedures set forth in Sec.  425.224.) We 
note that early renewal, like renewing upon completion of an agreement 
period, will result in rebasing of the ACO's historical benchmark, and 
will affect the ACO's eligibility for certain participation options 
(refer to section III.G.2. of this final rule), as well as the 
agreement period the ACO is entering for purposes of applying program 
requirements that phase-in over multiple agreement periods (refer to 
Sec.  425.600(f)).
    Comment: Many commenters supportive of the proposed policy had 
suggestions for additional policy changes that went beyond the scope of 
modifications we proposed to the regional adjustment methodology. One 
commenter suggested that high-cost ACOs may see the negative regional 
adjustment proposal as making the Shared Savings Program more 
attractive, but these ACOs may still not participate if regional trends 
are not accurately reflected in historical benchmark update factors.
    Several commenters recommended that CMS further lower the negative 
regional adjustment cap based on the proportion of an ACO's population 
that is assigned based on primary care services furnished by 
specialists (Step 2 of the assignment methodology \343\). The 
commenters explained that even after accounting for their higher risk 
scores, beneficiaries assigned through specialists have higher costs 
than those who are assigned based on services furnished by primary care 
providers (Step 1 of the assignment methodology \344\) in the same 
given region.
---------------------------------------------------------------------------

    \343\ Refer to Sec.  425.402(b)(4).
    \344\ Refer to Sec.  425.402(b)(3).
---------------------------------------------------------------------------

    Another commenter requested that CMS move ACOs with lower spending 
than their region to fully regional benchmarks over time (for example, 
by their second agreement period). The commenter also stated that CMS 
should allow ACOs with higher spending than their region to ``remain in 
historical benchmarks'' until they become efficient relative to their 
regions, then phase in the regional adjustment. The commenter noted 
that this additional modification would serve CMS' goal of encouraging 
increased participation in the program.
    Another commenter requested that CMS consider two additional 
modifications to the regional adjustment policy: (1) extend the scope 
of the policy to apply a similar offset factor for positive regional 
adjustments; and (2) account for changes in an ACO's proportion of 
beneficiaries dually eligible for Medicare and Medicaid between its BY3 
and the performance year when updating the ACO's benchmark to reflect 
changes in the cost of care for assigned beneficiaries with ``social 
needs,'' similar to what is done in risk adjustment to account for 
changes in severity and case mix between BY3 and the performance year.
    MedPAC noted concern that risk adjustment may not be adequately 
accounting for an ACO's regional efficiency. They explained that 
regional adjustments to benchmarks rely heavily on the accuracy of risk 
adjustment and presented evidence that ``discrepancies'' in the CMS-HCC 
risk adjustment model may penalize ACOs that disproportionately serve 
high-needs populations. They added that ACOs can create favorable bias 
in regional adjustments by being selective about identifying physician 
practices that serve assignable beneficiaries with low risk-adjusted 
spending. They provided (in response to our proposals for adjusting 
benchmarks to account for an ACO's prior savings and reducing negative 
regional adjustments) their recommendations for phasing out the 
regional adjustment to an ACO's benchmark expenditures.
    Response: At this time, we decline the commenters' suggestions as 
summarized in the comment summary above. These suggestions go beyond 
the scope of the modifications we proposed to the program's regional 
adjustment methodology. In regards to the commenters' concern that 
high-cost ACOs may still not participate in the program if they believe 
regional trends are not accurately reflected in historical benchmark 
update factors, we note that we believe that incorporating a 
prospective, external factor that is risk adjusted in the growth rates 
used to update the historical benchmark (see section III.G.5.c.(3) of 
this final rule) will help to mitigate this concern by decreasing the 
weight placed on the two-way blend of national and regional growth 
rates when updating an ACO's historical benchmark for each performance 
year in the ACO's agreement period. In regards to the

[[Page 69923]]

commenters' concerns that regional adjustments to benchmarks (that rely 
on the accuracy of risk adjustment) may penalize ACOs that 
disproportionately serve high-needs populations, we believe the 
proposal to reduce the cap on negative regional adjustments from 
negative 5 percent to negative 1.5 percent, and then gradually decrease 
the negative regional adjustment amount as an ACO's proportion of 
dually eligible Medicare and Medicaid beneficiaries increases or its 
weighted average prospective HCC risk score increases, will address 
this concern.
    After consideration of public comments, we are finalizing our 
proposal to make changes to the calculation of the regional adjustment 
for agreement periods beginning on January 1, 2024, and in subsequent 
years, with a modification to correct an error in the description of 
the methodology in the proposed rule and a non-substantive modification 
for consistency of terminology, both of which were discussed earlier in 
this section of this final rule. Under this final policy, we will apply 
a cap on the negative regional adjustment at negative 1.5 percent of 
national per capita expenditures for Parts A and B services under the 
original Medicare FFS program in BY3 for assignable beneficiaries, and 
after the cap is applied to the regional adjustment, gradually decrease 
the negative regional adjustment amount as an ACO's proportion of 
dually eligible Medicare and Medicaid beneficiaries increases or its 
weighted average prospective HCC risk score increases. We are also 
finalizing our proposal to specify the provisions related to the 
calculation of the regional adjustment to the benchmark in a new 
regulation at Sec.  425.656. However, we are revising Sec.  
425.656(c)(4)(ii) to specify that when calculating the weighted average 
prospective HCC risk score for BY3 across the four Medicare enrollment 
type, the weight applied to the prospective HCC risk score for BY3 for 
each enrollment type is equal to the product of the BY3 per capita 
expenditures for that enrollment type and the BY3 person years for that 
enrollment type.
    We are also finalizing without modification our proposal to specify 
in paragraph (a)(8) of Sec.  425.652, also applicable for agreement 
periods beginning on January 1, 2024, and in subsequent years, the 
approach for comparing the pro-rated positive average prior savings 
amount (described in Sec.  425.658(b)(3)(ii), and as discussed in 
section III.G.5.c.(4) of this final rule) with the ACO's regional 
adjustment amount (described in Sec.  425.656(c)), to determine the 
applicability of a prior savings adjustment, the regional adjustment, 
or a combination of these two adjustments.
(6) Alternative Options for Addressing Concerns About the Effect of an 
ACO's Assigned Beneficiaries on Regional FFS Expenditures in 
Establishing, Adjusting, Updating, and Resetting the ACO's Historical 
Benchmark
    ACOs and other interested parties have expressed concerns with CMS' 
approach to determining regional FFS expenditures using a population of 
assignable beneficiaries that includes an ACO's assigned beneficiaries 
including, with respect to the impact on the calculation of the 
regional adjustment and the blended national-regional growth rate used 
to trend and update the ACO's historical benchmark, suggesting this 
policy results in relatively lower benchmarks for ACOs, particularly 
ACOs with high market penetration in their regional service area, which 
may tend to be ACOs located in rural areas. In the CY 2022 PFS proposed 
rule (86 FR 39291 through 39294), we sought comment on a number of 
potential approaches to addressing these concerns, as well as any 
unintended consequences that may result from removing an ACO's assigned 
beneficiaries from regional calculations. We summarized comments 
received in the CY 2022 PFS final rule (86 FR 65296 through 65302). In 
sections III.G.5.c.(3) through (5) of the proposed rule (87 FR 46158 
through 46183), we proposed a package of three provisions: 
incorporating a prospective, external factor in the growth rates used 
in updating the benchmark; adjusting rebased benchmarks to account for 
an ACO's prior savings; and reducing the impact of negative regional 
adjustments on ACO benchmarks. We designed this package of proposed 
provisions to, among other things, address concerns associated with 
including an ACO's own beneficiaries in its regional FFS expenditures. 
For example, the proposed inclusion of the ACPT in the growth rates 
used to update the benchmark based on a three-way blend would reduce 
the impact of including an ACO's assigned beneficiaries in the regional 
component of the blend. Under the proposal to use the higher of a prior 
savings adjustment, a positive regional adjustment, or a combination of 
both, the proposed prior savings adjustment could increase the 
historical benchmark for an ACO whose regional adjustment could have 
been decreased by the inclusion of its own assigned beneficiaries in 
the regional expenditure calculation.
    As discussed in the proposed rule (87 FR 46183 through 46186), we 
also considered alternative options to this package of three proposals 
that would more directly reduce the effect of the ACO's own 
beneficiaries on its regional FFS expenditures: (1) removing an ACO's 
assigned beneficiaries from the assignable beneficiary population used 
in regional expenditure calculations; and (2) expanding the definition 
of the ACO's regional service area to use a larger geographic area to 
determine regional FFS expenditures. We noted that these related 
approaches were among the policies we discussed and on which we sought 
comment in the CY 2022 PFS proposed rule. We also noted that we 
considered whether to use a combination of these two alternative 
approaches under which we would expand the ACO's regional service area 
in combination with removing an ACO's assigned beneficiaries from the 
assignable beneficiary population used in calculating regional FFS 
expenditures. In evaluating these alternative approaches, we considered 
the comments we received in response to that comment solicitation 
(summarized in the CY 2022 PFS final rule) and considered the extent to 
which each alternative would address three core concerns (or dynamics) 
previously described in section III.G.5.c.(2) of the proposed rule (87 
FR 46160) and summarized here:
     Mitigating the ratchet effect to ensure ACOs' rebased 
benchmarks remain accurate and serve as a reasonable baseline.
     Reducing a single ACO's or multiple ACOs' collective 
impacts on an ACO's regional expenditures, which are used to calculate 
the regional adjustment and the regional portion of the trend and 
update factors.
     Ensuring the benchmarking methodology results in 
benchmarks of sufficient value to encourage program entry and continued 
participation by ACOs, ACO participants, and ACO providers/suppliers 
serving medically-complex, high-cost populations.
    We also noted that we considered the extent to which the 
alternatives could lead to other unintended consequences including 
introducing excessive benchmark volatility or creating incentives for 
market consolidation. We noted some of these alternatives may require 
use of our authority under section 1899(i)(3) of the Act to implement 
alternative benchmarking methodologies that diverge from the 
requirements of section 1899(d)(1)(B)(ii) of the Act, including 
alternative

[[Page 69924]]

approaches to updating the historical benchmark. We explained that in 
order to use our authority under section 1899(i)(3) of the Act, we must 
determine that the alternative payment methodology will improve the 
quality and efficiency of items and services furnished to Medicare 
beneficiaries, without resulting in additional program expenditures. We 
noted that as of the time the CY 2023 PFS proposed rule was issued, we 
had not performed an analysis of the extent to which the alternative 
approaches would meet the requirements of section 1899(i)(3) of the 
Act, when use of this authority would be necessary for implementing 
such approaches within the Shared Savings Program's financial 
methodology.
    In the proposed rule, we described the alternative options that we 
considered in more detail, as well as our assessment of the ability of 
each alternative to address the three core concerns we articulated and 
the other factors considered. We sought comment on these alternative 
options noting that interested parties would have the opportunity to 
consider their merits relative to the package of policies we proposed 
in sections III.G.5.c.(3) through (5) of the proposed rule (87 FR 46158 
through 46183). We also sought comment on certain operational factors 
that we would need to address with greater specificity if we were to 
finalize any of the alternatives. We noted that we would consider the 
comments received on these alternative options along with the comments 
on the proposed package of policies in the development of our final 
policy, and that we might consider adopting one or both of the 
alternatives in lieu of the package of policies we proposed in section 
III.G.5.c.(3) through (5) of the proposed rule.
Alternative 1: Removing an ACO's Assigned Beneficiaries From the 
Assignable Beneficiary Population Used in Regional Expenditure 
Calculations
    Under the first alternative considered, which aligns with 
suggestions made by some ACOs and other interested parties, we would 
exclude an ACO's assigned beneficiaries from the population of 
assignable beneficiaries in the ACO's regional service area used to 
determine the regional FFS expenditures used in all benchmarking 
calculations including trending and updating the benchmark and 
calculating the regional adjustment. We noted in the proposed rule (87 
FR 46184) that if we were to adopt this first alternative to remove the 
ACO's own assigned beneficiaries but not also adopt the alternative to 
expand the ACO's regional service area under a combined approach, the 
ACO's regional service area would remain as all counties where one or 
more beneficiaries assigned to the ACO reside (as defined under Sec.  
425.20). If we were to adopt a combined alternative, we would consider 
a modified definition of the ACO's regional service area. To remove an 
ACO's assigned beneficiaries from the regional expenditure calculation, 
we would use the mathematical approach described in the CY 2022 PFS 
proposed rule (86 FR 39292 and 39293), which relies on the premise that 
per capita risk-adjusted FFS expenditures for all assignable 
beneficiaries in an ACO's regional service area (a) can be interpreted 
as a weighted average of per capita risk-adjusted FFS expenditures for 
the ACO's assigned beneficiaries (b) and per capita risk-adjusted FFS 
expenditures for assignable beneficiaries in the region who are not 
assigned to the ACO (c), where the weight on (b) is the ACO's regional 
market share \345\ and the weight on (c) is one minus the ACO's 
regional market share. Shown as an equation this is:
---------------------------------------------------------------------------

    \345\ What is referred to here as the ``ACO's regional market 
share'' is the share of assignable beneficiaries in the ACO's 
regional service area that are assigned to the ACO, which is the 
weight that it is applied to the national component of the national-
regional blend under Sec.  425.601(a)(5)(iv) and (v).

(a) = [(b) x (ACO's regional market share)] + [(c) x (1-ACO's regional 
---------------------------------------------------------------------------
market share)].

Thus, to remove the ACO's assigned beneficiaries from the regional 
expenditure calculation, we would insert the applicable values for (a), 
(b), and regional market share (all data elements already computed 
under the current benchmarking methodology) into the above equation and 
solve for (c) by rearranging the equation as follows:

(c) = {(a)-[(b) x (ACO's regional market share)]{time} /(1-ACO's 
regional market share).

    By using such ACO- and regional-level values, this approach, 
performed separately by Medicare enrollment type, would avoid the need 
to calculate individualized ACO county-level risk-adjusted 
expenditures. As such, and by leveraging existing data elements, we 
noted our belief that this approach would pose relatively limited 
operational burden.
    As described in the CY 2022 PFS final rule, some of the commenters 
responding to our initial comment solicitation indicated CMS' 
mathematical approach was ``directionally correct,'' relatively simple, 
and would work well in nearly every case while using data that CMS 
already produces (86 FR 65299 and 65300). However, in the CY 2022 PFS 
final rule we also noted that we share the concerns raised by several 
commenters that an approach to remove an ACO's assigned beneficiaries 
from the assignable population could incentivize ACOs to ``cherry-
pick'' healthier, lower-cost patients and could unfairly penalize ACOs 
that specialize in more medically-complex, higher-cost patients, 
running counter to one of the core dynamics we seek to address (86 FR 
65300 and 65301). Similarly, we indicated that we are also concerned 
that this approach would incentivize market consolidation, as ACOs may 
anticipate a benefit to maintaining the largest market share in the 
region if their own assigned beneficiaries are removed from the 
assignable population. Additionally, removing an ACO's assigned 
beneficiaries from the calculation of regional FFS expenditures could 
yield unstable estimates due to small sample sizes in areas with high 
program penetration and/or in rural areas. As a result, an approach 
that would remove an ACO's assigned beneficiaries from the assignable 
population used to calculate regional FFS expenditures could result in 
a situation where the ACO's assigned population is relatively healthier 
and less costly than the assignable beneficiary population in the 
regional service area, which in turn would result in higher benchmarks 
for ACOs and thereby greater shared savings payments and reduced shared 
losses. More generous benchmark updates resulting from this approach 
could jeopardize CMS' use of the statutory authority under section 
1899(i)(3) of the Act to adopt such an alternative approach. In the CY 
2023 PFS proposed rule, we stated our belief that these concerns would 
be relevant to whether we adopt this alternative alone or adopt a 
combined approach, under which we would both remove the ACO's own 
assigned beneficiaries from the regional expenditure calculation and 
expand the ACO's regional service area for purposes of that 
calculation. We noted that expanding the regional service area may also 
mitigate the concern about unstable estimates due to small sample 
sizes.
    In the proposed rule (87 FR 46184) we noted that while we believed 
this first alternative would partially address one of our core concerns 
by removing an ACO's own impact on the regional expenditures used in 
its benchmark calculations, it would not directly address the 
collective impact of multiple ACOs that may be operating in the same 
regional service area. We

[[Page 69925]]

further noted that under the proposed changes described in the proposed 
rule designed to increase participation in the Shared Savings Program, 
we would expect this issue to grow more prominent over the coming 
years.\346\ Additionally, we noted that we believed removing an ACO's 
own assigned beneficiaries from the regional expenditure calculation 
would be less effective at mitigating the ratchet effect than our 
proposed package of policies. For example, while this alternative might 
address how the ACO's prior performance affects regional factors used 
for purposes of calculating an ACO's rebased historical benchmark, this 
alternative would not address the concern that actual assigned 
beneficiary expenditures used in establishing an ACO's rebased 
historical benchmark may already be reduced by the ACO's prior success 
in reducing expenditures for its own assigned beneficiary population. 
We stated that the proposed adjustment for prior savings described in 
section III.G.5.c.(4) of the proposed rule would more directly address 
this concern by adding a portion of the ACO's prior savings during the 
benchmark years back into the rebased benchmark. Further, the proposal 
to include the ACPT in a three-way blended update factor as described 
in section III.G.5.c.(4) of the proposed rule would more directly 
``decouple'' the update factor from actual observed expenditures, 
including expenditure reductions that are a result of savings already 
achieved by the ACO, than simply removing the ACO's own beneficiaries 
from the regional expenditure calculation.
---------------------------------------------------------------------------

    \346\ CMS has set forth a goal that 100 percent of people with 
Original Medicare will be in a care relationship with accountability 
for quality and total cost of care by 2030.
---------------------------------------------------------------------------

    We explained that one option that had been suggested by commenters 
during prior rulemaking is to remove all Shared Savings Program 
assigned beneficiaries from the assignable beneficiary population used 
to calculate each ACO's regional expenditures. In the proposed rule (87 
FR 46185) we declined to consider removing all Shared Savings Program 
assigned beneficiaries from the assignable beneficiary population used 
to calculate each ACO's regional expenditures, as we had concerns about 
the short- and long-term sustainability and soundness of such an 
approach given the Agency's goal to expand participation in accountable 
care. We noted our belief that under the current level of program 
participation, an approach that would remove all Shared Savings Program 
assigned beneficiaries from the assignable population for each ACO's 
regional service area would yield unstable estimates of regional FFS 
expenditures for some ACOs, even if we were to expand the definition of 
an ACO's regional service area. We also noted that over time, we would 
expect this issue to worsen as Shared Savings Program participation 
expands.
    We noted in the proposed rule that if we were to seek to finalize 
the first alternative of removing an ACO's assigned beneficiaries from 
the calculation of regional expenditures either by itself or in the 
combination with expanding our definition of an ACO's regional service 
area in lieu of the proposed package of policies, we would potentially 
need to adjust the weights used in calculating the regional adjustment 
to the historical benchmark. Under the current regulations, for ACOs 
that have lower average spending than their regional service area, we 
use a weight of 35 percent in the first agreement period that an ACO is 
subject to a regional adjustment and a weight of 50 percent in the 
second and subsequent agreement periods the ACO is subject to a 
regional adjustment. If an ACO was serving an assigned population that 
is markedly healthier than other assignable beneficiaries in the ACO's 
regional service area, removing the ACO's assigned beneficiaries from 
the population used to compute regional expenditures would increase the 
magnitude of the regional adjustment, all else being equal. This could 
potentially lead to a dramatic increase in program costs as higher 
regional adjustments could translate to higher shared savings payments. 
Thus, we indicated that we would potentially need to consider reducing 
the weights used to calculate the regional adjustment to protect the 
Medicare Trust Funds. Determining the appropriate adjustment to the 
weights may be complicated by potential resulting consolidation. For 
example, assume for illustration purposes that the regional adjustment 
weights were reduced by 10 percentage points to bring the overall 
impact of regional adjustments back in line with the existing program 
design (that is, the weighting would be reduced from 35 to 25 percent 
in the first agreement period if positive, and from 50 percent to 40 
percent in succeeding agreement periods if positive, etc.). If ACOs 
consolidate in order to concentrate the residual regional spending on 
fewer higher spending assignable beneficiaries, then the weights may 
need to be further reduced to offset the further increase in regional 
adjustments for consolidated ACOs.
Alternative 2: Expanding the Regional Service Area
    The second alternative we considered in the proposed rule in place 
of the package of proposed policies would seek to reduce an ACO's 
influence on expenditures in its regional service area by expanding the 
ACO's regional service area. While we did not outline a specific 
approach to expanding an ACO's regional service area in the CY 2022 PFS 
proposed rule (86 FR 39294), we sought comment on basing regional 
expenditure calculations on larger geographic areas, such as using 
State-level data or Core-Based Statistical Area (CBSA)-level data, or a 
combination of data for these larger geographic areas and county-level 
data (such as blended county/State expenditures). We also sought 
comment on what would constitute heavy market penetration by an ACO in 
its regional service area if we were to use an approach that would 
consider the ACO's level of penetration in determining whether to 
expand the ACO's regional service area.
    For example, one potential approach to expanding the regional 
service area would be to define an ACO's regional service area to 
include all States in which at least one of the ACO's assigned 
beneficiaries resides and calculating regional expenditures as a 
weighted average of State-level risk-adjusted expenditures, with the 
weights reflecting the proportion of the ACO's total assigned 
beneficiaries residing in each State. This approach would therefore 
mimic the current calculation, but replace county-level data with 
State-level data.
    Another possible approach would be to follow the existing 
methodology, but replace county-level risk-adjusted expenditure values 
with State-level risk-adjusted expenditure values for the corresponding 
State only for counties where an ACO has market share above a specified 
threshold, such as 50 percent. Such a blended approach would maintain 
greater geographic specificity than an approach that relies exclusively 
on State-level data, while still reducing the influence of an ACO's own 
beneficiaries in areas where the impacts may be most acute.
    In its comment responding to our solicitation in the CY 2022 PFS 
proposed rule, MedPAC favored altering the calculation of regional 
spending by extending the ACO's regional service area to a larger 
market area (for example, CBSAs, health service areas, or hospital 
referral regions) in lieu of removing ACO assigned beneficiaries from 
the

[[Page 69926]]

calculation of regional FFS expenditures, noting that expanding an 
ACO's regional service area would help to reduce an ACO's influence on 
its regional benchmark calculation without explicitly favoring certain 
categories of ACOs (for example, historically low spending ACOs). Other 
commenters on the comment solicitation in the CY 2022 PFS proposed rule 
also supported expanding the regional service area for the purposes of 
calculating regional FFS expenditures in cases where ACO market 
penetration is high, with some of those commenters suggesting this 
would mitigate concerns about the reference population being too small 
after removing the ACO's assigned beneficiaries. Some commenters 
specifically called for using a threshold of 50 percent market 
penetration in such an approach. For example, a commenter suggested 
expanding the regional service area to include all contiguous counties 
for ACOs that have high market penetration (for example, when an ACO's 
assigned beneficiary population in a county exceeds 50 percent), with 
allowances for a lower threshold under special circumstances. For a 
full summary of the considerations and comments received, refer to the 
CY 2022 PFS final rule (86 FR 65301 and 65302).
    As discussed in the proposed rule (87 FR 46185), like MedPAC, we 
believed that adopting only this second alternative to expand the 
regional service area would reduce the impact of an ACO's own 
expenditures on its regional expenditures without introducing 
incentives for favorable patient selection or concerns about increased 
volatility that may result from the first alternative of excluding an 
ACO's assigned beneficiaries from the population of assignable 
beneficiaries used to determine regional FFS expenditures. However, 
like that first alternative, expanding the regional service area might 
not address concerns about ACOs' collective market penetration. We also 
noted our belief that this second alternative or a combined approach 
would do less to ``decouple'' the ACO's benchmark from observed FFS 
spending than the package of policies that we had proposed, and thus 
would likely be more limited in countering the ratchet effect. By 
contrast, the proposal to incorporate the ACPT into the growth rates 
used to update the benchmark would ensure that a portion of the update 
will remain unaffected by observed FFS spending. Furthermore, we noted 
in the proposed rule that we had concerns that use of a market 
penetration threshold may drive further market consolidation as ACOs 
seek to meet such a threshold.
    We noted in the proposed rule that if we were to decide to finalize 
this second alternative or a combined approach in lieu of our proposed 
package of policies, there would be a number of operational factors 
that we would need to address with greater specificity, including, but 
not limited to: what alternative geographic area we would use, whether 
we would replace county-level data with data based on an alternate 
geographic area or use a blend, and, if using a blend, at what 
threshold it would be triggered, and what weights would be applied when 
aggregating expenditures across geographic areas.
    On the balance, we noted that we believed the proposed package of 
policies described in sections III.G.5.c.(3) through (5) of the 
proposed rule would collectively be more effective at addressing the 
core concerns we articulated than the two alternatives described or a 
combined approach, and would avoid some of the alternatives' potential 
unintended consequences. However, we sought further comment on these 
alternatives, including various operational considerations we would 
need to specify if we were to finalize either alternative 1, 
alternative 2, or a combined approach. As stated previously, we noted 
that we would consider the comments received on these alternative 
options and the related operational considerations along with the 
comments on the proposed package of policies in the development of our 
final policies, and might consider adopting one or both of the 
alternatives discussed in this section in lieu of the package of 
proposed policies discussed in section III.G.5.c.(3) through (5) of the 
proposed rule.
    The following is a summary of the public comments received on these 
alternative options for addressing concerns about the effect of an 
ACO's assigned beneficiaries on regional FFS expenditures in 
establishing, adjusting, updating, and resetting the ACO's historical 
benchmark and our responses:
    Comment: A few commenters addressed the concerns we raised in the 
proposed rule about Alternative 1, under which we would remove an ACO's 
assigned beneficiaries from the assignable beneficiary population used 
in regional expenditure calculations.
    One commenter stated that they shared CMS' concerns outlined in the 
proposed rule regarding Alternative 1, noting that this approach is not 
adaptable or sustainable when CMS' objective is to grow participation 
in the Shared Savings Program with the goal of having all Original 
Medicare beneficiaries cared for by participants of value-based payment 
initiatives by 2030. Additionally, the commenter noted that as CMS 
nears this goal, eventually there will be regions where all Original 
Medicare beneficiaries are assigned to ACOs participating in the Shared 
Savings Program or entities participating in other value-based payment 
initiatives and it will not be possible to calculate regional 
expenditures under this alternative option. Another commenter disagreed 
with certain concerns CMS outlined in the proposed rule regarding the 
proposed Alternative 1, stating that the concerns were unfounded. 
Specifically, the commenter noted that there is no evidence to support 
CMS' concerns regarding potential beneficiary selection or market 
consolidation that would result from removing an ACO's assigned 
beneficiaries from the assignable population used in regional 
expenditure calculations. Additionally, the commenter stated that 
incentives for ACOs to consolidate currently exist in the program due 
to ACOs needing to compete against themselves, as well as each other, 
and that removing the ACO's assigned beneficiaries from regional 
calculations would not address the competition between ACOs but would 
eliminate the need for an ACO to compete against itself. Finally, the 
commenter described being less concerned than CMS that competition 
between ACOs in areas with multiple ACOs in a market is a major barrier 
to entry for ACOs, given that ACOs currently compete on trends, not on 
the absolute level of spending. The commenter noted that CMS creates 
county rates in Medicare Advantage in counties where the Original 
Medicare population is in the minority. The commenter noted that a 
counterfactual population would still be available for calculating 
regional trend factors within the Shared Savings Program even after 
removing the ACO's own assigned beneficiaries. It was unclear to this 
commenter why CMS can overcome the rate-setting issues in Medicare 
Advantage but not in the Shared Savings Program. The commenter also 
disagreed with CMS' concern that removing assigned beneficiaries would 
jeopardize the ability to use an alternative payment model adopted 
under section 1899(i)(3) of the Act.
    Response: We appreciate the commenters' input on the concerns laid 
out in the proposed rule with the alternative options. We continue to 
share the concern of the first commenter that removing the ACO's own 
assigned beneficiaries from regional FFS

[[Page 69927]]

expenditure calculations will be problematic as ACO assigned 
beneficiaries account for a greater share of Medicare FFS beneficiaries 
over time. We disagree with the second commenter that we would retain 
valid counterfactual populations in all ACO regions after removing the 
ACO's assigned beneficiaries from the population of assignable 
beneficiaries in the region. We note that under the Medicare Advantage 
program, the counterfactual population used for county rate setting is 
the Medicare FFS population. The Shared Savings Program is already 
limited to the Medicare FFS beneficiary population; and removing the 
ACO's own assigned beneficiaries would further limit the number of 
beneficiaries in a counterfactual population. We believe that removing 
the beneficiaries from the region could leave highly penetrated ACOs 
with adjusted regional trends based on very small sample sizes where 
the resulting trend target could lack validity. For example, if the 
ACO's trend was 3 percent and the unadjusted regional and national 
trends were 5 percent, but the adjusted regional trend was 30 percent, 
then the target calculation under Alternative 1 would appear deeply 
problematic on its face.
    We disagree with the second commenter that the concerns we laid out 
about beneficiary selection and market consolidation are unfounded. We 
continue to believe that a policy of removing an ACO's own assigned 
beneficiaries from the calculation of its regional FFS expenditures 
would create a strong incentive for both beneficiary selection and 
market consolidation. Removing an ACO's own assigned beneficiaries from 
the regional trend calculation would reward an ACO for serving an 
assigned beneficiary population whose spending grew slower between the 
benchmark period and the performance year than the spending of the 
remaining assignable FFS beneficiaries in the ACO's region. 
Additionally, removing an ACO's own assigned beneficiaries from the 
regional trend calculation would penalize an ACO for serving an 
assigned beneficiary population whose spending grew faster between the 
benchmark period and the performance year than the spending of the 
remaining assignable FFS beneficiaries in the ACO's region, which could 
make it harder for ACOs caring for medically complex and high cost 
beneficiaries to achieve shared savings and could cause such ACOs to 
drop out of the Shared Savings Program. These situations may occur, 
either intentionally or accidentally, through shifts in the types of 
services provided by ACO participants or shifts in the ACO 
professionals billing through those ACO participant TINs between the 
benchmark period and the performance year. That is, because the Shared 
Savings Program assignment methodology considers all primary care 
services billed under an ACO participant TIN that are furnished by an 
ACO professional with a primary specialty designation used in 
assignment, shifts in billing patterns or the populations served by any 
given ACO participant TIN could produce a biased residual trend at the 
regional level if an ACO's own assigned beneficiaries are not included 
in the respective benchmark and performance years. Removing the ACO's 
beneficiaries from regional FFS expenditures for purposes of 
calculating the regional trend could also incentivize consolidation so 
that an ACO could have more ACO-related spending excluded from its 
regional trend than if the ACO is only one of multiple ACOs in its 
market.
    We also disagree with the commenter's statement that removing 
assigned beneficiaries would not jeopardize CMS's ability to use an 
alternative payment model under section 1899(i)(3) of the Act. 
Preliminary modeling indicates program outlays for shared savings could 
rise by roughly 15 to 40 percent or more initially under Alternative 1 
(presuming use of the current two-way blended update factor) and could 
grow significantly beyond that if gaming via consolidation were to 
follow.
    Comment: We received several comments in support of Alternative 1, 
Alternative 2, or a combination of the two.
    The majority of commenters expressed support for Alternative 1, 
either by itself or as part of a combination of Alternative 1 and 
Alternative 2. Among these commenters, it was not always clear whether 
the commenter supported removing ACO-assigned beneficiaries from the 
regional FFS expenditures used in determining the regional component of 
the update factor (also referred to as the regional trend), from the 
regional FFS expenditures used in determining the regional adjustment, 
or both.
    The majority of these commenters specified their preference for 
Alternative 1 over the proposed policy to incorporate a prospective, 
external factor (the ACPT) in growth rates used to update the 
historical benchmark. Among these commenters, most discussed how 
Alternative 1 would more directly or comprehensively address the 
``rural glitch'' than the proposal to incorporate the ACPT as part of a 
three-way blended update factor. Another commenter indicated that they 
could not support CMS' proposal to address the rural glitch and that 
CMS should instead remove assigned beneficiaries from ``benchmark 
calculations.'' Some commenters who expressed a preference for 
Alternative 1 over the three-way blend that incorporates the ACPT 
offered an alternative suggestion to: (1) use the ACPT as the national 
component in the two-way blend; and (2) remove assigned beneficiaries 
from the regional component in the two-way blend. Another commenter 
preferred an approach that would combine Alternative 1 and Alternative 
2 to remove the ACO's own assigned beneficiaries from the calculation 
of the regional trend, as well as to broaden the region when needed for 
ACOs with large market shares to allow for statistically valid non-ACO 
reference populations. One commenter who expressed a preference for 
Alternative 1 over the proposed three-way blend that incorporates the 
ACPT specified that while they supported removal of the ACO's assigned 
beneficiaries from the calculation of the regional trend, they did not 
support removal of the ACO's assigned beneficiaries for purposes of 
calculating the regional adjustment to the benchmark because they 
believe doing so could discourage participation by high-cost ACOs and 
work against the goal of equity.
    One commenter indicated that they preferred Alternative 1, 
Alternative 2, or a combination of the two, over the prior savings 
adjustment proposal, asserting that the proposed formulas used in the 
latter seem quite complicated and the impact is unclear.
    Some commenters that expressed general support for Alternative 1 
did not expressly indicate a preference for that option over the other 
benchmarking proposals. These commenters stated generally that they 
supported CMS' removing the ACO's assigned beneficiaries from benchmark 
calculations. One commenter supported CMS' adopting either or both of 
the alternative policies to help mitigate the problems associated with 
including an ACO's own beneficiaries in benchmark calculations, 
particularly for ACOs that have a high market share in their region. 
One commenter stated that they agreed completely with the policy under 
the section heading ``Alternative Options for Addressing Concerns About 
the Effect of an ACO's Assigned Beneficiaries on Regional FFS

[[Page 69928]]

Expenditures in Establishing, Adjusting, Updating, and Resetting the 
ACO's Historical Benchmark'' in the proposed rule, but the commenter 
did not specify further.
    Some commenters urged CMS to adopt Alternative 2 to expand the 
ACO's regional service area, but did not specify an approach to doing 
so. One of these commenters also supported the prior savings adjustment 
proposal and the proposal to reduce the impact of the negative regional 
adjustment, but did not comment on CMS' proposal for a three-way 
blended updated factor so it was unclear if the commenter preferred 
Alternative 2 over the proposed changes to the update methodology. 
Another commenter suggested that CMS expand the ACO's regional service 
area for purposes of computing the regional component of the existing 
national-regional blended update factor and incorporate a set increase 
in the growth factor each year, preferring this combination over the 
proposed three-way blend. Another commenter recommended that CMS 
broaden the region when needed to allow for statistically valid non-ACO 
reference populations for ACOs with large market shares.
    One commenter mentioned that CMS could remove all Shared Savings 
Program assigned beneficiaries from regional expenditure calculations 
in order to remove competition among ACOs operating in the same market, 
but did not recommend doing so, as they do not believe competition is a 
major barrier to entry for ACOs given that ACOs currently compete on 
trends, not on the absolute level of spending.
    Response: We appreciate commenters' sharing their perspectives on 
Alternative 1 and Alternative 2. We interpret comments expressing 
preference for Alternative 1 over a three-way blended update factor 
that incorporates the ACPT as specifically requesting that CMS remove 
an ACO's assigned beneficiaries from the regional component of the 
update factor. We interpret comments described as supportive of 
applying Alternative 1 for benchmark calculations as supporting the 
removal of an ACO's assigned beneficiaries from all benchmark 
calculations involving regional FFS expenditures, which includes not 
only the update factor, but also the regional adjustment.
    As we stated in the proposed rule and have reiterated above, we are 
concerned that serious unintended consequences may arise from adopting 
Alternative 1. Specifically, we continue to believe that removing an 
ACO's assigned beneficiaries from the assignable beneficiary population 
used to compute regional expenditures would amplify the benefit to ACOs 
of selecting lower cost patients and avoiding higher needs groups and 
drive market consolidation, while still failing to mitigate the problem 
in cases where multiple ACOs work in combination to drive down regional 
spending. Furthermore, it would increase program spending to such a 
degree that compliance with the requirements of section 1899(i)(3) of 
the Act regarding the use other payment models would be violated. We 
also have these same concerns with an approach that would remove all 
Shared Savings Program assigned beneficiaries from regional expenditure 
calculations, which was an option we declined to consider in the 
proposed rule.
    As Alternative 2 does not include removing the ACO's own assigned 
beneficiaries from regional FFS calculations, we do not believe that 
the same serious unintended consequences would arise from that option, 
nor did we receive comments suggesting as such. However, although 
Alternative 2 may not have the same serious unintended consequences, we 
believe that adopting Alternative 2 alone without also adopting the 
other policies in this rule, would not effectively address the 
ratcheting effect that could be created by multiple Shared Savings 
Program ACOs operating in the same market. One way ratcheting could 
occur is if beneficiaries assigned to any Shared Savings Program ACO 
make up a significant enough proportion of assignable beneficiaries in 
the ACO's regional service area to constrain regional FFS expenditures 
because expenditures among these Shared Savings Program assigned 
beneficiaries have already been reduced by ACO actions. Alternative 2, 
which would expand the regional service area, would not necessarily 
reduce the proportion of the assignable beneficiaries in the ACO's 
region that are assigned to Shared Savings Program ACOs. Rather, one 
ACO may see a reduced proportion of beneficiaries assigned to Shared 
Savings Program ACOs in its expanded region, while another may see an 
increased proportion. The change in the proportion depends on the 
degree of penetration of all Shared Savings Program ACOs in the ACO's 
expanded regional service area. Therefore, we remain concerned that 
Alternative 2 would not fully address the concerns raised by interested 
parties about ratcheting.
    We continue to believe that the package of three benchmarking 
policies proposed in the proposed rule will adequately address concerns 
raised by interested parties about the ability of ACOs with high market 
penetration to generate shared savings. For the reasons discussed in 
the proposed rule, we believe that incorporating a prospective trend 
into the benchmarking methodology by including the ACPT in a three-way 
blended update factor would be an important step towards an 
administrative benchmarking approach. ACOs may have a greater incentive 
to enter and continue participation in the Shared Savings Program when 
their benchmarks are further decoupled from their ongoing observed FFS 
spending while continuing to reflect a measure of the ACO's efficiency 
relative to its region. This approach may also serve to anchor and 
stabilize benchmarks to the extent that the ACPT projected growth 
component of the three-way blend is an effective counterbalance when 
there are changes in an ACO's penetration in its regional service area 
that affect the weights given to the national and regional expenditure 
components in the current two-way blended update factor. Furthermore, 
as we discussed in the proposed rule, incorporating the ACPT, which is 
not influenced by actual performance by a single ACO, multiple ACOs in 
a region, or all ACOs nationally, as part of a three-way blend, will 
also address the wider issue of multiple neighboring ACOs pushing down 
the regional trend.
    However, given the continued interest among interested parties in 
Alternative 2, and given that we do not have the same concerns about 
unintended consequences from expanding the definition of an ACO's 
regional service area, we believe that additional consideration of 
Alternative 2 is warranted. As we stated in the proposed rule, there 
are a number of operational factors that we would need to address with 
greater specificity before deciding to adopt such an approach, 
including, but not limited to: what alternative geographic area we 
would use, whether we would replace county-level data with data based 
on an alternate geographic area or use a blend, and, if using a blend, 
at what threshold it would be triggered, and what weights would be 
applied when aggregating expenditures across geographic areas.
    We intend to continue to explore approaches for expanding the 
definition of the ACO's regional service area to use a larger 
geographic area to determine regional FFS expenditures that could be 
incorporated into the financial methodology in the future. We may 
revisit the issue of expanding the definition of the ACO's regional 
service area in future rulemaking.

[[Page 69929]]

d. Calculating County FFS Expenditures To Reflect Differences in 
Prospective Assignment and Preliminary Prospective Assignment With 
Retrospective Reconciliation
(1) Background
    Under the current regulation at Sec.  425.601, CMS uses risk-
adjusted county-level FFS expenditures, determined based on 
expenditures for assignable beneficiaries identified for the 12-month 
calendar year corresponding to the relevant benchmark or performance 
year, to calculate factors used in establishing, adjusting and updating 
the ACO's historical benchmark. Specifically, we use these risk-
adjusted county-level FFS expenditures to determine the ACO's regional 
service area expenditures, which are used to calculate the regional 
adjustment in accordance with Sec.  425.601(a)(8) and the blended 
national-regional growth rates used to trend forward expenditures for 
BY1 and BY2 to BY3 dollars (Sec.  425.601(a)(5)), and to update the 
ACO's historical benchmark between BY3 and each performance year in the 
ACO's agreement period (Sec.  425.601(b)).
    To calculate the risk-adjusted regional expenditure amounts under 
Sec.  425.601(d) for each Medicare enrollment type, we first calculate 
risk-adjusted expenditures for the relevant benchmark year or 
performance year for assignable beneficiaries in each county in the 
ACO's regional service area in accordance with Sec.  425.601(c). We 
then weight these county-level risk-adjusted expenditure amounts by the 
proportion of the ACO's assigned beneficiaries residing in each county, 
and sum across all counties in the ACO's regional service area. 
Additionally, we use county-level assignable beneficiary person years 
in combination with the ACO's assigned beneficiary person years by 
county to calculate an ACO's share of assignable beneficiaries in the 
ACO's regional service area as described in Sec.  425.601(a)(5)(v). 
These shares are, in turn, used to determine the weights used in 
calculating the blended national-regional trend and update factors as 
described in Sec. Sec.  425.601(a)(5)(iv) and (v) and 425.601(b)(4).
    The assignable population of beneficiaries used to calculate the 
county level values described above is identified in accordance with 
the definition of ``assignable beneficiary'' under Sec.  425.20. 
Specifically, an assignable beneficiary means a Medicare FFS 
beneficiary who receives at least one primary care service with a date 
of service during a specified 12-month assignment window from a 
Medicare-enrolled physician who is a primary care physician or who has 
one of the specialty designations included in Sec.  425.402(c). When 
first proposing to incorporate regional and national factors based on 
the assignable beneficiary population in the February 2016 proposed 
rule (81 FR 5843 through 5845), we discussed our consideration of which 
assignment window to use to identify the assignable population used to 
calculate inputs to the program's financial calculations. Specifically, 
we considered using the 12-month period based on a calendar year, which 
aligned with the assignment window for preliminary prospective 
assignment with retrospective reconciliation, or an offset 12-month 
period, which aligned with the assignment window for prospective 
assignment (for example, October through September preceding the 
calendar year). We proposed, and ultimately finalized, use of the 12-
month period based on the calendar year for all ACOs, regardless of the 
ACO's assignment methodology (81 FR 37985 through 37989).
    In the February 2016 proposed rule (81 FR 5843 and 5844), and as 
restated in the June 2016 final rule (81 FR 37985 and 37986), we 
expressed our belief that it is important to calculate regional and 
national FFS factors consistently program-wide, so as not to advantage 
or disadvantage an organization simply on the basis of the assignment 
methodology that applied under its track. We also noted our belief that 
this consistency would help to ensure a level playing field in markets 
where multiple ACOs are present and would also simplify program 
operations. We indicated that we would monitor for observable 
differences in the health status (for example, as identified by 
prospective HCC risk scores) and expenditures of the assignable 
beneficiaries identified using the 12-month calendar year assignment 
window, as compared to assignable beneficiaries identified using the 
offset assignment window (for example, October through September 
preceding the calendar year) and would, if warranted, address the need 
for additional adjustments to account for the use of assignable 
beneficiaries identified using an assignment window that is different 
from the assignment window used to assign beneficiaries to the ACO 
through future rulemaking.
    In addition to these inputs based on county-level assignable 
beneficiary data, the Shared Savings Program's financial calculations 
also use the assignable beneficiary population to calculate a variety 
of factors based on national FFS expenditures, including:
     National growth rates used to trend and update the 
benchmark (see Sec.  425.601(a)(5)(ii) and Sec.  425.601(b)(2));
     Thresholds used to truncate beneficiary expenditures (see 
Sec. Sec.  425.601(a)(4), 425.601(c)(3), 425.605(a)(3) and 
425.610(a)(4)(ii));
     Caps applied to the regional adjustment (see Sec.  
425.601(a)(8)(ii)(c)); and
     Mean risk scores used to renormalize ACO- and county-level 
risk scores (see discussion in 83 FR 68007 through 68013).
    Having gained experience using factors based on the assignable 
beneficiary population since PY 2017, and based on our monitoring of 
differences in expenditure and risk scores among beneficiaries 
identified using an assignment window based on the calendar year versus 
an offset assignment window, we have concluded that there exists a 
systematic bias in the calculations using county-level expenditures 
that favors ACOs under prospective assignment. Based on historical 
data, we have observed that for a given calendar year, risk-adjusted 
expenditures for populations identified based on the offset assignment 
window are systematically lower than risk adjusted expenditures for 
populations identified based on the calendar year assignment window, 
all else equal. In the calculation of the regional adjustment, the 
favorable bias arises for ACOs under prospective assignment because we 
are comparing risk-adjusted expenditure levels between populations 
identified based on different assignment windows for BY3: the ACO's own 
assigned beneficiary population identified based on the offset 
assignment window, and expenditures for the assignable population of 
beneficiaries in the ACO's region identified based on the calendar year 
assignment window. This mismatch causes the ACO's spending to look 
``low'' relative to the regional spending, leading to a larger positive 
(or smaller negative) regional adjustment than we would observe if the 
assignment windows used to identify the two populations were 
consistent.
    Based on modeling using historical benchmarks for ACOs 
participating in the 6-month performance year from July 1, 2019, 
through December 31, 2019, and after accounting for regional adjustment 
weighting and capping, we estimate that actual regionally adjusted 
historical benchmarks were 0.2 percent to 1.9 percent higher for ACOs 
under prospective assignment than they would have been if the regional 
adjustment had been calculated using risk-adjusted regional 
expenditures for assignable

[[Page 69930]]

beneficiaries identified using the offset assignment window used under 
prospective assignment. The median estimated bias was 1.0 percent. We 
believe the program-wide impact of this bias was likely low in the 
initial years that the regional adjustment was in effect because only a 
subset of ACOs were originally eligible for the regional adjustment 
(ACOs that renewed for a second agreement period starting in January 
2017, January 2018, or January 2019), and a relatively small share of 
those ACOs were under prospective assignment (ACOs participating in 
Track 3 or the Track 1+ ACO Model). Starting with agreement periods 
beginning on July 1, 2019, all ACOs became eligible to receive a 
regional adjustment and to select their assignment methodology in 
accordance with Sec. Sec.  425.226(a)(1) and 425.400(a)(4)(ii). With 
this latter change, the share of ACOs under prospective assignment grew 
considerably, from around 17 percent in PY 2019 to 38 percent in PY 
2022. Because of this, we believe that the bias has a larger impact 
currently than in earlier years.
    Additionally, while risk-adjusted expenditure trends have generally 
been consistent for prospectively and retrospectively determined 
assignable populations, this stable relationship was disrupted in the 
PHE for COVID-19 when decreased utilization led to expenditures for 
prospectively determined populations falling more sharply in CY 2020 
than for retrospectively determined populations (due to an increase in 
the number of beneficiaries that did not utilize any care after being 
prospectively assigned to an ACO). This appears to have generated an 
additional 1.0 percentage point increase in measured savings (relative 
to total benchmark) for ACOs under prospective assignment in PY 2020 
beyond the effect of the biased regional adjustment. However, we note 
that between CY 2020 and CY 2021 expenditures grew more quickly for 
prospectively determined populations, causing cumulative trends from 
years preceding the PHE for COVID-19 to CY 2021 to return to a roughly 
parallel state for the two populations. Although the disruption of 
expenditure trends between prospective and retrospectively assignable 
populations was temporary in this case, the disruption of stable 
expenditure trends during the PHE for COVID-19 highlights the 
possibility of future biases in the blended national-regional growth 
factor. If the blended growth factor is based on an assignable 
population with a different expenditure growth trend than the expected 
trend in expenditures of an ACO's assigned population, an ACO could 
receive an artificial increase or decrease in savings.
    In the CY 2023 PFS proposed rule, we stated our belief that without 
correction the impact of this bias has the potential to grow costlier 
to the Trust Funds over time. For one, more ACOs will be subject to 
higher weights used in calculating the regional adjustment as they 
progress in the Shared Savings Program, which is expected to lead to 
larger regional adjustments and, by extension, larger biases than those 
estimated in our analysis using benchmark data from the 6-month 
performance year beginning July 1, 2019, in which most ACOs were 
subject to the lowest regional adjustment weights. Second, as more ACOs 
move to the ENHANCED track with its 75 percent sharing rate, aggregate 
savings against a favorably biased benchmark will be shared by ACOs at 
a higher rate. We also stated that preventing further influence of the 
bias would be important for ensuring good stewardship of Medicare Trust 
Fund dollars. Addressing this bias in Shared Savings Program 
calculations for ACOs under prospective assignment would also ensure a 
more level playing field for ACOs under both assignment methodologies 
and would improve the comparability of ACOs' performance under the 
Shared Savings Program irrespective of the ACO's chosen assignment 
methodology.
    Further, if left unresolved, this bias would need to be taken into 
account as part of the regulatory impact analysis for evaluating 
proposed modifications to policies under the Shared Savings Program, 
and in considering whether CMS has met the requirements for use of 
other payment models under section 1899(i)(3) of the Act. The authority 
to use other payment models under section 1899(i)(3) of the Act is 
necessary for implementing key aspects of the Shared Savings Program's 
financial methodology, including the two-sided models and the blended 
national-regional growth factors used to update the historical 
benchmark (as discussed in section III.G.5.c.(3) of the proposed rule), 
as well as the proposal to provide AIPs to eligible ACOs (discussed in 
section III.G.2 of the proposed rule). This authority is contingent on 
the statutory requirement that other payment models adopted under 
section 1899(i)(3) of the Act must be determined to improve the quality 
and efficiency of items and services furnished to Medicare FFS 
beneficiaries and not to increase program spending relative to a 
baseline estimated for the Shared Savings Program were it not to employ 
modifications authorized under section 1899(i)(3) of the Act. A 
predictable favorable bias would increase program spending 
(particularly in combination with modifications like two-sided risk 
sharing that require authority from section 1899(i)(3) of the Act), and 
therefore, jeopardize CMS' ability to satisfy the requirements of 
section 1899(i)(3) of the Act for use of other payment models.
    In the CY 2023 PFS proposed rule, we stated our belief that 
modification to the methodology for calculating regional FFS 
expenditures is necessary and timely to mitigate the observed favorable 
bias for ACOs under prospective assignment.
(2) Revisions
    To remove the favorable bias and bring greater precision to the 
calculation of factors based on regional FFS expenditures, we proposed 
to modify the calculation of risk-adjusted regional expenditures used 
in the regional adjustment and in the regional component of the blended 
factors used to trend and update the benchmark (including, if 
finalized, the three-way blend proposed in section III.G.5.c.(3) of the 
proposed rule). As proposed, for agreement periods beginning on January 
1, 2024, and in subsequent years, we would calculate risk-adjusted 
regional expenditures using county-level values computed using an 
assignment window that is consistent with an ACO's assignment 
methodology selection for the performance year under Sec.  425.400(a). 
That is, for ACOs selecting prospective assignment, we would use an 
assignable population of beneficiaries that is identified based on the 
offset assignment window (for example, October through September 
preceding the calendar year) and for ACOs selecting preliminary 
prospective assignment with retrospective reconciliation, we would 
continue to use an assignable population of beneficiaries that is 
identified based on the calendar year assignment window. In the 
proposed rule, we noted our belief that removing the current mismatch 
in the assignment window used to determine the assignable population, 
and the assigned population for ACOs under prospective assignment would 
create a more equitable historical benchmark across assignment 
methodologies and help protect the Trust Funds. For consistency, we 
also proposed to use an assignable population identified using an 
assignment window that corresponds to an ACO's selected assignment 
methodology to calculate other factors based on county-level data, 
namely, the

[[Page 69931]]

weights used in computing the blended trend and update factors.
    We did not propose to change the way we compute national factors 
that require identifying assignable populations. That is, all factors 
used in calculations that are based on the national assignable FFS 
population would continue to be computed using an assignable population 
identified based on the calendar year assignment window. As discussed 
in the proposed rule, this choice was driven by two factors. First, for 
simplicity, we favored using the same set of national values for all 
ACOs. Second, we did not believe the national factors, as currently 
computed, contribute to the current bias that we have observed, and 
which is the motivation for the proposed policy changes. While using a 
national assignable population based on an offset assignment window to 
compute the national component of trend and update factors could help 
to further protect against unanticipated biases in those calculations, 
the national component represents a small portion of the blend for most 
ACOs. Thus, the additional protection provided would be limited. 
However, we indicated that we intend to continue monitoring how 
national assignable expenditure trends hinge on the selection of 
assignment methodology and may return to this issue in future 
rulemaking if significant biases exist that may systemically impact the 
national component of the trend and update factors.
    We also noted that we currently make available public use files 
(PUFs) containing the county level expenditures, risk scores and 
assignable beneficiary person years for each calendar year on the 
data.cms.gov website, specifically: (1) County-level Aggregate 
Expenditure and Risk Score Data on Assignable Beneficiaries PUF,\347\ 
and (2) Number of ACO Assigned Beneficiaries by County PUF.\348\ 
Interested parties are able to use these files to replicate the 
calculation of risk-adjusted regional expenditures or the weights used 
in the blended trend and update factors. We also provide ACOs with 
program reports that include information on the geographic distribution 
of their assigned beneficiary populations which can also be used along 
with the county-level data based on the assignable population for 
modeling purposes.
---------------------------------------------------------------------------

    \347\ Refer to Data.CMS.gov, County-level Aggregate Expenditure 
and Risk Score Data on Assignable Beneficiaries, available at 
https://data.cms.gov/medicare-shared-savings-program/county-level-aggregate-expenditure-and-risk-score-data-on-assignable-beneficiaries.
    \348\ Refer to Data.CMS.gov, Number of Accountable Care 
Organization Assigned Beneficiaries by County, available at https://data.cms.gov/medicare-shared-savings-program/number-of-accountable-care-organization-assigned-beneficiaries-by-county.
---------------------------------------------------------------------------

    In the CY 2023 PFS proposed rule, we noted that if the proposal was 
finalized, we anticipated making two sets of county-level values 
publicly available for each calendar year: we would continue to provide 
county-level data on the assignable population identified based on the 
calendar year assignment window and would also make available county-
level data based on the assignable population identified using the 
offset assignment window. Additionally, we would update the public use 
files that reflect the distribution of each ACO's assigned beneficiary 
population by county to include a field indicating each ACO's 
assignment methodology selection for the applicable performance year.
    We noted our belief that this additional data would facilitate 
modeling of the proposed changes to the calculation of county-level FFS 
expenditures used in Shared Savings Program benchmark calculations. 
Concurrent with the issuance of the proposed rule, we provided through 
the Shared Savings Program website at www.cms.gov/sharedsavingsprogram/ 
data files containing risk-adjusted county-level FFS expenditures for 
2018-2020 calculated based on an assignable beneficiary population 
identified using an offset assignment window.
    We proposed new regulations at Sec. Sec.  425.652, 425.654, and 
425.656 to reflect this proposal. (Refer to section III.G.5.i. of the 
proposed rule for a discussion of the organization of the proposed 
provisions in 42 CFR part 425, subpart G.)
    In the proposed rule, we noted that in order to finalize the 
proposed changes to the regional component of the update factor, we 
would need to use our statutory authority under section 1899(i)(3) of 
the Act. We referred readers to section III.G.5.c.(3) of the proposed 
rule and the Regulatory Impacts Analysis section for related 
discussions regarding the use of this authority with respect to the 
proposed modifications to the update factor.
    We sought comment on these proposals.
    The following is a summary of the public comments received on the 
proposed modifications to the methodology for calculating county FFS 
expenditures to reflect differences in prospective assignment and 
preliminary prospective assignment with retrospective reconciliation 
and our responses:
    Comment: Several commenters supported the proposal to modify the 
calculation of risk-adjusted regional expenditures used in the regional 
adjustment and in the regional component of the blended factors used to 
trend and update the benchmark. Some of these commenters outlined 
specific reasons for their support. Two commenters supported the idea 
of removing the selection bias that currently favors ACOs under 
prospective assignment. One commenter agreed with CMS that COVID-19 has 
created significant variation and supported the idea that an ACO's 
assignment methodology should apply to all aspects of the benchmarking 
methodology. Another commenter supported using assignment windows in 
benchmark calculations that are consistent with an ACO's selected 
assignment methodology.
    Response: We thank commenters for their support of the proposal to 
align the assignment windows used to calculate county FFS expenditures 
with an ACO's selected assignment methodology.
    Comment: Multiple commenters requested that CMS mitigate any 
potential negative impacts that this proposal could have on ACOs under 
prospective assignment. Commenters listed their concerns, which 
included potentially lower benchmarks for ACOs under prospective 
assignment, a disproportionate impact on specific ACOs/ACO cohorts (the 
specific ACO cohorts were not identified by the commenters). A couple 
of these commenters provided specific recommendations for CMS on how to 
alter the proposal to limit its potential adverse impacts. 
Specifically, one commenter requested that CMS consider capping the 
adverse impacts of this policy for ACOs under prospective assignment. 
This commenter provided an example under which the impact on a given 
prospective ACO's benchmark would be limited to no more than a +/- 0.5 
percent change as a result of this policy. Another commenter 
recommended that CMS mitigate the potential negative impacts of the 
policy by phasing it in over a period of years, making the change 
optional, or limiting its influence on historical benchmarks.
    Response: We appreciate commenters' sharing their concerns about 
ACOs receiving lower benchmarks as a result of the proposed 
modifications to the methodology for calculating county FFS 
expenditures. However, given the observed historical bias favoring ACOs 
under prospective assignment and the fact that implementing the 
proposed policy change would align a component of benchmark 
calculations with an

[[Page 69932]]

ACO's selected assignment methodology, we believe that finalizing the 
proposed policy would bring greater consistency to the program, create 
a more neutral choice between assignment methodologies, and increase 
incentives for ACOs under the prospective assignment methodology to 
grow more efficient over time. Therefore, we disagree with the 
commenters' assertions that this policy could have unfair, adverse 
impacts for ACOs under prospective assignment or for other cohorts of 
ACOs.
    Comment: One commenter requested more information on the underlying 
cause of higher historical benchmarks for ACOs under prospective 
assignment. This commenter also requested that, in the event this 
proposal is finalized, CMS consider revising its policy for annual 
wellness visits (AWVs) to transition to a calendar year basis (the 
commenter did not provide any rationale for the suggested AWV changes).
    Response: We believe that the underlying cause of the more 
favorable historical benchmarks for ACOs under prospective assignment 
was clearly described in section III.G.5d.(1) of the proposed rule. 
Risk-adjusted expenditures for populations identified based on the 
offset assignment window are systematically lower than risk-adjusted 
expenditures for populations identified based on the calendar year 
assignment window, all else equal. CMS has conducted additional 
modeling of the impact of this bias since the proposed rule was issued. 
Based on this updated modeling using historical benchmarks for ACOs 
participating in PY 2020, we estimate that actual regionally adjusted 
historical benchmarks were 0.2 percent to 2.0 percent higher for ACOs 
under prospective assignment than they would have been if the regional 
adjustment had been calculated using risk-adjusted regional 
expenditures for assignable beneficiaries identified using the offset 
assignment window used under prospective assignment. The median 
estimated bias was 1.0 percent. Additionally, we decline to consider 
the commenter's suggestion that CMS consider revising its policy for 
annual wellness timelines because it is outside the scope of the 
proposal being considered.
    Comment: Two commenters expressed concern that this proposal would 
grant a potential structural advantage to ACOs under the preliminary 
prospective assignment with retrospective reconciliation methodology. 
One commenter stated that although they agree in principle with the 
proposal to align the assignment windows used to calculate benchmarks 
with the assignment windows used to assign beneficiaries and calculate 
assigned beneficiary expenditures, their internal analysis suggests 
that implementing the proposal would generate a bias in favor of ACOs 
under retrospective assignment. This commenter claimed that their 
analysis using data from the largest TINs in the country suggests that 
ACOs may receive a more favorable regional adjustment under preliminary 
prospective assignment with retrospective reconciliation than under 
prospective assignment if this proposal was implemented. However, the 
commenter did not elaborate on the specific methodology used to reach 
this conclusion or the reasons that ACOs would receive more favorable 
regional adjustments under preliminary prospective assignment. The 
other commenter raised concern that the proposed policy ``could widen a 
structural advantage for retrospective assignment''. Both commenters 
suggested that ACOs may change assignment methodologies from 
prospective to preliminary prospective assignment with retrospective 
reconciliation due to this policy change, which could add operational 
burden and cost.
    Both commenters requested that CMS take more time to understand the 
impact of the proposed policy before implementing it and provided 
additional recommendations for CMS' consideration, including 
establishing a pilot period before finalizing the proposal, offering 
transparency to ACOs by making final settlement results available that 
utilize both calendar year and offset assignment windows to calculate 
county FFS expenditures, and offering ACOs waiver flexibility with 
respect to this policy.
    Response: We had some difficulty understanding the commenters' 
conclusions because some of the data analysis methodologies underlying 
their assertions were unclear and the sources of a potential bias 
favoring ACOs electing preliminary prospective assignment with 
retrospective reconciliation were not thoroughly described. Based on 
the observed historical trend that risk-adjusted expenditures for 
populations identified based on the offset assignment window are 
systematically lower than risk-adjusted expenditures for populations 
identified based on the calendar year assignment window, we believe 
that it is appropriate to align the methodology for determining the 
components of the benchmark calculation with an ACO's chosen assignment 
methodology. We believe that the proposed approach would also support a 
more neutral choice between assignment methodologies and minimize bias 
in benchmark calculations. However, we plan to continue monitoring for 
biases for or against any assignment methodology across the program as 
a whole in the future. With respect to the commenters' suggestion that 
CMS take more time to study the impact of the proposed policy, we note 
that CMS has studied and modeled this proposal using multiple years of 
historical data and made public files available for stakeholders to 
assess its likely impact. We believe that this level of analysis and 
transparency will help the commenters and others interested in further 
reviewing how this policy may relate to their ACO.
    After consideration of these public comments, we are finalizing as 
proposed the modifications to our methodology for calculating county 
FFS expenditures to provide for the use of separate assignment windows 
for ACOs depending on their selected assignment methodology. We are 
finalizing our proposal to specify in the new regulation at Sec.  
425.654 the methodology for calculating county FFS expenditures with an 
offset assignment window for ACOs selecting prospective assignment and 
with a calendar year assignment window for ACOs selecting preliminary 
prospective assignment with retrospective reconciliation and for 
calculating regional expenditures using these county FFS expenditures. 
We are also finalizing our proposal to specify in the new regulations 
at Sec. Sec.  425.652 and 425.656 the use of regional expenditures 
calculated under Sec.  425.654 in certain benchmark calculations.
e. Improving the Risk Adjustment Methodology To Better Account for 
Medically Complex, High-Cost Beneficiaries and Guard Against Coding 
Initiatives
(1) Background
    Currently, for ACOs in agreement periods beginning on or after July 
1, 2019, we account for changes in severity and case mix of the ACO's 
assigned beneficiary population when establishing the benchmark for an 
agreement period and also in adjusting the benchmark for each 
performance year during the agreement period. In accordance with Sec.  
425.601(a)(3), in establishing the benchmark, we adjust expenditures 
for changes in severity and case mix using CMS Hierarchical Condition 
Category (CMS-HCC) prospective risk scores (herein referred to as 
prospective HCC risk scores).

[[Page 69933]]

Pursuant to Sec.  425.601(a)(10), we further adjust the ACO's 
historical benchmark at the time of reconciliation for a performance 
year to account for changes in severity and case mix for the ACO's 
assigned beneficiary population between BY3 and the performance year 
(refer to Sec.  425.605(a)(1), (a)(2); Sec.  425.610(a)(2), (a)(3)). In 
making this risk adjustment, we make separate adjustments for the 
population of assigned beneficiaries in each Medicare enrollment type 
used in the Shared Savings Program (ESRD, disabled, aged/dual eligible, 
aged/non-dual eligible). We use prospective HCC risk scores to adjust 
the historical benchmark for changes in severity and case mix for all 
assigned beneficiaries, subject to a cap of positive 3 percent for the 
agreement period (referred to herein as the ``3 percent cap''). This 
cap is the maximum increase in prospective HCC risk scores allowed for 
each agreement period, such that any positive adjustment between BY3 
and any performance year in the agreement period cannot be larger than 
3 percent. That is, the prospective HCC risk ratios (ratio of 
performance year risk score to the BY3 risk score) applied to 
historical benchmark expenditures to capture changes in health status 
between BY3 and the performance year will never be higher than 1.030 
for any performance year over the course of the agreement period. This 
cap is applied separately for the population of beneficiaries in each 
Medicare enrollment type.\349\
---------------------------------------------------------------------------

    \349\ Refer to the December 2018 final rule (83 FR 68007 through 
68013), section on ``Risk Adjustment Methodology for Adjusting 
Historical Benchmark Each Performance Year''. See also, the Medicare 
Shared Savings Program, Shared Savings and Losses and Assignment 
Methodology Specifications (version #10, January 2022), section 3.6, 
available at https://www.cms.gov/files/document/medicare-shared-savings-program-shared-savings-and-losses-and-assignment-methodology-specifications.pdf-1.
---------------------------------------------------------------------------

    The 3 percent cap was finalized through the December 2018 final 
rule (83 FR 68013) to address concerns with the prior approach for risk 
adjustment, which used a methodology that differentiated between newly 
assigned and continuously assigned beneficiaries, as defined in Sec.  
425.20. The issues raised by interested parties included concerns that 
the risk adjustment methodology did not adequately adjust for changes 
in health status among continuously assigned beneficiaries between the 
benchmark and performance years and that performing risk adjustment 
separately for newly and continuously assigned beneficiaries created 
uncertainty around benchmarks and made it difficult for ACOs to 
anticipate how risk scores would affect their financial performance 
(refer to 76 FR 67916 through 67919, 80 FR 32777 through 32778, 81 FR 
37962 through 37968, 83 FR 68008 through 68013). As a result, in the 
December 2018 final rule, we modified the risk adjustment methodology 
to provide for the use of prospective HCC risk scores to adjust the 
historical benchmark for changes in severity and case mix for all 
assigned beneficiaries, subject to a cap of positive 3 percent for the 
agreement period, for agreement periods beginning on July 1, 2019, and 
in subsequent years (83 FR 68013).
    As we stated in the CY 2023 PFS proposed rule, we believe this 
current policy has several advantages relative to the original risk 
adjustment methodology distinguishing between newly and continuously 
assigned beneficiaries, including: allowing for some upward growth in 
prospective HCC risk scores between the benchmark period and the 
performance year for an ACO's entire assigned beneficiary population, 
providing better recognition for changes in beneficiary health status 
between the benchmark period and the performance year, and providing 
greater clarity for ACOs than the previous methodology, while still 
limiting the impact of ACO coding initiatives. However, interested 
parties remain concerned about the program's risk adjustment 
methodology, including the 3 percent cap. In the CY 2022 PFS proposed 
rule, we solicited comment on several issues related to the Shared 
Savings Program's risk adjustment methodology (86 FR 39294 and 39295).
     Approaches, generally, to improving the risk adjustment 
methodology for the Shared Savings Program, and specifically for ACOs 
with medically complex, high-cost beneficiaries.
     Approaches to risk adjustment that would balance the need 
for accurate and complete coding, while protecting against 
incentivizing coding intensity initiatives by ACO participants and ACO 
providers/suppliers (which may be even more problematic for ACOs with 
high penetration in their region) that increase risk score growth above 
the existing 3 percent cap.
     Alternate approaches that would increase the cap on an 
ACO's risk score growth in relation to risk score growth in the ACO's 
regional service area.
     The potential interactions between policies to remove 
assigned beneficiaries from the assignable beneficiary population used 
to calculate regional FFS expenditures and growth rates, and policies 
addressing regional risk score growth.
    For a full summary of the comments submitted in response to our 
comment solicitation, we refer readers to the relevant discussion in 
the CY 2022 PFS final rule (86 FR 65302 through 65306). Among the 
comments received, many commenters expressed concern about the existing 
3 percent cap on positive risk score growth, as well as the absence of 
a cap (or floor) on negative adjustments to account for risk score 
decreases. Several commenters indicated that the current 3 percent cap 
on risk score growth is unfair over a 5-year period, suggesting that 
the cap is too low over a period of this length. Additionally, several 
commenters suggested that the existing policy is driving inequity and 
may disadvantage ACOs that serve more vulnerable populations or 
beneficiaries with complex medical needs. Some commenters explained 
that beneficiaries who are in the disabled and the aged/dual eligible 
Medicare enrollment types are, in most combinations, more than twice as 
likely to have risk score growth above the cap as those who are in the 
aged/non-dual eligible category. These concerns are similar to certain 
comments made in response to the original proposal for the 3 percent 
cap and summarized in the December 2018 final rule (83 FR 68010 through 
68012). Additionally, some commenters indicated that due to a variety 
of factors, such as sample size and volatility, the rates at which 
Medicare enrollment types are subject to the 3 percent cap on risk 
score growth are often significantly different. A commenter explained 
that there can also be significant risk score volatility when the high-
risk patient population is small. This concern was also raised in 
response to the original proposal for the current policy (83 FR 68012). 
Several commenters on that proposal recommended that any cap be applied 
at the aggregate level rather than the enrollment type level, with one 
commenter suggesting that we cap the prospective HCC risk ratios in the 
aggregate across the four beneficiary enrollment types to account for 
smaller sample sizes and resulting higher volatility for certain 
enrollment types.
    Many of the comments received in response to the comment 
solicitation in the CY 2022 PFS proposed rule also expressed concern 
that the current policy places a cap on the ACO's risk score growth but 
does not restrict regional risk score growth that is reflected in the 
regional component of the update factor, noting that this penalizes 
ACOs in markets where a region's risk score growth exceeds the 3 
percent cap (86 FR 65304). Other

[[Page 69934]]

commenters, notably MedPAC, expressed support for CMS' considerable 
caution in the area of risk adjustment, noting that population-based 
models can be highly susceptible to coding incentives and that the 
Shared Savings Program does not include a retrospective coding 
adjustment to offset these incentives. MedPAC recommended that CMS 
should address the underlying incentives for coding intensity and the 
accuracy of risk adjustment before considering any policy that would 
increase the risk score growth cap (86 FR 65304).
(2) Revisions
    In response to these concerns, we considered three options to 
modify the existing 3 percent cap on risk score growth: (1) Account for 
all changes in demographic risk scores for the ACO's assigned 
beneficiary population between BY3 and the performance year prior to 
applying the 3 percent cap on positive adjustments resulting from 
changes in prospective HCC risk scores, and apply the cap in aggregate 
across the four Medicare enrollment types (ESRD, disabled, aged/dual 
eligible, aged/non-dual eligible); (2) Apply the 3 percent cap in 
aggregate across the four Medicare enrollment types (ESRD, disabled, 
aged/dual eligible, aged/non-dual eligible) without first accounting 
for changes in demographic risk scores for the ACO's assigned 
beneficiary population between BY3 and the performance year; and (3) 
Allow the cap on an ACO's risk score growth to increase by a percentage 
of the difference between the current 3 percent cap and risk score 
growth in the ACO's regional service area, where the percentage applied 
would be equal to 1 minus the ACO's regional market share (continuing 
our consideration of the approach described in the CY 2022 PFS proposed 
rule (86 FR 39294)).
    In the CY 2023 PFS proposed rule, we stated our belief that the 
first two options for modifications to the risk adjustment methodology 
(applying the cap on risk score growth in aggregate across Medicare 
enrollment types, with or without first accounting for changes in 
demographic risk scores for the ACO's assigned beneficiary population 
between BY3 and the performance year) would address several of the 
concerns raised by interested parties by: accounting for higher 
volatility in prospective HCC risk scores for certain enrollment types 
due to smaller sample sizes; allowing for higher benchmarks than the 
current risk adjustment methodology for ACOs that care for larger 
proportions of beneficiaries in aged/dual eligible, disabled and ESRD 
enrollment types (which are frequently subject to the cap on risk score 
growth currently); and continuing to safeguard the Trust Funds by 
limiting returns from coding initiatives. We also explained our belief 
that the third option (to allow the cap on an ACO's risk score growth 
to increase by a percentage of the difference between the current 3 
percent cap and risk score growth in the ACO's regional service area) 
would address some of the commenters' concerns about the possible 
impacts of regional prospective HCC risk score growth, but would not 
address the multiple other concerns addressed by options 1 and 2. We 
also noted that the approach described in the second option includes a 
component of the first option (applying the cap on an ACO's risk score 
growth in aggregate across Medicare enrollment types). We also noted 
that we had considered the third option independently from the first 
and second options and did not consider using the third option in 
combination with either the first or second option. That is, we did not 
consider an approach under which we would account for the difference 
between the 3 percent cap and the risk score growth in the ACO's 
regional service area (third option) in combination with applying a cap 
on risk score growth in aggregate across Medicare enrollment types, 
with or without first accounting for changes in demographic risk scores 
for the ACO's assigned beneficiary population between BY3 and the 
performance year (the first and second options, respectively). We 
stated that we view these two approaches to be inconsistent with each 
other, as the third approach allows an ACO's risk score growth to rise 
above 3 percent based on risk score growth in the ACO's regional 
service area, whereas the first and second options would retain the 3 
percent cap, but apply it at the aggregate level (with or without first 
accounting for changes in demographic risk scores for the ACO's 
assigned beneficiary population between BY3 and the performance year).
    As discussed in the proposed rule, after careful consideration and 
modeling of the impacts of these three potential modifications to the 
existing 3 percent cap on positive prospective HCC risk score growth, 
we proposed to use the authority granted by section 1899(d)(1)(B)(ii) 
of the Act to adjust the benchmark for beneficiary characteristics and 
other such factors as the Secretary determines to be appropriate, to 
modify the existing 3 percent cap on risk score growth using the first 
option. We also sought comment on the second and third options as 
potential alternatives to the proposed approach. We noted that we would 
consider the comments received on these alternative options along with 
the comments on the proposal to adopt the first option in the 
development of our final policy and indicated that we might consider 
adopting one of these alternatives in place of the proposed approach if 
we conclude that it would better address the concerns with the current 
risk adjustment methodology.
    Under the proposal of the first option, an ACO's aggregate 
prospective HCC risk score would be subject to a cap equal to the ACO's 
aggregate growth in demographic risk scores between BY3 and the 
performance year plus 3 percentage points. Specifically, we proposed 
that we would:
     Account for all changes in demographic risk scores for the 
ACO's assigned beneficiary population between BY3 and the performance 
year prior to applying the 3 percent cap on positive adjustments 
resulting from changes in prospective HCC risk scores.
     Then apply the 3 percent cap in aggregate across the four 
Medicare enrollment types (ESRD, disabled, aged/dual eligible, aged/
non-dual eligible).
---------------------------------------------------------------------------

    \350\ Medicare Shared Savings Program, Shared Savings and Losses 
and Assignment Methodology Specifications (version #7, February 
2019), section 3.4.2, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/Shared-Savings-Losses-Assignment-Spec-V7.pdf.
---------------------------------------------------------------------------

    Demographic risk scores are based on certain demographic attributes 
that do not vary with the beneficiary's health condition, such as age, 
sex, Medicaid status, and original reason for Medicare 
entitlement.\350\ Unlike prospective HCC risk scores, demographic risk 
scores are not subject to coding intensity because they do not use 
diagnosis information. In the proposed rule, we noted that accounting 
for all changes in demographic risk scores for the ACO's assigned 
beneficiary population between BY3 and the performance year prior to 
applying the 3 percent cap on positive prospective HCC risk score 
growth could allow for higher benchmarks than the current methodology 
for ACOs that have experienced increases in health risk among their 
assigned beneficiary populations, while still safeguarding the Trust 
Funds by limiting returns due to coding initiatives. We also noted that 
the CMS Innovation Center's Global and Professional Direct Contracting 
(GPDC) Model, which will transition to the redesigned and renamed 
Accountable Care Organization (ACO) Realizing Equity, Access, and 
Community Health (REACH) Model on January 1, 2023, will

[[Page 69935]]

also take into account the underlying demographics of a model 
participant's aligned beneficiary population when determining whether 
risk score growth will be capped starting in PY 2024.\351\
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    \351\ CMS. Accountable Care Organization (ACO) Realizing Equity, 
Access, and Community Health (REACH) Model. February 24, 2022. 
Available at https://www.cms.gov/newsroom/fact-sheets/accountable-care-organization-aco-realizing-equity-access-and-community-health-reach-model.
---------------------------------------------------------------------------

    As proposed, the positive 3 percent cap (after accounting for 
changes in demographic risk scores) would also apply in aggregate 
across the four Medicare enrollment types (ESRD, disabled, aged/dual 
eligible, and aged/non-dual eligible). In other words, we would 
calculate a single aggregate value for the cap equal to the dollar-
weighted average growth in demographic risk scores across the four 
enrollment types plus 3 percentage points. We would only apply this cap 
to risk score growth for a particular enrollment type if the aggregate 
growth in prospective HCC risk scores, calculated as the dollar-
weighted average growth in prospective HCC risk scores across the four 
enrollment types, exceeds the value of the cap. We noted that we 
believed this would make it less likely that the prospective HCC risk 
scores for Medicare enrollment types with smaller populations, 
typically populations of ESRD, disabled, or aged/dual eligible 
beneficiaries, would be subject to the cap. We also explained that 
these smaller populations are more likely to experience random 
variation in risk score growth as a relatively small number of assigned 
beneficiaries with large changes in prospective HCC risk scores can 
have an outsized impact on the average score for the Medicare 
enrollment type.
    To implement the new cap, we proposed to follow these steps:
     Step 1: Determine demographic risk score growth for each 
Medicare enrollment type. Demographic risk score growth is measured as 
the ratio of the ACO's performance year demographic risk score for an 
enrollment type to the ACO's BY3 demographic risk score for that 
enrollment type. Before calculating these demographic risk ratios, the 
demographic risk scores for each enrollment type for each year would be 
renormalized by dividing by the national mean demographic risk score 
for that enrollment type for that year.
     Step 2: Calculate the dollar-weighted average demographic 
risk ratio across the four enrollment types to obtain a single 
aggregate weighted average demographic risk ratio. The dollar weight 
for each enrollment type would be equal to historical benchmark 
expenditures for that enrollment type divided by the sum of historical 
benchmark expenditures across all enrollment types. Historical 
benchmark expenditures for each enrollment type would be calculated as 
per capita historical benchmark expenditures for that enrollment type 
multiplied by the ACO's BY3 assigned beneficiary person years for that 
enrollment type. The aggregate dollar-weighted average demographic risk 
ratio would be computed by multiplying the risk ratio for each 
enrollment type by its respective dollar weight and then summing across 
the four enrollment types. We noted that the approach of using an 
aggregate dollar-weighted average in this calculation would be similar 
to the approach used in the Shared Savings Program's original 
benchmarking methodology to determine whether demographic factors would 
be used to adjust risk scores for an ACO's continuously assigned 
beneficiaries.\352\
---------------------------------------------------------------------------

    \352\ Refer to the Medicare Shared Savings Program, Shared 
Savings and Losses and Assignment Methodology Specifications 
(version #7, February 2019), section 3.4.2, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/Shared-Savings-Losses-Assignment-Spec-V7.pdf.
---------------------------------------------------------------------------

     Step 3: Calculate the sum of the aggregate dollar-weighted 
average demographic risk ratio from Step 2 and 0.030. This would 
represent the aggregate cap.
     Step 4: Determine prospective HCC risk score growth for 
each Medicare enrollment type. Prospective HCC risk score growth would 
be measured as the ratio of the ACO's performance year prospective HCC 
risk score for that enrollment type to the ACO's BY3 prospective HCC 
risk score for that enrollment type. Before calculating these 
prospective HCC risk ratios, the prospective HCC risk scores for each 
enrollment type for each year would be renormalized by dividing by the 
national mean prospective HCC risk score for that enrollment type for 
that year.
     Step 5: Calculate the aggregate growth in prospective HCC 
risk scores by calculating the dollar-weighted average prospective HCC 
risk ratio across the four enrollment types to obtain a single 
aggregate dollar-weighted average prospective HCC risk ratio, using the 
same dollar weights and the same approach described in Step 2.
     Step 6: Determine if the ACO will be subject to the cap. 
If the ACO's aggregate dollar-weighted average prospective HCC risk 
ratio determined in Step 5 is less than the aggregate cap determined in 
Step 3, no cap would apply to the prospective HCC risk ratio for any 
enrollment type, even if the prospective HCC risk ratio for a given 
enrollment type is higher than the aggregate cap. If the ACO's 
aggregate dollar-weighted average prospective HCC risk ratio determined 
in Step 5 is greater than or equal to the aggregate cap determined in 
Step 3, proceed to Step 7.
     Step 7: Compare the prospective HCC risk ratio for each 
enrollment type calculated in Step 4 to the aggregate cap determined in 
Step 3. If the prospective HCC risk ratio for a given enrollment type 
is greater than the aggregate cap, the prospective HCC risk ratio for 
that enrollment type would be set equal to the aggregate cap. If the 
prospective HCC risk ratio for a given enrollment type is less than or 
equal to the aggregate cap, no cap would apply to the prospective HCC 
risk ratio for that enrollment type.
    The resulting prospective HCC risk ratios would then be multiplied 
by the ACO's historical benchmark expenditures for the relevant 
Medicare enrollment type at the time of reconciliation for a 
performance year to account for changes in severity and case mix for 
the ACO's assigned beneficiary population between BY3 and the 
performance year.
    Table 76 provides a numeric example of the proposed methodology for 
a hypothetical ACO that is determined to be subject to the cap:

[[Page 69936]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.105

    For this hypothetical ACO, the dollar-weighted average demographic 
risk ratio is 1.026, meaning that demographic risk score growth 
averaged across the four enrollment types was 2.6 percent from BY3 to 
the performance year for the ACO's assigned beneficiaries, when 
measured against national mean risk score growth. To calculate the cap, 
we would add 0.03 to this value, arriving at an aggregate cap of 1.056. 
This ACO is determined to be subject to the cap because its dollar-
weighted average prospective HCC risk ratio of 1.070 was higher than 
the aggregate cap. When comparing the aggregate cap to the prospective 
HCC risk ratio for each individual enrollment type, risk score growth 
for both the aged/dual eligible and aged/non-dual eligible enrollment 
types would be constrained by the cap. In this example, the aggregate 
cap that is ultimately applied is higher than the current 3 percent 
cap, meaning that this hypothetical ACO would benefit from the proposed 
policy relative to the current policy.
    In the second numeric example described in Table 77, the ACO's 
aggregate demographic risk ratio is less than 1 and its aggregate cap 
of 1.028 is less than the current effective risk score cap of 1.030. In 
this case, the ACO's dollar-weighted average prospective HCC risk ratio 
of 1.013 is below the aggregate cap meaning that no cap would be 
applied to the prospective HCC risk score growth for any enrollment 
type, even though the ACO's ESRD, disabled, and aged/dual eligible 
populations all have prospective HCC risk ratios above the aggregate 
cap. This ACO would also benefit from the proposed policy relative to 
the current policy, with its benefit solely stemming from the use of an 
aggregate cap.
[GRAPHIC] [TIFF OMITTED] TR18NO22.106

    While the examples above show ACOs that would benefit from the 
proposed risk adjustment policy relative to the current policy, we 
acknowledged in the proposed rule that there are ACOs that would 
receive a lower updated benchmark under the proposed policy, all else 
being equal. Namely, ACOs with a dollar-weighted average demographic 
risk ratio less than 1 found to be subject to the aggregate cap (which 
by default, will be less than 1.030) would have their upward risk score 
growth constrained more by the proposed aggregate cap than the existing 
3 percent cap.
    We simulated the impact of the proposed policy change using PY 2020 
financial reconciliation data from ACOs in agreement periods beginning 
on or after July 1, 2019. This simulation found that 45 percent of ACOs 
would have had a higher updated benchmark with the proposed policy 
compared to the current policy, 5 percent would have had a lower 
updated benchmark with the proposed policy, and 50 percent would have 
been unaffected (that is, because they were not subject to any cap 
under either policy). Fifty-three ACOs had their prospective HCC risk 
ratio capped for at least one Medicare enrollment type under the 
proposed policy, compared to 177 ACOs under the current policy. Among 
ACOs that were capped under the current policy but not the proposed 
policy, many had prospective HCC risk score growth above 1.030 for one 
or more of the typically smaller enrollment types (that is, ESRD, 
disabled, aged/dual eligible) but not for their aged/non-dual eligible 
population. Table 78 illustrates that 47 percent of ACOs were subject 
to the current 3 percent cap imposed at the enrollment type level for 
one or more of the ESRD, disabled or aged/dual eligible enrollment 
types versus 17 percent for aged/non-dual eligible. Under the

[[Page 69937]]

proposed policy, the share would fall to 14 percent for both groups.
[GRAPHIC] [TIFF OMITTED] TR18NO22.107

    Based on this modeling, in the proposed rule we explained our 
belief that a significant share of ACOs would either be unaffected by 
or benefit from the proposed policy, especially those with increases in 
health risk as measured by demographic risk ratios, while a small share 
would do worse, likely reflecting decreases in health risk for their 
assigned beneficiary population as measured by demographic risk ratios. 
Additionally, we noted that the prospective HCC risk ratios for ESRD, 
disabled, and aged/dual eligible Medicare enrollment types would be 
much less likely to be capped under this proposed policy which would 
improve the incentives for ACOs to treat these medically complex, high-
cost populations. At the same time, we noted that we believed the 
proposed policy would continue to be protective of the Trust Funds by 
continuing to limit incentives for coding intensity, as it would retain 
the 3 percent cap on growth in prospective HCC risk scores after 
accounting for all changes in demographic risk scores for the ACO's 
assigned beneficiary population.
    Under the second option that we considered, we would continue to 
employ a fixed 3 percent cap on positive adjustments to prospective HCC 
risk scores, but we would apply the cap at the aggregate level. 
Specifically, the current 3 percent cap on risk score growth would 
apply in aggregate across the four Medicare enrollment types (ESRD, 
disabled, aged/dual eligible, and aged/non-dual eligible) instead of 
being applied separately for the population of beneficiaries in each 
Medicare enrollment type. We would only apply the current 3 percent cap 
on risk score growth for a particular enrollment type if the ACO's 
aggregate growth in prospective HCC risk scores, calculated as the 
dollar-weighted average growth in prospective HCC risk scores across 
the four enrollment types, exceeded the value of the cap.
    In the proposed rule, we explained that one advantage of this 
second, alternative option over the proposed approach, which allows 
aggregate prospective HCC risk score growth above 3 percent when 
aggregate demographic risk score growth is positive, is that no ACOs 
would receive a lower updated benchmark under this methodology compared 
to the current approach. However, according to our simulations using PY 
2020 financial reconciliation data from ACOs in agreement periods 
beginning on or after July 1, 2019, while around 5 percent of ACOs 
would have had higher benchmarks under this second, alternative 
approach compared to the proposed approach, around 12 percent would 
have had lower benchmarks under this approach compared to the proposed 
approach. Thus, we noted that we believed that this second, alternative 
approach would, in aggregate, be less advantageous to ACOs than the 
proposed approach.
    Under the third option that we considered, which we also described 
in the CY 2022 PFS proposed rule (86 FR 39294), we would allow the cap 
on an ACO's risk score growth to increase by a percentage of the 
difference between the current 3 percent cap and risk score growth in 
the ACO's regional service area. The percentage applied would be equal 
to 1 minus the ACO's regional market share. For example, if regional 
risk score growth for a particular enrollment type was 5 percent and 
the ACO's regional market share was 20 percent, we would increase the 
cap on the ACO's risk score growth for that enrollment type by an 
amount equal to the difference between the regional risk score growth 
and the existing cap (2 percent) multiplied by one minus the ACO's 
regional market share (80 percent). Thus, the ACO would face a cap for 
this enrollment type equal to 4.6 percent instead of 3 percent (3 
percent + (2 percent x 80 percent)). This approach would raise the 
existing cap while limiting the ability for ACOs with high penetration 
in their regional service areas to increase their cap by engaging in 
coding intensity initiatives that significantly raise their regions' 
prospective HCC risk scores. While this third, alternative option could 
potentially mitigate concerns raised by some commenters about the 
impacts of regional prospective HCC risk score growth, modeling 
suggested that relatively fewer ACOs would benefit under this 
alternative approach as compared to the proposed methodology 
incorporating demographic risk score growth. As we explained in the 
proposed rule, a key reason for this is that a relatively small share 
of ACOs affected by the existing 3 percent cap on risk score growth 
operate in regional service areas where regional risk score growth was 
greater than 3 percent.
    In the CY 2023 PFS proposed rule, we noted that we still have 
concerns that allowing the cap on an ACO's risk score growth to 
increase with regional risk score growth could incentivize ACOs, 
particularly those highly penetrated in their regional service areas, 
to engage in coding behavior that would increase their cap, even if 
this incentive would be mitigated to some degree by limiting the 
allowable increase in the cap based on the ACO's market share. We also 
noted that we believed that our proposed methodology would avoid this 
undesired incentive while still accounting for changes in health risk 
for an ACO's assigned beneficiary population to a greater extent than 
the current policy and would also help to address cases where regional 
risk score growth stems from higher volatility due to small sample 
sizes or shifting demographics within a regional service area.
    As discussed in the proposed rule, our modeling suggests that a 
majority of ACOs that operate in regions with risk score growth in 
excess of 3 percent for at least one Medicare enrollment type would 
have a higher updated benchmark under the proposed policy than the 
current policy. In addition, we explained our belief that our proposal 
to incorporate a prospective, external factor in the growth rates used 
to update the historical benchmark (see section III.G.5.c.(3) of the 
proposed rule) would further help to mitigate concerns raised by some 
commenters about the impacts of regional risk score growth, by

[[Page 69938]]

decreasing the weight placed on the two-way blend of national and 
regional growth rates when updating an ACO's historical benchmark for 
each performance year in the ACO's agreement period.
    Although requested by some commenters in previous rulemaking, we 
declined to consider an approach that would limit the impact of 
prospective HCC risk score decreases. As we have described in past 
rulemaking (83 FR 68011), we remain concerned that such an approach 
would encourage favorable risk selection. If ACOs seek to attract low-
cost beneficiaries or avoid high-cost beneficiaries, they could lower 
their performance year expenditures without any corresponding 
adjustment to their benchmark due to the cap on negative prospective 
HCC risk adjustments. We noted that we continued to believe that this 
effect would be detrimental to medically complex patients, who may miss 
the opportunity to receive better coordinated care through an ACO, as 
well as to the Medicare Trust Funds. We also declined to consider an 
approach that would impose a direct cap on risk score growth in an 
ACO's regional service area, as requested by some commenters as we were 
concerned that such an approach would create adverse incentives for 
coding behavior, especially for ACOs that are highly penetrated in 
their regional service areas. Currently, ACOs that are highly 
penetrated in their regional service area have a disincentive to engage 
in coding initiatives, as it could increase risk score growth in their 
regional service area and potentially decrease the value of the 
regional component of their update factor. We noted that capping risk 
score growth in an ACO's regional service area could change these 
incentives and encourage ACOs to engage in coding initiatives.
    We proposed to revise the regulations governing risk adjustment 
under the BASIC track and the ENHANCED track at Sec.  425.605(a)(1) and 
Sec.  425.610(a)(2), respectively, to reflect the proposed 
modifications to the risk adjustment methodology.
    We sought comment on the proposed changes to the risk adjustment 
methodology for agreement periods beginning on or after January 1, 
2024. While we noted that we believed that the proposed modifications 
to the program's risk adjustment methodology in conjunction with the 
other policies we were proposing would provide the best balance between 
addressing concerns raised by interested parties and limiting 
incentives for coding intensity and risk selection, we also sought 
comment on the two alternatives considered. We noted that we would 
consider the comments received on these alternative options along with 
the comments on our proposed changes to the risk adjustment 
methodology, and that we might consider adopting one of these 
alternatives in place of the proposed approach if we conclude that it 
would better address the concerns with the current risk adjustment 
methodology.
    The following is a summary of the public comments received on the 
proposal to improve the risk adjustment methodology to better account 
for medically complex, high-cost beneficiaries and guard against coding 
initiatives and our responses:
    Comment: Many commenters supported the proposal to account for all 
changes in demographic risk scores for the ACO's assigned beneficiary 
population between BY3 and the performance year prior to applying the 3 
percent cap on positive adjustments resulting from changes in 
prospective HCC risk scores, and to apply the cap in aggregate across 
the four Medicare enrollment types (ESRD, disabled, aged/dual eligible, 
aged/non-dual eligible).
    Several commenters stated that they believe this proposed change to 
risk adjustment methodology would create a benchmark that is fairer and 
more representative of an ACO's assigned population. One commenter 
noted that effective risk adjustment discourages ACOs from taking steps 
to attract healthier beneficiaries or avoid sicker ones and makes 
program participation more attractive by reducing ACOs' exposure to 
financial risk stemming from fluctuations in patient mix. This 
commenter noted that ``relaxing'' the cap on risk score growth, as the 
proposed policy would do in some instances, would allow risk adjustment 
to do a better job of meeting these goals in cases where ACOs 
experience large increases in risk scores.
    Several supportive commenters noted the proposed policy would 
continue to effectively guard against coding initiatives while 
balancing incentives for ACOs to care for high-risk beneficiaries. One 
commenter stated that the current 3 percent cap not only limits reward 
for coding initiatives but may also limit incentives for ACOs to care 
for high-risk beneficiaries. This commenter stated that the proposed 
policy would increase incentives for ACOs to care for underserved 
populations, while also protecting against coding initiatives and 
unwarranted spending increases since demographic risk score changes are 
less susceptible to coding initiatives than claims-based prospective 
HCC risk scores. Another commenter gave an example of how demographic 
risk scores are less susceptible to coding initiatives; one input to 
demographic risk scores is age, and a beneficiary is either 75 years 
old, or they are not, so age is not subject to coding intensity. That 
commenter stated that because they believe the only reason to have a 
cap on risk score growth is to address concerns around coding 
initiatives and demographic risk scores are not subject to coding 
initiatives, they support accounting for all changes in demographic 
risk scores. Another commenter explained their support for the proposal 
to apply the 3 percent cap in aggregate across the four Medicare 
enrollment types, as it would allow certain segments of the population 
to have ``appropriate coding documentation'' while also safeguarding 
against coding initiatives. Another commenter stated they supported the 
proposed changes because they would allow the risk adjustment 
methodology to better reflect changes to an ACO's assigned population 
without any unintended increase in coding intensity. One commenter 
explained that ACO coding initiatives represent a waste of real 
resources, since resources that ACOs invest in identifying and coding 
patient diagnoses will likely do ``little or nothing'' to improve 
patient care. Another commenter noted that they appreciate what CMS is 
doing to try to lessen the impact of coding initiatives, however, they 
also referenced concerns about the complexity of risk adjustment, and 
the potential for the current risk adjustment policy to drive inequity.
    Many commenters stated that they support the proposed policy as it 
better incentivizes ACOs to care for certain populations, such as high-
cost, medically complex, high-need, dually eligible, or underserved 
beneficiaries, with some saying this policy would create more equity 
than the current policy. Several commenters explained their belief the 
current policy is driving inequity. A few commenters stated that 
current policy may disadvantage ACOs that serve more vulnerable 
populations of beneficiaries with complex medical needs, and that the 
policy proposal offers an improvement over the current policy. A few 
commenters also noted that this proposal would better account for 
medically complex, higher cost beneficiaries, with one stating that 
that these beneficiaries would benefit from the proposal and another 
stating that the proposal would allow for more accurate benchmarks for 
ACOs that care for those populations. Another commenter added that the 
proposed policy would ensure

[[Page 69939]]

ACOs are not disincentivized from serving high-risk groups. A few 
commenters explained that the proposed policy would strengthen 
incentives for ACOs to care for underserved populations, with one 
explaining that enabling more ``accurate and appropriate'' payment for 
high-need beneficiaries will help facilitate increasing the number of 
ACOs participating in the Shared Savings Program who are focusing on 
enhancing equity by targeting underserved populations. Another 
commenter explained that the proposed policy is an improvement over 
current policy, as the current policy ``underemphasizes'' demographic 
risk factors and encourages ACOs to underserve beneficiaries with lower 
``social determinant of health profiles,'' such as beneficiaries dually 
eligible for Medicare and Medicaid.
    Many commenters indicated that one way the proposed policy would 
help to incentivize care for high-risk beneficiaries is through 
applying the 3 percent cap in aggregate across the four Medicare 
enrollment types, instead of capping by enrollment type. One commenter 
noted that applying the cap in aggregate will help to mitigate ACOs' 
avoiding providing care for certain underserved groups of 
beneficiaries. A few commenters noted that application of the current 
cap by enrollment type negatively impacts or disadvantages ACOs serving 
certain types of beneficiaries such as beneficiaries in the ESRD, 
disabled, and aged/dual enrollment types, with several commenters 
explaining that these enrollment types are more likely to be subject to 
the current 3 percent cap than the aged/non-dual enrollment type. One 
commenter stated that the current policy of capping by enrollment type 
creates a ``perverse'' incentive to avoid patients from high-risk 
enrollment types in favor of patients from enrollment types that are 
less likely to be subject to the 3 percent cap. Another commenter 
expressed their support for the aggregate cap because they believe that 
the current methodology does not do enough to adjust for changes in 
health status among beneficiaries that are assigned in one of the 
benchmark years and remain assigned in the performance year.
    A few commenters noted that applying the cap at the aggregate level 
will help account for higher volatility in year-to-year changes in risk 
scores across the Medicare enrollment types, with one noting this would 
be especially true for the ESRD enrollment type. Another commenter 
explained that this change would make it less likely for the cap to 
apply when there are smaller sample sizes for high-risk enrollment 
types (that is, ESRD, disabled, and aged/dual). One commenter noted 
that among their own ACOs they see considerable variation in the risk 
ratios between the enrollment types, whereas they would expect that 
coding initiatives would increase all the risk ratios uniformly. 
Therefore, the commenter noted the variation is likely due to 
underlying changes in the beneficiary populations, not coding 
initiatives.
    Response: We agree with commenters that the proposed policy would 
address several of the concerns previously raised by interested parties 
by allowing for higher benchmarks than the current risk adjustment 
methodology for ACOs that care for larger proportions of beneficiaries 
in aged/dual eligible, disabled and ESRD enrollment types and 
continuing to safeguard the Trust Funds by limiting returns from coding 
initiatives. The proposed policy also accounts for potentially 
significant changes in prospective HCC risk scores for certain 
enrollment types due to the smaller number of assigned beneficiaries in 
those enrollment types.
    Comment: A few commenters who supported the proposed policy also 
offered caution about the policy. One commenter cautioned that it may 
introduce more complexity and less financial certainty. Several 
commenters cautioned that the proposed policy could hurt some ACOs if 
their demographic risk score drops.
    Response: While we agree that incorporating changes in demographic 
risk scores and using an aggregate cap across all enrollment types 
would increase the complexity of the risk adjustment cap methodology, 
we believe the benefits of the proposed policy, as described in in 
section III.G.5.e.(2) of the proposed rule, outweigh the increased 
complexity. We disagree that our proposal would result in less 
financial certainty. We believe that the proposed policy would better 
account for changes in prospective HCC risk scores for certain 
enrollment types due to smaller numbers of assigned beneficiaries and 
reflect underlying changes in health risk for ACO's assigned 
beneficiary population as measured by demographic risk ratios.
    Based on our modeling of the proposed policy as described in 
section III.G.5.e.(2) of the proposed rule, we believe that a 
significant share of ACOs, especially those with increases in health 
risk as measured by demographic risk ratios, would either be unaffected 
by or benefit from the proposed policies, while a small share of ACOs 
would have lower benchmarks, likely reflecting decreases in health risk 
for their assigned beneficiary population as measured by demographic 
risk ratios.
    In addition to simulations discussed in section III.G.5.e.(2) of 
the proposed rule, which used PY 2020 financial reconciliation data, we 
have also simulated the impact of the proposed policy change using PY 
2021 financial reconciliation data from ACOs in agreement periods 
beginning on or after July 1, 2019. This simulation found that 81 out 
of 332 ACOs had their prospective HCC risk ratio capped for at least 
one Medicare enrollment type under the proposed policy, compared to 185 
ACOs under the current policy. Among ACOs that were capped under the 
current policy but not the proposed policy, many had prospective HCC 
risk score growth above 1.030 for one or more of the typically smaller 
enrollment types (that is, ESRD, disabled, aged/dual eligible) but not 
for their aged/non-dual eligible population. Table 79 illustrates that 
50 percent of ACOs were subject to the current 3 percent cap imposed at 
the enrollment type level for one or more of the ESRD, disabled or 
aged/dual eligible enrollment types versus 30 percent for aged/non-dual 
eligible. Under the proposed policy, the share would fall to below 25 
percent for both groups.
[GRAPHIC] [TIFF OMITTED] TR18NO22.108


[[Page 69940]]


    Based on both the PY 2020 and PY 2021 modeling, ACOs would be much 
less likely to have prospective HCC risk ratios for ESRD, disabled, and 
aged/dual eligible Medicare enrollment types capped under the proposed 
policies, which should improve the incentives for ACOs to treat these 
medically complex, high-cost populations. At the same time, we believe 
that the proposed policy would continue to protect the Trust Funds by 
continuing to limit incentives for coding intensity, as it would retain 
the 3 percent cap on growth in prospective HCC risk scores after 
accounting for all changes in demographic risk scores for the ACO's 
assigned beneficiary population.
    Comment: One commenter was opposed to the proposal to account for 
changes in demographic risk scores before applying the 3 percent cap. 
This commenter did not indicate if they supported or opposed the 
proposal to apply the 3 percent cap in aggregate across the four 
Medicare enrollment types. The commenter stated that accounting for 
changes in demographic risk scores would hurt their ACO. They explained 
that the population of Medicare beneficiaries in their region is 
growing at more than double the national average, especially among 
those who have just ``aged-in'' to Medicare. They expressed concern 
that this increase in younger Medicare beneficiaries would lower 
demographic risk scores over time. The commenter stated that these 
demographic risk scores would be low compared to the ``reality of [the] 
population's true risk status''. They urged CMS to consider a possible 
unintended consequence to this policy proposal, which they believed 
could encourage ACOs to ``cherry-pick'' patients based on demographics 
like age, since younger patients may have lower demographic risk 
scores.
    Response: As described earlier in this section, we believe that 
changes in demographic risk ratios reflect actual changes in health 
risk for ACO's assigned beneficiary population. We also believe that 
the proposal to account for changes in demographic risk ratios would 
create incentives for ACOs to care for older beneficiaries, as well as 
beneficiaries in the aged/dual, disabled and ESRD enrollment types as 
risk score growth for these enrollment types would be less likely to be 
capped, as discussed earlier in this section. We are unsure why the 
commenter believes that the demographic risk scores of their ACO's 
assigned beneficiaries do not reflect the population's actual risk 
status. However, we note that after accounting for changes in 
demographic risk ratios, the proposed policy would continue to allow 
for up to three percent growth in prospective HCC risk scores. At this 
time, we believe that accounting for changes in demographic risk ratios 
prior to applying the 3 percent cap on positive adjustments resulting 
from changes in prospective HCC risk scores is appropriate, but we will 
continue to monitor the impacts of the cap and may propose further 
refinements to our risk adjustment policies in future rulemaking.
    Comment: MedPAC supported accounting for all changes in demographic 
risk scores prior to applying the cap but disagreed with our proposal 
to maintain the 3 percent cap after accounting for demographic risk 
scores, believing it should be reduced. More specifically, MedPAC noted 
its belief that there is insufficient justification for maintaining the 
current 3 percent cap after accounting for demographic risk score 
changes. They explained their belief that part of the impetus for the 
current policy of allowing risk scores to increase by 3 percent was 
that it would better account for demographic changes that are largely 
out of an ACO's control. MedPAC did not believe that further risk score 
growth above the current 3 percent cap was justified. MedPAC expects 
that changes in an ACO's population health status would be adequately 
accounted for by the CMS-HCC risk adjustment model, and the current 3 
percent cap would likely cover anomalies when ACO populations have 
deteriorating health status.
    MedPAC disagreed with CMS that continuing to allow for a 3 percent 
cap would incentivize ACOs to care for underrepresented beneficiaries. 
MedPAC explained that applying the 3 percent cap after accounting for 
demographic risk score changes would primarily benefit ACOs that serve 
disproportionately more white and aged/non-dual beneficiaries. MedPAC 
explained that allowing this increase in risk scores presumes that CMS 
expects ACOs' assigned populations to become sicker more rapidly than 
the national population of assignable beneficiaries within each of the 
four Medicare enrollment types and pointed to statements by CMS in the 
CY 2023 PFS proposed rule that indicate otherwise. MedPAC also stated 
that despite the fact that the non-ACO population is increasingly 
comprised of higher spending beneficiaries and medically complex 
patients, the growth in risk scores for this population has been slower 
than that of beneficiaries assigned to ACOs.
    MedPAC explained its belief, based on its own analysis and other 
recent research,\353\ that the majority of CMS-HCC risk score growth 
for beneficiaries assigned to ACOs comes from coding initiatives and 
not from changes in beneficiary demographics or deteriorating health 
status. Another commenter, who did not clearly state whether they 
supported or did not support the proposed policy, stated that there 
should be guardrails to deter ACOs from taking advantage of an 
increased cap with coding initiatives.
---------------------------------------------------------------------------

    \353\ Citing Chernew, M.E., J. Carichner, J. Impreso, et al. 
2021. Coding-driven changes in measured risk in accountable care 
organizations. Health Affairs 40, no. 12 (December). https://www.healthaffairs.org/doi/full/10.1377/hlthaff.2021.00361.
---------------------------------------------------------------------------

    Response: When we finalized the 3 percent cap in the December 2018 
final rule (83 FR 68007 through 68013), we acknowledged that the policy 
balanced competing concerns between the need to allow for some upward 
growth in prospective HCC risk scores between the benchmark period and 
the performance year and the concern that those risk scores, in 
general, are susceptible to coding initiatives. We believe that the 
proposed policy continues to balance these competing concerns. 
Specifically, we believe that the proposed policy would be protective 
of the Trust Funds by limiting incentives for coding intensity as it 
would retain the 3 percent cap on growth in prospective HCC risk scores 
after accounting for all changes in demographic risk scores for the 
ACO's assigned beneficiary population, while also allowing for more 
significant changes in prospective HCC risk scores for certain 
enrollment types with smaller numbers of assigned beneficiaries and for 
potentially higher benchmarks than the current risk adjustment 
methodology for ACOs that care for larger proportions of high risk 
beneficiaries in the aged/dual eligible, disabled and ESRD enrollment 
types.
    While we recognize there is a risk of rewarding coding initiatives 
by maintaining the 3 percent cap on growth in prospective HCC scores, 
there are also reasons to allow some prospective HCC risk score growth 
beyond demographic risk score growth. For example, there may be natural 
variation over time in the health of an ACO's assigned population, an 
ACO may establish new services that provide care for medically complex 
populations in their regional service area, or an ACO may attract a 
sicker population over time in response to Shared Savings Program 
policies designed to encourage ACOs to care for these populations. In 
addition, some increased coding by ACO participants and ACO providers/

[[Page 69941]]

suppliers may be appropriate when more complete clinical information at 
the point of care is required to help facilitate care coordination, 
quality improvement, and population management activities. We also 
recognize that certain acute events, such as a heart attack, which 
almost always requires a hospitalization, are likely to have an upward 
impact on prospective HCC risk scores that is not attributable to 
provider coding initiatives. Additionally, if an ACO begins to serve 
previously underserved beneficiaries during an agreement period, those 
beneficiaries may not have had complete diagnosis coding due to lack of 
access to care. As a result, capturing their healthcare needs may also 
have an upward impact on prospective HCC risk scores for the ACO's 
assigned beneficiary population that is not attributable to provider 
coding initiatives.
    While we believe that there are reasons to allow for some upward 
growth in prospective HCC risk scores between the benchmark period and 
the performance year, the proposed policy would continue to guard 
against coding initiatives. As described earlier, the proposed policy 
retains the 3 percent cap on growth in prospective HCC risk scores 
after accounting for all changes in demographic risk scores for the 
ACO's assigned beneficiary population. Additionally, ACOs experiencing 
a decrease in health risk for their assigned beneficiary population as 
measured by demographic risk ratios would likely have an aggregate 
demographic risk ratio less than 1, meaning that their aggregate cap on 
prospective HCC risk score growth would be less than the current cap of 
3 percent. We also note that the cap on positive growth of prospective 
HCC risk scores remains the same for the entirety of an ACO's 5-year 
agreement period. We believe it is reasonable to expect some increase 
in beneficiary health risk over a 5-year period even in the absence of 
coding initiatives. Although we believe that the proposed cap on 
positive risk adjustments is reasonable and appropriate, we will 
continue to monitor impacts of the cap and may propose further 
refinements to our risk adjustment policies in future rulemaking.
    Comment: Several commenters that were supportive of the proposed 
policy asked that the cap applied at the aggregate level after 
accounting for all changes in demographic risk scores be raised above 3 
percent. Several requested that the cap be raised to 5 percent. Another 
commenter requested that CMS remove the cap on increases in diagnosis 
risk scores, as well as demographic risk scores.
    Many commenters explained their request for a higher cap. Several 
commenters stated their belief that a 3 percent cap is insufficient 
and/or arbitrary when applied over the course of a 5-year agreement 
period. Several stated that allowing risk scores to increase by only 3 
percent after adjusting for demographic risk scores will not fully 
assist outlier ACOs that will still be capped under the proposed 
policy. A couple of commenters cited findings from NAACOS that 87 
percent of ACOs would have had at least one enrollment type capped at 
either positive or negative 3 percent (even though the current and 
proposed policy do not include a cap on risk score decreases) within 
the first 3 years of their agreement period, with 88 percent of ACOs 
capped in the first performance year, 85 in the second performance 
year, and 92 percent in the third performance year. However, these 
commenters did not provide further details on how their modeling was 
developed.
    Many commenters noted a higher cap would incentivize ACOs to care 
for certain populations, such as high-cost, medically complex, high-
risk, underserved and/or beneficiaries with new or worsening illnesses. 
Several commenters stated their belief that under the current cap ACOs 
can be penalized for accurately coding and maintaining the same level 
of risk over their agreement period. A few commenters explained that 
raising the cap above 3 percent would reduce the negative impact of 
physicians accurately identifying patient needs, especially in 
underserved communities. Many commenters similarly stated that that a 
higher cap would decrease the penalty on ACOs for accurate coding of 
conditions that may have historically been underreported for 
underserved beneficiaries.
    A couple of commenters explained that as ACO penetration increases 
in underserved areas, where patients have not had appropriate access to 
high quality care, physicians in ACOs will increasingly identify 
underreported healthcare needs and a static cap on risk score growth 
will penalize this appropriate effort to accurately document the health 
of the community. According to the commenters, the cap on risk score 
growth is a meaningful disincentive for treating underserved 
communities that CMS should address if it is to be successful in 
meeting the goal of increasing ACO participation in these areas. 
Another commenter explained that ACOs serving these underserved 
populations must devote and deploy significant resources to capturing 
and care planning around the needs of complex patients who have not had 
sufficient contact with the health care system to have a grasp on their 
health risks and disease burden or that need education around managing 
chronic illnesses. The commenter stated that, as a result, it is 
crucial that risk adjustment accounts for the actual risk burden of 
assigned beneficiaries so an ACO's benchmark reflects the full amount 
of resources needed to provide comprehensive care to this beneficiary 
population. That commenter concluded that a higher risk score growth 
cap will encourage providers and suppliers in underserved areas to join 
ACOs in larger numbers, knowing that their resource allocations will be 
sufficiently accounted for in benchmark adjustments that reflect the 
actual risk burden of their assigned beneficiary population.
    Another commenter stated that maintaining the cap on risk scores 
does not allow ACOs to capture the significant turnover and changes in 
health status that their beneficiaries experience, and that this is 
particularly true as the burden of illness in the Medicare population 
increases over time. Another commenter similarly stated that even if 
the 3 percent cap on positive risk score increases applies only after 
accounting for changes in demographic risk scores, the increased costs 
of individuals who develop a medically complex, high-cost condition 
after they have been assigned to an ACO will not be adequately 
accounted for. That commenter explained that failing to adjust fully 
for changes in beneficiary health status ignores the fact that even 
when care is optimally managed, individuals become sicker, and 
therefore, more expensive to care for as disease progresses. The 
commenter gave as an example the case of a beneficiary who has been 
continuously attributed to an ACO and is diagnosed with cancer, stating 
that it is inappropriate for the ACO to be responsible for that 
additional cost without adjustments from Medicare for higher spending 
related to that beneficiary.
    A few commenters stated that increasing the cap is important given 
the effects of the COVID-19 pandemic on healthcare utilization. One of 
those commenters explained that the COVID-19 PHE caused significant 
decreases in patient encounter volume, and as a result, ACOs were 
unable to capture ``large swaths'' of beneficiaries' HCCs. Thus, the 
commenter explained, most ACO risk scores for 2021 were ``extremely'' 
low but they will likely increase significantly in subsequent

[[Page 69942]]

years because patients have returned to the office. A couple of 
commenters noted another reason that risk scores may increase in 
subsequent years is that many patients delayed care during the COVID-19 
pandemic and may now have a higher severity of illness. One of those 
commenters concluded that applying the existing cap artificially 
penalizes ACOs for patients that delayed or missed receiving care 
because they needed to stay in the safety of their homes during the 
pandemic. A few commenters noted that ACOs that started an agreement 
period in January of 2022, and for which 2021 is their third benchmark 
year, would be significantly impacted by the COVID-19 PHE because they 
are likely to have significant risk score growth between BY3 and the 
performance years of their agreement period. Specifically, these 
commenters noted that risk scores for 2021 would be based on diagnoses 
captured the year before, which is 2020. The reduction in services in 
2020 due to the pandemic may have caused an artificial reduction in 
risk scores in 2021 that, in turn, will result in ACOs starting a new 
agreement period in 2022 being more likely to be subject to the 3 
percent cap.
    One commenter, who requested that CMS raise the cap on risk score 
changes by at least 10 percent, noted that in an assessment they 
conducted they saw a number of diagnoses that are documented in a 
medical record but that are not submitted in claims due to the 
structural limitation of the number of diagnoses that can be submitted 
on a CMS-1500 claim form. The commenter did not provide additional 
rationale for how raising the risk score cap to at least 10 percent 
would be applied relative to the existing or proposed risk adjustment 
methodology.
    Response: At this time, we decline to lift the cap on positive 
adjustments resulting from changes in prospective HCC risk scores above 
3 percent. We believe that the proposed policy, under which the cap 
would apply after accounting for changes in demographic risk scores, 
will allow for higher benchmarks than the current risk adjustment 
methodology for ACOs that care for larger proportions of beneficiaries 
in aged/dual, disabled and ESRD enrollment types, while still 
protecting against increases in coding intensity. We believe that 
further increasing the cap would allow for excessive returns for coding 
initiatives. While we do not intend to hinder appropriate efforts to 
accurately document the health of the beneficiaries, we note, as 
discussed earlier in this section, that MedPAC has observed that the 
majority of the CMS-HCC risk score growth for ACOs comes from coding 
initiatives and not from changes in beneficiary demographics or 
deteriorating health status.
    With regards to the concerns raised by commenters about the impact 
of the COVID-19 pandemic on risk scores, we believe that CMS' 
methodology of renormalizing risk scores by dividing by the national 
mean will mitigate the impacts of any changes in ACO risk scores that 
may have stemmed from the impact of COVID-19 such that the cap will not 
inappropriately limit risk score growth for ACOs that started a new 
agreement period in 2022. Although we believe that the proposed cap on 
positive risk adjustments is reasonable and appropriate, we will 
continue to monitor impacts of the cap and may propose further 
refinements to our risk adjustment policies in future rulemaking.
    With regard to the commenter that requested that CMS remove the cap 
on diagnosis risk scores, as well as demographic risk scores, we 
clarify that the 3 percent cap is on diagnosis, or HCC, risk scores, 
not demographic risk scores. Regarding the comment raising concerns 
about structural limitations on reporting diagnosis codes on the CMS-
1500 claim form, we note that the allowance of twelve diagnosis codes 
is the national format for CMS FFS claims as developed by the National 
Uniform Claim Committee and claims used to compute risk scores for both 
assigned and assignable FFS beneficiaries under the Shared Savings 
Program contain a maximum of twelve diagnosis codes ensuring 
comparability between the two populations.
    Comment: Several commenters requested that a cap be placed on 
negative changes in risk scores, also referred to as a symmetrical cap. 
One commenter who opposed the proposed policy suggested that CMS apply 
a symmetrical 5 percent cap across all enrollment types. Some of the 
commenters that were generally supportive of the proposed policy but 
that requested the cap be increased to 5 percent also requested a 
symmetrical downward cap of negative 5 percent. Many of those 
commenters seemed to indicate that if the cap could not be raised to 5 
percent, a downward 3 percent cap should be applied along with the 
positive 3 percent cap. There were several other commenters who also 
requested a negative cap be instituted in addition to a positive cap, 
but did not request the cap be increased, instead asking for a 
symmetrical 3 percent cap.
    A few of the commenters requesting a downward cap stated that an 
ACO may experience a potential decrease in its risk score if others in 
their region increase their coding intensity, and that this could be 
made worse for ACOs with large numbers of specialists who have fewer 
opportunities to increase their risk score. Another commenter stated 
that a downward cap would protect ACOs with less sophisticated coding 
efforts from large adjustments in their benchmark resulting from 
increased national coding and provide more predictability. One 
commenter noted that the application of a symmetrical floor on an ACO's 
risk score would be similar to the risk adjustment model the Innovation 
Center uses in the GPDC Model (which will transition to the redesigned 
and renamed ACO REACH Model on January 1, 2023). One commenter stated 
that a higher, symmetrical cap is important given the effects of the 
COVID-19 pandemic. This commenter stated that patients appear to be 
sicker and more medically complex than before the pandemic, so a higher 
symmetrical cap amount would more appropriately account for risk 
adjustment changes over a 5-year agreement period.
    Response: As described in section III.G.5.e.(2) of the proposed 
rule, we decline to consider an approach that would limit the impact of 
prospective HCC risk score decreases at this time. As we have described 
in past rulemaking (83 FR 68011), we remain concerned that such an 
approach would encourage favorable risk selection. If ACOs seek to 
attract low-cost beneficiaries or avoid high-cost beneficiaries, they 
could lower their performance year expenditures without a corresponding 
adjustment to their benchmark due to the cap on negative prospective 
HCC risk adjustments. We noted that we continue to believe that this 
effect would be detrimental to medically complex patients, who may miss 
the opportunity to receive better coordinated care through an ACO, as 
well as to the Medicare Trust Funds. We will continue to monitor the 
impacts of HCC risk score changes and may propose further refinements 
to our risk adjustment policies in future rulemaking.
    Comment: A couple of commenters that requested raising the cap 
applied to ACO prospective HCC risk score growth to 5 percent 
additionally requested that the cap be allowed to further increase for 
ACOs in regions where risk score growth exceeds five percent, with one 
stating that a flat percentage cap will always disadvantage ACOs in 
regions where risk score growth exceeds the cap and another stating 
that this additional flexibility would ensure ACOs are not

[[Page 69943]]

disadvantaged by operating in underserved communities.
    Many commenters wrote in support of capping regional risk ratios in 
addition to capping ACO risk ratios. Several commenters stated that it 
is critical that whatever policy CMS finalizes for capping ACOs' risk 
score growth the same policy must also apply to regional risk scores. 
Several commenters noted that CMS should not apply adjustments to only 
one side of the equation, referring to capping ACO risk ratios without 
capping regional risk ratios, with many of them saying this would lead 
to unintended consequences and another saying it would have inequitable 
results. One commenter stated that by not capping regional risk ratios, 
CMS would be sending a message that is not aligned with reducing 
inequity. Several commenters stated that not capping increases in 
regional risk scores will stifle growth in exactly the areas CMS wants 
growth the most. A few commenters explained that lack of regional risk 
score growth caps incentivizes ACOs not to grow in places with certain 
types of populations, such as those with increasing health burdens, 
higher needs, and/or higher numbers of aged/dual and disabled 
enrollees. Several commenters stated that they do not believe that it 
was CMS's intent to financially penalize ACOs for growing in counties 
where beneficiaries are getting sicker but that this is effectively 
what is done by applying the cap only to the ACO and not to the 
regional risk ratios.
    One commenter stated that they agree with CMS' statements in the 
proposed rule and comments made by CMS officials that there is reason 
to be concerned about regional risk ratios being subject to coding 
intensity, but that they disagree with CMS that it is a small problem 
when the risk ratio for a region exceeds the cap. Several commenters 
cited analysis by Milliman \354\ which found that 15 percent of Shared 
Savings Program beneficiaries already reside in counties that have risk 
ratios above the 3 percent cap. Many of these commenters noted that 
this means that every ACO in those counties will incur losses for every 
additional at-risk beneficiary they establish a relationship with. One 
commenter added that Milliman's analysis also found that in 2020 40 
percent of ACOs served regions where at least one Medicare enrollment 
type exceeded the cap, and that by 2024 Milliman estimates that one in 
four ACOs will serve regions with risk ratios greater than three 
percent. This commenter stated that they knew of specific ACOs that 
have seen their savings rate cut in half due to their region exceeding 
the three percent cap. Another commenter stated that since the risk 
scores used to calculate the risk-adjusted regional benchmark trend are 
not capped, the regional risk score trend could reduce an ACO's 
benchmark by more than 3 percent.
---------------------------------------------------------------------------

    \354\ Kildow, J., Gusland, C., Kramer, M.J., & Li, C. Evaluating 
the financial cost of the asymmetry in the MSSP risk score growth 
cap. May 10, 2022. available at https://us.milliman.com/en/insight/evaluating-the-financial-cost-of-the-asymmetry-in-the-mssp-risk-score-growth-cap.
---------------------------------------------------------------------------

    Response: As described in section III.G.5.e.(2) of the proposed 
rule, in developing our proposed policy we declined to consider an 
approach that would impose a direct cap on risk score growth in an 
ACO's regional service area, as requested by some commenters, as we are 
concerned that such an approach would create adverse incentives for 
coding behavior, especially for ACOs that are highly penetrated in 
their regional service areas. Currently, ACOs that are highly 
penetrated in their regional service area have a disincentive to engage 
in coding initiatives, as it could increase risk score growth in their 
regional service area and potentially decrease the value of the 
regional component of their update factor. Capping risk score growth in 
an ACO's regional service area could remove this disincentive and 
encourage ACOs to engage in coding initiatives.
    We also noted in section III.G.5.e.(2) of the proposed rule that we 
did not consider an approach under which we would account for the 
difference between the 3 percent cap and risk score growth in the ACO's 
regional service area in combination with applying a cap on risk score 
growth in aggregate across Medicare enrollment types (with or without 
first accounting for changes in demographic risk scores for the ACO's 
assigned beneficiary population between BY3 and the performance year). 
As we explained in the proposed rule, we view these two approaches to 
be inconsistent with each other, as one approach allows an ACO's risk 
score growth to rise above 3 percent based on risk score growth in the 
ACO's regional service area, whereas the other would retain the 3 
percent cap, but apply it at the aggregate level. We also noted that we 
still have concerns that allowing the cap on an ACO's risk score growth 
to increase with regional risk score growth could incentivize ACOs, 
particularly those highly penetrated in their regional service areas, 
to engage in coding behavior that would increase their cap, even if 
this incentive would be mitigated to some degree by limiting the 
allowable increase in the cap based on the ACO's market share. We also 
noted our belief that the proposed methodology would avoid this 
undesired incentive while still accounting for changes in health risk 
for an ACO's assigned beneficiary population to a greater extent than 
the current policy and would also help to address cases where regional 
risk score growth stems from volatility due to the small number of 
assignable beneficiaries in a particular enrollment type or shifting 
demographics within a regional service area.
    In section III.G.5.e.(2) of the proposed rule, we stated that a 
relatively small share of ACOs affected by the existing 3 percent cap 
on risk score growth operated in regional service areas where regional 
risk score growth was greater than 3 percent. Since then, we have done 
additional analysis. Using PY 2020 data for ACOs in agreement periods 
beginning on or after July 1, 2019, we found that sixteen percent of 
ACOs were operating in a region where the regional risk ratio was above 
1.03 for at least one enrollment type and 4 percent were operating in a 
region where the weighted average regional risk ratio was above 
1.03.\355\ Using PY 2021 data, 31 percent of ACOs were operating in a 
region where the regional risk ratio was above 1.03 for at least one 
enrollment type and 11 percent were operating in a region where the 
weighted average regional risk ratio was above 1.03. Reviewing this 
more recent data, we continue to believe a relatively small share of 
ACOs operate in regional service areas where regional risk score growth 
is greater than 3 percent, but we will continue to monitor the impacts 
of regional risk score growth and may propose further refinements to 
our risk adjustment policies in future rulemaking.
---------------------------------------------------------------------------

    \355\ For purposes of this analysis, we estimated regional risk 
scores for the performance year and BY3 by dividing non-risk 
adjusted regional expenditures for each enrollment type by risk-
adjusted regional expenditures for that enrollment type.
---------------------------------------------------------------------------

    As noted previously in this section of this final rule, the 
modeling conducted during the development of the proposed policy 
suggests that a majority of ACOs that operate in regions with risk 
score growth in excess of 3 percent for at least one Medicare 
enrollment type would have had a higher updated benchmark under the 
proposed policy than the current policy. This continues to be true in 
our modeling using PY 2021 data. In addition, we believe that our 
decision to finalize the proposal to incorporate a prospective, 
external factor in the growth rates used to update the historical 
benchmark (see section

[[Page 69944]]

III.G.5.c.(3) of this final rule) will further help to mitigate 
concerns raised by some commenters about the impacts of regional risk 
score growth, by decreasing the weight placed on the two-way blend of 
national and regional growth rates when updating an ACO's historical 
benchmark for each performance year in the ACO's agreement period.
    Comment: A few commenters urged CMS to allow ACOs that are in the 
middle of an agreement period on January 1, 2024, the flexibility to 
opt into this proposed policy without having to early renew. One 
commenter described the early renewal process as being onerous. Another 
asked that, where possible, this policy should apply to all currently 
participating ACOs with earlier agreement period start dates (such as, 
agreement periods beginning on January 1, 2023, and earlier).
    Response: We decline the commenters' suggestion and are finalizing 
our proposal to apply the changes to the risk adjustment methodology on 
an agreement period basis. The revisions we are making in this final 
rule to the risk adjustment methodology will apply to ACOs entering a 
new agreement period beginning on or after January 1, 2024. Elsewhere 
in section III.G.5 of the final rule, we explain our concerns with an 
approach to applying benchmarking changes to ACOs within an agreement 
period in responding to similar suggestions. Among other reasons, such 
an approach would introduce considerable operational complexity into 
the program's benchmarking methodology, particularly as the revised 
risk adjustment methodology is one of a package of changes, we are 
finalizing to the benchmarking methodology to be applicable for 
agreement periods beginning on January 1, 2024, and in subsequent 
years.
    We recognize that currently participating ACOs that entered an 
agreement period prior to January 1, 2024, may wish to pursue the 
option to early renew for a new agreement period beginning on January 
1, 2024, by terminating their current agreement and immediately 
entering a new agreement period, so that they would have the 
opportunity to participate under the revised benchmarking methodology. 
(Refer to paragraph (2) of the definition of ``renewing ACO'' in Sec.  
425.20, and the application procedures set forth in Sec.  425.224.) We 
note that early renewal, like renewing upon completion of an agreement 
period, will result in rebasing of the ACO's historical benchmark, and 
will affect the ACO's eligibility for certain participation options 
(refer to section III.G.2. of this final rule), as well as the 
agreement period the ACO is entering for purposes of applying program 
requirements that phase-in over multiple agreement periods (refer to 
Sec.  425.600(f)).
    Comment: MedPAC recommended that CMS address the underlying 
incentives for coding initiatives and the accuracy of risk adjustment 
before considering any policy that would increase the risk score growth 
cap (such as the proposed policy), repeating their comment on the CY 
2022 PFS proposed rule summarized in the CY 2022 PFS final rule (86 FR 
65304). MedPAC also recommended that CMS use 2 years of diagnostic data 
for risk adjustment as permitted under the 21st Century Cures Act, 
which they believe would improve the accuracy of coefficients estimated 
with FFS data and reduce year-to-year variation in beneficiary risk 
scores, along with reducing the administrative burden for ACO 
participants related to HCC documentation. MedPAC further suggested 
that CMS should only consider changes to the 3 percent cap after making 
this suggested change and after observing the effect of the phase-in 
from 2020 to 2022 of the Alternative Payment Condition Count (APCC) 
CMS-HCC risk adjustment model, which they noted was designed to improve 
the accuracy of risk adjustment for high-spending beneficiaries. In 
addition, MedPAC also advocated for the approach outlined in the 
Commission's June 2022 report to the Congress that would limit the 
effect of outliers (that is, beneficiaries with the largest 
underpredictions and overpredictions in spending) on risk score 
coefficients. MedPAC relayed that the Commission's analysis showed that 
this change would improve the accuracy of predicted spending under the 
risk-adjustment model, especially for medically complex beneficiaries. 
MedPAC stated that until CMS is willing to consider underlying changes 
that directly affect coding incentives or provides an empirical 
justification for a 3 percent allowance for coding changes (after 
allowing demographic risk score changes), the agency should consider 
applying a uniform coding adjustment across all ACOs to offset the 
increases to benchmarks via coding increases. This adjustment would 
protect the Medicare program from subsidies given to ACOs for their 
coding efforts. MedPAC urged that to the extent that CMS considers any 
additional coding allowance in the future (including for regional 
changes in risk scores), CMS should apply an adjustment that ensures 
the average increase in risk scores across all ACOs is no greater than 
the average increase in risk scores for the assignable population. To 
mitigate coding initiatives, they suggested that CMS could group ACOs 
into categories of high, medium, and low coding intensity and then 
apply a coding intensity adjustment based on the average level of 
coding intensity for each group (similar to an option the Commission 
discussed in its March 2017 report to the Congress).
    Response: We appreciate MedPAC's suggestions, and we believe our 
current risk adjustment methodology which renormalizes risk scores for 
each enrollment type based on a national assignable FFS population, and 
our proposed changes to apply the 3 percent cap after accounting for 
demographic risk score changes address many of the concerns raised by 
MedPAC. However, CMS will continue to monitor how the risk adjustment 
model is used in the Shared Savings Program and the impact of the 
policies finalized in this rule and may propose further changes or 
refinements in future rulemaking. We also note that many of these 
suggestions go beyond the scope of the modifications we proposed to the 
program's risk adjustment methodology.
    Comment: A few commenters offered two recommendations for CMS: (1) 
removing dually eligible beneficiaries from the risk adjustment 
calculation and limiting it to non-dually eligible beneficiaries; and 
(2) adding ESRD patients to this calculation. These commenters 
explained that they wanted the dually eligible beneficiaries removed 
because the cost of care required for these beneficiaries is much 
greater and would not be addressed by the proposed modifications to 
risk adjustment methodology. These commenters also noted that adding 
ESRD patients would account for high-cost beneficiaries more 
accurately.
    Response: We believe these comments could be interpreted in 
multiple ways and would require additional clarity before we could 
consider implementing the commenters' suggestions. However, we note 
that for the reasons discussed previously in this section, we believe 
the proposed modifications to the risk adjustment methodology, which we 
are adopting in this final rule, will make it less likely that the 
aged/dual eligible enrollment type is capped. Regarding the commenters' 
second request, we clarify that beneficiaries in the ESRD enrollment 
type are included in risk adjustment calculations using the separate 
CMS ESRD risk adjustment model.
    Comment: One commenter indicated their support for the alternative 
option,

[[Page 69945]]

also referred to as the second option, to apply an aggregate cap 
without first accounting for changes to demographic risk scores. This 
commenter stated that they were ``very pleased'' with CMS' proposal to 
apply the 3 percent cap in aggregate across the four Medicare 
enrollment types, which they stated would allow ACOs that care for 
larger populations of beneficiaries in the ESRD, disabled, and aged/
dual enrollment types to receive higher benchmarks than under the 
current risk adjustment methodology. However, this commenter urged CMS 
to reconsider its proposal to move forward with a methodology that 
would first account for demographic risk changes prior to applying the 
3 percent cap on risk score, particularly for ACOs serving populations 
with a high rate of death. This commenter explained that they are an 
ACO that serves many high-risk beneficiaries at the end of life, as 
measured by a high death rate in their long-term institutionalized 
(LTI) population, and are concerned that churn in their assigned 
beneficiary population, which causes fluctuations in their annual 
demographic score, would result in unintended year-to-year changes in 
their aggregate risk score cap, creating significant annual instability 
for their ACO. This commenter asked that at a minimum, CMS use the 
higher of the proposed policy or this alternative option when 
calculating the risk score cap for each ACO to avoid unforeseen and 
negative consequences to ACOs with a large proportion of high-risk 
beneficiaries.
    Response: We decline to finalize the alternative option of applying 
the 3 percent cap in aggregate across the four Medicare enrollment 
types (ESRD, disabled, aged/dual eligible, aged/non-dual eligible) 
without first accounting for changes in demographic risk scores for the 
ACO's assigned beneficiary population between BY3 and the performance 
year. We also decline the commenter's suggestion that we use the higher 
of the proposed policy or this alternative option.
    As noted earlier in this section and in section III.G.5.e.(2) of 
the proposed rule, based on our modeling of the proposed policy, we 
believe that a significant share of ACOs, especially those with 
increases in health risk as measured by demographic risk ratios, would 
either be unaffected by or benefit from the proposed policy, while a 
small share would do worse, likely reflecting decreases in health risk 
for their assigned beneficiary population as measured by reductions in 
demographic risk ratios.
    Additionally, as noted in section III.G.5.e.(2) of the proposed 
rule, while one advantage of this alternative option of applying the 
cap on risk score growth in aggregate across Medicare enrollment types, 
without first accounting for changes in demographic risk scores for the 
ACO's assigned beneficiary population between BY3 and the performance 
year over the proposed approach is that no ACOs would receive a lower 
updated benchmark, according to our simulations using PY 2020 financial 
reconciliation data from ACOs this alternative approach would, in 
aggregate, be less advantageous to ACOs than the proposed approach. 
This remains true in our simulations using PY 2021 financial 
reconciliation data.
    Comment: Several commenters urged CMS to standardize the risk 
adjustment methodology it uses, with some commenters asking for 
standardization across all Medicare programs and models and others 
focusing on standardization across the Shared Savings Program and MA. 
Some of these commenters asked CMS to limit MA risk score growth and 
others asked that we allow ACO risk scores to grow the same way they do 
in MA plans. Several of these commenters discussed differences in the 
limits on coding intensity between MA and the Shared Savings Program, 
with many commenters indicating that more risk score growth is allowed 
in the MA program than in the Shared Savings Program.
    One commenter argued that CMS should take steps to limit MA risk 
score growth, and if that cannot be done, should pursue a policy of 
bringing the risk score methodology for the two programs into parity. 
The commenter noted that if this issue is not resolved, it is likely 
that providers and suppliers will continue their movement out of ACOs 
and into the ``much more lucrative'' MA program. Another commenter 
argued that eliminating the cap on ACO risk score growth and replacing 
it with the MA coding intensity adjustment would be the best way to 
bring parity between the two programs. Other commenters stated that, at 
a minimum, CMS should align the methodology used in the ENHANCED track 
of the Shared Savings Program with MA, since currently providers and 
suppliers have different incentives under the two programs which lead 
to inconsistent coding practices. One commenter stated that CMS should 
consider leveling the Medicare risk adjustment (MRA) playing field 
between MA plans and ACOs because it will increase ACO participation by 
providers and suppliers and propel participation in value-based care 
models by 2030. This commenter noted that most of their providers and 
suppliers participate in multiple MA plans that have established 
oversight and internal audits into MRA coding, and typically use the 
same care parameters for both FFS and MA plans. However, their 
participants are frustrated by the different methodologies for risk 
score normalization and determining risk adjustments and the different 
impacts on payments under MA and the Shared Savings Program. One 
commenter also urged CMS to reduce the opportunity for either ACOs or 
MA plans to increase their risk scores through coding initiatives in 
order to reduce the resources wasted in this area. However, this 
commenter noted that, contrary to CMS' assertion in the proposed rule, 
allowing for more aggressive coding initiatives by ACOs probably would 
not increase costs to the Federal government because it would reduce 
the difference in coding intensity between traditional Medicare and MA, 
which would potentially reduce payments to MA plans which would offset 
the cost of these more aggressive coding initiatives by ACOs. Several 
commenters that requested a cap on downward risk score growth noted 
that a cap on downward adjustments would help ACOs to compete with MA 
plans. Another commenter encouraged CMS to explore ways to implement 
the CMS Innovation Center HCC concurrent risk adjustment model in the 
Shared Savings Program. They explained that concurrent risk models are 
better able to predict costs for populations with high-disease burden 
or who are otherwise seriously ill, because the approach can better 
capture a rapid deterioration in health in the current year, such as 
through the occurrence of acute episodes that are difficult to predict 
or prevent (for example, heart attack). In contrast, they explained 
that the existing CMS-HCC prospective risk adjustment model predicts 
current-year costs using health status indicators (diagnoses) from the 
prior year.
    Response: We appreciate the commenters' suggestions but note that 
these suggestions go beyond the scope of modifications we proposed to 
the program's risk adjustment methodology.
    Comment: A couple of commenters requested that CMS change the risk 
adjustment methodology across all Medicare models by: updating the HCC 
Model to use ICD-10 codes; refining HCC diagnoses; and incorporating a 
social determinants of health (SDOH) component into the HCC severity 
calculations. In regard to the use of ICD-10 codes, one of the 
commenters explained that the current methodology

[[Page 69946]]

is based on ICD-9 codes, which have been largely phased out under the 
Medicare payment systems in favor of ICD-10 codes. The commenter stated 
that ICD-10 codes allow for multiple clinical concepts, offering more 
specificity than ICD-9 codes.
    Another commenter stated that the current Shared Savings Program 
risk adjustment policy could be improved further by incorporating 
sociodemographic factors such as food insecurity, homelessness, and 
other factors. The commenter explained that SDOH are widely recognized 
as important predictors in clinical care, noting that the American 
Medical Association (AMA) has recognized the importance of SDOH in the 
medical decision-making component used in the assignment of evaluation 
and management code level. That commenter stated that incorporating 
SDOH disease interactions would provide a mechanism to encourage the 
collection of information on SDOH without incentivizing coding 
initiatives for financial improvement and should be used to 
appropriately capture the impact of SDOH on patient severity reporting.
    Response: We appreciate the commenters' suggestions but note that 
these suggestions go beyond the scope of the proposed modifications to 
the Shared Savings Program's risk adjustment methodology. We will 
monitor the impacts of the combination of Shared Savings Program 
policies that we are finalizing in this rule, and as we gain experience 
with the updated risk adjustment methodology, we will continue to 
consider these recommendations to help inform future rulemaking.
    After consideration of the public comments, we are finalizing the 
proposed modifications to the risk adjustment methodology to account 
for all changes in demographic risk scores for the ACO's assigned 
beneficiary population between BY3 and the performance year prior to 
applying the 3 percent cap on positive adjustments resulting from 
changes in prospective HCC risk scores, and to apply the cap in 
aggregate across the four Medicare enrollment types (ESRD, disabled, 
aged/dual eligible, aged/non-dual eligible), with one modification to 
correct an error in the description of the methodology for calculating 
of the weighted average demographic and prospective HCC risk scores in 
the proposed rule.
    As described earlier in this section of this final rule, in the CY 
2023 PFS proposed rule we proposed to calculate the weighted average 
demographic risk ratio across the four Medicare enrollment types, where 
the weight applied to the demographic risk ratio for each enrollment 
type would be equal to historical benchmark expenditures for that 
enrollment type divided by the sum of historical benchmark expenditures 
across all enrollment types. We indicated that the historical benchmark 
expenditures for each enrollment type would be calculated as per capita 
historical benchmark expenditures for that enrollment type multiplied 
by the ACO's BY3 assigned beneficiary person years for that enrollment 
type. We also indicated that those same weights would be applied to the 
prospective HCC risk ratios for each of the four Medicare enrollment 
types in the calculation of the weighted average prospective HCC risk 
ratio. We need to correct the description of the weights applied to the 
risk ratios for each of the four Medicare enrollment types when 
calculating the weighted average demographic risk ratio and the 
prospective HCC risk ratio. The weights applied will be equal to the 
per capita historical benchmark expenditures for that enrollment type 
multiplied by the ACO's performance year assigned beneficiary person 
years for that enrollment type (not multiplied by the ACO's BY3 
assigned beneficiary person years for that enrollment type as 
previously erroneously stated). This error was typographical. The 
correct weights were used in determining the weighted average 
prospective HCC and demographic risk ratios in the simulations 
discussed earlier in this section of this final rule, whose results are 
shown in Tables 78 and 79. Additionally, we believe that weighting 
prospective HCC and demographic risk ratios for each enrollment type by 
both per capita historical benchmark expenditures and performance year 
person years for each enrollment type is warranted when calculating 
weighted average prospective HCC and demographic risk ratios because of 
the assumption that growth in expenditures is proportional to growth in 
risk scores. We also note that, while in the proposed rule and earlier 
in this section of the final rule we used the term ``dollar-weighted 
average'' when describing the weighted average prospective HCC and 
demographic risk scores, we have elected to no longer use this 
terminology as the weights used in the weighted averages are not just 
per capita historical benchmark expenditures (or ``dollars'') but also 
performance year person years.
    We are finalizing the proposed revisions to the regulations at 
Sec.  425.605(a)(1) and Sec.  425.610(a)(2) with modifications to 
incorporate the aforementioned correction to the methodology for 
determining the aggregate weighted average growth in demographic risk 
scores and the aggregate weighted average growth in prospective HCC 
risk scores, and to no longer use the term ``dollar-weighted''. 
Accordingly, we have revised the language in Sec. Sec.  
425.605(a)(1)(ii)(C) and 425.610(a)(2)(ii)(C). In addition, the 
proposed provisions at Sec. Sec.  425.605(a)(1)(ii)(C)(1) and (2), and 
425.610(a)(2)(ii)(C)(1) and (2) have been removed as they are no longer 
needed in light of the revisions to Sec. Sec.  425.605(a)(1)(ii)(C) and 
425.610(a)(2)(ii)(C). The resulting final regulation text accurately 
describes the weights used when calculating the weighted average growth 
in demographic risk scores or prospective HCC risk scores. 
Specifically, the final regulation text now states that when 
calculating the weighted average growth in demographic risk scores or 
prospective HCC risk scores, as applicable, the weight applied to the 
growth in risk scores (expressed as a ratio of the ACO's performance 
year risk score to the ACO's BY3 risk score) for each Medicare 
enrollment type is equal to the product of the historical benchmark 
expenditures for that enrollment type and the performance year person 
years for that enrollment type.
f. Increased Opportunities for Low Revenue ACOs to Share in Savings
(1) Background
    In the November 2011 final rule (76 FR 67927 through 67929), we 
explained that a goal of the Shared Savings Program is to use a portion 
of the savings (the difference between the ACO's actual expenditures 
and the benchmark) to encourage and reward participating ACOs for 
coordinating the care for an assigned beneficiary population in a way 
that controls the growth in Medicare expenditures for that patient 
population while also meeting the established quality performance 
standards. However, we also acknowledged that observed savings can also 
occur as a result of normal year-to-year variations in Medicare 
beneficiaries' claims expenditures in addition to the ACO's activities. 
Thus, even if an ACO engages in no activities to improve the quality 
and efficiency of the services it delivers, in certain cases, 
differences between the benchmark expenditures and assigned patients' 
expenditures would be observed during some performance

[[Page 69947]]

periods merely because of such normal variation. Consequently, section 
1899(d)(1)(B)(i) of the Act requires us to specify an MSR to account 
for the normal variation in expenditures, based upon the number of 
Medicare FFS beneficiaries assigned to the ACO. As we stated in the 
November 2011 final rule, the MSR should be set in a way that gives us 
some assurance that the ACO's performance is a result of its 
interventions, not normal variation in expenditures. However, we also 
do not want an outcome where savings that have been earned are not 
recognized.
    Establishing an MSR on the basis of standard inferential statistics 
that take into account the size of an ACO's beneficiary population 
provides confidence that, once the savings achieved by the ACO exceed 
the MSR, the change in expenditures represents actual performance 
improvements by the ACO as opposed to normal variations. There are 
several policy implications associated with the methodology used to set 
the MSR. A higher MSR would provide greater confidence that the shared 
savings amounts reflect real quality and efficiency gains and offer 
greater protection to the Medicare Trust Funds. However, due to the 
larger barrier to achieving savings, a higher MSR could also discourage 
potentially successful ACOs, especially physician-organized ACOs and 
smaller ACOs in rural areas, from participating in the program. In 
contrast, a lower MSR would encourage more potential ACOs to 
participate in the program but would also provide less confidence that 
shared savings amounts are a result of improvements in quality and 
efficiency made by an ACO. In the original rulemaking establishing the 
Shared Savings Program, we stated that we believed that the most 
appropriate policy concerning determination of the ``appropriate 
percent'' for the MSR would achieve a balance between the advantages of 
making incentives and rewards available to successful ACOs and prudent 
stewardship of the Medicare Trust Funds. In the November 2011 final 
rule, we finalized an approach wherein the MSR and MLR are calculated 
as a percentage of the ACO's updated historical benchmark (see 
Sec. Sec.  425.604(b) (Track 1), 425.606(b) (Track 2)).
    In the June 2015 final rule, we finalized an approach to offer 
Track 2 ACOs and ACOs in the new Track 3 (subsequently renamed the 
ENHANCED track) the opportunity to select the MSR/MLR that will apply 
for the duration of the ACO's 3-year agreement period from several 
symmetrical MSR/MLR options (80 FR 32769 through 32771, and 80 FR 32779 
and 32780; Sec. Sec.  425.606(b)(1)(ii) and 425.610(b)(1)). We 
explained our belief that offering ACOs a choice of MSR/MLR will 
encourage ACOs to move to two-sided risk, and that ACOs are best 
positioned to determine the level of risk they are prepared to accept. 
For instance, ACOs that are more hesitant to enter a performance-based 
risk arrangement may choose a higher MSR/MLR, to have the protection of 
a higher threshold before the ACO would become liable to repay shared 
losses, thus mitigating downside risk, although the ACO would in turn 
be required to meet a higher threshold before being eligible to receive 
shared savings. ACOs that are comfortable with a lower threshold of 
protection from risk of shared losses may select a lower MSR/MLR to 
benefit from a corresponding lower threshold for eligibility for shared 
savings. We also explained our belief that applying the same MSR/MLR 
methodology in both of the risk-based tracks reduces complexity for 
CMS' operations and establishes more equal footing between the risk 
models. ACOs participating in the Track 1+ Model were also allowed the 
same choice of MSR/MLR to be applied for the duration of the ACO's 
agreement period under the Track 1+ Model.\356\
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    \356\ Refer to the Medicare ACO Track 1+ Model Participation 
Agreement, section V, available at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/track-1plus-model-par-agreement.pdf.
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    ACOs applying to a two-sided model (Track 2, Track 3 or the Track 
1+ Model) could select from the following options:
     Zero percent MSR/MLR.
     Symmetrical MSR/MLR in a 0.5 percent increment between 
0.5-2.0 percent.
     Symmetrical MSR/MLR that varies based on the ACO's number 
of assigned beneficiaries according to the methodology established 
under Sec.  425.604(b) for Track 1. The MSR is the same as the MSR that 
would apply in the one-sided model, and the MLR is equal to the 
negative MSR.
    In the December 2018 final rule, we finalized policies governing 
the MSR/MLR for ACOs in the BASIC track at Sec.  425.605(b). Under the 
final policies, ACOs in a one-sided model of the BASIC track's glide 
path have a variable MSR based on the number of beneficiaries assigned 
to the ACO (Sec.  425.605(b)(1)). The variable MSR (ranging from 3.9 
percent for ACOs with 5,000 assigned beneficiaries to 2.0 percent for 
ACOs with 60,000 or more assigned beneficiaries) is determined using 
the same methodology that was used for Track 1. ACOs in a two-sided 
model of the BASIC track are able to choose among the MSR/MLR options 
that are available to ACOs in the ENHANCED track. ACOs participating 
under Level A or B of the BASIC track's glide path will choose an MSR/
MLR, ranging from zero to 2 percent (in 0.5 percent increments), or 
that is variable based on number of beneficiaries assigned to the ACO, 
before the start of their first performance year in a two-sided model 
(Sec.  425.605(b)(2)(i)). This selection will occur before the ACO 
enters Level C, D or E of the BASIC track's glide path, depending on 
whether the ACO is automatically transitioned to a two-sided model 
(Level C or E) or elects to more quickly transition to a two-sided 
model within the glide path (Level C, D, or E), and will be in effect 
for the duration of the agreement period that the ACO is under two-
sided risk (Sec.  425.605(b)(2)(ii)).
    In addition to the MSR/MLR, we also use an ACO's quality score as 
part of the determination of eligibility for and calculation of shared 
savings and shared losses. In the CY 2021 PFS final rule, we adopted a 
new regulation at Sec.  425.512(a) to reflect the new quality 
performance requirements under the Shared Savings Program for PY 2021 
and subsequent performance years. For performance years beginning on 
January 1, 2021, and subsequent performance years, if the ACO meets the 
quality performance standard established under Sec.  425.512, the ACO 
will share in savings at the maximum sharing rate based on the ACO's 
track/level of participation (refer to Table 80). The final sharing 
rate is applied to an ACO's savings on a first dollar basis up to the 
applicable performance payment limit, expressed as a percentage of the 
ACO's updated benchmark.

[[Page 69948]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.109

    As discussed in the November 2011 final rule and during subsequent 
rulemaking cycles, we have received comments from ACOs and other 
interested parties expressing concerns regarding the MSR/MLR 
methodology and proposing revisions. Commenters responding to the April 
2011 proposed rule \357\ expressed concern that the proposed (and later 
finalized) methodology for establishing the MSR on a sliding scale 
based on population size would disadvantage smaller ACOs, including 
ACOs likely to form in rural areas and those largely comprised of 
small- and medium-sized physician practices, and discourage their 
participation by setting too high a bar on shared savings (76 FR 67928 
and 67929). Some commenters considered the potential long-term 
consequences of this dynamic, indicating it could ultimately result in 
diminished provider competition in some markets or stifle the 
development of innovative care coordination strategies. Further, as 
other commenters indicated, smaller ACOs are likely to be in greatest 
need of additional capital to support start-up and operational 
expenses. Some commenters suggested that the MSRs that apply to smaller 
ACOs based on their number of assigned beneficiaries may make it 
impossible for these ACOs to ever share in savings.
---------------------------------------------------------------------------

    \357\ The proposed rule proposing the establishment of the 
Shared Savings Program entitled ``Medicare Program; Medicare Shared 
Savings Program: Accountable Care Organizations'' appeared in the 
April 7, 2011 Federal Register (76 FR 19528) (herein referred to as 
the ``April 2011 proposed rule'').
---------------------------------------------------------------------------

    Additionally, a number of commenters offered that other proposed 
policies under the Shared Savings Program, including, for example, the 
rigorous quality performance standards and the requirement that all 
ACOs ultimately accept downside performance risk, are sufficient to 
ensure savings are a result of actions by ACOs and obviate the need for 
an MSR. One commenter suggested a blended approach such that if an ACO 
exceeds the 2 percent MSR, it would be eligible for a lower sharing 
rate, but would not receive the full sharing rate unless it exceeded 
its statistically adjusted MSR.
    In the December 2018 final rule (83 FR 67924 through 67928), we 
summarized commenters' responses to the proposals described in August 
2018 proposed rule related to the MSR and MLR. One commenter asked that 
CMS reconsider its proposals in order to ``lessen restrictions and 
remove barriers to participation in risk sharing arrangements,'' but 
did not specify which aspects of the MSR/MLR proposals they believed to 
be restrictive or to create barriers. A number of commenters supported 
a combination of a lower MSR and higher sharing rates for low revenue 
ACOs participating in the BASIC track and offered several different 
alternatives. Commenters explained that combining a lower MSR and 
higher final sharing rate was necessary to ensure there are sufficient 
and attainable incentives to support ACOs' efforts to improve quality 
and lower cost, to provide early returns on investments, as well as 
predictability of savings and the financial support ACOs need to ensure 
successful participation, and to incentivize low revenue and 
physician[hyphen]led ACOs to participate in the redesigned 
participation options under the Shared Savings Program.
    In the CY 2023 PFS proposed rule, we stated that while it remains 
important to ensure performance payments are not based on normal 
expenditure fluctuations, we believe modification to our MSR policy 
would provide payments to ACOs with the greatest need for shared 
savings, in particular smaller, rural ACOs which tend to be less 
capitalized, allowing for investments in care redesign and quality 
improvement activities. We indicated that this modification would also 
align with the other changes we were proposing to the participation 
options and financial methodologies under the Shared Savings Program to 
encourage participation by new ACOs and ACOs that focus on underserved 
populations, such as the proposal to offer AIPs to new low revenue ACOs 
joining the BASIC track as described in section III.G.2. of the 
proposed rule.
(2) Revisions
    In the CY 2023 PFS proposed rule, we proposed to use our authority 
under section 1899(i)(3) of the Act, for the use of other payment 
models, to expand the eligibility criteria to qualify for shared 
savings to enable certain low revenue ACOs participating in the BASIC 
track to share in savings even if the ACO does not meet the MSR as 
required under section 1899(d)(1)(B)(i) of the Act. Specifically, as 
described in the CY 2023 PFS proposed rule (87 FR 46196 through 46198), 
we proposed to modify the relevant provisions of Sec.  425.605 to 
specify that ACOs participating in the BASIC track that do not meet the 
MSR requirement, but that do meet the quality performance standard or 
the proposed alternative quality performance standard under Sec.  
425.512 and otherwise maintain eligibility to participate in the Shared 
Savings Program, would qualify for a shared savings payment if the 
following criteria are met:
     The ACO has average per capita Medicare Parts A and B FFS 
expenditures below the updated benchmark.
     The ACO is a low revenue ACO as defined in Sec.  425.20 at 
the time of financial reconciliation for the relevant performance year.

[[Page 69949]]

     The ACO has at least 5,000 assigned beneficiaries at the 
time of financial reconciliation for the relevant performance year.
    Eligible ACOs that meet the quality performance standard required 
to share in savings at the maximum sharing rate would receive half of 
the maximum sharing rate for their level of participation (20 percent 
instead of 40 percent under Levels A and B, and 25 percent instead of 
50 percent under Levels C, D, and E). For eligible ACOs that do not 
meet the quality performance standard required to share in savings at 
the maximum sharing rate but meet the proposed alternative quality 
performance standard, the sharing rate would be further adjusted 
according to the proposal outlined in section III.G.4.b. of the 
proposed rule (87 FR 46129 and 46130), which would reinstate a sliding 
scale approach for determining shared savings. This calculation would 
use an ACO's quality performance score, which would reflect the 
inclusion of health equity adjustment bonus points as described in 
section III.G.4.b.(7) of the proposed rule. A numerical example of the 
proposed modification to BASIC Track sharing rates for eligible ACOs is 
provided in Table 81.
[GRAPHIC] [TIFF OMITTED] TR18NO22.110

    As proposed, this approach would apply to low revenue ACOs entering 
an agreement period in the BASIC track beginning on January 1, 2024, 
and in subsequent years. High revenue ACOs in the BASIC track, ACOs 
below 5,000 assigned beneficiaries at the time of financial 
reconciliation, and ACOs in the ENHANCED track would not be eligible 
for this option. We proposed that this policy would apply to all ACOs 
meeting the criteria, including new, renewing, and re-entering ACOs, in 
order to provide incentives both for new ACOs to join the Shared 
Savings Program and for existing ACOs to remain in the program. We 
noted that this differed from the proposed eligibility criteria for 
AIPs outlined in section III.G.2.a.(2) of the proposed rule (87 FR 
46099 and 46100), which we proposed to limit to ACOs that are new to 
the Shared Savings Program with the intent of lowering barriers to 
entry. Although as described in section III.G.2.b.(2) of the proposed 
rule (87 FR 46114 through 46119) we proposed to revise our regulations 
to permit all otherwise eligible ACOs that are inexperienced with 
performance-based risk Medicare ACO initiatives to elect to participate 
in one, 5-year agreement period under a one-sided model of the BASIC 
track's glide path regardless of revenue status, we explained our 
belief that it would be appropriate to limit this proposed policy 
change to the low revenue ACOs in the BASIC track in order to direct 
the payments to ACOs with the greatest need for capital, in particular 
smaller, rural ACOs which tend to be less capitalized, allowing for 
investments in care redesign and quality improvement activities. As 
discussed in the proposed rule, we did not believe it would be 
necessary or appropriate to extend this opportunity to high revenue 
ACOs as these ACOs, which tend to include institutional providers and 
are typically larger and better capitalized, have the potential to 
exert more influence, direction, and coordination over the full 
continuum of care, and thus have a greater potential to achieve the 
level of savings necessary to meet the MSR. Rather, we stated our 
belief that by retaining the requirement that high revenue ACOs meet or 
exceed their MSR, we would drive more meaningful systematic change by 
the ACOs that have the greatest potential to achieve significant change 
in spending. Furthermore, we noted that our proposal to exclude ACOs 
with fewer than 5,000 assigned beneficiaries at the time of financial 
reconciliation would align with the requirement under section 
1899(b)(2)(D) of the Act and Sec.  425.110 that an ACO have at least 
5,000 assigned beneficiaries and guard against the heightened risk--
absent an MSR--that any savings are the result of random variation.
    We simulated the impact of the proposal using financial 
reconciliation data from PYs 2020, 2019, and 2019A.\358\ There were 80, 
109, and 60 positive within corridor ACOs (that is, ACOs that had 
performance year expenditures below benchmark expenditures but did not 
meet the MSR and did not receive shared savings

[[Page 69950]]

payments) in each year, respectively. Of these positive within corridor 
ACOs, 35 ACOs in 2020 and 2019, and 18 ACOs in 2019A would have met the 
criteria described in this section and received a shared savings 
payment under our proposed policy change. On average, the positive 
within corridor ACOs that would benefit from the proposed policy change 
were smaller (had fewer assigned beneficiaries) in all 3 performance 
years and a larger share of these ACOs were classified as rural in PYs 
2020 and 2019.\359\ In the proposed rule, we stated our belief that by 
offering additional opportunities for low revenue ACOs to share in 
savings, the proposed approach could increase participation in the 
Shared Savings Program by providing an incentive for new ACOs to join 
the program and for existing ACOs to remain in the program. In 
addition, the proposal would enable low revenue ACOs, which are most in 
need of additional capital, to make investments in care redesign and 
quality improvement activities and would also recognize incremental 
improvements in care by ACOs that receive AIPs.
---------------------------------------------------------------------------

    \358\ PY 2019 refers to both the 12-month performance year from 
January 1, 2019 through December 31, 2019 and the 6-month 
performance year from January 1, 2019 through June 30, 2019. PY 
2019A refers to the 6-month performance year from July 2, 2019 
through December 31, 2019.
    \359\ For this analysis, ACOs were classified as rural if the 
plurality of their assigned beneficiaries resided in either 
micropolitan or noncore counties as defined by The United States 
Census Bureau and the Office of Management and Budget (OMB).
---------------------------------------------------------------------------

    Additional analysis completed after the publication of the CY 2023 
PFS proposed rule upon the availability of PY 2021 financial 
reconciliation data yielded consistent results. Of the 111 positive 
within corridor ACOs in PY 2021, 33 would have been eligible for 
partial shared savings under this policy. Unlike in previous PYs, none 
of the positive within corridor ACOs in PY 2021 that would have been 
eligible for partial shared savings under this policy were classified 
as rural, but they did, on average, have fewer assigned beneficiaries 
than ineligible ACOs.
    In the CY 2023 PFS proposed rule, we acknowledged that to exercise 
our authority under section 1899(i) of the Act, we must determine that 
a payment model under which certain low revenue ACOs participating in 
the BASIC track may qualify for shared savings payments even when the 
MSR as required under section 1899(d)(1)(B)(i) of the Act is not met, 
will improve the quality and efficiency of items and services furnished 
under the Medicare program, and that program expenditures under the 
alternative methodology would be equal to or lower than those that 
would result under the statutory payment model. By supporting expanded 
and sustained participation by ACOs in the Shared Savings Program, we 
noted our belief that the proposed approach would allow for lower 
growth in Medicare FFS expenditures. We also believed the proposed 
approach would lead to improvement in the quality of care furnished to 
Medicare FFS beneficiaries because participating ACOs would have an 
incentive to perform well on quality measures in order to maximize the 
shared savings they may receive. Further, the proposed approach would 
provide additional capital to enable low revenue ACOs to make 
investments in care redesign and quality improvement activities, 
potentially leading to improvements in the quality and efficiency of 
items and services furnished to Medicare FFS beneficiaries. We also 
stated our belief that the proposal, along with many of the other 
proposals in the proposed rule, would expand participation among ACOs 
serving higher cost beneficiaries for whom the savings potential is 
greater (relative to ACOs serving lower cost beneficiaries that may 
already find the current regional adjustment methodology an adequate 
incentive to participate in the program), and among low revenue ACOs, 
which have historically performed well in the program. For example, in 
PY 2018, about 49 percent of low revenue Shared Savings Program ACOs 
shared in savings compared to 28 percent of high revenue ACOs. These 
proportions were 63 percent and 40 percent in PY 2019, 69 percent and 
40 percent in PY 2019-A, and 75 percent and 59 percent in PY 
2020.360 361 Lastly, we noted that as discussed in the 
Regulatory Impact Analysis of the proposed rule (87 FR 46381)), the 
proposed change was not expected to result in a situation in which all 
policies adopted under the authority of section 1899(i) of the Act, 
when taken together, result in more spending under the program than 
would have resulted under the statutory payment methodology in section 
1899(d) of the Act.
---------------------------------------------------------------------------

    \360\ Refer to Data.CMS.gov, Performance Year Financial and 
Quality Results, available at https://data.cms.gov/medicare-shared-savings-program/performance-year-financial-and-quality-results/data.
    \361\ For PY 2021, 69 percent of low revenue Shared Savings 
Program ACOs shared in savings compared to 46 percent of high 
revenue ACOs, based on analysis of PY 2021 financial reconciliation 
data completed after the publication of the CY 2023 PFS proposed 
rule.
---------------------------------------------------------------------------

    We proposed to amend the regulation at Sec.  425.605, which governs 
calculation of shared savings and shared losses under the BASIC track, 
to specify an exception to the MSR requirement for eligible ACOs 
participating in an agreement period beginning on January 1, 2024, and 
in subsequent years, in a new provision at Sec.  425.605(h). We also 
proposed modifications to the provisions in Sec.  425.605(d)(1) 
specifying the calculation of the final sharing rate for the different 
levels of the BASIC track. Further, we proposed conforming changes to 
Sec. Sec.  425.100(b)(1), 425.605(a), 425.605(b)(3), and 425.605(c)(2) 
to reflect this exception to the MSR requirement.
    We sought comment on the proposal to expand the criteria ACOs can 
meet to qualify for shared savings under the BASIC track. The following 
is a summary of the public comments received on this proposal and our 
responses:
    Comment: We received several comments in support of this proposal, 
citing the potential for ACOs to invest the savings earned under this 
policy in care redesign and quality improvement activities.
    Many commenters provided additional reasons for their support of 
the proposed policy. Two commenters described how this policy could 
impact new ACOs, citing the time it takes for new ACOs to generate 
savings with one explaining how increased beneficiary engagement and 
uptake of preventive services may increase short-term spending. A few 
commenters noted the policy's potential to increase participation, with 
two explaining that savings earned under this policy could be used by 
ACOs to cover infrastructure costs, allowing them to continue 
participating in the program. Another commenter stated the benefits of 
this policy for physician-led ACOs, explaining that it would help them 
improve care and remain in the ACO program. A few commenters noted the 
proposed policy's potential to support ACOs with the largest need for 
shared savings, including small rural ACOs, independent primary care 
practices, and those serving underserved patient populations.
    One commenter argued that the existing MSR is harmful to low 
revenue ACOs and agreed that this policy could encourage participation 
in the program, but they urged CMS to ensure that the low revenue 
standard is not gamed in such a manner that some ACOs qualify only 
through technicalities and are able to take undue advantage of any 
final policy.
    A few commenters noted the value of the policy beyond the financial 
benefits. One commenter supported this proposal citing personal 
experience with missing the MSR requirement by a marginal amount. They 
understand the actuarial benefits of an MSR, but do not believe a 
strict cutoff makes for a good policy. They stated that the shared 
savings

[[Page 69951]]

earned under this policy may have little impact on an ACO's operating 
costs but would provide valuable motivation for program participants. 
Another commenter had a similar sentiment, stating that ACOs could miss 
out on shared savings by just a fraction of a percent, which is 
discouraging and could affect participation. Another commenter endorsed 
the proposal, noting that the amount of shared savings may not be 
sufficient to sustain ACO participation, but that it would help 
continuous investment in care management strategies and personnel, 
particularly if an ACO's eligibility to receive AIP payments has 
expired.
    Response: We thank commenters for their support of the proposal to 
increase opportunities for eligible low revenue ACOs to share in 
savings by. We agree that this policy under which eligible low revenue 
ACOs may receive up to half of the maximum sharing rate for their level 
of participation will help bolster participation among both new and 
reentering ACOs, particularly those with the greatest need for shared 
savings, by allowing for investment in care improvement, covering 
infrastructure costs, and providing motivation for ACOs that generate 
savings but have not met the MSR requirement. However, we also believe 
it remains important to ensure shared savings payments are not based on 
normal expenditure fluctuations, and we believe that meeting the MSR 
should remain a necessary requirement for an ACO to receive shared 
savings based on the maximum sharing rate under their track.
    Comment: We received one comment opposed to this proposal. The 
commenter expressed their belief that ACOs should meet the MSR to share 
in savings, stating that the MSR is necessary to protect the Trust Fund 
from making payments based solely on random variation, and that the 
performance of smaller ACOs may be driven by random variation even 
under the current MSR requirements. They also noted that this proposed 
policy is focused on low revenue ACOs, but 56 percent of Shared Savings 
Program ACOs are currently classified as low revenue. Moreover, they 
believe that the ACOs that would benefit from this policy would be 
those that already benefit from selection against high spending, 
medically complex, and underserved populations through positive 
regional adjustments to their benchmarks. The commenter supported more 
direct methods for increasing program participation and noted that 
there were several other proposals for the Shared Savings Program in 
the CY 2023 PFS proposed rule that could accomplish this.
    Response: By supporting expanded and sustained participation by low 
revenue ACOs in the Shared Savings Program, we believe this proposed 
approach will allow for lower growth in Medicare FFS expenditures 
because low revenue ACOs have historically produced higher net per 
capita savings. As described in the Regulatory Impact Analysis in 
section VII. for this final rule, a key to generating net savings for 
the Shared Savings Program is attracting more ACOs into the BASIC track 
that serve higher spending populations, particularly low revenue 
physician-led ACOs. Making partial shared savings payments to certain 
ACOs in the BASIC track with savings below their MSR will only 
marginally increase payments to ACOs under the Shared Savings Program 
but is expected to increase the share of new ACOs that are low revenue 
participating in the Shared Savings Program. Because low revenue ACOs 
have historically performed well in the program, we expect this to 
increase overall program savings.
    Comment: We received several comments that were generally 
supportive of the proposal but recommended alternative eligibility 
criteria.
    Several commenters supported the proposed policy but recommended 
extending the opportunity to share in savings at a reduced rate to all 
ACOs. Some commenters cited the significant number of ACOs that 
generate some savings, but not enough to earn shared savings payments, 
and stated their belief that extending this proposal to all ACOs would 
help incentivize ACOs to remain in the program. One commenter stated 
that failing to extend this opportunity to all ACOs would limit the 
program's attractiveness to healthcare providers given the financial 
pressures they are currently facing. A couple of commenters argued that 
high revenue, hospital-led ACOs (like low revenue, physician-led ACOs) 
often include independent physicians and that they would be more likely 
to participate in the Shared Savings Program and engage in meaningful 
transformation if the likelihood of savings increased. One of these 
commenters noted limiting this opportunity to low revenue ACOs unfairly 
penalizes physicians for participating in an ACO that includes a 
hospital system.
    One commenter recommended extending the proposed policy to all new 
ACOs in their first agreement period of the BASIC Track, including ACOs 
currently participating in their first agreement period in the Shared 
Savings Program. They argued that the policy as proposed limits the 
ability of under-resourced ACOs currently participating in their first 
agreement period to share in partial shared savings until entering a 
new agreement period, and therefore, limits the expansion of 
accountable care to patients primarily served by such providers. They 
stated expanding the eligibility criteria would provide a greater 
incentive for new providers and suppliers to join ACOs and provide them 
an onboarding opportunity to invest in the care transformation 
necessary to generate savings greater than the MSR.
    Another commenter urged CMS to expand eligibility for the proposed 
policy to ACOs in the ENHANCED track. This commenter stated that the 
policy as proposed could create disincentives for ACOs to enter the 
ENHANCED track and that the opportunity to share in savings below the 
MSR may encourage ACOs to take on more risk through the ENHANCED track, 
leading to ACOs staying in the program longer and generating more 
savings for the ACO and the Trust Funds.
    Response: While we acknowledge that ACOs that do not meet the 
proposed eligibility criteria could also benefit from increased 
opportunities to share in savings, we continue to believe it is 
appropriate to limit this policy to low revenue ACOs participating in 
the BASIC track, as proposed, in order to attract ACOs that serve 
higher spending populations into the BASIC track, particularly low 
revenue, physician-led ACOs that have historically performed well in 
the program. As described in the Regulatory Impact Analysis in section 
VII. of this final rule, increasing participation among these ACOs is 
key to generating net savings for the Shared Savings Program. By 
supporting ACOs with the greatest need for capital, in particular 
smaller, rural ACOs, which tend to be less capitalized, this policy is 
expected to increase participation among these ACOs and provide 
additional support for investments in care redesign and quality 
improvement activities. With respect to the requests that we expand 
this policy to ACOs participating in the ENHANCED track, we note that 
the ENHANCED track was designed for more advanced ACOs prepared for the 
higher levels of risk and reward. In addition, the higher maximum 
sharing rate of 75 percent that exists in the ENHANCED track already 
provides a strong incentive for these ACOs to participate.
    Comment: Several commenters who supported the proposal and 
recommended expanding the eligibility

[[Page 69952]]

criteria also recommended eliminating the high/low revenue distinction 
from the Shared Savings Program.
    Of the commenters who recommended extending this policy to all 
ACOs, some expressed belief that the high/low revenue distinction for 
ACOs is flawed and should be eliminated. One disagreed with the premise 
that hospital-led (high revenue) ACOs are less efficient than 
physician-led (low revenue) ACOs and that low revenue ACOs have less 
ability to control expenditures for beneficiaries. Many commenters 
noted that the high/low revenue distinction has discouraged partnership 
with certain types of healthcare providers. Another commenter took 
issue with the assumption that high revenue ACOs are likely to include 
hospitals, health systems, and/or other institutional providers and 
does not believe that whether an ACO treats underserved populations can 
be determined by the high/low revenue distinction. A couple of 
commenters suggested that many safety net providers that would most 
benefit from this opportunity--including RHCs, CAHs, and FQHCs--would 
likely be designated as high-revenue if they formed an ACO. Another 
commenter questioned the relevance of the high/low revenue designation 
to a redesign effort whose stated primary goal is to grow the Shared 
Savings Program and ensure its sustainability. They argued that the 
policy would sharply increase support for new, inexperienced, and low 
revenue participants but would offer few incentives to existing ACOs, 
especially those that are categorized as renewing, experienced with 
risk-bearing, or high revenue. They instead suggested that distinctions 
based on revenue and experience should be replaced with health equity 
criteria accounting for the needs of an ACO's assigned population and/
or its community.
    Some commenters who recommended removing the high/low revenue 
designation only had concerns with the low revenue criterion for this 
policy and did not comment on other eligibility requirements. One 
commenter who supported removing the high/low revenue designation 
argued that high revenue ACOs also contend with multiple financial and 
operational challenges and would benefit from this proposal. Another 
commenter suggested that, if CMS does not update the eligibility 
criteria to include high revenue ACOs, CMS should consider additional 
incentives to encourage participation of high revenue ACOs.
    Response: We disagree with commenters that CMS should remove the 
revenue distinction from the Shared Savings Program, and therefore, the 
criteria ACOs must meet to qualify to receive shared savings under the 
proposed policy. We continue to believe high revenue ACOs have 
sufficient resources to support continued participation given they are 
generally composed of hospitals and health systems that have greater 
access to capital for investing in care redesign, better care 
coordination, and quality improvement. Furthermore, regarding the 
concern that safety net providers would be excluded from this 
opportunity, ACOs that include safety net providers without also 
including a hospital are overwhelmingly designated as low revenue.
    Comment: One commenter supported this proposal but was concerned 
that the policy would only go into effect for ACOs entering a new 
agreement period in 2024 or a subsequent year, recommending it be 
applied to all ACOs, regardless of start year.
    Response: We decline the commenter's recommendation that we extend 
this policy to ACOs in a current agreement period. As described in 
section III.G.5.a of this final rule, limiting this policy to ACOs 
entering a new agreement period beginning on or after January 1, 2024, 
will allow current and new ACOs to decide whether to renew for a new 
agreement period or join the Shared Savings Program, respectively, and 
provide sufficient time for CMS to implement these changes.
    Comment: Some commenters who supported the proposed policy had 
additional recommendations related to this proposal. A few commenters 
recommended that CMS allow ACOs to change their MSR/MLR selection on an 
annual basis prior to the start of each performance year. These 
commenters believe that ACOs may be more comfortable with a lower MSR/
MLR as they gain experience in the program and should not have to wait 
until entering a new agreement period to update their selection. They 
supported the increased flexibility and opportunity this would provide 
for ACOs in the program. Another commenter suggested implementing a 
sliding scale policy with an upper and lower MSR threshold where ACOs 
would share in a portion of shared savings as long as the lower 
threshold was met. They recommended this for all ACOs but particularly 
for ACOs in their first agreement period regardless of revenue status, 
arguing that it can take multiple years for an ACO to meet the current 
MSR requirement.
    Response: At this time, we decline these commenters' suggestions as 
they go beyond the scope of the modifications we proposed to the 
program's eligibility criteria to qualify for shared savings. 
Additionally, for the reasons discussed in the August 2018 proposed 
rule (83 FR 41837) and the December 2018 final rule (83 FR 67923), we 
continue to believe it is appropriate to decline requests to allow ACOs 
to change their MSR/MLR selection on an annual basis. Allowing for an 
annual selection of the MSR/MLR by ACOs in a two-sided level of the 
BASIC Track or the ENHANCED track could lead to gaming as ACOs gain 
more experience in the program and would not be sufficiently protective 
of the Trust Funds.
    After consideration of the comments, we are finalizing the proposal 
to increase opportunities for eligible low revenue ACOs to share in 
savings as proposed. We will use an ACO's health equity adjusted 
quality performance score, which, as discussed in section III.G.4.b.(7) 
of this final rule, will incorporate LIS status in addition to dually 
eligible beneficiary status and ADI in the calculation of the 
underserved multiplier, to determine the ACO's eligibility to share in 
savings and the amount of shared savings for ACOs that meet the 
alternative quality performance standard. We are also finalizing the 
proposed revisions to Sec.  425.605 to incorporate this policy without 
modification.
g. Ongoing Consideration of Concerns About the Impact of the PHE for 
COVID-19 on ACOs' Expenditures
    On January 31, 2020, Health and Human Services Secretary, Alex M. 
Azar II, declared a PHE for the United States to aid the nation's 
healthcare community in responding to COVID-19 (hereafter referred to 
as the PHE for COVID-19). On March 11, 2020, the World Health 
Organization (WHO) publicly characterized COVID-19 as a pandemic. On 
March 13, 2020, the President of the United States declared the COVID-
19 outbreak a national emergency. The term ``Public Health Emergency,'' 
as defined in the regulation at Sec.  400.200, identifies the PHE 
determined to exist nationwide as of January 27, 2020, by the Secretary 
under Section 319 of the Public Health Service Act on January 31, 2020, 
as a result of confirmed cases of COVID-19, including any subsequent 
renewals. This determination was, as of this publication, subsequently 
renewed on April 21, 2020, July 23, 2020, October 2, 2020, January 7, 
2021, April 15, 2021, July 19, 2021, October 15, 2021, January 14, 
2022, April 12, 2022, July 15, 2022, and October 13, 2022. In the March 
31st

[[Page 69953]]

COVID-19 IFC (85 FR 19267 and 19268) and the May 8th COVID-19 IFC (85 
FR 27573 through 27587) we adopted several modifications to policies 
under the Shared Savings Program in response to the PHE.
    In the March 31st COVID-19 IFC (85 FR 19267 and 19268), we removed 
the restriction which prevented the application of the Shared Savings 
Program extreme and uncontrollable circumstances (EUC) policy for 
disasters that occur during the quality reporting period if the 
reporting period is extended, to offer relief under the Shared Savings 
Program to all ACOs that may have been unable to completely and 
accurately report quality data for 2019 due to the PHE for COVID-19.
    In the May 8th COVID-19 IFC (85 FR 27573 through 27587), we 
modified certain Shared Savings Program policies to: (1) allow ACOs 
whose current agreement periods expired on December 31, 2020, the 
option to extend their existing agreement period by 1 year; (2) allow 
ACOs in the BASIC track's glide path the option to elect to maintain 
their current level of participation for PY 2021; (3) adjust certain 
program calculations to remove payment amounts for episodes of care for 
treatment of COVID-19; and (4) expand the definition of primary care 
services for purposes of determining beneficiary assignment to include 
telehealth codes for virtual check-ins, e-visits, and telephonic 
communication.
    As discussed in the May 8th COVID-19 IFC (85 FR 27578 through 
27582) and in accordance with Sec.  425.611, all Parts A and B FFS 
payment amounts for an episode of care for treatment of COVID-19 are 
excluded from the following Shared Savings Program calculations:
     Calculation of Medicare Parts A and B FFS expenditures for 
an ACO's assigned beneficiaries for all purposes including the 
following: Establishing, adjusting, updating, and resetting the ACO's 
historical benchmark and determining performance year expenditures.
     Calculation of FFS expenditures for assignable 
beneficiaries as used in determining county-level FFS expenditures and 
national Medicare FFS expenditures.
     Calculation of Medicare Parts A and B FFS revenue of ACO 
participants for purposes of calculating the ACO's loss recoupment 
limit under the BASIC track as specified in Sec.  425.605(d).
     Calculation of total Medicare Parts A and B FFS revenue of 
ACO participants and total Medicare Parts A and B FFS expenditures for 
the ACO's assigned beneficiaries for purposes of identifying whether an 
ACO is a high revenue ACO or low revenue ACO, as defined under Sec.  
425.20, and determining an ACO's eligibility for participation options 
according to Sec.  425.600(d).
     Calculation or recalculation of the amount of the ACO's 
repayment mechanism arrangement according to Sec.  425.204(f)(4).
    As part of the March 2020 Coronavirus Aid, Relief, and Economic 
Security (CARES) Act, Medicare sequestration adjustments were 
temporarily suspended. This suspension was further extended through 
March 31, 2022, in subsequent legislation. From April 1, 2022, to June 
30, 2022, sequestration was set at 1 percent. Starting July 1, 2022, 
sequestration increased to 2 percent. When full Medicare sequestration 
is in effect, a 2 percent reduction to shared savings payments is 
applied before applying an ACO's shared savings limit. As a result of 
the suspension of sequestration, shared savings payments made in CY 
2020 and CY 2021 (for PYs 2019 and 2020) were roughly 2 percent higher 
than they would have been otherwise for ACOs that did not earn shared 
savings in excess of their shared savings limit.
    In December 2017, we issued an interim final rule with comment 
period entitled ``Medicare Program; Medicare Shared Savings Program: 
Extreme and Uncontrollable Circumstances Policies for Performance Year 
2017'' (hereinafter referred to as the ``December 2017 IFC''), which 
appeared in the December 26, 2017 Federal Register (82 FR 60912 through 
60919). In the December 2017 IFC, we established a policy for 
mitigating shared losses for Shared Savings Program ACOs participating 
in a performance-based risk track, when the ACO's assigned 
beneficiaries were located in geographic areas that were impacted by 
extreme and uncontrollable circumstances, such as hurricanes, 
wildfires, or other triggering events, during PY 2017. In the CY 2019 
PFS final rule (83 FR 59707), we extended the extreme and 
uncontrollable circumstances policy finalized for PY 2017 to PY 2018 
and subsequent performance years. We apply determinations made under 
the Quality Payment Program with respect to whether an extreme and 
uncontrollable circumstance has occurred and the affected areas. 
Further, we have sole discretion to determine the time period during 
which an extreme and uncontrollable circumstance occurred and the 
percentage of the ACO's assigned beneficiaries residing in the affected 
areas.
    The Secretary's declaration of the PHE for COVID-19 in January 2020 
triggered the Medicare Shared Savings Program's Extreme and 
Uncontrollable Circumstances Policy. The extreme and uncontrollable 
circumstances of the PHE for COVID-19 began in January 2020 and will 
apply nationwide for the duration of the PHE for COVID-19. As set forth 
in Sec. Sec.  25.605(f) (applicable to ACOs in two-sided models of the 
BASIC track) and 425.610(i) (applicable to ACOs in the ENHANCED track), 
we reduce the amount of an ACO's shared losses by an amount determined 
by multiplying the shared losses by the percentage of the total months 
in the performance year affected by an extreme and uncontrollable 
circumstance, and the percentage of the ACO's assigned beneficiaries 
who reside in an area affected by an extreme and uncontrollable 
circumstance. The PHE for COVID-19 was considered an extreme and 
uncontrollable circumstance that applied to all counties in the United 
States for the entirety of PY 2020 and PY 2021, and no ACOs were liable 
for shared losses for those performance years as any such losses were 
fully mitigated by the adjustment for extreme and uncontrollable 
circumstances.
    As a result of forgoing the 2021 application cycle for new 
applications, agreement periods starting in 2022 are the first 
agreement periods for which 2020 and 2021 serve as benchmark years for 
ACOs in the Shared Savings Program. Interested parties have expressed 
concern that the policy adjustments made in response to the PHE for 
COVID-19 may not fully address the potential for relatively lower 
expenditures resulting from lower utilization by non-COVID-19 patients. 
For example, in 2020, Parts A and B FFS expenditures decreased by 7 
percent nationally compared to 2019. This decrease in utilization and 
expenditures could result in relatively lower benchmark year 
expenditures for ACOs in agreement periods beginning in 2022, 2023 or 
2024 for which 2020 and/or 2021 are benchmark years. Several interested 
parties have suggested alternative approaches to establishing 
benchmarks for ACOs for which 2020 and 2021 are benchmark years, 
including using alternative years (such as 2017, 2018, and 2019), or 
differently weighting COVID-19 affected years in the calculation of 
financial benchmarks. In the CY 2023 PFS proposed rule, we noted that 
the impact of COVID-19 was not uniform for all areas of the country as 
surges occurred in different geographic areas at different times.

[[Page 69954]]

Removing specific years from benchmark calculations would have varied 
effects on different geographic areas depending on when COVID-19 had 
the largest impact in those areas. Thus, as we explained in the 
proposed rule, such approaches could produce mixed results; one 
analysis performed by the Institute for Accountable Care \362\ 
estimated that 55 percent of ACOs would have lower benchmarks if 2020 
were dropped from the benchmark period.
---------------------------------------------------------------------------

    \362\ Institute for Accountable Care. Analysis of Policy Options 
to Reduce the Impact of COVID-19 on ACO Benchmarks. October 13, 
2021. Available at https://www.institute4ac.org/covid-19-aco-benchmarks-analysis/.
---------------------------------------------------------------------------

    In the CY 2023 PFS proposed rule, we described OACT's analysis of 
current data, which indicated that ACOs exhibiting sharp declines in 
spending in 2020 tended to show rebounds in spending in 2021 such that 
historical benchmarks averaged across a base period including both 2020 
and 2021 would appear to represent a reasonable basis from which to 
update ACO spending targets going forward. Due to the rebound in 2021 
national expenditures, which increased by roughly 8.4 percent between 
2021 Q1 (lowest observed expenditures since the PHE for COVID-19 began) 
and 2021 Q4, we stated our belief that the current blended national-
regional trend and update factors would be sufficient to address and 
mitigate the impact of the start of the PHE for COVID-19 on benchmark 
year expenditures. ACOs that did not experience such an increase in 
spending between 2021 Q1 and 2021 Q4 would still be subject to a 
regional adjustment that could beneficially impact their benchmark 
determination. We also explained that the proposal described in section 
III.G.5.c.(3) of the proposed rule to utilize a three-way blend of the 
ACPT/national-regional growth rates to update benchmarks would further 
mitigate any potential adverse effects of the PHE for COVID-19 on 
historical benchmarks while also protecting against unanticipated 
variation in performance year expenditures and utilization resulting 
from a future PHE. We sought comment on the analysis regarding the 
impact of the PHE for COVID-19 on Shared Savings Program ACOs' 
expenditures. In addition, we noted that we would continue to monitor 
the impact of the PHE for COVID-19 to determine whether any further 
changes may be necessary to account for the effects of this PHE or 
future PHEs.
    The following is a summary of the public comments received on the 
impact of the PHE for COVID-19 on ACOs' expenditures and our responses:
    Comment: Several commenters supported the current policies in place 
to address the impact of the PHE for COVID-19 on ACO expenditures and 
agreed that no further direct interventions are necessary at this time. 
One commenter noted that PY 2022 final historical benchmarks, which 
include both 2020 and 2021, were stable relative to previous benchmarks 
that did not include years impacted by the PHE for COVID-19. This 
commenter also asked for clarification regarding when COVID-19 
hospitalizations will be added back into expenditure calculations.
    Response: We thank these commenters for their support of the 
existing policies. To clarify, as finalized in the CY 2021 PFS final 
rule (85 FR 84780), all Part A and Part B claims that occur during an 
inpatient episode of treatment for COVID-19 will be removed from 
program calculations when the date of discharge occurs within the PHE 
as defined in 42 CFR 400.200. Furthermore, adjustments for episodes of 
care for the treatment of COVID-19, will continue to be reflected in 
any program calculations that include the time period covered by the 
PHE for COVID-19. Thus, any qualifying claims that were excluded from 
program calculations for a performance year that in the future becomes 
a benchmark year, will continue to be excluded when that performance 
year is included in program calculations. In particular, 2020 serves as 
a benchmark year for currently participating ACOs that entered an 
agreement period on January 1, 2022 and will also be a benchmark year 
for ACOs that enter an agreement period on January 1, 2023. In light of 
the shift to 5-year agreement periods, adjustments made to expenditures 
during benchmark year 2020 will continue to be reflected in benchmark 
calculations until the end of PY 2027 (the final performance year for 
2023 starters), under the program's existing policies.
    Comment: Several commenters expressed concern about including 2020 
and 2021 as benchmark years due to the impact of COVID-19 on 
expenditures and utilization rates. These commenters noted that other 
Medicare programs have not used years affected by COVID-19 when 
determining financial or quality benchmarks and requested that CMS 
extend this policy to the Shared Savings Program. The commenters 
requested that ACOs be allowed to select years prior to the PHE for 
COVID-19 to be used as benchmark years in place of 2020 or 2021 because 
in regions that have been slower to recover from the impact of the 
pandemic the use of both 2020 and 2021 in combination as benchmark 
years still will not be enough to mitigate potential negative effects 
on their benchmarks. One commenter expressed concern about the low 
utilization rates observed during the PHE for COVID-19 and recommended 
that CMS consider additional adjustments to account for this.
    Response: Our analysis of the 3-year weighted average expenditures 
used to calculate PY 2022 final historical benchmarks, show that 
historical benchmarks averaged across a base period including both 2020 
and 2021, appear to represent a reasonable basis from which to 
establish ACO spending targets. Additionally, as spending continues to 
rebound from the low levels observed in 2020, the national-regional 
trend factors used to calculate updated historical benchmarks at the 
time of financial reconciliation will further mitigate any adverse 
effects that 2020 and 2021 may have on an ACO's financial performance. 
We also believe that regional trend factors used to update the 
historical benchmark at the time of financial reconciliation will be 
sufficient to offset any regional behavior that diverges significantly 
from national trends.
    We did not propose any changes in the CY 2023 PFS proposed rule to 
address the impact of the PHE for COVID-19 on ACOs' expenditures. 
However, we will continue to monitor the impact of the PHE for COVID-19 
on the Shared Savings Program.
h. Supplemental Payment for Indian Health Service and Tribal Hospitals 
and Hospitals Located in Puerto Rico
    As discussed in the December 2018 final rule (83 FR 67856 and 
67857), we exclude Indirect Medical Education (IME), Disproportionate 
Share Hospital (DSH) and uncompensated care payments from ACOs' 
assigned and assignable beneficiary expenditure calculations because we 
do not wish to incentivize ACOs to avoid the types of providers that 
receive these payments, and for other reasons described in earlier 
rulemaking (76 FR 67919 through 67922, and 80 FR 32796 through 32799). 
In the FY 2023 IPPS/LTCH PPS final rule (87 FR 49047 through 49051), we 
established a new supplemental payment for IHS/Tribal hospitals and 
hospitals located in Puerto Rico, beginning in FY 2023. As explained in 
the FY 2023 IPPS/LTCH PPS final rule, this supplemental payment is 
necessary to avoid causing undue long-term financial disruption to IHS/
Tribal hospitals and hospitals located in

[[Page 69955]]

Puerto Rico as a result of a change in the data used to determine 
uncompensated care payments for these hospitals beginning in FY 2023.
    In order to align Shared Savings Program policies with updates made 
to Medicare FFS payment policies, we proposed to exclude this 
supplemental payment for IHS/Tribal Hospitals and hospitals located in 
Puerto Rico from the determination of Medicare Parts A and B 
expenditures for purposes of calculations under the Shared Savings 
Program. Further, for consistency with our current approach of using 
total revenue, including IME, DSH and uncompensated care payments, in 
Shared Savings Program calculations of ACO participant revenue,\363\ we 
proposed to similarly include the supplemental payment to IHS/Tribal 
hospitals and hospitals located in Puerto Rico in such calculations for 
the performance year beginning January 1, 2023, and subsequent 
performance years. More specifically, ACO participant revenue is used 
in determining whether an ACO is a low revenue ACO or high revenue ACO 
as defined in Sec.  425.20, and in determining the revenue-based loss 
sharing limits under two-sided models of the BASIC track's glide path 
in accordance with Sec.  425.605. Because the new supplemental payment 
for IHS/Tribal hospitals and hospitals located in Puerto Rico is 
intended to prevent disruptions due to a change in the uncompensated 
care payment methodology for these hospitals and uses these hospitals' 
FY 2022 uncompensated care payments as the starting point for this 
calculation, in the CY 2023 PFS proposed rule, we stated our belief 
that it should be treated consistently with how we currently treat 
uncompensated care payments in Shared Savings Program calculations. We 
sought comment on the proposed change to the determination of Medicare 
Parts A and B expenditures for purposes of calculations under the 
Shared Savings Program, including the determination of benchmark and 
performance year expenditures, as well as the calculation of ACO 
participant revenue.
---------------------------------------------------------------------------

    \363\ In the December 2018 final rule, see for example the 
discussion of the calculation of ACO participant revenue as used in 
the determining the revenue-based loss sharing limits under the 
BASIC track (83 FR 67856) and the determination of whether an ACO 
qualifies as a low revenue ACO or a high revenue ACO (83 FR 67875).
---------------------------------------------------------------------------

    In the November 2011 final rule (76 FR 67919), we explained that 
section 1899(d) of the Act provides flexibility to adjust the benchmark 
for IME and DSH payments, and certain other adjustments to Parts A and 
B payments. Section 1899(d)(1)(B)(ii) of the Act states, among other 
things, that the benchmark shall be adjusted for beneficiary 
characteristics and such other factors as the Secretary determines 
appropriate. However, when it comes to performance year expenditures, 
section 1899(d)(1)(B)(i) of the Act provides authority to adjust 
expenditures in the performance period for beneficiary characteristics, 
but does not provide authority to adjust for ``other factors.'' Thus, 
we noted that while we could make some adjustments to the benchmark 
pursuant to section 1899(d)(1)(B)(ii) of the Act, to exclude certain 
payments, we could not make similar adjustments in our calculation of 
performance year expenditures. In the November 2011 final rule (76 FR 
67921 and 67922), we adopted an alternate payment methodology that 
excluded IME and DSH payments from ACO benchmark and performance year 
expenditures, as authorized by section 1899(i) of the Act. We have 
maintained this approach to excluding IME and DSH payments across all 
Shared Savings Program calculations of benchmark and performance year 
expenditures, as specified in 42 CFR part 425, subpart G.
    Consistent with our longstanding policy with respect to excluding 
IME and DSH payments from benchmarking and performance year 
expenditures, we proposed to use our authority under section 1899(i)(3) 
of the Act to use other payment models to remove the supplemental 
payment for IHS/Tribal hospitals and hospitals located in Puerto Rico 
from performance year expenditures. To exercise our authority under 
section 1899(i)(3) of the Act to use other payment models, we must 
demonstrate that the payment model would improve the quality and 
efficiency of items and services furnished under the Medicare program 
and that program expenditures under the alternative methodology would 
be equal to or lower than those that would result under the statutory 
payment model. Because we proposed to exclude the supplemental payment 
from benchmark year expenditures using our authority under section 
1899(d)(1)(B)(ii) of the Act, we explained that removing this payment 
from performance year expenditures would ensure greater parity between 
benchmark and performance year expenditure calculations. Further, we 
noted that by removing the supplemental payment for IHS/Tribal 
hospitals and hospitals located in Puerto Rico from performance year 
expenditures, we can reward more accurately actual decreases in 
unnecessary utilization of health care services. Excluding supplemental 
payments for IHS/Tribal hospitals and hospitals located in Puerto Rico 
from performance year expenditure calculations ensures these payments 
do not make it more challenging for an ACO to generate shared savings 
as compared to its updated historical benchmark. We also noted that, 
for ACOs participating under two-sided models of the BASIC track's 
glide path, excluding the supplemental payment from performance year 
expenditures may help to mitigate the amount of losses generated by an 
ACO, although including the supplemental payment in the calculation of 
ACO participant revenue used to determine the revenue-based loss 
sharing limit may result in a relatively higher loss sharing limit used 
in determining an ACO's shared losses.
    As discussed in the proposed rule, considering the balance of these 
factors, we believed that the approach, as proposed, could help ensure 
participation of IHS/Tribal hospitals and hospitals located in Puerto 
Rico in ACOs, and their engagement in the accountable care model. In 
turn, this could result in Medicare beneficiaries receiving higher 
quality, better coordinated and more cost-efficient care in these 
settings. We also noted that we did not expect that excluding the new 
supplemental payment for IHS/Tribal hospitals and hospitals located in 
Puerto Rico from performance year expenditures would result in greater 
payments to ACOs than would otherwise have been made if the new 
supplemental payment were included. We indicated that we would continue 
to reexamine this policy in the future to ensure that the requirement 
under section 1899(i)(3)(B) of the Act that an alternative payment 
model not result in additional program expenditures continues to be 
satisfied. We also noted that in the event that we later determine that 
the payment model established under section 1899(i)(3) of the Act no 
longer meets this requirement, we would undertake additional notice and 
comment rulemaking to make adjustments to the payment model to assure 
continued compliance with the statutory requirements.
    We proposed to modify the provisions of the existing regulations 
describing calculations of benchmark year and performance year 
expenditures to incorporate a reference to the exclusion of the new 
supplemental payment for IHS/Tribal hospitals and hospitals located in 
Puerto Rico, for the performance year beginning January 1, 2023, and 
subsequent performance

[[Page 69956]]

years, and to include this exclusion in proposed new sections of the 
regulations as follows:
     Within Sec.  425.601(a)(1)(i) and proposed Sec.  
425.652(a)(1)(i), specifying the calculation of payment amounts 
included in Parts A and B FFS claims using a 3-month claims run out 
with a completion factor, for computing per capita Medicare Parts A and 
B benchmark expenditures for beneficiaries that would have been 
assigned to ACO in any of the 3 most recent years prior to the start of 
the agreement period.
     Within Sec.  425.601(c)(2)(i) and proposed Sec.  
425.654(a)(2)(i), specifying the calculation of county-level assignable 
beneficiary expenditures using payment amounts included in Parts A and 
B FFS claims with dates of service in the 12-month calendar year for 
the relevant benchmark or performance year, using a 3-month claims run 
out with a completion factor.
     Within Sec.  425.605(a)(5)(i), describing the calculation 
of performance year expenditures under the BASIC track using payment 
amounts included in Medicare Parts A and B FFS claims for the ACO's 
assigned beneficiary population for the performance year.
     Within Sec.  425.610(a)(6)(i), describing the calculation 
of performance year expenditures under the ENHANCED track using payment 
amounts included in Medicare Parts A and B FFS claims for the ACO's 
assigned beneficiaries for the performance year.
     Within proposed Sec.  425.660(b)(1)(i), describing the 
calculation of the ACPT.
    The following is a summary of the public comments received on our 
proposals regarding the treatment of the supplemental payments for IHS/
Tribal hospitals and hospitals located in Puerto Rico for purposes of 
calculations under the Shared Savings Program and our responses:
    Comment: We received one comment supporting our proposal to modify 
the provisions of the existing regulations describing calculations of 
benchmark year and performance year expenditures to incorporate a 
reference to the exclusion of the new supplemental payment for IHS/
Tribal hospitals and hospitals located in Puerto Rico, for the 
performance year beginning January 1, 2023, and subsequent performance 
years. This commenter offered support without rationale.
    Response: We appreciate the commenter's support of this proposal. 
We are finalizing our proposal to exclude the new supplemental payment 
for IHS/Tribal hospitals and hospitals located in Puerto Rico from the 
calculation of benchmark year and performance year expenditures for the 
performance year beginning January 1, 2023, and subsequent performance 
years. We are also finalizing the modifications to the existing 
regulations describing calculations of benchmark and performance year 
expenditures to incorporate a reference to the exclusion of the new 
supplemental payment, as proposed. Further, as discussed in the 
proposed rule, we will include the supplemental payment to IHS/Tribal 
hospitals and hospitals located in Puerto Rico in Shared Savings 
Program calculations of ACO participant revenue for the performance 
year beginning January 1, 2023, and subsequent performance years.
i. Organization and Structure of the Regulations Text Within 42 CFR 
Part 425 Subpart G; Technical and Conforming Changes
    In section III.G.5.i of the proposed rule (87 FR 46201 and 46202), 
we explained that since the Shared Savings Program was established in 
2012, the benchmarking methodology has been specified in several 
sections of the Shared Savings Program regulations within 42 CFR part 
425, subpart G. Section 425.601 specifies the methodology for 
establishing, adjusting, and updating the benchmark for agreement 
periods beginning on July 1, 2019, and in subsequent years. Sections 
425.602 and 425.603 specify the benchmarking methodology applicable to 
earlier agreement periods for new and renewing ACOs, respectively. We 
noted that we have tended to include the entirety of the benchmarking 
methodology applicable to ACOs, based on their agreement period start 
date, within a single section of the regulations. We also explained 
that there is a limited number of unused sections within the range 
between Sec. Sec.  425.600 and 425.613, and no remaining sections in 
sequential order immediately following the existing benchmarking 
sections within this range.
    A variety of other provisions are contained within subpart G. 
Specifically, Sec.  425.600 specifies selection of risk models. The 
methodology for calculation of shared savings or losses (as applicable) 
under each of the Shared Savings Program's financial models is 
specified within Sec. Sec.  425.604 (Track 1), 425.605 (BASIC track), 
425.606 (Track 2), and 425.610 (ENHANCED track). Several sections 
specify particular requirements or exceptions relating to determining 
performance for ACOs in earlier performance years: Sec.  425.608 
applied to determine first year performance for ACOs beginning their 
participation in the program on April 1 or July 1, 2012; and Sec.  
425.609 applied to determine performance for a 6-month performance year 
(or performance period) during CY 2019. Section 425.611 specifies 
adjustments to Shared Savings Program calculations to address the 
COVID-19 pandemic. Section 425.612 specifies waivers of payment rules 
and other Medicare requirements, including the SNF 3-day rule waiver, 
and Sec.  425.613 addresses expanded use of telehealth services 
furnished by physicians or other practitioners participating in 
applicable Shared Savings Program ACOs.
    As discussed in the CY 2023 PFS proposed rule, we considered how to 
restructure the regulations to incorporate the proposed modifications 
to the benchmarking methodology in the proposed rule. One consideration 
discussed was that the existing provisions of the regulations under 
subpart G are referred to within programmatic material, including 
guidance and technical specifications documents. For continuity and 
clarity, we noted that it would be important to maintain the 
organization of the existing provisions, as opposed to renumbering 
these existing sections. We also considered the need for a regulations 
text structure that would organize the details for the multiple aspects 
of the benchmarking calculations, each of which is detailed and 
complex. Lastly, as discussed in section III.G.2. of the proposed rule, 
we proposed to specify the policies governing the proposed AIPs in a 
new section of the regulations at Sec.  425.630. For these reasons, we 
proposed to specify the proposed modifications to the benchmarking 
methodology for agreement periods beginning on January 1, 2024, and in 
subsequent years in a series of new regulations at Sec. Sec.  425.650 
through 425.660. We proposed the following organization and structure 
for subpart G of the regulations:
     Reserve sections Sec. Sec.  425.614 through 425.629, prior 
to the proposed new section of the regulations at Sec.  425.630 on the 
option to receive AIPs.
     Reserve sections Sec. Sec.  425.631 through 425.649.
     Establish a new section of the regulations at Sec.  
425.650, generally describing the organization of the sections on the 
benchmarking methodology within 42 CFR part 425, subpart G.
     Establish a new section of the regulations at Sec.  
425.652 which specifies the methodology for establishing, adjusting, 
and updating the benchmark for agreement periods beginning on

[[Page 69957]]

January 1, 2024, and in subsequent years.
     Establish a new section of the regulations at Sec.  
425.654, which specifies the methodology for calculating county 
expenditures and regional expenditures for agreement periods beginning 
on January 1, 2024, and in subsequent years.
     Establish a new section of the regulations at Sec.  
425.656, which specifies the methodology for calculating the regional 
adjustment to the historical benchmark for agreement periods beginning 
on January 1, 2024, and in subsequent years.
     Establish a new section of the regulations at Sec.  
425.658, which specifies the methodology for calculating the prior 
savings adjustment to the historical benchmark for agreement periods 
beginning on January 1, 2024, and in subsequent years.
     Establish a new section of the regulations at Sec.  
425.660, which specifies the methodology for calculating the ACPT used 
in updating the historical benchmark for agreement periods beginning on 
January 1, 2024, and in subsequent years.
    We also proposed to make certain technical and conforming changes 
to the following provisions to reflect the proposal to add new 
regulations at Sec. Sec.  425.652 through 425.660 to establish the 
benchmarking methodology applicable to all agreement periods starting 
on January 1, 2024, and in subsequent years.
     Under subpart C, which governs application procedures, add 
a reference to Sec.  425.652 in Sec.  425.204(g).
     Under subpart G, which governs shared savings and losses 
calculations, do the following--
    ++ In Sec.  425.600(f)(4), add a reference to Sec.  425.656(d) in 
Sec.  425.600(f)(4)(ii) and a reference to Sec.  425.652(c) in Sec.  
425.600(f)(4)(iii);
    ++ Revise Sec.  425.601 to specify that it applies to agreement 
periods beginning on or after July 1, 2019, and before January 1, 2024;
    ++ Add references to Sec.  425.652 in Sec. Sec.  425.605(a), 
425.605(a)(2), 425.605(d)(1)(iii)(D)(2), 425.605(d)(1)(iv)(D)(2), 
425.605(d)(1)(v)(D)(2), 425.610(a), and 425.610(g);
    ++ Add a reference to Sec.  425.652(a)(10) in Sec.  425.610(a)(3);
    ++ Add a reference to Sec.  425.654(a) in Sec.  425.611(c)(2)(i);
    ++ Add a reference to Sec.  425.652(a)(4) in Sec.  
425.611(c)(2)(ii)(A);
    ++ Add a reference to Sec.  425.654(a)(3) in Sec.  
425.611(c)(2)(ii)(B);
    ++ Within Sec.  425.611(c)(2)(iii), remove the specific reference 
to 5 percent of national per capita FFS expenditures for assignable 
beneficiaries, to account for the proposed modifications to the cap on 
the regional adjustment as specified in section III.G.5.c.(5) of the 
proposed rule, and to add a reference to Sec.  425.656(c)(3), which 
refers to the cap of 5 percent of the national per capita expenditure 
amount applied to positive regional adjustments, and the cap of 1.5 
percent of the national per capita expenditure amount applied to 
negative regional adjustments for ACOs in agreement periods beginning 
on January 1, 2024, and in subsequent years; and add a reference to 
Sec.  425.652(a)(8)(iv) which refers to the cap equal to 5 percent of 
the national per capita expenditure amount that is applied in 
calculating the prior savings adjustment; and
    ++ Add references to Sec.  425.652(a)(5)(ii) (referring to the 
national component of the blended growth rates used to trend forward 
BY1 and BY2 expenditures to BY3) and Sec.  425.652(b)(2)(i) (referring 
to the national component of the blended growth rate used to update the 
benchmark) in Sec.  425.611(c)(2)(v).
     Under subpart I, which governs the reconsideration review 
process, add a reference to Sec.  425.652 in Sec.  425.800(a)(4).
    We also proposed to correct the following inadvertent errors in 
cross-references:
     In Sec.  425.601(f)(5)(ii), remove the reference 
``paragraph (f)(4)(i) of this section'', and add in its place the 
reference ``paragraph (f)(5)(i) of this section''.
     In Sec.  425.601(f)(5)(iv), remove the reference 
``paragraphs (f)(1) and (2) of this section'', and add in its place the 
reference ``paragraphs (f)(1) through (3) of this section''.
    Additionally, we explained our belief that it would be appropriate 
to specify in the proposed new regulation at Sec.  425.656(e) a 
narrower set of special rules for determining the weights used in 
calculating the regional adjustment for certain ACOs that previously 
participated in the Shared Savings Program. In the December 2018 final 
rule (83 FR 68024), we established Sec.  425.601(e)(2)(ii) which 
specifies that for renewing or re-entering ACOs whose prior agreement 
period benchmark was calculated according to Sec.  425.603(c), we 
consider the agreement period the ACO is entering upon renewal or re-
entry in combination with either of the following in determining the 
weight used in the regional adjustment calculation in the ACO's new 
agreement period: (A) The weight previously applied to calculate the 
regional adjustment to the ACO's benchmark in the ACO's most recent 
prior agreement period; or (B) For new ACOs that are identified as re-
entering ACOs, we consider the weight previously applied to calculate 
the regional adjustment to the benchmark for the ACO in which the 
majority of the new ACO's participants were participating previously. 
With the agreement period beginning on January 1, 2022, all ACOs 
continuing their participation in the Shared Savings Program that were 
previously under the benchmarking rebasing methodology specified in 
Sec.  425.603 are now participating under the benchmarking methodology 
specified in Sec.  425.601. However, it is possible that an ACO that 
participated in a second agreement period beginning on January 1, 2017, 
January 1, 2018, or January 1, 2019, and whose rebased benchmark was 
established in accordance with Sec.  425.603(c), and whose 
participation agreement expired without having been renewed, or whose 
participation agreement was terminated under Sec.  425.218 or Sec.  
425.220, may seek to re-enter the Shared Savings Program. Therefore, we 
explained our belief that it would be necessary to maintain special 
rules for determining the weights used in the regional adjustment 
calculation for re-entering ACOs. Accordingly, we proposed to 
incorporate the policies that currently apply to re-entering ACOs under 
Sec.  425.601(e)(2)(ii) in the new regulation at Sec.  425.656(e).
    Lastly, we proposed to remove from the existing regulations on 
calculating county expenditures and regional expenditures an extraneous 
step in the calculation specified under Sec.  425.601(d)(3). This 
provision specifies that CMS weights aggregate expenditure values 
determined for each population of beneficiaries according to Medicare 
enrollment type to reflect the proportion of the ACO's overall 
beneficiary population in the applicable Medicare enrollment type for 
the relevant benchmark or performance year. However, as we noted in the 
proposed rule, at no point in the calculation do we actually combine 
the risk-adjusted regional expenditures across the four Medicare 
enrollment types to determine a single risk-adjusted regional 
expenditure value. Risk-adjusted regional expenditures are incorporated 
in all relevant calculations at the Medicare enrollment type level. 
Similarly, as part of our proposal to establish a new regulation at 
Sec.  425.654 to govern the calculation of county expenditures and 
regional expenditures for agreement periods beginning on January 1, 
2024, and in subsequent

[[Page 69958]]

years, we would also omit this extraneous step in the calculation.
    We did not receive any comments specifically addressing the 
organization and structure of the regulations text within 42 CFR part 
425 subpart G, or the technical and conforming changes proposed in 
section III.G.5.i of the CY 2023 PFS proposed rule, and we are 
finalizing these changes as proposed with the exception of minor 
technical corrections to the structure and formatting of Sec.  
425.601(d). We note that to the extent that comments addressed proposed 
provisions within the new regulations at Sec.  425.630 and Sec. Sec.  
425.650 through 425.660, these comments are summarized and responded to 
elsewhere within section III.G.5. of this final rule.
6. Administrative Burden and Other Policy Refinements
a. Overview
    We are dedicated to reducing unnecessary ACO and CMS administrative 
burden where possible. In response to requests from interested parties 
from prior rules, we proposed 2 burden reduction proposals and 2 policy 
refinements in the CY 2023 PFS proposed rule. We noted that if 
finalized in the CY 2023 PFS final rule, the policy proposals and 
refinements would be implemented January 1, 2023. Specifically, we 
proposed the following, which are discussed in more detail in sections 
(b) through (e) below:
     Modify Sec.  425.310 to eliminate the requirement for an 
ACO to submit marketing materials to CMS for review and approval prior 
to disseminating notifications to beneficiaries and participants.
     Amend the beneficiary notification requirements at Sec.  
425.312 to reduce the frequency of certain beneficiary notifications 
from once annually to once in an agreement period, and to further 
clarify the settings in which ACO participants are expected to make 
required beneficiary notifications by displaying signs in their 
facilities.
     Streamline the SNF 3-Day Rule Waiver application review 
process by amending requirements at Sec.  425.612(a)(1)(i)(A) to 
include an ACO attestation that plan narratives are in place and 
available to CMS upon request.
     Amend the regulations at Sec. Sec.  425.702(c)(2) and 
425.704(b) to recognize ACOs structured as OHCAs for data sharing 
purposes.
    We noted that we anticipate that, collectively, these proposals 
would significantly reduce administrative burden in the Shared Savings 
Program.
b. Modify Marketing Material Review Requirements
(1) Background
    The Shared Savings Program regulations define ``marketing materials 
and activities'' at Sec.  425.20 to include, without limitation, 
``general audience materials'' and activities used or conducted by or 
on behalf of the ACO, or by ACO participants, or ACO providers/
suppliers when used to educate, solicit, notify, or contact Medicare 
beneficiaries or providers and suppliers about the Shared Savings 
Program. General audience materials include brochures, advertisements, 
outreach events, letters to beneficiaries, web pages, data-sharing opt-
out letters, mailings, and social media. The following beneficiary 
communications are not marketing materials and activities: certain 
informational materials customized or limited to a subset of 
beneficiaries; materials that do not include information about the ACO, 
its ACO participants, or its ACO providers/suppliers; materials that 
cover beneficiary-specific billing and claims issues or other specific 
individual health-related issues; educational information on specific 
medical conditions; written referrals for health care items and 
services; and materials or activities that do not constitute 
``marketing'' under 45 CFR 164.501 and 164.508(a)(3)(i).
    In addition, the Shared Savings Program regulations impose certain 
marketing requirements at Sec.  425.310 regarding the content and 
approval of marketing materials and activities. Specifically, under 
Sec.  425.310(c), all marketing materials and activities must: (1) use 
template language developed by CMS, if available; (2) not be used in a 
discriminatory manner or for discriminatory purposes; (3) comply with 
Sec.  425.304 regarding beneficiary incentives; and (4) not be 
materially inaccurate or misleading. Under Sec.  425.310(a), marketing 
materials may be used 5 business days following their submission to CMS 
if: (1) The ACO certifies compliance with all the marketing 
requirements under this section; and (2) CMS does not disapprove the 
marketing materials or activities. Under Sec.  425.310(b), marketing 
materials and activities are deemed approved after the initial 5-day 
review period. In other words, if CMS has not disapproved of the 
marketing submission within 5 days, the ACO may use the submitted 
marketing materials. CMS may subsequently issue a written notice of 
disapproval at any time, including after the expiration of the initial 
5-day review period, at which point the ACO must discontinue use of the 
disapproved marketing materials. Per Sec.  425.310(d), failure of an 
ACO to comply with the marketing requirements will subject the ACO to 
pre-termination actions sets forth in Sec.  425.216, termination from 
the program under Sec.  425.218, or both.
    As indicated in the November 2011 final rule (74 FR 67948), we 
finalized these marketing policies as an aspect of patient-
centeredness, indicating that we believed it would be appropriate and 
consistent with the purpose and intent of the statute to limit and 
monitor the use of ACO-related marketing activities and materials to 
ensure that such communications and marketing are used only for 
appropriate purposes, such as notification that a beneficiary's 
healthcare provider is participating in the ACO, issuance of any CMS-
required notices, or notification of provider or ACO terminations.
    Historically, the majority of marketing submissions for the Shared 
Savings Program are approved upon review or are found not to constitute 
marketing materials and activities, as defined at Sec.  425.20. For 
example, in 2021, of 241 Shared Savings Program marketing material 
submissions reviewed by CMS, 163 (~68 percent) of those submissions 
were approved, while only 1 submission (0.4 percent) was denied. For 
the remaining 77 submissions (~32 percent), 58 submissions did not to 
meet the definition of marketing materials and activities; 9 were 
approved after the ACO responded with additional information or 
resubmitted revised materials; 9 were withdrawn for unspecified 
reasons, and 1 was neither approved nor denied and remained in non-
compliant status.
    We believe that marketing materials and activities are important 
communications between an ACO and its patients and participants, and we 
remain committed to patient-centered care, patient engagement, and 
program transparency in the Shared Savings Program. However, given the 
breakdown of marketing material review dispositions, the time and 
resources CMS currently expends to review all submitted marketing 
materials, and the additional effort involved in ACOs submitting these 
materials prior to use, we believe the current submission requirements 
create an unnecessary administrative burden for both CMS and ACOs that 
is not outweighed by the benefits of the current policy.
(2) Modify Regulations on Review of ACO Marketing Materials
    To reduce unnecessary administrative burden, we proposed to remove 
the

[[Page 69959]]

requirement at Sec.  425.310(a) that ACOs submit marketing materials 
and activities to CMS before use, but to maintain the requirement that 
ACOs must provide marketing materials upon request. Additionally, we 
proposed to remove the provisions in Sec.  425.310(b) regarding deemed 
approval of marketing materials and activities after a 5-day review 
period. We noted that ACOs must continue to comply with all Shared 
Savings Program regulations, including the marketing material content 
requirements that currently appear at Sec.  425.310(c). As proposed, 
the policy does not affect an ACO's obligation to comply with marketing 
content requirements, and we proposed to retain the authority to 
request the submission of marketing materials and activities at any 
time. We proposed that if we determine an ACO's marketing materials and 
activities to be non-compliant, we will issue a written notice of 
disapproval under proposed Sec.  425.310(b)(1). In addition, we 
proposed that ACOs must discontinue (and must require its ACO 
participants, ACO providers/suppliers, and other individuals or 
entities performing functions or services related to ACO activities to 
discontinue) use of any disapproved materials or activities. Under our 
proposal, we would retain language stating that the failure to comply 
with the requirements of Sec.  425.310 will subject the ACO to the 
penalties set forth in Sec.  425.216, termination under Sec.  425.218, 
or both.
    We believe that the existing marketing material content 
requirements and the proposed policy to review marketing materials and 
activities upon request would provide sufficient safeguards and 
appropriate patient protections. Additionally, beneficiaries may 
express concerns regarding ACO marketing materials by utilizing the 1-
800-MEDICARE hotline, contacting their healthcare provider, or 
submitting a complaint to the Medicare Ombudsman's office, while ACOs 
and other interested parties may use any of these avenues, as well as 
express concerns via the Shared Savings Program mailbox or via their 
ACO coordinators.
    We noted that we would codify the proposal by revising Sec.  
425.310 to remove existing references to CMS' collection, review, and 
approval of marketing materials. Specifically, we proposed to remove 
the marketing material file and use requirement at Sec.  425.310(a) so 
that they may be used without prior approval. We proposed that Sec.  
425.310(a) would set forth without change the marketing material 
content requirements that currently appear in paragraph (c) (for 
example, the requirement to use template language and not be materially 
inaccurate or misleading). We proposed to revise paragraph (b) to 
remove language at Sec.  425.310 (b)(1) regarding deemed approval after 
expiration of a 5-day review period and to retitle the section 
``Monitoring.'' Under proposed paragraph (b)(1), CMS may request the 
submission of marketing materials and activities at any time, and if 
CMS determines that the marketing materials and activities do not 
comply with the content requirements of paragraph (a), CMS will issue 
written notice of disapproval to the ACO. Proposed paragraph (b)(2) 
sets forth without change language that currently appears Sec.  
425.310(b)(2)(ii) regarding the duty to cease use of disapproved 
marketing materials and activities. Finally, proposed paragraph (c) 
would set forth, without change, the sanctions provision that currently 
appears at Sec.  425.310(d).
    We noted that if finalized, our proposed modifications to Sec.  
425.310 would become effective on January 1, 2023. We believe that, if 
finalized, this proposal would reduce administrative burden for both 
CMS and for ACOs, while maintaining program integrity and beneficiary 
protections. We believe the revised regulation would provide sufficient 
safeguards and appropriate patient protections.
    The following is a summary of the public comments received on the 
proposal to modify regulations on the review of ACO marketing materials 
and our responses:
    Comment: Many commenters supported the proposal to eliminate the 
requirement that ACOs submit marketing materials to CMS for review and 
approval prior to dissemination among ACO participants and Medicare 
beneficiaries. Many commenters encouraged CMS to finalize this policy 
as proposed and agreed that marketing notices include important program 
information for ACO participants and beneficiaries and that materials 
can be retained and provided to CMS upon request with minimal burden.
    Response: We appreciate commenters' support of our proposal to 
modify the program requirements for submitting marketing materials 
prior to use. We remind commenters that CMS is maintaining the current 
requirement for ACOs to make any marketing materials available to CMS 
upon request. As we stated in the CY 2023 PFS proposed rule (87 FR 
46203), we have found that most marketing materials are compliant, and 
that because the majority of materials are compliant, the submission of 
marketing materials prior to use is an unnecessary program burden. We 
appreciate commenters' support of the proposal to eliminate the 
requirement that ACOs submit marketing materials to CMS for review and 
approval prior to dissemination among ACO participants and Medicare 
beneficiaries.
    Comment: A few commenters disagreed with CMS's proposal to remove 
the requirement that ACOs submit marketing materials for review and 
approval before disseminating them. The commenters contended that 
marketing materials and activities are important communications between 
an ACO and its beneficiaries and ACO participants. Therefore, they 
stressed that continued review by CMS of marketing materials before use 
is essential.
    Response: We appreciate commenters' support of important patient 
protections in providing program communications to patients that 
empower them to make informed choices about where and how they receive 
care. We disagree that the current file and use requirements are 
essential. ACOs have an understanding of marketing requirements and 
have systems in place to adhere to all marketing material requirements, 
as demonstrated by the generally compliant materials ACOs have 
submitted to CMS for review and approval. As we noted in the CY 2023 
PFS proposed rule, CMS conducted an analysis on all marketing materials 
reviewed in PY 2021 and found that less than 1 percent of submitted 
materials were not approved. Therefore, we believe that the submission 
of marketing materials prior to use is an unnecessary administrative 
burden for ACOs. Our proposed policy maintains the requirement that 
ACOs must make materials available upon CMS request and CMS reserves to 
right to review all, or a subset, of an ACO's marketing material at any 
point during the agreement period. Based on our prior experience, we 
believe that this requirement is sufficient to ensure continued 
adherence to Shared Savings Program policies and will uphold and 
safeguard important beneficiary protections.
    Comment: We received a few comments suggesting that CMS make 
template language publicly available to promote transparency and 
solicit feedback from ACOs, patient advocacy groups, and other 
interested parties. Commenters also requested flexibility from CMS in 
the template language to be site-specific with regards to the type of 
practice or facility, in an effort to ensure that the language enhances 
beneficiary understanding of the benefits of receiving care in an ACO 
and

[[Page 69960]]

advising them of important program requirements such as data sharing 
with CMS and among the different providers who coordinate a 
beneficiary's care. Additionally, we received one comment requesting 
that CMS eliminate the posted notice requirement completely.
    Response: We appreciate commenters' suggestions on how to improve 
program marketing materials and templates and are committed to working 
with CMS' Office of Communications to revise our communication 
templates with the goal of decreasing beneficiary confusion and 
ensuring the provided information is clearly communicated and 
understood by a wide audience. However, we disagree that CMS should 
eliminate the posted notice requirement or grant flexibility allowing 
ACOs to make changes to the template to communicate the type of 
facility being represented and contend that templates are different 
from other types of marketing materials because of the standardization 
of the content across ACOs. We also note that templates are intended to 
balance program benefits (improved care quality and coordination) and 
inform providers and suppliers of incentives (the potential to earn 
shared savings) when participating in value-based healthcare and that 
this information be transparent for all involved and reiterate that CMS 
will make efforts to ensure that future template versions are versatile 
and convey the appropriate information, regardless of facility type.
    For the reasons provided above, we are finalizing our proposal 
without change effective January 1, 2023. Specifically, we are 
reorganizing and revising Sec.  425.310 to remove the provision at 
Sec.  425.310(a) regarding the obligation to submit marketing materials 
to CMS prior to use. Revised Sec.  425.310(a) sets forth without change 
the marketing material content requirements that currently appear in 
paragraph (c) (for example, the requirement to use template language 
and not be materially inaccurate or misleading). Under revised Sec.  
425.310(b)(1), CMS may request the submission of marketing materials 
and activities at any time, and if CMS determines that the marketing 
materials and activities do not comply with the content requirements of 
Sec.  425.310(a), CMS will issue written notice of disapproval to the 
ACO. Under Sec.  425.310(b)(2), the ACO must discontinue, and must 
require its ACO participants, ACO providers/suppliers, and other 
individuals or entities performing functions or services related to ACO 
activities to discontinue, use of any marketing materials or activities 
disapproved by CMS. Additionally, under Sec.  425.310(c), failure to 
comply with this section will subject the ACO to the penalties set 
forth in Sec.  425.216, termination under Sec.  425.218, or both.
    We again appreciate commenters' overwhelming support and 
suggestions for improving Shared Savings Program policies and in 
reducing unnecessary program burden. We will continue to work with the 
CMS Office of Communications to improve required templates and posters 
to ease beneficiary confusion, while ensuring that content features 
plain language, and is clear and concise.
c. Modify Beneficiary Notification Requirements
(1) Background
    Under Sec.  425.312(a), an ACO is required to ensure that Medicare 
FFS beneficiaries are notified of the following: (1) that each ACO 
participant and its ACO providers/suppliers are participating in the 
Shared Savings Program; (2) the beneficiary's opportunity to decline 
claims data sharing; and (3) the ability to, and process by which, the 
beneficiary may identify or change identification of a primary care 
provider for purposes of voluntary alignment.
    Section 425.312(a)(2) sets forth the manner in which ACOs or ACO 
participants are required to notify beneficiaries of this information. 
ACO participants must post signs in their facilities and, in settings 
in which beneficiaries receive primary care services, make standardized 
written notices available upon request. In addition, in the case of an 
ACO that has selected preliminary prospective assignment with 
retrospective reconciliation, the ACO or ACO participant must provide 
each FFS beneficiary with a standardized written notice prior to or at 
the first primary care visit of the performance year (Sec.  
425.312(a)(2)(ii)). Finally, in the case of an ACO that has selected 
prospective assignment, the ACO or ACO participant must provide the 
standardized written notice to each prospectively assigned beneficiary 
prior to or at the first primary care visit of the performance year 
(Sec.  425.312(a)(2)(iii)).
    We periodically receive inquiries from ACOs seeking clarification 
as to the types of facilities in which signs are required to be posted. 
In addition, ACOs have continued to express concern regarding the 
obligation to provide an annual standardized notification prior to or 
at a beneficiary's first primary care service visit of the performance 
year. Specifically, ACOs state that such notices may confuse 
beneficiaries, who misinterpret the notice and believe that it 
signifies a change to their Medicare benefits or otherwise represents 
an undesirable or disadvantageous change regarding their health care 
services. ACOs assert that this confusion may cause a beneficiary to 
opt out of data sharing, which could result in less cohesive care, 
duplicative or unnecessary medical tests, or contraindicated 
prescription drug therapy. ACOs have reported that the information in 
the beneficiary information notice is unclear and that the frequency of 
notifications containing identical information is redundant. According 
to ACOs, the beneficiary notices also cause unnecessary administrative 
burden to ACOs because ACOs retain documentation that the notices were 
sent, and ACOs may be required to perform additional follow-up for 
patients contacting ACOs with questions regarding the notice.
    CMS remains committed to program transparency. Beneficiary notices 
are important communication tools, and we believe that ACOs are in the 
best position to communicate with beneficiaries regarding their care 
and the purposes for Medicare claims data sharing. We want to ensure 
that beneficiaries understand the advantages of their participation in 
ACOs, that their data is secure, that only the minimum necessary data 
is collected, and how this data is used for purposes of improving the 
quality of care for beneficiaries in the Shared Savings Program. We are 
working to improve the beneficiary notice to ensure that the content of 
the notice utilizes plain language and is beneficiary-friendly, as well 
as affirming patient choice and clarifying the beneficiary's 
opportunity to decline claims data sharing.
(2) Clarify Location of Beneficiary Notification Signage
    ACOs and ACO participants frequently ask whether CMS requires 
signage to be posted in all facilities or only those where primary care 
services are provided. Although we believe the existing regulation text 
is clear on this point, we wish to provide clarification that ACO 
participants are required to post beneficiary notification signs in all 
of their facilities, whether or not primary care services are provided 
in every facility. Accordingly, we proposed to modify Sec.  
425.312(a)(2)(i) to move the requirement for standardized written 
notices available to the newly proposed, redesignated Sec.  
425.312(a)(2)(ii). With this modification, CMS clarifies that an ACO 
participant must post signs in ``all'' of its facilities and make 
standardized written notices available

[[Page 69961]]

upon request in ``all'' settings in which beneficiaries receive primary 
care services. Signage notifies the entirety of a patient population 
that the facility participates in an ACO, and therefore, is 
qualitatively different from standardized written notices provided 
directly to individual patients in conjunction with primary care 
service visits. We noted that the requirement to furnish standardized 
written notices upon the request of a beneficiary applies only in 
settings or facilities in which beneficiaries receive primary care 
services. We did not propose to expand the care settings in which 
standardized written notices must be furnished to beneficiaries upon 
request.
(3) Reduce the Frequency of Annual Standardized Written Notices
    In addition to providing standardized written notices to 
beneficiaries upon request, ACOs and ACO participants are currently 
required to furnish standardized written notices prior to or at the 
first primary care visit of the performance year (Sec.  
425.312(a)(2)(iii), (iv)). We continue to believe that requiring 
periodic beneficiary notifications affords ACOs and ACO participants an 
opportunity for direct engagement with the beneficiary, thereby serving 
to strengthen the beneficiary's relationship with the ACO and ACO 
participants from whom the beneficiary may receive care. The 
requirement promotes program transparency and empowers patients with 
the knowledge of the ACO's mission, data sharing requirements, and ACO 
operations, thereby allowing patients to make informed decisions about 
where they receive care. Therefore, we intend to retain the beneficiary 
notification policies, but in the interest of an overall reduction in 
administrative burden, we proposed to modify Sec.  425.312(a) to reduce 
the frequency with which an ACO or ACO participant must furnish 
standardized written notifications to beneficiaries from up to 5 times 
per agreement period to once per agreement period. We also proposed to 
implement a new follow-up beneficiary communication that we expect will 
reduce beneficiary confusion and improve beneficiary comprehension. The 
proposed changes would become effective January 1, 2023.
    First, we proposed to revise the requirements regarding annual 
beneficiary notifications, which currently appear at Sec.  
425.312(a)(2)(ii) and (iii). Specifically, at proposed Sec.  
425.312(a)(2)(iii), we proposed to provide that, in the case of an ACO 
that has selected preliminary prospective assignment with retrospective 
reconciliation, the ACO or ACO participant must provide each FFS 
beneficiary with a standardized written notice at least once during an 
agreement period. Similarly, at proposed Sec.  425.312(a)(2)(iv), we 
proposed to provide that, in the case of an ACO that has selected 
prospective assignment, the ACO or ACO participant must provide each 
prospectively assigned beneficiary with a standardized written notice 
at least once during an agreement period. In either case, the 
standardized written notice must be furnished prior to or at the first 
primary care service visit during the first performance year in which 
the beneficiary receives a primary care service from an ACO 
participant, and the notice must be in the form and manner specified by 
CMS.
    Second, in the interest of ensuring program transparency, 
maintaining beneficiary protections, reducing beneficiary confusion, 
and improving beneficiary comprehension, we proposed at Sec.  
425.312(a)(2)(v) to require the ACO or ACO participant to follow up 
with each beneficiary to whom it furnished the standardized written 
notice pursuant to proposed Sec.  425.312(a)(2)(iii) or (iv). We 
proposed that the follow-up communication may be verbal or written and 
must occur no later than the earlier of the beneficiary's next primary 
care service visit or 180 days from the date the first standardized 
written notice was provided. The follow-up communication must afford 
the beneficiary an opportunity to ask any outstanding questions they 
may have, thereby reducing any potential beneficiary confusion and 
improving their understanding of the advantages of value-based care. 
The follow-up communication may be provided in any manner, so long as 
the form of the follow-up communication includes a meaningful 
opportunity for beneficiaries to ask questions and engage with a 
representative of the ACO or ACO participant with regard to the 
beneficiary notice. Because of the flexibility granted to ACOs in 
communicating key features of the beneficiary notification, we proposed 
that ACOs track and document how this beneficiary communication is 
implemented and make this documentation available to CMS upon request.
    ACOs should administer the communication in the way that best suits 
their beneficiary population. We believe that while the follow-up 
communication would be most effective when occurring during a primary 
care service visit, it may be delivered in another manner. We noted 
that while it is permissible to provide the standardized written notice 
again during the course of the follow-up communication, simply 
providing the same standardized written notice as the full extent of 
the follow-up communication is not sufficient to satisfy the proposed 
requirements at Sec.  425.312(a)(v), since doing so would not allow for 
an opportunity to engage the beneficiary and ensure they have the 
chance to ask any questions they may have as a result of receiving the 
standardized written notice. The implementation of the follow-up 
communication does not create a new benefit or billable service, and 
therefore, no additional payment will be made for the follow-up 
communication.
    We are actively engaged in efforts to improve beneficiary 
notification materials, which include gathering feedback from 
beneficiaries and beneficiary representatives to make improvements as 
to how we disseminate information to beneficiaries. Further, we noted 
that we would work expeditiously to provide any updated and new 
materials as they become available. Although the proposal would reduce 
the frequency with which beneficiaries would receive the information 
that appears in standardized written notices, we noted that this 
information remains readily available via signage in ACO facilities, as 
well as appearing in the Medicare & You Handbook. Additionally, we 
indicated that we would maintain the requirement for ACO participants 
to make the notice available upon request in all settings in which 
beneficiaries receive primary care services. We noted that ACOs and ACO 
participants may choose to provide the standardized written notice or 
follow-up beneficiary engagement communications more frequently than 
once per agreement period, and we would support their efforts to do so.
    We sought comment on the proposed frequency of the notification and 
whether our proposal will reduce net burden and mitigate any potential 
beneficiary confusion.
    The following is a summary of the public comments received on the 
proposed modifications to the beneficiary notification requirements and 
our responses:
    Comment: Many commenters supported providing beneficiary 
notification requirements once per agreement period rather than once 
per performance year and agreed that such a change would reduce 
administrative burden and ensure program transparency for 
beneficiaries.
    Response: We appreciate commenters' support of our proposal to 
reduce unnecessary administrative burden by

[[Page 69962]]

amending our regulation to require the provision of beneficiary notices 
once during an agreement period. As discussed in the CY 2023 PFS 
proposed rule, we agree that reducing the frequency of these 
notifications would reduce confusion for beneficiaries.
    Comment: One commenter specifically supported the follow-up 
communication, particularly in light of our proposal to reduce the 
frequency of beneficiary notifications that are currently furnished 
annually. The commenter encouraged CMS to finalize the follow-up 
communication proposal as proposed because it would increase 
beneficiary protections.
    Response: We appreciate this commenter's support for our proposal 
for a follow-up communication. We agree that a follow-up communication 
is important to ensure that beneficiaries understand the notification 
and have an opportunity to ask questions about the Shared Savings 
Program and the benefits of value-based care. We also find that while 
there may be some burden in providing the follow-up communication, 
there is an overall reduction in burden for ACOs, as the proposed 
policy reduces the number of times that the beneficiary notice will be 
provided during an agreement period.
    Comment: Many commenters requested flexibility in the beneficiary 
information notice template and requested that CMS allow ACOs to tailor 
the language of the written notice and modify template language to best 
meet the needs of their beneficiaries within set standards. Other 
commenters requested flexibility in how an ACO provides the follow-up 
communication, suggesting that it should be via email or secure patient 
portal.
    Response: We appreciate commenters' request for flexibility in the 
beneficiary notification language and the manner in which ACOs must 
conduct the follow-up communication. CMS conducted focus groups with 
beneficiaries and interested parties to improve the notification 
template. We believe strongly that our efforts to revise the 
notification templates, based on feedback from the focus groups, will 
reduce beneficiary confusion, improve clarity and clearly communicate 
the benefits of value-based care and do not believe that allowing 
modifications to the template language would further these goals or 
best serve the interests of Medicare beneficiaries. The revised 
notification and poster templates will be made available to ACOs this 
fall for use at the start of the January 1, 2023 performance year and 
will continue to allow for the inclusion of ACO-specific information in 
fillable fields. Furthermore, as we noted in the CY 2023 PFS proposed 
rule, we expect ACOs to conduct follow-up communications in the manner 
that best suits their patient population. We agree with commenters that 
this flexibility is necessary and expect that some follow-up 
communications will take place face to face, while others may be 
conducted via email or telephone outreach, or in a follow-up mailing, 
as long as there is a meaningful opportunity for engagement, and 
depending on the frequency of primary care visits and the health status 
of the patient.
    Comment: Most commenters did not support the follow-up 
communication and contend that follow-up communication creates 
significant operational burden without meaningful benefit, as it 
requires significant administrative cost to coordinate, train, and 
document and it is unclear whether beneficiaries wish to have such an 
opportunity. Other commenters expressed that multiple notices, even a 
follow-up notice, will confuse beneficiaries. These commenters believe 
that one clear and concise notice is sufficient, and suggested that CMS 
explore alternate strategies and work with ACOs to promote beneficiary 
education and engagement.
    Response: We appreciate commenters' thoughts on the practical 
effects of implementing a follow up beneficiary communication but 
disagree that a follow-up notice will increase confusion. We note that 
while the implementation of this policy may create some level of 
administrative burden, there is still an overall net reduction in the 
total amount of communications ACOs are required to convey under this 
final rule. Further, there are multiple acceptable options that ACOs 
may use when operationalizing this requirement. As we stated in the CY 
2023 PFS proposed rule, the most desirable form of follow-up would 
occur face to face (for instance, at a primary care office visit), 
where the beneficiary and provider can discuss potential concerns. 
However, we understand that depending upon a patient's health status or 
other circumstances, the patient may not have another primary care 
visit within the 180-day window. In those cases, we believe that 
alternate forms of outreach to the beneficiary as described in the CY 
2023 PFS proposed rule would be sufficient to provide the beneficiary 
with a meaningful opportunity to ask any outstanding questions they 
might have, and as such, serve as a tool to reduce beneficiary 
confusion and increase comprehension of the required beneficiary 
notifications. Examples of appropriate modes of conducting this follow-
up communication include disseminating it via secure patient portal, 
postal mail, or email, or outreach conducted via telephone or video 
visit. However, we reiterate that the follow-up communication may be 
provided in any manner, so long as the form of the follow-up 
communication includes a meaningful opportunity for beneficiaries to 
ask questions and engage with a representative of the ACO or ACO 
participant with regard to the beneficiary notice. We believe this 
provides a balance between educating beneficiaries and extending the 
flexibility to ACOs to implement the requirement in a manner that works 
well for their ACO.
    Comment: We received one comment advocating that notifications for 
all assigned beneficiaries be made at the start of each agreement 
period and each new assigned beneficiary on a biannual basis by means 
of a letter through the electronic medical record (EMR) or patient 
portal and also have a hard copy available for each beneficiary to view 
at the practice on request.
    Response: We appreciate the commenter's suggestion. However, we 
recognize that different ACOs have different IT infrastructures and 
that not all ACOs may be able to communicate with their assigned 
beneficiaries in the manner suggested (for example, beneficiaries may 
not choose to access their EMRs or patient portals). Accordingly, CMS 
is allowing ACOs flexibility in how to conduct these follow-up 
communications, including, but not limited to, communicating via EMR or 
patient portal.
    Comment: A few commenters supported CMS' proposal to clarify that 
ACO participants are currently required to post signs in all facilities 
and make standardized written notices available upon request in all 
settings in which beneficiaries receive primary care services.
    Response: We appreciate commenters' support of our proposal to 
clarify our signage requirement and to ensure that all beneficiaries 
who receive care in the facilities understand that the facility 
participates in an ACO.
    Comment: One commenter contended that the ACO poster found in the 
ACO-MS Knowledge Library states, ``for more details about our ACO, ask 
the front desk for a copy of the ACO beneficiary notice.'' The 
commenter asked that CMS acknowledge that separate posters will be 
required. There would be one poster serving as notification in primary 
care locations to accommodate the ``standardized written notices 
available upon request in all settings in which

[[Page 69963]]

beneficiaries receive primary care services,'' and a second poster for 
all other ACO participant facilities that do not provide primary care 
services and would be excluded from providing standardized written 
notices upon request.
    Response: We appreciate the commenter's suggestions regarding 
providing setting-specific posters. We are working with our colleagues 
in the Office of Communications to improve the poster which includes 
removing references to the standardized written notice.
    Comment: A few commenters did not agree with our proposals to 
reduce communication between ACOs and assigned beneficiaries and 
contended that such communication is critical to informed healthcare 
decision making by beneficiaries.
    Response: Again, we appreciate commenters highlighting the 
importance of timely communications and beneficiary protections. We 
share the same goal to improve beneficiary awareness and comprehension 
of value based care and believe that our notification requirement with 
a follow-up communication will achieve this goal while reducing the 
potential for beneficiaries to misinterpret the notice as communicating 
a change regarding their health care services and coverage. We believe 
that reducing the frequency of beneficiary notifications will help to 
mitigate any potential concerns that their FFS benefits are changing. 
Further, we continue to require poster notifications be placed in all 
ACO participant facilities.
    Comment: We received one comment explaining that some ACOs partner 
with specialist practices, which may include sites where no assigned 
beneficiaries are seen. This commenter relayed that requiring ACO-
related signage at such sites would create confusion for beneficiaries 
and thereby impose burden on the specialist providers who must take 
time to explain the irrelevant signage. The commenter encouraged CMS to 
modify the policy and clarify that signage is required only in 
facilities where ACO-aligned beneficiaries receive care.
    Response: We appreciate the commenter's suggestion. We disagree 
that a non-assigned beneficiary does not benefit from the knowledge 
that their provider is participating in an ACO. We believe all 
providers and suppliers participating in an ACO play important roles in 
coordinating care for beneficiaries. We believe it is appropriate for 
beneficiaries, including those not assigned to an ACO, to understand 
that their health care provider works with other health care providers 
and an ACO to improve the quality and experience of care practices, 
since those improved care practices may ultimately benefit all 
patients. While we understand that this may cause some confusion, we 
remain committed to working with the CMS Office of Communications to 
improve all communications, including signage, to use plainer language 
and ensure beneficiary comprehension.
    Comment: We received one comment with a mixed opinion about the 
proposals, urging CMS to work with stakeholders to find a comprehensive 
workable solution to the ongoing burden, redundancy, and beneficiary 
confusion that arises in these instances.
    Response: We appreciate the commenter's support and collaboration, 
and we commit to working to refine the required communications and 
signage to ensure that beneficiary protections are in place and that 
the content is clear and concise for all readers.
    We appreciate the commenters' support and suggestions to modify the 
beneficiary notice requirements. For the reasons discussed above, we 
are finalizing our policies as proposed at Sec.  425.312. Specifically, 
we are revising Sec.  425.312(a)(2) to provide that the notifications 
required under Sec.  425.312(a)(1) must be carried out through the 
following methods: (i) by an ACO participant posting signs in all of 
its facilities; (ii) by an ACO participant making standardized written 
notices available upon request in all settings in which beneficiaries 
receive primary care services; (iii) in the case of an ACO that has 
selected preliminary prospective assignment with retrospective 
reconciliation, by the ACO or ACO participant providing each FFS 
beneficiary with a standardized written notice at least once during an 
agreement period in the form and manner specified by CMS and prior to 
or at the first primary care service visit during the first performance 
year in which the beneficiary receives a primary care service from an 
ACO participant; and (iv) in the case of an ACO that has selected 
prospective assignment, by the ACO or ACO participant providing each 
prospectively assigned beneficiary with a standardized written notice 
at least once during an agreement period in the form and manner 
specified by CMS and during the performance year for which the 
beneficiary is prospectively assigned to the ACO; and (v) following the 
provision of the standardized written notice to a beneficiary, as 
specified in Sec.  425.312(a)(2)(iii) and (iv) of this section, the ACO 
or ACO participant must provide a verbal or written follow-up 
communication to the beneficiary.
    Additionally, under Sec.  425.312(2)(v)(A), the follow-up 
communication must occur no later than the earlier of the beneficiary's 
next primary care service visit or 180 days from the date the 
standardized written notice was provided. Under Sec.  425.312(2)(v)(B), 
The ACO must retain a record of all beneficiaries receiving the follow-
up communication and the form and manner in which the communication was 
made available to the beneficiary; the ACO must make these records 
available to CMS upon request.
d. Streamline SNF 3-Day Rule Waiver Application Review Process
    Under section 1861(i) of the Act, beneficiaries must have a prior 
inpatient hospital stay of no fewer than 3 consecutive days to be 
eligible for Medicare coverage of inpatient skilled nursing facility 
(SNF) care (the SNF 3-day rule). Section 1819(a) of the Act defines a 
SNF, in part, as an institution (or a distinct part of an institution) 
that is not primarily for the care and treatment of mental diseases but 
is primarily engaged in providing the following to residents: skilled 
nursing care and related services for residents who require medical or 
nursing care; or rehabilitation services for the rehabilitation of 
injured, disabled, or sick persons. The Medicare SNF benefit applies to 
beneficiaries who require a short-term intensive stay in a skilled 
nursing facility or rehabilitation facility, or both.
    In the CY 2015 Shared Savings Program final rule (80 FR 32692), CMS 
used its authority under section 1899(f) to waive the SNF 3-day rule 
under section 1861(i) of the Act in order to carry out the provisions 
of section 1899 of the Act by offering ACOs that have accepted two-
sided risk under the Shared Savings Program more flexibility under FFS 
Medicare to provide appropriate care for beneficiaries in the most 
appropriate care setting. We noted that we believe this is an 
opportunity to provide experienced, risk-bearing ACOs with additional 
flexibilities to increase quality and decrease costs.
    The waiver is codified in the Shared Savings Program regulations at 
Sec.  425.612(a)(1). Specifically, for PY 2017 and subsequent 
performance years, we waive the SNF 3-day rule for eligible 
beneficiaries that are assigned to an ACO participating in a two-sided 
model (or as provided in Sec.  425.612(a)(1)(iv) during a grace period 
for beneficiaries excluded from prospective assignment to such an ACO) 
and who receive

[[Page 69964]]

covered post-hospital extended care services furnished by an eligible 
SNF that has entered into a written agreement to partner with the ACO 
(a ``SNF Affiliate''). An ACO is eligible to use the SNF 3-Day Rule 
Waiver if the ACO participates in performance-based risk (for example, 
Levels C, D, or E of the BASIC track or the ENHANCED track) and has a 
SNF affiliate list. All other statutory and regulatory provisions 
regarding Medicare Part A post-hospital extended care services continue 
to apply.
    An eligible ACO may apply for a programmatic waiver of the SNF 3-
day rule to allow its assigned beneficiaries to receive coverage for 
inpatient SNF care without a prior 3-day inpatient hospital stay when 
admitted to a SNF affiliate. A SNF affiliate is a SNF that has executed 
a written agreement with an eligible ACO that meets the requirements of 
Sec.  425.612(a)(1)(iii)(B) and is included on the ACO's SNF affiliate 
list. If the SNF affiliate is eligible to be included in the CMS 5-star 
Quality Rating System, it must have and maintain an overall rating of 3 
or higher (Sec.  425.612(a)(1)(iii)(A)).
    It is important to note that the Shared Savings Program SNF 3-Day 
Rule Waiver does not create a new benefit or extend Medicare SNF 
coverage to patients who could be treated in outpatient settings or who 
require long-term custodial care. Also, the SNF 3-Day Rule Waiver does 
not restrict a beneficiary's choice of provider or supplier. A 
beneficiary will continue to have the option to seek care from any 
Medicare FFS provider or supplier, including from a SNF or other 
facility that is not an affiliate of an ACO participating in the Shared 
Savings Program. If a beneficiary that is assigned to an ACO chooses to 
receive care from a SNF or other facility that is not an affiliate of 
the ACO, normal Medicare requirements apply, including the requirement 
for a 3-day inpatient hospitalization. The SNF 3-Day Rule Waiver is 
intended to provide ACOs that are participating in certain performance-
based risk tracks with additional flexibility to increase quality and 
decrease costs.
(1) SNF 3-Day Rule Waiver Application Process
    An ACO participating or applying to participate in performance-
based risk within the BASIC track under Sec.  425.605 or the ENHANCED 
track under Sec.  425.610 may request to use the SNF 3-Day Rule Waiver 
at the time of application to participate in the program or during its 
agreement period. The waiver request must be submitted in a form and 
manner and by a deadline specified by CMS, which typically occurs once 
each year. Any ACO, including those applying for the waiver during the 
term of an existing participation agreement, must apply during the 
annual application process. Current regulations require that an ACO 
submit an application demonstrating that it has the capacity to 
identify and manage beneficiaries who would either be directly admitted 
to a SNF or admitted to a SNF after an inpatient hospitalization of 
fewer than 3 days. Under Sec.  425.612(a)(1)(i), to be eligible to use 
the SNF 3-Day Rule Waiver, an ACO must submit supplemental application 
materials that include, but are not limited to, a list of SNFs with 
whom the ACO will partner (that is, a SNF affiliate list), along with 
executed written SNF affiliate agreements between the ACO and each 
listed SNF, in addition to 3 narratives describing how the ACO plans to 
implement the waiver. The narratives must include: the communication 
plan between the ACO and its SNF affiliates, a care management plan for 
beneficiaries admitted to a SNF affiliate, and 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.
    Historically, the SNF 3-Day Rule Waiver originated from the CMS 
Innovation Center's Pioneer ACO and Next Generation ACO Models. These 
models included application questions (answered by the ACO in a 
narrative format) which, while not codified in regulation, were 
transformed into plan narrative requirements in the Shared Savings 
Program SNF 3-Day Rule Waiver application. In the CY 2015 Shared 
Savings Program final rule (80 FR at 32805), we discussed a variety of 
issues that could be addressed in these narratives, such as the 
protocol that will be followed by ACOs for evaluating and approving 
admissions to a SNF under the waiver and consistent with the 
beneficiary eligibility requirements and the education and training for 
eligible SNFs regarding waiver requirements. We have not set forth 
specific ways that ACOs must address issues in their plan narratives 
because we believe the ACO is in the best position to establish its 
protocols, develop SNF training, and otherwise determine how to best 
coordinate care for patients transferred to their SNF affiliates.
    After successfully implementing the Shared Savings Program SNF 3-
Day Rule Waiver for several performance years, we determined in 2017 
that some application requirements were burdensome for both CMS and 
ACOs, did not add value to the application review, or were not 
permitted by regulation. For example, the SNF 3-Day Rule Waiver 
application originally included a narrative describing any financial 
relationships between an ACO, SNF affiliate and acute care hospital. 
Because the Shared Savings Program regulations do not prohibit ACOs or 
SNFs from having financial arrangements with acute care hospitals, nor 
do they require such arrangements, we discontinued the submission of 
this narrative. Previously, ACOs also submitted documentation for each 
proposed SNF affiliate demonstrating they met minimum star rating 
requirements. Because CMS could obtain the required star rating 
information directly from the CMS Care Compare website, this 
application submission requirement was discontinued. We removed the 
requirement for these two application elements in the CY 2018 PFS final 
rule (82 FR 52976).
    At the time of these modifications, CMS chose to retain the three 
narratives related to an ACO's communication plan, care management 
plan, and beneficiary evaluation and admission plan without 
establishing specific criteria for an ACO's process for implementing 
the SNF 3-Day Rule Waiver. We have since found that these plan 
narratives have not aided in our ability to evaluate an ACO's capacity 
to identify and manage beneficiaries who may be admitted to a SNF 
affiliate beyond what is otherwise established within the application. 
These narratives describe the plans that exist and that the ACO will 
adhere to requirements for beneficiary eligibility set forth in the 
waiver, but the program continues to provide operational flexibility to 
ACOs to develop their own internal processes and protocols.
(2) Modify the CMS Review Process for ACOs Applying for a Shared 
Savings Program SNF 3-Day Rule Waiver
    We remain committed to reducing unnecessary application and/or 
program burden where possible and consider application attestations as 
a way of streamlining processes when appropriate. The submission of the 
three remaining narratives has largely functioned as a mechanism for 
ACOs to confirm that they have established operations for communicating 
between the ACO and its SNF affiliates, establishing a care management 
plan, and beneficiary evaluation and admission plan. The existence of 
the three narrative plans provides some assurance of an ACO's capacity 
to

[[Page 69965]]

identify and manage beneficiaries who may be admitted to a SNF 
affiliate. However, as a payer, we do not have the experience that 
would be required to evaluate the appropriateness of the contents of 
these plans. Therefore, to reduce CMS and ACO burden, we proposed to 
remove the requirement to submit the plan narratives and instead 
proposed to require ACOs to certify that they have a communication 
plan, care management plan, and beneficiary evaluation and admission 
plan in place prior to SNF 3-Day Rule Waiver approval. Such plans 
should continue to address the issues we previously discussed in the CY 
2015 Shared Savings Program final rule at 80 FR 32805. ACOs must 
continue to develop robust processes to implement the 3-Day Rule Waiver 
and to successfully transition care for their identified FFS 
beneficiaries and must be able to provide upon request a narrative 
describing their communication plan, care management plan, and 
beneficiary evaluation and admission plan. We noted in the CY 2023 PFS 
proposed rule that if our proposed policy is finalized, an ACO would be 
subject to compliance action if it fails to submit, upon CMS request, 
the narratives about its capacity to manage patients under the waiver. 
The proposed attestation requirement retains oversight for ensuring 
that an ACO has the capacity to identify and manage beneficiaries while 
reducing burden during the application process.
    Furthermore, we have determined that other provisions of our 
regulations provide sufficient safeguards to ensure that CMS can assess 
an ACO's capacity to identify and manage beneficiaries who would be 
either directly admitted to a SNF or admitted to a SNF after an 
inpatient stay of less than 3 days. We also noted that we have found 
that these experienced, risk-bearing ACOs focus on care coordination 
and clinically-integrated, patient-centered care. Such investments in 
care coordination not only improve patient outcomes, but also serve to 
reduce the cost of care. In addition, our ongoing oversight and program 
compliance monitoring of the use of the waiver by ACOs helps us to 
ensure that ACOs have the capacity to identify and manage beneficiaries 
who are admitted to a SNF under the SNF 3-Day Rule Waiver.
    In summary, we proposed to amend Sec.  425.612(a)(1)(i)(A) to 
require that an ACO applying to use the SNF 3-Day Rule Waiver must 
submit an attestation that it has established plan narratives 
(communication plan, care management plan, and beneficiary evaluation 
and admission plan) and will make them available to CMS upon request. 
We proposed minor revisions to the narrative language by replacing 
``the communication plan'' with ``a communication plan'' in Sec.  
425.612(a)(1)(i)(A)(1). We noted that we expected that, when 
implemented, the proposal will reduce the application review burden on 
CMS, as well as the burden on ACOs to submit this information.
    The following is a summary of the public comments received on the 
proposals to streamline the SNF 3-day rule waiver application review 
process and our responses:
    Comment: In general, the majority of commenters supported efforts 
to reduce administrative burden on ACOs, including the proposed 
modifications to the SNF 3-day rule waiver application. One commenter 
indicated that this would enable ACOs to redirect these resources 
toward patient care. Another stated this would substantially reduce the 
amount of upfront documentation required for submission with ACO's 
application.
    Response: We appreciate commenters' support of our proposal to 
remove the requirements for ACOs to submit plan narratives 
(communication plan, care management plan, and beneficiary evaluation 
and admission plan) with the SNF 3-day rule waiver application for CMS 
approval, and instead to attest that the plans are in place and can be 
made available to CMS upon request. We agree with commenters that this 
will reduce unnecessary administrative burden when ACOs apply for the 
waiver and will increase usability of this important ACO benefit for 
patients.
    Comment: One commenter recognized that CMS intends to decrease 
administrative burden, and requested that CMS ensure that the final 
rule protects program integrity and beneficiary access to care.
    Response: We appreciate the commenter sharing their concern for 
program integrity and beneficiary access to care. With respect to 
access to care, we note that we did not propose and are not finalizing 
any change to the SNF 3-day waiver provisions that affects beneficiary 
access to care. We believe this final rule adequately protects the 
integrity of the program by maintaining the requirement to have 
communication, care management, and beneficiary evaluation and 
admission plans and maintaining all other programmatic requirements 
regarding the SNF 3-day waiver, including the eligibility criteria for 
SNF Affiliates and the requirement that an ACO provider/supplier who is 
a physician must evaluate and approve a beneficiary's admission to a 
SNF Affiliate.
    Comment: We received one comment urging CMS to eliminate the 
requirement at Sec.  425.612(a)(1)(ii)(H), which requires an ACO 
provider/supplier who is a physician to have evaluated and approved the 
beneficiary for admission to a SNF affiliate within three days prior to 
the SNF admission.
    Response: We appreciate the commenter's suggestion, but note that 
it is beyond the scope of our proposal. We continue to believe that the 
requirement set forth at Sec.  425.612(a)(1)(ii)(H) is an important 
protection for beneficiaries and aids ACOs in coordinating care for 
their assigned beneficiaries. We believe that the ACO is in the best 
position to oversee the transfer of beneficiaries to SNFs or LTC 
settings.
    Comment: One commenter urged CMS to not finalize the proposal. The 
commenter appreciated the intent to make it easier for ACOs to obtain a 
waiver but stated that beneficiaries are not provided sufficient 
information about how to use and benefit from the waiver and that the 
proposed changes will make it more, not less, difficult for those 
attributed to an ACO to access the SNF 3-day rule waiver. The commenter 
urged CMS to take additional measures to ensure that eligible 
beneficiaries are aware they can receive services covered by a waiver 
and stated their concern that there are instances where beneficiaries 
who go to a SNF without a prior three-day inpatient hospital stay do 
not have their SNF stay covered by Medicare and instead are required to 
pay out-of-pocket so the expenses are not attributable to the ACO.
    Response: Nothing in our proposal or this final rule alters the 
beneficiary eligibility requirements for receiving SNF care under the 
waiver. It is important to note that not every beneficiary will be 
determined to meet the criteria to be admitted under the waiver, for 
example, a beneficiary must be medically stable and not require 
inpatient or further inpatient hospital evaluation or treatment, and 
this final rule does not make changes to those established criteria. 
Our final policy is limited to allowing ACOs to attest that they have 
developed a communication plan with its SNF Affiliates, care management 
plan, and beneficiary evaluation and admission plan when transferring 
eligible beneficiaries to a SNF, and that they can be made available to 
CMS upon request.
    Comment: One commenter requested that we make additional SNF 3-day 
rule waiver utilization data publicly available in order to allow a 
fuller understanding of the potential impact of increasing access to 
the SNF 3-day rule waiver. The commenter also expressed

[[Page 69966]]

interest in data which shows what, if any, impacts have been observed 
from waiving the three-day inpatient hospital stay requirement during 
the COVID-19 PHE.
    Response: We appreciate this suggestion and are constantly 
reviewing Shared Savings Program data and frequently make updates to 
our publicly available reports. We will take this suggestion under 
advisement the next time we make updates.
    Comment: Other commenters requested additional flexibility in the 
SNF 3-day rule waiver, and that waiver eligibility should be extended 
to ACOs in nonperformance-based risk tracks (BASIC track Level A and B) 
so that all ACOs have access to this a tool to manage costs and provide 
the right care at the most appropriate location. Another commenter 
requested CMS go further and eliminate the SNF 3-day qualifying 
inpatient stay requirement for long-term care nursing facility 
residents in an ACO.
    Response: We appreciate the commenters' suggestions; however, we 
note that our policy modifications in this final rule were only 
intended to reduce the burden for ACOs when applying for SNF 3-day rule 
waivers and to promote the use of such waivers when and where they are 
authorized in our current policies. The commenters' suggestions are 
outside the scope of this rulemaking.
    As a result of the discussion above and the support of commenters, 
we are finalizing without change our proposed policy to remove the 
requirement for ACOs to submit communication plan, care management 
plan, and beneficiary evaluation and admission plan narratives with a 
SNF 3-day rule waiver application. Specifically, we are revising Sec.  
425.612(a)(1)(i)(A) to require an ACO applying for the waiver to submit 
an attestation that it has established and will make available to CMS 
upon request communication, care management, and beneficiary evaluation 
and admission plan narratives describing how the ACO plans to implement 
the waiver.
e. Updating Shared Savings Program Data Sharing Regulations To 
Recognize ACOs Structured as Organized Health Care Arrangements (OHCAs) 
for Data Sharing Purposes
    In the CY 2022 PFS final rule (86 FR 65261), we stated that we were 
considering whether it would be appropriate to revise the regulations 
at Sec. Sec.  425.702(c) and 425.704(b) to allow data sharing with a 
Shared Savings Program ACO that has structured its relationship with 
its ACO participants as an OHCA, as that term is defined in the Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) 
regulations at 45 CFR 160.103. This was in response to commenters who 
shared concerns about collecting patient-level all-payer data (eCQMs/
MIPS CQM) from patients who were not assigned to the ACO. These 
commenters cited HIPAA and patient consent concerns related to sharing 
non-Medicare patient information with the ACO and with CMS for a 
population that is not assigned to the ACO and indicated that obtaining 
this consent would be an additional burden.
    We explained in the CY 2022 PFS final rule (86 FR 65261) that we 
believed the disclosure of this all-payer data to CMS as required by 
Sec.  414.1340(a) is permitted by the HIPAA Privacy rule under the 
provision that permits disclosures of protected health information 
(PHI) as ``required by law.'' \364\ We also encouraged ACOs and their 
ACO participants to consult with their legal counsel as necessary to 
ensure that their business associate agreements (BAAs) address the need 
to share data for patients covered by all payers with the ACO to permit 
the ACO to comply with its legal obligation to completely and 
accurately report this data to CMS. Nevertheless, these comments 
prompted us to consider whether the current Shared Savings Program 
regulations provide sufficient flexibility regarding different 
arrangements permitted under HIPAA. In the CY 2022 PFS final rule, we 
stated that we were specifically considering potential revisions to the 
regulations at Sec. Sec.  425.702(c) and 425.704(b) to permit data 
sharing with an ACO structured as an OHCA. We then proposed these 
changes in the CY 2023 PFS proposed rule (87 FR 46207 through 46208).
---------------------------------------------------------------------------

    \364\ 45 CFR 164.512(a).
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    As described in the CY 2023 PFS proposed rule, in the April 2011 
proposed rule (76 FR 19528, 19556), we discussed the importance of data 
sharing and beneficiary protections in light of existing HIPAA 
requirements. We noted that ACO participants and ACO providers/
suppliers are also covered entities, provided they are health care 
providers as defined by 45 CFR 160.103 and they or their agents 
electronically engage in one or more HIPAA standard transactions, such 
as for claims, eligibility or enrollment transactions. We also stated 
that an ACO may itself be a HIPAA covered entity if it is a health care 
provider that conducts such transactions or may qualify as the business 
associate of its covered entity ACO participants and ACO providers/
suppliers based on the quality assessment and improvement activities 
that the ACO is conducting on behalf of those ACO participants and ACO 
providers/suppliers (76 FR 19556). In the November 2011 final rule (76 
FR 67846 through 67851), we established requirements for data sharing 
with ACOs that are designed around the HIPAA provisions for ``health 
care operations'' disclosures. These provisions permit CMS to disclose 
PHI without obtaining individual authorization for the health care 
operations activities of the recipient of the data (that is, the 
ACO).\365\ As we explained in the CY 2015 PFS final rule (80 FR 32692), 
ACOs work with their ACO participants and ACO providers/suppliers to 
evaluate their performance, conduct quality assessment and improvement 
activities, perform care coordination activities, and conduct 
population-based activities relating to improved health for their 
assigned beneficiary population. When done by or on behalf of a covered 
entity, these are activities that would qualify as health care 
operations under the first and second paragraphs of the definition of 
``health care operations'' at 45 CFR 164.501 (76 FR 19558). Therefore, 
in the Shared Savings Program data sharing regulations at Sec. Sec.  
425.702(c)(2) and 425.704(b), we have focused on ACOs that are 
themselves HIPAA-covered entities, or that are acting as business 
associates on behalf of their ACO participants and ACO providers/
suppliers who are HIPAA-covered entities.
---------------------------------------------------------------------------

    \365\ 45 CFR 164.506(c)(4).
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    We stated in the CY 2023 PFS proposed rule that we believed that 
most ACOs are acting as business associates of their covered entity ACO 
participants (the providers and suppliers that are part of the ACO). 
However, we noted that we believed it is possible that some ACOs may 
choose to operate as an OHCA.
    An OHCA is another type of entity that is recognized under the 
HIPAA regulations. An OHCA is a distinct entity from a covered entity 
or a business associate under HIPAA, although it is made up of covered 
entities. As most relevant to Shared Savings Program ACOs, under 45 CFR 
160.103, an OHCA is defined to include an organized system of health 
care in which more than one covered entity participates and in which 
the participating covered entities hold themselves out to the public as 
participating in a joint arrangement and participate in specified joint 
activities such as quality assessment and

[[Page 69967]]

improvement activities and payment activities.\366\ In addition, the 
purpose of the OHCA is that participants in such clinically integrated 
settings are able to share health information freely not only for 
purposes of care, but also to improve their joint operations (65 FR 
82494). The HIPAA Privacy Rule has specific provisions relevant to 
OHCAs. For example, under 45 CFR 164.506(c)(5), a covered entity that 
participates in an OHCA may disclose PHI about an individual to other 
participants in the OHCA for any health care operations activities of 
the OHCA.
---------------------------------------------------------------------------

    \366\ For the complete definition of an OHCA, see 45 CFR 
160.103.
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    We noted that the Office for Civil Rights (OCR) and the Office of 
the National Coordinator for Health Information Technology (ONC) have 
recognized in joint guidance that ACOs may operate as OHCAs.\367\ An 
ACO that operates as an OHCA would be able to share PHI among the 
covered entities in the OHCA without getting authorization from 
individuals for the health care operations of the OHCA and would be 
permitted to share PHI for the health care activities of the OHCA 
without entering into BAAs with each other.\368\
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    \367\ Permitted Uses and Disclosures: Exchange for Health Care 
Operations (https://www.healthit.gov/sites/default/files/exchange_health_care_ops.pdf).
    \368\ Please see HIPAA For Professionals FAQ 242 (Are covered 
entities that engage in joint activities under an organized health 
care arrangement (OHCA) required to have business associate 
contracts with each other?) (https://www.hhs.gov/hipaa/for-professionals/faq/242/may-i-share-protected-health-information-directly-with-another/index.html).
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    We proposed to modify the Shared Savings Program data sharing 
regulations at Sec. Sec.  425.702(c)(2) and 425.704(b) to specify that 
for PY 2023 and subsequent performance years, ACOs acting as OHCAs may 
request aggregate reports and beneficiary-identifiable claims data from 
CMS, respectively. We stated that these proposed changes would 
recognize an OHCA as an additional organizational structure under which 
an ACO can request data from CMS. We explained that our intention was 
to update the data sharing regulations to reflect how ACOs may be 
structured and provide flexibility with respect to the different 
arrangements permitted under HIPAA for purposes of data sharing.
    Separately, we stated our belief that an OHCA structure potentially 
could address some of the concerns that commenters have raised about 
ACOs collecting and reporting all-payer data to CMS as required under 
the APP. However, we noted that the proposal was limited to the Shared 
Savings Program regulations governing CMS' data sharing with ACOs and 
was not intended to affect or modify any existing obligations under the 
HIPAA Privacy Rule. We also noted that it is the ACOs' responsibility 
to consult with their legal counsel and others as necessary to 
determine how to structure their arrangements with their ACO 
participants and ACO providers/suppliers to comply with HIPAA 
requirements.
    We received public comments on the proposal to update the Shared 
Savings Program data sharing regulations to recognize ACOs structured 
as OHCAs. The following is a summary of the comments we received and 
our responses.
    Comment: A majority of commenters supported our proposal to modify 
the Shared Savings Program data sharing regulations at Sec. Sec.  
425.702(c)(2) and 425.704(b) to specify that ACOs acting as OHCAs may 
request aggregate reports and beneficiary-identifiable claims data from 
CMS, respectively. Several commenters stated that they supported this 
change because it would allow ACOs that operate as OHCAs to share the 
data needed to connect patients from across their delivery systems 
(urgent care, emergency department (ED), specialists) with primary care 
providers. One commenter supported the proposal and emphasized an 
interest in receiving as much data from CMS and in promoting as much 
transparency, as possible. Other commenters appreciated CMS' efforts 
generally to reduce administrative requirements for ACOs. One commenter 
explained that reporting, patient notification, and other 
administrative requirements cost ACOs staff time and financial 
resources and that the proposed modifications would minimize these 
requirements and enable ACOs to redirect resources toward patient care 
and reduce disincentives to participation in an ACO.
    Response: We appreciate commenters' support for our proposed 
modifications to amend the Shared Savings Program data sharing 
regulations at Sec. Sec.  425.702(c)(2) and 425.704(b) to specify that 
ACOs acting as OHCAs may request both aggregate reports and 
beneficiary-identifiable claims data. As we discussed in the proposed 
rule, these modifications will help ensure our data sharing regulations 
reflect how ACOs may be structured and provide flexibility with respect 
to different arrangements permitted under HIPAA for purposes of data 
sharing. We agree with the commenters that these changes may help ACOs 
improve operations, reduce administrative burden, increase 
opportunities for data sharing among ACO participants, and support 
transparency in Shared Savings Program data across the continuum of 
care.
    Comment: Several commenters stated that while they supported the 
proposal, they disagreed that an OHCA structure would support all-payer 
quality reporting because, regardless of the structure used to comply 
with HIPAA (that is, business associate agreements versus OHCA), 
combining data across numerous EHR systems is an onerous process and 
EHR vendors are not yet equipped to support ACOs in this endeavor. 
These commenters asserted that they do not believe it is appropriate 
for CMS to assess ACOs' quality performance for patient populations 
outside of the ACO.
    Response: We acknowledge the concerns raised by commenters about 
the challenges ACOs encounter when working across the multiple EHR 
systems used by their ACO participants. However, our proposed policy 
change was designed to ease the data sharing burden of ACOs that 
organize as OHCAs by ensuring that our regulations reflect how ACOs may 
be structured and provide flexibility with respect to the different 
arrangements permitted under HIPAA for purposes of data sharing. The 
proposed policy change was not intended to affect or modify any 
existing obligations under the HIPAA Privacy Rule. We recognize the 
commenters' concerns about reporting all-payer data, but we note that 
our proposed modification in section III.G.6 of the CY 2023 PFS 
proposed rule was limited to the way in which ACOs may be structured 
for purposes of the Shared Savings Program data sharing regulations, 
and we did not propose any modifications to previously finalized 
policies with respect to quality reporting in that section of the CY 
2023 PFS proposed rule. Please see section III.G.4 of this final rule 
for a discussion of our proposed and final policies with respect to the 
quality performance standard and quality reporting requirements under 
the Shared Savings Program.
    Comment: Another commenter supported the proposal and mentioned 
that it had ACOs that were organized as OHCAs in some States. This 
commenter stated that, while rare, there are instances in which State 
law conflicts with Federal laws governing data sharing and the lack of 
Federal guidance when those conflicts arise increases the costs of 
running an ACO because specialized legal counsel is needed, and this 
expense diverts investments into administration and away from 
population health.
    Response: We understand that there may be conflicts that arise 
between State

[[Page 69968]]

and Federal laws governing data sharing, but we note that the proposed 
modifications were limited to the Shared Savings Program regulations 
governing CMS' data sharing with ACOs and were not intended to affect 
or modify any existing obligations under the HIPAA Privacy Rule or 
other laws. We encourage ACOs to consult with legal counsel as 
necessary to determine how to comply with applicable Federal and State 
laws. While we acknowledge that ACOs may incur costs when consulting 
with legal counsel, we believe that these costs are worthwhile 
investments for ACOs to ensure compliance with Federal and State laws.
    After considering the comments, we are finalizing, as proposed, our 
revisions to the Shared Savings Program data sharing regulations at 
Sec. Sec.  425.702(c)(2) and 425.704(b) to specify that ACOs acting as 
OHCAs may request aggregate reports and beneficiary-identifiable claims 
data. Under this policy change, CMS will recognize an OHCA as an 
additional organizational structure under which an ACO can request data 
from CMS and the updated data sharing regulations will better reflect 
how ACOs may be structured and provide flexibility with respect to the 
different arrangements permitted under HIPAA for purposes of data 
sharing.
7. Responses to the Comment Solicitation on Incorporating an 
Administrative Benchmarking Approach Into the Shared Savings Program
a. Background on Longer Term Approach to Benchmarking Under the Shared 
Savings Program
    We have set a goal that 100 percent of Original Medicare 
beneficiaries will be in a care relationship with accountability for 
quality and total cost of care by 2030.\369\ Achieving this goal will 
require significant growth in the number of ACOs participating in the 
Shared Savings Program, or the number of beneficiaries served by 
existing ACOs, or both. Benchmarks are a core policy instrument for 
providing sufficient incentives for ACOs to enter and remain in the 
Shared Savings Program, with significant implications on impacts to the 
Medicare Trust Funds.
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    \369\ Seshamani M, Fowler E, Brooks-LaSure C. Building On The 
CMS Strategic Vision: Working Together For A Stronger Medicare. 
Health Affairs. January 11, 2022. Available at https://www.healthaffairs.org/do/10.1377/forefront.20220110.198444.
---------------------------------------------------------------------------

    The benchmark is a cost target used to determine savings or losses 
for an ACO compared to performance year expenditures for its assigned 
beneficiary population and, importantly, to create incentives for ACOs 
to reduce spending and generate savings, which will be shared by the 
ACO and CMS; by extension, these savings opportunities also create 
incentives for providers and suppliers to participate in ACOs. Many 
factors need to be considered in establishing benchmarks including the 
variability in the composition of ACOs, the beneficiary populations 
they serve, and their experience with accountable care models, as well 
as the need to protect the Trust Funds and minimize unintended 
consequences such as market consolidation and patient risk selection. 
In the CY 2023 PFS proposed rule (87 FR 46208 through 46217), we 
described and solicited comment on a modified benchmarking methodology 
that may boost participation, increase savings to the Medicare Trust 
Funds, and make long-term participation in the Shared Savings Program 
possible for more ACOs.
    As explained in the proposed rule, we currently establish, adjust, 
update and reset the historical benchmark under the Shared Savings 
Program in accordance with Sec.  425.601. An ACO's benchmark is 
established based on historical expenditures for a population of 
beneficiaries that would have been assigned to that ACO in the 3 years 
prior to the start of its agreement period. In establishing the 
benchmark, we adjust the benchmark based on the ACO's spending relative 
to its service area (referred to as the regional adjustment). For each 
performance year of the ACO's 5-year agreement period, we risk adjust 
the benchmark for changes in severity and case mix of the ACO's 
assigned beneficiaries, and we update the benchmark using growth rates 
that are a blend of observed national and regional FFS spending trends. 
We reset (or rebase) the ACO's benchmark at the start of the ACO's 
second and each subsequent agreement period. Refer to section III.G.5. 
of the proposed rule for a more detailed description of the statutory 
and regulatory background of the Shared Savings Program's current 
benchmarking methodology and certain benchmark calculations, as well as 
proposed modifications to the current benchmarking methodology for 
agreement periods starting on January 1, 2024, and in subsequent years.
    ACOs and other interested parties have expressed concerns about the 
effects of current benchmarking methods on ACOs' incentives to generate 
savings, the extent to which they are able to share in those savings, 
and thus the incentives for ACOs to enter and remain in the program 
over the long-term. Specifically, there are two ways in which the use 
of factors based on realized FFS spending (which reflects any ACO 
spending reductions) can lead to lower benchmarks, which we will refer 
to as ``ratchet'' effects: (1) downward pressure on an individual ACO's 
benchmark resulting from the impact of its achieved spending reductions 
on its historical benchmark expenditures, regional adjustment, and 
update factor; and (2) downward pressure on benchmarks due to program-
wide spending reductions across all ACOs.
    The first type of ratchet effect occurs at the individual ACO 
level, when an ACO's own savings reduce its benchmark, which can occur 
when we reset the historical benchmark at the start of the ACO's second 
or subsequent agreement period. When the benchmark years correspond to 
performance years from the ACO's preceding agreement period, the 
benchmark reflects a portion of any spending reductions achieved by the 
ACO. A ratchet effect can also occur through the use of factors based 
on the regional FFS expenditures to adjust the benchmark and update an 
ACO's benchmark; specifically, when an ACO reduces spending, it also 
reduces average spending in its region, thereby lowering the regional 
adjustment to its benchmark. This effect becomes more prominent as an 
ACO has increasing market share in its region. Critically, ACOs must be 
able to retain the ability to achieve savings over the long-term to 
have an incentive to take the steps necessary to generate them, as 
there are costs associated with delivering care outside of the FFS 
construct and in running an ACO to lower (and maintain) reduced 
spending levels.
    The second type of ratchet effect occurs at the program level, 
where overall program success can apply downward pressure on ACOs' 
benchmarks through the method for updating benchmarks each performance 
year for changes in expenditures between Base Year 3 (BY3) and the 
performance year. We explained in the proposed rule that we currently 
determine the update factor retrospectively using a blend of realized 
national and regional FFS expenditure growth rates, which incorporates 
the collective impact of ACOs on spending across Original Medicare. As 
a greater portion of Medicare FFS beneficiaries are assigned to ACOs, 
this program level ratcheting effect increasingly diminishes incentives 
to participate in the Shared Savings Program. If all beneficiaries 
enrolled in the Original Medicare FFS program under Parts A and B were 
assigned to an ACO, calculating the update factor based on realized

[[Page 69969]]

spending growth rates would necessitate that some ACOs would experience 
expenditure growth in excess of the update factor (and forgo shared 
savings), even if all ACOs reduced spending growth. That is, an ACO 
would have to reduce spending more than the average ACO in order to 
earn savings, all else equal (absent regional adjustments to historical 
benchmarks). Similarly, program-wide savings lower the average per 
capita amounts of expenditures for an ACO's regional service area which 
are used in computing the regional adjustment to the historical 
benchmark. As ACOs' benchmarks converge toward average realized FFS 
spending, approximately half of ACOs will necessarily be given 
benchmarks below their spending at the start of their current agreement 
period, even if all ACOs have generated spending reductions relative to 
the counterfactual (that is, what spending would have been without the 
ACO). This downward pressure of program success on benchmark updates 
means that ACOs collectively keep less of the savings they generate. In 
the context of CMS' strategic objective to increase the number of 
Medicare beneficiaries in a care relationship with quality and total 
cost of care accountability, we anticipate that this program level 
ratcheting effect will become more pronounced with the growth in the 
number of beneficiaries assigned to ACOs, further weakening incentives 
to participate in the Shared Savings Program with the potential for 
impeding progress towards the fulfillment of this same goal.
    For illustrative purposes, consider a scenario in which all 
Original Medicare beneficiaries are receiving the plurality of their 
primary care from an ACO provider/supplier, and thus are assigned to an 
ACO. Assume that FFS expenditure growth in the absence of ACOs would be 
5 percent each year, but that ACOs, on average, slow expenditure growth 
to 3 percent each year. Under the current benchmarking approach, the 
update factor applied to an ACO's benchmark would be 3 percent, 
matching the average overall FFS expenditure growth rate under 100 
percent ACO penetration. However, because 3 percent is the average 
growth rate, there will be ACOs with both higher and lower growth rates 
than 3 percent, meaning that some ACOs' growth in expenditures will 
outpace their benchmarks, even if they reduced spending relative to the 
counterfactual. In this example, an ACO that limited expenditure growth 
to 4 percent would (ignoring regional adjustments to the benchmark) 
show losses, despite reducing spending relative to the 5 percent growth 
rate expected without ACOs. Figure 2 provides a visual example of this 
scenario.
[GRAPHIC] [TIFF OMITTED] TR18NO22.111

    MedPAC and researchers are also examining the Shared Savings 
Program benchmarking methodology and have noted many of the above 
concerns. MedPAC has discussed ratchet effects in ACO benchmarks in its 
November 2021 public meeting \370\ and January 2022 public 
meeting,\371\ with the general consensus that eliminating ratcheting 
effects is essential for the long-term sustainability of the Shared 
Savings Program. Many of the commissioners discussed a longer-term 
approach under which CMS would update ACOs' benchmarks annually using 
``exogenous'' factors, meaning factors not impacted by the individual 
or collective performance of ACOs. Under this approach, which has also 
been referred to as administratively set benchmarks, benchmarks may be 
set prospectively based on projected growth in volume and intensity of 
FFS services, with guardrails in place to account for actual changes in 
FFS prices, demographics, and large projection errors. McWilliams, 
Chen, and Chernew have also raised concerns about ACO benchmark ratchet 
effects in outlining a blueprint for ACO benchmark changes in a recent 
white paper.\372\
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    \370\ https://www.medpac.gov/wp-content/uploads/2021/09/aco-benchmarks-medpac-nov-2021.pdf; https://www.medpac.gov/wp-content/uploads/2021/11/november21_medpac_transcript_sec.pdf.
    \371\ https://www.medpac.gov/wp-content/uploads/2021/10/APM-MedPAC-Jan22.pdf; https://www.medpac.gov/wp-content/uploads/2021/10/Jan22_MedPAC_Meeting_Transcript_SEC.pdf.
    \372\ https://www.brookings.edu/research/from-vision-to-design-in-advancing-medicare-payment-reform-a-blueprint-for-population-based-payments/.
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    Addressing these ratchet effects may also improve the experience of 
beneficiaries assigned to ACOs. ACOs are incentivized through sharing 
savings

[[Page 69970]]

to provide services to beneficiaries that may not have been 
traditionally reimbursed under Medicare FFS. However, because any costs 
incurred in providing such services are not reflected in observed FFS 
spending but may help to reduce that spending and thus result in the 
ratcheting down of future benchmarks, incentives to provide such 
services are diminished. As we stated in the proposed rule, we 
anticipate that addressing these ratchet effects under the current 
benchmarking methodology will allow ACOs and their ACO participants to 
provide additional services, and therefore, improve the beneficiary 
experience in ACOs.
    We have used a variety of approaches to mitigate the effect of ACO 
performance on their historical benchmarks, as described in earlier 
rulemaking and as summarized in section III.G.5. of the proposed rule, 
including: adjusting the ACO's rebased benchmark to account for savings 
generated by the ACO in its prior agreement period (Sec.  
425.603(b)(2), June 2015 final rule, 80 FR 32788 through 32791); 
subsequently replacing the prior savings adjustment with an approach 
that incorporated factors based on regional FFS expenditures in 
resetting the ACO's benchmark through a regional adjustment (Sec.  
425.603(c) through (f), June 2016 final rule, 81 FR 37953 through 
37991); in addition, more recent modifications to use blended national-
regional growth factors to trend and update the ACO's historical 
benchmark help ameliorate the ACO-specific ratchet effect caused by the 
use of regional trends to update benchmarks in areas where ACOs 
contribute substantially to regional trends (Sec.  425.601(a)(5), (b), 
December 2018 final rule, 83 FR 68005 through 68030).
    In particular, the regional adjustment has reduced the impact of 
rebasing by partially decoupling an ACO's benchmark from its prior 
savings performance. Importantly, this adjustment also begins to 
converge benchmarks toward a consistent basis within a region, which we 
believe is an important objective for creating equitable payment within 
a market that rewards ACOs for relative efficiency. However, recent 
experience suggests that the regional adjustment may have led to 
selective participation, with 80-87 percent of ACOs subject to a 
regional adjustment having spending below their region for PYs 2017 
through 2020, as shown in Table 82.\373\
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    \373\ https://data.cms.gov/medicare-shared-savings-program/performance-year-financial-and-quality-results.
[GRAPHIC] [TIFF OMITTED] TR18NO22.112

    Furthermore, as shown in Table 83, selective participation effects 
are stronger for ACOs subject to downside risk, with 92-100 percent of 
ACOs having positive regional adjustments. This suggests that as ACOs 
are required to participate under performance-based risk and higher 
levels of downside risk, these selective participation effects may 
continue to grow. Setting aside the net costs to the Trust Funds from 
subsidizing participation by ACOs with spending already below their 
region, the chief concern with this pattern of participation under the 
current methodology is that the providers/suppliers with the greatest 
savings potential (those with high spending relative to their region) 
have fewer incentives to participate.
[GRAPHIC] [TIFF OMITTED] TR18NO22.113


[[Page 69971]]


    In the CY 2023 PFS proposed rule, we explained that through the 
proposed benchmarking changes discussed in section III.G.5. of the 
proposed rule, we were seeking to more immediately address certain 
ratchet effects and features within the existing benchmarking 
methodology that result in selective participation. Specifically, we 
noted that the proposals to incorporate a prior savings adjustment, 
mitigate the impact of the negative regional adjustment, and to modify 
the benchmark update to incorporate a prospective, external factor 
(ACPT) were intended to address these dynamics. In section III.G.7 of 
the proposed rule, we sought comment on broader changes to the 
benchmarking methodology that may be needed to further strengthen 
incentives for providers and suppliers to participate in the Shared 
Savings Program and generate savings while preserving a mechanism for 
convergence to a consistent regional benchmarking approach that does 
not elicit selective participation.
b. Administratively-Established Benchmarks as a Potential Solution To 
Address Benchmarking Concerns
    In section III.G.7.b. of the CY 2023 PFS proposed rule, we sought 
comment on a direction for future benchmarking that is designed to 
create a sustainable pathway for long term program savings for both 
ACOs and CMS and to address interested parties' concerns around 
ratcheting. We included an overview of and discussed details of key 
components of this potential approach.
    This approach involves separating benchmarking update factors from 
realized FFS expenditure growth through the implementation of a 
prospective, administratively set annual growth rate to update 
benchmarks. Under this approach, benchmarks would be allowed to rise 
above realized FFS expenditure growth as ACOs generate savings, 
allowing ACOs to retain more of their savings and thus strengthening 
incentives to participate and achieve savings. Over time, use of this 
administratively set growth rate would allow for a wedge to accrue 
between average benchmarks and realized spending reductions, offering 
greater and more sustainable savings opportunities over the long-term 
for both Medicare and ACOs. Importantly, average benchmark growth would 
only exceed realized FFS spending growth to the extent that ACOs reduce 
spending, such that benchmarks remain at or below FFS spending levels 
projected in the absence of ACO participation. A graphic depiction of 
administratively-established benchmarking is provided in Figure 3.
[GRAPHIC] [TIFF OMITTED] TR18NO22.114

    We explained that in concert with shifting from a benchmark update 
based on observed, or realized, FFS expenditure growth to a 
prospectively set trend that does not ratchet benchmarks downward as 
ACOs slow observed FFS expenditure growth, we are considering 
approaches that would minimize rebasing effects between agreement 
periods.
    An administratively set benchmarking approach also offers a path 
for converging benchmarks gradually towards a common risk-adjusted rate 
in each region, which we anticipate would mitigate selective 
participation and improve the savings potential of the program. 
Allowing benchmarks to remain above observed FFS spending as ACOs lower 
spending also allows convergence of benchmarks to a regional rate that 
is above average regional FFS spending. Accordingly, convergence would 
not require ACOs operating in the same region to outcompete each other 
to accrue savings and should not discourage participation by ACOs with 
above average observed spending to the same extent that they are 
discouraged under the present methodology. As long as ACOs are 
generating savings collectively, this approach would allow all ACOs a 
chance to earn shared savings while reducing overall spending relative 
to projections and protecting the Trust Funds. In addition, benchmarks 
that exceed FFS spending would give ACOs flexibility to meet 
beneficiary needs through alternative modes of care such as virtual 
care or care management programs that have not traditionally been 
reimbursed under FFS.
    We further explained our belief that through the design of this 
approach, CMS could address the selective participation effects that 
currently discourage participation by ACOs with higher spending 
compared to their

[[Page 69972]]

regional services area. For example, we noted that we are considering 
an approach that would remove the negative regional adjustment to ACO 
historical benchmarks. This approach would mean that an ACO with 
spending above its regional average would receive a historical 
benchmark set at the ACO's average historical FFS expenditures, rather 
than below its historical spending levels due to the negative regional 
adjustment.
    We also stated that we envision such an approach would ultimately 
generate sufficient spending reductions for higher spending providers 
and suppliers such that CMS could consider a further modified 
benchmarking methodology under which ACOs' benchmarks would be 
calculated using a regionally consistent baseline. This longer-term 
option was discussed in section III.G.7.d. of the proposed rule. To 
maintain the divergence between benchmarks and realized FFS 
expenditures, regional baselines would be set to incorporate accrued 
FFS expenditure reductions relative to projected growth, rather than 
setting regional baselines at average FFS spending, which would 
effectively claw back the accrued savings. We noted that we consider 
regionally consistent benchmarks to be an important objective for the 
longer-term sustainability of the Shared Savings Program in that they 
would create equitable payment within a market by rewarding ACOs for 
their relative efficiency. Such an approach could also reduce 
complexity relative to both the current methodology (including the 
proposed changes described in section III.G.5. of the proposed rule) 
and the administratively established benchmark methodology used to 
generate convergence.
    We invited comments on these concepts and on the design of an 
administratively established benchmarking methodology. We welcomed 
comments on the stages for implementing such an approach within the 
Shared Savings Program, particularly on an initial convergence phase 
and a post-convergence phase, and any other considerations related to 
this approach that we had not addressed in the proposed rule. We noted 
that any such modifications to the benchmarking methodology would need 
to be adopted through notice and comment rulemaking.
    As we explained in the comment solicitation in the proposed rule, 
we are continuing to consider the financial impact of this modified 
approach and are also considering other modifications to the design of 
the Shared Savings Program that may be needed along with an 
administratively established benchmarking methodology, including 
potential changes to the program's participation options and financial 
models (level of risk and potential reward). We sought comment on any 
additional modifications to the design of the Shared Savings Program 
that should be considered in conjunction with administratively set 
benchmarks.
    Lastly, we noted that a number of the features of an 
administratively established benchmarking methodology diverge from the 
benchmarking requirements under section 1899(d)(1)(B)(ii) of the Act 
and would require the use of our authority under section 1899(i)(3) of 
the Act. Under section 1899(i)(3) of the Act, in order to use a payment 
model other than the payment model described in section 1899(d) of the 
Act, we must determine that the alternative payment methodology will 
improve the quality and efficiency of items and services furnished to 
Medicare beneficiaries, without resulting in additional program 
expenditures. Accordingly, we also sought comment on the extent to 
which the use of administratively set benchmarks might have the 
potential to improve the quality and efficiency of care furnished to 
Medicare beneficiaries and any anticipated impact on Medicare 
expenditures. We noted that we would consider the information submitted 
as part of any determination of whether to propose in future rulemaking 
to implement aspects of an administratively-established benchmarking 
methodology in the Shared Savings Program.
c. Establishing an Administrative Benchmark Update Factor
(1) Overview
    As we explained in the comment solicitation in the proposed rule, 
under the administratively-established benchmarking concept, we would 
continue to utilize an ACO's historical FFS expenditures to establish 
the ACO's historical benchmark. However, we would modify the existing 
methodology to fully remove negative regional adjustments to the 
benchmark. We noted that we would otherwise retain much of the existing 
methodology for calculating the historical benchmark, including, if 
finalized, the proposed changes detailed in section III.G.5. of the 
proposed rule.
    When setting the historical benchmark, we would continue to 
calculate the annualized and truncated per capita expenditures for 
beneficiaries who would have been assigned to the ACO using the 3 most 
recent years prior to the start of the agreement period for each of the 
four Medicare enrollment types. We would then trend the BY1 and BY2 
expenditures forward to BY3, using the existing blend of national and 
regional FFS expenditure growth rates, adjust for health risk using the 
CMS-HCC model, and apply benchmark year weights to the trended, risk-
adjusted expenditures for each Medicare enrollment type. The benchmark 
year weights would remain as follows: for new ACOs, BY1 (10 percent), 
BY2 (30 percent), BY3 (60 percent), and for ACOs in their second or 
subsequent agreement period, each benchmark year is weighted equally.
    As described in the comment solicitation, we would apply an 
alternative approach to annually updating the ACO's historical 
benchmark, using an OACT-projected ACPT factor, and applying a discount 
to the benchmark update to support savings to the Medicare program; the 
discount factor would vary based on the ACO's regional efficiency to 
converge benchmarks gradually between ACOs with higher and lower 
spending compared to their regions. We also further explained that with 
the use of a discount factor, we would no longer apply a negative 
regional adjustment. We also provided an overview of the steps for the 
calculation for the administratively-established benchmark update 
factor.
(2) Use of Accountable Care Prospective Trend in the Benchmark Update
    As explained in the proposed rule, we are considering an approach 
that would transition from a three-way blend between the prospective 
ACPT and retrospectively determined regional and national growth rates 
(as described in section III.G.5.c. of the proposed rule) to an 
entirely prospectively set trend. This approach would further decouple 
benchmark updates from growth in realized FFS expenditures, thereby 
strengthening incentives for ACOs to participate in the Shared Savings 
Program and achieve savings.
    OACT annually develops and publishes United States Per Capita Cost 
(USPCC) growth projections for Medicare spending. As described in 
section III.G.5.c. of the proposed rule, under the three-way blended 
update factor OACT would calculate an ACPT, based on a modification of 
the existing USPCC growth projections used annually for establishing 
Medicare Advantage rates. However, as discussed in the proposed rule, 
we envision that an ACPT, with some additional modifications as 
described below, would serve as the core component of

[[Page 69973]]

the administratively set benchmark update under the potential longer-
term approach.
    As we explained in the comment solicitation in the proposed rule, 
we are considering how to calculate and apply the ACPT in a manner that 
maintains a consistent national benchmark update trend across ACOs for 
a given performance year, independent of when the ACO's agreement 
period began. We are considering an approach under which we would 
establish an ACPT every 5 years which would apply during that 5-year 
window. For example, if we were to establish an average annual trend 
for the years 2025 through 2029, we would then calculate a new average 
annual trend for the years 2030 through 2034, then for 2035 through 
2039, and so on for each subsequent period.\374\ An ACO's update factor 
for a given performance year would be derived from the average annual 
trend established for the 5-year window that includes the applicable 
performance year.
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    \374\ ACPT 5-year growth projection trends include different 
growth rates for each year within the 5-year projection. However, 
for the purposes of simplicity, the overall average annualized 
growth rate over the 5-year period would be utilized, such that the 
growth rate is constant over each of the 5 years. Price and 
demographic projections would be considered at an annual level for 
the purposes of the adjustment for forecasting error.
---------------------------------------------------------------------------

    For example, an ACO beginning its 5-year agreement period in 2025 
would have a single update factor trend for all performance years under 
the agreement period. For illustration, Table V.D1 from the 2021 
Medicare Trustees Report \375\ projects overall per capita spending 
growth for Medicare Parts A and B at an annualized rate of 5.1 percent 
from a 2024 base year to what would be a fifth performance year in 
2029. Note that this projected spending growth serves as an 
illustrative proxy for what a corresponding ACPT might show, though it 
is based on a different methodology that is not customized to the mix 
of spending categories included in Shared Savings Program benchmark 
calculations. In contrast, an ACO beginning its 5-year agreement period 
in 2027 would have one trend rate for its first 3 performance years 
(2027, 2028, and 2029) and another for its last 2 performance years 
(2030 and 2031), as the update factor would be reset every 5 calendar 
years. This update factor would not change for the duration of the 5-
year period in response to changes to the OACT projection, with the 
exception of an adjustment for changes to the price and demographic 
components of the ACPT trend, or to account for extreme and 
uncontrollable circumstances. We noted that we would plan to continue 
to apply the update factor as a flat dollar, risk-adjusted amount, 
consistent with the methodology for the use of ACPT in a three-way 
blend described in section III.G.5.c. of the proposed rule.
---------------------------------------------------------------------------

    \375\ https://www.cms.gov/files/document/2021-medicare-trustees-report.pdf.
---------------------------------------------------------------------------

    We also noted that we are considering further refinements to 
calculating the ACPT as part of a longer-term approach for updating 
benchmarks using entirely administratively set update factors. For 
example, we are considering maintaining separate projections within the 
ACPT for price growth, volume/intensity growth, and demographic factors 
(with potential exceptions for certain service types such as Part B 
drugs, which are not currently projected using disaggregated growth 
assumptions). This disaggregation of these factors could be utilized in 
ACO benchmark updates (for service types where possible), as ACOs are 
anticipated to have impacts on volume/intensity growth but have minimal 
impact on price growth and demographic factors. Therefore, the ACPT 
volume-intensity trend would be held constant for the duration of the 
agreement period, but retrospective adjustments could be made annually 
to account for any differences between projected and actual price 
growth and demographic factors. This would mitigate the effects of 
unexpected changes in assignable beneficiary demographics, as well as 
of inflationary pressures or other price changes on ACOs benchmarks. We 
would also incorporate adjustments to the ACPT to account for changes 
in relative price levels across counties, as has been done in other ACO 
initiatives that use national trend projections, such as the Next 
Generation ACO Model.
    By incorporating annual adjustments for changes in price and 
demographics, we expect that the administrative growth projection will 
exceed the observed volume/intensity growth, as ACOs generate savings 
relative to the growth projection. However, we are considering adding 
potential guardrails to the administrative growth projection in early 
years to ensure that forecasting error does not unfairly penalize ACOs 
or discourage participation. One option would be to phase-in the 
administrative trend over the first 5 years, increasing the weighting 
of the administrative trend component of the update in the three-way 
blend calculation from 33 percent in PY1 to 50 percent in PY2, 75 
percent in PY3, and 100 percent thereafter. Another option would be to 
limit the contribution of forecasting error to savings and loss 
calculations during the first 5 years of the new methodology. For 
example, a floor could be set such that the national mean benchmark 
could not fall more than 2 percent below national mean FFS spending. We 
noted that CMS may consider applying either or both of these guardrail 
options as part of a prospectively-set update factor.
    In section III.G.5.c. of the proposed rule, we proposed to adopt a 
prior savings adjustment with a 50 percent scaling factor for renewing 
and re-entering ACOs. In the comment solicitation, we explained that 
this proposed change together with the changes to the benchmark update 
described in the comment solicitation would act to limit the impact of 
an ACO's performance on its own benchmark. We also noted that 
increasing the 50 percent scaling factor for prior savings adjustments 
could be considered to further limit the impact of rebasing. The 
prospective update factor would remove this link within an agreement 
period and the prior savings adjustment would mitigate the impact of 
rebasing between agreement periods. We further explained that after 
benchmarks converge to a regional baseline (as discussed in section 
III.G.7.d. of the proposed rule), the link between an ACO's savings and 
its subsequent benchmark would be severed completely. We stated that we 
anticipated these changes would create and improve long-term incentives 
for ACOs to generate savings.
    In the comment solicitation, we noted that we would also need to 
establish a process for considering additional factors when 
recalculating the ACPT prospective update factor every 5 years. We 
explained that one factor may be the size of the accrued wedge between 
benchmarks and realized FFS spending. It is vital that ACOs are 
permitted to retain savings in subsequent agreement periods for there 
to be a strong incentive to generate savings. Allowing a permanent 
wedge between benchmarks and FFS spending is also vital to giving ACOs 
flexibility to meet patient needs by providing care that has been 
traditionally unreimbursed under FFS, such as care management programs 
or services addressing social needs. Should this wedge grow excessive, 
however, the update trend may need to be slowed to recover more savings 
for the Medicare program and its beneficiaries. Over time, updated OACT 
ACPT projections would also come to reflect the impact of ACOs on 
spending, and therefore, we may need to use other external indices as 
factors in determining the preset benchmark update factor to ensure 
that

[[Page 69974]]

ACOs continue to retain accrued savings.
    We sought comment on these considerations for calculating an ACPT 
to be used as an administratively set benchmark update factor. We 
sought comment on the 5-year intervals for establishing an ACPT, and 
alternative approaches that would tie the ACPT to an ACO's agreement 
period. We also sought comment on approaches to accounting for price 
growth and demographic factors versus volume/intensity and 
considerations for guardrails to protect against projection error. 
Finally, we sought comment on approaches to updating the ACPT that 
would ensure it does not overly reflect ACOs' collective impact on 
spending.
(3) Discount Factor
    As we explained in the comment solicitation, under the approach we 
are considering for implementing a common risk-adjusted regional 
benchmark (described in section III.G.7.d. of the proposed rule) that 
encourages participation by both historically efficient (spending below 
regional average) and inefficient (spending above regional average) 
ACOs, we believe there would need to be a period of gradual convergence 
in spending between efficient and inefficient ACOs, while allowing 
benchmarks for both to remain above realized FFS spending as ACOs 
generate savings. Therefore, we sought comment on the approach of 
subtracting a modest annual discount factor from the fixed 5-year ACPT 
growth trend based on the relative efficiency of the ACO. For example, 
if the projected ACPT trend was 5.1 percent annual growth, an ACO with 
a 0.2 percent discount factor would have a benchmark update factor 
based on a 4.9 percent annual growth rate (5.1 percent minus 0.2 
percent). Overall, these discount factors would be intended to provide 
realistic targets that encourage participation by ACOs and providers 
and suppliers with spending above their regional average. Once in the 
program, these ACOs and providers and suppliers would have incentives 
to generate savings, and thus, gradually converge their spending more 
in line with historically lower spending ACOs.
    We noted that to determine the discount that would be applied to an 
ACO's update factor, we would calculate a measure of the ACO's regional 
efficiency. We would compare the ACO's historical spending (the 
weighted-average spending for the ACO in benchmark year 3 to a regional 
benchmark (the weighted-average regional FFS expenditures for benchmark 
year 3). This calculation would be similar to the approach used to 
determine the difference between the average per capita expenditures 
for the ACO's regional service area, and the average per capita amount 
of the ACO's historical benchmark under Sec.  425.601(a)(8)(ii)(A). The 
discount would vary according to the regional efficiency of each 
participating ACO but, importantly, would not grow if an ACO 
successfully lowers spending (as it would under the current regional 
adjustment methodology). Sample discount factors are shown in Table 84. 
If an ACO's historical spending was greater than its regional 
benchmark, we would apply a discount to the amount of the benchmark 
update, scaled such that a larger discount is applied for ACOs with 
increasingly higher spending (less efficient) compared to their 
regional benchmark. No discount would be applied to the update amount 
for ACOs with spending 2 percent or more below their regional 
benchmark. Applying larger discount factors to less efficient ACOs 
would converge benchmarks towards regionally consistent levels, 
allowing CMS to remove negative regional adjustments as discussed in 
section III.G.7.c.(4) of the proposed rule while still driving 
convergence.
[GRAPHIC] [TIFF OMITTED] TR18NO22.115

    As we stated in the comment solicitation, we have observed that 
ACOs make significant changes in composition of ACO participant TINs 
during an agreement period, by adding and removing ACO participants. To 
account for ACO participant TIN changes, we would recalculate the ACO's 
discount factor for each performance year of the agreement period based 
on its regional efficiency using the composition of its ACO participant 
TINs for the applicable performance year. That is, we would use the 
ACO's certified ACO participant list for the performance year to 
determine the ACO's historical spending based on expenditures for the 
beneficiaries who would have been assigned to the ACO in benchmark year 
3 and determine the ACO's regional service area for calculating the 
ACO's regional benchmark, and thus its regional efficiency.
    We sought comment on this approach for calculating and applying a 
discount factor in determining the amount of an ACO's benchmark update. 
We sought comment on the intervals of the discount we described, and 
alternative approaches such as use of a sliding scale in determining 
the discount amount. We also sought comment on approaches to ensuring 
the discount is reflective of the ACO's regional efficiency, including 
the approach of recalculating the discount factor to reflect changes in 
an ACO's regional efficiency as a result of changes in the ACO's 
composition during its agreement period.
(4) Removal of Negative Regional Adjustments to the Benchmark
    In accordance with Sec.  425.601(a)(8), we currently apply a 
regional adjustment in establishing the ACO's historical benchmark, 
which is equal to a percentage of the difference between the average 
per capita amount of expenditures for the ACO's regional service area 
for BY3 and the ACO's historical benchmark.
    In the comment solicitation, we explained that under the 
administratively-established benchmarking concept we would no longer 
apply negative regional adjustments to the benchmark, although positive 
regional adjustments would remain. Under this approach, ACOs with 
higher than average historical

[[Page 69975]]

spending would begin with a benchmark calculated solely using their 
historical experience. This would encourage providers and suppliers 
with higher historical spending relative to their region to participate 
in the Shared Savings Program, while continuing to reward ACOs with 
lower-than-average historical spending for their efficiency relative to 
their region. We explained that this approach would build on the 
policies proposed in section III.G.5.c.(5) of the proposed rule to 
mitigate the impact of the negative regional adjustment on ACOs, 
particularly those caring for high-risk populations.
    As discussed in the comment solicitation in the proposed rule, we 
are also considering approaches for addressing a potential concern that 
efficient ACOs would be disincentivized from adding less efficient 
providers and suppliers as ACO participants because it would reduce 
their regional adjustment. One approach would be to scale an ACO's 
initial, larger positive regional adjustment based on the overlap in 
beneficiaries that would have been aligned to the ACO using the ACO's 
initial ACO participant list and its updated ACO participant list. In 
this way, an ACO with spending below its regional average would retain 
its advantage conferred by the regional efficiency adjustment under its 
initial ACO participant list (to the extent it retains those ACO 
participants) while also being able to pursue the expanded savings 
opportunity afforded by the new benchmarking approach by adding less 
efficient providers and suppliers to its ACO participant list.
    We sought comment on this approach, and considerations related to 
removing the negative regional adjustment in establishing the ACO's 
historical benchmark under an administratively-established benchmark 
approach. We also sought comment on considerations for limiting 
disincentives for efficient ACOs to add less efficient providers and 
suppliers.
(5) Detailed Administratively-Established Benchmark Update Calculation
    The following is a step-by-step example of the administratively-
established benchmark update calculation on which we sought comment:
     Step 1: Calculate the historical benchmark according to 
the existing Shared Savings Program benchmarking methodology 
(including, if finalized, the proposed changes detailed in section 
III.G.5. of the proposed rule), without applying negative regional 
adjustments.
     Step 2: Risk-adjust the historical benchmark to account 
for changes in severity and case mix between BY3 and the performance 
year for each enrollment type.
     Step 3: Apply the update factor to the risk-adjusted 
historical benchmark for each enrollment type, calculated as follows:
    ++ Start with the overall OACT-projected Shared Savings Program 
ACPT 5-year projected trend \376\ applicable for the ACO based on the 
start of its agreement period and the performance year for each 
enrollment type.\377\ The update rate over an agreement period may 
include ACPT projected trends from more than one 5-year period if the 
ACO's agreement period does not align with the 5-year cycle for ACPT 
calculation.
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    \376\ As described in section III.G.5.c. of the proposed rule, 
we proposed that OACT would develop a Shared Savings Program-
specific ACPT to incorporate into the update factor calculation. 
This projected trend would vary from the USPCC projections designed 
for MA payment purposes in that adjustments would be made to make it 
applicable to ACO spending calculations, including adding back 
hospice and removing IME, DSH, and uncompensated care payments (as 
is already done for benchmarking under the Global and Professional 
Direct Contracting Model and will continue when the model 
transitions to the redesigned ACO REACH Model on January 1, 2023).
    \377\ The ACPT would include trends for Aged & Disabled (A&D) 
and End Stage Renal Disease (ESRD) beneficiaries. The Aged & 
Disabled trend would apply for the disabled, aged/dual eligible, 
aged/non-dual eligible enrollment types.
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    ++ Apply the average projected trend based on the number of years 
between BY3 and the performance year.
    ++ Apply any retrospective adjustments to the trend based on 
divergence between the price and demographic components of the ACPT 
projected trend and observed price trends and demographic changes. This 
retrospective adjustment would be calculated annually after the end of 
each performance year only for the price and demographic components (no 
such adjustment would be made for the volume-intensity component).
    ++ Subtract the relevant discount factor (as per the examples in 
Table 84, based on the regional efficiency of the ACO in BY3) from the 
adjusted trend for each year between BY3 and the performance year to 
determine the ACO's trend percentage.
    ++ Multiply the ACO's trend percentage by the average national ACPT 
value for assignment eligible beneficiaries (adjusted to reflect the 
ACO's relative risk in each eligibility category) to determine the flat 
dollar update amount.
    ++ Apply any guardrails as described in section III.G.7.c.(2) of 
the proposed rule.
    ++ Add the flat dollar update amount to the ACO's risk-adjusted 
historical benchmark for the applicable enrollment type.
     Step 4: Calculate a single per capita benchmark amount by 
taking a weighted average across each enrollment type.
d. Convergence to Regional Benchmarks; Post-Convergence Phase
    As we explained in the proposed rule, this administratively-
established benchmark approach would be partially intended to drive 
ACOs towards regional spending convergence, such that the Shared 
Savings Program could consider further benchmarking changes under which 
benchmarks would be established on a regionally consistent risk-
adjusted basis across ACOs in the same area. This post-convergence 
phase would completely eliminate ratcheting effects by removing 
rebasing and would also decouple benchmarks from an ACO's historical 
spending, thereby creating a sustainable benchmarking approach that 
would support high ACO participation levels and reward ACOs for 
increased efficiency.
    We noted that regionally consistent benchmarking has precedent in 
other CMS models and programs. Medicare Advantage benchmarks are 
established using beneficiary risk scores and the Medicare Advantage 
Ratebook of county risk-standardized benchmarks, as described in 
Sec. Sec.  422.258 and 422.306. In the ACO REACH Model,\378\ the 
baseline component of the benchmark will be calculated either entirely 
or in part using a rate book with county benchmark expenditures and 
beneficiary risk scores. The Shared Savings Program calculates risk-
adjusted county FFS expenditures for individual calendar years using a 
comparable approach, as discussed in section III.G.5.d. of the proposed 
rule.
---------------------------------------------------------------------------

    \378\ See the ACO REACH Request for Applications at https://innovation.cms.gov/media/document/aco-reach-rfa.
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    Under the administratively-established benchmark approach under 
consideration, ACO benchmarks in this post-convergence phase would be 
calculated based on a rate book of risk-standardized average per capita 
rates at the county level and beneficiary level risk scores. Crucially, 
the initial per capita county rates would reflect the average benchmark 
levels in the county, inclusive of the accrued wedge between benchmarks 
and realized spending, as opposed to reflecting average expenditures. 
An ACO's benchmark would be the product of its average beneficiary risk 
score, weighted by assigned beneficiary months, and its

[[Page 69976]]

average regional benchmark rate, calculated as the weighted average of 
the county rates, weighted by the number of months of experience 
contributed by assigned beneficiaries residing in each county. The 
administratively set update factor would continue to be applied to ACO 
benchmarks in the post-convergence phase to determine average benchmark 
growth. As an example, say an ACO has assigned beneficiaries that 
reside entirely in two counties (County A and County B), with 50 
percent of the assigned beneficiary population in each county. If the 
rate book rate for County A is $1,300 per beneficiary per month (PBPM) 
and the rate for County B is $1,100 PBPM, then the ACO's average 
regional benchmark rate would be $1,200 PBPM. If the ACO's assigned 
beneficiaries have an average risk score of 1.5, then the risk-adjusted 
benchmark would be $1,800 PBPM, pending application of the update 
factor. This regionally consistent benchmarking approach would likely 
involve an annual determination of county rates tied to the publication 
of the rate book.
    As we explained in the comment solicitation in the proposed rule, 
the convergence phase would be intended to converge benchmarks toward 
some level above realized spending, but below predicted spending absent 
ACOs, assuming ACOs generate savings. We also noted that we are 
considering several approaches for developing county per capita rates. 
One method under consideration would be to calculate risk-standardized 
average per capita expenditures and apply a scalar adjustment that 
accounts for prior savings or the accrued wedge. Alternatively, another 
approach could involve developing county rates by calculating a 
weighted average benchmark across ACO-assigned and unassigned 
beneficiary populations in the county. In either case, we would 
continue to use an administratively-established factor to update county 
rates over time; however, we anticipate the need for a process to 
monitor the size of the wedge within a region (the risk-adjusted 
difference between the benchmark and FFS spending) and to establish 
bounds that restrict regional rates from exceeding a certain level 
above FFS spending.
    We further explained that we anticipate that the convergence phase 
would last between 5-10 years, depending on participation rates and the 
pace of spending convergence within regions. We noted that we expect 
ACO spending will converge within regions under the changes described 
in the comment solicitation because the incentives for providers and 
suppliers with high spending for their region to participate in ACOs 
and lower spending would be much stronger, and the ACOs in which those 
providers and suppliers participate would have strong savings 
potential. Convergence in risk-adjusted spending may also be fostered 
by improvements to the risk adjustment methodology. Convergence in 
spending would not have to be complete, however, to transition to a 
post-convergence phase in which benchmarks are set based on a common 
regional rate that is risk-adjusted for an ACO's aligned population 
characteristics. We noted that we would expect some continued variation 
in ACO spending, but the convergence to regional rates would still 
provide all ACOs an opportunity to lower spending below their 
benchmarks. Still, we acknowledged that the timing for transitioning to 
the post-convergence phase is important, as it may cause a significant 
shift in benchmarks for many ACOs as the baseline component shifts from 
population-specific to regionally consistent. In order to maintain 
participation, it would be essential that this phase does not occur 
until a sufficient portion of providers are below the administratively 
projected regional benchmark.
    If the convergence phase takes longer than 5 years, we noted that 
we would need to address the potential rebasing effects for ACOs 
renewing for subsequent agreement periods under the new benchmarking 
approach. One approach would be to completely eliminate rebasing and 
use the historical benchmark period from an ACO's first agreement 
period under the new benchmarking approach for subsequent agreement 
periods until the post-convergence phase. This approach would most 
directly eliminate rebasing effects but would risk weakening the 
accuracy of the historical baseline expenditures as the number of years 
separating the baseline period and performance year increases. In prior 
rulemaking, we have acknowledged concerns about an approach that 
depends on older historical data in benchmark calculations (see, for 
example, February 2016 proposed rule, 81 FR 5832 through 5834, 5865 and 
5866), including operational complications and potential biases that 
result from use of older historical data when the ACO's composition of 
providers and suppliers changes over time. These complicating 
circumstances may become more pronounced with a longer convergence 
period and a larger gap between the historical benchmark and 
performance period. An alternative approach would be to continue to use 
a baseline period of 3 years directly proceeding the start of the 
agreement period, but with ACO-specific adjustments to limit rebasing 
effects. As an example of this type of ACO-specific adjustment, we 
noted that we are considering approaches that would build on the 
proposal, discussed in section III.G.5.c. of the proposed rule, to add 
prior ACO savings into subsequent benchmarks, with weighting to address 
changes in ACO composition.
    We sought comment on--
     Considerations for the design of a regionally consistent 
benchmarking approach, including how to set fair and accurate risk-
standardized benchmarks, the process for annual updates to regional 
rates, and how to distinguish between enrollment types.
     Considerations for the required conditions and timing for 
reaching this post-convergence phase with the use of regionally 
consistent benchmarks, as well as incentives to promote ACO spending 
convergence within a region.
     Approaches to addressing rebasing effects for renewing and 
re-entering ACOs in subsequent agreement periods during the convergence 
phase.
     Considerations for converging to nationally consistent 
spending versus regionally consistent spending.
    The following is a summary of the public comments received in 
response to the Comment Solicitation on Incorporating an Administrative 
Benchmarking Approach into the Shared Savings Program and our 
responses:
    Comment: The vast majority of commenters expressed support for the 
concept of utilizing a prospective, administratively set benchmark in 
the Medicare Shared Savings Program. These commenters expressed the 
need to address the ratchet effect, through which ACOs' benchmarks are 
impacted by the individual and collective savings generated by ACOs and 
noted that administratively-set benchmarks were an appropriate 
mechanism to address these effects. Several commenters noted that an 
administrative benchmarking approach would be a necessary step to 
achieve CMS' stated goals of substantial growth in the number of 
Medicare beneficiaries under accountable care relationships.
    In the context of support for the overall approach, many commenters 
shared considerations for implementation of an administrative 
benchmarking approach. Additionally, numerous commenters urged CMS to 
engage with stakeholders in the

[[Page 69977]]

development of these new benchmarking methodologies.
    Several commenters expressed concerns that a national 
administratively-set benchmark trend would not adequately account for 
regional variation in spending growth trends. These commenters urged 
CMS to consider regional adjustments to the administratively-set 
benchmark trends. One commenter recommended implementing a glidepath to 
administrative benchmarks to mitigate short-term windfall gains/losses 
due to regional spending variations or forecasting errors.
    Commenters expressed differing views on the timing of a transition 
to an administrative benchmarking methodology. Several commenters 
expressed urgency in implementing this benchmarking methodology, citing 
the growing impact of the ratchet effect and a desire to grow the 
Medicare Shared Savings Program. Other commenters noted that while this 
administrative benchmarking methodology was an appropriate long-term 
goal, there was no urgent need to move to administrative benchmarks, 
noting that CMS is still able to set Medicare Advantage benchmarks 
based on FFS spending data in regions with high Medicare Advantage 
penetration. Two commenters specifically questioned the timing of 
introducing administrative benchmarks given volatility introduced by 
the COVID-19 pandemic.
    Multiple commenters specifically commented on the possibility of 
applying a variable discount rate to the benchmark trend according to 
an ACO's risk-adjusted spending relative to its region. Most of these 
commenters supported this approach, stating that variable discount 
factors would allow for gradual convergence to a common regional 
benchmark while not discouraging ACO participation. One commenter was 
opposed, stating that discount factors were not appropriate for the 
Shared Savings Program.
    Multiple commenters expressed support for the concept of allowing 
for retrospective adjustments to an administrative benchmark based on 
observed changes in regional prices and demographics only. These 
commenters noted such adjustments may address concerns about the 
accuracy of an administratively set benchmark. No commenters expressed 
concerns about such price adjustments.
    Many commenters indicated that the development of a wedge in which 
the administratively-set benchmark remains at a level above observed 
FFS spending would be critical to the success of this benchmarking 
approach. Some of these commenters expressed concern that this wedge 
may be reduced in the future, either through future rulemaking or 
congressional action. These commenters urged CMS to provide assurances 
that an administrative benchmarking approach would remain stable over 
time and provide transparency into what would lead to changes in the 
benchmark calculation.
    Several commenters encouraged CMS to consider how an administrative 
benchmarking approach would interact with the Medicare Advantage 
program. These commenters urged CMS to utilize administrative 
benchmarking to achieve ``parity'' between FFS and Medicare Advantage 
reimbursement, but did not specify what this would entail. One 
commenter suggested that CMS consider utilizing price trends in 
Medicare Advantage in calculating the administrative benchmark.
    One commenter expressed concern that an administrative benchmark 
based on the USPCC may artificially inflate benchmarks, given this 
commenter's assertion that the USPCC has systemically overestimated 
spending in the past. This commenter also encouraged CMS to remove 
shared savings payments from the calculation of any administrative 
benchmark trend.
    One commenter urged CMS to consider whether legislative changes to 
the Shared Savings Program's statutory authority would be needed to 
allow for an administrative benchmarking approach, and whether CMS 
would be able to set benchmarks based on factors other than cost trends 
in FFS Medicare under the existing authority.
    Another commenter suggested that a separate benchmarking approach 
would be required for very high cost, high needs populations, and 
questioned whether converging to a common regional risk-adjusted 
benchmark would be possible in this patient population. Two commenters 
encouraged CMS to consider alternative payment methodologies such as a 
capitated primary care payment in conjunction with an administrative 
benchmarking approach. Additionally, while not in response to the 
administrative benchmarking request for information but the proposed 
rule generally, one commenter cited the recent National Academies of 
Sciences, Engineering, and Medicine (NASEM) report \379\ and suggested 
CMS use the authority in section 1899(i) of the Act to include a hybrid 
payment--part fee-for-service and part prospective capitated payment--
in the Shared Savings Program to better support primary care.
---------------------------------------------------------------------------

    \379\ https://nap.nationalacademies.org/read/25983/chapter/1.
---------------------------------------------------------------------------

    Response: We appreciate these thoughtful comments in response to 
our comment solicitation on incorporating an administrative 
benchmarking methodology in the Shared Savings Program. We will 
consider these comments in the development of policies for future 
rulemaking. We note that some of these comments are similar to those 
received in response to our proposal to incorporate the ACPT into the 
Shared Savings Program. In response to both the proposal to incorporate 
the ACPT into the Shared Savings Program and the comment solicitation 
on incorporating an administrative benchmarking approach, commenters 
expressed overall support for the ACPT, but shared concerns that basing 
the ACPT solely on national spending trends may not adequately account 
for geographic variation in spending trends that are outside of ACOs' 
control. Commenters recommended applying regional adjustments to the 
ACPT. However, comments received in response to the comment 
solicitation also addressed the use of variable discount factors 
applied to the ACPT and convergence to a regionally consistent risk-
adjusted rate. Most commenters expressed support for the use of 
variable discount factors as a means to drive gradual convergence to a 
common regional benchmark. Although these comments are outside the 
scope of the proposed changes to the benchmarking methodology discussed 
in section III.G.5.c.(3), we may consider them in the development of 
policies for future rulemaking. Please see section III.G.5.c.(3) of 
this final rule for CMS' response to comments on the proposal to 
incorporate the ACPT as part of a three-way blended update factor.
e. Responses to Comment Solicitation on Addressing Health Equity 
Through Benchmarking
    In the CY 2023 PFS proposed rule (87 FR 46217 and 46218), we 
explained that consistent with the Executive Order on Advancing Racial 
Equity and Support for Underserved Communities Through the Federal 
Government (E.O. 13985), we are committed to advancing equity in health 
and healthcare for all individuals and addressing inequities that exist 
in our policies and programs that serve as barriers to equal 
opportunity. The term ``equity'' is defined in E.O. 13985 as ``the 
consistent and systematic fair, just, and impartial treatment of all 
individuals, including individuals who belong to underserved 
communities that have been denied such treatment . . . .''

[[Page 69978]]

    Benchmarks based on historically observed spending may be 
inequitable to the extent that historical patterns reflect existing 
inequities in both access to care and the provision of care. We are 
interested in considering how direct modification of benchmarks to 
account for existing inequities in care can be used to advance health 
equity. Direct increases to benchmarks for historically underserved 
populations would grant additional financial resources to health care 
providers accountable for the care of these populations, and may work 
to offset historical patterns of underspending that influence benchmark 
calculation. Furthermore, setting payment in excess of current spending 
for groups experiencing disadvantage would incentivize ACOs to attract 
those groups with care and enhancements valued by these beneficiaries. 
Pairing such benchmark changes with monitoring of use of resources, 
quality, and outcomes can ensure that increased benchmarks are being 
used to address care inequities, rather than solely generating 
increased shared savings potential for ACOs benefitting from positive 
benchmark adjustments.
    In the proposed rule, we explained that the redesigned ACO REACH 
Model \380\ will be implementing a benchmark adjustment to address 
historical health inequities within CMS ACO initiatives, with the 
intent of incentivizing ACOs to seek out and form relationships with 
historically underserved beneficiaries. The ACO REACH benchmark 
adjustment is calculated at the beneficiary level, and provides for a 
$30 per beneficiary per month (PBPM) increase to an ACO's benchmark for 
each assigned beneficiary classified as being in the top decile of 
underserved beneficiaries across all beneficiaries in the ACO REACH 
Model. The adjustment is designed in a budget neutral manner, in which 
benchmarks will be reduced by a smaller $6 PBPM adjustment for each 
assigned beneficiary classified as being in the bottom five deciles. 
Beneficiaries will be stratified using a composite measure that 
incorporates a combination of ADI (percentile score from 1-100) and 
Dual Medicaid Status (Medicare only vs. Full or Partial Dual 
Eligibility). The area-level measure (Area Deprivation Index \381\) 
captures local socioeconomic factors correlated with medical 
disparities and underservice, while the beneficiary level measure (Dual 
Medicaid Status) captures economic challenges directly affecting 
individual beneficiaries' ability to access high-quality care. Because 
ADI is measured as a percentile (continuous variable), while Medicaid 
Status is a binary metric, a simple blending of the variables would 
underweight the ADI. Therefore, CMS will calculate the measure by 
starting with the ADI for a given beneficiary's census block group of 
residence (scored from 0-99 based on percentile relative to the 
nation), and applying a 25-point increase to the score for dually 
eligible beneficiaries. For example, a dually eligible beneficiary 
residing in a census block group with an ADI in the 75th percentile 
would receive a score of 75 + 25, for a total of 100.
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    \380\ See the ACO REACH Request for Applications at https://innovation.cms.gov/media/document/aco-reach-rfa.
    \381\ The University of Wisconsin Neighborhood Atlas website 
(https://www.neighborhoodatlas.medicine.wisc.edu/) Area Deprivation 
Index was developed by researchers at the University of Wisconsin 
based on a measure developed by the Health Resources and Services 
Administration (HRSA) over 3 decades ago. It has been adapted to the 
Census Block Group level and includes factors measuring income, 
education, employment, and housing quality, which have been linked 
to a number of healthcare outcomes, to rank neighborhoods by 
socioeconomic disadvantage.
---------------------------------------------------------------------------

    Each ACO will then receive a net benchmark adjustment based on the 
number of its assigned beneficiaries in each category. For example, an 
ACO with 100 beneficiaries scoring in the top decile and 500 
beneficiaries in the bottom five deciles in a given month would receive 
a net neutral benchmark impact for that month [($30 PBPM x 100)-($6 
PBPM x 500) = 0].
    The ACO REACH health equity benchmark adjustment addresses inequity 
in benchmarks calculated primarily using historical expenditures, where 
historical underspending for underserved beneficiaries informs 
benchmarks. We noted, however, that in the context of the 
administratively-established benchmarking approach outlined in the 
comment solicitation in section III.G.7.a.-d. of the proposed rule, our 
intent would be to converge spending to the point where benchmarks can 
be calculated on a regionally consistent basis, which would address 
equity concerns associated with entrenched historical underspending. By 
utilizing risk-standardized regional rates to derive benchmarks, rather 
than blends of historical and regional spending that can entrench 
inappropriately low levels of spending for populations with unmet 
needs, the new benchmarking approach would facilitate setting 
benchmarks above current levels of spending for ACOs caring for 
underserved populations. Such adjustments could be implemented within 
the estimation of the predictive model of spending used for risk 
adjustment (the CMS-HCC model) or in a post-estimation benchmark 
adjustment as in ACO REACH so that benchmarks would support optimal 
rather than current spending for historically marginalized groups. 
These adjustments would not only act to correct resource disparities 
but also establish incentives for ACOs to attract underserved groups 
with enhanced care.
    We also explained that these and other approaches could be employed 
to preserve (if not expand) existing payment differentials that set 
payment higher for certain providers and suppliers. Equity-motivated 
benchmark adjustments could be implemented, for example, to support 
additional funding for safety net providers (for example, CAHs, RHCs, 
and FQHCs). In other cases, add-on payments, such as DSH and IME, might 
continue to be carved out of ACO benchmarks and performance year 
expenditures, as they are now. We sought comment on other policy 
adjustments that should be considered for benchmark setting in the 
post-convergence phase.
    We sought comment on--
     Approaches, generally, to addressing health inequities via 
the benchmark methodology for the Shared Savings Program, and 
specifically to incentivize ACOs to serve historically underserved 
communities.
     Considerations for what data would need to be collected on 
Medicare beneficiaries and their communities (for example, need for and 
access to health care providers, transportation, and social services) 
and what factors should be considered to identify underserved 
communities and adjust ACO benchmarks.
     Considerations for including a health equity benchmark 
adjustment in the Shared Savings Program in the near term comparable to 
the equity adjustment being tested within the ACO REACH Model.
     Considerations for addressing health inequities in the 
context of the benchmarking concept outlined in the comment 
solicitation in section III.G.7.a.-d. of the proposed rule.
     Considerations for monitoring and program integrity tools 
that would track the use of any health equity benchmark adjustments for 
the intended purposes.
     Considerations for whether benchmark adjustments for ACOs 
that include CAHs, RHCs, FQHCs, and REHs as ACO participants would 
improve care for rural and underserved populations and increase 
participation by these providers and suppliers in the Medicare Shared 
Savings Program.

[[Page 69979]]

    The following is a summary of the public comments received in 
response to the Comment Solicitation on Addressing Health Equity 
Through Benchmarking and our responses:
    Comment: The vast majority of commenters expressed support for 
exploring methodologies to address health equity via benchmarking 
changes. Specifically, many of these commenters noted that benchmark 
adjustments could be an effective tool to redirect resources to ACOs 
serving underserved communities.
    Multiple commenters commented specifically on the health equity 
benchmark adjustment approach utilized in ACO REACH. Several of these 
commenters expressed support for using a similar methodology in 
implementing a health equity benchmark adjustment in the Shared Savings 
Program. However, other commenters expressed concern regarding the 
``budget-neutral'' approach adopted in ACO REACH, whereby higher 
benchmarks for underserved populations were offset by lower benchmarks 
for other populations. These commenters noted that benchmark 
adjustments for underserved populations should not negatively impact 
benchmarks for ACOs serving other populations.
    Several commenters specifically encouraged CMS to consider equity-
motivated benchmark adjustments that would provide higher benchmarks to 
ACOs that include safety net providers, such as CAHs, FQHCs, RHCs, and 
REHs. One commenter suggested that benchmarks should include explicit 
adjustments for ACOs serving rural areas. Another commenter urged CMS 
to explore regulatory opportunities that would expand its authority to 
pay providers and suppliers differently depending on the degree of 
social deprivation in their community and explore obtaining authority 
from Congress to create additional payment streams to put these 
communities on a level funding basis with other communities.
    One commenter expressed concerns with the potential use of the Area 
Deprivation Index (ADI) to identify underserved populations, and 
specifically noted that ADI does not incorporate race or ethnicity 
variables. This commenter recommended CMS consider using the Social 
Vulnerability Index because that index includes race as a variable 
which may account for the impact of structural racism on health care 
utilization and outcomes. Another commenter recommended that CMS 
encourage standardization of the collection of social determinants of 
health data, which could allow for more effective equity-motivated 
benchmark adjustments.
    One commenter observed that CMS has recently rolled out many health 
equity related initiatives, and recommended observing the impacts of 
these policies, including the health equity benchmark adjustment being 
tested in the ACO REACH Model, prior to proposing new health equity 
initiatives. Another commenter suggested that any health equity 
motivated changes to the Shared Savings Program be considered 
holistically across multiple program features such as quality metrics 
and risk adjustment rather than focused on benchmarking alone.
    Response: We appreciate these thoughtful comments in response to 
our comment solicitation on addressing health equity via benchmarking 
in the Shared Savings Program. We will consider these comments in the 
development of policies for future rulemaking.

H. Medicare Part B Payment for Preventive Vaccine Administration 
Services

1. Statutory Background
    Under section 1861(s)(10) of the Act, Medicare Part B covers both 
the vaccine and its administration for the specified preventive 
vaccines--the influenza, pneumococcal, and hepatitis B virus (HBV) 
vaccines. Under sections 1833(a)(1)(B) and 1833(b)(1) of the Act, 
respectively, there is no applicable beneficiary coinsurance, and the 
annual Part B deductible does not apply for these vaccinations or the 
services to administer them. Payment for these vaccines is based on 95 
percent of the Average Wholesale Price (AWP) for a particular vaccine 
product except where furnished in the settings for which payment is 
based on reasonable cost, such as a hospital outpatient department 
(HOPD), rural health clinic (RHC), or Federally qualified health center 
(FQHC). We note that many other preventive vaccine products, such as 
the shingles vaccine, are not specified for Medicare Part B coverage 
under section 1861(s)(10) of the Act, and are instead covered and paid 
for under Medicare Part D.
    Section 1861(s)(10)(A) of the Act, as amended by section 3713 of 
the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) 
(Pub. L. 116-136), includes the COVID-19 vaccine and its administration 
in the same subparagraph as the influenza and pneumococcal vaccines and 
their administration. We implemented this change in the interim final 
rule with comment period titled, ``Additional Policy and Regulatory 
Revisions in Response to the COVID-19 Public Health Emergency,'' 
published in the November 6, 2020, Federal Register (85 FR 71142, 71145 
through 71150) (hereafter referred to as ``the November 2020 IFC''). In 
the November 2020 IFC, we established that payments for COVID-19 
vaccines and vaccine administration would be made in the same manner as 
payments for the influenza and pneumococcal vaccines. In section 
III.H.5. of this final rule, we are finalizing our proposal to 
permanently codify regulatory changes published in the November 2020 
IFC.
2. Refinement to the Payment Amount for Preventive Vaccine 
Administration
a. Background for Medicare Part B Payment for Administration of 
Influenza, Pneumococcal, HBV Vaccines
    As we discussed in the CY 2023 PFS proposed rule (87 FR 46218 
through 46219), vaccine administration services described under section 
1861(s)(10) of the Act are not technically valued or paid under the 
PFS, as they are not included within the statutory definition of 
physicians' services in section 1848(j)(3) of the Act. Prior to CY 
2022, we had based payment rates for the administration of these 
preventive vaccines by suppliers such as physicians, NPPs, and mass 
immunizers on an evaluation of the resource costs involved in 
furnishing the service, which is similar to the methodology that we use 
to establish payment rates for the PFS. Payments for the administration 
of the preventive vaccines by these suppliers are geographically 
adjusted based on the location of where the service was performed. 
Under the Outpatient Prospective Payment System (OPPS), we assign a 
payment rate for administering these preventive vaccines and the 
payment rates are applicable for preventive vaccine administration 
services by hospitals and home health agencies. Certain other types of 
providers and suppliers, such as RHCs, FQHCs and critical access 
hospitals (CAHs), are paid based on reasonable cost for vaccine 
administration.
    We noted that a discussion is provided in the CY 2022 PFS final 
rule on the history of the valuation of the three HCPCS codes, G0008, 
G0009, and G0010, which describes the services to administer an 
influenza, pneumococcal, and HBV vaccine, respectively (86 FR 65180 
through 65182). We explained that we generally had established payment 
rates for the three codes based on a direct crosswalk to the PFS

[[Page 69980]]

payment rate for CPT code 96372 (Therapeutic, prophylactic, or 
diagnostic injection (specify substance or drug); subcutaneous or 
intramuscular).
    Additionally, we stated that using this methodology resulted in 
reductions in the payment rates for the preventive vaccine 
administration services over several years and raised concerns from 
interested parties. Therefore, we attempted to address the reduction in 
payment rates for these vaccine administration HCPCS codes in the CY 
2020 and CY 2021 PFS final rules (84 FR 62798 and 85 FR 84626 through 
84628, respectively) by maintaining the CY 2019 payment rate for all 
three codes.
    We explained that in rulemaking for the CY 2022 PFS, we continued 
efforts to establish payment for vaccine administration services on a 
long-term basis. In the CY 2022 PFS proposed rule (86 FR 39220 through 
39224), we included a comment solicitation requesting information that 
specifically identifies the resource costs and inputs that should be 
considered when determining the payment amount for vaccine 
administration services. In the CY 2022 PFS final rule (86 FR 65183 
through 65187), we discussed the feedback received from a wide variety 
of interested parties in response to our comment solicitation. In that 
rule, we explained that we agreed with commenters on the need to 
establish stable payment rates that consider the costs associated with 
administering the preventive vaccines included in the Part B preventive 
vaccine benefit. In particular, we agreed that the payment rates for 
administration of the influenza, pneumococcal and hepatitis B vaccines 
are too low and need to be adjusted to reflect the costs incurred by 
healthcare providers. Furthermore, we agreed with commenters who stated 
that we should decouple payment for these vaccine administration 
services from the crosswalk to the PFS and treat them independently.
    Additionally, we explained in the CY 2022 PFS final rule (86 FR 
65185) that, based on the history and status of payment for preventive 
vaccine administration and given the concerns gathered through the 
comment solicitation, we believed that we needed to act expeditiously 
to update payment rates for the administration of preventive vaccines 
paid under Medicare Part B, effective January 1, 2022. In addition, we 
believed that the timing was appropriate for establishing a predictable 
payment rate for preventive vaccine administration since the PHE had 
ignited a hypervigilance for infectious diseases.
    Therefore, for CY 2022, we finalized a uniform payment rate of $30 
for the administration of an influenza, pneumococcal or HBV vaccine 
covered under the Medicare Part B preventive vaccine benefit at section 
1861(s)(10) of the Act. We explained that since the administration of 
the preventive vaccines described under section 1861(s)(10) of the Act 
are finalized independent of the PFS, these payment rates will be 
updated as necessary independently of the valuation of any specific 
codes under the PFS.
b. Background for Medicare Part B Payment for Administration of COVID-
19 Vaccines
    As discussed in the CY 2023 PFS proposed rule (87 FR 46219), under 
the authority provided by section 3713 of the CARES Act, we have 
established specific coding and payment rates for the COVID-19 vaccine 
and its administration through technical direction to Medicare 
Administrative Contractors (MACs) and information posted publicly on 
the CMS website.\382\ We noted that a detailed history on how the 
initial payment rates for the administration of the COVID-19 vaccines 
were determined and how the payment policy evolved to a rate of $40 per 
dose is provided in the CY 2022 PFS final rule (86 FR 65181 and 65182).
---------------------------------------------------------------------------

    \382\ https://www.cms.gov/medicare/medicare-part-b-drug-average-sales-price/covid-19-vaccines-and-monoclonal-antibodies.
---------------------------------------------------------------------------

    We noted that in the CY 2022 PFS proposed rule (86 FR 39220 through 
39224), we included a comment solicitation requesting information that 
specifically identifies the resource costs and inputs that should be 
considered when determining a payment amount for preventive vaccine 
administration. As part of the comment solicitation, we requested 
feedback specifically related to the circumstances and costs associated 
with furnishing the COVID-19 vaccines to ensure we took these into 
consideration when determining our payment policy. In the CY 2022 PFS 
final rule (86 FR 65185), we discussed the feedback received in 
response to our comment solicitation with regard to the COVID-19 
pandemic. In that rule, we recognized that the PHE has posed and 
continues to pose unique challenges for vaccination providers, 
particularly with respect to the administration of vaccines for COVID-
19. For example, we stated that we anticipate that healthcare providers 
will continue to experience unusual costs associated with staffing, 
scheduling, and reporting requirements as increasing numbers of 
patients receive additional doses and boosters of the COVID-19 vaccines 
in the near future, and as health care providers adapt their vaccine 
delivery infrastructure accordingly. However, we explained that after 
the PHE, we anticipate that these costs will go down as patient volumes 
stabilize and as healthcare providers incorporate tasks such as 
scheduling and reporting into their routine clinical practice. For 
example, while we may see annual vaccination for COVID-19 similar to 
influenza, these vaccinations may happen in a more predictable manner, 
which would provide healthcare settings more time and ability to plan 
ahead for future vaccination needs. In addition, we noted that 
healthcare providers will have already made certain capital investments 
associated with the COVID-19 vaccines, such as ultra-cold storage 
freezers and software upgrades, during the course of the PHE, and thus, 
after the PHE such investments will no longer represent a significant 
additional cost over and above the costs of administering other 
preventive vaccines. For example, we believe recurrent staffing costs 
for COVID-19 vaccines may mirror the staffing needs for the 
administration of the yearly influenza vaccine. At the same time, we 
recognized that the formal termination of the PHE will not necessarily 
coincide with an immediate return to pre-pandemic circumstances, and 
that some of the additional costs mentioned above may persist while 
conditions normalize. For those reasons, we believed that it was 
appropriate to establish a single, consistent payment rate for the 
administration of all Part B preventive vaccines following the end of 
the calendar year in which the PHE expires. That is, we finalized last 
year that, effective January 1 of the year following the year in which 
the PHE ends, the $40 payment rate for administration of the COVID-19 
vaccines would be adjusted to align with the payment rate for the 
administration of other Part B preventive vaccines (86 FR 65185). While 
the above information is presented for background purposes, we direct 
readers to section III.H.4.e for the most current policies on this 
matter, as finalized in this rule.
c. Adjustment to the Payment Amount for Administration of Preventive 
Vaccines for Geographic Locality
    In the CY 2023 PFS proposed rule (87 FR 46219 through 46220), we 
stated that our method of paying for the administration of preventive 
vaccines has varied over time. We explained that

[[Page 69981]]

prior to March 1, 2003, we paid for the administration of an influenza, 
pneumococcal, or HBV vaccine, at the same rate as CPT code 90782 for 
the year corresponding to the date of service on the claim.\383\ For 
dates of service on or after March 1, 2003 through December 31, 2021, 
the vaccine administration payment rates for an influenza, 
pneumococcal, or HBV vaccine were established through notice-and-
comment rulemaking using a crosswalk to the payment rate for similar 
services paid under the PFS, such as, CPT code 96372 (Therapeutic, 
prophylactic, or diagnostic injection (specify substance or drug); 
subcutaneous or intramuscular) or CPT code 36000 (Introduction of 
needle or intracatheter, vein). Using the direct crosswalk to a similar 
service under the PFS requires applying the PFS payment calculation. 
This formula that uses a HCPCS code's relative value units (RVUs) for 
work, practice expense (PE), and malpractice (MP) adjusted by the 
location where the service is furnished (that is, geographic practice 
cost indices (GPCIs)). The GPCIs reflect the relative costs of work, 
PE, and MP in an area compared to the average national costs for 
furnishing the service. Thus, in order to calculate the payment for the 
vaccine administration codes, the work, PE, and MP RVUs are adjusted by 
the GPCIs to reflect the variations in the costs of furnishing the 
services.
---------------------------------------------------------------------------

    \383\ Pub. 100-04, Chapter 18, Section 10.2.5.2. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/clm104c18pdf.pdf.
---------------------------------------------------------------------------

    For CY 2022, we decoupled payment for these vaccine administration 
services from the PFS crosswalk and finalized a payment rate of $30 for 
the administration of an influenza, pneumococcal, or HBV vaccine and a 
payment rate of $40 for the administration of COVID-19 vaccines. 
However, in the CY 2022 PFS final rule, we inadvertently neglected to 
address a geographic adjustment policy for these payment rates and 
instead, noted only that payments would be geographically adjusted. We 
noted when we posted the CY 2022 payment rates for preventive vaccine 
administration to the seasonal influenza web page, we posted locality-
specific payment rates based on application of the PFS GPCIs to the 
finalized payment rate.\384\ Similarly, when we posted the CY 2022 
payment rates for the COVID-19 vaccine administration to the COVID-19 
vaccine web page, we posted locality-specific payment rates based on 
application of the PFS GPCIs to the finalized payment rate.\385\
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    \384\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice/VaccinesPricing.
    \385\ https://www.cms.gov/medicare/medicare-part-b-drug-average-sales-price/covid-19-vaccines-and-monoclonal-antibodies.
---------------------------------------------------------------------------

    In the CY 2023 PFS proposed rule (87 FR 46219 through 46221), we 
discussed our proposal for a geographic adjustment policy that would 
apply to preventive vaccine administration services for CY 2023 and 
subsequent years. We noted that we believe that it is appropriate to 
adjust the payment amount for the administration of preventive vaccines 
to reflect cost differences for each geographic locality. For example, 
suppliers' costs for rent or employee wages could vary significantly 
across different geographic areas. We also noted that we believe the 
geographic variation in costs of administering preventive vaccines 
provided by suppliers such as physicians, NPPs, and mass immunizers is 
similar to the geographic variation in the cost of physicians' services 
paid under the PFS.
    Since we have decoupled payment for these vaccine administration 
services from the PFS crosswalk and finalized a payment rate for them, 
we noted that we believe the next step in establishing appropriate 
payment for preventive vaccine administration services independent of 
the PFS would be to consider a more independent approach to geographic 
payment adjustment. The PFS GPCIs reflect cost differences for each 
geographic locality for each of the three distinct components of PFS 
services (work, PE, and MP). In contrast, the payment rate we have 
established for administration of the flu, pneumococcal, and HBV 
preventive vaccines is a flat rate payment of $30, and for the 
administration of COVID-19 vaccines is a flat rate payment of $40. As 
such, a single adjustment factor could be used to apply the geographic 
locality adjustment for these services. In addition to calculating the 
three component GPCIs (work, PE and MP) to adjust payment under the 
PFS, under section 1848(e)(2) of the Act, we also calculated a 
Geographic Adjustment Factor (GAF) for each fee schedule area and, we 
proposed to use this GAF described in Sec.  414.26 to geographically 
adjust payment for preventive vaccine administration services beginning 
for CY 2023. Specifically, we proposed to use the GAF to adjust the 
payment to reflect the costs of administering preventive vaccines in 
each of the PFS fee schedule areas. The GAF is calculated using the 
three component GPCIs under the PFS (work, PE, and malpractice), and is 
calculated for each PFS fee schedule area as the weighted composite of 
all three GPCIs for each fee schedule area using the national GPCI cost 
share weights. The GAF, which is described under our regulation at 
Sec.  414.26, was further discussed in section II.D. of the proposed 
rule, and the specific proposed GAF values for each fee schedule area 
are posted in Addendum D to the proposed rule.
    We discussed in the proposed rule that we also considered 
continuing to adjust the payment amount for administration of 
preventive vaccines by applying the PFS GPCIs to reflect cost 
differences for each geographic area. However, to effectuate this 
adjustment, this method would require a crosswalk to the RVUs 
established under the PFS for a CPT code that describes a similar 
service and is reflective of the mix of work, PE and MP for preventive 
vaccine administration services. Having recently disconnected payment 
for preventive vaccine administration services from the PFS through 
rulemaking as explained above, we did not believe it would be 
appropriate to continue connecting these payments to the PFS in this 
way for purposes of geographic adjustment.
    We proposed use of the GAFs to adjust payment for the preventive 
vaccine administration services for geographic cost differences 
beginning for CY 2023. As we discussed in the proposed rule and in the 
CY 2022 PFS final rule (86 FR 65180 through 65194), we engaged the 
preventive vaccine community and established a stable payment amount 
for preventive vaccine administration that is based on resource costs. 
Since calculation of the GAFs incorporates the fundamental relative 
cost structure of the PFS GPCIs, but is a single factor that is 
weighted by the overall relative share of the three PFS component 
GPCIs, we noted that we believe application of the single GAF to 
geographically adjust the payment rate for preventive vaccine 
administration services based on costs in a given locality would be a 
more appropriate, streamlined approach to geographic adjustment that 
results in similar payment. Additionally, we explained that this method 
avoids the need to refer to the component RVUs for any particular 
reference service that is valued under the PFS, and thus gets us closer 
to updating the preventive vaccine administration rates independent of 
the PFS.
    We proposed to amend our regulation at Sec.  410.152 to codify the 
use of the GAFs for each PFS fee schedule area to adjust payment 
amounts for the preventive vaccine administration services (influenza, 
pneumococcal,

[[Page 69982]]

HBV, and COVID-19) to reflect the cost differences in furnishing these 
services in different fee schedule areas. We noted that as proposed, 
beginning January 1, 2023, we would apply the GAF to the $40 payment 
amount for COVID-19 vaccine administration service so long as the 
emergency use authorization (EUA) declaration is still in place.
    We invited public comment on the proposal to adjust the payment 
amount for the administration of preventive vaccines for geographic 
cost variations using the GAF. We also welcomed comments on any other 
factors that could be used to make the payment adjustment to reflect 
geographic cost differences.
    We also proposed to amend our regulations to codify the payment 
amount established for administration of preventive vaccines in the CY 
2022 PFS final rule and the proposed method for adjusting this rate for 
cost differences in each geographic locality.
    In the CY 2023 PFS proposed rule (87 FR 46221), we noted that Sec.  
410.152(h) currently contains outdated payment policies for 
pneumococcal vaccine administration. Therefore, we proposed to revise 
Sec.  410.152 by replacing the current paragraph (h) to reflect the 
following:
     Effective January 1, 2022, the established payment amount 
under Medicare Part B for administration of influenza, pneumococcal, 
and HBV vaccines is $30. For preventive vaccines administered January 
1, 2022 through December 31, 2022, payments under Medicare Part B for 
administration of preventive vaccines are adjusted to reflect 
geographic cost variations using the GPCIs established under the PFS 
and the RVUs for a designated reference code under the PFS. Beginning 
January 1, 2023, we would adjust the payment amount for the 
administration of preventive vaccines for geographic cost variations 
using the GAF described in Sec.  414.26.
     Effective January 1, 2022, the established payment amount 
under Medicare Part B for administration of COVID-19 vaccines is $40. 
For COVID-19 vaccines administered January 1, 2022 through December 31, 
2022, payments under Medicare Part B for administration of COVID-19 
vaccines are adjusted to reflect geographic cost variations using the 
GPCIs established under the PFS and the RVUs for a designated reference 
code under the PFS. Beginning January 1, 2023, we would adjust the 
payment amount for the administration of COVID-19 vaccines for 
geographic cost variations using the GAF described in Sec.  414.26.
     Effective January 1 of the year following the year in 
which the PHE ends, the payment rate for administration of the COVID-19 
vaccines will be adjusted to align with the payment amount for the 
administration of other Part B preventive vaccines.
    We solicited comment on the proposals and the proposed amendments 
to the regulation text.
    The following is a summary of the public comments received on the 
adjustment to the payment amount for administration of preventive 
vaccines for geographic locality provisions and our responses:
    Comment: Commenters were very supportive of the proposal to adjust 
the payment amount for the administration of COVID-19 vaccines for 
geographic cost variations using the GAF beginning January 1, 2023. One 
commenter specified that they are supportive of the proposed 
adjustment, so long as it does not result in a reduction in 
reimbursement from current levels.
    Response: We are grateful to commenters for expressing their 
support for this proposal. With regard to the comment that is 
supportive of basing the adjustment on the PFS GAF instead of the GPCIs 
as long as the change does not result in a reduction in payment, we 
clarify that this change from using the PFS GPCIs to the GAF is 
technical in nature. Since the data inputs are generally the same, 
changes in payment amounts would be minimal for any particular service, 
and insignificant in the aggregate. For example, using the COVID-19 
vaccine administration payment amount of $40, the average adjusted rate 
using the 2022 GAF is $40.99 and using the 2022 GPCIs is $41.09.
    After consideration of public comments, we are finalizing use of 
the GAF, described under Sec.  414.26, for each PFS fee schedule area 
to adjust payment amounts for the preventive vaccine administration 
services (influenza, pneumococcal, HBV, and COVID-19) to reflect cost 
differences in furnishing these services in each of the PFS areas as 
proposed. We are also finalizing revisions to the regulation at Sec.  
410.152 to reflect this payment policy as proposed.
    The following is a summary of the public comments received on the 
proposals to revise Sec.  410.152 to reflect updated payment policies 
for preventive vaccine administration, followed by our responses:
    Comment: One commenter emphasized that preventive vaccines have 
been shown to lower overall costs of health care, and they thus 
requested a one-time increase in payment amounts for all Part B 
vaccines, as an incentive to providers to administer these critical 
vaccines promptly and efficiently. Other commenters mentioned the 
historical decline in payment rates for vaccine administration, as we 
discussed in the CY2022 PFS final rule (86 FR 65180 through 65182), and 
they explained that higher rates of payment are needed to encourage 
providers to continue vaccination services in the future. Other 
commenters called generally for increases in payments and other 
incentives under the Part B preventive vaccine benefit, in order to 
cover the resources that providers need to administer vaccines, and 
thereby increase adult vaccination rates.
    Other commenters suggested that CMS make more significant changes 
to the Part B preventive vaccine benefit. A number of commenters 
requested that CMS increase, or at least consider increasing, the 
vaccine administration payment for all Part B vaccines to $40, in order 
to incentivize providers to increase vaccine administration and support 
their overhead costs related to vaccines. Other commenters generally 
asked that CMS continue to review the proposed vaccine administration 
payment rates over time to ensure that the rates accurately reflect 
current health care costs, and therefore serve as adequate incentives 
to encourage all types of providers to continue providing vaccination 
services in a variety of settings. Several commenters voiced strong 
support for the addition of vaccine counseling under the Part B 
preventive vaccine benefit. Some commenters requested that the Part B 
vaccine benefit cover all Medicare-covered vaccines, including those 
currently covered under Part D, while others commented that the Part B 
vaccine benefit should include all vaccines recommended by the CDC's 
Advisory Committee on Immunization Practices (ACIP). One commenter 
requested that CMS adopt a site-neutral payment policy for Part B 
preventive vaccine administration, and that those payments should align 
with the current OPPS payment rates for vaccine administration. A few 
commenters requested that CMS clarify the difference between vaccine 
administration coverage under Medicare Parts B and D, and another 
commenter requested that CMS consider expanding the Part B vaccine 
benefit to other settings, like RHCs and FQHCs. One commenter requested 
that CMS update Medicare Part D vaccine administration payment rates to 
match Part B vaccine administration payment rates, since

[[Page 69983]]

both services are very similar, and since CMS' discussion regarding 
reductions in Part B vaccine administration payment rates (most 
recently at 86 FR 65184 through 65186) applies similarly to those in 
Part D. This commenter also noted that CMS guidance recommends that 
Part B and Part D vaccine administration payments should consider the 
same factors. Another commenter asked that CMS consider new, non-cost-
based payment methodologies for vaccine benefits that would more 
effectively capture the value of vaccinations and maximize vaccination 
rates; however, the commenter did not recommend a specific alternative 
payment methodology.
    Response: We did not make any proposals in the CY 2023 PFS proposed 
rule regarding expanding the Part B preventive vaccine benefit to 
additional vaccines, which would require a statutory change, or to pay 
for the current Part B preventive vaccines via any new methodologies. 
We have also not made any proposals regarding vaccine administration 
payments in Part D. We direct commenters to the CY 2023 OPPS proposed 
rule (87 FR 44575 through 44577) for a discussion on COVID-19 vaccine 
administration payments in the hospital outpatient setting, where a 
different payment methodology is currently used.
    After consideration of the public comments, we are finalizing our 
proposal to revise Sec.  410.152 by replacing the current paragraph (h) 
to reflect that, for preventive vaccines administered January 1, 2022 
through December 31, 2022, payments under Medicare Part B for 
administration of preventive vaccines are adjusted to reflect 
geographic cost variations using the GPCIs established under the PFS 
and the RVUs for a designated reference code under the PFS, and 
beginning January 1, 2023, the payment amount for the administration of 
preventive vaccines for geographic cost variations will be adjusted 
using the GAF described in Sec.  414.26.
    We are also finalizing our proposal to revise Sec.  410.152 to 
reflect that, effective January 1, 2022, the established payment amount 
under Medicare Part B for administration of COVID-19 vaccines is $40, 
and effective January 1 of the year following the year in which the PHE 
ends, the payment rate for administration of the COVID-19 vaccines will 
be adjusted to align with the payment amount for the administration of 
other Part B preventive vaccines. We note in section III.H.4.d.i. of 
this final rule, we are finalizing our proposal to clarify that this 
policy will be dependent on the declaration under section 564 of the 
Federal Food, Drug, and Cosmetic Act (FD&C Act), that is, EUA 
declaration for drugs and biological products.
d. Annual Adjustment to the Payment Amount for Administration of 
Preventive Vaccines to Reflect Changes in Cost
    As discussed in the CY 2023 PFS proposed rule (87 FR 46221 through 
46222), as part of the comment solicitation in the CY 2022 PFS proposed 
rule, we requested feedback on whether CMS should use a different 
process to update the payment rates for administration of the 
preventive vaccines described in section 1861(s)(10) of the Act on an 
annual basis. Some commenters provided feedback in response to this 
specific inquiry. One commenter suggested that incremental updates 
should be made to the payment rate each year. Another commenter stated 
that annual updates to the vaccine administration payment rates based 
on OPPS claims data would be a reliable and data-based method for 
updating the payment rate and would prevent the issues that have 
occurred in the past with the crosswalk under the PFS to CPT code 
96372. In response to those comments, we stated that we would continue 
to seek feedback on an appropriate mechanism for updating these 
payments on a yearly basis by, for example, applying an annual 
inflation factor, for example the increase in the MEI, to the payment 
rate in order to reflect increases in costs faced by providers and 
suppliers that furnish the service; and that we plan to address 
updating the payment rate for Part B preventive vaccine administration 
in future rulemaking.
    We noted that we believed finalizing a $30 payment amount adjusted 
for geographic locality for the service to administer preventive 
vaccines in CY 2022 was the first step in the development of a Part B 
payment methodology that provides predictable payment to the providers/
suppliers furnishing these vaccines. Therefore, we discussed how we 
would annually update the $30 payment amount to account for changes in 
costs associated with furnishing the service.
    To account for the change in costs of administering preventive 
vaccines, we proposed to update the payment amount (that is, $30) 
established in the CY 2022 PFS final rule for the administration of 
preventive vaccines based upon the annual increase to the MEI. The MEI 
is defined in section 1842(i)(3) of the Act and is used to update 
payment amounts in other healthcare settings. For example, the MEI is 
used to update the non-drug component of the OTP payment bundle and is 
also used to update the fixed-dollar payment amount for the originating 
site facility fee for Medicare telehealth services. The MEI is a fixed-
weight input price index that reflects the physicians' own time and the 
physicians' practice expenses, with an adjustment for the change in 
economy-wide, private nonfarm business total factor productivity. We 
noted that the MEI was last revised in the CY 2014 PFS final rule with 
comment period (78 FR 74264) and the proposal to rebase and revise the 
MEI for CY 2023 is discussed in section II.M. of the proposed rule (87 
FR 46041-46055). At the time of the CY 2023 PFS proposed rule, the 
available forecast of the increase in the MEI for CY 2023 was 3.8 
percent based on the proposed 2017-based MEI. We also noted that the CY 
2023 MEI increase factor for the final rule would be based on 
historical data through the 2nd quarter of 2022.
    As discussed in the proposed rule, in developing the proposed 
method to update the payment amount for administering preventive 
vaccines, we considered other potential update factors, such as the 
Bureau of Labor Statistics Consumer Price Index for All Items for Urban 
Consumers (Bureau of Labor Statistics #CUUR0000SA0 (https://www.bls.gov/cpi/data.htm). The Consumer Price Index for All Items (CPI-
U) is a measure of the average change over time in the prices paid by 
urban consumers for a market basket of consumer goods and services. 
However, we concluded that a healthcare-specific update factor, such as 
the MEI, would be more appropriate for suppliers that administer 
preventive vaccines than the CPI-U, which measures general inflation, 
as the MEI would more accurately reflect the change in the prices of 
goods and services included in the vaccine administration service. We 
also considered using a labor-specific series for the inflation factor 
since a main source of the expenses related to the administration of 
vaccines are related to the staff who administer them. For example, we 
considered the Employment Cost Index (ECI)--Wages and salaries for All 
Civilian workers in Hospitals or the ECI--Wages and salaries for All 
Civilian workers in Health care and social assistance. However, we 
concluded that an update factor that considers other costs, such as the 
MEI, would be more appropriate for suppliers that administer preventive 
vaccines than the ECI.
    We noted that under the proposal, beginning January 1, 2023 we 
would update the $40 payment amount for

[[Page 69984]]

COVID-19 vaccine administration based upon the proposed 2017-based MEI 
so long as the EUA declaration is still in place.
    Accordingly, we proposed to annually update the payment amount for 
administration of preventive vaccines based upon the most recently 
available historical annual growth in the MEI available at the time of 
rulemaking. We proposed to codify this proposal in tandem with the 
revisions discussed in section III.H.2.c. of the proposed rule under 
Sec.  410.152. We invited public comment on the proposal. We also 
welcomed comments on potential approaches to updating payment rates for 
administration of preventive vaccines other than the MEI that could be 
used as an annual adjustment to account for the change in costs 
associated with administering preventive vaccines.
    The following is a summary of the public comments received on the 
annual adjustment to the payment amount for administration of 
preventive vaccines to reflect changes in cost provisions and our 
responses:
    Comment: All commenters supported an annual increase to the Part B 
preventive vaccine administration payment amount to reflect changes in 
cost faced by providers and suppliers that furnish the service. The 
majority of the commenters supported the proposal to annually adjust 
the Part B preventive vaccine administration payment amount based upon 
the annual increase in the MEI. However, several commenters noted that, 
while they are in favor of an annual payment update for vaccine 
administration rates with the MEI, they expressed concerns with the CY 
2023 PFS proposed rule's suggested changes to the MEI calculation (87 
FR 46041-46055). Two commenters supported conditional use of the 
proposed rebased and revised MEI if CMS considered their suggested 
recommendations. Two other commenters recommended that CMS not rely on 
the proposed rebased and revised MEI because of their concerns, but 
they did not offer an alternative policy. One commenter requested that 
CMS periodically review the cost of vaccine administration to ensure 
that the MEI is adequately reflecting annual increased costs.
    Response: We direct those with concerns about the proposed changes 
to the MEI calculation to section II.M of this final rule. While we 
acknowledge those concerns, CMS believes that the MEI remains the most 
appropriate measure by which to annually adjust Part B preventive 
vaccine administration payments. After consideration of the public 
comments, we are finalizing our proposed policy. That is, beginning 
January 1, 2023 and in subsequent years, the payment amount for 
administration of preventive vaccines will be annually updated based 
upon the most recently available historical annual growth in the MEI 
available at the time of rulemaking. We are also finalizing revisions 
to the regulation at Sec.  410.152 to reflect this payment policy as 
proposed.
    We note that, in section II.M. of this final rule, we are 
finalizing the 2017-based MEI for CY 2023, with technical modifications 
based on public comments. The CY 2023 MEI update is 3.8 percent, based 
on historical data through the 2nd quarter of 2022 of the finalized 
2017-based MEI.
e. Summary of Final Payment Policies and Implementation
    In summary, beginning January 1, 2023 and in subsequent years, we 
are finalizing our proposal to annually update the payment amount for 
the administration of Part B preventive vaccines based upon the 
increase in the MEI. Additionally, we are finalizing our proposal to 
adjust this payment amount to reflect cost differences for the 
geographic locality based upon the fee schedule area where the 
preventive vaccine is administered using the GAF. These adjustments 
will apply to HCPCS codes G0008, G0009, G0010, and CPT codes that 
describe the service to administer COVID-19 vaccines \386\ effective 
January 1, 2023.
---------------------------------------------------------------------------

    \386\ The current list of effective COVID-19 vaccine 
administration codes is available on the CMS web page: https://www.cms.gov/medicare/medicare-part-b-drug-average-sales-price/covid-19-vaccines-and-monoclonal-antibodies.
---------------------------------------------------------------------------

    Since the CY 2023 MEI update is 3.8 percent, the CY 2023 payment 
amount for influenza, pneumococcal, and HBV vaccine administration is 
$31.14 ($30.00 x 1.038 = $31.14). This amount will be geographically 
adjusted based upon the fee schedule area where the preventive vaccine 
is administered using the GAF. To facilitate these new payment rules, 
CMS plans to release subregulatory guidance to implement a new national 
fee schedule for Part B preventive vaccine administration. With regard 
to COVID-19 vaccine administration, for CY 2023 the payment amount is 
$41.52 ($40.00 x 1.038 = $41.52), through the end of the calendar year 
in which the current EUA declaration for drugs and biologicals with 
respect to COVID-19 remains in place. Thereafter, the payment amount 
for COVID-19 vaccine administration will be adjusted to align with the 
payment rate for the other Medicare Part B preventive vaccines. Please 
see section III.H.4 of this final rule for more information on final 
policies regarding COVID-19 vaccine administration.
3. In-Home Additional Payment for Administration of COVID-19 Vaccines
a. Background
    On June 9, 2021, we announced a new add-on payment with a national 
rate of approximately $35.00 when a COVID-19 vaccine is administered in 
the home, and on August 24, 2021, we expanded the circumstances under 
which the in-home add-on payment is available.387 388 Under 
this policy, providers and suppliers that administer a COVID-19 vaccine 
in the home under certain circumstances can bill Medicare for one of 
the existing COVID-19 vaccine administration CPT codes \389\ along with 
HCPCS code M0201 (COVID-19 vaccine administration inside a patient's 
home; reported only once per individual home per date of service when 
only COVID-19 vaccine administration is performed at the patient's 
home). The total national average payment to providers and suppliers 
administering a COVID-19 vaccine in the home is $75.50 dollars per dose 
($40 for COVID-19 vaccine administration and $35.50 for the additional 
payment for administration in the home), and both payments are 
geographically adjusted using PFS GPCIs as discussed in section 
III.H.2.c. of this final rule. In the CY 2022 PFS final rule (86 FR 
65187 and 65188), we provided a detailed explanation on how the payment 
amount was established. In announcing the add-on payment for in-home 
COVID-19 vaccine administration, we noted that we established these 
policies on a preliminary basis to ensure access to COVID-19 vaccines 
during the public health emergency and that we will continue to 
evaluate the needs of Medicare patients and these policies, and address 
them in the future, as needed.
---------------------------------------------------------------------------

    \387\ https://www.cms.gov/newsroom/press-releases/biden-administration-continues-efforts-increase-vaccinations-bolstering-payments-home-covid-19.
    \388\ https://www.cms.gov/newsroom/press-releases/cms-expands-medicare-payments-home-covid-19-vaccinations.
    \389\ https://www.cms.gov/medicare/medicare-part-b-drug-average-sales-price/covid-19-vaccines-and-monoclonal-antibodies.
---------------------------------------------------------------------------

    In the CY 2022 PFS proposed rule (86 FR 39224 through 39226), we 
included a comment solicitation to collect feedback on these policies 
and potential future changes. As part of the comment solicitation, we 
requested feedback related to our definition of ``home,'' program 
integrity concerns, changes that we should consider, costs associated

[[Page 69985]]

with administering COVID-19 vaccines in the home, and whether outside 
of a PHE there is a need to vaccinate people in the home rather than 
going to a health care provider or supplier. In the CY 2022 PFS final 
rule (86 FR 65188 through 65190), we discussed the feedback received 
and that commenters overwhelmingly recommended that we continue making 
the additional payment beyond the end of the PHE, with many also 
supporting extending the payment to other preventive vaccines, either 
permanently or until the end of the PHE. Commenters emphasized the 
importance of increasing vaccination rates and making vaccines 
available to vulnerable homebound beneficiaries who face barriers 
including chronic illness, financial and social precarity, and lack of 
access to digital resources.
    In that rule, we agreed with commenters that the added costs and 
compelling needs required CMS to adopt the in-home add-on payment rate 
for COVID-19 vaccine administration. In addition, we stated that since 
we did not expect those needs or costs to diminish immediately with the 
end of the PHE, we believed it would be appropriate to leave the in-
home add-on payment rate in place through the end of the CY in which 
the PHE ends. For example, we anticipated that additional COVID-19 
vaccine booster doses will be needed. In addition, we believed that 
that this policy would set clear expectations for vaccine providers and 
suppliers and allow for a more gradual transition to a permanent 
payment policy.
    Therefore, we finalized continuation of the additional payment of 
$35.50 when a COVID-19 vaccine is administered in a beneficiary's home 
under certain circumstances until end of the calendar year in which the 
PHE ends. As we discussed in the CY 2022 PFS final rule, extending the 
availability of the in-home add-on payment past the end of the PHE 
maximizes access to COVID-19 vaccines for vulnerable homebound 
beneficiaries during the gradual return to normal conditions following 
the formal termination of the PHE. We also explained that this 
extension of payment past the end of the PHE affords CMS the 
opportunity to monitor vaccine uptake data (86 FR 65189).
b. Conditions for Billing HCPCS Code M0201
    In establishing the additional payment for COVID-19 vaccine 
administration in the home, we also established certain conditions for 
the add-on payment described by HCPCS code M0201. In the CY 2022 PFS 
final rule, we provide a detailed discussion on how we established the 
certain conditions under which the code can be used, and the situations 
we contemplated to arrive at our final payment policy (86 FR 65187 and 
65188).
    For purposes of this add-on payment for in-home COVID-19 vaccine 
administration, the following requirements apply when billing for HCPCS 
code M0201: 390 391
---------------------------------------------------------------------------

    \390\ https://www.cms.gov/medicare/covid-19/medicare-covid-19-vaccine-shot-payment.
    \391\ https://www.cms.gov/files/document/vaccine-home.pdf.
---------------------------------------------------------------------------

     The patient has difficulty leaving the home to get the 
vaccine, which could mean any of these:
    ++ They have a condition, due to an illness or injury, that 
restricts their ability to leave home without a supportive device or 
help from a paid or unpaid caregiver;
    ++ They have a condition that makes them more susceptible to 
contracting a pandemic disease like COVID-19; or
    ++ They are generally unable to leave the home, and if they do 
leave home, it requires a considerable and taxing effort.
     The patient is hard-to-reach because they have a 
disability or face clinical, socioeconomic, or geographical barriers to 
getting a COVID-19 vaccine in settings other than their home. These 
patients face challenges that significantly reduce their ability to get 
vaccinated outside the home, such as challenges with transportation, 
communication, or caregiving.
     The sole purpose of the visit is to administer the COVID-
19 vaccine. Medicare will not pay the additional amount if the provider 
or supplier furnished another Medicare covered service in the same home 
on the same date.
     A home can be:
    ++ A private residence, temporary lodging (for example, a hotel or 
motel, campground, hostel, or homeless shelter);
    ++ An apartment in an apartment complex or a unit in an assisted 
living facility or group home (including assisted living facilities 
participating in the CDC's Pharmacy Partnership for Long-Term Care 
Program when their residents are vaccinated through this program);
    ++ A patient's home that is made provider-based to a hospital 
during the PHE for COVID-19; or
    ++ Communal spaces of a multi-unit or communal living arrangement.
     A home cannot be:
    ++ An institution that meets the requirements of sections 
1861(e)(1), 1819(a)(1), or 1919(a)(1) of the Act, which includes 
hospitals and skilled nursing facilities (SNFs), as well as most 
nursing facilities under Medicaid.\392\
---------------------------------------------------------------------------

    \392\ 42 CFR 409.42(a).
---------------------------------------------------------------------------

    The COVID-19 vaccine must be administered inside an individual's 
home. For this purpose, an individual unit in a multi-dwelling building 
is considered a home. For example, an individual apartment in an 
apartment complex or an individual bedroom inside an assisted living 
facility or group home is considered a home. HCPCS code M0201, as noted 
in the code descriptor, can be billed only once per individual home per 
date of service. Medicare pays the additional payment amount for up to 
a maximum of 5 vaccine administration services per home unit or 
communal space within a single group living location; but only when 
fewer than 10 Medicare patients receive a COVID-19 vaccine dose on the 
same day at the same group living location.
c. Changes for CY 2023
    As discussed in the CY 2023 PFS proposed rule (87 FR 46223), 
subsequent to the CY 2022 PFS final rule, we received suggestions from 
interested parties that this in-home add-on payment should be applied 
more broadly to all preventive vaccines, and concerns that 
discontinuation of the payment would negatively impact access to 
preventive vaccines for vulnerable homebound beneficiaries. We noted 
that while we agreed with these concerns, we also believed that we need 
to learn more about the populations served through the current in-home 
add-on payment, and other potential populations that may not have been 
able to access a COVID-19 vaccine despite the availability of the in-
home add-on payment, to understand the barriers they face in receiving 
vaccinations in their home versus in the community. We also noted the 
need to consider potential program integrity concerns.
    We discussed continuing the additional payment for at-home COVID-19 
vaccinations for another year to provide us time to track utilization 
and trends associated with its use to inform the policy for CY 2024. We 
noted that we are not extending the policy to include the other 
preventive vaccines and explained that one of the reasons we 
established this rate is to account for the post-administration time 
that the health care professional must spend in the home to monitor the 
patient after

[[Page 69986]]

administration of the COVID-19 vaccine. Administration of the COVID-19 
vaccine typically involves monitoring the patient for at least 15-30 
minutes post-injection, which is not the general administration 
protocol for other vaccines. We also noted that the in-home add-on 
payment helps to account for the costs associated with special handling 
of the vaccine and the extra time spent with the patient when a vaccine 
is administered in the home.
    Therefore, for CY 2023, we proposed to continue the additional 
payment of $35.50 when a COVID-19 vaccine is administered in a 
beneficiary's home under the certain circumstances described in section 
III.H.3.b of the proposed rule. We also proposed to adjust this payment 
amount for geographic cost differences as we do the payment for the 
preventive vaccine administration service. That is, for CY 2023, we 
would adjust this payment amount to reflect cost differences for the 
geographic area based upon the fee schedule area where the COVID-19 
vaccine is administered using the GAF. In addition, for CY 2023, we 
discussed in the proposed rule that we would update the $35.50 by the 
CY 2023 MEI consistent with the proposal for the other preventive 
vaccine administration services. We noted that we believe this policy 
will continue to provide access to beneficiaries who would otherwise 
have difficulty getting vaccinated, while we continue to monitor 
utilization and receive information to be considered in developing our 
policy for the future. We welcomed comments and suggestions on steps we 
could take related to program integrity and beneficiary protections 
associated with payments for administering preventive vaccines in the 
home, including the COVID-19 vaccine and other preventive vaccines 
under Medicare Part B.
    The following is a summary of the public comments received on the 
in-home additional payment for administration of COVID-19 vaccines 
provisions and our responses:
    Comment: Many commenters supported continuation of the in-home 
additional payment for COVID-19 vaccine administration. Commenters 
largely echoed the positive comments summarized in the CY 2022 PFS 
final rule (86 FR 65189 and 65190). They explained that, over the past 
calendar year, this policy has provided critical expanded access to 
COVID-19 vaccines for vulnerable beneficiaries living in rural areas, 
for those who are homebound or lack transportation, or for those who 
have a condition that would put them at high risk for contracting 
severe COVID-19. Commenters pointed out that this policy has also 
helped those with chronic illnesses and those with mental and physical 
limitations that severely curtail their mobility and/or their ability 
to seek vaccination administration outside the home. In addition to 
general support for the policy, commenters were also very supportive of 
updating the in-home additional payment both annually and for 
geographic location, via the MEI and GAF respectively.
    In addition to the positive feedback received, we received many 
comments that requested that this in-home benefit be expanded. Similar 
to the feedback described in CY 2022 PFS final rule (86 FR 65188 
through 65190), many commenters recommended that CMS extend the in-home 
additional payment to the other preventive vaccines covered under Part 
B, additional vaccines covered under Medicare, and all Advisory 
Committee on Immunization Practices (ACIP)-recommended vaccines. 
Several commenters expressed their hope that the in-home additional 
payment continue indefinitely. One commenter requested that CMS allow 
home care providers to receive the additional in-home payment when 
administering the COVID-19 vaccine alongside an Evaluation and 
Management (E/M) visit. These commenters emphasized the importance of 
increasing vaccination rates and making vaccines available to the 
multiple types of vulnerable beneficiaries mentioned above.
    Response: We thank all commenters for their feedback on the in-home 
additional payment for COVID-19 vaccine administration. At this time, 
we are finalizing our proposal to continue the in-home additional 
payment as proposed for CY 2023. While we did not make any proposals 
about expanding this payment to other vaccines or to home care 
providers when administering the COVID-19 vaccine alongside an E/M 
visit, we are carefully reviewing all of the aforementioned comments as 
we consider potential policy changes regarding in-home vaccine 
administration payments in the future. After consideration of the 
public comments, we are finalizing our proposed policies for CY 2023 to 
continue the in-home additional payment for the administration of 
COVID-19 vaccines, to adjust payments for these services based on the 
PFS GAF, and to update the payment by the CY 2023 MEI. Therefore, for 
CY 2023 the in-home additional payment amount for COVID-19 vaccine 
administration described by HCPCS code M0201 is $36.85 ($35.50 x 1.038 
= $36.85), and payment for these services will be adjusted for 
geographic cost differences using the relevant PFS GAF.
4. Clarification on Policies for COVID-19 Vaccine and Monoclonal 
Antibody Products
a. Background
    Under section 319 of the Public Health Service (PHS) Act (42 U.S.C. 
247d), the Secretary can declare a public health emergency (PHE) if he 
determines that: (1) a disease or disorder presents a PHE; or (2) a 
PHE, including significant outbreaks of infectious diseases or 
bioterrorist attacks, otherwise exists. A PHE declaration allows the 
Secretary to take certain actions in response to the PHE. In addition, 
a PHE declaration under section 319 of the PHS Act can be a necessary 
step in authorizing the Secretary to take a variety of discretionary 
actions to respond to the PHE under the statutes HHS administers.\393\ 
If the criteria under section 564 of the FD&C Act are met, the 
Secretary may make a declaration that the circumstances exist 
justifying an emergency use authorization (EUA) of unapproved drugs, 
devices, or biological products, or of approved drugs, devices, or 
biological products for an unapproved use.\394\
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    \393\ https://www.cms.gov/Medicare/Provider-Enrollment-and-Certification/SurveyCertEmergPrep/Downloads/PHE-Questions-and-Answers.pdf.
    \394\ https://www.fda.gov/regulatory-information/search-fda-guidance-documents/emergency-use-authorization-medical-products-and-related-authorities.
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    On January 31, 2020, under section 319 of the PHS Act, the 
Secretary determined that a PHE as a result of confirmed cases of 2019 
Novel Coronavirus existed nationwide and had existed since January 27, 
2020 (hereafter referred to as the PHE for COVID-19). The Secretary has 
since renewed this declaration for successive 90-day periods, most 
recently on October 13, 2022.\395\ On March 27, 2020, the Secretary 
declared that circumstances exist justifying the authorization of 
emergency use of drugs and biological products during the COVID-19 
pandemic, pursuant to section 564 of the FD&C Act, subject to the terms 
of any authorization issued under that section (85 FR 18250 through 
18251). This latter declaration enabled the Commissioner of Food and 
Drugs to issue an EUA for a drug or biological product if the 
Commissioner reasonably concludes that, among other criteria, based on 
the totality of available scientific evidence, the product may be

[[Page 69987]]

effective in diagnosing, treating or preventing such disease or 
condition, and the product's known and potential benefits when used to 
diagnose, prevent, or treat such disease or condition, outweigh its 
known and potential risks.
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    \395\ https://aspr.hhs.gov/legal/PHE/Pages/covid19-13Oct2022.aspx.
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b. Timing Distinction Between Section 319 of the PHS Act and Section 
564 of the FD&C Act Declarations
    As discussed in the CY 2023 PFS proposed rule (87 FR 46224), 
declarations under section 319 of the PHS Act generally last for 90 
days, but may be extended \396\ by the Secretary. After each extension, 
the declaration lasts for 90 days or until the Secretary declares the 
emergency no longer exists, whichever occurs first. In contrast, an 
emergency declaration pursuant to section 564 of the FD&C Act (an ``EUA 
declaration'') continues until specifically terminated.\397\ An EUA 
declaration may remain in effect beyond the duration of the section 319 
PHE declaration. When an EUA declaration is to be terminated, notice of 
termination will be published in the Federal Register that provides a 
reasonable period of advance notice to the public that the EUA 
declaration is being terminated, to permit manufacturers, health care 
facilities, providers, patients, and other interested parties to 
transition away from EUA products and the policies that support them.
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    \396\ https://www.phe.gov/emergency/news/healthactions/phe/Pages/default.aspx.
    \397\ https://www.fda.gov/emergency-preparedness-and-response/mcm-legal-regulatory-and-policy-framework/faqs-what-happens-euas-when-public-health-emergency-ends.
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c. Medicare Part B Coverage and Payment of COVID-19 Vaccine and 
Therapeutic Monoclonal Antibody Products
    At the time of drafting this final rule, four COVID-19 vaccines are 
authorized or approved for use in the US to prevent COVID-19.\398\ FDA 
has approved licensure of Pfizer-BioNTech and Moderna COVID-19 mRNA 
vaccines for use in certain individuals, but there are also individuals 
for whom these vaccines continue to be available under an EUA. FDA has 
limited the authorized use of the Janssen-manufactured COVID-19 viral 
vector vaccine to individuals 18 years of age and older for whom other 
FDA-authorized or licensed COVID-19 vaccines are not accessible or 
clinically appropriate, and to individuals 18 years of age and older 
who elect to receive the Janssen COVID-19 vaccine because they would 
otherwise not receive a COVID-19 vaccine. Since the publication of the 
proposed rule, FDA has issued an EUA for emergency use of the Novavax 
COVID-19 Vaccine, Adjuvanted for individuals 12 years of age and older. 
In addition, there are other COVID-19 vaccines that are not licensed or 
authorized under an EUA, but are in Phase 3 clinical trial.\399\
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    \398\ Viewed 9/18/2022. https://www.cdc.gov/coronavirus/2019-ncov/vaccines/stay-up-to-date.html#about-vaccines.
    \399\ Viewed 9/18/2022. https://www.medicalcountermeasures.gov/app/barda/coronavirus/COVID19.aspx?filter=vaccine.
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    Regarding availability of COVID-19 monoclonal antibody products, 
there are no monoclonal antibody products approved for the treatment or 
prevention of COVID-19. There are three authorized monoclonal antibody 
COVID-19 products; two are authorized for the treatment of COVID-19 
(one specifically for use in hospitalized patients) and one is 
authorized as pre-exposure prophylaxis for prevention of COVID-19.\400\
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    \400\ Viewed 9/18/2022. https://www.fda.gov/emergency-preparedness-and-response/mcm-legal-regulatory-and-policy-framework/emergency-use-authorization.
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    In the November 2020 IFC, we discussed how we believed it is 
appropriate for Medicare to consider any EUA under section 564 of the 
FD&C Act issued for a COVID-19 vaccine during the PHE to be tantamount 
to a license under section 351 of the PHS Act for the sole purpose of 
considering such a vaccine to be described in section 1861(s)(10)(A) of 
the Act (85 FR 71145 through 71148). That is, even though section 3713 
of the CARES Act refers to a COVID-19 vaccine ``licensed under section 
351 of the PHS Act,'' CMS could consider any vaccine for which FDA 
issued an EUA during the PHE, when furnished consistent with terms of 
the EUA, to be eligible for Medicare coverage and payment.
    Subsequent to the November 2020 IFC and as discussed in the CY 2022 
PFS final rule (86 FR 65190 through 65194), when COVID-19 monoclonal 
antibody products were granted EUAs during the PHE for COVID-19, we 
made the determination to cover and pay for them under the Part B 
vaccine benefit in section 1861(s)(10) of the Act. This determination 
effectively extended the policy decision for COVID-19 vaccines to 
COVID-19 monoclonal antibody products, that is, that an EUA under 
section 564 of the FD&C Act issued for a COVID-19 monoclonal antibody 
product during the PHE is tantamount to a license under section 351 of 
the PHS Act for the sole purpose of considering such a COVID-19 
monoclonal antibody product to be described in section 1861(s)(10)(A) 
of the Act.
    As we discussed in the CY 2023 PFS proposed rule (87 FR 46225), the 
decision to cover and pay for monoclonal antibody products used to 
treat COVID-19 under the Part B vaccine benefit prioritized access to 
these products during the COVID-19 pandemic by allowing almost all 
Medicare enrolled providers and suppliers, as permitted by State law 
and consistent with the terms of the EUA, to furnish and bill for 
administering these products across settings of care. Covering and 
paying for these services under the Part B vaccine benefit also means 
that beneficiaries are not responsible for any cost sharing for the 
product or the service to administer it.
    We noted that under the Part B preventive vaccine benefit, Medicare 
pays for the vaccine product (when such product is not free to the 
provider/supplier, as is the case for COVID-19 vaccines as of the 
publication of this rule) and its administration. Typically, payment 
for the vaccine product is made at 95 percent of the AWP, but some 
healthcare settings, such as RHCs, are paid at 100 percent of their 
reasonable cost. Typically, payment for the administration of the 
preventive vaccine shots is approximately $30 per dose, but again, some 
healthcare settings are paid at 100 percent of their reasonable cost. 
We also noted that in contrast to vaccine shots, payment for 
administration of COVID-19 monoclonal antibody products under the Part 
B preventive vaccine benefit depends on the route of administration, 
and whether the product is furnished in a healthcare setting or in the 
beneficiary's home. As discussed in more detail in the CMS COVID-19 
Monoclonal Toolkit, payment for administration of monoclonal antibodies 
can range from $150.50 to $750.00. \401\
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    \401\ https://www.cms.gov/monoclonal.
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    We noted in the CY 2023 PFS proposed rule that in the CY 2022 PFS 
final rule (86 FR 65179 through 65193) we discussed several steps CMS 
has taken to promote broad and timely access to COVID-19 vaccines and 
monoclonal antibody products used to treat COVID-19 paid for under the 
Part B preventive vaccine benefit, during the PHE for COVID-19. We 
specifically discussed the unique circumstances providers and suppliers 
face when administering COVID-19 vaccines and recognized the difficulty 
to predict when resource costs relating to COVID-19 vaccination will 
align with those for

[[Page 69988]]

other vaccinations after the PHE ends, as we believe the scale of this 
PHE is unique in Medicare payment history. Therefore, last year, we 
finalized the policy to maintain the current payment rate of $40 per 
dose for the administration of the COVID-19 vaccines through the end of 
the calendar year in which the PHE ends. That is, we finalized for CY 
2022, effective January 1 of the year following the year in which the 
PHE ends, the payment rate for COVID-19 vaccine administration will be 
set at a rate that aligns with the per dose payment rate for 
administration of other Part B preventive vaccines (86 FR 65186). While 
this information is presented for background purposes, we direct 
readers to section III.H.4.e below for the most current policies on 
this matter, as finalized in this rule.
    We also noted in the CY 2023 PFS proposed rule that in the CY 2022 
PFS final rule, we contemplated how to cover and pay for COVID-19 
monoclonal antibody products following the end of the PHE for COVID-19, 
including whether we should align their payment and coverage with other 
biologicals (86 FR 65190 through 65194). After review of the comments 
received, we agreed with commenters who recommended CMS transition to 
treating monoclonal antibody therapies used to treat COVID-19 as 
biologicals that are paid using methodologies under section 1847A of 
the Act following the end of the calendar year in which the PHE 
expires. We noted that Medicare considers other monoclonal antibody 
products--that is, monoclonal antibody products used in the treatment 
of other health conditions--to be ``biologicals,'' and Medicare pays 
for them based on the methodology in section 1847A of the Act when they 
are furnished in physician offices or ambulatory infusion clinics, and 
under a similar methodology under the hospital OPPS. We explained that 
for these care settings, we typically rely on the applicable AMA CPT 
codes to describe and pay for drug administration services performed by 
providers and suppliers.
    We further noted that in the CY 2022 PFS final rule, we explained 
that the public health needs that prompted coverage of monoclonal 
antibody products used to treat COVID-19 paid for under the Medicare 
Part B vaccine benefit will gradually stabilize following the end of 
the PHE, and that extending the current payment approach to the end of 
the year will give healthcare providers adequate time to prepare for 
the change in payment methodology while continuing to maximize access 
to beneficiaries, including those who receive these treatments in the 
home. In addition, we stated that since we do not expect those needs or 
costs to diminish immediately with the end of the PHE, we believe it 
would be appropriate to continue to provide payment and coverage for 
COVID-19 monoclonal antibody therapies under the Medicare Part B 
vaccine benefit in place through the end of the CY in which the PHE 
ends, when such treatments are used consistent with the scope and 
conditions of authorization in the relevant EUA (while in effect). In 
the CY 2022 PFS final rule, we recognized that once an EUA declaration 
is terminated,\402\ EUAs issued under that declaration will no longer 
remain in effect,\403\ which may affect the availability of some 
products either for the diagnosis, treatment, or prevention of COVID-
19, because they will need to have the requisite marketing 
authorization to remain on the market. To the extent there are products 
that would no longer have the requisite marketing authorization to 
remain on the market after a revocation of an EUA, we believe a 
transition period would be appropriate to allow for adjustments, as 
needed, to care plans that included such products (86 FR 65192).
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    \402\ Subsequent to the issuance of the final rule, we found 
that we incorrectly stated `once the COVID-19 PHE declaration is 
terminated.' The correct statement is `once the EUA declaration is 
terminated.'
    \403\ https://www.fda.gov/media/97321/download.
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d. Clarification of Medicare Part B Policies
    In the CY 2023 PFS proposed rule (87 FR 46225 through 46226) we 
stated that in light of the timing distinctions between a PHE declared 
under section 319 of the PHS Act and an EUA declaration under section 
564 of the FD&C Act, we reconsidered the policies finalized in the CY 
2022 PFS final rule and believe a clarification is necessary. We noted 
that throughout our discussions and specifically in policy statements 
related to payment and coverage for COVID-19 vaccines and monoclonal 
antibody products, we have used phrases such as, ``through the end of 
the calendar year in which the PHE ends'' and ``effective January 1 of 
the year following the year in which the PHE ends.'' While we 
acknowledged that the intent at the time was to refer to the 
declaration under section 319 of the PHS Act, we reconsidered this 
position in light of the fact that the March 27, 2020 EUA declaration 
under section 564 of the FD&C Act is distinct from, and not dependent 
on, the PHE declaration under section 319 of the PHS Act. We explained 
an EUA for a drug or biological product issued pursuant to the March 
27, 2020 EUA declaration may remain in effect beyond the duration of 
the section 319 declaration if all statutory conditions are met.\404\ 
On further consideration, we discussed in the proposed rule that we 
believe that our goal to promote broad and timely access to COVID-19 
vaccines and COVID-19 monoclonal antibody products, will be better 
served if our policies with respect to payment for these products, as 
addressed in the November 2020 IFC and CY 2022 PFS final rule, continue 
until the EUA declaration for drugs and biological products (see 85 FR 
18250) is terminated. Therefore, we proposed to clarify our policies as 
stated below. Table 85 displays the CY 2023 Part B payment for 
preventive vaccine administration if the EUA declaration continues into 
CY 2023 and Table 86 displays the CY 2023 Part B payment for preventive 
vaccine administration if the EUA declaration ends on or before 
December 31, 2022.
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    \404\ https://www.fda.gov/emergency-preparedness-and-response/mcm-legal-regulatory-and-policy-framework/faqs-what-happens-euas-when-public-health-emergency-ends.
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i. COVID-19 Vaccines and Their Administration
    In the CY 2023 proposed rule, we proposed that CMS would maintain 
the current payment rate of $40 per dose, updated by the increase in 
the MEI and adjusted by the PFS GAF as discussed above, for the 
administration of the COVID-19 vaccines through the end of the calendar 
year in which the March 27, 2020 EUA declaration under section 564 of 
the FD&C Act (EUA declaration) for drugs and biological products ends. 
Effective January 1 of the year following the year in which the EUA 
declaration ends, we proposed that the payment rate for COVID-19 
vaccine administration would be set at a rate to align with the payment 
rate for the administration of other Part B preventive vaccines.
ii. In-Home Administration of COVID-19 Vaccines
    In the CY 2023 proposed rule, we noted the policy finalized for in-
home administration of COVID-19 vaccines in the CY 2022 PFS final rule. 
That is, in CY2022, we finalized that CMS will continue the additional 
payment of $35.50 for COVID-19 vaccine administration in the home under 
certain circumstances through the end of the calendar year in which the 
PHE ends. However, in section III.H.3 of this final rule, we discuss 
finalizing the proposal to continue the in-home

[[Page 69989]]

additional payment of $35.50 for administering COVID-19 vaccines for CY 
2023. We are also finalizing our proposals to update this payment 
amount by the CY 2023 MEI and to adjust it by the PFS GAF. Therefore, 
for CY 2023, the in-home additional payment amount for COVID-19 vaccine 
administration described by HCPCS code M0201 is $36.85 ($35.50 x 1.038 
= $36.85).
    We note that we have finalized the policy to continue to pay the 
additional in-home payment for the entire duration of CY2023. 
Consequently, this finalized policy for CY2023 will allow for the 
additional in-home payment regardless of the status of the current PHE 
or the EUA declaration. Therefore, for CY2023, the additional in-home 
payment will not be affected by either the end of the PHE or the 
termination of the EUA declaration.
iii. Monoclonal Antibody Products Used for Treatment or for Post-
Exposure Prophylaxis of COVID-19
    We proposed to continue to pay for COVID-19 monoclonal antibody 
products under the Medicare Part B vaccine benefit through the end of 
the calendar year in which the EUA declaration under section 564 of the 
FD&C Act for drugs and biological products is terminated. Until the end 
of the calendar year in which the EUA declaration for drugs and 
biological products is terminated, we proposed to maintain the payment 
rate for administering a COVID-19 monoclonal antibody product used for 
treatment or for post-exposure prophylaxis of COVID-19 in a healthcare 
setting, as well as the payment rates for administering a COVID-19 
monoclonal antibody product in the home as described on the CMS COVID-
19 Monoclonal Toolkit.\405\ Effective January 1 of the year following 
the year in which the EUA declaration for drugs and biological products 
ends, CMS would pay physicians and other suppliers for covered COVID-19 
monoclonal antibody products used for the treatment or for post-
exposure prophylaxis of COVID-19 as biological products paid under 
section 1847A of the Act; healthcare providers and practitioners will 
be paid under the applicable payment system, and using the appropriate 
coding and payment rates, for administering COVID-19 monoclonal 
antibody therapies similar to the way they are paid for administering 
other complex biological products (86 FR 65192).
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    \405\ https://www.cms.gov/monoclonal.
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    As we explained, since an EUA for a drug or biological product 
issued pursuant to the March 27, 2020 EUA declaration may remain in 
effect beyond the duration of the section 319 declaration, we 
contemplated our payment policies for COVID-19 monoclonal antibody 
products. Since we do not know when the HHS Secretary would terminate 
the March 27, 2020 EUA declaration, we noted that we believe that we 
need to give notice on how these proposals would impact payments for 
administering COVID-19 monoclonal antibody products in the event the 
EUA declaration continues in CY 2023. Therefore, beginning January 1, 
2023, we proposed to apply the GAF to the payment amount for the 
administration of monoclonal antibody products used for treatment or 
for post-exposure prophylaxis of COVID-19 so long as the EUA 
declaration is still in place. We noted that we believe it is 
appropriate to continue to adjust this payment amount to reflect cost 
differences for each geographic area, and proposed to do so using the 
GAFs as for other COVID-19 vaccine administration services (please see 
section III.H.2.c. of this final rule).
    Regarding an update based upon the MEI beginning January 1, 2023, 
we did not extend the proposal to update the payment amount for the 
administration of these products. We noted that we believe that the 
payment amounts established for the administration of monoclonal 
antibody products used for treatment or for post-exposure prophylaxis 
of COVID-19 were approximations intended to reflect resource costs 
associated with furnishing these particular services during the 
pandemic response and generally corresponding to the timeframe the EUA 
declaration is effective. We also noted that some of the resource costs 
reflected in those rates, such as costs to establish the necessary 
operational infrastructure, may dissipate over time, even as the 
pandemic persists. Consequently, we discussed that we did not believe 
it would be appropriate to establish annual updates to reflect 
increased costs that would likely be offset to some extent by reduced 
costs given the more established infrastructure and delivery 
approaches. We pointed out, too, that the current payment rates 
effective during the years in which the PHE continues correspond with 
OPPS New Tech payment amounts that are intended to serve as estimates 
of overall costs, in contrast to more finely tuned amounts that are 
typically subject to annual updates (increases or reductions) to 
reflect greater efficiency. Therefore, we proposed to maintain the 
current rates for CY 2023 for administration of a COVID-19 monoclonal 
antibody product used for treatment or for post-exposure prophylaxis of 
COVID-19, and to not update these rates based on the increase in the 
MEI.
e. Monoclonal Antibody Products Used as Pre-Exposure Prophylaxis for 
Prevention of COVID-19
    As discussed in the CY 2023 PFS proposed rule (87 FR 46226 through 
46227) and section III.H.4.c of this final rule, there are no 
monoclonal antibody products approved by the FDA for the treatment or 
prevention of COVID-19 as of the publication of this proposed rule. 
However, we noted in the proposed rule that there are currently three 
COVID-19 products authorized under an EUA; two are authorized for the 
treatment of COVID-19, and one is authorized as pre-exposure 
prophylaxis for prevention of COVID-19.\406\ The monoclonal antibody 
product for use as pre-exposure prophylaxis prevention of COVID-19 was 
granted an EUA subsequent to the CY 2022 PFS final rule. Therefore, we 
explained that our policies regarding coverage of COVID-19 monoclonal 
antibody products as finalized in the CY 2022 PFS final rule did not 
address monoclonal antibody products used as pre-exposure prophylaxis 
for prevention of COVID-19. Nevertheless, we noted that when this 
COVID-19 monoclonal antibody pre-exposure prophylactic product was 
granted an EUA, we promptly provided payment and coverage for it under 
the Part B vaccine benefit in section 1861(s)(10) of the Act as we have 
done for the other COVID-19 monoclonal antibody products.\407\
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    \406\ Viewed 5/6/2022. https://www.fda.gov/emergency-preparedness-and-response/mcm-legal-regulatory-and-policy-framework/emergency-use-authorization.
    \407\ https://www.cms.gov/monoclonal.
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    We recognized that there are certain individuals for whom these 
pre-exposure prophylactic products may be their only preventive option 
against COVID-19. These individuals would include, for example, those 
who are not currently infected with COVID-19, who have not had a known 
recent exposure to an individual infected with COVID-19, and for whom 
vaccination with any available COVID-19 vaccine is not recommended due 
to a history of severe adverse reaction (for example, severe allergic 
reaction) to a COVID-19 vaccine(s) and/or COVID-19 vaccine 
component(s). Therefore, we proposed to clarify that our policy of 
coverage and payment under the Part B vaccine

[[Page 69990]]

benefit for monoclonal antibody products includes those used as pre-
exposure prophylaxis for prevention of COVID-19. In addition, to ensure 
the aforementioned beneficiaries have access to COVID-19 pre-exposure 
prophylactic products, we proposed to continue the existing policy to 
pay for these products and their administration under the Part B 
vaccine benefit even after the EUA declaration for drugs and biological 
products is terminated, so long as after the EUA declaration is 
terminated, such products have market authorization.
    Since we proposed to pay for pre-exposure prophylaxis monoclonal 
antibody products for COVID-19 under the Part B vaccine benefit, we 
also proposed to apply the PFS GAF to geographically adjust the payment 
amount for the administration of those monoclonal antibody products, 
effective January 1, 2023. However, we did not propose to update the 
payment amount with the MEI beginning January 1, 2023. The payment 
amounts established for the administration of monoclonal antibody 
products used as pre-exposure prophylaxis for COVID-19 were intended to 
account for resource costs associated with pandemic response, and like 
the payment amounts for administration of other COVID-19 monoclonal 
antibody products, reflects an approximation. Therefore, we proposed to 
maintain the current amount without a specified update mechanism, but 
also sought comment on how best to consider refining rates for 
administration of this specific kind of product in the future. We 
solicited comment on these proposals.
    The following is a summary of the public comments received on the 
clarification on policies for COVID-19 vaccine and monoclonal antibody 
products provisions and our responses:
    Comment: Many commenters supported our proposal to continue the $40 
payment rate, updated by the MEI, for COVID-19 vaccine administration 
through the end of the year in which the EUA declaration for drugs and 
biologicals is terminated. Several commenters supported our proposal to 
align the payment rate for administration of the COVID-19 vaccines with 
the payment amount for the administration of other Part B preventive 
vaccines, effective January 1 of the year following the year in which 
the EUA declaration ends.
    However, many commenters stated that the vaccine administration 
rate for other Part B preventive vaccines, that is, $30 updated 
annually by the increase in the MEI, is not adequate payment for the 
administration of the COVID-19 vaccine, even after HHS ends its EUA 
declaration for drugs and biological products with respect to COVID-19. 
Some commenters called for CMS to continue the higher payment rate for 
COVID-19 vaccine administration for additional years or even 
indefinitely, and provided several reasons they believe the higher 
payment amount should remain: continued physician effort needed to 
navigate the many COVID-19 vaccine options; need to ensure broad and 
equitable access to COVID-19 vaccines; the possible need for additional 
booster or vaccine doses even after the end of the PHE; the costs 
involved in monitoring those who receive the COVID-19 vaccines for 15-
30 minutes after it is administered; staffing shortages; supply 
challenges; the need to educate patients on the value of vaccines, 
vaccine effectiveness and safety, and to combat vaccine misinformation; 
unique reporting needs for COVID-19 vaccines; unique storage 
requirements for many COVID-19 vaccines; the potential for new COVID-19 
variants to emerge; and the possibility of new vaccines being approved. 
Commenters also explained that a transition away from emergency-period 
policies can cause operational and administrative challenges for those 
who furnish the vaccines, which may result in health care access issues 
for Medicare beneficiaries.
    One commenter stated that, instead of a reduction, an increase is 
needed to the COVID-19 vaccine administration rate, due to the still-
changing circumstances surrounding COVID-19 vaccines and their 
administration, as described above. Finally, several commenters 
requested that CMS provide clear guidance and sufficient notice in 
anticipation of any transition in payment amounts for COVID-19 vaccine 
administration.
    Response: We thank all commenters for their attention to this 
important issue regarding COVID-19 vaccinations. The CY 2022 PFS final 
rule (87 FR 65184 through 65186) contains an extensive discussion on 
our rationale for setting the $40 COVID-19 vaccine administration rate 
during the PHE, and for aligning the COVID-19 vaccine administration 
rate with the rate for administration of the other Part B preventive 
vaccines after the end of the PHE. We acknowledge the unique and 
unusual circumstances that still surround the COVID-19 vaccine 
landscape, as described by the commenters, and we recognize the higher 
resource load that those administering vaccines still need in order to 
provide those vaccinations. We believe that our proposal to continue 
the higher COVID-19 vaccine administration rate through the end of the 
year in which the EUA declaration ends, rather than immediately 
aligning the COVID-19 vaccine administration rate with the rate for the 
other Part B preventive vaccinations after the PHE ends, will provide 
an appropriate transition period to recognize the potential 
continuation of higher resource needs, and to assist those 
administering COVID-19 vaccines as they continue to furnish them. We 
will continue to review payment policies for the Part B preventive 
vaccine benefit in the coming years, as circumstances continue to 
evolve regarding COVID-19 specifically, and with regard to public 
health in general. When the transition to a calendar year post-EUA 
declaration does arrive, CMS certainly plans to provide sufficient 
notice and thorough guidance regarding the transition to both providers 
and beneficiaries.
    Comment: Commenters were all supportive of our proposal to continue 
the in-home additional payment for administering COVID-19 vaccines 
through CY 2023, regardless of the status of the PHE or EUA 
declaration. As discussed above in section III.H.3.c. of this final 
rule, commenters expressed that this additional payment has had a 
positive effect on vaccination rates among vulnerable populations, and 
commenters believe this beneficial effect will continue in CY 2023.
    Response: We thank commenters for their support. As discussed above 
in section III.H.3.c. of this final rule, we are finalizing the in-home 
additional payment for COVID-19 vaccine administration as proposed.
    Comment: Commenters were supportive of our proposals to cover and 
pay for monoclonal antibody products used for treatment or post-
exposure prophylaxis of COVID-19 under the Part B preventive vaccine 
benefit through the end of the year in which the EUA declaration for 
drugs and biologicals is terminated. These commenters supported our 
proposal to geographically adjust monoclonal antibodies payments for 
the administration of COVID-19 monoclonal antibodies via the GAF 
beginning January 1, 2023 and they generally supported our proposals 
regarding the proposed payment adjustments for CY 2023. Additionally, 
these commenters supported coverage and payment of monoclonal 
antibodies used for the treatment or for post-exposure prophylaxis of 
COVID-19 as biological products paid under section 1847A of the Act 
where healthcare providers and practitioners will be paid under the 
applicable payment system, and using the appropriate coding and

[[Page 69991]]

payment rates, beginning January 1 after the year the EUA declaration 
is terminated. These commenters thanked CMS for the transition guidance 
provided to date.
    However, several commenters objected to the proposal to end our 
current payment policies for monoclonal antibody products used for 
treatment or post-exposure prophylaxis of COVID-19. These commenters 
stated that, even following the year in which the EUA declaration 
terminates, healthcare providers will need extensive resources to 
provide care and COVID-19 monoclonal antibody treatments to COVID-19 
patients, including extra Personal Protective Equipment (PPE) and 
airflow protections. Some commenters also objected to our proposal to 
refrain from an annual update to the payment amount for administration 
of these products based upon the increase in the MEI, as they believe 
that an update is needed to maintain appropriate reimbursement for 
these critical COVID-19 therapies.
    Several commenters requested that CMS provide sufficient notice and 
clear guidance before a payment transition begins for COVID-19 
monoclonal antibody products, and that CMS consider ways to minimize 
out-of-pocket costs for beneficiaries who will begin being charged 
cost-sharing (Part B deductible and copayment) amounts for these 
therapies. Another commenter asked CMS to create and maintain a payment 
mechanism for future EUAs for monoclonal antibody treatments that are 
authorized by FDA against future COVID-19 variants and/or any future 
public health emergencies, and that the policy should particularly 
address vulnerable beneficiary populations.
    Response: We acknowledge the unique and unusual circumstances that 
still surround the COVID-19 landscape, as described by the commenters, 
and we recognize the higher resource load that healthcare providers 
still face when administering COVID-19 monoclonal antibodies to 
beneficiaries. We continue to believe that our proposal to continue 
payment and coverage of COVID-19 monoclonal antibodies under the Part B 
preventive vaccine benefit until the end of the CY in which the EUA 
declaration ends, rather than the end of the CY in which the PHE for 
COVID-19 ends, will appropriately mitigate the commenters' concerns. We 
will continue to assess the fluid circumstances of the COVID-19 
pandemic in considering whether further policy changes are warranted 
through additional rulemaking. When the transition to a calendar year 
post-EUA declaration does arrive, we plan to notify vaccine providers 
and beneficiaries, and we expect to issue information and guidance in 
advance of the transition in payment policies, including information on 
payment policies and applicable beneficiary cost-sharing.
    Regarding comments expressing concern that the payment amount for 
COVID-19 monoclonal antibody administration needs to be updated for CY 
2023 to maintain appropriate payment, we believe the current payment 
amounts continue to be appropriate for these services through the 
period they will remain in effect. As discussed above, these payments 
are approximations intended to reflect resource costs associated with 
furnishing these particular services during the COVID-19 pandemic 
response, and they generally correspond to the timeframe in which EUA 
declaration is effective. We continue to believe that some of the 
resource costs reflected in those rates, such as costs to create needed 
operational infrastructure in health care settings for administering 
COVID-19 monoclonal antibodies, may dissipate over time, even as the 
need for COVID-19 treatments continues. Therefore, we are not persuaded 
that it would be appropriate to establish annual updates to reflect 
increased costs over time, given the temporary nature of these payment 
rates, and since cost increases would likely be offset by the reduced 
costs of infrastructures established by those furnishing these 
products.
    After consideration of public comments, we are finalizing the 
proposed policy. That is, in the event the EUA declaration continues 
into CY 2023, CMS will maintain the current payment rates for 
administration of a COVID-19 monoclonal antibody product used for 
treatment or for post-exposure prophylaxis of COVID-19, and apply the 
GAF to geographically adjust the payment amount. The payment rates will 
not be updated for CY 2023 based on the increase in the MEI. In the 
event the EUA declaration ends in CY 2022, beginning January 1, 2023 
CMS will pay physicians and other suppliers for covered COVID-19 
monoclonal antibody products used for the treatment or for post-
exposure prophylaxis of COVID-19 as biological products paid under 
section 1847A of the Act; healthcare providers and practitioners will 
be paid to administer these products under the applicable payment 
system, and using the appropriate coding and payment rates, similar to 
the way they are paid for administering other complex biological 
products. These payment amounts are displayed in Tables 85 and 86.
    Comment: One commenter requested that CMS clarify the reasoning for 
a lower payment rate of $550.50 per administration for in-home 
intravenous (IV) injections of monoclonal antibodies, as they believe 
that the resources needed to provide this therapy in the home are 
similar to those needed for infused therapies which are paid $750.00 
per administration.
    Response: In determining appropriate payment amounts for the 
administration of monoclonal antibody products for COVID-19, CMS 
considers the costs associated with the route of administration and how 
long each method takes to administer, post-administration practitioner 
monitoring time, and the rates that correspond for similar services 
under the OPPS New Technology Ambulatory Payment Classification (APC). 
Effective February 11, 2022, CMS established separate coding and 
payment for administering COVID-19 monoclonal antibody products through 
IV injection in a patient's home or residence.\408\ This guidance 
established the payment rate for administering COVID-19 monoclonal 
antibody products through IV injection in a patient's home or residence 
as approximately $550.50. This rate reflects information about the 
costs involved in furnishing these unique injection products in a 
patient's home.
---------------------------------------------------------------------------

    \408\ https://www.cms.gov/outreach-and-educationoutreachffsprovpartprogprovider-partnership-email-archive/2022-02-18-mlnc-se.
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    Comment: A few commenters asked that we confirm how payment will be 
made for monoclonal antibody products used for treatment or for post-
exposure prophylaxis of COVID-19 after the end of the year in which the 
EUA declaration ends. The commenter envisioned this transition as 
moving from 95 percent of Average Wholesale Price (AWP) to Wholesale 
Acquisition Cost (WAC) + 3% in the quarter after the effective date of 
EUA declaration termination, and then to ASP+6% after a full quarter of 
data is collected.
    Response: During the EUA declaration for drugs and biological 
products, Medicare will not pay for COVID-19 monoclonal antibody 
products that health care providers receive for free, which has been 
the case upon the product's initial availability in response to the 
COVID-19 PHE. Bebtelovimab is an example of an authorized product 
previously distributed to providers and suppliers by the U.S. 
Government and is now available on the commercial market. CMS sets the 
Medicare payment rate for the product based on 95 percent of the AWP 
for those settings that are

[[Page 69992]]

not paid under reasonable costs for vaccine products.
    As stated above in section III.H.4.c., beginning January 1 of the 
year after the year in which the EUA declaration is terminated, CMS 
will pay providers and suppliers for covered COVID-19 monoclonal 
antibody products used for the treatment or for post-exposure 
prophylaxis of COVID-19 as biological products, for which payments are 
generally based on pricing methodologies for Medicare Part B drugs 
under section 1847A of the Act. We note depending on the setting, there 
are several different payment structures that could possibly apply to 
covered COVID-19 monoclonal antibody products when they are furnished. 
We believe the commenter is reflecting on how Medicare Part B pays for 
drugs and biological products under section 1847A of the Act, as it 
relates to products furnished incident to a physician's service. As we 
describe in section III.A.1 of this final rule, the payment limit 
amounts for most drugs and biologicals separately payable under 
Medicare Part B are based on the average sales price (ASP), plus a 
statutorily mandated 6 percent add-on. The add-on percentage for WAC-
based payments determined by MACs for new drugs before an ASP-based 
payment limit is available is up to 3 percent.\409\
---------------------------------------------------------------------------

    \409\ https://www.cms.gov/files/document/r11572CP.pdf.
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    Comment: Commenters overwhelmingly supported our proposal to 
continue paying for monoclonal antibody products used as pre-exposure 
prophylaxis for the prevention of COVID-19 under the Part B preventive 
vaccine benefit on a permanent basis. Several commenters suggested that 
continuing the policy to pay for these monoclonal antibody products 
under the preventive vaccine benefit will greatly benefit those who are 
immunocompromised, such as cancer patients or those with rare diseases, 
and those with severe adverse reactions to COVID-19 vaccines or their 
components, and will therefore increase health equity and health care 
access.
    Some commenters recommended that we continue to distinguish between 
preventive monoclonal antibody products used as pre-exposure 
prophylaxis targeting infectious diseases and monoclonal antibody 
products used for treatment or post-exposure prophylaxis in other 
therapeutic areas, in order to continue to recognize the needs of 
patient populations like the immunocompromised. One commenter 
specifically requested that we cover and pay for other monoclonal 
antibodies used for pre-exposure prophylaxis for infectious diseases 
other than COVID-19 under the Part B preventive vaccine benefit.
    Response: We appreciate the overall positive response to this 
proposal and we thank commenters for their insights. Regarding coverage 
and payment of monoclonal antibody products used for pre-exposure 
prophylaxis for infectious diseases other than COVID-19, we did not 
discuss or include proposals for these products in the CY 2023 PFS 
proposed rule. As such, these comments are outside the scope of this 
rulemaking.
    After consideration of public comments, we are finalizing the 
proposed policy. That is, to ensure the aforementioned beneficiaries 
have access to COVID-19 pre-exposure prophylactic products, we are 
finalizing our proposal to continue to pay for these products and their 
administration under the Part B vaccine benefit even after the EUA 
declaration for drugs and biological products is terminated, so long as 
after the EUA declaration is terminated, such products have market 
authorization. Additionally, we are finalizing the proposal to maintain 
the current payment amount without a specified update mechanism and 
adjust for geographic cost variations using the PFS GAF.
    In summary, we are finalizing these policies as proposed. We direct 
readers to the following section and its accompanying Tables 85 and 86 
for a summary of the final payment amounts for CY 2023.
f. Summary of Payment Amounts for CY 2023 With or Without a Continuing 
EUA Declaration for Drugs and Biologicals
    Due to the uncertainty surrounding the future of the EUA 
declaration for drugs and biological products for COVID-19, we are 
including Tables 85 and 86 that summarize our final provisions in both 
scenarios.
BILLING CODE 4150-28-P

[[Page 69993]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.116

[GRAPHIC] [TIFF OMITTED] TR18NO22.117

5. Regulatory Updates and Conforming Changes
    As discussed in the CY 2023 PFS proposed rule (87 FR 46228), in the 
November 2020 IFC, we published several changes to the regulations 
governing Part B preventive vaccines and their administration, in order 
to include the COVID-19 vaccine and its administration (85 FR 71147). 
We explained that since Section 3713 of the CARES Act added the COVID-
19 vaccine and its administration to section 1861(s)(10)(A) of the Act 
in the same subparagraph as the flu and pneumococcal vaccines and their 
administration, the COVID-19 vaccine

[[Page 69994]]

was similarly added in several regulations regarding the influenza, 
pneumococcal, and hepatitis B virus (HBV) vaccinations. We stated our 
intention to finalize the following regulatory changes, which were 
adopted in the November 2020 IFC:
     Sec.  410.152(l)(1), which includes the COVID-19 vaccine 
to the list of vaccines for which Medicare Part B pays 100 percent of 
the Medicare payment amount.
     Sec.  410.160(b)(2), which includes the COVID-19 vaccine 
in the list of vaccines that are not subject to the Part B annual 
deductible and do not count toward meeting that deductible.
     Sec.  411.15(e)(5), which adds an exception for COVID-19 
vaccinations to the general exclusion of coverage for immunizations.
     Sec.  414.701, which includes the COVID-19 vaccine in the 
list of statutorily covered drugs.
     Sec.  414.707(a)(2)(iii), which includes the COVID-19 
vaccine in the list of vaccines with a payment limit calculated using 
95 percent of the AWP.
     Sec.  414.900(b)(3), which includes the COVID-19 vaccine 
in the list of statutorily covered drugs.
     Sec.  414.904(e)(1), which includes the COVID-19 vaccine 
in the list of vaccines with payment limits calculated using 95 percent 
of the AWP.
    We noted that in the course of developing the proposed changes to 
Sec.  410.152 described in section III.H.2.c. of the proposed rule, we 
came across several outdated and incomplete regulations regarding Part 
B preventive vaccines and vaccine administration. Therefore, we 
proposed updates and corrections to the following regulations:
     At Sec.  410.10, Medical and other health services: 
Included services, we proposed to amend paragraph (l) to list 
pneumococcal, influenza, and COVID-19 vaccines and their 
administration.
     At Sec.  410.10, Medical and other health services: 
Included services, we proposed to amend paragraph (p) to list both 
Hepatitis B vaccine and its administration, as defined in Sec.  
410.63(a).
     At Sec.  410.57, we proposed to amend the section title to 
read ``Preventive Vaccinations,'' to amend paragraph (a) to state only 
that Medicare Part B pays for pneumococcal vaccine and its 
administration, to remove the remainder of the outdated language, and 
to add paragraph (d) to state that Medicare Part B pays for the 
Hepatitis B vaccine and its administration, as defined in Sec.  
410.63(a).
     At Sec.  410.63, Hepatitis B vaccine and blood clotting 
factors: Conditions, we proposed to amend the introductory paragraph to 
replace the outdated reference to Sec.  405.310 with an updated 
reference to Sec.  411.15.
     At Sec.  414.707, Basis of Payment, we proposed to amend 
paragraph (a)(2)(iii) to replace the phrase in parentheses with ``as 
defined in Sec.  410.63(a) of this subchapter.''
     At Sec.  414.904, Average sales price as the basis for 
payment, we proposed to amend paragraph (e)(1) to replace the 
parentheses with ``as defined in Sec.  410.63(a) of this subchapter.''
    Comment: We received one comment in support of these changes.
    Response: We thank the commenter for their support and are 
finalizing these regulatory revisions as proposed.

I. Medical Necessity and Documentation Requirements for Nonemergency, 
Scheduled, Repetitive Ambulance Services

1. Background--Nonemergency, Scheduled, Repetitive Ambulance Service
a. General Discussion
    Section 1861(s)(7) of the Act states that, for the purposes of 
Medicare, the term ``medical and other health services'' includes 
ambulance services, but only ``where the use of other methods of 
transportation is contraindicated by the individual's condition, but 
only to the extent provided in regulations.'' Regulations at Sec.  
410.40 govern Medicare coverage of ambulance services. Under Sec.  
410.40(e), Medicare Part B covers ground (land and water) and air 
(fixed-wing and rotary-wing) ambulance transport services only if they 
are furnished to a Medicare beneficiary whose medical condition is such 
that other means of transportation are contraindicated. The 
beneficiary's condition must require both the ambulance transportation 
itself and the level of service provided for the billed services to be 
considered medically necessary.
    Section 410.40(e) provides that nonemergency transportation by 
ambulance is appropriate if either the beneficiary is bed-confined, and 
it is documented that the beneficiary's condition is such that other 
methods of transportation are contraindicated; or, if his or her 
medical condition, regardless of bed confinement, is such that 
transportation by ambulance is medically required. For a beneficiary to 
be considered bed-confined, Sec.  410.40(e) states that all of the 
following criteria must be met: (1) the beneficiary is unable to get up 
from bed without assistance; (2) the beneficiary is unable to ambulate; 
and (3) the beneficiary is unable to sit in a chair or wheelchair. 
Section 410.40(e) further provides that bed confinement is not the sole 
criterion in determining the medical necessity of ambulance 
transportation, but is one factor that is considered in medical 
necessity determinations. In all cases, a beneficiary's condition must 
be documented appropriately for coverage of services.
    In the ``Medicare Program; Coverage of Ambulance Services and 
Vehicle and Staff Requirements'' final rule with comment period \410\ 
(64 FR 3637, January 25, 1999) (hereinafter referred to as the 
``January 25, 1999 final rule''), we finalized language at Sec.  
410.40(d)(3) to require ambulance providers or suppliers, in the case 
of nonemergency, unscheduled, ambulance services to obtain a physician 
certification statement (PCS). There, we explained that: (1) 
nonemergency ambulance service is a Medicare service furnished to a 
beneficiary for whom a physician is responsible, and, therefore, the 
physician is responsible for the medical necessity determination; and 
(2) the PCS would help to ensure that the claims submitted for 
ambulance services are reasonable and necessary, because other methods 
of transportation are contraindicated (64 FR 3648).
---------------------------------------------------------------------------

    \410\ https://www.govinfo.gov/content/pkg/FR-1999-01-25/pdf/99-1547.pdf.
---------------------------------------------------------------------------

    We further stated that we believed the requirement would help to 
avoid Medicare payment for unnecessary ambulance services that are not 
medically necessary even though they may be desirable to beneficiaries. 
However, in the January 25, 1999 final rule we also addressed the 
ability of ambulance providers or suppliers to obtain a written order 
from the beneficiary's attending physician and agreed with interested 
parties that while it is reasonable to expect that an ambulance 
provider or supplier could obtain a pre-transport PCS for routine, 
scheduled trips, it is less reasonable to impose such a requirement on 
unscheduled transports, and that it was not necessary that the 
ambulance providers and suppliers have the PCS in hand prior to 
furnishing the service. To avoid unnecessary delays for unscheduled 
transports, we finalized a requirement that required documentation can 
be obtained within 48 hours after the ambulance transportation service 
has been furnished.
    In the ``Medicare Program; Fee Schedule for Payment of Ambulance 
Services and Revisions to the Physician Certification Requirements for 
Coverage of Nonemergency Ambulance Services''

[[Page 69995]]

final rule with comment period \411\ (67 FR 9100) (hereinafter referred 
to as the ``February 27, 2002 final rule''), in response to interested 
parties response, we modified our documentation regulations, noting 
that we had been made aware of instances in which ambulance providers 
and suppliers, despite having provided ambulance transports, were 
experiencing difficulty in obtaining the necessary PCS within the 
required 48-hour timeframe through no fault of their own. We stated 
that the 48-hour period remained the appropriate period of time, but, 
with respect to unscheduled, or scheduled but non-repetitive 
nonemergency ambulance transports, created alternatives for ambulance 
providers and suppliers unable to obtain a PCS. We finalized an 
alternative at Sec.  410.40(e)(3)(iii) where ambulance providers and 
suppliers unable to obtain a PCS from the attending physician could 
obtain a signed certification (not a physician certification statement) 
from certain other staff. At that time, we identified, at Sec.  
410.40(a)(iii), several staff members, including a physician assistant 
(PA), nurse practitioner (NP), clinical nurse specialist (CNS), 
registered nurse (RN), and a discharge planner as staff members able to 
sign such a non-physician certification statement. The only additional 
constraints were: (1) that the staff be employed by the beneficiary's 
attending physician or by the hospital or facility where the 
beneficiary is being treated and from which the beneficiary is 
transported; and (2) that the staff have personal knowledge of the 
beneficiary's condition at the time the ambulance transport is ordered 
or the service is furnished.
---------------------------------------------------------------------------

    \411\ https://www.govinfo.gov/content/pkg/FR-2002-02-27/pdf/02-4548.pdf.
---------------------------------------------------------------------------

    Since being finalized in the February 27, 2002 final rule, Sec.  
410.40(e)(2) has stated that Medicare covers medically necessary 
nonemergency, scheduled, repetitive ambulance services if the ambulance 
provider or supplier, before furnishing the service to the beneficiary, 
obtains a written order from the beneficiary's attending physician 
certifying that the medical necessity requirements of paragraph (e)(1) 
of this section are met (67 FR 9132).
    In the November 16, 2012 final rule with comment period \412\ (77 
FR 68892), we finalized provisions currently at Sec.  410.40(e)(2), 
incorporating nearly the same provision found at Sec.  410.40(e)(3)(v) 
to clarify that a PCS does not, in and of itself, demonstrate that a 
nonemergency, scheduled, repetitive ambulance service is medically 
necessary for Medicare coverage. As we note above, the 1861(s)(7) 
definition of ``ambulance service'' in the context of Medicare 
expresses the clinical medical necessity requirement that the use of 
other methods of transportation is contraindicated by the individual's 
condition, but only to the extent provided in regulations.
---------------------------------------------------------------------------

    \412\ Medicare Program; Revisions to Payment Policies Under the 
Physician Fee Schedule, DME Face-to-Face Encounters, Elimination of 
the Requirement for Termination of NonRandom Prepayment Complex 
Medical Review and Other Revisions to Part B for CY 2013; https://www.govinfo.gov/content/pkg/FR-2012-11-16/pdf/2012-26900.pdf.
---------------------------------------------------------------------------

    In the November 15, 2019 final rule \413\ (84 FR 62568), in 
response to interested parties' requests, we clarified the requirements 
for certification statements based on potential confusion surrounding 
the format, content, and use of both PCS and non-physician 
certification statements. Further, we added licensed practical nurses 
(LPNs), social workers and case managers as individuals listed at Sec.  
410.40(a)(iii) who may sign the non-physician certification statement 
if the ambulance provider or supplier is unable to obtain the attending 
physician's signature within 48 hours of the transport.
---------------------------------------------------------------------------

    \413\ Medicare Program; CY 2020 Revisions to Payment Policies 
Under the Physician Fee Schedule and Other Changes to Part B Payment 
Policies; Medicare Shared Savings Program Requirements; Medicaid 
Promoting Interoperability Program Requirements for Eligible 
Professionals; Establishment of an Ambulance Data Collection System; 
Updates to the Quality Payment Program; Medicare Enrollment of 
Opioid Treatment Programs and Enhancements to Provider Enrollment 
Regulations Concerning Improper Prescribing and Patient Harm; and 
Amendments to Physician Self-Referral Law Advisory Opinion 
Regulations Final Rule; and Coding and Payment for Evaluation and 
Management, Observation and Provision of Self-Administered 
Esketamine Interim Final Rule; https://www.govinfo.gov/content/pkg/FR-2019-11-15/pdf/2019-24086.pdf.
---------------------------------------------------------------------------

    Other factors have significantly altered the Medicare ambulance 
benefit, notably section 637 of the American Taxpayer Relief Act of 
2012 (Pub. L. 112-240, enacted January 2, 2013) (ATRA), which required 
a 10-percent reduction in fee schedule payments for nonemergency (BLS 
transports of beneficiaries with ESRD) to and from both hospital-based 
and freestanding renal dialysis treatment facilities, for non-emergent 
dialysis services. Section 53108 of the Bipartisan Budget Act of 2018 
(Pub. L. 115-123, enacted February 9, 2018) increased the payment 
reduction of fee schedule payments for BLS transports to and from renal 
dialysis treatments, from ATRA's 10 percent to 23 percent.
    The Department of Health and Human Services (HHS) Office of 
Inspector General (OIG) has published numerous reports about Medicare's 
ambulance benefit and has concluded that this benefit is highly 
vulnerable to abuse. In September 2015, in a report titled, 
``Inappropriate Payments and Questionable Billing for Medicare Part B 
Ambulance Transports,'' \414\ the OIG reported that approximately one 
in five ambulance suppliers had questionable billing, and that 
suppliers that had questionable billing provided nonemergency basic 
life support transports more often than other suppliers.
---------------------------------------------------------------------------

    \414\ Inappropriate Payments and Questionable Billing for 
Medicare Part B Ambulance Transports (OEI-09-12-00351; 09/15) 
(hhs.gov).
---------------------------------------------------------------------------

    In addition, in June 2013, MedPAC published a report that included 
an analysis of nonemergent ambulance transports to dialysis facilities. 
The report showed that transports to and from dialysis facilities 
continue to grow and represent a large share of non-emergent ambulance 
claims. In the 5-year period between 2007 and 2011, the volume of 
transports to and from a dialysis facility increased 20 percent, more 
than twice the rate of all other ambulance transports combined. In 
2011, ambulance transports to and from dialysis facilities accounted 
for nearly $700 million in Medicare spending, or approximately 13 
percent of Medicare expenditures on ambulance services. The report 
further found that certain States had dramatically higher spending on 
ambulance transportation for dialysis treatment than other States. We 
believe that the provisions that we proposed are consistent with 
MedPAC's recommendations that the agency promulgate national guidelines 
to more precisely define medical necessity requirements. This will 
ensure consistent application of the benefit across beneficiary 
populations, regardless of geographic location.
    Under section 1115A of the Act, CMS initiated the testing of the 
Repetitive, Scheduled Non-Emergent Ambulance Transport (RSNAT) Prior 
Authorization Model, which tested whether prior authorization helped to 
reduce expenditures while maintaining or improving quality of care. 
Beneficiaries who qualify for these services are typically transported 
to receive either cancer treatment or dialysis, although there are 
other services for which this type of transportation is needed. Section 
515 of the Medicare Access and CHIP Reauthorization Act (Pub. L. 114-
10, enacted April 16, 2015) (MACRA), required this model to be expanded 
to

[[Page 69996]]

include eight States and the District of Columbia, not later than 
January 1, 2016. Also in section 515 of MACRA, Congress amended section 
1834(l) of the Act to require the model be expanded to all States, 
beginning January 1, 2017, to the extent that the expansion that 
Congress required above satisfied certain criteria specified at 
1115A(c) of the Act.
    We released two Interim Evaluation Reports \415\ and a Final 
Evaluation Report \416\ on the model. The Final Evaluation Report, 
similar to the two Interim Evaluation Reports, found that the model was 
successful in reducing nonemergency, scheduled, repetitive ambulance 
transport spending and total Medicare spending while maintaining the 
overall quality of and access to care. In comparison to groups of 
similar States, the model reduced nonemergency, scheduled, repetitive 
ambulance transport use by 72 percent and expenditures by 76 percent, 
for Medicare beneficiaries with end-stage renal disease (ESRD) and/or 
severe pressure ulcers in the model States, resulting in a reduction of 
approximately $750 million in expenditures. This decrease in 
nonemergency, scheduled, repetitive ambulance transport expenditures 
contributed to a 2.4 percent ($1 billion over the first 5 years of the 
model) decrease in total Medicare fee-for-service (FFS) expenditures 
among beneficiaries with ESRD and/or pressure ulcers relative to the 
comparison groups. Overall, the findings suggested that the model had 
few to no adverse effects on quality of, or access to, care.
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    \415\ https://innovation.cms.gov/files/reports/rsnat-firstintevalrpt.pdf and https://innovation.cms.gov/data-andreports/2020/rsnat-secondintevalrpt.
    \416\ https://innovation.cms.gov/data-and-reports/2021/rsnat-finalevalrpt.
---------------------------------------------------------------------------

    On March 28, 2018, CMS' Chief Actuary certified that expansion of 
the model would reduce program spending under the Medicare program, 
thereby satisfying the requirements of section 1115A(c)(2) of the Act 
for expansion of the model. Based on the CMS Chief Actuary 
certification and the first Interim Evaluation Report, the HHS 
Secretary determined that the model met the statutory criteria for 
expansion under sections 1115A(c)(1) and (c)(3) of the Act. Therefore, 
on September 22, 2020, CMS announced that it would expand the model 
nationwide under section 1834(l)(16) of the Act.\417\ The 8 
participating States and the District of Columbia were transitioned to 
the national model on December 2, 2020. After a delay due to the COVID-
19 public health emergency, HHS began expanding the model nationwide 
through multiple phases starting on December 1, 2021. As of August 1, 
2022, the model is fully operational nationwide.
---------------------------------------------------------------------------

    \417\ https://www.cms.gov/newsroom/press-releases/cms-expand-successful-ambulance-program-integrity-payment-model-nationwide.
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    Inconsistent application of payments for medically necessary, 
nonemergent, repetitive, scheduled ambulance services has the potential 
to disproportionately and substantially impact communities of color, 
underserved communities (including rural communities), and modest-
income beneficiaries. Further, these communities may disproportionately 
suffer from conditions for which nonemergent, repetitive, scheduled 
ambulance services are necessary, creating access to care issues with 
corresponding clinical complications. We believe that improving clarity 
in our regulatory provisions will have positive impacts on the health 
and well-being of beneficiaries. Therefore, we proposed and requested 
public comment on policy clarifications to ensure beneficiaries receive 
the care they need.
b. Legal Authorities
    The legal authority for this provision is section 1861(s)(7) of the 
Act, which provides general authority for the ambulance benefit and 
grants the Secretary authority to prescribe regulations for the 
administration of the benefit.
2. Revision to Sec.  410.40
    We sought public comment on proposed language that clarifies 
documentation and medical necessity requirements for nonemergency, 
scheduled, repetitive ambulance services, by modifying Sec.  
410.40(e)(2)(ii).
    Section 410.40 describes the Medicare Part B ambulance benefit, 
generally. Because medical necessity is a requirement of the statutory 
requirement at section 1861(s)(7) of the Act, the requirements for 
coverage are more fully explained in paragraph (e) of Sec.  410.40, 
starting with general rules covering all Part B ambulance services, and 
the special rules that only apply to nonemergency, scheduled, 
repetitive ambulance services are situated in paragraph (e)(2). For the 
reasons discussed above, we proposed to modify existing language in 
Sec.  410.40(e)(2)(ii) and add additional language to provide needed 
clarity and ensure consistent application of the nonemergency, 
scheduled, repetitive ambulance service benefit. We solicited comments 
on the proposal.
    We proposed at Sec.  410.40(e)(2)(ii) to retain the existing 
language stating that, in all cases, the provider or supplier must keep 
appropriate documentation on file and, upon request, present it to CMS 
(OMB control number 0938-0969). We proposed to maintain the language 
that states that the ambulance service must meet all program coverage 
criteria including vehicle and staffing requirements. We also proposed 
to maintain the language that states that a signed PCS does not alone 
demonstrate that transportation by ground ambulance was medically 
necessary. We proposed to clarify that the PCS, and additional 
documentation from the beneficiary's medical record, may be used to 
support a claim that transportation by ground ambulance is medically 
necessary. Further, we proposed to clarify that the PCS and additional 
documentation must provide detailed explanations, that are consistent 
with the beneficiary's current medical condition, that explains the 
beneficiary's need for transport by an ambulance, as described at Sec.  
410.41(a). Finally, we proposed to clarify that coverage includes 
observation or other services rendered by qualified ambulance 
personnel, as described in Sec.  410.41(b).
    We received few comments on the proposed clarifications. Commenters 
were overwhelmingly supportive of the clarification proposed; however, 
commenters had some questions and suggestions. The following is a 
summary of the public comments received on the revisions to Sec.  
410.40 and our responses:
    Comment: One commenter stated that the clarifications were critical 
for dialysis transport; however, they were concerned, stating that they 
did not want to be penalized for using forms with check boxes.
    Response: We appreciate the commenters support. We did not propose 
and have not established new documentation requirements pertaining to 
forms and are only clarifying existing policies.
    Comment: One commenter supported the clarifications; however, the 
commenter requested that we clarify that these changes only pertain the 
RSNAT prior authorization program. Further, the commenter wanted us to 
clarify what the ``additional medical record'' or the ``additional 
documentation'' should be and the specific data elements that 
prescribers should include.
    Response: We decline to confine this regulatory clarification to 
the RSNAT prior authorization program, as there may be non-emergent, 
scheduled, repetitive ambulance transport services outside of that 
program that would be affected. To address the second point on

[[Page 69997]]

clarification of terms, we did not propose to use the term ``additional 
medical record'' in the regulatory text. We did use the term 
``additional documentation'' but did not propose a definition for that 
term. The data elements needed will vary depending upon the 
beneficiary's specific conditions and needs.
    Comment: One commenter expressed concern about the clarifying 
language used in the proposal that states that the PCS does not, alone, 
demonstrate the medical necessity of transportation by ground 
ambulance. The commenter stated that this language seems to extend 
beyond the proposal addressing repetitive, scheduled, nonemergency 
ambulance transportation.
    Response: We point out that the language cited is not new language 
and is contained in existing Sec.  410.40(e)(2)(ii). When we proposed 
our clarifications to this section, we combined (i) and (ii). We did 
not change the substance of the language, simply the sentence order, 
and added the clarification cited in the proposal.
    Comment: Another commenter questioned the PCS and additional 
documentation that must be provided to explain the beneficiary's need 
for transport by an ambulance. The commenter requested clarification 
regarding the use of the words ``may'' and ``must,'' stating their 
interpretation of the proposal is that the PCS and any additional 
documentation from the medical record is not required to be submitted, 
but can be included if the provider believes it could offer support of 
meeting medical necessity criteria. In addition, they interpret that 
``the PCS and additional documentation must provide detailed 
explanations. . .'' to mean if or when a provider submits a PCS and any 
supporting documentation, that this is the specific information that 
Medicare Administrative Contractor (MAC) claim adjudicators will look 
for in verifying medical necessity criteria. Further, based on their 
understanding of the proposal as written, every claim submitted for 
reimbursement of nonemergency, scheduled, repetitive ambulance services 
will not require a PCS and additional documentation. The commenter 
stated if these were requirements, that this would be a burdensome task 
requiring operational changes, which they would not support.
    Response: This proposal does not establish new obligations for 
documentation; rather, it merely clarifies existing requirements. We 
believe the commenter raises two distinct, but important questions: (1) 
whether the PCS and additional documentation must be prepared and 
retained for every non-emergency repetitive, scheduled ambulance 
service; and (2) whether such information needs to be submitted with 
every claim. Regarding whether the PCS and additional documentation 
must be prepared and retained, we refer the reader to Sec.  
410.40(e)(2)(i), where we state that Medicare covers medically 
necessary nonemergency, scheduled, repetitive ambulance services if 
[emphasis added] the ambulance provider or supplier, before furnishing 
the service to the beneficiary, obtains a physician certification 
statement dated no earlier than 60 days before the date the service is 
furnished. In addition, our pre-proposal language and proposed 
regulatory language both reflect that the presence of a PCS alone is 
not sufficient to demonstrate medical necessity, and, therefore, must 
be supported by medical documentation.
    We agree with the commenter's statement that the PCS and any 
additional documentation from the medical record is not required to be 
submitted with every claim, but must be provided upon request to 
support medical necessity and payment. In the commenters submission, 
they stated that they interpret that ``the PCS and additional 
documentation must provide detailed explanations. . .'' to mean if or 
when a provider submits a PCS and any supporting documentation, that 
this is the specific information Medicare Administrative Contractor 
(MAC) claim adjudicators will look for in verifying medical necessity 
criteria. We agree that, if requested, the MACs will review this 
information in determining medical necessity.
    To address the commenter's understanding of the proposal, the 
commenter stated that they believe that every claim submitted for 
reimbursement of nonemergency, scheduled, repetitive ambulance services 
will not require a PCS and additional documentation. We agree that this 
information does not need to be submitted with every claim, but clarify 
that it must be retained, and submitted upon request. These 
requirements are consistent with current policy and operational 
practices, so they do not impose additional burdens on providers. We 
appreciate the commenter's questions and opportunity to clarify.
    Comment: A commenter acknowledged support for our efforts to reduce 
policy inconsistencies and stated that much of the work to fulfill 
these requirements will not be performed by the ambulance suppliers, 
but, instead, will fall to the practitioner who orders the service. 
They urged CMS to be cognizant of the additional burden of these 
proposals and consider other ways that it can achieve these goals.
    Response: As the commenter cited no specifics, we are not clear 
what additional burden the commenter believes would be imposed by 
virtue of this proposal. To clarify, we have not proposed to add any 
additional requirements and have only proposed to clarify existing 
requirements. There are no additional burdens associated with this 
policy clarification.
    Comment: Two commenters supported the proposal, but asked CMS to 
amend Sec.  410.40 to also authorize other practitioners, specifically 
nurse practitioners and physicians' assistants, to certify a patient's 
need for nonemergency, scheduled, repetitive ambulance services or 
transfers under EMTALA without physician consultation and cosignature.
    Response: We appreciate the support of the proposal; however, the 
request to extend authorization to nurse practitioners and physicians' 
assistants is outside of the scope of this rule.
    Comment: One commenter stated that Medicare needs to address the 
lack of coverage for an alternative, lower level of non-emergency 
transport and that CMS should ensure access to Medicaid NEMT for full 
and partial dual eligible beneficiaries.
    Response: We appreciate these suggestions; however, these concerns 
are outside the scope of this rule, as the rule is focused on medical 
necessity requirements for nonemergency, scheduled, repetitive 
ambulance services.
    Comment: One commenter expressed support for the RSNAT prior 
authorization model and this clarification to existing regulations; 
however, the commenter noted that CMS should reinvest these savings 
into EMS medicine by reimbursing physician oversight of EMS services.
    Response: We thank the commenter for the suggestion; however, this 
is outside the scope of the rule, as the rule is focused on medical 
necessity requirements for nonemergency, scheduled, repetitive 
ambulance services.
    Comment: Another commenter expressed support and urged CMS to work 
with the kidney care community to align on policy that can expand 
beneficiary access to non-emergency medical assistance benefits, 
including transportation options beyond ground ambulance services to 
dialysis facilities.
    Response: We thank the commenter for the suggestion; however, this 
is outside the scope of the rule, as the rule is focused on medical 
necessity

[[Page 69998]]

requirements for nonemergency, scheduled, repetitive ambulance 
services.
    As a result of, and in consideration of, the public comments, we 
are finalizing the revisions to Sec.  410.40 as proposed.

J. Medicare Provider and Supplier Enrollment and Conditions of DMEPOS 
Payment

1. Enrollment Process
a. General Discussion
    Section 1866(j)(1)(A) of the Act requires the Secretary to 
establish a process for the enrollment of providers and suppliers into 
the Medicare program. The overarching purpose of the enrollment process 
is to help confirm that providers and suppliers seeking to bill 
Medicare for services and items furnished to Medicare beneficiaries 
meet all applicable Federal and State requirements to do so. The 
process is, to an extent, a ``gatekeeper'' that prevents unqualified 
and potentially fraudulent individuals and entities from entering and 
inappropriately billing Medicare. Since 2006, we have undertaken 
rulemaking efforts to outline our enrollment procedures. These 
regulations are generally codified in 42 CFR part 424, subpart P 
(currently Sec. Sec.  424.500 through 424.570 and hereafter 
occasionally referenced as subpart P). They address, among other 
things, requirements that providers and suppliers must meet to obtain 
and maintain Medicare billing privileges.
    As outlined in Sec.  424.510, one such requirement is that the 
provider or supplier must complete, sign, and submit to its assigned 
Medicare Administrative Contractor (MAC) the appropriate enrollment 
form, typically the Form CMS-855 (OMB Control No. 0938-0685). The Form 
CMS-855, which can be submitted via paper or electronically through the 
internet-based Provider Enrollment, Chain, and Ownership System (PECOS) 
process (SORN: 09-70-0532, PECOS), collects important information about 
the provider or supplier. Such data includes, but is not limited to, 
general identifying information (for example, legal business name), 
licensure and/or certification data, and practice locations. After 
receiving the provider's or supplier's initial enrollment application, 
CMS or the MAC reviews and confirms the information thereon and 
determines whether the provider or supplier meets all applicable 
Medicare requirements. We believe this screening process has greatly 
assisted CMS in executing its responsibility to prevent Medicare fraud, 
waste, and abuse.
    As previously mentioned, over the years we have issued various 
final rules pertaining to provider enrollment. These rules were 
intended not only to clarify or strengthen certain components of the 
enrollment process but also to enable us to take further action against 
providers and suppliers: (1) engaging (or potentially engaging) in 
fraudulent or abusive behavior; (2) presenting a risk of harm to 
Medicare beneficiaries or the Medicare Trust Funds; or (3) that are 
otherwise unqualified to furnish Medicare services or items. Consistent 
with this, and as we discussed in section III.J. of the proposed rule, 
we proposed several changes to our existing Medicare provider 
enrollment regulations. (We note that section III.K of the proposed 
rule addressed a proposed change to one of our Medicaid provider 
enrollment provisions.)
b. Legal Authorities
    There are two principal categories of legal authorities for the 
Medicare provider enrollment provisions we proposed:
     Section 1866(j) of the Act furnishes specific authority 
regarding the enrollment process for providers and suppliers.
     Sections 1102 and 1871 of the Act provide general 
authority for the Secretary to prescribe regulations for the efficient 
administration of the Medicare program.
    With respect to our Medicaid proposal in section III.K. of the 
proposed rule:
     Section 1902(kk)(3) of the Act,\418\ as amended by section 
6401(b) of the Affordable Care Act, which mandates that States require 
providers and suppliers to comply with the same disclosure requirements 
established by the Secretary under section 1866(j)(5) of the Act.\419\
---------------------------------------------------------------------------

    \418\ Because section 6401(b) of the Affordable Care Act 
erroneously added a duplicate section 1902(ii) of the Act, the 
Congress enacted a technical correction in the Medicare and Medicaid 
Extenders Act of 2010 (MMEA) (Pub. L. 111-309) to redesignate 
section 1902(ii) of the Act as section 1902(kk) of the Act, a 
designation we will use in this final rule with comment period.
    \419\ Section 1304 of the Health Care and Education 
Reconciliation Act (Pub. L. 111-152) added a new paragraph (j)(4) to 
section 1866 of the Act, thus re-designating the subsequent 
paragraphs. Accordingly, we are interpreting the reference in 
section 1902(kk)(3) of the Act to ``disclosure requirements 
established by the Secretary under section 1866(j)(4)'' of the Act 
to mean the disclosure requirements described in section 1866(j)(5) 
of the Act.
---------------------------------------------------------------------------

     Section 2107(e)(1) of the Act, as amended by section 
6401(c) of the Affordable Care Act, which makes the requirements of 
section 1902(kk) of the Act, including the disclosure requirements, 
applicable to CHIP.
2. Medicare Enrollment Provisions
a. Expansion of Authority to Deny or Revoke Based on OIG Exclusion or 
Felony Conviction and Associated Definitions
i. OIG Exclusions
    Under Sec. Sec.  424.530(a)(2) and 424.535(a)(2), respectively, CMS 
denies or revokes a provider's or supplier's enrollment if the provider 
or supplier, or any owner, managing employee, authorized or delegated 
official, medical director, supervising physician, or other health care 
or administrative or management services personnel furnishing services 
payable by a Federal health care program, of the provider or supplier 
is excluded by the OIG. We proposed several changes related to these 
authorities.
    First, we proposed to expand the categories of parties listed 
within these denial and revocation provisions to include: (1) managing 
organizations; and (2) officers and directors of the provider or 
supplier if the provider or supplier is a corporation. Consistent with 
sections 1124 and 1124A of the Act (and depending upon the specific 
enrollment transaction and provider type involved), these parties must 
be reported on the provider's or supplier's Form CMS-855 or, for 
Medicare diabetes prevention program (MDPP) suppliers, the Form CMS-
20134. Although they are not explicitly listed in Sec. Sec.  
424.530(a)(2) and 424.535(a)(2), we have generally considered these 
individuals and entities to be parties that exercise managing control 
over the provider or supplier in a vein similar to managing employees. 
Accordingly, and to help prevent excluded managing organizations, 
officers, and directors from posing a program integrity threat to 
Medicare, we proposed to incorporate these persons and organizations 
within the two aforementioned regulatory paragraphs.
    Second, we proposed to add new paragraphs to Sec. Sec.  
424.530(a)(2) and 424.535(a)(2) to clarify that the persons and 
entities listed in those two regulatory provisions include, but are not 
limited to, W-2 employees and contracted parties of the provider or 
supplier. We have traditionally applied Sec. Sec.  424.530(a)(2) and 
424.535(a)(2) to the individuals listed therein (such as supervising 
physicians) regardless of their W-2 status; this is consistent with the 
definition of ``managing employee'' in Sec.  424.502, which does not 
exclude contracted personnel from its purview.
    Pursuant to this change regarding contracted parties, we also 
proposed to:

[[Page 69999]]

     Redesignate the introductory paragraph of existing Sec.  
424.530(a)(2) as Sec.  424.530(a)(2)(i).
     Redesignate current Sec. Sec.  424.530(a)(2)(i) and (ii) 
as Sec.  424.530(a)(2)(i)(A) and (B), respectively. The new paragraph 
concerning contracted personnel would be new Sec.  424.530(a)(2)(ii).
     Make similar structural revisions to Sec.  424.535(a)(2).
ii. Felony Convictions
    Under Sec. Sec.  424.530(a)(3) and 424.535(a)(3), respectively, CMS 
may deny or revoke enrollment if the provider or supplier, or any owner 
or managing employee of the provider or supplier was, within the 
preceding 10 years, convicted of a Federal or State felony offense that 
CMS determines is detrimental to the best interests of the Medicare 
program and its beneficiaries. We proposed to expand these two 
regulatory provisions to include therein managing organizations, 
officers, and directors. As previously explained, we are obligated to 
protect the Medicare program, the Trust Funds, and beneficiaries. As 
with exclusions, we are concerned that persons and entities that have 
engaged in felonious behavior could, through their association with the 
provider or supplier, present program integrity risks. Consequently, we 
believe that an expansion of Sec. Sec.  424.530(a)(3) and 424.535(a)(3) 
is warranted.
    We also proposed to add new paragraphs at Sec. Sec.  
424.530(a)(3)(iii) and 424.535(a)(3)(iv) clarifying that these two 
provisions apply to contracted parties, as well.
iii. Definitions
    In light of our additions of ``managing organization,'' 
``officer'', and ``director'' to the aforementioned denial and 
revocation provisions, we proposed to define these terms in Sec.  
424.502.
    ``Managing organization'' would mean an entity that exercises 
operational or managerial control over, or that directly or indirectly 
conducts, the day-to-day operations of the provider or supplier, either 
under contract or through some other arrangement. We proposed to define 
``officer'' as an officer of a corporation, regardless of whether the 
provider or supplier is a non-profit entity. Since section 1124(a) of 
the Act requires the disclosure of officers if the entity is a 
corporation, we included the same reference to corporations in our 
proposed definition. In a similar context, we proposed to define 
``director'' as a director of a corporation, regardless of whether the 
provider or supplier is a non-profit entity. To further clarify this 
definition, however, we proposed that ``director'' includes any member 
of the corporation's governing body irrespective of the precise title 
of either the board or the member. This body could be a board of 
directors, board of trustees, or similar body, while a director can be 
merely a volunteer or ceremonial board member.
iv. Comments Received
    The following is a summary of the public comments received on the 
foregoing proposals:
    Comment: Several commenters supported our proposals to expand our 
denial and revocation authorities and to add definitions of ``managing 
organization,'' ``officer,'' and ``director''.
    Response: We appreciate the commenters' support.
    Comment: Regarding our proposal that the term ``director'' would 
include board members of non-profit corporations (NPCs), a commenter 
expressed concern about our longstanding requirement that volunteer 
board members of NPCs (including community-based NPCs) disclose their 
social security numbers (SSNs) on CMS enrollment applications.
    Response: As we indicated in the proposed rule, we have long taken 
the position that sections 1124(a) and 1124A(a) of the Act require all 
directors (if the provider or supplier is a corporation) and their SSNs 
to be reported as part of the enrollment process. Given that sections 
1124(a) and 1124A(a) of the Act make no distinction between for-profit 
and non-profit entities or between paid and voluntary board members, we 
believe that the SSNs of NPC board members must be disclosed.
    Comment: Concerning our proposed changes to Sec. Sec.  
424.530(a)(2) and 424.535(a)(2), a commenter stated that the OIG does 
not always accurately identify fraud and that CMS should target actual, 
demonstrated fraud.
    Response: We agree that targeting fraud is of utmost importance, 
but we emphasize that fraud is not the only activity that can threaten 
the Medicare program and its beneficiaries. To illustrate, section 1128 
of the Act identifies numerous bases for OIG exclusions that do not 
necessarily involve health care fraud, such as a criminal conviction 
for the unlawful manufacture, distribution, prescription, or dispensing 
of a controlled substance. CMS also has more than 20 grounds for 
revocation of enrollment under Sec.  424.535, many of which do not 
directly or necessarily pertain to fraudulent activity. Regardless, and 
given CMS' confidence in the thoroughness of the OIG's exclusion 
assessments, we believe that an OIG exclusion reflects conduct of 
sufficient severity that the application of Sec. Sec.  424.530(a)(2) or 
424.535(a)(2) in such cases is justified. We note further that an 
excluded party may appeal the exclusion pursuant to 42 CFR 402.214.
    Comment: A commenter stated that in determining whether to deny or 
revoke enrollment based on a director's actions, CMS should consider 
whether the conduct occurred while the individual was serving as a 
director of the provider or supplier.
    Response: Our central concern in the situation to which the 
commenter refers is the director's inappropriate conduct itself--and 
what it suggests about the director's and the associated provider or 
supplier's trustworthiness to interact with the Medicare program and 
its beneficiaries--rather than the specific forum in which it happened. 
For example, and as previously mentioned, Sec. Sec.  424.530(a)(3) and 
424.535(a)(3) apply to felony convictions occurring within the previous 
10 years. In our experience in reviewing potential Sec. Sec.  
424.530(a)(3) and 424.535(a)(3) cases, many felonies involved activity 
that took place before the individual become a director or that was 
otherwise unrelated to his or her role as such. In this example, it is 
the felony itself, irrespective of the forum involved, that potentially 
threatens the integrity of the Medicare program.
    As a result of the public comments, we are finalizing the revisions 
described in section III.J.2. of this final rule as proposed.
b. Reversal of Revocation or Denial
    Sections 424.535(e) and 424.530(c) state that if a revocation or 
denial, respectively, was due to a prior adverse action (such as a 
sanction, exclusion, or felony) against a provider's or supplier's 
owner, managing employee, authorized or delegated official, medical 
director, supervising physician, or other health care or administrative 
or management services personnel furnishing services payable by a 
Federal health care program, the revocation or denial may be reversed 
if the provider or supplier terminates and submits proof that it has 
terminated its business relationship with that party within 30 days of 
the revocation or denial notification. To maintain consistency with our 
aforementioned changes to Sec. Sec.  424.530(a) and 424.535(a), we 
proposed to add managing organizations, officers, and directors to 
Sec. Sec.  424.535(e) and 424.530(c).
    The following is a summary of the public comments received on this 
proposal:

[[Page 70000]]

    Comment: Several commenters expressed support for our proposed 
changes to Sec. Sec.  424.535(e) and 424.530(c).
    Response: We appreciate the commenters' support.
    Comment: A commenter questioned whether the word ``terminates'' in 
Sec. Sec.  424.535(e) and 424.530(c) means a termination of enrollment 
or a termination of the individual's or entity's relationship with the 
provider or supplier.
    Response: It means a termination of the individual's or entity's 
business relationship with the provider or supplier.
    As a result of the public comments, we are finalizing the revisions 
discussed in section III.J.2.b. of this final rule as proposed.
c. Medicare Revocation Based on Other Program Termination
    Section 424.535(a)(12)(i) states, in part, that CMS can revoke 
enrollment if the provider or supplier is terminated, revoked, or 
otherwise barred from participation in a State Medicaid program or any 
Federal health care program. However, under Sec.  424.535(a)(12)(ii) 
revocation cannot occur unless and until the provider or supplier has 
exhausted all applicable appeal rights. Our position has always been 
that revocation under Sec.  424.535(a)(12)(i) can ensue once the 
initial period to file an appeal has ended; that is, CMS need not wait 
until the expiration of every subsequent appellate period that would 
have applied had the provider or supplier appealed. To clarify this via 
rulemaking, we proposed to add the language ``or the timeframe for 
filing an appeal has expired without the provider or supplier filing an 
appeal'' to the end of Sec.  424.535(a)(12)(ii).
    The following is a summary of the public comments received on this 
proposal:
    Comment: Several commenters expressed support for our proposed 
change to Sec.  424.535(a)(12)(ii).
    Response: We appreciate the commenters' support.
    Comment: A commenter expressed concern that the addition of our 
proposed language would shorten the period in which a provider or 
supplier can appeal a revocation of enrollment.
    Response: Our proposed addition would not reduce the timeframe for 
filing an appeal of a revocation or otherwise affect appeal rights in 
any way. It merely clarifies that if no appeal is filed within the 
prescribed timeframe, the revocation becomes effective.
    As a result of the public comments, we are finalizing the revisions 
discussed in section III.J.2.c as proposed.
d. Categorical Risk Designation--Ownership Changes and Adverse Actions
i. Background
    Under the authority granted to us by section 6401(a) of the 
Affordable Care Act (which amended section 1866(j) to the Act), we 
established Sec.  424.518 in a final rule with comment period entitled 
``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,'' which was published in the Federal Register 
on February 2, 2011 (76 FR 5862). Section 424.518 outlines levels of 
screening by which CMS and its MACs review initial applications, 
revalidation applications, and applications to add a practice location. 
These screening categories and requirements are based on a CMS 
assessment of the risk of fraud, waste, and abuse posed by a particular 
type of provider or supplier. In general, the higher the risk that a 
certain provider or supplier type poses, the greater the scrutiny with 
which CMS will screen and review providers or suppliers within that 
category.
    There are three levels of screening in Sec.  424.518: high, 
moderate, and limited. Irrespective of which level a provider or 
supplier type falls within, the MAC performs the following screening 
functions upon receipt of an initial enrollment application, a 
revalidation application, or an application to add a new location:
     Verifies that a provider or supplier meets all applicable 
Federal regulations and State requirements for their provider or 
supplier type.
     Conducts State license verifications.
     Conducts database checks on a pre- and post-enrollment 
basis to ensure that providers and suppliers continue to meet the 
enrollment criteria for their provider or supplier type.
    Providers and suppliers at the moderate and high categorical risk 
levels must also undergo a site visit. Furthermore, for those at the 
high screening level, the MAC performs two additional functions under 
Sec.  424.518(c)(2). First, the MAC requires the submission of a set of 
fingerprints for a national background check from all individuals with 
a 5 percent or greater direct or indirect ownership interest in the 
provider or supplier. Second, it conducts a fingerprint-based criminal 
history record check of the Federal Bureau of Investigation's (FBI) 
Integrated Automated Fingerprint Identification System on all persons 
with a 5 percent or greater direct or indirect ownership interest in 
the provider or supplier. These additional verification activities are 
meant to correspond to the heightened risk involved.
    There currently are only four provider or supplier types within the 
high categorical risk level under Sec.  424.518(c)(1): newly/initially 
enrolling home health agencies (HHAs); newly/initially enrolling DMEPOS 
suppliers; newly/initially enrolling MDPP suppliers; and newly/
initially enrolling opioid treatment programs (OTPs).
ii. Current Grounds for Risk Level Increase (or ``Bump Up'')
    Under Sec.  424.518(c)(3)(i) and (ii), CMS adjusts a particular 
provider's or supplier's screening level from ``limited'' or 
``moderate'' to ``high'' if the provider or supplier:
     Has had a payment suspension within the previous 10 years;
     Has been excluded by the OIG;
     Has had its Medicare billing privileges revoked within the 
previous 10 years and is attempting to establish additional Medicare 
billing privileges by (i) enrolling as a new provider or supplier or 
(ii) adding a new practice location;
     Has been terminated or is otherwise precluded from billing 
Medicaid;
     Has been excluded from any Federal health care program; or
     Has been subject to any final adverse action (as defined 
at Sec.  424.502) within the previous 10 years.
    The general purpose of Sec.  424.518(c)(3) is to ensure that 
providers and suppliers that have had certain adverse actions imposed 
against them are reviewed with a concomitant level of scrutiny.
iii. Analysis
    As previously mentioned in this final rule, Sec.  424.518 outlines 
screening requirements for initial enrollment applications, 
revalidation applications, and practice location additions. Yet it does 
not specifically address:
     Change of ownership (CHOW) applications under 42 CFR 
489.18; or
     The reporting of a new owner when a formal Sec.  489.18 
CHOW is not involved (such as disclosing a new 10 percent owner per 
Sec.  424.516(e)(1)).
    Section 424.518's dearth of explicit applicability to these two 
situations effectively means that a high-risk level provider or 
supplier can have a new owner without the latter having to undergo the 
important scrutiny that fingerprint-based criminal background

[[Page 70001]]

checks furnish. In promulgating Sec.  424.518 in 2011, we recognized 
the uniquely critical role that owners often play in the provider's or 
supplier's operations by restricting our fingerprinting requirement to 
such persons. To mandate the fingerprinting of owners with initial 
applications, revalidations, and new practice locations but not with 
the aforementioned two transactions that specifically focus on the 
disclosure of new owners would be both an inconsistency and a program 
integrity risk.
    Concerning the risk-level elevation criteria in Sec.  
424.518(c)(3), there are numerous health care entities that have 
multiple enrollments under their organizational umbrella. Situations 
can arise where an organization with multiple enrollments has had an 
action described in Sec.  424.518(c)(3) imposed against it or against 
one of its enrollments. Consider the following examples:
     Example 1--Entity Y has three separately enrolled 
physician groups (A, B, and C), each at the limited-risk level of 
categorical screening. Group C has just been revoked under Sec.  
424.535(a)(1) for non-compliance with enrollment requirements.
     Example 2--Organization Z has within its structure an 
enrolled HHA, an enrolled nurse practitioner group, and an enrolled 
independent diagnostic testing facility (IDTF). The organization itself 
has recently been convicted of a felony (which is identified as a final 
adverse action under Sec.  424.502). All three of its enrollments are 
accordingly revoked.
    The adverse actions described in these two examples fall within the 
scope of events that would trigger an increase in risk level under 
Sec.  424.518 to ``high.'' There has been uncertainty among interested 
parties, particularly provider organizations with multiple enrollments, 
as to the extent of the risk-level elevation in these cases. That is, 
the issue is whether an adverse action imposed with respect to a 
particular enrollment applies strictly to said enrollment or also 
applies to all of the provider's or supplier's other enrollments, 
meaning that the screening level for these additional enrollments 
would, too, be raised to ``high.'' Under this latter approach, which 
has generally been our policy, the following would occur under 
aforementioned Examples 1 and 2:
     Example 1--All initial enrollment applications, 
revalidations, and additions of practice locations involving Group 
Practice A, B, or C (for instance, Group C sought to re-enroll in 
Medicare after the expiration of its reenrollment bar under Sec.  
424.535(c)) would be processed at the ``high'' level of categorical 
screening. In addition, if Entity Y sought to enroll new Group Practice 
D, the latter's initial application would be subject to the ``high'' 
screening category.
     Example 2--As with Example 1, all of Organization Z's 
enrollments would be elevated to ``high'' under Sec.  424.518(c)(3). If 
any of the revoked providers and suppliers sought to reenroll in 
Medicare after their reenrollment bars expire, their enrollments would 
be processed at the high-risk level.
    As discussed in the proposed rule, we believe the foregoing 
approach is warranted because we have historically viewed Sec.  
424.518(c)(3) as applying to the controlling provider or supplier at 
large and not necessarily being confined to one of its enrollments. The 
core consideration, in our view, is the risk that the behavior at issue 
poses to the Trust Funds and to beneficiary safety. Even if, for 
instance, a Medicaid termination occurred with only one of the entity's 
enrollments, this raises serious questions about the organization's 
oversight of the enrolled providers and suppliers under its control. We 
also noted in the proposed rule our belief that the overriding need to 
protect the Medicare program justifies heightened examination of the 
other enrollments within the organization's domain.
iv. Regulatory Revisions
    Given the prior discussion and for reasons already outlined, we 
proposed the following changes to Sec.  424.518.
    First, the introductory paragraph of Sec.  424.518 references 
initial applications, revalidation applications, and practice location 
additions as falling within Sec.  424.518's purview. We proposed to add 
to this paragraph the following transactions: (1) change of ownership 
applications under Sec.  489.18; and (2) the reporting of any new owner 
(regardless of ownership percentage) via a change of information or 
other enrollment transaction (such as a full or partial certified 
supplier ownership change) under Title 42.
    Second, we proposed to clarify in Sec.  424.518(c) that the 
provider and supplier types included therein--once enrolled--are 
subject to high-risk screening if they are submitting a Sec.  489.18 
change of ownership application or an application to report a new owner 
(as described in the previous paragraph). As a technical elucidation, 
we also proposed to change the language in paragraph (c)(1) that reads, 
``CMS has designated the following home health agencies and suppliers 
of DMEPOS as ``high'' categorical risk'' to ``CMS has designated the 
following provider and supplier types as ``high'' categorical risk.'' 
This would merely clarify that certain providers and suppliers other 
than HHAs and DMEPOS suppliers (such as OTPs) fall within paragraph 
(c)(1).
    Third, the introductory language at Sec.  424.518(c)(3) states that 
CMS adjusts the screening level from limited or moderate to high if any 
of the previously cited adverse actions against the provider or 
supplier occur. To explain the extent of such adjustments, we proposed 
to add a new paragraph (c)(4). We proposed to state therein that any 
adjustment under paragraph (c)(3) would also apply to all other 
enrolled and prospective providers and suppliers that have the same 
legal business name and tax identification number as the provider or 
supplier for which the risk level under paragraph (c)(3) was originally 
raised.
    The following is a summary of the public comments received on the 
foregoing proposals:
    Comment: Several commenters questioned how our proposals concerning 
fingerprinting would impact providers and suppliers that are owned and 
operated by non-profit entities or by hedge funds. One commenter stated 
that if CMS intends to apply the fingerprinting requirement to non-
profit providers and suppliers, CMS should undertake separate notice-
and-comment rulemaking to explain how this process would work.
    Response: We note two things. First, the fingerprinting requirement 
only applies to the fairly small number of providers and suppliers 
falling within the ``high'' screening level under Sec.  424.518(c). It 
does not apply to all Medicare providers and suppliers. Second, and as 
has always been the case, only individuals who own a 5 percent or 
greater direct or indirect ownership interest in the provider or 
supplier need be fingerprinted; an entity itself cannot be 
fingerprinted. Accordingly, if a provider or supplier has no persons 
who fall within this category (for instance, all of its direct and 
indirect owners are organizations), fingerprinting is unnecessary. This 
same principle applies with respect to non-profit entities. Five 
percent or greater direct or indirect individual owners of all provider 
and supplier organizations, whether for-profit or non-profit, that fall 
within Sec.  424.518(c) are subject to fingerprinting. There are no 
exceptions in Sec.  424.518(c) for certain types of entities. However, 
Sec.  424.518(c)'s

[[Page 70002]]

fingerprinting requirement does not apply if the organization has no 
individual owners. Accordingly, those non-profit entities that do not 
have such owners (and most non-profit entities do not) would not need 
to submit fingerprints under Sec.  424.518(c).
    Comment: A commenter requested that we revise proposed Sec.  
424.518(c)(4) to give MACs the discretion to make individual 
determinations as to whether a particular provider or supplier with the 
same LBN and TIN as the originally bumped-up provider or supplier 
should also be bumped-up.
    Response: We respectfully disagree. As we explained in the proposed 
rule, we believe that the very close organizational nexus between these 
providers and suppliers requires a simultaneous increase in their risk 
levels.
    Comment: A commenter opposed our proposed addition of ownership 
changes to the scope of Sec.  424.518. The commenter focused on our 
aforementioned proposed introductory language regarding the reporting 
of a new owner ``regardless of the ownership percentage involved.'' The 
commenter appeared to interpret this to mean that providers and 
suppliers must now report to Medicare all ownership changes no matter 
how small the percentage.
    Response: We respectfully believe that the commenter is 
misinterpreting our proposal. The term ``owner'' is defined in Sec.  
424.502 as any individual or entity that has any partnership interest 
in, or that has 5 percent or more direct or indirect ownership of, the 
provider or supplier. This definition aligns with the reporting 
requirements for owners described in sections 1124 and 1124A of the 
Act. We did not propose to change these thresholds for disclosing new 
owners, and we do not believe the wording of our proposed change to 
Sec.  424.518's introductory language indicates such an intent. The 
sole purpose of the caveat regarding ownership percentage is to clarify 
that the ownership change need not be, for instance, greater than 50 
percent but can be as small as the minimum thresholds described in 
Sec.  424.502's definition of owner.
    Comment: Several commenters cautioned CMS against implementing 
proposed Sec.  424.518(c)(4), as well as our expansion of Sec.  424.518 
to include ownership changes, until these provisions' potential impacts 
and burdens on providers, the MACs, and beneficiary access to care are 
assessed. They expressed particular concern about the burden on owners 
of multiple providers and suppliers. One commenter stated that because 
physician practices are often affiliated with health systems and other 
medical groups, proposed Sec.  424.518(c)(4) could lead to 
unnecessarily enhanced screening of practices and their physicians, 
none of whom violated any laws; this, in turn, could delay care for 
beneficiaries. Considering the possible effects of this provision and 
the importance of alerting providers and suppliers thereof, this 
commenter recommended that CMS: (1) delay Sec.  424.518(c)(4)'s 
implementation until July 1, 2023 at the earliest; and (2) monitor the 
provision's impact on the provider community and beneficiaries.
    Response: We appreciate the commenters' concerns and emphasize that 
we carefully considered the possible impacts of these proposals. We 
estimated in the regulatory impact analysis of the proposed rule that 
less than 3,000 providers and suppliers per year would be affected by 
any of our proposed changes to Sec.  424.518; we believe this number is 
extremely small when compared to the universe of over 2 million current 
Medicare providers and suppliers. Given this, the overall impact of 
these changes should be minimal, and we do not believe they will result 
in delays in enrollment application processing. We note that the 
fingerprinting requirement has existed for a decade, and CMS has not 
seen during this period any problems stemming therefrom regarding, for 
instance, patient access to care or application processing delays. 
Nonetheless, we will monitor the implementation of this provision for 
any potential, significant undue burdens.
    Comment: A commenter expressed concern that our proposals would 
require the annual fingerprinting of owners of providers and suppliers 
in the high screening category.
    Response: In terms of timing, fingerprinting of such owners is only 
required upon initial enrollment, revalidation, the addition of a 
practice location, and, as proposed, an ownership change as described 
in the introduction to Sec.  424.518. Nothing in Sec.  424.518 requires 
the annual submission of fingerprints.
    As a result of the public comments, we are finalizing the revisions 
discussed in section III.J.2.d. of this final rule as proposed.
e. Categorical Risk Designation--Skilled Nursing Facilities (SNFs)
    SNFs are currently in the limited-risk screening category under 
Sec.  424.518. However, CMS in recent years has become increasingly 
concerned about certain problems within the SNF community, particularly 
potential and actual criminal behavior. Indeed, a specific concern 
raised in several government reports involves patient abuse. For 
instance, the United States Government Accountability Office (GAO) 
published an analysis on January 14, 2022 titled ``Health Care Capsule: 
Improving Nursing Home Quality and Information'' (GAO-22-105422). In 
this report, the GAO identified gaps in CMS' prior oversight of nursing 
homes that make it more difficult to prevent patient abuse. Another GAO 
report, titled ``Nursing Homes: Better Oversight Needed to Protect 
Residents from Abuse'' (GAO-19-433), was published in June 2019.\420\ 
The study aimed to: (1) determine the trends and types of nursing home 
patient abuse in recent years; and (2) evaluate CMS' oversight that is 
intended to ensure residents are free from abuse. The report concluded, 
among other things, that patient abuse deficiencies found on State 
surveys more than doubled between 2013 and 2017.\421\ It also noted 
inconsistencies as to when State survey abuse findings or allegations 
of abuse are referred to law enforcement.\422\ The subject of 
background checks was also addressed. The GAO interviewed various 
interested parties and determined that nursing homes without adequate 
staff screening mechanisms (such as background checks) could result in 
hiring staff with histories of abuse.\423\ It added that because 
``staff screening through background checks and the nurse aide registry 
is not coordinated across the country, there are gaps that could enable 
individuals who committed crimes in one state to obtain employment at a 
nursing home in another state . . . . Staff from a nursing home we 
visited said the prevention of abuse `starts with hiring the right 
staff' and noted the importance of conducting background checks and 
checking references for prospective employees.'' \424\
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    \420\ https://www.gao.gov/assets/gao-19-433.pdf.
    \421\ Ibid.
    \422\ Ibid., 42.
    \423\ Ibid., 29.
    \424\ Ibid., 31-32.
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    The OIG, too, has opined on this matter. In a September 2020 report 
titled, ``National Background Check Program for Long-Term Care 
Providers: Assessment of State Programs Concluded in 2019'' (OEI-07-20-
00180), the OIG noted that patient abuse, patient neglect, and 
misappropriation of property have been detected as problems harmful to 
beneficiaries receiving long-term care. Somewhat akin to the previously 
mentioned June 2019 GAO report, the

[[Page 70003]]

OIG stated that, per various studies, some nurse aides who were 
convicted of abuse, neglect, or theft had previous criminal convictions 
that could have been found through background checks of prospective 
employees.\425\ The OIG added that such employee background checks can 
help protect long-term care beneficiaries.\426\
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    \425\ OEI-07-20-00180, p. 1. Such employee background checks are 
conducted pursuant to the National Background Check Program, enacted 
by legislation in 2010. This is a voluntary grant program for States 
to develop systems to conduct Federal and State background checks. 
See https://www.bgcheckinfo.org/.
    \426\ Ibid.
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    Our aforementioned concerns regarding problematic activity in the 
nursing home arena are not limited to patient abuse. We outlined in the 
proposed rule numerous recent cases that highlight issues regarding 
fraud or improper billing among nursing home owners or operators. The 
cases were as follows:
     In April 2019, a jury found an owner of nursing homes and 
assisted living facilities in Florida guilty of 20 charges related to 
health care fraud. The United States Department of Justice (DOJ) noted 
that the owner's actions were part of the largest health care fraud 
scheme ever charged by the DOJ. It involved over $1.3 billion in 
fraudulent claims to Medicare and Medicaid for services that were not 
provided, were not medically necessary, or were procured through the 
payment of kickbacks.\427\
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    \427\ https://www.justice.gov/opa/pr/south-florida-health-care-facility-owner-convicted-role-largest-health-care-fraud-scheme-ever.
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     In July 2021, a Virginia nursing home operator was 
sentenced to 2 years in prison for defrauding Medicaid after submitting 
more than $188,000 in false claims.\428\
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    \428\ https://www.justice.gov/usao-edva/pr/operator-residential-nursing-facility-sentenced-health-care-fraud.
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     In March 2022, the DOJ settled a False Claims Act case 
with a Georgia nursing home for $400,000. The matter involved 
allegations that the nursing home deliberately billed Medicare for 
services that were not reasonable, necessary, or skilled.\429\
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    \429\ https://www.justice.gov/usao-ndga/pr/england-associates-lp-dba-new-london-health-center-pays-40000000-resolve-false-claims#:.
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     A nursing home entity based in Georgia (which operates 
nursing homes across the country) agreed in May 2021 to pay $11.2 
million to resolve allegations that it: (1) violated the False Claims 
Act by causing its nursing homes to bill the Medicare program for 
rehabilitation therapy services that were not reasonable, necessary or 
skilled; and (2) billed Medicare and Medicaid for substandard skilled 
nursing services.\430\
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    \430\ https://www.justice.gov/opa/pr/savaseniorcare-llc-agrees-pay-112-million-resolve-false-claims-act-allegations.
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     In January 2020, a New York man pled guilty in federal 
court to embezzlement and tax offenses related to his operation of 
nursing homes in Connecticut.\431\
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    \431\ https://www.justice.gov/usao-ct/pr/nursing-home-operator-pleads-guilty-embezzlement-and-tax-offenses.
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     Also in 2020, a Pennsylvania nursing home chain and its 
related companies agreed to pay more than $15 million to settle claims 
that the chain provided medically unnecessary rehabilitation therapy to 
residents in order to meet revenue goals, instead of clinical 
needs.\432\
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    \432\ https://www.justice.gov/usao-edpa/pr/pennsylvania-nursing-home-chain-pay-155-million-settle-false-claims-act-allegations.
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     A California corporation and 27 affiliated nursing homes 
in the State agreed in July 2020 to resolve allegations that they 
violated the False Claims Act by submitting false claims to Medicare 
for rehabilitation therapy services that were not reasonable or 
necessary.\433\
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    \433\ https://www.justice.gov/usao-cdca/pr/27-skilled-nursing-facilities-controlled-longwood-management-corp-pay-167-million.
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     In June 2019, four Illinois nursing facilities and a 
physical therapy center agreed to pay $9.7 million to resolve civil 
allegations that they violated the False Claims Act by providing 
unnecessary services to increase Medicare payments.\434\
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    \434\ https://www.justice.gov/usao-ndil/pr/chicago-area-physical-therapy-center-and-4-nursing-facilities-pay-97-million-resolve.
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     A Tennessee-based nursing home chain agreed in February 
2018 to pay more than $18 million in allowed claims to resolve a 
lawsuit brought against them by the DOJ and the State of Tennessee for 
billing the Medicare and Medicaid programs for substandard nursing home 
services.\435\
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    \435\ https://www.justice.gov/opa/pr/vanguard-healthcare-agrees-resolve-federal-and-state-false-claims-act-liability.
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    As we explained in the proposed rule and reiterate here, the 
disconcerting number of recent cases involving fraud and improper 
billing by nursing home owners and operators, as well as the OIG and 
GAO reports concerning patient abuse at the nursing homes these 
individuals oversee, requires, in our view, strengthened protections of 
the Medicare program and its nursing home beneficiaries. CMS has an 
obligation to safeguard the integrity of both the Trust Funds and the 
services that nursing home patients receive. Financial malfeasance and 
beneficiary abuse are unacceptable, and we believe that more closely 
scrutinizing the owners of nursing homes through our existing criminal 
background checks under Sec.  424.518 can help detect potential 
criminal or abusive behavior at the nursing home before it begins. We 
cited the following illustrations in the proposed rule:
     If a SNF owner is found through a fingerprint-based 
background review to have been convicted of battery, sexual assault, or 
other serious crime, this could raise significant concerns as to 
whether this conduct will be repeated during the owner's oversight or 
management of the facility.
     A SNF owner with an embezzlement conviction might be more 
inclined to divert the SNF's funds to his personal use (and away from 
monies otherwise intended for beneficiary care) than a different owner; 
he or she might also be more willing to tolerate malfeasance in the 
nursing home or to hire persons with criminal records.
    As two of the aforementioned OIG and GAO reports indicated 
regarding nursing home employees, background reviews can prove helpful 
in screening individuals for possible problematic behavior. We, too, 
have found our fingerprint-based criminal background checks of great 
assistance in detecting felonious behavior by the owners of high-risk 
providers and suppliers.
    Given the prevalence of recent unacceptable behavior by nursing 
home overseers and the OIG and GAO-documented instances of nursing home 
beneficiary abuse, we proposed to revise Sec.  424.518 to move 
initially enrolling SNFs into the high-level of categorical screening; 
revalidating SNFs would be subject to moderate risk-level screening. 
This would help us detect parties potentially posing a risk of fraud, 
waste, or abuse and, with this, the threat of patient abuse. In 
addition, we stated in the proposed rule that our proposal would assist 
in protecting Medicare Trust Fund dollars and beneficiaries and aligns 
with the Biden-Harris Administration's initiative to improve nursing 
home accountability.\436\
---------------------------------------------------------------------------

    \436\ See https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/28/fact-sheet-protecting-seniors-and-people-with-disabilities-by-improving-safety-and-quality-of-care-in-the-nations-nursing-homes/.
---------------------------------------------------------------------------

    The following is a summary of the public comments received on this 
proposal:
    Comment: Several commenters expressed support for our proposal. 
They concurred with our concerns about patient abuse by nursing home 
staff as well as fraud and improper billing by nursing home owners and

[[Page 70004]]

operators. One commenter stated that the multiple cases of patient 
abuse and financial fraud we cited in the proposed rule justified our 
proposed change.
    Response: We appreciate the commenters' support.
    Comment: A commenter expressed concern about our statement in the 
proposed rule regarding felonious activity by nursing home owners, in 
which we emphasized that Sec. Sec.  424.530(a)(3) and 424.535(a)(3) are 
discretionary provisions that we are not required to apply in every 
case. The commenter contended that this is a loophole that could 
endanger Medicare beneficiaries and the Trust Funds and recommended 
that CMS remove the discretionary aspect of Sec. Sec.  424.530(a)(3) 
and 424.535(a)(3).
    Response: We appreciate this concern, but respectfully disagree 
with the commenter's suggestion. Every potential Sec. Sec.  
424.530(a)(3) and 424.535(a)(3) situation is different and, to ensure a 
careful review of the matter, we must consider all of the facts and 
circumstances involved.
    Comment: Several commenters urged CMS to: (1) more closely examine 
the accuracy of information that SNFs furnish on their enrollment 
applications; and (2) deny or revoke their Medicare enrollment under, 
Sec. Sec.  424.530(a)(4)) or 424.535(a)(4)), respectively, if they 
provide false or misleading information on their application. Citing 
various media reports, a commenter stated that nursing home owners: (1) 
often create new companies when they seek to purchase a SNF so that 
there is no ``record'' for the State to review; and (2) use multiple 
names in order to conceal their actual ownership of nursing facilities. 
Another commenter (also citing news reports) stated that actions such 
as creating new companies and using multiple names can decrease the 
transparency of SNF owners and shield them from accountability for 
wrongdoing.
    Response: As the commenters noted, we can deny or revoke enrollment 
under Sec. Sec.  424.530(a)(4)) or 424.535(a)(4), respectively, if a 
provider or supplier submits false or misleading data on its enrollment 
application. We take very seriously the importance of attempting to 
ensure the accuracy of submitted enrollment data. We will continue to 
do so and, as circumstances warrant, take action under Sec. Sec.  
424.530(a)(4)) or 424.535(a)(4).
    Comment: A commenter recommended that, pursuant to Sec.  
424.535(a)(8)(ii), CMS revoke the enrollments of SNFs that engage in a 
pattern or practice of submitting claims that fail to meet Medicare 
requirements.
    Response: We appreciate the commenter's concern. As with the 
submission of accurate enrollment information, providers and suppliers 
(including SNFs) have an obligation to submit claims that comply with 
Medicare requirements. Should circumstances warrant, we will exercise 
our revocation authority under Sec.  424.535(a)(8)(ii).
    Comment: A commenter stated that SNFs that have settled False 
Claims Act cases with the United States for fraudulently billing the 
Medicare program should be revoked from Medicare, even if the SNF did 
not formally admit responsibility for the fraudulent billing.
    Response: We appreciate the commenter's concern and agree that it 
is important to undertake program integrity measures, consistent with 
our statutory and regulatory authority, with respect to providers and 
suppliers that engage or could engage in improper conduct.
    Comment: A commenter contended that CMS lacks the statutory 
authority for its proposal to move SNFs to the high screening category. 
Citing language that CMS used in the previously mentioned February 2, 
2011 final rule as support for its contention, the commenter stated 
that: (1) CMS' statutory authority under section 1866(j)(1)(A) of the 
Act regarding provider enrollment screening is restricted to matters 
involving fiscal program integrity and does not extend to the 
monitoring of provider and supplier conditions of participation (CoPs) 
(such as the SNF CoPs in 42 CFR part 483); and (2) quality of care is 
unrelated to the establishment of screening levels for providers and 
suppliers.
    Response: Our proposal was not intended to use the increase in the 
screening level of SNFs to detect compliance with the SNF CoPs under 42 
CFR part 483. Rather, it was to more closely monitor SNFs for having 
engaged in criminal activity that threatens Medicare beneficiaries and 
the Trust Funds. For instance, the OIG and GAO reports we cited 
discussed the abuse of patients at nursing homes, which can certainly 
involve potential criminal behavior; indeed, section 1128(a)(2) of the 
Act requires the Secretary to exclude from participation in any federal 
health care program an individual or entity that has been convicted of 
a criminal offense relating to the neglect or abuse of patients in 
connection with the delivery of a health care item or service. We also 
cited numerous instances of improper conduct, such as fraudulent 
billing, by nursing home owners. Moreover, we noted in the introductory 
paragraph of this rule's preamble discussion our concerns about 
potential and actual criminal conduct in nursing homes; no mention was 
made therein of quality of care. Although we referenced later in the 
proposed rule the Biden-Harris Administration's initiative regarding 
SNF quality of care and our proposal's role in it, this did not negate 
the proposal's fundamental emphasis on program integrity, a matter 
directly related to preventing parties that have engaged in criminal 
activity from entering the Medicare program. We believe such prevention 
falls squarely within the authority granted to the Secretary under 
section 1866(j)(1)(A) of the Act.
    Comment: A commenter contended that sections 1102, 1871, 
1902(kk)(3), and 2107(e)(1) of the Act, which we cited as authorities 
for our provider enrollment provisions, constitute insufficient legal 
bases for our SNF proposal or for taking measures to halt patient abuse 
by SNF employees. The commenter stated that: (1) sections 1102 and 1871 
of the Act address general requirements for the Secretary to provide 
impact analyses and regulation promulgation requirements for the 
Medicare program; and (2) sections 1902(kk)(3) and 2107(e)(1) of the 
Act are merely conforming provisions designed to align the Medicaid and 
CHIP provider enrollment screening processes with the section 
1866(j)(1)(A) Medicare screening provisions. The commenter stated that 
if CMS wishes to propose regulations addressing patient harm, it should 
use a different statutory authority.
    Response: We would like to note that, we did not rely upon any of 
these four statutory provisions as authority for our SNF proposal; 
these were used as authorities for some of our other proposals. We 
instead relied upon section 1866(j) of the Act. Our references to 
patient abuse in the proposed rule were merely examples of potential 
criminal conduct that have come to our attention. We cited other types 
of improper behavior, too, such as fraudulent billing. We reiterate 
that the SNF proposal's focus went well beyond patient abuse to include 
any form of criminal activity that can jeopardize Medicare 
beneficiaries and the Trust Funds. Congress explicitly authorized the 
Secretary in section 1866(j)(2)(B)(ii) of the Act to use fingerprinting 
and criminal background checks as part of the screening process. We 
believe this underscores the fact that section 1866(j) of the Act 
permits us to screen for prior criminal activity regardless of whether 
it

[[Page 70005]]

involved patient abuse, fraudulent billing, or other nefarious conduct.
    Comment: A commenter stated that none of the OIG or GAO reports CMS 
mentioned in the proposed rule recommended that CMS increase the risk 
level of SNFs under Sec.  424.518 to address, for example, patient 
abuse; nor, the commenter added, has the DOJ urged CMS to do so. The 
commenter cited this as evidence that our proposal is unnecessary.
    Response: We respectfully disagree with the commenter. We have 
undertaken many program integrity initiatives over the years on our own 
volition without prior prompting from the OIG, GAO, or the DOJ, and we 
previously outlined evidence (including OIG and GAO findings) in 
support of our proposal and explained why we believe it is necessary. 
Indeed, we must be able to rapidly respond to payment safeguard 
challenges as they arise and cannot wait (and are not required by law 
to wait) until a law enforcement or other government body recommends 
that we do so.
    Comment: A commenter stated that our proposal is unnecessary 
because SNFs already undergo very extensive vetting before being able 
to participate in Medicare. This includes, but is not limited to: (1) 
furnishing detailed information on the enrollment application regarding 
the SNF's owners and managing employees and any final adverse actions 
(as that term is defined in Sec.  424.502); and (2) undergoing the 
survey and certification process. The commenter added that CMS 
currently has measures in place to detect fraudulent behavior, such as 
improved data analytics and CMS' Targeted Probe and Educate Program, 
which addresses claim submission error rates. Using these and similar 
mechanisms, CMS should narrow its program integrity focus towards 
specific areas of vulnerability involving all provider and supplier 
types rather than apply an across-the-board fingerprinting requirement 
to SNFs. The commenter believes this would be a better use of CMS' 
resources.
    Response: We sincerely appreciate the commenter's concern. However, 
we note that certain other provider and supplier types also undergo 
considerable vetting but are still subject to the enhanced scrutiny of 
the high screening category. To illustrate, HHAs must report the same 
information as SNFs on the enrollment application, undergo a survey, 
and meet capitalization requirements under Sec.  489.28 with which no 
other provider or supplier type must comply. Although organizational 
DMEPOS suppliers do not undergo a survey, they must (unless exempted) 
be accredited under Sec.  424.58, have a surety bond under Sec.  
424.57(d), and meet 30 different provider enrollment supplier standards 
in Sec.  424.57(c). In addition, OTPs must be certified (and are 
subject to strict oversight) by HHS' Federal Substance Abuse and Mental 
Health Services Administration. All of these provider and supplier 
types also receive site visits under Sec.  424.518, to which SNFs are 
not presently subject. The purpose of the high screening category is to 
review certain provider and supplier types presenting a heightened risk 
of fraud, waste, abuse above and beyond the normal screening that other 
provider and supplier types receive. In our view, merely because a 
provider or supplier already receives stringent review as part of the 
enrollment and/or certification processes does not mean that additional 
screening is never needed.
    Comment: A commenter cited language in the aforementioned February 
2, 2011 final rule whereby CMS states that fingerprinting will assist 
CMS ``in determining whether individuals submitted a complete and 
truthful Medicare enrollment application and whether an individual is 
eligible to enroll in the Medicare program or maintain Medicare billing 
privileges.'' The commenter seemingly interpreted this to mean that the 
principal purpose of fingerprinting is to verify whether the provider 
or supplier was truthful on its application regarding its adverse legal 
history. The commenter stated that none of the criminal or civil cases 
CMS mentioned in the proposed rule indicated that the nursing facility 
misrepresented ownership or final adverse action information on any 
Medicare enrollment application. The commenter contended that because 
CMS presented no evidence that SNFs are historically untruthful on 
their applications, there is no basis to subject their owners to 
fingerprinting.
    Response: We respectfully disagree with the commenter's apparent 
interpretation. The main purpose of fingerprinting has always been to 
check the provider's or supplier's criminal background with the FBI 
aside from whatever data the provider or supplier furnished on the 
application. Put more simply, the core objective is to assess whether a 
criminal history exists and not whether the provider or supplier 
accurately disclosed this data on the application. We note that the 
last clause of the above-quoted language states, ``and whether an 
individual is eligible to enroll in the Medicare program or maintain 
Medicare billing privileges.'' This clause does not pertain to 
information accuracy but stresses the importance of fingerprinting in 
assessing enrollment eligibility as a whole. Moreover, we did not cite 
potential untruthfulness on the application as a factor when we 
included OTPs and MDPPs in the high screening category and hence 
required their owners to be fingerprinted; this is because our concerns 
focused on verifying possible criminal conduct by the owners of these 
two provider and supplier types irrespective of the data furnished on 
the application.
    Comment: A commenter stated that CMS, in citing various criminal 
and civil cases against SNF owners and operators in the proposal rule, 
failed to note that the majority of these cases involved: (1) 
allegations related to a prior (and, the commenter stated, problematic) 
SNF payment model that has not existed since September 2019; and (2) 
settlements without any admission of guilt. Furthermore, the commenter 
stated that none of the cases demonstrate Medicare vulnerabilities 
under the current SNF payment model and that basing an increase in the 
SNF screening level on a defunct model would depart from CMS' previous 
rulemaking efforts regarding screening level classification.
    Response: We believe that the payment model under which improper 
conduct occurs is far less important than the conduct itself. Providers 
and suppliers are obligated to abide by Medicare requirements 
regardless of the mechanism by which they are paid. We cannot disregard 
improper activity merely because it happened under a former payment 
system. In addition, to the extent the settlements in question did not 
(as part of the agreement) include an official admission of wrongdoing, 
the DOJ in the associated press releases nonetheless outlined the 
improper activities that were involved, conduct that we found extremely 
concerning. In our view, we would be derelict in our duty to protect 
the Medicare program from fraud, waste, and abuse if we simply ignored 
them.
    Comment: A commenter noted that CMS cited two examples in the 
proposed rule of where prior criminal activity by SNF owners and 
operators could later result in patient abuse or other criminal 
conduct. The commenter stated that CMS identified no instances where 
this has actually happened. In addition, the commenter stated that CMS 
did not explain how fingerprinting would have prevented: (1) the 
patient abuse referenced in the aforementioned June 2019 OIG report and 
the September 2020 GAO report; or (2) any of the conduct outlined in 
the previously

[[Page 70006]]

mentioned DOJ criminal and civil cases or have detected any prior 
criminal convictions, since there was no indication that the involved 
parties had any. The commenter maintained that the cited DOJ cases, 
either individually or taken as a whole, do not justify moving SNFs to 
the high screening level, with the commenter adding that two of the 
cases did not even involve improper billing at all but rather: (1) the 
forging of the signature of a nurse whom the nursing home no longer 
employed; and (2) falsification of employee records.
    Response: The two examples the commenter references were merely 
intended to help interested parties understand how certain criminal 
conduct could conceivably result in future improper activity. They were 
for illustrative purposes only.
    As for the aforementioned OIG and GAO reports, these were cited to 
underscore the prevalence of patient abuse in nursing homes and the 
benefits of criminal background checks in potentially preventing it. 
Although the reports focused on patient harm by SNF staff, we believe 
their conclusion that background checks can help detect prior criminal 
activity can be equally applied to SNF owners and, by extension, our 
proposal. Simply because SNF owners were not specifically referenced in 
these reports does not negate the importance of the OIG's and GAO's 
findings regarding the general value of criminal background reviews in 
stemming patient abuse.
    Concerning the above-referenced DOJ criminal cases, we emphasize 
that fingerprinting is not principally intended to actively prevent an 
individual from committing a felony. Instead, the aim is to keep 
persons who have already committed one from entering the Medicare 
program as an owner so as to eliminate the potential risk to Medicare 
and its beneficiaries that their criminal background might pose. If an 
individual who was convicted in one of these two criminal cases later 
attempted to become an owner of a Medicare-enrolling or enrolled SNF, 
fingerprinting would detect his or her criminal background.
    Regarding the DOJ civil cases we cited, we reiterate that our 
primary concern from a program integrity perspective is the improper 
conduct itself rather than the specific means by which the DOJ sought 
to address it (that is, via a criminal case or a civil action). 
Depending on the precise circumstances of the case and the statutory 
provisions potentially implicated, fraudulent or otherwise improper 
billing can indeed involve criminal activity. We cannot ignore the risk 
that such behavior poses to the Medicare program, and it is important 
to have the ability via fingerprinting to discover it (to the extent it 
resulted in a criminal conviction).
    Finally, with respect to the two cases involving forged signatures 
and falsified employee records, we again mention our authority under 
Sec. Sec.  424.530(a)(3)) and 424.535(a)(3) to deny or revoke 
enrollment for any felony conviction within the previous 10 years that 
CMS deems detrimental to the best interests of the Medicare program and 
its beneficiaries. The conviction need not be for fraudulent billing or 
activity related to Medicare but can involve, for example, a crime 
against an individual (such as rape or assault) or a financial crime 
like embezzlement, income tax evasion, or insurance fraud. Felonies of 
any type are of concern to us, and, as already discussed, 
fingerprinting has proven useful in preventing owners with such 
backgrounds from entering the Medicare program.
    Comment: A commenter stated that requiring site visits for 
initially enrolling and revalidating SNFs would be redundant and 
unnecessary for several reasons. First, SNFs are already subject to a 
survey as part of the certification process. Second, site visits are 
more appropriate for provider and supplier types that can quickly shift 
their practice locations and places of business than for the fixed, 
brick-and-mortar locations that SNFs generally have and which tend to 
be subject to stricter Federal and State scrutiny. In support of this 
statement, the commenter cited CMS statements in the February 2, 2011 
final rule that the commenter believes is evidence that detecting such 
``fly-by-night'' operations was and remains CMS' main motivation for 
site visits. Third, the commenter stated that SNF site visits would be 
an undue expenditure of time and resources given, again, the survey 
process and other stringent requirements to which SNFs must adhere. 
Fourth, in lieu of performing SNF site visits in the instances 
described in Sec.  424.518, CMS should use its authority under Sec.  
424.517 to conduct them merely on an as-needed basis.
    Response: We mentioned in the February 2, 2011 final rule that site 
visits were designed to ascertain whether the provider and supplier 
was: (1) located where it reported itself to be; and (2) a legitimate 
business. We noted our belief that site visits would be particularly 
useful for HHAs and DMEPOS suppliers given their history of heightened 
Medicare program risk and, as the commenter noted, their ability to 
switch locations more expeditiously than certain other provider and 
supplier types. Nonetheless, we assigned some of these other provider 
and supplier types to the moderate screening category, which, as 
already mentioned, requires a site visit. These included brick-and-
mortar providers such as hospices, comprehensive outpatient 
rehabilitation facilities, and community mental health centers, each of 
which, like SNFs (and, for that matter, HHAs), undergo a survey; too, 
although OTPs are not surveyed, they have fixed locations, sometimes in 
affiliation with (or even as part of) a hospital. The above-referenced 
statements in the February 2, 2011 final rule were never intended to 
restrict CMS' authority to conduct site visits upon initial enrollment, 
revalidation, etc., to providers and suppliers capable of rapidly 
shifting locations and/or that do not undergo surveys. In a similar 
vein, and with respect to providers and suppliers in the moderate and 
high screening categories, Sec.  424.517 was never meant to serve as a 
substitute for the site visits required under these categories but to 
supplement them. To illustrate, suppose CMS receives information 1 year 
after a provider revalidated its enrollment but well before its next 
revalidation due date that it has relocated without notifying CMS. The 
flexibility afforded by Sec.  424.517 would enable CMS to perform a 
site visit even though none of the enrollment transactions discussed in 
Sec.  424.518 (such as revalidation or, as we proposed, an ownership 
change) are involved.
    We have not found site visits, including those of fixed locations 
that receive surveys, to be an unwarranted expenditure of resources. To 
the contrary, we deem them a crucial means of verifying a provider's or 
supplier's location (and that, among other things, the location is or 
remains operational) that is less intrusive than a comprehensive survey 
that ascertains compliance with Medicare CoPs or conditions of 
coverage. Even if a survey has very recently been performed, a follow-
up site visit helps confirm that the provider did not move after the 
survey; this is an important consideration given the need to ensure the 
continued accuracy of the provider's enrollment information so that 
Medicare payments are made correctly.
    As a result of the public comments, we are finalizing the revisions 
discussed in section III.J.2.e. of this final rule as proposed.

[[Page 70007]]

f. DMEPOS Payment Denial Based on Lack of Required Licensure
    In comparison to many other provider and supplier types, DMEPOS 
suppliers have long presented to the Medicare program an elevated risk 
of fraud, waste, and abuse. Recognizing this, CMS over the years has 
established particularly stringent requirements with which DMEPOS 
suppliers must comply to enroll and maintain enrollment in Medicare, 
some of which we previously mentioned in this section III.J (for 
instance, the need to obtain and maintain a surety bond). To 
illustrate, Sec.  424.57(b) contains five conditions of payment that 
DMEPOS suppliers must meet to receive payment. These include, for 
example: (1) submission of a completed application to enroll in 
Medicare; and (2) furnishing a DMEPOS item only on or after the date 
CMS issued the supplier a billing number. Noncompliance with any DMEPOS 
condition of payment in Sec.  424.57(b) can result in a revocation 
under Sec.  424.57(e)(1). In addition, Sec.  424.57(c) lists 30 
enrollment standards to which DMEPOS suppliers must adhere at all 
times. Should the supplier fail to meet any of them, revocation under 
Sec.  424.57(e)(1) is warranted.
    One such enrollment standard, codified in Sec.  
424.57(c)(1)(ii)(A), provides that if the State requires licensure to 
furnish certain items or services, the DMEPOS supplier must be licensed 
to provide the item or service. We have encountered situations where an 
unlicensed DMEPOS supplier furnishes items for an extended period. The 
supplier then terminates its enrollment or CMS revokes the supplier's 
enrollment under Sec.  424.57(e)(1) effective 30 days after the DMEPOS 
supplier is sent notice of the revocation per Sec.  405.874. Tens of 
thousands of Medicare dollars were placed at great risk because the 
supplier was furnishing items and services while unlicensed up to the 
point of its termination of enrollment. To address this vulnerability, 
we proposed an additional condition of payment in new paragraph (b)(6) 
of Sec.  424.57. This condition would state that to receive payment for 
a furnished DMEPOS item or service, the supplier must have been in 
compliance with all conditions of payment in Sec.  424.57(b) as well as 
with Sec.  424.57(c)(1)(ii)(A) at the time the item or service was 
provided. We cited section 1834(j)(1)(B)(ii)(I) of the Act as authority 
for our proposal.
    The following is a summary of the public comments received on this 
proposal:
    Comment: Several commenters expressed support for our proposal.
    Response: We appreciate the commenters' support.
    Comment: Although supportive of our proposal, one commenter stated 
that beneficiaries must be protected against any responsibility for 
payment if the DMEPOS supplier's claim is denied due to a lack of 
licensure.
    Response: As stated in Sec.  424.555(b), no payment may be made for 
otherwise Medicare-covered items or services furnished to a Medicare 
beneficiary by a provider or supplier if the provider's or supplier's 
billing privileges are deactivated, denied, or revoked; moreover, the 
beneficiary under Sec.  424.555(b) has no financial liability or 
responsibility for expenses in such cases. Since a DMEPOS supplier that 
does not meet licensure requirements is revoked from Medicare, the 
beneficiary protections described in Sec.  424.555(b) would apply in 
the situation the commenter describes.
    As a result of the public comments, we are finalizing the revision 
discussed in section III.J.2.f. of this final rule as proposed.

K. State Options for Implementing Medicaid Provider Enrollment 
Affiliation Provision

    On September 10, 2019, we published a final rule with comment 
period in the Federal Register titled ``Program Integrity Enhancements 
to the Provider Enrollment Process'' (84 FR 47794). Several provisions 
therein implemented section 1866(j)(5) of the Act. Section 
1866(j)(5)(A) of the Act requires Medicare, Medicaid, and Children's 
Health Insurance Program (CHIP) providers and suppliers to disclose any 
current or previous direct or indirect affiliation with a provider or 
supplier that--(1) has uncollected debt; (2) has been or is subject to 
a payment suspension under a Federal health care program; (3) has been 
or is excluded by the OIG from Medicare, Medicaid, and CHIP; or (4) has 
had its Medicare, Medicaid, or CHIP billing privileges denied or 
revoked. Under section 1866(j)(5)(B) of the Act, the Secretary may deny 
enrollment based on such an affiliation if the Secretary determines 
that the affiliation poses an undue risk of fraud, waste, or abuse.
    The above-mentioned statutory requirements were implemented in 
Sec. Sec.  424.502 and 424.519 with respect to Medicare enrollment and 
42 CFR 455.101 and 455.107 for Medicaid and CHIP enrollment. The 
general purpose of the affiliation disclosure requirement is to help 
combat fraud, waste, and abuse by enabling CMS and the States to: (1) 
better track certain current and past relationships between and among 
different providers and suppliers; and (2) identify and take action on 
affiliations among providers and suppliers that pose an undue risk to 
Medicare, Medicaid, or CHIP.
    In terms of the scope and timing of the disclosure requirement, 
section 1866(j)(5)(A) of the Act states that providers and suppliers 
submitting an application for enrollment or revalidation of enrollment 
in Medicare, Medicaid, or CHIP must make the disclosures in a form and 
manner and at such time as determined by the Secretary. Based in part 
on concerns about the potential burden on the provider community in 
disclosing affiliations on every initial and revalidation application 
(and pursuant to the aforementioned statutory authorization regarding 
the form, manner, and timing for submitting disclosures), current 
regulations outline a ``phased in'' approach to implementing the 
disclosure requirements, pending further rulemaking. For Medicare 
enrollment, Sec.  424.519(b) states that providers and suppliers must 
submit affiliation disclosures upon a CMS request. CMS will make these 
requests when it determines that an initially enrolling or revalidating 
provider or supplier may have at least one affiliation meeting certain 
criteria specified in the regulation. For Medicaid and CHIP 
enrollments, Sec.  455.107(b) requires each State, in consultation with 
CMS, to select one of the following two options for implementing the 
disclosure requirement:
     Under Option #1, all providers that are not enrolled in 
Medicare but are initially enrolling in Medicaid or CHIP or 
revalidating their Medicaid or CHIP enrollment information must 
disclose their affiliations.
     Under Option #2, providers that are not enrolled in 
Medicare but are initially enrolling in Medicaid or CHIP or 
revalidating their Medicaid or CHIP enrollment information must 
disclose their affiliations only upon request from the State. (The 
State will make the request when, in consultation with CMS, it has 
determined that the initially enrolling or revalidating provider may 
have at least one affiliation meeting certain criteria specified in the 
regulation.)
    Existing Sec.  455.107(b)(1)(ii) holds that the State cannot change 
options once its selection has been made. Our concern at the time of 
issuing Sec.  455.107(b) was that switching options after one of them 
is implemented could lead to logistical and administrative 
complications and,

[[Page 70008]]

perhaps, confusion in the provider community as to what the State 
requires. Yet after consultations with the States and after analyzing 
data regarding the submission of affiliation disclosures to date, we do 
not believe Sec.  455.107(b)(1)(ii) need be so restrictive. A number of 
States are seeking greater discretion in their operationalization of 
Sec.  455.107(b), and we concur (as explained in the proposed rule) 
that increased flexibility is warranted. Accordingly, we proposed to 
revise Sec.  455.107(b)(1)(ii) such that a State may, in consultation 
with CMS, change its selection under Sec.  455.107(b) (after it has 
been made) from Sec.  455.107(b)(2)(ii) to Sec.  455.107(b)(2)(i). 
However, we noted that we would not permit a change from Sec.  
455.107(b)(2)(i) to Sec.  455.107(b)(2)(ii). This is because the former 
option more thoroughly implements section 1866(j)(5)(A) and thus 
furnishes greater program integrity protections by requiring all 
enrolling or revalidating providers to disclose affiliations; section 
Sec.  455.107(b)(2)(ii) requires disclosure in more limited 
circumstances.
    The following is a summary of the public comments received on our 
proposal:
    Comment: Several commenters expressed support for our proposal.
    Response: We appreciate the commenters' support.
    As a result of the public comments, we are finalizing our revision 
as proposed.

L. Requirement for Electronic Prescribing for Controlled Substances for 
a Covered Part D Drug Under a Prescription Drug Plan or an MA-PD Plan

1. Previous Regulatory Action
    In the CY 2021 PFS final rule and CY 2022 PFS final rule, we 
finalized policies for the EPCS requirement specified in section 2003 
of the SUPPORT Act (Pub. L. 115-271, enacted October 24, 2018). We 
refer readers to 86 FR 65361 through 65370 for the complete details of 
the statutory requirements and those finalized policies. Specifically, 
in the CY 2022 PFS final rule, we finalized multiple proposals related 
to EPCS. First, we finalized our proposal to extend the date of 
compliance actions to no earlier than January 1, 2023, and for 
prescribers writing Part D controlled substances prescriptions for 
beneficiaries in long-term care (LTC) facilities, we extended the date 
on or after which we will pursue compliance actions from January 1, 
2022 to January 1, 2025 (86 FR 65364 and 65365). Second, we finalized 
our proposal to require prescribers to electronically prescribe at 
least 70 percent of their Schedule II, III, IV, and V controlled 
substances that are Part D drugs, except in cases where an exception or 
waiver applies (86 FR 65366). Third, we finalized multiple proposals 
related to the classes of exceptions specified by section 2003 of the 
SUPPORT Act (86 FR 65366 through 65369): (1) we amended Sec.  
423.160(a)(5) by adding paragraph (a)(5)(i), which is the exception 
listed in section 1860D-4(e)(7)(B)(i) of the Act, for prescriptions 
issued where the prescriber and dispensing pharmacy are the same 
entity; (2) we amended Sec.  423.160(a)(5) by adding paragraph 
(a)(5)(ii), which created an exception for prescribers who issue 100 or 
fewer controlled substance prescriptions for Part D drugs per calendar 
year as determined using prescription drug event (PDE) claims data as 
of December 31st of the preceding year; (3) we amended Sec.  
423.160(a)(5) by adding paragraph (a)(5)(iii) to create an exception 
for prescribers located in the geographic area of an emergency or 
disaster declared by a Federal, State or local government entity; and 
(4) we amended Sec.  423.160(a)(5) by adding paragraph (a)(5)(iv) to 
create an exception for prescribers who have received a CMS-approved 
waiver because the prescriber is unable to conduct EPCS due to 
circumstances beyond the prescriber's control, respectively. We did not 
adopt exemptions for prescribers issuing prescriptions for individuals 
who are residents of a nursing facility and eligible for Medicare and 
Medicaid benefits, or for prescribers issuing prescriptions for 
individuals enrolled in hospice. Finally, we finalized our proposal to 
limit compliance actions with respect to compliance from January 1, 
2023, through December 31, 2023, to a non-compliance letter (now 
referred to as non-compliance notice) sent to prescribers that we 
believe are violating the EPCS requirement (86 FR 65370). Moving 
forward, we will refer to the letters CMS sends as the only non-
compliance action as non-compliance ``notices'' to clarify that the 
compliance notification will not always be sent via a physical letter 
and can be sent via email, as discussed in the Timing for Issuing Non-
compliance Notices section.
2. Evaluation of Compliance
    In the CY 2022 PFS final rule, we discussed the EPCS policy, 
exceptions, and a compliance threshold. Specifically, we stated that 
starting in CY 2023, we would begin initial EPCS compliance actions (86 
FR 65363). We noted that we believe it is important to provide a 
general timeline that describes the general process by which prescriber 
compliance will be evaluated. Previously, we stated that some 
exceptions would be evaluated on the basis of Prescription Drug Event 
(PDE) data from the preceding year as opposed to the evaluated year. We 
recognize that prescriber practices may change from year to year and 
believe it is inconsistent to evaluate exceptions and compliance on the 
basis of PDE data from the preceding year as opposed to the year under 
evaluation. To that end, we aimed to use PDE data from the evaluated 
year (that is, the current year) as soon as it becomes available to 
ensure that the data is relevant to the prescriber's practices in the 
evaluated year. For example, evaluation of CY 2023 prescriber practices 
will be based on CY 2023 PDE data, though the evaluation will not begin 
until late CY 2024 and will be based on the PDE data used in the Part D 
Payment Reconciliation for CY 2023. Following the PDE availability and 
our evaluation for exceptions and compliance, CMS will begin addressing 
prescriber non-compliance by issuing non-compliance notices as 
previously described in the CY 2022 PFS final rule (86 FR 65370).
    Additionally, in the CY 2023 PFS proposed rule (87 FR 46240), we 
proposed to extend the existing non-compliance action of sending 
notices to non-compliant prescribers for the CY 2023 EPCS program 
implementation year (January 1, 2023 through December 31, 2023) to the 
following year (January 1, 2024 through December 31, 2024). We also 
proposed a change to the data source used to identify the geographic 
location of prescribers for purposes of the recognized emergency 
exception at Sec.  423.160(a)(5)(iii) (87 FR 46239 through 46240). As 
also discussed in the CY 2023 PFS proposed rule, starting for the CY 
2025 EPCS program implementation year, we are planning to propose 
alternative, more burdensome penalties that would apply to non-
compliant prescribers rather than issuance of non-compliance notices. 
Therefore, we sought further public comment on potential penalties for 
non-compliant prescribers (87 FR 46240 through 46241).
3. Changes to Exceptions
a. Cases Where Prescribers Issue Only a Small Number of Part D 
Prescriptions
    In the CY 2022 PFS final rule, we finalized our proposal to amend 
Sec.  423.160(a)(5) by adding Sec.  423.160(a)(5)(ii), which created an 
exception for prescribers who issue 100 or fewer controlled substance

[[Page 70009]]

prescriptions for Part D drugs per calendar year as determined using 
PDE claims data as of December 31st of the preceding year, so that 
these prescribers are not required to meet the EPCS requirement. We 
referred to this exception as one for small prescribers. For a complete 
discussion of this topic please see the CY 2022 PFS final rule (86 FR 
65366 and 65367). We noted that we intended to implement the proposal 
by examining PDE claims as of December 31 of the prior year to 
determine which prescribers fall within this exception. We stated CMS 
will use the previous year's data to determine whether the prescriber 
falls under this exception for the year-in-question.
    In the CY 2023 PFS proposed rule (87 FR 46238 through 46239), we 
proposed to modify the exception to better align the timeframes of data 
used to evaluate each exception. We also noted that, other than the 
small prescriber exception, every exception described in the CY 2022 
PFS final rule is evaluated based on data from the same year to which 
the exception is applied. For instance, in the case of a recognized 
emergency, an exception would be granted during the period of time in 
the year in which the emergency took place, and the emergency would not 
be considered for an exception in the following year's compliance 
evaluation, except to the extent that the emergency continued into the 
following year. Similarly, for purposes of Sec.  423.160(a)(5)(ii), we 
noted that we believe that it is consistent to consider the 
prescriptions issued during the evaluated period, rather than the 
previous year, in case there are year-over-year changes. In this 
manner, we explained that we believe the proposal is a more consistent 
approach than the existing requirement to utilize claims data from the 
prior year to assess whether a prescriber issues 100 or fewer Part D 
controlled substance prescriptions.
    Therefore, we proposed to change the year from which PDE data is 
used from the preceding year to the current evaluated year when CMS 
determines whether a prescriber qualifies for an exception based on the 
number of Part D controlled substance claims. To effect this change, we 
proposed to modify the exception at Sec.  423.160(a)(5)(ii), which 
states, ``Prescriber issues 100 or fewer controlled substance 
prescriptions for Part D drugs per calendar year as determined using 
CMS claims data as of December 31st of the preceding year,'' by 
changing ``CMS claims data as of December 31st of the preceding year'' 
to ``CMS claims data with dates of service as of December 31st of the 
current year.'' We noted that if finalized, the provision would become 
effective for CY 2023 and for subsequent years. Thus, for CY 2023 EPCS 
compliance, the small prescriber exception would be assessed using CY 
2023 PDE data based on our proposed change. Additionally, a 
prescriber's compliance status would be evaluated based on PDE data 
reflecting PDEs with a `Date of Service' within the evaluated calendar 
year, which Part D sponsors must submit by mid-way through the 
following year.
    The following is the example we provided of how we expect this to 
work in practice:
    Prescriber A had fewer than 100 Medicare Part D controlled 
substances prescriptions in CY 2022, and therefore, was excepted from 
EPCS compliance for CY 2022. During the first quarter of CY 2023, she 
issues 85 Part D controlled substance prescriptions. After Prescriber A 
crosses the threshold of more than 100 Part D controlled substance 
prescriptions, she must reach the compliance threshold of 
electronically prescribing at least 70 percent of all her prescribed 
Part D Schedule II, III, IV, and V controlled substances in CY 2023. If 
she does not utilize EPCS for at least 70 percent of Part D controlled 
substance prescriptions in CY 2023, including those prescribed prior to 
reaching the 100 Part D controlled substance prescriptions threshold, 
she would be subject to a compliance action based on failing to meet 
the requirement at Sec.  423.160(a)(5), unless another exception 
applied. PDEs with a Date of Service between January 1, 2023 to 
December 31, 2023, with a submission date on or before the PDE 
submission deadline for 2023 (that is, June 28, 2024) would be included 
in the compliance analysis.
    Again, we noted in the CY 2023 PFS proposed rule (87 FR 46239) that 
if the proposal were finalized, neither CMS nor an individual 
prescriber will be able to determine until after the evaluated year 
whether or not the individual prescriber qualifies as a ``small 
prescriber'' for purposes of Sec.  423.160(a)(5)(ii), unless the 
prescriber tracks the number of Medicare Part D controlled substance 
prescriptions the prescriber issues during the evaluated year. This is 
in comparison to our existing policy, where CMS would not determine if 
prescribers qualified as a ``small prescriber'' until the middle of the 
evaluated year when the PDE data from the prior year becomes available. 
Despite the delay in identifying which prescribers qualify for the 
small prescriber exception, we explained that we believe the proposal 
would better identify small prescribers for purposes of EPCS compliance 
and simplify the program by aligning the time periods of the 
exceptions. We also noted that we believe that prescribers will be able 
to understand their Medicare Part D controlled substance prescribing 
patterns more clearly throughout the first 2 years of the EPCS program, 
where the only action for non-compliance is a notice.
    We sought comment on the proposal to modify the exception at Sec.  
423.160(a)(5)(ii) and on the possibility that prescribers would avoid 
prescribing controlled substances to Medicare beneficiaries, 
particularly where they are approaching the 100 Part D controlled 
substance prescriptions threshold late in a calendar year, in order to 
remain a small prescriber.
    Additionally, recognizing some prescribers are expecting CMS to use 
the CY 2022 PDE data to assess whether the exception at Sec.  
423.160(a)(5)(ii) applies for purposes of CY 2023 EPCS compliance, we 
sought comment on an alternative for the CY 2023 year only. In the 
alternative, we noted that we would recognize a prescriber as a small 
prescriber for purposes of the exception at Sec.  423.160(a)(5)(ii) if 
the prescriber had fewer than 100 Part D controlled substance 
prescriptions in CY 2022 or fewer than 100 Part D controlled substance 
prescriptions in CY 2023. We discussed that we did not propose this 
option because we thought it would be simpler to have a single set of 
exceptions for the program versus different rules for different years. 
Additionally, we noted that we believed the risk to prescribers who may 
change their small prescriber status would be low as the sole 
consequence for non-compliance for CY 2023 is a notice.
    The following is a summary of the public comments received on the 
Cases where Prescribers Issue Only a Small Number of Part D 
Prescriptions provision and our responses:
    Comment: A few commenters supported our proposal to use 
prescriptions issued during the evaluated period, rather than the 
previous year, to calculate the small prescriber exception. Commenters 
noted this would be a more accurate accounting of prescribing levels 
and would align the timelines. One commenter supported the proposal but 
disagreed with the concern referenced in the proposal that questioned 
whether prescribers would avoid prescribing controlled substances in 
order to retain small prescriber status.
    Response: We agree that this change would improve accuracy, as well 
as align timelines and appreciate the belief that prescribers would not 
avoid

[[Page 70010]]

prescribing controlled substance prescriptions for Part D drugs, where 
appropriate, to retain the small prescriber status.
    Comment: A few commenters did not support our proposal to use 
prescriptions issued during the evaluated period, rather than the 
previous year, to determine whether the small prescriber exception 
applies to a particular prescriber. Commenters expressed concern that 
the proposal will be overly confusing for prescribers in small 
practices and hard for prescribers to track. One commenter noted that 
prescribers may be unduly subject to a compliance action because they 
may not be aware of the number of Part D controlled substance 
prescriptions they have written. Another commenter stated their belief 
that the proposal would have unintended consequences for patients' 
access to controlled substances, especially in medically underserved 
areas, if prescribers are reluctant to write controlled substance 
prescriptions for Part D drugs.
    Response: We acknowledged the commenters' concerns. To address 
potential confusion about the small prescriber status and to improve 
transparency, we intend to provide feedback to prescribers via an 
online dashboard that will contain a variety of EPCS elements (EPCS 
dashboard) and will be developed as soon as technically feasible. At a 
minimum, the initial dashboard will include whether or not a prescriber 
was determined to be compliant (at this point, those who are exempt 
from the requirements are considered compliant) or non-compliant. We 
anticipate adding information that defines the type of exceptions and 
provides more detail about prescribers' EPCS status so that they can 
see the number of prescriptions for Medicare Part D controlled 
substances they issued in the measurement period (evaluated year). Due 
to the lag in claims data, this information would not be available 
until after the PDE submission deadline, which is generally 6 months 
after the end of the calendar year being evaluated. For example, for 
the CY 2023 evaluated year, the information on small prescriber 
exceptions, based on PDE claims data from CY 2023, will be available in 
the second half of 2024 because PDE data for the 2023 evaluated year is 
not due to CMS until the end of June 2024. Additionally, through the CY 
2024 EPCS compliance year and based on a proposal we finalize below, 
the only consequence of non-compliance is a notice informing the 
prescriber of the prescriber's non-compliance. Therefore, CMS will 
provide prescribers who do not meet the small prescriber exception with 
at least two separate notices that they do not meet the exception, with 
information included about how they can come into compliance with the 
requirement at Sec.  423.160(a)(5), before a compliance action other 
than a notice would be imposed. We believe this will also help educate 
prescribers who do not qualify as a small prescriber.
    We agree that changes to the program should not contribute to a 
negative impact on patients' access to prescriptions for controlled 
substances that are Part D drugs. We do not believe that the specific 
policy of changing the year from which PDE data is used to determine 
the small prescriber status will impact patient access because as we 
mention above, if we used the prior year, prescribers would not know 
until late in the evaluated year whether or not they met that 
exception. We do intend to monitor for potential other factors that 
could affect access, by monitoring the number of providers prescribing 
Medicare Part D controlled substances and the number of prescribed 
Medicare Part D controlled substances, and to consider stakeholder 
feedback to address potential issues through future rulemaking. 
Additionally, we note that prescribers who are concerned about EPCS and 
patient access, and who are unable to conduct EPCS due to circumstances 
beyond their control, may apply for a waiver from EPCS program 
requirements of up to one year.
    Comment: A few commenters noted that CMS should notify small 
prescribers when they are approaching the 100-prescription threshold. 
One commenter noted that CMS should include specific instructions on 
compliance in situations where the prescriber no longer meets the small 
prescriber exception along with appropriate time to comply. One 
commenter requested clarification that prescribers are not required to 
track the number of Medicare Part D controlled substance prescriptions 
to qualify as a small prescriber, and that non-compliance notices will 
not be issued before CMS determines a prescriber's small prescriber 
status.
    Response: We appreciate the commenters' recommendations, but we do 
not believe it is operationally feasible to notify prescribers as they 
are approaching the 100-prescription threshold. Our analysis for the 
small prescriber exception relies on the controlled substance PDEs 
found in Medicare Part D claims data based on the prescriber NPI, which 
can take an estimated 6 months to sufficiently capture those 
prescriptions.
    We clarify that prescribers are not required to track the number of 
controlled substance prescriptions for Part D drugs they issue. 
Prescribers, however, will not be able to determine until after the 
evaluated year whether or not they qualify as ``small prescribers'' for 
purposes of Sec.  423.160(a)(5)(ii) unless they track the number of 
controlled substance prescriptions for Part D drugs they issue during 
the evaluated year. We will calculate this information after the 
calendar year being evaluated, integrate the information into our 
compliance calculations, and for the CY 2023 and CY 2024 EPCS program 
implementation years, will send a notice for all prescribers who are 
non-compliant. Additionally, all prescribers will at a minimum be able 
to find their compliance status in an EPCS dashboard and, as soon as 
feasible, will be able to view data about their EPCS exceptions status 
and their compliance rate in the EPCS dashboard. Non-compliance 
notices, as the only non-compliance action at this time, will not be 
sent until after all EPCS calculations, including determining the 
applicability of the small prescriber exception, are completed.
    Comment: A few commenters recommended alternatives to our 
proposals. One commenter recommended that if a prescriber was a small 
prescriber in the prior year, they should not be penalized in the 
current year but rather offered a warning. Another commenter 
recommended that the 70 percent compliance calculation should begin 
after a notification is sent and should not apply to the first 100 
prescriptions for controlled substances that are Part D drugs. A few 
commenters recommended that CMS allow appropriate exceptions to the 
EPCS requirement for certain written prescriptions, such as 
buprenorphine. One commenter noted that titrations for some EPCS drugs 
such as buprenorphine often have complicated directions for use that 
sometimes result in errors when electronically prescribed. One 
commenter requested the exception be expanded to small practices as 
well.
    Response: We thank the commenters for their suggested alternatives. 
In future rulemaking, we may consider the recommendation that if a 
prescriber was a small prescriber in the prior year, they should not be 
penalized in the current year but rather offered a warning, as we 
assess potential future non-compliance actions. We do not believe this 
modification is necessary when the only action for non-compliance is a 
notice. We believe prescribers will have adequate time to assess 
whether or not they are a small prescriber before

[[Page 70011]]

different, potentially more burdensome non-compliance actions would be 
imposed. Additionally, we do not believe it is feasible to start the 70 
percent compliance calculation after sending a notification that the 
first 100 prescriptions for controlled substances that are Part D drugs 
have been issued. As discussed in the prior response, due to data lag, 
we will not have immediate access to information allowing us to know 
when a prescriber has exceeded 100 prescriptions for controlled 
substances that are Part D drugs. Prescribers, however, would have the 
option to track the number of prescriptions for controlled substances 
that are Part D drugs they issue during an evaluated year.
    In the 2022 PFS final rule (86 FR 65368), we noted that 
buprenorphine prescriptions make up less than 2 percent of all Part D 
Schedule II, III, IV, and V prescriptions. It is for this reason that 
we believe prescribers who experience difficulties electronically 
prescribing buprenorphine should still be able to meet the compliance 
threshold that allows prescribers to fully comply with the EPCS 
requirement in Sec.  423.160(a)(5) if they electronically prescribe 70 
percent or more of their Part D controlled substance prescriptions. As 
a result, we do not believe that an exception for this purpose is 
necessary. Additionally, should a prescriber find that the requirements 
related to prescribing buprenorphine prevent the prescriber from 
utilizing EPCS, we encourage the prescriber to request a waiver 
documenting the circumstances beyond the prescriber's control, which we 
will consider. In addition, we will continue to monitor PDE data for 
trends, including whether certain prescriptions are more frequently 
prescribed using paper prescriptions. If CMS finds that this is the 
case, we could consider taking future actions, such as proposing 
additional exceptions to the requirement at Sec.  423.160(a)(5), to 
help ensure that EPCS is not becoming overly burdensome for these 
prescriptions.
    We do not believe it is appropriate to expand the exception in 
Sec.  423.160(a)(5)(ii) to small practices at this time. It is our 
intention to exempt prescribers who prescribe fewer than 100 Part D 
controlled substance prescriptions. As discussed in the CY 2022 PFS 
final rule (86 FR 65366), based on our conversations with stakeholders, 
we believe the cost of EPCS transactions is less than the cost of 
transmitting certain transactions manually, and we believe that the 
initial investment to install EPCS equipment and software is likely 
justified once prescribers transmit more than 100 Part D controlled 
substance prescriptions per year. We solicited comment on this 
assumption and the cost of third-party applications required to conduct 
EPCS. We noted in the CY 2022 PFS final rule that we did not receive 
any comments on these assumptions (86 FR 65366). We do not believe it 
necessary to expand the exception to small practices because 
prescribers in small practices could prescribe many more controlled 
substance prescriptions for Part D drugs than would be required to 
justify the initial investment, depending on the number of prescribers 
in a given small practice and the type of practice. Therefore, we 
believe it most appropriate to consider the number of controlled 
substance prescriptions for Part D drugs each prescriber issues for 
purposes of this exception.
    Comment: One commenter supported the alternative outlined for the 
CY 2023 year only, in which CMS would recognize a prescriber as a small 
prescriber for purposes of the exception if the prescriber had fewer 
than 100 Part D controlled substance prescriptions in 2022 or fewer 
than 100 Part D controlled substance prescriptions in 2023. The 
commenter stated their belief that the alternative is accommodating to 
small practices, considering some prescribers are expecting CMS to use 
the CY 2022 PDE data to assess whether the exception applies for 
purposes of CY 2023 EPCS compliance as finalized in the CY 2022 PFS 
final rule.
    Response: We believe that the benefit of the alternative to 
prescribers in small practices is limited because they would not know 
until the middle of the evaluated year whether or not they qualified 
for the small prescriber exception. For example, if we used the 
controlled substance prescriptions for Part D drugs prescribed in CY 
2022 to determine the small prescriber exception for the CY 2023 
evaluated year, then prescribers would not know that information until 
the second half of CY 2023, which would limit their ability to modify 
their practices. We believe the benefits of having a single set of 
rules across program years will ultimately be less confusing to 
prescribers. We are therefore declining to adopt this alternative.
    Comment: One commenter did not believe that low volume of opioid 
prescriptions should be a reason to exempt a prescriber from the EPCS 
requirement. The commenter expressed concern that there is no 
requirement that ``cash pay'' prescriptions be submitted by the 
pharmacy to the PDP or Medicare Advantage Prescription Drug plans 
(MAPD), meaning that CMS cannot use this method to monitor for fraud, 
waste, and abuse. The commenter suggested CMS to reconsider any volume-
based exceptions as creating a dangerous loophole contrary to 
Congress's intent for EPCS and against the public interest.
    Response: We appreciate the commenter's feedback, but in our 
proposal, we did not reconsider the need for a small prescriber 
exception, we only proposed to modify the date range used to calculate 
the exception.
    After consideration of the public comments, we are finalizing 
without modification our proposal to change the exception at Sec.  
423.160(a)(5)(ii), to state ``Prescriber issues 100 or fewer controlled 
substance prescriptions for Part D drugs per calendar year as 
determined using CMS claims data with dates of service as of December 
31st of the current year.''
b. Cases of Recognized Emergencies
    In the CY 2022 PFS final rule (86 FR 65367 and 65368), we finalized 
our proposal to adopt an exception at Sec.  423.160(a)(5)(iii) for 
prescribers who are prescribing during a recognized emergency, such as 
a natural disaster, a pandemic, or a similar situation where there is 
an environmental hazard. We stated that to qualify for this exception, 
this circumstance will have to arise from an emergency or disaster 
declared by a Federal, State, or local government entity. We finalized 
our proposal to determine whether a prescriber qualifies for this 
exception based on whether the prescriber's National Council for 
Prescription Drug Programs (NCPDP) Pharmacy Database address is located 
in the geographic area of an emergency or disaster declared by a 
Federal, State, or local government entity, which is reflected in the 
text of Sec.  423.160(a)(5)(iii). Since, as stated in the CY 2022 PFS 
proposed and final rules, we intend this exception to avoid unduly 
burdening prescribers during difficult situations, we would like to 
again clarify that this exception would be applicable only if the 
dispensing date of the medication occurs during the time period that 
the declared disaster is occurring.
    We have determined that the NCPDP Pharmacy Database contains 
pharmacy addresses as opposed to prescriber addresses. Because it is 
likely that the address of a prescriber differs from that of the 
pharmacy where a prescription is filled, and the prescriber might be 
located at an address within an emergency or disaster area when the 
pharmacy is not, we believe the NCPDP database may not always be an 
appropriate data source to inform the

[[Page 70012]]

exception based on emergencies such as natural disasters, pandemics, or 
similar situations where there is an environmental hazard. It is our 
intention that the EPCS exception apply based on where the prescriber 
is located, not where the pharmacy is located, to the extent that the 
locations differ. We believe the Medicare Provider Enrollment, Chain, 
and Ownership System (PECOS) would have the most current address 
information for prescribers who are enrolled in Medicare. Additionally, 
this is the data source that the Quality Payment Program's Merit-based 
Incentive Payment System (MIPS) uses to determine if a MIPS eligible 
clinician is located in an area that has been affected by extreme and 
uncontrollable circumstances (82 FR 53895 through 53900). Therefore, 
for prescribers who have an address in PECOS, we proposed to use the 
PECOS address instead of the of the NCPDP Pharmacy Database address to 
determine whether the exception at Sec.  423.160(a)(5)(iii) is 
applicable. We noted that we have concerns that not all prescribers 
would be enrolled in Medicare, and therefore, their addresses would not 
be in PECOS. In situations where prescribers do not have a PECOS 
address, we proposed to use the prescriber address in the National Plan 
and Provider Enumeration System (NPPES) data. We proposed to revise the 
text of Sec.  423.160(a)(5)(iii) accordingly. Additionally, we sought 
public comment on whether using NPPES, NCPDP, or some other database is 
appropriate when there is no prescriber address in PECOS.
    We also sought comment on an alternative of using NPPES as the 
source of addresses for all prescribers. We noted that we believe this 
data may have information for all prescribers, but that providers may 
not update their address in NPPES as often as they do in PECOS. 
Finally, we sought comment on other potential data sources that could 
be used to verify a prescriber's address for purposes of Sec.  
423.160(a)(5)(iii).
    The following is a summary of the public comments received on Cases 
of Recognized Emergencies and our responses:
    Comment: A few commenters supported the proposal to use PECOS as 
the source of data to identify a prescriber's location for purposes of 
Sec.  423.160(a)(5)(iii). The commenters noted that the change from 
NCPDP to PECOS would result in more accurate information and help to 
relieve administrative burden on providers.
    Response: We agree that using PECOS would provide the most current 
address information for prescribers who are enrolled in Medicare.
    After consideration of public comments, we are finalizing without 
modification our proposal to change the exception at Sec.  
423.160(a)(5)(iii), to state ``(iii) Prescriber has an address in PECOS 
in the geographic area of an emergency or disaster declared by a 
Federal, State, or local government entity. If a prescriber does not 
have an address in PECOS, prescriber has an address in NPPES in the 
geographic area of an emergency or disaster declared by a Federal, 
State, or local government entity.''
4. Penalties
    Section 1860D-4(e)(7)(D) of the Act gives the Secretary the 
authority through rulemaking to enforce and specify appropriate 
penalties for non-compliance with the EPCS requirement. In the CY 2022 
PFS proposed and final rules, we sought feedback from interested 
parties on whether CMS should impose penalties for non-compliance with 
the EPCS requirement and if so, what penalties should be imposed. We 
are continuing to examine State EPCS requirements and their 
accompanying penalties. However, because these requirements have only 
been recently implemented and most States do not have penalties for 
failing to adopt EPCS, we have not been able to evaluate what type of 
penalties have been effective to enforce State mandates.
    In our ongoing implementation of the EPCS requirement, we continue 
to seek input to ensure that we do not place too much of a burden on 
prescribers, as we do not want this requirement to have an unintended 
consequence of incentivizing prescribers to stop prescribing controlled 
substances to Part D beneficiaries, where appropriate, should they not 
have EPCS set-up. We continue to believe additional time is needed to 
gather more feedback from interested parties on the most effective and 
most appropriate type of penalties. In the CY 2022 PFS final rule, we 
finalized our proposal to limit CY 2023 compliance actions to a non-
compliance notice sent to prescribers that are violating the EPCS 
requirement.
a. Timing for Issuing Non-Compliance Notices
    In the CY 2023 PFS proposed rule, we proposed to adjust the period 
of time during which CMS will issue non-compliance notices as the sole 
non-compliance action. For the period of time during which CMS non-
compliance actions will consist of sending notices to prescribers that 
we believe are violating EPCS requirements, we proposed to extend the 
existing compliance action of sending notices to non-compliant 
prescribers from the CY 2023 EPCS program implementation year (January 
1, 2023 through December 31, 2023) to the CY 2024 implementation year 
(January 1, 2024 through December 31, 2024). We discussed in the CY 
2023 PFS proposed rule that, if adopted, CMS compliance actions will 
consist of CMS sending notices to prescribers who we believe are 
violating the EPCS requirement between January 1, 2023 and December 31, 
2024. The content of the notices would remain unchanged. These notices, 
as the sole non-compliance action at this time, will consist of a 
notification to prescribers that they are violating the EPCS 
requirement, information about how they can come into compliance, the 
benefits of EPCS, an information solicitation as to why they are not 
conducting EPCS, and a link to the EPCS dashboard to request a waiver. 
We sought public comment on the proposal.
    The following is a summary of the public comments received on the 
Timing for Issuing Non-compliance Notices and our responses:
    Comment: Many commenters supported our proposal to extend the 
existing compliance action of sending notices to non-compliant 
prescribers from the CY 2023 EPCS program implementation year through 
the CY 2024 EPCS program implementation year. They noted our proposal 
will provide non-compliant prescribers additional time to achieve 
compliance, recognizes the unique situation practices, prescribers, and 
patients face during the COVID-19 pandemic while promoting the value 
and convenience of EPCS, and prioritizes access to appropriate care for 
patients. A few commenters noted that continued education and 
assistance to gain compliance with EPCS through the non-compliance 
notices would be more effective than punitive measures, especially as 
there are still broadband internet access problems in some remote 
communities. A few commenters noted extending the existing compliance 
action of sending notices to non-compliant prescribers for CY 2024 
gives vendors and practices time to implement EPCS and adjust products 
and technology to align with Drug Enforcement Administration (DEA) EPCS 
requirements and regulations.
    Response: We agree that sending notices as the only non-compliance 
action to prescribers, rather than imposing alternative non-compliance 
actions, may avoid overly burdening prescribers who are unable to meet 
the

[[Page 70013]]

EPCS mandate in CY 2024 while providing non-compliant prescribers 
additional time to achieve compliance and promoting the value and 
convenience of EPCS through the non-compliance notices. We would like 
to clarify that these notices would be sent by email when possible to 
all available email addresses in PECOS and NPPES and by regular mail if 
there is no email address in PECOS or and no email address in NPPES. 
These notices will consist of a notification to prescribers that they 
are violating the EPCS requirement, information about how they can come 
into compliance, the benefits of EPCS, and an information solicitation 
as to why they are not conducting EPCS. If there is an email address in 
either PECOS or NPPES, then the only notice the prescriber receives 
will be via email. Prescribers must exercise diligence to ensure that 
the email address is accurate and up to date (that is, accessible to 
and monitored by the prescriber).
    Comment: A few commenters did not support our proposal to extend 
the existing compliance action of sending notices to non-compliant 
prescribers from the CY 2023 EPCS program implementation year to the CY 
2024 year because they stated timely enforcement of the Federal EPCS 
mandate is essential to supporting the nation's ongoing fight against 
drug abuse and diversion, especially now when these problems have been 
exacerbated by the PHE for COVID-19, and the continued enforcement 
delay of the of the Medicare Part D EPCS requirements undermines the 
requirements of the program. One commenter noted that all parties have 
had more than adequate time to prepare for implementation of these 
requirements and stated that the needed infrastructure is in place, the 
updated transmission standard has been finalized, and the technology is 
updated, so now the policy should follow suit, in the commenter's view. 
One commenter stated that since the first year of enforcement includes 
the non-compliance notice and that there would be no immediate fines or 
other actions against non-compliant prescribers, the initial 
enforcement action would serve as a prompt for non-compliant 
prescribers to come into compliance with the EPCS requirements for CY 
2023. The commenter noted that with the delay, and without the promise 
of imminent enforcement, some prescribers who could otherwise make the 
necessary system updates may delay doing so because the deadline is no 
longer looming. The commenter also noted that the availability of the 
waiver process for prescribers in temporary situations accommodates 
prescribers unable to conduct EPCS due to circumstances beyond the 
prescriber's control.
    Response: We agree that the timely enforcement of the Federal EPCS 
mandate is essential to supporting the nation's ongoing fight against 
drug abuse and diversion. At this time, we want to continue to ensure 
that our actions do not have unintended consequences for prescribers 
who still require additional time to implement EPCS, while also 
recognizing the benefits of EPCS. It is for this reason that we 
encourage prescribers to conduct EPCS as soon as possible.
    Our proposal to send non-compliance notices as the sole non-
compliance action through the CY 2024 EPCS program implementation year 
would consist of sending notices to prescribers that we believe are 
violating the EPCS requirement during that period of time. We are still 
considering adopting penalties in future rulemaking and plan to use 
information gathered in the Request for Information Relating to 
Potential Future EPCS Penalties (87 FR 46240 and 46241) to inform 
future compliance action decisions. We agree that the initial 
enforcement action of sending non-compliance notices for CY 2023 and CY 
2024 EPCS program implementation years will serve as a prompt for non-
compliant prescribers to come into compliance with the EPCS 
requirements. We appreciate that the commenter is concerned that by 
extending the period of time during which CMS will send non-compliance 
notices as the sole non-compliance action prescribers might delay EPCS 
adoption, but we do note that from 2020 to 2021, we saw an increase, 
from 62.3 percent in 2020 to 79.6 percent in 2021, in prescribers who 
electronically prescribed 70 percent or more of their Medicare Part D 
controlled substances. Through the information provided in our non-
compliance notices, we anticipate this number to continue to grow.
    Comment: One commenter stated that we should not delay the 
commencement of enforcement actions, as it sends the wrong message to 
prescribers about the need to comply. The commenter noted we should 
continue to move forward with sending compliance enforcement notices in 
CY 2023 to improve EPCS adherence knowing there is a compliance 
threshold of 70 percent and exceptions in place for prescribers who 
face extraordinary circumstances. The commenter noted that EPCS 
represents progress in the movement toward the use of interoperable 
technology, supports inclusion of a verifiable and traceable history, 
prevents drug abuse, and reduces burden. The commenter also noted that 
experience at the State level demonstrates the importance of 
enforcement mechanisms, as States with enforcement mechanisms have 
faster EPCS adoption rates than States without enforcement mechanisms. 
The commenter noted that EPCS saves money and lives and urged us to 
send non-compliance notices in CY 2023 to improve EPCS adherence.
    Response: We proposed to extend the existing compliance action of 
sending notices to non-compliant prescribers from the CY 2023 EPCS 
program implementation year (January 1, 2023 through December 31, 
2023), with non-compliance notices sent out in 2024, to the CY 2024 
EPCS program implementation year (January 1, 2024 through December 31, 
2024), with non-compliance notices sent out in 2025. Our proposal 
maintains the compliance action of sending notices to non-compliant 
prescribers based on the CY 2023 EPCS program implementation year and 
extends the sending of notices to non-compliant prescribers as the 
compliance action for the CY 2024 EPCS program year, as well. We 
disagree with the commenter that we are delaying the commencement of 
enforcement actions, as sending non-compliance notices is an 
enforcement and compliance action. We agree with the commenter that 
EPCS encourages the use of interoperable technology, produces a 
verifiable and traceable history, prevents fraud and abuse, and reduces 
burden. We also believe we should continue to move forward with sending 
compliance enforcement notices to improve EPCS adherence and encourage 
faster EPCS adoption rates.
    After consideration of public comments, we are finalizing our 
proposal without modification to extend the existing compliance action 
of sending notices to non-compliant prescribers from the CY 2023 EPCS 
program implementation year (January 1, 2023 through December 31, 2023) 
to the CY 2024 year (January 1, 2024, through December 31, 2024).
b. Request for Information Relating to Potential Future EPCS Penalties
    Consistent with the CY 2022 PFS final rule, we continue to be 
interested in identifying additional meaningful penalties to enforce 
the EPCS requirement. Therefore, we sought public comment on additional 
penalties that CMS may impose to enforce the EPCS requirement through a 
Request for Information in the CY 2023 PFS

[[Page 70014]]

proposed rule (87 FR 46240 through 46241). We noted that any penalties 
would go into effect no sooner than January 1, 2025. We are exploring a 
range of options, and we explained that feedback from interested 
parties would help us to develop meaningful and appropriate penalties 
in the future.
    While we will not be responding to specific comments submitted in 
response to this Request for Information, we will actively consider all 
input as we develop future regulatory proposals. Any updates to 
specific requirements related to potential EPCS penalties or actions 
may be addressed through separate and future notice-and-comment 
rulemaking, as necessary.

M. Medicare Ground Ambulance Data Collection System (GADCS)

1. Background on Ambulance Services
    Section 1861(s)(7) of the Act establishes an ambulance service as a 
Medicare Part B service where the use of other methods of 
transportation is contraindicated by the individual's condition, but 
only to the extent provided in regulations. Since April 1, 2002, 
payment for ambulance services is made under the ambulance fee schedule 
(AFS), which the Secretary established under section 1834(l) of the 
Act. Payment for an ambulance service is made at the lesser of the 
actual billed amount or the AFS amount, which consists of a base rate 
for the level of service, a separate payment for mileage to the nearest 
appropriate facility, a geographic adjustment factor (GAF), and other 
applicable adjustment factors as set forth at section 1834(l) of the 
Act and 42 CFR 414.610 of the regulations. In accordance with section 
1834(l)(3) of the Act and Sec.  414.610(f), the AFS rates are adjusted 
annually based on an inflation factor. The AFS also incorporates two 
permanent add-on payments and three temporary add-on payments to the 
base rate and/or mileage rate. The two permanent add-on payments at 
Sec.  414.610(c)(5)(i) are: (1) a 50 percent increase in the standard 
mileage rate for ground ambulance transports that originate in rural 
areas where the travel distance is between 1 and 17 miles; and (2) a 50 
percent increase to both the base and mileage rate for rural air 
ambulance transports. The three temporary add-on payments at sections 
1834(l)(12)(A) and (13)(A) of the Act and Sec.  414.610 are: (1) a 3 
percent increase to the base and mileage rate for ground ambulance 
transports that originate in rural areas; (2) a 2 percent increase to 
the base and mileage rate for ground ambulance transports that 
originate in urban areas; and (3) a 22.6 percent increase in the base 
rate for ground ambulance transports that originate in ``super rural'' 
areas. Section 50203(a)(1) and (2) of the Bipartisan Budget Act (BBA) 
of 2018 (Pub. L. 115-123, February 9, 2018) includes an extension of 
the temporary add-on payments through December 31, 2022.
    Our regulations relating to coverage of and payment for ambulance 
services are set forth at 42 CFR part 410, subpart B, and 42 CFR part 
414, subpart H.
2. Statutory Requirements for the Ground Ambulance Providers and 
Suppliers To Submit Cost and Other Information Background
    Section 50203(b) of the BBA of 2018 added paragraph (17) to section 
1834(l) of the Act, which requires ground ambulance providers of 
services and suppliers (ground ambulance organizations) to submit cost 
and other information. Specifically, section 1834(l)(17)(A) of the Act 
requires the Secretary to develop a data collection system (which may 
include use of a cost survey) to collect cost, revenue, utilization, 
and other information determined appropriate by the Secretary for 
providers and suppliers of ground ambulance services. Section 
1834(l)(17)(B)(i) of the Act required the Secretary to specify the data 
collection system by December 31, 2019, and to identify the ground 
ambulance providers and suppliers that would be required to submit 
information under the data collection system. Section 1834(l)(17)(D) of 
the Act required that beginning January 1, 2022, the Secretary apply a 
10 percent payment reduction to payments made under section 1834(l) of 
the Act for the applicable period to a ground ambulance provider or 
supplier that is required to submit information under the data 
collection system and does not sufficiently submit such information. 
The term ``applicable period'' is defined under section 
1834(l)(17)(D)(ii) of the Act to mean, for a ground ambulance provider 
or supplier, a year specified by the Secretary not more than 2 years 
after the end of the period for which the Secretary has made a 
determination that the ground ambulance provider or supplier has failed 
to sufficiently submit information under the data collection system. 
Section 311 of the Consolidated Appropriations Act, 2022 (Pub. L. 117-
103) amended section 1834(l)(17)(F)(i) of the Act to delay the deadline 
for MedPAC to submit its report to Congress on the ground ambulance 
data collection system study until the second June 15th following the 
date the Secretary transmits data for the first representative sample 
of ground ambulance organizations. Section 1834(l)(17)(I) of the Act 
states that the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.) 
does not apply to the collection of information required under section 
1834(l)(17) of the Act.
    In the CY 2020 PFS final rule (84 FR 62864 through 62897), we 
implemented section 1834(l)(17) of the Act and codified regulations 
governing data reporting by ground ambulance organizations at 
Sec. Sec.  414.601, 414.605, 414.610(c)(9), and 414.626. In the CY 2020 
PFS final rule (84 FR 62863 through 629897), we finalized a data 
collection system that collects detailed information on ground 
ambulance provider and supplier characteristics including service 
areas, service volume, costs, and revenue through a data collection 
instrument, commonly referred to as the Medicare Ground Ambulance Data 
Collection Instrument, via a web-based system. This instrument includes 
the specific questions that will be asked of ground ambulance 
organizations about the total service volume, costs, and revenue 
associated with a provider or supplier's entire ground ambulance 
organization in such a way that MedPAC could use to calculate an 
average cost per ground ambulance transport. We refer the reader to our 
CY 2020 PFS final rule (84 FR 62863 through 62897) for more specifics 
on the establishment of the Medicare Ground Ambulance Data Collection 
System.
    In the CY 2022 PFS final rule (86 FR 65306 through 65317), we 
finalized a number of updates to the Medicare Ground Ambulance Data 
Collection System, including: (1) a new data collection period 
beginning between January 1, 2023, and December 31, 2023, and a new 
data reporting period beginning between January 1, 2024, and December 
31, 2024, for selected ground ambulance organizations in year 3; (2) 
aligning the timelines for the application of penalties for not 
reporting data with our new timelines for data collection and reporting 
and the data collected will be publicly available beginning in 2024; 
and (3) revisions to the Medicare Ground Ambulance Data Collection 
Instrument that include better accounting for labor hours across 
different categories of personnel and better distinguishing between 
accrual and cost basis accounting methodologies. We refer the reader to 
our CY 2022 PFS final rule (86 FR 65306-65317) for more specifics on 
the revisions to the Medicare Ground Ambulance Data Collection System.

[[Page 70015]]

3. Revisions to the Medicare Ground Ambulance Data Collection 
Instrument
    As described in the CY 2020 PFS final rule (84 FR 62867), the 
Medicare Ground Ambulance Data Collection Instrument uses screening 
questions and skip patterns so that it is applicable to all ground 
ambulance organizations regardless of their size, scope of operations 
and services offered, and structure. We stated that we believe this 
approach is easier to navigate and less time consuming to complete than 
a cost report template or instrument and that it minimizes respondent 
burden by directing ground ambulance organizations to only view and 
respond to questions that apply to their specific type of organization, 
all while still collecting the information required in section 
1834(l)(17)(A) of the Act.
    The CY 2020 PFS final rule provided a detailed overview of the 
elements of the data collection instrument, including questions to 
collect information on costs, revenues, utilization (which CMS defines 
for the purposes of the data collection instrument as service volume 
and service mix), as well as the characteristics of ground ambulance 
organizations. Table 87 includes a high-level summary of the 13 
sections of the Medicare Ground Ambulance Data Collection Instrument.
[GRAPHIC] [TIFF OMITTED] TR18NO22.118

    As described in the CY 2022 PFS final rule (86 FR 65307), we made 
several changes to the instrument instructions and questions to improve 
clarity and reduce burden for respondents. A printable version of the 
current instrument instructions and questions is available in English 
and Spanish on the CMS website at https://www.cms.gov/Center/Provider-Type/Ambulances-Services-Center.html.
    In the CY 2023 PFS proposed rule (87 FR 46243), we stated that we 
have continued to receive ad hoc questions and feedback related to the 
Medicare Ground Ambulance Data Collection System and the Medicare 
Ground Ambulance Data Collection Instrument via four primary channels. 
First, we receive email and other written communication from ground 
ambulance organizations via the CMS Ambulance Data Collection email 
inbox ([email protected]) and through other channels 
(for example, inquiries sent by organizations to Medicare 
Administrative Contractors (MACs) and then forwarded to CMS). These 
emails and other communications often include questions seeking 
clarification of instrument questions and their applicability to 
specific ground ambulance organization scenarios and context. We 
continue to update a Medicare Ground Ambulance Data Collection System 
Frequently Asked Questions (FAQ) document with answers to commonly 
asked questions. This document is available on the CMS website at 
https://www.cms.gov/Center/Provider-Type/Ambulances-Services-Center.html. Through review of questions and feedback, we have 
identified some instances where a clarification to the instrument 
language itself will likely be more useful and less burdensome to 
respondents than having to respond with reference to the FAQ document. 
Second, we answer questions live from interested parties during

[[Page 70016]]

webinars, dedicated question and answer sessions, and other educational 
sessions. As with the emailed questions described above, live question 
and answer exchanges sometimes identify opportunities for clarifying 
instrument language. Third, we conducted cognitive testing and user 
acceptance testing of the GADCS. Feedback from this preliminary testing 
effort was helpful to identify some additional opportunities for 
clarification. Fourth, we continue to identify opportunities to clarify 
instructions and correct a small number of typos as we work to develop 
the web-based, programmed version of the Medicare Ground Ambulance Data 
Collection Instrument.
    Based on information that we received via the four sources 
described above, we proposed in the CY 2023 PFS proposed rule (87 FR 
46243) the following further changes and clarifications to the Medicare 
Ground Ambulance Data Collection Instrument. The proposed changes and 
clarifications aimed to reduce burden on respondents, improve data 
quality, or both. We grouped our proposed changes and clarifications 
into four broad categories:
     Editorial changes for clarity and consistency.
     Updates to reflect the web-based system.
     Clarifications responding to feedback from questions from 
interested parties and testing.
     Typos and Technical Corrections.
    A draft of the updated instrument that includes all of the CY 2023 
proposed changes is posted on the CMS website at https://www.cms.gov/Center/Provider-Type/Ambulances-Services-Center.html.
a. Editorial Changes for Clarity and Consistency
    In the CY 2023 PFS proposed rule (87 FR 46244), we proposed 14 
editorial changes to improve the clarity of instrument instructions and 
questions. We stated that we do not believe these changes substantively 
affect the meaning of any instruction or question.
    The first three proposed changes would apply throughout the entire 
Medicare Ground Ambulance Data Collection Instrument. Specifically, we 
proposed to:
     Use the past tense to refer to data collected during 
selected ground ambulance organizations' continuous 12-month data 
collection periods throughout the instrument. All organizations are 
currently required to complete their data collection prior to reporting 
the data. Using the present tense may be confusion by implying 
organizations should report data beyond their 12-month data collection 
period.
     Consistently refer to ``ground ambulance'' rather than 
only ``ambulance'' throughout the instrument to clarify that the scope 
of the Medicare Ground Ambulance Data Collection System (GADCS) is 
limited to ground ambulance operations and not air ambulance 
operations.
     Edit sentences written in the passive voice to the active 
voice for editorial consistency.
    The fourth and fifth proposed changes in the CY 2023 PFS proposed 
rule (87 FR 46244) focused on Section 1 (General Survey Instructions) 
in the instrument as we proposed to:
     Refer to organizations' ``continuous 12-month data 
collection period'' rather than just ``12-month data collection 
period'' throughout the instrument. We believe this will help remind 
organizations that their data collection period must cover a 
continuous, 12-month period.
     Align the description of how organizations must provide 
their data collection start date prior to data reporting in Section 1 
(General Survey Instructions) with the process codified at Sec.  
414.626(b)(1).
    The remainder of the proposed changes in this category in the CY 
2023 PFS proposed rule (87 FR 46244) focused on editorial changes to 
specific instrument questions or instructions in Sections 2 
(Organizational Characteristics) through Section 6 (Service Mix). 
Specifically, we proposed to:
     Edit response Option d in Section 2, Question 9 from 
``Another health care organization (excluding hospitals, skilled 
nursing facilities, or other Medicare provider of services),'' to 
``Other health care delivery operations such as a clinic or urgent care 
center (excluding hospitals, skilled nursing facilities, or other 
Medicare provider of services in Option c).'' In a previous 
clarification, we reworded Section 2, Question 9 from ``Does your 
ground ambulance operation share any operational costs, such as 
building space or personnel, with one of the following?'' to ``Does 
your organization provide any of the following services or operations 
(select all that apply)?'' Given the change in the structure of the 
question asking about types of services/operations as opposed to types 
of organizations, we proposed to reword one answer option to better 
reflect the question.
     Clarify Section 4 (Emergency Response Time), Question 4b, 
which asks whether the organization is penalized if it exceeds response 
time targets, to focus specifically on monetary penalties. We are 
concerned that the current phrasing is too subjective and will be 
difficult for respondents to answer.
     Clarify that the definition of ``total response'' in the 
Section 5 (Ground Ambulance Service Volume) instructions and Section 5, 
Question 1 applies to ``emergency responses'' rather than ``EMS 
responses.'' In some organizations, the initial responders to a call 
for service may not be EMS responders.
     Clarify that estimates of the share of responses that are 
joint with another organization are acceptable in Section 5, Question 
3c, to better align with Section 5, Question 3a where estimates are 
explicitly permitted.
     Specify in Sections 5 and 6 (Service Mix) and elsewhere in 
the Medicare Ground Ambulance Data Collection Instrument when questions 
ask for information on ``ground ambulance transports'' rather than just 
``transports'' to avoid confusion with services that may colloquially 
be referred to as transports but that do not meet the definition of a 
``ground ambulance transport'' in the instrument, which is defined as 
``the use of a fully staffed and equipped ground ambulance responding 
to a request for service to provide a medically necessary transport 
(based on the rules relevant to the applicable payer).''
    The 11th and 12th proposed changes in the CY 2023 proposed rule (87 
FR 46244) applied to Section 7 (Labor Costs) where we proposed to:
     Standardize the example staff categories listed under 
``other medical staff'' across all Section 7 tables. Currently, the 
first table in Section 7 lists ``respiratory therapist'' among example 
staff categories while none of the subsequent tables do. We proposed to 
remove ``respiratory therapist'' as an example from the first table in 
Section 7 for consistency and brevity. However, respiratory therapists 
should continue to be included in this category, along with all other 
medical staff, even if they are not specifically cited as an example.
     Add a reminder (``do not include medical directors'') in 
Section 7.3 (Volunteer Labor), Question 3 on administrative/facility 
volunteer hours to ensure respondents do not include medical directors 
in this category (medical director hours are reported separately).
    The 13th proposed change in the CY 2023 PFS proposed rule (87 FR 
46244) applied to Section 9 (Vehicle Costs) as we proposed to:
     Define ``Quick Response Vehicle'' alongside the acronym 
(QRV)

[[Page 70017]]

throughout the instrument and particular in Section 9 (Vehicle Costs). 
The current Section 9 instructions sometimes refer to ``QRV'' without 
elaboration. We believed this may be confusing to some ground ambulance 
organizations.
    The 14th and final proposed change in this category in the CY 2023 
PFS proposed rule (87 FR 46244) related to Section 13 (Revenue). 
Specifically, we proposed to:
     Edit the warning that applies to organizations operating 
both ground and air ambulances in Section 13 to clarify that air 
ambulance revenue should not be included in Section 13 except in the 
organization's response to Section 13, Question 1. This question 
explicitly asks organizations to report on revenue across their entire 
organization, including revenue related to services other than ground 
ambulance services, and so the current warning may seem to be 
contradictory.
    We invited comments on the 14 proposed editorial changes for 
clarity and consistency, which we summarize and respond to below.
    Comment: One commenter expressed support for our proposal to 
clarify the difference between ``EMS response'' and ``emergency 
response'' in Section 5, Question 1. The commenter stated that 
situations arise where a supervisor (who may or may not be an EMT) 
arrives on the scene first and subsequently cancels the call for a 
broader EMS or ambulance response. The commenter noted that the 
proposed language helps to clarify the language and will more 
effectively capture the data sought in this section.
    Response: We appreciate the commenter's support of this proposal. 
We agree this clarification will be helpful.
    Comment: One commenter generally supported our proposal to allow 
respondents to provide an estimate in response to Section 5, Question 
3c, which asks for the share of responses that are joint with another 
organization. The commenter further stated that while the example in 
the question of an ambulance organization responding alongside a local 
fire department clearly qualifies as a joint response for the purposes 
of this question, other situations such as advanced life support EMS 
programs intercepting basic life support ambulances are more ambiguous. 
As such, the commenter requested that CMS further clarifies this 
question, particularly in terms of the specific scenarios that should 
be considered as respondents answer this question.
    Response: We agree with the commenter that additional clarification 
in Section 5, Question 3c will be helpful to improve the accuracy of 
the responses. The intent of Section 5, Question 3c was to include all 
joint responses with another organization, such as a separate fire 
department (as noted in the current question text) or another public 
safety organization or ground ambulance organization. After considering 
this comment, we are clarifying Section 5, Question 3c to read as 
follows: Does your organization respond to calls with another non-
transporting agency such as a local fire department that is not part of 
your organization? After the question, the following instructions will 
be provided: This includes joint responses with other ground ambulance 
organizations, as well as cases where a fire, police, or other public 
safety department responses to calls for service with your 
organization. Only consider cases where your ground ambulance does or 
would have transported the patient, if necessary.
    Comment: One commenter supported the refinements outlined in the 
proposed rule and appreciated the efforts to provide additional clarity 
in the Medicare Ground Ambulance Data Collection System without 
referring to specific proposals.
    Response: We appreciate the commenter's support.
    After consideration of the public comments we received, we are 
finalizing our 14 editorial changes for clarity and consistency 
proposals as proposed with one additional editorial change. As a result 
of the comment on Section 5, Question 3c, we are clarifying Section 5, 
Question 3c to read as follows: Does your organization respond to calls 
with another non-transporting agency such as a local fire department 
that is not part of your organization? After the question, the 
following instructions will be provided: This includes joint responses 
with other ground ambulance organizations as well as cases where a 
fire, police, or other public safety department responses to calls for 
service with your organization. Only consider cases where your ground 
ambulance does or would have transported the patient, if necessary.
b. Updates To Reflect the Web-Based System
    As we discussed in the CY 2023 proposed rule (87 FR 46244), we are 
in the process of developing the web-based GADCS portal and programmed 
instrument that ground ambulance organizations will use to report data. 
The printable instrument noted several cases where the ultimate 
instrument functionality and wording hinges on the specifications and 
implementation of the GADCS portal and programmed instrument, for 
example around account creation, programmed skip logic, and pop-up 
warnings.
    In the CY 2023 PFS proposed rule (87 FR 46244), we proposed 13 
changes to the printable instrument so that it better matches our 
current plans and expectations for the programmed instrument. We 
discussed that we believe these changes will help ground ambulance 
organizations referencing the printable instrument understand how the 
data they have collected should be entered in the programmed instrument 
on the GADCS portal. We proposed to:
     Update the brief description of the programmed 
instrument's functionality in Section 1. We proposed the specific text: 
``Your organization must report the required information prior to 
[INSERT DATE], which is 5 months after the end of its data collection 
period. You can enter the required information over multiple sittings. 
The system will save your responses after every screen, or whenever you 
hit the ``Save'' button at the bottom of your screen. When you log in 
again later, you can pick up where you left off. After you enter all 
required information, a Certifier at your organization will review the 
entire response and either request changes or certify the information. 
[Note: This instruction will be updated to reflect the capabilities of 
the programmed instrument.]'' This description provides readers of the 
printable instrument a clearer sense of the functionality they should 
expect from the programmed instrument.
     Add specific pop-up window text from Section 2, Question 1 
in the programmed instrument to the printable instrument. Section 2, 
Question 1 confirms that the ground ambulance organization billed 
Medicare for ground ambulance services during its continuous, 12-month 
data collection period. A response of ``no'' effectively ends the 
organization's reporting requirement under GADCS. As a result, the 
programmed instrument includes pop-up warnings asking the respondent to 
confirm that they did not bill Medicare for ground ambulance services. 
We noted that we believe describing the pop-up boxes as programming 
notes in the printable instrument will help organizations no longer 
providing ground ambulance organizations understand how they will 
progress through the GADCS.
     Edit the printable instrument to refer to ``your 
organization's data collection period'' rather than ``calendar year 
202X [or fill fiscal year as appropriate]'' throughout the document.

[[Page 70018]]

Given CMS' approach to collecting data collection period start dates 
and contact information from organizations within 30 days of 
notification, we expect to know the data collection period start date 
ahead of the organization entering the web-based GADCS. We noted that 
we believe it will be clearer for organizations if the question text 
refers consistently to the organization's data collection period.
     Move Section 7.2, Question 4 (``Does your organization 
contract with a medical director, rather than employing them 
directly?'') to earlier in Section 7, immediately following Section 7, 
Question 1, to become Section 7, Question 2. The existing Section 7, 
Question 2 item (asking about staff categories not used by the 
organization) would be renumbered as Section 7, Question 3. With the 
current flow of Section 7 in the printable instrument, organizations 
contracting with a medical director must confusingly answer a question 
on why they do not employ a medical director before they report that 
they contract with one. Asking whether the organization contracts with 
a medical director earlier in Section 7 enables the programmed 
instrument to better adapt later questions in Section 7 related to 
medical directors. For example, organizations indicating earlier in 
Section 7 that they contract with a medical director will not need to 
be asked why they do not employ a medical director.
     Clarify the instructions for Section 8.1 (Facility 
Information) Question 1, Section 9.1 (Ground Ambulance Vehicle Costs), 
Questions 1 and 2, and Section 9.2 (Other Vehicle Costs (Non-
Ambulance)), Questions 1 and 2 so that they note the number of 
facilities and vehicles that users report as answers to these questions 
will adjust the number of rows that they subsequently see in Section 
8.2 (Annual Lease, Mortgage, and Other Costs of Ownership for 
Facilities), Section 9.1, and Section 9.2 tables, respectively. We 
noted that we believe this clarification would help users understand 
the linkages between these initial questions and the later tables that 
they need to fill out. This clarification may also help users 
appreciate that changing earlier answers to these initial questions 
will have ramifications for the tables that follow, including the 
potential addition or deletion of rows.
     Allow organizations to enter information by hand or via an 
uploaded file for the facility-level tables in Section 8.1 and for the 
vehicle-level tables in Section 9.1 and Section 9.2. These tables 
require organizations to report on the characteristics and expenses 
related to individual facilities and vehicles. Ground ambulance 
organizations with many facilities and/or vehicles may find it 
burdensome to enter information on each facility and vehicle 
individually in the web-based GADCS. Other organizations may find it 
easier or preferable to enter information by hand. Organizations 
choosing to import responses for these three tables would use Microsoft 
Excel templates with the same structure as the tables in the web-based 
instrument. Organizations would download these templates prior to or 
while reporting information to the GADCS, complete the template, and 
then import the completed template into the GADCS. The GADCS would 
validate completed templates and request modifications (if necessary) 
prior to accepting completed templates. Organizations importing 
responses for these tables would have an opportunity to review their 
responses before continuing to later Section 8 and/or Section 9 
questions. We noted that the proposed change would require 
clarification in the Section 8 and Section 9 instructions to describe 
the two alternative data entry approaches. The revised instructions 
would stress that the use of the import templates is optional and that 
the exact same information is required regardless of whether 
information is entered by hand or via the template. We noted that we 
believe offering the option to import responses to these tables will 
substantially reduce response burden particularly for larger ground 
ambulance organizations with many facilities and/or vehicles.
    The remaining proposed changes in this category (changes 6-12) in 
the CY 2023 PFS proposed rule (87 FR 46245) aimed to harmonize and 
clarify programming notes throughout the instrument related to ground 
ambulance organizations that also provide other services (for example, 
fire departments, or ``shared services'' as we describe them in the 
instrument). The programming notes in the printable instrument are 
meant to provide context to readers on the ultimate functionality of 
the programmed instrument within the constraints of a static document. 
Some of the programming notes were broadened and updated since the 
initial version of the printable instrument while others have not. We 
noted that we believe some ground ambulance organizations may want to 
respond to questions as if they were shared services, even if they do 
not meet the specific programming notes laid out in the printable 
instrument. Broadly, we proposed to expand or remove programming notes 
restricting certain responses for follow-up questions for shared 
services. We noted that we believe this will provide respondents with 
more flexibility to respond to questions in a way that best matches 
their characteristics, services, and organizational structure.
    Specifically, for changes to programming notes, we proposed to:
     Edit the Section 2, Question 9 note to read: `[Note: For 
the remainder of the data collection instrument, instructions and items 
related to fire, police, or other public safety department-based ground 
ambulance organizations are shown to organizations that answer Section 
2, Question 7 = ``a'' or ``b'' AND Question 8 = Yes (1) OR answer 
Question 9 = Yes (1) to one or both of a and b. To streamline the skip 
logic, the answers to these questions are referred to as ``Public 
Safety = Yes'' for the remainder of the document.]'
     Clarify the definition of ``total responses'' in the 
Section 5 (Service Volume) instructions and Question 1 which currently 
reads: `[If Section 2, Question 7 is ``a'' also display] ``Include 
emergency responses that did not involve a ground ambulance, such as 
those involving only fire trucks and/or other fire/rescue vehicles;'' 
[if ``b''] ``Include emergency responses that did not involve a ground 
ambulance, such as those involving only police cars and/or other public 
safety vehicles.'' ' These instructions do not account for those who 
indicated public safety services in Section 2, Question 9. We proposed 
to use the new ``public safety'' definition and to decrease 
repetitiveness for those with both fire and other public safety 
services: ``[If Public Safety = Yes] Include emergency responses that 
did not involve a ground ambulance, such as those involving only fire 
trucks, other fire/rescue vehicles, police cars and/or other public 
safety vehicles.''
     Edit programming notes throughout Section 7 (Labor Costs) 
instructions to refer to ``If Public Safety = Yes'' rather than ``if 
appropriate for shared services.''
     Make the skip logic more precise and consistent throughout 
Section 7.1 by changing ``[Include only if relevant based on responses 
to Section 7, Question 1] Total hours worked annually related to fire, 
police, and/or other public safety operations'' and ``[Include only if 
Section 2, Question 7 = ``a'' or ``b.'']'' to ``[Include if any paid 
EMT/response staff with fire, police, and/or other public safety role 
was indicated in Section 7, Question 1].''
     Change ``[Include only if Section 2, Question 7 = ``a'' or 
``b.'']'' to ``[Include

[[Page 70019]]

if any paid Administration/Facilities or medical director staff with 
fire, police, and/or other public safety role were indicated in Section 
7, Question 1]'' in Section 7.2.
     Change ``[Include only if Section 2, Question 7 = ``a'' or 
``b.'']'' to ``[Include if any volunteer EMT/response staff with fire, 
police, and/or other public safety role were indicated in Section 7, 
Question 1]'' in Section 7.3, Question 2.
     Change ``[Include only if relevant based on responses to 
Section 7, Question 1 and populate with ``fire,'' ``police,'' and/or 
``other public safety'' as appropriate]'' to ``[Include if any 
volunteer administrative/facilities staff with fire, police, and/or 
other public safety role were indicated in Section 7, Question 1]'' in 
Section 7.3, Question 4.
    We invited comments on the proposals aiming to better align the 
printable instrument with the functionality of the programmed 
instrument and system, which we summarize and respond to below.
    Comment: One commenter supported CMS' recognition of the importance 
of medical direction and oversight by including questions in Section 7 
(Labor Costs) pertaining to whether the position is paid for or 
voluntary, the nature of the compensation arrangement, the amount of 
hours worked annually, and the amount of total compensation. The 
commenter noted that these data would demonstrate the unequivocal 
importance of EMS physician medical directors to patient safety and 
outcomes and would implore CMS to explore reimbursement for EMS 
clinical and quality outcomes, as well as the critically important role 
of an EMS physician medical director, which should be an industry 
standard.
    Response: We appreciate the commenter's support for the proposal.
    Comment: Three commenters made specific recommendations with 
respect to the usability and functionality of the Medicare Ground 
Ambulance Data Collection System. Two of these commenters recommended 
the inclusion of a ``save'' function as information is entered. Three 
commenters recommended programmed error and validation checks. Three 
commenters recommended that the GADCS should be a user-friendly 
experience and should be designed in a way that does not increase 
administrative burden or costs.
    Response: As we described in the CY 2020 PFS final rule (84 FR 
62868), we designed the Medicare Ground Ambulance Data Collection 
System to collect the information required in section 1834(l)(17)(A) of 
the Act while: (1) accommodating a wide range of ground ambulance 
organizations; and (2) minimizing respondent burden. Subsequent 
improvements in the Medicare Ground Ambulance Data Collection System in 
the CY 2022 PFS final rule (86 FR 65306), and those described in this 
final rule, aim to further streamline the Medicare Ground Ambulance 
Data Collection System and reduce burden.
    Several of the features noted by commenters are already part of the 
web-based GADCS. The system already includes an ``autosave'' feature 
that saves responses as they are entered. This feature is always 
active. It allows the same user to enter information at different 
times, and/or multiple users to enter information at different times. 
The system also already includes many validation and error checking 
steps that are automatically applied as respondents enter information. 
The purpose of these checks is to prevent respondents from entering 
information that does not align with the instructions, or that does not 
make sense.
    Comment: One commenter expressed general support for ground 
ambulance organizations to be able to import responses into the GADCS 
as a way to reduce human error. The commenter noted that it is not 
clear which sections and questions can be answered by uploading 
spreadsheets. The commenter suggested that the system allow 
organizations to report information via an application programming 
interface (API).
    Response: We have recently updated the Medicare Ground Ambulance 
Data Collection System to give respondents an option to complete and 
import Microsoft Excel-based templates to respond to certain questions 
in Section 8 (Facilities Costs) and in Section 9 (Vehicle Costs). 
Please see our Ambulance Events website at https://www.cms.gov/medicare/ambulance-fee-schedule-zip-code-files/ambulance-events for 
further information. We do not have plans to implement additional 
import functionality prior to the launch of the system. CMS will 
continue to assess the benefits of an API in future years.
    Comment: One commenter expressed concern regarding potential 
discrepancies between the printable version of the GADCS instrument and 
the web-based, programmed version of the instrument that some ground 
ambulance organizations have tested for CMS. The same commenter noted 
that it would be helpful for the web-based Medicare Ground Ambulance 
Data Collection System to include a print function.
    Response: The version of the web-based system available for testing 
is not the final version that ground ambulance organizations will use 
to report data to CMS. Our main interest in testing the system is to 
identify opportunities to improve the clarity and functioning of the 
web-based system. The printable instrument will be updated with the 
most recent changes, such as those we are finalizing in this final 
rule, and will be the version that ground ambulance organizations use 
to report to the GADCS. The questions in the web-based, programmed 
system will be identical to the printable instrument that will be 
posted on CMS' Ambulances Services Center website when this final rule 
is published. We also note that the web-based Medicare Ground Ambulance 
Data Collection System will have a ``print'' function so that 
respondents can view and/or save an Adobe PDF or paper copy of their 
responses.
    Comment: One commenter asked that CMS provide a timeline on when it 
plans to release the data from selected ground ambulance organizations 
in Year 1 and Year 2 that reported to the Medicare Ground Ambulance 
Data Collection System. The commenter stated that this information will 
help the community understand the timeline so that the ground ambulance 
industry can gather ``lessons learned'' to help address any issues that 
may arise for the next reporting period.
    Response: As described in the CY 2020 PFS final rule (84 FR 62897), 
we plan to post a report on our website describing the data collected 
via the Medicare Ground Ambulance Data Collection System including 
information on summary statistics, respondent characteristics, and 
other relevant results in the aggregate so that individual ground 
ambulance organizations are not identifiable. We stated that these data 
will be made available to the public through posting on our website at 
least every 2 years and we will post summary results by the last 
quarter of 2022. However, in the CY 2022 PFS final rule (86 FR 65317), 
due to the COVID-19 delay, we revised Sec.  414.626(f) to state that we 
will make the data collected under the GADCS publicly available 
beginning in 2024.
    Comment: One commenter asked for confirmation that the same 
individual will be able to serve in the data entry submitter and data 
certifier roles for the purposes of reporting data to the web-based 
system. The commenter noted that smaller organizations may be more 
likely to have the same individual serving in both roles.

[[Page 70020]]

    Response: We will not require a ground ambulance organization to 
fill the data entry submitter and data certifier roles with different 
individuals, even if the ground ambulance organization otherwise has 
different individuals serving in those roles.
    After consideration of the public comments we received, we are 
finalizing our proposed updates to reflect the web-based system.
c. Clarifications Responding to Feedback From Interested Parties' 
Questions and Testing
    In the CY 2023 PFS proposed rule (87 FR 46246), we proposed 12 
instrument changes stemming from feedback we received from emailed 
questions, during live question and answer and other educational 
sessions, and via preliminary testing. Specifically, we proposed to:
     Clarify when and how to report expenses paid for by a 
local municipality in the Section 1 General Survey Instructions. 
Several organizations have asked CMS for guidance on how to collect and 
report data in this scenario. The GADCS FAQ includes several entries 
related to this question. In brief, whether or not municipal expenses 
for dispatch services, fuel, facility space, employee benefits, or in 
any other category must be reported under GADCS depends on the 
relationship between the ground ambulance organization and the 
municipality. If the ground ambulance organization is owned and 
operated by the same municipality paying for the expense, then the 
expense is in-scope and must be reported. If not, for example in cases 
where a municipality provides dispatch services to local ground 
ambulance organizations free of charge, then the expense should not be 
included. In many cases, ground ambulance organizations can report when 
a particular input or resource is donated, which likely applies in 
these cases. To help resolve any ambiguity, we proposed to replace the 
Section 1 text starting with ``If your organization is part of a local 
government . . .'' with the following text adapted from existing FAQ 
entries: ``If your organization was part of a municipal government or 
larger entity that paid for certain ground ambulance expenses (for 
example, if your municipality pays for rent, benefits, fuel, or 
dispatch), you must report information on these expenses. This applies 
only in cases where you are owned or operated by or have a partnership 
or joint venture with the entity that covers expenses for your ground 
ambulance operation. In other cases, do not estimate or report the 
value of donated vehicles, supplies, equipment, or other resources or 
labor used in your ground ambulance operation. For example, if your 
local hospital provided drugs at no cost, but you are not a hospital-
based ground ambulance organization, then do not report the expense 
associated with the donated drugs.''
     Remove the text ``in your primary service area (the area 
in which you usually provide service and where the majority of your 
transport pickups occur)'' from Section 4 (Emergency Response Time), 
Question 1, which asks the organization to describe its approach to 
measuring response times. The intent is for this question to ask about 
how the organization measures response times across all responses, not 
just those in their primary service area. Some interested parties 
shared that they expected to see a corresponding question for their 
secondary service area. We believe this clarification should resolve 
any ambiguity.
     Add programming notes to the printable instrument noting 
that a response to Section 4 (Emergency Response Time) questions 
related to their primary and secondary service areas should be answered 
only when the organization provided emergency responses in such areas. 
For example, an organization with both primary and secondary service 
areas that provided emergency responses in their primary service area 
but not in their secondary service area should report response time 
information for their primary but not secondary area. Several 
organizations have asked how to report information in Section 4 in this 
case.
     Clarify that the scope of GADCS is limited to ground 
ambulance operations. For the many ground ambulance organizations that 
are fire department-based, a Medicare provider, or provide other 
services beyond ground ambulance services, only a portion of total 
expenses and revenue are associated with ground ambulance operations. 
As a result, with the exception of two specific questions (Section 12, 
Question 1, and Section 13, Question 1), information on expenses and 
revenue must be reported to GADCS in such a way that CMS can identify 
an amount associated with or allocated to ground ambulance operations.
     Add guidance throughout Sections 7 through 13 related to 
allocating a share of expenses and revenue attributable to ground 
ambulance operations versus other operations (for example, fire, 
police, or hospital operations). Several ground ambulance organizations 
and other interested parties have posed questions to CMS asking for 
clarification on the specific methods they should use to allocate 
certain amounts prior to reporting information to GADCS. Allocating 
expenses is crucial for ground ambulance organizations that also 
provide other services or functions. If amounts are not allocated 
appropriately, the expenses and revenue reported to GADCS may be higher 
or lower than the actual expenses and revenue related to organizations' 
ground ambulance operations. The current instrument instructions allow 
ground ambulance organizations to use their current allocation approach 
or any reasonable alternative. The additional guidance in the 
instrument would provide an example allocation approach relevant to 
each section. For example, in fire department-based organizations, 
respondents can allocate dispatch, fire truck, and firefighter/EMT 
labor expenses using the share of total responses that are medical 
calls for service and/or involve a fully staffed and equipped 
ambulance. As another example relevant to fire department-based 
organizations, Medicare providers, and some other organizations, 
respondents can allocate facility expenses based on the share of square 
footage used by ground ambulance operations. While organizations 
looking for guidance on an approach could adopt these allocation 
methods, all organizations would remain free to use alternative 
allocation methods.
     Add a new screening question asking whether the ground 
ambulance organization broadly contracts out their ground ambulance 
organization. We have heard that in some cases a Medicare provider or 
supplier billing for ground ambulance services and selected to 
participate in GADCS will pay another organization to provide the 
entirety of the selected organization's emergency medical services 
capability, including ambulances, facilities, and EMT/response staff. 
In other cases, a selected organization may provide ambulances and 
facilities while some or all EMT/response labor is contracted out to 
another company. The current instrument instructions ask respondents to 
report the expenses associated with these broad contracts in Section 
11, Question 1. However, the instrument instructions in Sections 7 
through 11 do not specify whether the sampled organization should 
report on staff, facilities, and vehicles that are not owned or leased 
by the organization itself but instead are provided by the organization 
with which the sample organization contracts to provide

[[Page 70021]]

ground ambulance services. If selected organizations that broadly 
contract out staffing or ground ambulance capabilities report the total 
contract expenses in Section 11 but do not report on the staff, 
facilities, and vehicles that their contractor used to provide services 
in Sections 7 through 9, then the selected organization's expenses will 
appear very high relative to the inputs they report as necessary to run 
their ground ambulance operation.
     Add a new screening question in Section 2 that will ask 
whether organizations contract out some or all of their labor, 
facilities, vehicles, or other key inputs used to furnish ground 
ambulance services. We proposed that organizations answering ``yes'' to 
this initial screening question will see new instructions in Sections 7 
through 13 asking them to report only select information on inputs 
provided by their contractors, including staff hours in Section 7, the 
number of facilities in Section 8, and counts of vehicles in Section 9. 
Importantly, the additional instruction will stress that organizations 
should not report on expenses for these contracted inputs in these 
sections. Organizations should continue to report the total expense for 
the broadly contracted service in Section 11, Question 1, following the 
existing instrument instructions. We noted that we believe this change 
will allow those analyzing data collected via GADCS to better align 
expenses for organizations that broadly contract out their ground 
ambulance services with the inputs reported via GADCS.
     Clarify (in Chapter 7 (Labor Costs)) for interested 
parties how to report labor hours and costs for staff categories not 
explicitly listed in the instrument. The Section 7 instructions already 
include a note that respondents should include Advanced-EMTs in the 
EMT-Intermediate category. To more prominently note how to collect and 
report data on Advanced-EMTs, and to provide more general guidance for 
other EMT/response labor categories that are State or locality-
specific, we proposed to add the following instruction in Section 7: 
``If your State uses levels of certification and licensure that differ 
from these categories, use your best judgement to assign staff to the 
CMS categories available.''
     Revise Section 7 labor category definitions from ``. . . 
with Fire/Police/Public Safety role'' to read ``. . . with role 
supporting fire, police, and/or other public safety operations.'' The 
Section 7 instructions require that staff with fire, police, or other 
public safety roles be included in separate ``with Fire/Police/Public 
Safety roles'' categories, regardless of whether they respond to calls 
for service (for example, as firefighter/EMTs); have a fire, police, or 
other public safety administrative or management role; or a combination 
of response and administrative roles. We learned that some ground 
ambulance organizations interpreted ``with Fire/Police/Public Safety 
roles'' in Section 7 labor categories to refer only to public safety 
responses role (that is, responding to calls for service) and not to 
other fire, police, or other public safety roles (for example, 
administrative or management roles). We believe this should clarify 
that our intent is not to limit the question to just fire, police, and 
other public safety response roles.
    The remaining proposed changes in this category in the CY 2023 PFS 
proposed rule (87 FR 46247) were related to clarifying skip logic and 
response categories. Specifically, we proposed to:
     Remove the shared service programming note from that 
question so that all organizations are able to provide a response. When 
speaking to ambulance organizations, we noted that some organizations 
that do not meet our definition of shared services (that is, share 
services with public safety, hospital, or other medical organization) 
may nonetheless have shared costs with other types of operations. For 
example, a government-based ground ambulance organization may have 
computers and printers which are shared by other municipal services. 
The shared service skip logic programming note was inadvertently 
included Section 9.2, Question 4. Even without the skip logic, 
respondents will still be able to report that 100 percent of expenses 
are related to their ground ambulance operation.
     Streamline the categories and examples presented in the 
Section 11, Question 3 question on ground ambulance expenses not 
otherwise reported. We received many questions on how to report certain 
specific expenses in the provided categories and whether it was 
appropriate to include a specific expense the ``Other'' category. 
Specifically, we proposed to:
    ++ Change the note in this question that reads ``(excluding labor 
for medical director if accounted for in Question 1 above or in the 
labor section)'' to read ``(excluding labor for medical director which 
must be included in Section 11 Question 1 or in the labor section)'' 
because expenses associated with Medical Directors may be reported 
either in Section 7 (Labor Costs) or in Section 11, Question 1.
    ++ Delete the cost category ``Overhead allocation from parent 
organization/central office'' as we already provide places to report 
these costs throughout relevant sections of the instrument.
    ++ Move the ``Miscellaneous administrative fees/costs . . .'' 
category to the end of the ``Administrative and General Expenses'' 
section to improve flow.
    ++ Clarify that fees for ``Licenses'' should ``(Include 
professional or any other license fees not reported elsewhere in the 
instrument. Do not include any vehicle license fees previously reported 
in the Vehicles Section.)''
    We invited comments on the proposals focusing on clarifications in 
response to feedback from interested parties' questions and testing. We 
did not receive any comments on clarifications responding to feedback 
from questions from interested parties and testing, and therefore, we 
are finalizing as proposed.
    In addition to finalizing our proposed changes, we are adding 
additional guidance related to allocation. The web-based GADCS 
instrument will present text from the Frequently Asked Question (FAQ) 
document related to allocation. The FAQ document is available at 
https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AmbulanceFeeSchedule/Downloads/Medicare-Ground-Ambulance-FAQs.pdf.
    In order to implement the addition of screening questions for 
broadly contracted services, we are adding a new question at the end of 
Section 2 (Organizational Characteristics) asking whether the 
organization contracted some or all of the following during its 
continuous, 12-month data collection period:
     EMT labor specifically (excluding medical direction).
     Broader ground ambulance services, for example specific 
response capabilities in terms of ambulance units or service hours.
    Answering ``Yes'' to either of these response options presents the 
respondent with additional instructions on how to report labor, 
vehicles, and facilities expenses in Sections 7 (Labor Costs), 8 
(Facilities Costs), and 9 (Vehicle Costs). These instructions are 
repeated at the start of the respective sections. The instructions will 
direct organizations answering ``Yes'' to either of these response 
options to: (1) report on the number and type of labor hours, 
facilities, and vehicles used by their contractor; (2) enter $0 as 
appropriate as the annual expense for staff, facilities, and vehicles 
in Sections 7 (Labor Costs), 8 (Facilities Costs), and 9 (Vehicle 
Costs); and (3) report the total contract expense in Section 11 (Other 
Costs),

[[Page 70022]]

Question 1. This approach will provide CMS with information on the type 
and number of labor hours, facilities, and vehicles without requiring 
organizations outsourcing core ground ambulance operations to request 
detailed allocated expenses from their contractors. We considered 
alternatives where respondents in this scenario would have to report 
separate expenses in Sections 7, 8, and 9, rather than in Section 11. 
However, these alternatives could involve substantial additional 
administrative effort for users and would have required more extensive 
changes to Section 11 questions to explicitly exclude costs for 
contracted services reported in sections prior to Section 11.
    We did not receive any comments on clarifications responding to 
feedback from questions from interested parties and testing, and 
therefore, we are finalizing as proposed. We are also finalizing adding 
additional guidance related to allocation and adding a new question at 
the end of Section 2 (Organizational Characteristics) asking whether 
the organization contracted some or all of the following during its 
continuous, 12-month data collection period.
d. Typos and Technical Corrections
    In the CY 2023 PFS proposed rule (87 FR 46248), the final category 
of our proposed changes to the instrument addressed technical 
corrections and typos. We proposed 10 corrections to the data 
collection instrument. Specifically, we proposed to:
     Clarify that Section 4, Question 3 refers to twice the 
average as intended and as respondents will infer given the flow of 
questions. The Section 4, Question 3, item refers to the ``90th 
percentile'' rather than ``twice the average.'' When we removed the 
question referring to the 90th percentile response time and replaced it 
with a question asking about the share of responses longer than twice 
the average response time, as finalized in the CY 2022 PFS final rule 
(86 FR 65310), we should have but did not also adjust the text in this 
question.
     Update the Section 7.2 definition to read ``total hours 
worked by paid administrative/facilities and medical director staff.'' 
The Section 7.2 instructions define total hours worked as ``total hours 
worked by paid administrative staff.'' While medical directors are also 
included in Section 7.2, the current definition inadvertently excludes 
medical directors.
     Address in the same instrument section, an inadvertent 
omission in Question 3. This question refers to ``administrative labor 
costs'' which excludes facility labor costs as is specified throughout 
the remainder of the section. We would correct this inadvertent 
omission by replacing ``administrative labor costs'' with 
``administrative/facilities costs.''
     Implement a technical correction in Section 8.1, Question 
3 which states ``for each of the following types of facilities'' when 
it should read ``for each of the following facilities.'' The question 
asks for information at the facility level (not by type of facilities).
     Insert ``rent,'' which was inadvertently omitted, into the 
Section 8.2, Question 3 text so that it reads ``Please report the 
allocated portion of rent, lease, or ownership facilities costs. . . 
.''.
     Remove the skip logic and programming note in Section 9.2, 
Question 4 which erroneously specifies that the total number of statute 
miles traveled by non-ambulance water vehicles only be asked of 
organizations that noted in Section 2 that they operated water 
ambulances. Because organizations may have water rescue vehicles, but 
no water ambulances, we believe this correction is warranted.
     Remove an extraneous ``ground ambulance'' term in the 
middle of Section 9.3, Question 4. As a result, the question would read 
``What was the total maintenance cost of all vehicles (ground ambulance 
and non-ambulance) used to respond to ground ambulance calls or support 
ground ambulance operations during your organization's data collection 
period? ''
     Revise the Section 11 instructions asking for information 
on allocated central office expenses. The revised question would read 
``(Questions 2 and 5)'' instead of just ``(Question 2)'' to align with 
prior changes in the CY 2022 PFS final rule (86 FR 65313) to ensure 
respondents can report allocated central office costs throughout the 
instrument.
     Edit a comma splice in the first sentence of the Section 
11 instructions so they begin ``This section asks about . . .''
     Remove the word ``approximate'' as it was erroneously 
included in Section 13, Question 2b and does not align with any of the 
other questions in this section.
    We invited comments on these proposals to address typos and 
technical clarifications.
    Comment: One commenter expressed general support for addressing 
typos and errors in the GADCS instrument but did not address any of the 
typo and technical correction proposals individually.
    Response: We appreciate the commenter's support.
    After consideration of the public comment we received, we are 
finalizing our 10 corrections as proposed. In addition, upon further 
review of the GADCS instrument, we identified one additional typo which 
we believe is important to address. The table in Section 13, Question 
5, which asks for information on other sources of revenue not 
previously reported, includes a row for revenue from standby events. In 
the printable GADCS instrument, this row includes a programming note 
indicating that the row should only appear if the respondent answered 
``Yes'' to Section 5, Question 7. This programming note should instead 
reference Section 5, Question 8, which asks whether the organization 
provided standby services during its continuous, 12-month data 
collection period. For clarity, we corrected this additional typo and 
will include the correction in the next posted version of the GADCS 
instrument.
4. Automation Process for Submitting a Hardship Exemption Request and 
Informal Review Request
    In the CY 2020 PFS final rule (84 FR 62895), we codified the 
hardship exemption requirement at Sec.  414.626(d). We stated that a 
ground ambulance organization can apply for a hardship exemption 
request based on a significant hardship, such as a natural disaster, 
bankruptcy, or other similar situation, that the Secretary determines 
interfered with the ability of the ground ambulance organization to 
submit such information in a timely manner for the data collection 
period selected by the ground ambulance organization.
    Specifically, Sec.  414.626(d)(1) states that to request a hardship 
exemption, the ground ambulance organization must submit a request form 
(accessed on the Ambulances Services Center website (https://www.cms.gov/Center/Provider-Type/Ambulances-Services-Center.html) to 
CMS within 90 calendar days of the date that CMS notified the ground 
ambulance organization that it would receive a 10 percent payment 
reduction as a result of not submitting sufficient information under 
the data collection system. The request form must include all of the 
following: Ground ambulance organization name; NPI number; Ground 
ambulance organization address; Chief executive officer and any other 
designated personnel contact information, including name, email 
address, telephone number and mailing address (must include a physical 
address, a post office box address is not acceptable); Reason for 
requesting a

[[Page 70023]]

hardship exemption; Evidence of the impact of the hardship (such as 
photographs, newspaper or other media articles, financial data, 
bankruptcy filing, etc.); Date when the ground ambulance organization 
would be able to begin collecting data under paragraph (b) of this 
section; and Date and signature of the chief executive officer or other 
designated personnel of the ground ambulance organization. Section 
414.626 (d)(2) states that CMS will provide a written response to the 
hardship exemption request within 30 days of its receipt of the 
hardship exemption form.
    In the CY 2020 PFS final rule (84 FR 62896), we also codified the 
process to request an informal review process under which a sampled 
ground ambulance organization may seek an informal review of a 
determination that is subject to the 10 percent reduction in payment at 
Sec.  414.626(e). Section 414.626(e) outlines the notification of non-
compliance and informal review. First, for notification of non-
compliance, a ground ambulance organization selected under Sec.  
414.626 (c) for a year that does not sufficiently report data under 
paragraph (b) of this section will receive written notification from 
CMS that it will receive a payment reduction under Sec.  414.610(c)(9). 
Second, with respect to informal review, a ground ambulance 
organization that receives a written notification under Sec.  414.610 
(e)(1) of a payment reduction under Sec.  414.610(c)(9) may submit a 
request for an informal review within 90 days of the date it received 
the notification by submitting all of the following information: ground 
ambulance organization name; NPI number; chief executive officer and 
any other designated personnel contact information, including name, 
email address, telephone number and mailing address with the street 
location of the ground ambulance organization; ground ambulance 
organization's selected data collection period and data reporting 
period; and a statement of the reasons why the ground ambulance 
organization does not agree with CMS' determination and any supporting 
documentation.
    In the CY 2020 PFS final rule (84 FR 62897), we stated that the 
hardship exemption and informal review requests should be submitted to 
the Ambulance ODF mailbox ([email protected]). We have been 
looking for ways to streamline both the hardship exemption request and 
informal review request and have determined that the most efficient 
method would be to require that the ground ambulance organizations 
submit a web-based form via the Medicare Ground Ambulance Data 
Collection System instead of submitting the requests via our Ambulance 
ODF mailbox. This method would be simpler, less burdensome, and less 
prone to error to track and process all incoming hardship exemption 
requests and informal review requests. We intend to launch the web-
based portal that ground ambulance organizations can use to submit 
their hardship exemption and informal review requests in late 2022. We 
will share more information about the web-based portal when available.
    We proposed to update our regulations to give us the necessary 
flexibility to specify how ground ambulance organizations should submit 
these requests, including to our web-based portal once that portal is 
operational. Specifically, we proposed to revise Sec.  414.626(d)(1) 
and (e)(2) to state that these requests must be submitted in the form 
and manner specified by CMS.
    As we stated in the CY 2020 PFS final rule (84 FR 62895) and in 
Sec.  414.626(d)(1), the hardship exemption request form may be 
accessed on the Ambulances Services Center website for reference.
    We invited comments on this proposal, which we summarize and 
respond to below.
    Comment: We received three comments on this proposal. One commenter 
supported the refinements outlined in the proposed rule. Another 
commenter applauded CMS and stated that the proposed method for 
submission is a significant improvement over the current process. The 
commenter further stated that while it is expected that hardship 
exemption requests would be rare, applying for such a request would 
indicate a significant event has occurred and that such event heavily 
impacted the ability of the ground ambulance organization to provide 
services. Therefore, this commenter stated that streamlining the 
process for requesting a hardship exemption under likely intense 
circumstances would be welcomed. The commenter further stated that CMS 
should continue to find ways to simplify and modernize processes across 
its programs generally. Another commenter encouraged CMS to implement 
this proposal in a way that does not increase administrative burden and 
in a way that is revenue neutral given the increase in expenses to 
provide care to patients.
    Response: We appreciate the support of the commenters. We are 
finalizing changes now that we believe further streamline the Medicare 
Ground Ambulance Data Collection System and reduce burden.
    After consideration of the public comments we received, we are 
finalizing our proposal to update our regulations to give us the 
necessary flexibility to specify how ground ambulance organizations 
should submit these requests, including to our web-based portal once 
that portal is operational. Specifically, we are revising Sec.  
414.626(d)(1) and (e)(2) to state that these requests must be submitted 
in the form and manner specified by CMS.

N. Proposed Revisions to the HCPCS Level II Coding Policies for Skin 
Substitutes 437
---------------------------------------------------------------------------

    \437\ As discussed in section II.J. of this final rule, CMS is 
not finalizing the adoption of the term ``wound care management 
products'' in this final rule. Therefore, we will use the term 
``skin substitutes'' in this section for purposes of consistency 
throughout the final rule.
---------------------------------------------------------------------------

1. Background
a. Healthcare Common Procedure Coding System (HCPCS) Level II Coding 
Procedures
    Section 1833(e) of the Act provides that no payment shall be made 
to any provider of services or other person under Medicare Part B 
unless there has been furnished such information as may be necessary in 
order to determine the amounts due such provider or other person under 
that part. To process claims and determine payment for items and 
services under Medicare, CMS needs a way to appropriately identify the 
items and services billed. CMS has established certain codes for 
providers and suppliers to use to identify items and services on 
claims. Medicare receives over 1 billion electronic claims per year.
    The HCPCS is a standardized coding system used to identify 
particular items and services on claims submitted to Medicare, 
Medicaid, and other health insurance programs in a consistent and 
orderly manner. The HCPCS is divided into two principal subsystems, 
referred to as HCPCS Level I and HCPCS Level II. The HCPCS Level I code 
set is comprised of Current Procedural Terminology (CPT[supreg]) codes 
\438\ and the HCPCS Level II code set is used primarily to identify 
items, services,

[[Page 70024]]

supplies, and equipment that are not identified by CPT[supreg] codes.
---------------------------------------------------------------------------

    \438\ The CPT[supreg] is a uniform coding system consisting of 
descriptive terms and identifying codes that are used primarily to 
identify medical services and procedures furnished by physicians and 
other health care professionals. Decisions regarding the addition, 
deletion, or revisions of the CPT[supreg] codes are made and 
published by the American Medical Association (AMA) through the 
CPT[supreg] Editorial Panel. More information on CPT[supreg] codes 
can be found at www.ama-assn/about/cpt-editorial-panel/cpt-code-
process.
---------------------------------------------------------------------------

    HCPCS Level II codes were originally created for use by government 
insurers including Medicare. On August 17, 2000, HHS published a final 
rule (65 FR 50312) in which it adopted HCPCS Level II codes as the 
standard code set to be used by all payers for, among other things, 
health care equipment and supplies not described by CPT[supreg] codes, 
for use in Health Insurance Portability and Accountability Act of 1996 
(HIPAA) transactions (45 CFR 162.1002). The HCPCS Level II coding 
system was selected as the standard code set, in part, because of its 
wide acceptance among both public and private insurers. With few 
exceptions,\439\ HCPCS Level II codes are maintained by CMS, which is 
responsible for making decisions about additions, revisions, and 
discontinuations of codes. CMS maintains the code set for Medicare, but 
because HCPCS Level II is a standard code set designated for use under 
HIPAA by all payers, CMS also considers the needs of other payers, 
including both government and private insurers, in establishing and 
maintaining codes.
---------------------------------------------------------------------------

    \439\ The Code on Dental Procedures and Nomenclature 
(CDT[supreg] code) represents a separate medical code set adopted 
under HIPAA. See 45 CFR 162.1002. Based on alpha-numeric format, 
they are considered HCPCS Level II series D-codes but are 
maintained, copyrighted, licensed and published separately by the 
American Dental Association. More information on CDT[supreg] codes 
can be found at https://www.ada.org/en/publications/cdt.
---------------------------------------------------------------------------

    HCPCS Level II codes are alpha-numeric codes that begin with an 
alphabetical letter followed by four numeric digits. Currently, there 
are almost 8,000 HCPCS Level II codes that represent categories of like 
items and services. Each code includes a text descriptor (code text) 
that identifies the category of items and services encompassed in the 
code. HCPCS Level II codes are generally organized into lettered 
categories that loosely describe the types of codes under that 
letter;\440\ however, the lettered categories are not dispositive, 
meaning that they are not all inclusive of the types of items and 
services described in the heading for each lettered category.
---------------------------------------------------------------------------

    \440\ A-codes: Transportation Services, Medical and Surgical 
Supplies, Miscellaneous; B-codes: Enteral and Parenteral Therapy; C-
codes: Hospital Outpatient Prospective Payment System; D-codes: 
Dental Procedures; E-codes: Durable Medical Equipment; G-codes: 
Temporary Codes for Procedures and Professional Services; H-codes: 
Rehabilitative Services; J-codes: Drugs Administered Other Than Oral 
Method, Chemotherapy Drugs; K-codes: Medicare National Codes for 
DMEPOS; L-codes: Orthotics, and Prosthetics; M-codes: Medical 
Services; P-codes: Pathology and Laboratory Services; Q-codes: 
Medicare National Codes; R-codes: Diagnostic Radiology Services; S-
codes: Non-Medicare National Codes; T-codes: State Medicaid Agency 
Codes; U-codes: Clinical Laboratory Tests; and V-codes: Vision and 
Hearing Services. 85 FR 70374.
---------------------------------------------------------------------------

    Anyone may submit a request to CMS for modifying the HCPCS Level II 
code set. Three types of coding revisions to the HCPCS may be 
requested: (1) that a new code be added (this may include requests to 
split an existing code category into its components or into 
subcategories); (2) that the language used to describe an existing code 
be changed; or (3) that an existing code be discontinued. Applicants 
who choose to submit a HCPCS Level II code application must submit 
their application using the online application portal known as the 
Medicare Electronic Application Request Information SystemTM 
(MEARIS\TM\).\441\
---------------------------------------------------------------------------

    \441\ OMB control number 0938-1042. Expiration Date: 07/31/2023.
---------------------------------------------------------------------------

    The procedures by which the public submits and CMS evaluates code 
applications to modify the HCPCS Level II code set have been primarily 
included in documents released on the CMS website at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo. We update and release the 
HCPCS Level II dataset files to our contractors and the public via our 
website on a quarterly basis.
    Prior to 2020, CMS received and reviewed HCPCS Level II code 
applications and typically made related coding changes annually, 
including releasing updated coding files. However, in November 2019, we 
announced updates to our HCPCS Level II coding procedures to enable 
shorter and more frequent HCPCS Level II code application cycles 
beginning in January 2020 as part of our initiative to facilitate 
launching new products into the marketplace for providers and patients. 
Specifically, we implemented a process under which HCPCS Level II code 
applications for drugs and biological products may be submitted and are 
reviewed quarterly, and HCPCS Level II code applications for non-drugs 
and non-biological products may be submitted and are reviewed 
biannually.
    The current coding procedures provide an opportunity for applicants 
who are dissatisfied with our coding decisions in a quarterly or 
biannual cycle an opportunity to reapply in a subsequent quarterly or 
biannual cycle. We release decisions on coding actions on both a 
quarterly and biannual basis for the respective coding cycle in the 
same format we used prior to 2020 to announce annual decisions. 
Additional information pertaining to CMS' HCPCS Level II coding 
decisions and procedures is available on the CMS website at https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo.
b. Food and Drug Administration (FDA) Regulation of Skin Substitutes
    The FDA regulates skin substitutes based on a variety of factors, 
including intended use. Certain skin substitutes are considered Human 
Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps) that 
are regulated by the FDA solely under section 361 of the Public Health 
Service (PHS) Act and the regulations in 21 CFR part 1271 (``361 HCT/
Ps''). To be regulated as a 361 HCT/P, the product must meet the four 
criteria set forth in 21 CFR 1271.10(a):
     The HCT/P is minimally manipulated;
     The HCT/P is intended for homologous use only, as 
reflected by the labeling, advertising, or other indications of the 
manufacturer's objective intent;
     The manufacture of the HCT/P does not involve the 
combination of the cells or tissues with another article, except for 
water, crystalloids, or a sterilizing, preserving, or storage agent, 
provided that the addition of water, crystalloids, or the sterilizing, 
preserving, or storage agent does not raise new clinical safety 
concerns with respect to the HCT/P; and
     Either, the HCT/P does not have a systemic effect and is 
not dependent upon the metabolic activity of living cells for its 
primary function, or the HCT/P has a systemic effect or is dependent 
upon the metabolic activity of living cells for its primary function, 
and: (1) Is for autologous use; (2) Is for allogeneic use in a first-
degree or second-degree blood relative; or (3) Is for reproductive use.
    For 361 HCT/Ps, establishments that perform one or more steps in 
the manufacture of the 361 HCT/Ps must register and list their 361 HCT/
Ps annually in the FDA's electronic Human Cell and Tissue Establishment 
Registration System (eHCTERS), but premarket review and approval by FDA 
is not needed. FDA acceptance of an establishment registration and 361 
HCT/P listing form does not constitute a determination that an 
establishment is compliant with applicable FDA rules and regulations or 
that the 361 HCT/P is licensed or approved by FDA (21 CFR 1271.27(b)).
    Other skin substitutes are regulated by the FDA as devices that may 
be subject to premarket review through a 510(k) premarket notification 
submission (``510(k)'') in accordance with section 510(k) of the 
Federal Food, Drug, and Cosmetic Act (FD&C Act) and implementing 
regulations in subpart E of 21 CFR part 807, through a premarket

[[Page 70025]]

approval (PMA) application process under section 515 of the FD&C Act 
and regulations in 21 CFR part 814, or through a De Novo classification 
request (De Novo request) under section 513(f)(2) of the FD&C Act and 
regulations in subpart D of 21 CFR part 860, or that may be exempt from 
premarket notification requirements. A 510(k) is a premarket submission 
made to the FDA to demonstrate that the device to be marketed is 
substantially equivalent to a legally marketed device that is not 
subject to PMA (section 510(k), 510(n), 513(f)(1), or 513(i) of the 
FD&C Act).\442\ A PMA is the most stringent type of premarket device 
submission and is required for approval of class III medical 
devices.\443\ A De Novo request provides a marketing pathway for novel 
medical devices for which general controls alone, or general and 
special controls, provide reasonable assurance of safety and 
effectiveness, but for which there is no legally marketed predicate 
device. Devices that are classified into class I or class II through a 
De Novo request may be marketed and used as predicates for future 
premarket notification [510(k)] submissions, when applicable.\444\
---------------------------------------------------------------------------

    \442\ https://www.fda.gov/medical-devices/premarket-submissions-
selecting-and-preparing-correct-submission/premarket-notification-
510k#:~:text=A%20510(k)%20requires%20demonstration,and%20effective%20
as%20the%20predicate.&text=the%20information%20submitted%20to%20FDA,a
s%20the%20legally%20marketed%20device.
    \443\ https://www.fda.gov/medical-devices/premarket-submissions-selecting-and-preparing-correct-submission/premarket-approval-pma.
    \444\ https://www.fda.gov/medical-devices/premarket-submissions-selecting-and-preparing-correct-submission/de-novo-classification-request.
---------------------------------------------------------------------------

2. Proposed Revisions to the HCPCS Level II Coding Policies for Skin 
Substitutes
    As of July 2022, there are approximately 155 unique HCPCS Level II 
codes that describe skin substitutes. Of these products, 137 are 
currently assigned a Q code. We assigned a Q code to these products 
because, at the time we made the code assignment, Medicare considered 
these products to be biological products. When these products are used 
in the office setting, they are paid by Medicare using the methodology 
under section 1847A of the Act, which, in many cases, is based on the 
average sales price (ASP) plus a statutorily mandated 6 percent add-on.
    In addition, as part of our requirements for HCPCS Level II 
applications, we have always required proof of how a product is 
regulated by the FDA to assist in verification that the product is 
medical and legally on the market. For example, we have required the 
510(k) clearance letter or the PMA approval letter for skin substitutes 
that are regulated by the FDA as devices.\445\ For products described 
in the application as 361 HCT/Ps, we have required proof that the 
manufacturer registered and listed their 361 HCT/P with the FDA 
pursuant to 21 CFR part 1271.
---------------------------------------------------------------------------

    \445\ To date, CMS has not received a HCPCS Level II application 
for any skin substitutes regulated by the FDA as a device through a 
De Novo request, but a De Novo request approval letter would have 
been required as part of the application to assist in verification 
that the product was medical and legally on the market.
---------------------------------------------------------------------------

    Beginning in 2020, in accordance with section 1833(e) of the Act, 
we concluded that each application requesting a HCPCS Level II code for 
a skin substitute described in the application as a 361 HCT/P must 
additionally include a letter from the FDA's Tissue Reference Group 
(TRG) recommending that the product appears to meet the criteria for 
regulation solely under section 361 of the PHS Act and the regulations 
in 21 CFR part 1271. As we stated in the CY 2023 PFS proposed rule (87 
FR 46251), this information is necessary for CMS to determine, for 
coding purposes, how the product should be classified. For example, 
such information may be necessary to determine whether the product 
should be coded as a different type of single source drug or biological 
product rather than as a 361 HCT/P.\446\ We stated in the CY 2023 PFS 
proposed rule that the collection of this additional information was 
intended to assist us in appropriately classifying, for purposes of 
assigning a HCPCS Level II code, when these medical products are 361 
HCT/Ps, biological products, drugs, or other.\447\
---------------------------------------------------------------------------

    \446\ Under a final rule promulgated by the FDA on August 31, 
2016, manufacturers of HCT/Ps that are regulated as drugs, devices, 
and/or biological products under section 351 of the PHS Act and/or 
the Federal Food, Drug, and Cosmetic Act, must register and list 
their HCT/Ps following the procedures in 21 CFR part 207 or 807, as 
applicable, rather than 21 CFR part 1271. FDA also maintains 
Frequently Asked Questions on this topic at https://www.fda.gov/vaccines-blood-biologics/cellular-gene-therapy-products/questions-and-answers-regarding-end-compliance-and-enforcement-policy-certain-human-cells-tissues-or.
    \447\ When a medical product is improperly grouped or described 
by CMS in the HCPCS Level II code set relative to our established 
conventions, payers may unintentionally apply inaccurate coverage 
and/or payment to the provider or supplier submitting a claim, and 
in that way, the beneficiary or enrollee may be subject to 
inaccurate cost-sharing. Each payer establishes its own methodology 
for coverage and payment but often rely on the HCPCS Level II 
groupings of similar types of medical products to accelerate the 
adoption process of new technologies.
---------------------------------------------------------------------------

    In the CY 2022 PFS final rule (86 FR 65121), we also finalized that 
ten specific 510(k)-cleared skin substitutes for which we had received 
a HCPCS Level II code application would be payable by Medicare in the 
physician office setting as contractor priced products that are billed 
separately from the procedure to apply them. In the latter part of 
2021, we published final decisions that assigned an A code to each of 
these ten 510(k)-cleared skin substitutes, with an effective date of 
January 1, 2022. These final decisions are located on the CMS website 
at https://www.cms.gov/files/document/2021-hcpcs-application-summary-supplemental-coding-cycle-updated-04062022.pdf.
    We subsequently discovered that we had inadvertently assigned an A 
code to one product (bio-ConneKt Wound Matrix) for which a Q code, 
Q4161, had already been assigned. As such, we updated the Supplemental 
Coding Cycle decision document in December 2021 to remove the A code 
assignment for bio-ConneKt Wound Matrix while retaining A code 
assignments for the other nine 510(k)-cleared skin substitutes. 
Following the Supplemental Coding Cycle, we assigned additional A codes 
for three 510(k)-cleared skin substitutes with an effective date of 
April 1, 2022, for which we received a first-time HCPCS Level II 
application in the Second Biannual, 2021 HCPCS Coding Cycle.\448\ Since 
the publication of the CY 2023 PFS proposed rule, we have assigned A 
codes to an additional five 510(k)-cleared skin substitutes with an 
effective date of October 1, 2022, for which we received a first-time 
HCPCS Level II application in the First Biannual, 2022 HCPCS Coding 
Cycle.
---------------------------------------------------------------------------

    \448\ https://www.cms.gov/files/document/2021-hcpcs-application-summary-biannual-2-2021-non-drug-and-non-biological-items-and-services.pdf.
---------------------------------------------------------------------------

a. Proposed Revisions to General Coding Policy for Skin Substitutes
    In the CY 2023 PFS proposed rule (87 FR 46251), we proposed to 
uniformly classify skin substitutes (that are not regulated by the FDA 
as drugs or biological products that would otherwise be eligible for 
separate payment under section 1847A of the Act) consistently in the 
HCPCS Level II code set based on information presented to CMS as 
described in additional detail below, effective January 1, 2024. We 
proposed that the assignment of A codes to all skin substitutes would 
continue with respect to products for which a HCPCS Level II code is 
requested for the first time, as well as for skin substitutes to which 
we previously assigned a Q code. See below for further details, as we 
also proposed that manufacturers of

[[Page 70026]]

certain skin substitutes will need to submit additional information to 
CMS prior to the assignment of an A code. We stated in the CY 2023 PFS 
proposed rule that these proposals aligned with our proposal in section 
II.J. of that proposed rule that all skin substitutes would be eligible 
for coverage under section 1861(s)(2)(A) of the Act as incident to 
supplies that are commonly furnished in the physician office setting.
    We stated in the CY 2023 PFS proposed rule (87 FR 46251) that HCPCS 
Level II Q codes are used to identify products separately payable as 
drugs and biologicals under Medicare Part B, and that such products are 
priced using the methodology in section 1847A of the Act which, in many 
cases, means that payment is based on the ASP plus a statutorily-
mandated 6 percent add-on. We also stated that A codes are used to 
identify transportation services and medical and surgical supplies. We 
stated that we believed that the assignment of an A code to all skin 
substitutes that are not drugs or biological products \449\ would 
better reflect what the product is for purposes of assigning a code 
because this proposed approach aligned with the payment proposal in 
section II.J. of the proposed rule that would establish a consistent 
pricing methodology by pricing all skin substitutes as incident to 
supplies. We also noted in the proposed rule that we believed the 
proposed policy would provide a more consistent and transparent 
approach to coding for skin substitutes.
---------------------------------------------------------------------------

    \449\ Drug and biological products would generally be coded as J 
or Q codes.
---------------------------------------------------------------------------

b. Proposed Additional Requirements Specific to HCPCS Level II Coding 
for Skin Substitutes
    With respect to 361 HCT/Ps, we proposed to no longer evaluate HCPCS 
Level II coding applications for such products on a quarterly basis 
beginning January 1, 2024,\450\ and to instead evaluate them through 
our biannual coding cycles for non-drugs and non-biological products. 
We explained that our proposal to assign A codes to all skin 
substitutes that are not drugs or biological products and to review 
these products in the same biannual coding cycle would align with the 
payment proposal in section II.J. of the proposed rule, as CMS uses the 
biannual cycles to review code applications for non-drugs and non-
biological products and section II.J proposed to price these products 
as incident to supplies. We noted that the biannual coding cycle 
includes preliminary coding determinations and an opportunity for 
written and public comment, which may assist manufacturers and CMS in 
reconciling any discrepancies with information submitted to us or 
addressing questions about a product that we may raise; we noted that 
we believed this dialogue would be productive for all involved.
---------------------------------------------------------------------------

    \450\ Manufacturers of skin substitutes that received a 510(k) 
clearance, PMA approval, or a granted De Novo request are currently 
reviewed in the non-drugs and non-biologicals biannual coding cycle 
and will continue in that cycle.
---------------------------------------------------------------------------

    We further proposed that manufacturers of products described as 361 
HCT/Ps that have already been assigned a Q code must also provide 
documentation from the FDA (that is, the TRG recommendation letter) 
that indicates how the product appears to be regulated by the FDA.\451\ 
This information would be part of a HCPCS Level II application 
submitted via MEARISTM and would be part of a public meeting 
for consideration. We proposed to allow a 12-month period from the 
effective date of the CY 2023 PFS final rule (that is, January 1, 2024) 
to allow for application submissions. We explained that this deadline 
for application submission would provide sufficient time for applicants 
to communicate with the FDA in regard to the TRG recommendation letter, 
as applicable. We also encouraged manufacturers with an existing Q code 
for products described as 361 HCT/Ps who would need to re-apply for an 
A code to submit their request for a TRG recommendation to the FDA as 
soon as feasible to ensure that they receive the recommendation in time 
to include it with the re-application. After a public meeting and 
appropriate review by CMS, we proposed to discontinue all existing Q 
codes for skin substitutes and to establish new A codes for such 
products that have submitted the appropriate documentation. We proposed 
to make the effective date of the new A codes coincide with the 
discontinuation date of the corresponding Q codes such that there would 
be no gap between the effective dates of the discontinued codes and the 
newly established codes. Based on our biannual coding process for non-
drugs and non-biological products, we noted that we anticipated the new 
A codes would take effect on October 1, 2024. If an application is not 
submitted, we proposed to discontinue the Q code in the quarterly 
update cycle following the proposed deadline for re-application 
submission (that is, January 1, 2024), which we anticipated would take 
effect on April 1, 2024.
---------------------------------------------------------------------------

    \451\ Manufacturers of skin substitutes that received a 510(k) 
clearance, PMA approval, or a granted De Novo request do not need to 
resubmit documentation. These products will be reclassified to an A 
code at the same time as the established 361 HCT/P products with Q 
codes are reclassified to an A code (that is, October 1, 2024).
---------------------------------------------------------------------------

    We also proposed to collect additional information in support of 
HCPCS Level II code applications for these products. As proposed, all 
first-time applications for 361 HCT/Ps would need to continue to be 
supported, as we started in 2020, with documentation from the FDA (that 
is, the TRG recommendation letter) that indicates how the product 
appears to be regulated by the FDA. That is, for a product that is 
described by the applicant as a 361 HCT/P, we proposed that the 
application would need to provide a recommendation letter from the 
FDA's TRG which would aid in our determination of how the product 
should be classified for coding purposes. We stated that the FDA TRG 
recommendation letter assists us in recognizing whether a product is a 
skin substitute, separately payable drug or biological product, or 
otherwise and aids us in issuing an appropriate code consistent with 
our coding conventions.\452\ We noted that a recommendation letter from 
FDA's TRG would also be necessary in other circumstances, such as when 
a product manufacturer seeks a change to a current code descriptor or 
presents other information to us in which a product's market status or 
other event has changed and the manufacturer believes a code should be 
revised.
---------------------------------------------------------------------------

    \452\ Based on prior experience, we noted that we may identify 
discrepancies between the FDA TRG recommendation letter and the 
application presented to CMS, particularly in regard to indications 
of use and clinical claims. In cases of discrepancies, we may ask 
for clarification, encourage the applicant to consult further with 
the FDA, consult further with the FDA ourselves, and/or engage with 
the applicant through the public meeting process. In doing so, we 
are working to ascertain that the product is a skin substitute 
rather than another product, which may be more appropriately 
classified elsewhere in the HCPCS Level II code set.
---------------------------------------------------------------------------

    We noted that we would notify the public of all future coding 
decisions for skin substitutes through our standard process of posting 
decisions for each coding cycle on the HCPCS web page on CMS.gov 
(https://www.cms.gov/Medicare/Coding/MedHCPCSGenInfo/Prior-Years-CMS-HCPCS-LevelII-Coding-Decisions-Narrative-Summary).
c. Summary of Proposals
    In summary, we proposed: (1) that the assignment of A codes to all 
skin substitutes (that are not regulated by FDA as drugs or biological 
products that would otherwise be eligible for separate payment under 
section 1847A of the Act) would continue with respect to products for 
which a HCPCS Level II

[[Page 70027]]

code is requested for the first time, as well as for skin substitutes 
to which we previously assigned a Q code; (2) to discontinue all 
existing Q codes for skin substitutes; (3) to require, prior to the 
assignment of an A code, products with an existing Q code that were 
described by the applicant as a 361 HCT/P to submit a HCPCS Level II 
application within 12 months of the effective date of the final rule 
(that is, January 1, 2024); (4) to require that a recommendation letter 
from the FDA's TRG be submitted as part of the HCPCS Level II 
application for all skin substitutes described by the applicant as a 
361 HCT/P, regardless if it is a first-time application or an 
application for a product with an existing Q code; and (5) to evaluate 
HCPCS Level II coding applications for all 361 HCT/P skin substitutes 
through our biannual coding cycles for non-drugs and non-biological 
products, rather than on a quarterly basis, beginning January 1, 2024.
    We sought comments on these proposals. We also sought comments on 
whether any codes were unintentionally omitted from the list of skin 
substitutes for which new code applications would need to be submitted 
or new A codes would be issued for devices that are 510(k)-cleared, 
PMA-approved, or classified into class I or class II through a De Novo 
request (Table 88) and should have similarly been subject to this 
proposal.

[[Page 70028]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.119


[[Page 70029]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.120


[[Page 70030]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.121

    For all 361 HCT/Ps for which CMS has issued a Q code with an 
effective date on or after October 1, 2021, as shown in Table 89, we 
proposed to discontinue the Q code and issue an A code, effective on 
the same date as the other products discussed in the proposal (that is, 
October 1, 2024). We did not propose to require resubmission of a HCPCS 
Level II coding application for these HCT/Ps because the applications 
already included a TRG recommendation letter from the FDA. We also 
proposed to take a similar approach for all new 361 HCT/Ps in which Q 
codes are issued before January 1, 2024.

[[Page 70031]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.122

d. Comments Received on the Proposed Coding Policies
    We received public comments on the coding policies that we 
proposed. Some of the commenters expressed support for our proposed 
coding policies, while other commenters expressed concerns regarding 
our proposed coding policies. The coding proposals were one part of our 
overall proposed approach to refining how we treat skin substitutes 
furnished in the physician office setting for purposes of coding, 
coverage, and payment under Medicare. As described more fully in 
section II.J. of this final rule, we are not finalizing our coverage 
and payment proposals with respect to these products. Accordingly, we 
are also not finalizing any of the coding proposals at this time. We 
are also not summarizing the public comments we received at this time 
and point interested parties to regulations.gov if they would like to 
review those public comments. We intend to summarize the public 
comments we received, and respond to those comments, in future 
rulemaking.

IV. Updates to the Quality Payment Program

A. CY 2023 Modifications to the Quality Payment Program

1. Executive Summary
a. Overview
    This section of the final rule outlines changes to the Quality 
Payment Program starting January 1, 2023, except as otherwise noted for 
specific provisions. The CY 2023 performance period/2025 MIPS payment 
year continues to move the Quality Payment Program forward to focus 
more on our measurement efforts, refines how clinicians would be able 
to participate in a more meaningful way through the Merit-based 
Incentive Payment System (MIPS) Value Pathways (MVPs), and encourages 
participation in Advanced Alternative Payment Models (APMs).
    Authorized by the Medicare Access and CHIP Reauthorization Act of 
2015 (MACRA) (Pub. L. 114-10, April 16, 2015), the Quality Payment 
Program is an incentive program that includes two participation tracks, 
MIPS and Advanced APMs. MIPS eligible clinicians are subject to a MIPS 
payment adjustment based on their performance in four performance 
categories: cost, quality, improvement activities, and Promoting 
Interoperability. The weights of those four performance categories are 
specified in statute. For CY 2023, those weights are as follows: 30 
percent for the quality performance category; 30 percent for the cost 
performance category; 15 percent for the improvement activities 
performance category; and 25 percent for the Promoting Interoperability 
performance category. If an eligible clinician participates in an 
Advanced APM and achieves Qualifying APM Participant (QP) status, they 
are excluded from the MIPS reporting requirements and payment 
adjustment. Those that are qualifying APM participants (QPs) for the 
year are eligible to receive a 5 percent lump sum incentive payment 
during the corresponding payment year through CY 2024, or a 
differential payment update under the PFS for payment years beginning 
in 2026.
    Participation in the Quality Payment Program, defined as clinicians 
with a final score greater than 0, including both those who submitted 
data (engaged) and those who did not submit data, remained consistent 
at 100 percent in the fifth year (CY 2021 performance period). We saw 
100 percent of MIPS eligible clinicians participate in MIPS in 2021 
with 698,937 MIPS eligible clinicians participating and receiving a 
payment adjustment, which was similar to our 2020 participation rates 
with 933,545 MIPS eligible clinicians receiving a payment adjustment 
and 933,543 MIPS eligible participants. Therefore, participation rates 
in MIPS did not meaningfully change in 2021 as compared to 2020. We did 
see a decrease in the number of eligible clinicians receiving a payment 
adjustment with 698,937 MIPS eligible clinicians in 2021 compared to 
933,545 in 2020. In addition, 86.03 percent of MIPS eligible clinicians 
received a positive payment adjustment for the 2023 MIPS payment year 
based on CY 2021 performance period data. We note that due to the 
Public Health Emergency (PHE) for COVID-19, 196,252 (or about 28 
percent of 698,937) MIPS eligible clinicians received reweighting for 
the CY 2021 performance period/2023 MIPS payment year of one or more 
MIPS performance categories under the MIPS extreme and uncontrollable 
circumstances policy.
    Please note that results for the CY 2021 performance period/2023 
MIPS payment year are subject to change as a result of the targeted 
review process which began on August 22, 2022 and will conclude on 
October 21, 2022. For more information on the targeted review process 
for 2021 please see our targeted review guide at https://qpp-cm-prod-

[[Page 70032]]

content.s3.amazonaws.com/uploads/2038/
2021%20Targeted%20Review%20Guide.pdf.
    Regarding performance in Advanced APMs, for the 2021 QP Performance 
Period, 271,276 eligible clinicians earned Qualifying APM Participant 
(QP) status while another 3,378 eligible clinicians earned partial QP 
status. We plan to continue developing Quality Payment Program policies 
that more effectively reward high-quality of care for patients and 
increase opportunities for Advanced APM participation. We are moving 
forward with MVPs to allow for a more cohesive participation experience 
by connecting activities and measures from the 4 MIPS performance 
categories that are relevant to a specialty, medical condition, or a 
particular population.
    As we make long-term improvements, continue evolving MIPS policies, 
and plan to begin implementing MVPs in 2023, we remain committed to our 
program goals. We are aligning with broader CMS initiatives, such as 
the CMS National Quality Strategy (https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/Legacy-Quality-Strategy), to unify strategic 
efforts to adopt measures most critical to providing high quality care 
and accelerate strategic improvements for quality programs and 
measures. The vision for the CMS National Quality Strategy is to shape 
a resilient, high-value American health care system to achieve high-
quality, safe, equitable, and accessible care for all. This strategy 
aims to promote the highest quality outcomes and safest care for all 
individuals. It also focuses on a person-centric approach as 
individuals journey across the continuum of care and across payer type. 
The goals of the strategy incorporate lessons learned from the COVID-19 
public health emergency (PHE) to inform both short and long-term 
direction for our health care system as well as support the creation of 
a more equitable, safe, and outcomes-based health care system for all 
individuals. The planned implementation of MVPs aligns with many of the 
objectives and goals the CMS National Quality Strategy will strive to 
achieve.
b. Summary of Major Provisions
(1) Major MIPS Provisions
    MIPS aims to drive value through the collection, assessment, and 
public reporting of data that informs and rewards the delivery of high-
value care.
    We have heard from clinicians that MIPS requirements are confusing, 
burdensome, and that it is difficult to choose measures from the 
several hundred MIPS and QCDR quality measures that are meaningful to 
their practices and have a direct benefit to patients. We have also 
heard concerns from interested parties that MIPS does not allow for 
sufficient differentiation of performance across practices due in part 
to clinician quality measure selection bias. Interested parties have 
indicated that these issues detract from the program's ability to 
effectively measure and compare performance, provide meaningful 
feedback, and incentivize quality. MVPs are intended to lead to a 
simplified MIPS clinician experience, improve value, reduce burden, and 
better inform patient choice in selecting clinicians. We noted that the 
MVP framework will connect measures and activities across the 4 MIPS 
performance categories, incorporate a set of administrative claims-
based quality measures that focus on population health, provide data 
and feedback to clinicians, and enhance information provided to 
patients (86 FR 65391). We intend to focus the future of MIPS on MVP 
development and implementation.
    Additionally, we have heard from patients, clinicians, and other 
interested parties that they would like more comprehensive and granular 
reporting from the MIPS program. To that end, in the CY 2022 PFS final 
rule (86 FR 65396 and 65397), we established voluntary subgroup 
reporting to help provide patients and clinicians information that is 
clinically meaningful at a more granular level.
(a) MIPS Value Pathways Development
    As discussed in the CY 2023 PFS final rule (87 FR 46263), we intend 
to continue improving the MIPS program through MVPs, promote the use of 
connected measures and activities, reward clinicians for providing high 
value care, and help all clinicians improve care and engage patients. 
We also intend to gather information from interested parties to help 
guide efforts to advance health equity throughout CMS quality programs. 
We previously finalized an MVP development process involving the 
submission of MVPs by interested parties for our consideration (85 FR 
84849 through 84850). We believe the MVP development process should 
also consider feedback from the general public outside of the notice 
and comment rulemaking process through which MVPs are adopted. 
Therefore, we are finalizing our proposal to modify the MVP development 
process such that were CMS to receive a new candidate MVP, evaluate it 
through the MVP development process and determine it ``ready'' for 
feedback, CMS would post a draft version of the MVP on the Quality 
Payment Program website (https://qpp.cms.gov/) and solicit feedback 
from interested parties as well as the general public for a 30-day 
period.
    In addition, we previously established a process for soliciting 
interested party recommendations for potential updates to established 
MVPs. On an annual basis, beginning in January, interested parties may 
submit their recommendations for the revision of an established MVP, 
and that input is accepted on a rolling basis throughout the year. We 
believe the MVP maintenance process should also consider feedback from 
the general public outside of the notice and comment rulemaking process 
through which MVPs are revised. Therefore, we are finalizing our 
proposal that after we review the submitted recommendations to revise 
established MVPs, and identify any feasible and appropriate revisions 
to established MVPs, we would host an annual public facing webinar, 
open to interested parties and the general public through which they 
may offer their feedback on potential revisions to the MVPs.
    In the CY 2022 PFS final rule (86 FR 65998 through 66031), we 
finalized seven MVPs that will be available for reporting beginning 
with the CY 2023 performance period/2025 MIPS payment year.
    In the CY 2023 PFS proposed rule (87 FR 46266), we proposed 
revisions to these seven MVPs based on the proposed removals of certain 
activities from the improvement activities inventory and the addition 
of other relevant existing quality measures for MVP participants to 
select from. We are finalizing the revisions to these seven MVPs. In 
addition, through this rulemaking cycle, we are finalizing as proposed 
five additional new MVPs:
     Advancing Cancer Care;
     Optimal Care for Kidney Health;
     Optimal Care for Neurological Conditions;
     Supportive Care for Cognitive-Based Neurological 
Conditions; and
     Promoting Wellness.
    The MVP framework aims to reduce complexity and burden, move 
towards more meaningful measurement, capture the patient voice, and 
move to higher value care. As discussed in the proposed rule (87 FR 
46264), we are continuing to explore opportunities to advance health 
equity in accordance with the CMS Framework for Health

[[Page 70033]]

Equity 2022-2023,\453\ across all CMS programs and policies, including 
the MVP framework. We are considering how MVPs should evolve to better 
promote higher value care and APM participation by both primary care 
and specialist clinicians. We sought public comment, through a request 
for information (see 87 FR 46264 through 46265), on ways to integrate 
MVPs into APP reporting and how to best facilitate specialty clinician 
reporting of quality performance measures (in addition to the APP) that 
reflect the specialty services provided.
---------------------------------------------------------------------------

    \453\ Centers for Medicare & Medicaid Services. CMS Framework 
for Health Equity 2022-2032, Available at https://www.cms.gov/files/document/cms-framework-health-equity.pdf.
---------------------------------------------------------------------------

(b) Subgroup Reporting
    To support clinicians in their transition to subgroup reporting, 
subgroup reporting will be voluntary for the CY 2023, 2024, and 2025 
performance periods/2025, 2026, and 2027 MIPS payment years. 
Multispecialty groups that choose to report through an MVP will be 
required to participate as subgroups beginning with CY 2026 performance 
period/2028 MIPS payment year. As discussed in section IV.A.4.e. of 
this final rule, we are finalizing the following policies for 
subgroups:
     Subgroup description requirement: A group must submit a 
description of each subgroup at the time of registration.
     Limitation of one subgroup per TIN-NPI combination: An 
individual eligible clinician, as represented by a TIN/NPI combination 
may register for no more than one subgroup within a group's TIN.
     Subgroup determination period: CMS will apply the low-
volume threshold criteria for a subgroup as described under Sec.  
414.1318(a)(1) using information from the first segment of the 
applicable MIPS determination period.
     Subgroup scores for administrative claims measures and 
cost measures: Subgroups are scored on each selected population health 
measure based on their affiliated group score, if available and that if 
the subgroup's affiliated group score is not available, each such 
measure is excluded from the subgroup's total measure achievement 
points and total available measure achievement points. We are also 
finalizing that subgroups are scored on the cost measures included in 
the MVP that they select, based on their affiliated group score, if 
available. If the affiliated group score is not available, the measure 
is excluded from the subgroup's total measure achievement points and 
total available measure achievement points, as described under Sec.  
414.1380(b)(2)(i) through (v).
     Scoring for subgroups that register but do not report: We 
will not assign a score for subgroups that register but do not submit 
data for an applicable performance period.
(c) Requests for Information (RFI)
    The CY 2023 PFS proposed rule contained the following RFIs (87 FR 
46256 through 46263):
     Request for Information Regarding QP Determination 
Calculations at the Individual Eligible Clinician Level
     Request for Information Regarding the Transition from APM 
Incentive Payments to the Enhanced PFS Conversion Factor Update for QPs
     Request for Information on Continuing to Advance to 
Digital Quality Measurement and the Use of Fast Healthcare 
Interoperability Resources (FHIR) in Physician Quality Programs
     Request for Information on Advancing the Trusted Exchange 
Framework and Common Agreement (TEFCA)
     Request for Information on Risk Indicators Within Complex 
Patient Bonus Formula to Continue to Align with CMS Approach to 
Operationalizing Health Equity
    We thank commenters for their responses to these requests for 
information. We may consider this information to inform future 
rulemaking.
(2) Major APM Provisions
(a) APM Entity Level Reporting of Promoting Interoperability 
Performance Category
    We are finalizing a policy to introduce a voluntary reporting 
option for APM Entities to report the promoting interoperability 
performance category at the APM Entity level beginning with the CY 2023 
performance period.
(b) Payment Based on Quality Measures
    We are finalizing a policy to revise the regulations and to clarify 
that the criterion for Advanced APMs that payment must be based on 
quality measures can be met through the use of a single quality measure 
that meets the criteria specified at Sec.  414.1415(b)(2) and (b)(3). 
We also proposed conforming changes in the Other Payer Advanced APM 
regulations.
(c) Medical Home Model 50 Eligible Clinician Limit
    We are finalizing a policy to apply the 50 eligible clinician limit 
directly to the APM Entity participating in the Medical Home Model, and 
to no longer look to the parent organization for the APM Entity. We 
explained that we would identify the eligible clinicians in the APM 
Entity on each of the three QP determination dates (March 31, June 30, 
and August 31). This policy would become effective in Performance Year 
2023. We also proposed conforming changes in the Other Payer Advanced 
APM regulations which will require that the eligible clinician pursuing 
the option provide the relevant information.
(3) Other MIPS and APM Policies
(a) Quality Performance Category
    In the CY 2023 PFS proposed rule (87 FR 46276 through 46280), we 
proposed the following proposals: expand the definition of the term 
high priority measure to include health equity quality measures; change 
the CAHPS for MIPS case-mix adjustor for ``Asian language survey 
completion'' to use instead ``language other than English spoken at 
home,'' ``Spanish language spoken at home,'' and ``Asian language 
spoken at home'' variables; increase the data completeness criteria 
threshold from 70 percent to 75 percent for the CY 2024 and 2025 
performance periods/2026 and 2027 MIPS payment years; and establish a 
set of 195 quality measures. In the CY 2023 PFS proposed rule (87 FR 
46155 through 46157, 46277, and 46280 through 48283), we sought public 
comment regarding requests for information pertaining to each of the 
following topics: the addition of questions related to health 
disparities and price transparency to the CAHPS for MIPS Survey; the 
development and implementation of health equity quality measures; and 
the development and implementation of quality measures that address 
amputation avoidance in diabetic patients.
(b) Cost Performance Category
    In section IV.A.6.c. of this final rule, we finalized as proposed 
to update the operational list of care episode and patient condition 
groups and codes by adding the Medicare Spending Per Beneficiary (MSPB) 
Clinician cost measure as a care episode group.
(c) Improvement Activities Performance Category
    We are finalizing as proposed to add four new, modify five 
existing, and remove six existing improvement activities from the 
Inventory. The new and modified activities help fill gaps we have 
identified in the Inventory as well as seek to ensure that activities 
reflect current clinical practice across the category. All four of the 
new activities

[[Page 70034]]

being finalized relate to CMS Six Health Equity Priorities for Reducing 
Disparities in Health. We also recommended the removal of six 
activities, both to align with current clinical guidelines and practice 
as well as to eliminate duplication, so that the Inventory offers 
flexibility and choice without a potentially burdensome number of 
activities available.
(d) Promoting Interoperability Performance Category
    We are finalizing several changes to the Promoting Interoperability 
performance category. Specifically, we are finalizing: (1) to require 
and modify the Electronic Prescribing Objective's Query of Prescription 
Drug Monitoring Program (PDMP) measure with added exclusions while 
maintaining the associated points at 10 points; (2) to expand the Query 
of PDMP measure to include not only Schedule II opioids, but also 
Schedule III, and IV drugs; (3) to add a new Health Information 
Exchange (HIE) Objective option, the Enabling Exchange under the 
Trusted Exchange Framework and Common Agreement (TEFCA) measure 
(requiring a yes/no response), as an optional alternative to fulfill 
the objective; (4) to consolidate the current options from three to two 
levels of active engagement for the Public Health and Clinical Data 
Exchange Objective and to require the reporting of active engagement 
for the measures under the objective; (5) to limit a clinician's time 
at the first level of active engagement to one performance period but 
delaying the applicability date until performance periods in 2024; (6) 
to modify the scoring methodology for the Promoting Interoperability 
performance category; and (7) to continue to reweight the Promoting 
Interoperability performance category for certain types of non-
physician practitioner MIPS eligible clinicians.
(e) Payment Adjustment
    We are finalizing as proposed to use the CY 2019 MIPS payment year 
as the prior period and the rounded mean final score of 75 points from 
that prior period as the performance threshold for the CY 2025 MIPS 
payment year.
(f) Scoring
    For scoring of the quality performance category, we are finalizing 
as proposed to score administrative claims measures using benchmarks 
calculate from data collected during the performance period and 
clarifying the topped-out measure lifecycle in instances where a 
measure is suppressed or otherwise has a benchmark removed. We also 
included a request for information on which additional risk indicators 
and data sources we should consider for the complex patient bonus to 
better assess the social and medical complexity for the patients of 
MIPS eligible clinicians. Lastly, we are finalizing as proposed to 
establish a maximum cost improvement score of 1 percentage point out of 
100 percentage points available for the cost performance category 
starting with the CY 2022 performance period/2024 MIPS payment year.
(g) Third Party Intermediaries
    We are finalizing our proposal to update the definition of third 
party intermediary consistent with existing policies and to make other 
minor technical edits to the regulation text governing third party 
intermediaries accordingly. We are also finalizing our proposal to 
revise QCDR measure self-nomination and measure approval requirements, 
including to delay the QCDR measure testing requirement for traditional 
MIPS by an additional year, until the CY 2024 performance period/2026 
MIPS payment year. We are finalizing our proposal to continue delaying 
this requirement based on our recognition of the continuing impact of 
the COVID-19 public health emergency on the ability of QCDRs to test 
measures. We are finalizing our proposal to revise remedial action and 
termination policies.
(h) Public Reporting/Physician Compare
    In an effort to expand the information available to patients and 
caregivers when choosing a doctor or clinician, we are finalizing as 
proposed to publicly report on individual clinician and group profile 
pages:
     A telehealth indicator, as applicable, and technically 
feasible, for those clinicians furnishing covered telehealth services.
     Utilization data related to applicable conditions treated 
and procedures performed by each clinician or group respectively.
    Additionally, we sought feedback from interested parties through a 
request for information, on ways to incorporate health equity into 
public reporting on Care Compare.
2. Definitions
    At Sec.  414.1305, we are finalizing as proposed revisions to the 
definitions of the following terms:
     Multispecialty group;
     Single specialty group;
     Facility-based group;
     Facility-based MIPS eligible clinician
     High priority measure; and
     Third party intermediary.
    These terms and definitions are discussed in detail in the relevant 
sections of the proposed rule.
7. Transforming MIPS: MVP Strategy
a. MVP Vision Overview
    As discussed in the CY 2023 PFS proposed rule (87 FR 46263 and 
46264), we are moving to MIPS Value Pathways (MVPs) to improve value, 
reduce burden, inform patient choice in selecting clinicians, and 
reduce barriers to participation in Alternative Payment Models (APMs). 
We intend to promote high value care by connecting performance on cost, 
quality, and patient experience of care to payment. We believe the MVP 
framework will move MIPS forward on the path to value by connecting the 
MIPS performance categories, better informing and empowering patients 
to make decisions about their healthcare, and by helping clinicians to 
achieve better outcomes using robust and accessible healthcare data and 
interoperability. The MVP framework aims to reduce complexity and 
burden, move towards more meaningful measurement, capture the patient 
voice, and move to higher value care. We intend for MVPs to drive value 
and help clinicians and practices prepare to take on and manage 
financial risk, for example, through Advanced APMs, as they build out 
their quality infrastructure components and gain experience with cost 
measurement. We envision that MVPs, in which there is aligned 
measurement of quality of care and cost, continuous improvement and 
innovation within the practice, and efficient management and transfers 
of information, will help clinicians deliver higher value care and 
remove barriers to APM participation. Combining linked performance 
measures and activities with more performance measurement 
standardization and focused reporting of meaningful measures in MVPs 
will, we believe, produce data that can better assist patients in 
comparing clinician performance and in selecting clinicians. Such data 
can also assist clinicians in making care improvements and making 
appropriate specialist referrals. As more clinicians have applicable 
MVPs available, the performance data available to patients will expand, 
and in the future, information on specialists in multispecialty groups 
will increase in our Compare Tools, enabling patients to make more 
informed choices for their care. MVPs will be available for voluntary 
reporting beginning with the CY 2023 MIPS performance period, and we 
intend for MVPs to become the only method to participate in MIPS in 
future

[[Page 70035]]

years, although we have not yet established the timing for the sunset 
of traditional MIPS.\454\
---------------------------------------------------------------------------

    \454\ 42 CFR 414.1365(a)(1).
---------------------------------------------------------------------------

    We continue to explore opportunities to advance health equity 
across all CMS programs and specifically the Quality Payment Program 
via MVPs and updated performance measures (see 87 FR 46264 in the CY 
2023 PFS proposed rule). On April 22, 2022, the CMS Office of Minority 
Health released the CMS Framework for Health Equity,\455\ which updates 
the CMS Equity Plan with an enhanced and more comprehensive 10-year 
approach to further embed health equity across all of CMS programs 
including Medicare, Medicaid, CHIP, and the Health Insurance 
Marketplaces[supreg]. This CMS Framework for Health Equity outlines 
five priorities: (1) Expand the collection, reporting and analysis of 
standardized data; (2) Assess causes of disparities within CMS 
programs, and address inequities in policies and operations to close 
gaps; (3) Build capacity of health care organizations and the workforce 
to reduce health and health care disparities; (4) Advance language 
access, health literacy, and the provision of culturally tailored 
services; and (5) Increase all forms of accessibility to health care 
services and coverage.\456\ We intend to use this health equity 
framework across CMS to design, implement, and operationalize policies 
to support health for all people served by our programs, eliminate 
avoidable differences in health outcomes experienced by people who are 
underserved, and provide the care and support that our enrollees need 
to thrive.
---------------------------------------------------------------------------

    \455\ CMS, CMS Framework for Health Equity, available at https://www.cms.gov/sites/default/files/2022-04/CMS%20Framework%20for%20Health%20Equity_2022%2004%2006.pdf.
    \456\ Ibid., at 10-11.
---------------------------------------------------------------------------

    We continue to consider ways that we can advance health equity via 
the Quality Payment Program. As we implement MVPs, we are considering 
how best to further the five priorities of the CMS Framework for Health 
Equity. We intend for both MVPs and APMs to advance health equity and 
increase the value of health care for all as we leverage improvement 
activities, quality measure performance data, and public reporting. We 
anticipate that MVPs and APMs will have greater impact on health equity 
as participation grows.
    In the CY 2023 PFS proposed rule we considered approaches for 
advancing health equity in MIPS and sought feedback (see 87 FR 46276 
through 87 FR 46283). Specifically, see 87 FR 46280 through 46283 and 
87 FR 46331 respectively for our request for comment on developing 
health equity measures in MIPS and MIPS Compare Tool public reporting 
in the future.
    We presented our MVP vision and guiding principles in the CY 2021 
PFS final rule (85 FR 84844 through 84845). We intend for MVP 
implementation to drive value, obtain comparative performance data, and 
elevate the patient voice while reducing clinician burden. We strive to 
achieve meaningful performance measurement, burden reduction, scoring 
equity, and increased value. The MVP framework was discussed in the CY 
2020 and the CY 2021 PFS proposed rules (84 FR 40732 through 40734, and 
85 FR 50279, respectively) and CY 2021 PFS final rule (85 FR 84844 
through 84845). Our MVP framework calls for linking the quality, cost, 
and improvement activities performance categories, as well as a 
foundation of required reporting for the Promoting Interoperability 
performance category and population health claims-based quality 
performance category measures. We continue to consider how to best 
implement an MVP portfolio that balances our MVP goals for 
transformative change and our five MVP guiding principles as discussed 
in the CY 2021 PFS final rule (85 FR 84845 through 84546) within 
current CMS and clinician practice capabilities. For more MVP 
information see the CY 2023 PFS proposed rule at 87 FR 46264 for 
discussion of initial MVP implementation steps and Sec. Sec.  414.1305 
Definitions, 414.1318 Subgroups, and 414.1365 MIPS Value Pathways for 
MVP policies regulatory text.
b. MVPs and APM Participant Reporting
    MVPs and APMs share a goal of meaningful performance measurement 
and burden reduction, along with objectives of scoring equity and 
advancing value. In the CY 2023 PFS proposed rule (87 FR 46264 and 
46265), we included a request for information regarding MVPs and APM 
participant reporting. Specifically, we sought ideas for how we could 
obtain more robust reporting of both primary care and specialty care 
performance measurement information from APM participants. We also 
sought feedback on how to best address the challenges commenters 
previously noted regarding specialist reporting of quality performance 
data to both the APM and MIPS such as increased reporting burden. We 
requested policy ideas that would encourage the reporting of specialty 
services performance information in addition to the APP, for example 
and to the extent feasible, by extending APP scoring policies for the 
cost and improvement activities performance categories outside the APP, 
by finding a way to roll MVP quality measure performance data into the 
APP, or by some other method. We also requested feedback on the 
benefits and disadvantages of the submitted policy ideas and asked how 
we should best limit burden and complexity. We continue to seek 
feedback on ways to better align clinician experience between MVPs and 
APMs, and to ensure that MVP reporting serves as a bridge to APM 
participation.
    As we move forward with MVP implementation, we will continue to 
seek feedback on the direction of our MVP framework and its 
intersection with APMs, including ways to better align clinician 
experience between MVPs and APMs and to ensure that MVP reporting 
serves as a bridge to APM participation. We envision MVP reporting to 
complement APP reporting such that it will enhance performance 
measurement and available information while minimizing additional 
burden. We thank commenters for their responses to this request for 
information. We may consider the information we received and use it to 
inform future rulemaking.
4. MVP Development and Reporting Requirements
a. MVP Development
(1) Development of New MVPs
    As discussed in the CY 2023 PFS proposed rule (87 FR 46265 and 
46266), we proposed to modify our MVP development process to include 
feedback from the general public before the notice and comment 
rulemaking process. We proposed to evaluate a submitted candidate MVP 
through the MVP development process, and if we determine it is 
``ready'' for feedback, we would post a draft version of the submitted 
candidate MVP on the Quality Payment Program website (https://qpp.cms.gov/) and solicit feedback for a 30-day period. The general 
public would have the opportunity to submit feedback on the candidate 
MVP for CMS's consideration through an email inbox. We stated that we 
would review the feedback received, and determine if any changes should 
be made to the candidate MVP prior to potentially including the MVP in 
a notice of proposed rulemaking. If we determine changes should be made 
to the candidate MVP, we would not notify the interested parties who 
originally submitted the candidate MVP for CMS consideration in advance 
of the rulemaking process. The following is a summary of the public 
comments

[[Page 70036]]

received on the proposed revisions to the process to develop new MVPs 
and our responses:
    Comment: Several commenters supported the proposals to modify the 
MVP development process. Many commenters indicated support of MVP 
development processes that promote transparency, collaboration, and 
regard for specialty expertise through the solicitation of feedback 
from the public prior to an MVP's proposed adoption. Several commenters 
stated that the proposed changes will improve transparency in the MVP 
development process and help to ensure MVPs are best aligned with 
patient care goals. One commenter expressed the belief that interested 
parties input will help CMS keep pace with progress in personalized 
medicine and optimize health care for patients. One commenter 
recommended that CMS communicate the public feedback period widely 
through available channels to further improve transparency. One 
commenter recommended a standard annual timeline for release of MVPs to 
allow third party intermediaries sufficient time to build and test any 
changes to MVPs reporting requirements. A few commenters requested 
clarification of how CMS defines when an MVP is ready for feedback.
    Response: We thank commenters for their suggestions to improve upon 
our proposed modifications to the process for developing new MVPs. We 
plan to post a draft version of each candidate MVP on the Quality 
Payment Program website (https://qpp.cms.gov/) and will communicate the 
opportunity to provide public feedback on the candidate MVP through QPP 
standard channels, including QPP listserv messaging. In regards to the 
request to have a standard timeline each year, we adopted the 
solicitation of feedback on a ``rolling basis'' to obtain feedback in a 
timely manner, so that we can receive feedback when an MVP is ready, 
rather than waiting for a specified public feedback period that begins 
and ends at the same time each year (85 FR 85855). We will determine if 
an MVP is ``ready'' for feedback using the criteria for MVP 
development, which are described in detail in the CY 2022 PFS final 
rule (86 FR 65405 through 65410).
    Comment: One commenter expressed the belief that the proposed 
revisions to the MVP development and maintenance processes are not 
adequate or well defined to ensure that the MVPs resonate with 
specialty practices, and recommended that CMS adopt a process for MVP 
development and maintenance that is similar to the electronic Clinical 
Quality Measure (eCQM) annual timeline. The commenter also expressed 
the belief that the development and maintenance processes do not 
sufficiently include input from all relevant specialty societies and 
recommended that CMS create an informal process to ensure transparency 
and coordination among the relevant specialty societies during the 
early development of an MVP.
    Response: We disagree. We believe our MVP development and 
maintenance processes in addition to our defined criteria for MVP 
development (86 FR 65405 through 65410) are adequate and will lead to 
the development and implementation of MVPs that will lead to better 
patient care. The MVP development and maintenance processes, as 
described at https://qpp.cms.gov/mips/mips-value-pathways/submit-candidate is structured in a manner to encompass updates that are made 
to individual measures through annual update measure processes. We 
believe the MVP development and maintenance processes should be 
structured in a manner that looks at the MVP holistically to ensure 
meaningful clinical connections can be made between the measures and 
improvement activities within the MVP. Since the MVP development and 
maintenance process already considers the updates made through the 
elaborate measure maintenance processes, we do not believe it is 
necessary to also have such an extensive process to develop and 
maintain MVPs. An elongated process, such as the eCQM annual update 
would require CMS to delay the implementation of MVPs further, which 
would by extension delay their availability for reporting by MVP 
participants. We believe the proposed updates to the MVP development 
and maintenance processes will allow relevant specialty societies 
amongst other interested parties ample opportunity to provide input. 
Providing feedback on draft candidate MVPs ahead of notice and comment 
rulemaking or updates to implemented MVPs is an opportunity that will 
be widely available to the public. Overall, we believe our processes 
are sufficient and allow for an extensive number of opportunities for 
interested parties to provide feedback to CMS before MVPs are 
implemented.
    Comment: A few commenters expressed that CMS should consider a 60-
day feedback period in order to maximize interested parties input.
    Response: While we understand the value of an extended public 
feedback period, there are unfortunately timeline constraints that 
prevent us from extending the feedback period beyond 30 days. Various 
factors were taken into consideration when determining the length of 
the feedback period including that an extended period would reduce the 
time available for the development of MVPs, possibly delay MVP 
implementation, and would not consider our current rulemaking 
timeframe. Before we adopt an MVP, we may discuss the candidate MVP 
with the interested parties that originally submitted the MVP to us, 
prepare documents defining the MVP for publication, publish the 
candidate MVPs and seek feedback on it, process and review the feedback 
received, determine what feedback would be applied to the candidate 
MVP, revise the MVP if necessary, and follow our rulemaking processes 
shortly thereafter. If the public feedback period ended in the midst of 
our rulemaking processes, we would have to wait until the following 
year to propose the candidate MVPs through notice and comment 
rulemaking. Moreover, it is not possible to start the public feedback 
period earlier, as that would cut into the time needed to develop the 
candidate MVP. We therefore believe that a 30-day period best balances 
the concerns described above with providing an opportunity for the 
public to provide feedback on MVP candidates ahead of their potential 
proposed adoption. If more time is needed, we note that there also 
would be an opportunity to submit comments during the notice and 
comment rulemaking process if the candidate MVP is proposed for 
adoption.
    Comment: A few commenters expressed concern that CMS stated that it 
would not notify the parties who originally submitted the candidate MVP 
in advance of rulemaking if changes are made to the MVP Commenters 
stated that, in most cases, the parties who initially submitted the MVP 
would include the specialties that are most connected to the procedure, 
condition, or patient population captured by the MVP. Commenters 
expressed the belief that it is critical that CMS recognizes the 
clinical content experts who developed the MVP by providing them with 
the opportunity to review whether the revised candidate MVP makes 
clinical sense before it is proposed through rulemaking. A few 
commenters recommended that CMS establish a process for robust outreach 
to impacted specialty societies during MVP development to ensure a 
meaningful and productive dialogue.
    Response: We note that if CMS opts to propose a candidate MVP for 
adoption, any individuals or entities

[[Page 70037]]

that originally submitted the candidate MVP or were involved in its 
development would have the opportunity to provide feedback on any 
proposed revisions during the notice and comment rulemaking process. We 
do not believe we need to further expand our outreach, as we intend on 
leveraging our public feedback periods as an opportunity for impacted 
specialty societies to provide input, and would also provide the 
opportunity to provide public comment on the updates to candidate MVPs 
or implemented MVPs through notice and comment rulemaking.
    After consideration of the public comments, we are finalizing our 
proposed revisions to the process to develop new MVPs as proposed.
(2) MVP Maintenance Process
    In the CY 2022 PFS final rule (86 FR 65410), we finalized an annual 
maintenance process for MVPs that were previously adopted through 
notice and comment rulemaking. We established a process for soliciting 
recommendations from interested parties for potential updates to 
adopted MVPs. As part of this process, beginning in January of the year 
prior to the performance period, interested parties may submit 
recommendations to revise an MVP that was previously finalized through 
rulemaking. Recommendations from interested parties would be accepted 
on a rolling basis throughout the year. We stated that we would be 
unable to communicate with interested parties as to whether their 
recommendations were accepted ahead of rulemaking, and that we would 
ultimately determine whether updates to an established MVP should be 
made (86 FR 65410). We stated that we would consult with the interested 
parties who originally nominated an MVP about any publicly recommended 
changes to the MVP (86 FR 65410).
    In the CY 2023 PFS proposed rule (87 FR 46266), we stated that 
similar to the proposed revisions to the process for developing new 
MVPs, (87 FR 46265 and 46266), and for the same reasons, we believe 
that we should also consider feedback during the MVP maintenance 
process, from a wide range of interested parties and the general 
public, prior to proposing changes to an existing MVP through the 
notice and comment rulemaking process. Therefore, in the CY 2023 PFS 
proposed rule (87 FR 46266), we proposed to modify the MVP maintenance 
process such that interested parties and the general public may submit 
their recommendations for potential revisions to established MVPs on a 
rolling basis throughout the year. We would then review the submitted 
recommendations and determine whether any are potentially feasible and 
appropriate. We stated that if we identify any submitted 
recommendations that are potentially feasible and appropriate, we would 
host a public facing webinar, open to interested parties and the 
general public through which they may offer their feedback on the 
potential revisions we have identified. We would publish details 
related to the timing and registration process for the webinar through 
our Quality Payment Program Listserv. As proposed, the changes to the 
MVP maintenance process would enable us to receive a wide range of 
perspectives on potential revisions to MVPs earlier in the maintenance 
process, which we believe is important in developing MVPs that are 
meaningful to clinicians, patients, and the general public. We stated 
that if we decide to make any revisions to an established MVP based on 
the recommendations submitted, we would adopt such revisions through 
notice and comment rulemaking. We requested comments on this proposal.
    The following is a summary of the public comments received on the 
proposed revisions to MVP maintenance process and our responses:
    Comment: Several commenters supported the proposal to modify the 
MVP maintenance process to allow the public to submit recommendations 
for potential revisions to established MVPs.
    Response: We thank commenters for their support.
    Comment: A few commenters recommended that CMS share all feedback 
with the MVP developer and one commenter suggested publishing all 
feedback in the proposed rule.
    Response: Through the MVP maintenance process, CMS intends to 
review all feedback received through the solicitation process, which 
occurs on a rolling basis throughout the year. Through our review of 
the feedback received, we will identify any feasible suggestions, which 
we intend to present and discuss during the MVP maintenance public 
webinar. We will look into the operational feasibility of publishing 
feedback we have identified as feasible suggestions ahead of the public 
webinar. We believe that a public webinar will allow us to gather more 
timely feedback on potentially feasible and appropriate 
recommendations, and we do not intend on publishing all feedback 
received in the proposed rule because we believe publishing all 
feedback received, regardless of the feedback's relevance to the MVP 
and whether the suggestion is feasible or not will likely cause 
confusion for our readers.
    After consideration of the public comments, we are finalizing our 
proposal to modify the MVP maintenance process as proposed.
(3) Revisions to Previously Finalized MVPs
    In the CY 2022 PFS final rule (86 FR 65998 through 66031), we 
finalized seven MVPs that will be available for reporting beginning 
with the CY 2023 performance period/2025 MIPS payment year. The seven 
MVPs are as follows: Advancing Rheumatology Patient Care; Coordinating 
Stroke Care to Promote Prevention and Cultivate Positive Outcomes; 
Advancing Care for Heart Disease; Optimizing Chronic Disease 
Management; Adopting Best Practices and Promoting Patient Safety within 
Emergency Medicine; Improving Care for Lower Extremity Joint Repair; 
and Patient Safety and Support of Positive Experiences with Anesthesia. 
In the CY 2023 PFS proposed rule (87 FR 46829 through 46842), we 
proposed modifications to these seven MVPs because of the proposed 
removals of certain improvement activities from the improvement 
activities inventory and the addition of other relevant existing 
quality measures for MVP participants to select from. We refer readers 
to Appendix 3: MVP Inventory of this final rule for the public comment 
received, responses, and finalized modifications to the established 
MVPs.
(4) New MVPs
    Through our development processes for new MVPs (see 85 FR 84849 
through 84856), we aim to gradually develop new MVPs that are relevant 
and meaningful for all clinicians who participate in MIPs. In the CY 
2023 PFS proposed rule, we proposed five new MVPs (87 FR 46813 through 
46829):
     Advancing Cancer Care;
     Optimal Care for Kidney Health;
     Optimal Care for Neurological Conditions;
     Supportive Care for Cognitive-Based Neurological 
Conditions; and
     Promoting Wellness.
    We continue to develop MVPs based on needs and priorities, as 
described in the MVP Needs and Priorities document at https://qpp-cm-prod-content.s3.amazonaws.com/uploads/1803/MIPS%20Value%20Pathways%20(MVPs)%20Development%20Resources.zip. We 
refer readers to Appendix 3: MVP Inventory, within this final rule 
where we discuss each proposed new MVP, the public comments received 
and our responses, and our determinations to finalize these new MVPs.

[[Page 70038]]

b. MVP Reporting Requirements
(1) Promoting Interoperability
    In the CY 2021 PFS final rule (85 FR 84849 through 84854), we 
finalized that MVPs must include the full set of Promoting 
Interoperability performance category measures. In the CY 2022 PFS 
final rule (86 FR 65413), we stated that we do not intend to establish 
different reporting requirements for Promoting Interoperability 
measures in MVPs from what is established under traditional MIPS. As 
described at Sec.  414.1365(c)(4)(i), an MVP Participant is required to 
meet the Promoting Interoperability performance category reporting 
requirements described at Sec.  414.1375(b).
    In the CY 2023 PFS proposed rule (87 FR 46266 through 46267), we 
referred readers to the changes that we were proposing with regard to 
the Promoting Interoperability performance category. We stated that we 
intend for any changes that are finalized for the Promoting 
Interoperability performance category under traditional MIPS to apply 
to MVPs. We refer readers to section IV.A.6.c.(4) of this final rule 
for a discussion of the finalized policies for the Promoting 
Interoperability performance category that would also apply to MVPs.
c. Reporting MVPs and Team-Based Care
    In the CY 2023 PFS proposed rule (87 FR 46267), we clarified how 
multispecialty groups who practice in a team-based care manner can 
report MVPs, but did not propose any policies related to this subject 
matter. If a multispecialty group identifies an MVP that is relevant to 
its practice, the group may register through the MVP registration 
process to report that single MVP (86 FR 65415 through 65418). We 
encourage a multispecialty group to choose an MVP that includes 
measures that are attributable to all clinician types that participate 
in its group, if it intends to report as a multispecialty group within 
the first few years of its MVP reporting. We believe that reporting 
data that is directly attributed to all clinicians in the group will 
better drive quality improvement and lead to improved patient outcomes.
    We encourage multispecialty groups to consider adopting subgroup 
reporting before it becomes mandatory in the CY 2026 performance 
period. Early adoption will allow clinicians within the subgroups to 
gain familiarity with reporting at the subgroup level before it becomes 
mandatory. We refer readers to the CY 2023 PFS proposed rule (87 FR 
46267) for the discussion of multispecialty groups who practice team-
based care reporting MVPs.
d. Scoring MVP Performance
    In the CY 2022 PFS final rule, we finalized policies for MVP 
scoring beginning with the CY 2023 performance period/2025 MIPS payment 
year. We refer readers to 86 FR 65419 through 65427 for the details of 
those final policies. We previously finalized at Sec.  414.1365(d)(2) 
that, unless otherwise indicated in Sec.  414.1365(d)(2), the 
performance standards described at Sec.  414.1380(a)(1)(i) through (iv) 
apply to the measures and activities included in the MVP (86 FR 65419 
through 65421). We noted that in general, we intend to adopt scoring 
policies from traditional MIPS for MVP participants unless there is a 
compelling reason to adopt a different policy to further the goals of 
the MVP framework (86 FR 65419).
    In the CY 2023 PFS proposed rule, we referred readers to our 
proposed revisions to traditional MIPS scoring policies regarding the 
determination of benchmarks for administrative claims quality measures 
(87 FR 46313 and 46314), assigning measure achievement points for 
topped out quality measures (87 FR 46314 and 46315), improvement 
scoring for cost measures (87 FR 46315 and 46316), and the changes to 
the scoring methodology for the Promoting Interoperability performance 
category for the performance period in CY 2023 (87 FR 46298 through 
46308). We are finalizing these proposals as described in sections 
IV.A.10.d.(1)(b)(i), IV.A.10.d.(1)(b)(ii), IV.A.10.d.(1)(c)(i), and 
IV.A.10.c.(4)(g) of this final rule, respectively. In the CY 2023 PFS 
proposed rule (87 FR 46267), we noted that in the event these proposals 
and any other scoring policies for traditional MIPS are adopted as 
final policy, they would apply to the measures and activities included 
in the MVP, unless otherwise indicated.
    In the CY 2022 PFS final rule, we finalized the subgroup reporting 
option for clinicians choosing to report MVPs or the APP (86 FR 65392 
through 65394). Subgroup reporting is a new option for clinicians, and, 
for clarity, we discussed all proposals regarding subgroups, including 
scoring, in one section of the CY 2023 PFS proposed rule (87 FR 46267 
through 46275). We referred readers to 87 FR 46271 through 46272 of the 
CY 2023 PFS proposed rule for our proposals related to subgroup scoring 
for administrative claims, cost measures, and subgroups that register 
but do not report. As described in section IV.A.8.e.(4)(b) and 
IV.A.8.e.(4)(c) of this final rule, we are finalizing our proposals 
related to subgroup scoring.
e. Subgroup Reporting
(1) Background
    In the CY 2022 PFS final rule, we finalized an option for 
clinicians choosing to report MVPs to report through subgroups 
beginning with the CY 2023 performance period/2025 MIPS payment year 
(86 FR 65392 through 65394). Additionally, we finalized: (1) A timeline 
for implementing subgroup reporting (86 FR 65396 and 65397); (2) 
registration requirements, reporting requirements, and scoring policies 
for clinicians desiring to report MVPs through subgroups (Sec.  
414.1365; 86 FR 65415 through 65426); (3) definitions of subgroup, 
single specialty group, multispecialty group, and special status (Sec.  
414.1305; 86 FR 65398 through 65401); (4) subgroup eligibility 
requirements (Sec.  414.1318; 86 FR 65401); (5) application of low-
volume threshold and special status designations for subgroups (Sec.  
414.1318(a)(2); 86 FR 65401 and 65402); and (6) subgroup inclusions and 
exclusions (Sec.  414.1318; 86 FR 65402 and 65403).
    In the CY 2023 PFS proposed rule, we proposed to: (1) modify the 
definitions of single specialty group and multispecialty group (87 FR 
46268); (2) add subgroup description requirements to the registration 
process (87 FR 46269); (3) limit the number of subgroups a clinician 
may participate in to one subgroup per Taxpayer Identification Number 
(TIN) (87 FR 46269 and 46270); (4) establish the subgroup determination 
period (87 FR 46270 and 46271); (5) apply new policies for scoring 
administrative claims measures and cost measures for subgroups (87 FR 
46271 and 46272); and (6) not assign a subgroup final score to 
registered subgroups that do not submit data (87 FR 46272).
(2) Definitions of a Single Specialty Group and a Multispecialty Group
    We previously finalized at Sec.  414.1305 the definitions of a 
single specialty group as a group that consists of one specialty type 
and a multispecialty group as a group that consists of two or more 
specialty types. We also finalized at Sec.  414.1305 the definition of 
an MVP participant for the purpose of MVP reporting. The definition of 
MVP Participant established in the CY 2022 PFS final rule (86 FR 65392 
through 65394) allows multispecialty groups to participate as a group 
for MVP reporting only for the CY 2023 performance period/2025 MIPS 
payment year through the CY 2025 performance period/2027 MIPS payment 
year. Beginning with the CY 2026 performance period/2028 MIPS

[[Page 70039]]

payment year, only single specialty groups may participate as a group 
for MVP reporting, and multispecialty groups that want to report an MVP 
will be required to form subgroups for that purpose. We believe that 
the definitions of single specialty group and multispecialty group 
allow groups to distinguish their specialty type or types and assess 
the requirement to participate as a subgroup in MVP reporting beginning 
with the CY 2026 performance period/2028 MIPS payment year.
    In the CY 2022 PFS proposed rule (86 FR 39360), we proposed to 
identify a group's specialty type or types using data from the Medicare 
Provider Enrollment, Chain, and Ownership System (PECOS). We received 
comments expressing concerns that the use of PECOS specialty 
designations would result in the exclusion of certain clinician types, 
such as nurse practitioners (NPs) and physician assistants (PAs) (86 FR 
65398). We adopted definitions of a single specialty group and a 
multispecialty group in the CY 2022 PFS final rule but did not finalize 
PECOS as the data source or specify another data source that we would 
use to determine a group's specialty type. We noted that we needed 
additional time to better understand our options to utilize different 
data sources when making this determination (86 FR 65399).
    Having reviewed the available data sources, we noted in the CY 2023 
PFS proposed rule our belief that Medicare Part B claims data is the 
appropriate data source for determining a group's specialty type or 
types for purposes of MVP reporting (87 FR 46268). Currently, we use 
PECOS and Medicare Part B claims data to identify clinician specialty 
for certain purposes. For purposes of public reporting, we rely on 
PECOS as the primary data source, and for purposes of MIPS eligibility 
determination, we use both PECOS and claims data. Additionally, we use 
the information on claims to identify clinician specialty when 
attributing some of the measures in the cost and quality performance 
categories.
    A clinician's primary specialty designation in PECOS is identified 
by the clinician in the Medicare enrollment application for physicians 
and non-physician practitioners. Additionally, there may be instances 
when a clinician would be allowed to select more than one primary 
specialty in PECOS.\457\ For example, a primary specialty designation 
of cardiothoracic surgery is not available in PECOS, and therefore, a 
cardiothoracic surgeon would have two primary specialty designations, 
one for cardiac surgery and another for thoracic surgery. In such 
instances, it would be difficult for CMS to identify a clinician's 
primary specialty using their PECOS designation. The specialty codes 
used on Medicare Part B claims \458\ are not reported by clinicians but 
are assigned by the Medicare Administrative Contractors (MACs) and 
derived from the clinician-reported specialty information in PECOS. In 
instances where more than one specialty code appears on a claim, we 
determine primary specialty based on the specialty code used for the 
plurality of the services billed by the clinician. We analyzed the 
identification of specialty for clinicians using claims data and PECOS 
data and found a variance rate of less than one percent between the two 
data sources. In the CY 2023 PFS proposed rule (87 FR 46268), we stated 
that given the strong alignment between the data sources and our 
historical use of claims data to identify a clinician's specialty, we 
believe that Medicare Part B claims data would be the best data source 
to use to determine a group's specialty type or types for purposes of 
participation in MVPs.
---------------------------------------------------------------------------

    \457\ https://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/downloads/cms855i.pdf.
    \458\ https://www.cms.gov/regulations-and-guidance/guidance/
manuals/downloads/clm104c26pdf.pdf.
---------------------------------------------------------------------------

    We noted that in response to our 2022 PFS proposal to use PECOS 
data in determining specialty, some commenters recommended that, 
instead of PECOS, CMS should utilize specialty taxonomy codes which 
they stated were more detailed than PECOS specialty codes (86 FR 
65398). While these commenters were not specific in their request, we 
understood them to be referring to the provider taxonomy codes used on 
the application to receive a National Provider Identifier (NPI). We 
agreed with the commenters that in some instances, the health care 
provider taxonomy code set may include more specificity than the 
information found in the specialty codes used on Medicare Part B 
claims. However, currently we do not use this data for other QPP 
purposes, and we are uncertain of the extent to which it is maintained 
by clinicians if their circumstances change. While we considered the 
use of this data as an alternative, we do not believe it is necessary 
to introduce a new data source at this point, given that subgroup 
reporting is voluntary at this time.
    For these reasons, we proposed in the CY 2023 PFS proposed rule to 
modify the definition of a single specialty group at Sec.  414.1305 to 
state that single specialty group means a group that consists of one 
specialty type as determined by CMS using Medicare Part B claims (87 FR 
46268). We also proposed to modify the definition of a multispecialty 
group at Sec.  414.1305 to state that multispecialty group means a 
group that consists of two or more specialty types as determined by CMS 
using Medicare Part B claims (Id.). We sought public comment on the 
proposals and requested comment on additional data sources CMS could 
use to determine a group's specialty type or types.
    The following is a summary of the public comments received on the 
proposed revisions to the definitions of a single specialty group and a 
multispecialty group and our responses:
    Comment: A few commenters supported the use of Medicare Part B 
claims as the data source to determine the specialty composition of a 
group. One commenter recommended CMS to provide additional guidance for 
a group practice to identify their specialty composition.
    Response: We acknowledge the commenter's recommendation for CMS to 
provide guidance on whether a group is a single specialty or a 
multispecialty group. There is no existing process in place for CMS to 
provide feedback on the specialty composition of a group. We will take 
this recommendation into consideration and may explore available 
options to provide guidance on the specialty composition of a group.
    Comment: Many commenters did not support the proposed use of 
Medicare Part B claims to determine the specialty composition of a 
group. A few commenters shared their belief that the specialty 
information indicated on Part B claims is not an accurate 
representation of the actual care provided by the various clinicians in 
a multispecialty group. Some commenters expressed concern that the 
specialty information from Part B claims may not be correct and stated 
that in the 2020 QPP Experience Report, over 15 percent of MIPS 
eligible clinicians had more than one specialty identified on their 
claims.
    Response: While we acknowledge that there may not always be a 
perfect match between the information on specialty included on Medicare 
Part B claims and the clinical focus of an individual clinician, we are 
also not aware of an alternative data source that would provide a 
closer match. We understand the commenters' concerns on identifying a 
single specialty for some clinicians using Medicare Part B claims. As 
is the case where we currently use Medicare Part B claims to determine

[[Page 70040]]

specialty (see 87 FR 46268), we will determine primary specialty based 
on the specialty code used for the plurality of the services billed by 
the clinician in instances where a clinician has more than one 
specialty indicated on their Medicare Part B claims.
    Comment: A few commenters recommended specialty attestation as part 
of the subgroup registration process in lieu of the Medicare Part B 
claims data to identify the specialty composition of a group.
    Response: We acknowledge the commenter's recommendation to allow 
specialty attestation as part of the subgroup registration process to 
accurately attribute the specialty based on the scope of care provided 
by a clinician. The definition of an MVP participant finalized in the 
CY 2022 PFS final rule (86 FR 65392 through 65394) allows 
multispecialty groups to participate as a group for MVP reporting only 
for the CY 2023 performance period/2025 MIPS payment year through the 
CY 2025 performance period/2027 MIPS payment year. Beginning with the 
CY 2026 performance period/2028 MIPS payment year, only single 
specialty groups may participate as a group for MVP reporting, and 
multispecialty groups must form subgroups for reporting an MVP. As a 
result, we believe that groups need to know of their specialty 
composition and their ability to participate as a group or a subgroup 
for reporting an MVP ahead of the subgroup registration process to make 
changes in their administrative workflows accordingly. Additionally, we 
anticipate that allowing specialty attestation as part of the subgroup 
registration process would require CMS to implement additional criteria 
for validating the specialty composition of a group and may cause 
confusion and add operational complexity.
    Comment: Several commenters expressed concern that beginning in the 
CY 2026 performance period/2028 MIPS payment year, only clinicians in 
single specialty groups may participate as a group for MVP reporting, 
and multispecialty groups must form subgroups for reporting an MVP. 
These commenters expressed concern about the administrative burden 
associated with dividing large groups into smaller groups. Some of the 
commenters expressed particular concern that the requirements for 
multispecialty practices to report on MVPs via subgroups would require 
groups that might have a single clinical focus to divide due to 
different specialties indicated on their Medicare claims (either 
closely related physician specialties (for example, internal medicine 
and family practice) or clinicians whose clinical focus is not 
represented in Medicare specialty data (for example, NPs and PAs)). A 
few commenters requested further guidance for implementing subgroups in 
anticipation of their future requirement for MVP reporting.
    Response: As we established in the CY 2022 PFS final rule (86 FR 
39360), beginning in the CY 2026 performance period/2028 MIPS payment 
year, only clinicians in single specialty groups may participate as a 
group for MVP reporting and multispecialty groups must form subgroups 
for reporting an MVP. We did not propose any change to that requirement 
in this proposed rule. We acknowledge the commenters' concerns related 
to the potential increase in administrative burden that may be caused 
by this requirement in the future. We note that we have made no 
proposal to make MVP reporting mandatory during the CY 2026 performance 
period/2028 MIPS payment year. Under the finalized policy, subgroup 
reporting is only mandatory for multispecialty groups choosing to 
participate in MVP reporting. However, we note that it is our intent to 
sunset traditional MIPS in the future and make MVP reporting mandatory 
for all MIPS eligible clinicians. We recognize the commenters' concerns 
related to the potential classification of a group with a single 
clinical focus as a multispecialty group that would be required to form 
subgroups. To assist groups in understanding the operational 
implications of these requirements, we anticipate providing additional 
guidance as appropriate in the future. We will continue to consider 
ways in which we can achieve the goals of more focused reporting via 
subgroups and ensure that these subgroups best represent clinical 
coherence. Any changes would be proposed via future rulemaking.
    After consideration of the public comments, we are finalizing the 
revised definitions of a single specialty group and a multispecialty 
group at Sec.  414.1305 as proposed.
(3) Subgroup Registration Requirements
(a) Background
    We established at Sec.  414.1365(b) a registration process for 
clinicians who choose to report MVPs through a subgroup. We refer 
readers to the CY 2022 PFS final rule (86 FR 65415 through 65418) for 
additional details on subgroup registration timeline and requirements.
(b) Subgroup Description Requirement
    In the CY 2022 PFS final rule (86 FR 65399), we defined a subgroup 
as a subset of a group which contains at least one MIPS eligible 
clinician and is identified by a combination of the group TIN, the 
subgroup identifier, and each eligible clinician's NPI. We did not 
propose any criteria for limiting the composition of a subgroup but did 
solicit comment on criteria that we could consider in the future (86 FR 
39362), such as establishing a threshold requiring 75 percent of the 
eligible clinicians in a group or subgroup to be of the same or a 
related specialty to form a subgroup.
    We believe the comments we received on the request for future 
consideration of subgroup criteria in the CY 2022 PFS proposed rule 
reflect the reality that clinicians practice in many ways within a 
group TIN (86 FR 65399 and 65400). We believe that we may need to 
establish limits on subgroups in order to further our goals of 
measuring as many clinicians as possible using the measures that are 
most relevant to their practice. We are concerned that if we do not 
establish restrictions or requirements in the future we may not move 
meaningfully towards that goal. However, given that subgroups will be 
newly available for the CY 2023 performance period/2025 MIPS payment 
year and will be voluntary, we do not believe we should yet establish 
those policies.
    To inform our future subgroup policies, we desire to better 
understand how group TINs form subgroups and how group TINs choose to 
organize their subgroups. For this reason, in the CY 2023 PFS proposed 
rule (87 FR 46269), we proposed that as part of the subgroup 
registration process, in addition to the previously established 
registration requirements, group TINs must provide a description of 
each subgroup that is registered. We stated we would identify some key 
scenarios for subgroups to select from that we expect might reflect a 
typical subgroup, but also wish to offer an opportunity for group TINs 
to describe how they constructed their subgroups by providing a 
narrative in a text-only field, if the options we provide do not 
correctly describe the subgroup. We explained in the proposed rule that 
we would not evaluate or approve the narrative description, if 
submitted. Rather, we intend to collect and review the information to 
better inform our understanding of subgroups and the different ways 
groups would choose to form subgroups. We noted that we believe that 
receiving the information

[[Page 70041]]

about the subgroup directly from the group TIN itself would fill a gap 
in our understanding of the nature of subgroup formation during the 
transition to MVPs that cannot be filled merely by reviewing PECOS or 
claims-based group specialty information. We stated that we understand 
requiring such reporting would create some additional burden, but we 
believe such burden is modest and worth the effort to inform future 
development of subgroup policies. Furthermore, we stated that we are 
attempting to mitigate this burden by permitting subgroups to select 
from certain common scenarios (for example, clinicians with the same 
specialty designation, practicing at the same geographic location, or 
providing care to the same patient population, etc.) for groups to form 
subgroups, when appropriate, instead of drafting a narrative 
description.
    We noted that we are not intending for these narratives to be 
lengthy but expect the narratives to be short descriptions of the 
nature of practice and appropriately reflect the composition of a 
subgroup. We offered some illustrative examples for the narrative 
description:
     Example 1: This subgroup represents our cardiovascular 
service line, which includes cardiologists, cardiothoracic surgeons, 
and other associated professionals.
     Example 2: This subgroup represents our west side 
practice, which uses one electronic health record (EHR) platform and 
collaborates on patient care across orthopedic surgeons, physical 
therapists, NPs, and other associated clinicians.
    We also noted that we believe that the availability of subgroups 
will facilitate our efforts to increase health equity. In part, we 
believe that by creating a smaller group of clinicians to analyze, we 
can better understand care at the patient and community level. This is 
important for measuring and improving health equity because subgroup 
data could be utilized to identify gaps in clinical outcomes, patient 
characteristics, and specialist care availability on a more targeted 
level than shown by examining TIN-level data. We stated that we also 
believe that group practices may share this same interest in improving 
health equity. For example, a group may have clinicians practicing in 
different locations and may choose to organize their subgroups to focus 
on certain underserved populations based on geography or income. We 
noted that we hope to better inform our understanding of clinicians 
supporting this goal through narrative descriptions of subgroup 
organization.
    The following is a summary of the public comments received on the 
proposed addition of the subgroup description requirement to the 
previously established subgroup registration process and our responses:
    Comment: Several commenters supported the proposed description 
requirement as part of the subgroup registration process. The 
commenters generally appreciated the flexibility for clinicians in a 
group to choose an appropriate subgroup relevant to their care needs.
    Response: We thank the commenters for their support. We agree with 
the commenters that not establishing restrictions on the composition of 
a subgroup at this time offers flexibility for groups to split into 
subgroups based on their care needs. We believe that it will also 
reduce the administrative complexity and burden associated with 
subgroup reporting that could potentially discourage clinician 
participation in MVP reporting.
    Comment: A few commenters did not support the proposed subgroup 
description requirement at subgroup registration. The commenters 
expressed concern about the associated burden for a subgroup to submit 
the narrative description annually, and recommended CMS to consider 
templates or checkboxes in lieu of the narratives.
    Response: We acknowledge the commenters' concern on the associated 
burden to submit a description of the subgroup. As described in the CY 
2023 PFS proposed rule (87 FR 46269), we intend to identify some key 
scenarios for subgroups to select from that we expect might reflect a 
typical subgroup in lieu of the narrative requirement. We intend to use 
a workable design, such as checkboxes, drop down menu, etc., for the 
key scenarios that subgroups could select from. If a subgroup selects 
an option from the available scenarios that accurately reflects the 
composition of their subgroup, the subgroup will not need to submit a 
separate narrative. We recognize the associated burden for subgroups 
relevant to this proposal and note that the text-only field to submit a 
narrative for the subgroup description is optional. We expect that a 
subgroup would need to use the text-only field in instances where none 
of the available key scenarios describe the construct of their 
subgroup. We do not intend to provide a template for the narrative 
requirement as we believe that a template may be too limiting for 
subgroups that choose to submit a narrative and it would add additional 
burden for subgroups that do not need to submit a narrative. We believe 
that the composition of subgroups may change yearly due to the 
clinicians joining or leaving a group, and therefore, subgroups should 
be required to submit a description during the annual subgroup 
registration process. We will continue to monitor the participation 
trends for subgroup registration and reporting and will consider 
appropriate updates to the subgroup description requirements and 
explore options to alleviate the subgroup registration burden for 
future performance periods.
    After consideration of the public comments, we are finalizing the 
subgroup description requirement for subgroup registration as proposed.
(c) Limitation of One Subgroup per TIN-NPI Combination
    In the CY 2022 PFS final rule (86 FR 65414 and 65415), we finalized 
at Sec.  414.1318(c)(2) that subgroups will have their performance 
assessed at the subgroup level across all the MIPS performance 
categories. Additionally, in the CY 2022 PFS proposed rule we did not 
propose any criteria for the composition of subgroups (86 FR 39362). We 
must nonetheless place some restrictions on the allocation of a group 
TIN's clinicians among subgroups to properly score each subgroup. 
Clinicians in small groups are eligible to register as subgroups and 
report using Medicare Part B claims. While we establish a subgroup 
identifier as part of the registration process, this subgroup 
identifier would not be present on any claims data. If we were to allow 
a clinician to register under more than one subgroup in a single group 
TIN, we would be unable to determine to which subgroup a particular 
claim should be connected. Therefore, we proposed at Sec.  
414.1318(a)(3) that an individual eligible clinician, as represented by 
a TIN-National Provider Identifier (NPI) combination, may register for 
no more than one subgroup within a group's TIN. We noted that we did 
not propose any other restrictions or requirements on the composition 
of subgroups at this time. We also proposed to limit a clinician to a 
single subgroup per group TIN to overcome current limitations in 
scoring certain cost and quality measures.
    In the CY 2023 PFS proposed rule (87 FR 46271 and 46272), we 
proposed to evaluate clinicians in subgroups using measures in the cost 
performance category, and the population health measures and outcomes-
based administrative claims measures in the quality performance 
category, based on their affiliated group's performance. As explained 
in the proposed rule, we made the proposal due to current technical 
limitations related to

[[Page 70042]]

attribution and risk adjustment of such measures but are working to 
potentially overcome those limitations in the future. CMS calculates 
administrative claims measures using Medicare claims data. This does 
not require any additional reporting by clinicians. If we were to allow 
a clinician to be a part of more than one subgroup within a single 
group TIN, however, we would be unable to identify which subgroup the 
clinician was part of for the purposes of attributing cost measures, 
population health measures, and outcomes-based administrative claims 
measures. We will continue to explore the options for allowing an 
individual clinician (NPI) to participate in multiple subgroups under a 
group TIN as we are working to potentially overcome challenges with 
attribution of the claims-based measures to the clinicians in a 
subgroup.
    We recognized that the proposal to limit each TIN-NPI combination 
to a single subgroup per group TIN would limit how a group may 
establish its subgroups. We stated that we believe there may be 
clinicians who work in different capacities within a single group TIN 
(for example, a clinician who works in a cardiology clinic on Mondays 
and the primary care clinic Tuesday-Friday) and could be considered to 
work in multiple subgroups within a single group TIN. For this reason, 
we noted that we are interested in hearing perspectives from groups on 
how common this is, and if there are ways that we could match a 
clinician to a subgroup for measures reported through Medicare Part B 
claims or calculated using administrative claims.
    The following is a summary of the public comments received on the 
proposal to limit a clinician, as identified by a TIN-NPI combination, 
to one subgroup within a group's TIN and our responses:
    Comment: A few commenters supported the proposal limiting a 
clinician (NPI) participation to only one subgroup per TIN.
    Response: We thank the commenters for their support.
    Comment: Several commenters opposed the proposal limiting an 
individual clinician (NPI) to participate in only one subgroup per TIN. 
A few commenters shared their belief that clinician participation in 
multiple subgroups under a TIN would allow clinicians to report on all 
the measures relevant to their scope of care.
    Response: We recognize that there may be instances where a 
clinician may be involved in care delivery in different capacities 
within the same TIN, and therefore, could reasonably be placed in more 
than one applicable subgroup under the TIN. However, as described in 
the CY 2023 PFS proposed rule (87 FR 46269 through 46272), due to 
issues that we identified with patient attribution and scoring of 
administrative claims measures at the subgroup level, we are not able 
to appropriately match a clinician to a subgroup for attribution and 
scoring of the administrative claims measures if the clinician is part 
of multiple subgroups under the TIN. We will continue to explore 
options to assess these measures at the subgroup level and propose any 
changes in future rulemaking.
    After consideration of the public comments, we are finalizing the 
proposed policy at Sec.  414.1318(a)(3) that an individual clinician, 
as represented by a TIN-NPI combination may register for no more than 
one subgroup within a group's TIN.
(d) Subgroup Determination Period
    In the CY 2022 PFS final rule, we established the definition of a 
subgroup at Sec.  414.1305 as a subset of a group which contains at 
least one MIPS eligible clinician and is identified by a combination of 
the group TIN, the subgroup identifier, and each eligible clinician's 
NPI (86 FR 65399). We also codified at Sec.  414.1318(a) that, for a 
MIPS payment year, low-volume threshold criteria and special status for 
subgroups are determined at the group level in accordance with 
Sec. Sec.  414.1305 and 414.1310. We also established at Sec.  
414.1365(b) a process for clinicians to register as a subgroup for the 
purpose of reporting the measures and activities in an MVP (86 FR 65415 
through 65418). Previously, we defined a MIPS determination period--the 
period of activity we review to identify clinicians who are eligible to 
participate in MIPS--to mean, in relevant part, a 24-month assessment 
period consisting of: (1) An initial 12-month segment beginning on 
October 1 of the calendar year 2 years prior to the applicable 
performance period and ending on September 30 of the calendar year 
preceding the applicable performance period, and that includes a 30-day 
claims run out; and (2) A second 12-month segment beginning on October 
1 of the calendar year preceding the applicable performance period and 
ending on September 30 of the calendar year in which the applicable 
performance period occurs (Sec.  414.1305; 83 FR 59727 through 59730). 
In order to be eligible to participate in MIPS for the applicable 
performance year, an individual clinician or a group must meet or 
exceed the low-volume threshold criteria specified under Sec.  414.1305 
during the MIPS determination period. An individual eligible clinician 
or group that is identified as not exceeding the low-volume threshold 
during the initial 12-month segment will continue to be excluded under 
Sec.  414.1310(b)(1)(iii) for the applicable year regardless of the 
results of the second 12-month segment analysis. Additionally, an 
individual eligible clinician or group for which the unique billing TIN 
and NPI combination is established during the second 12-month segment 
of the MIPS determination period will be assessed based solely on the 
results of such segment.
    In the CY 2022 PFS final rule, we did not discuss how CMS would 
assess the low-volume threshold for individual clinicians and groups 
for the purpose of subgroup participation. Specifically, we did not 
discuss whether any special considerations were necessary when applying 
the MIPS determination period for clinicians participating as 
subgroups. Currently, we review claims and PECOS data from a MIPS 
determination period to determine MIPS eligibility for an individual 
clinician and a group. The initial 12-month segment of the MIPS 
determination period spans from October 1 of the calendar year 2 years 
prior to the applicable performance period to September 30 of the 
calendar year preceding the applicable performance period and includes 
a 30-day claims run out. Individual clinicians and groups receive their 
initial eligibility information prior to the applicable performance 
period but do not know their final eligibility determination until 
November or December of the applicable performance period.
    Using a 2-year MIPS determination period is incompatible with the 
framework we have established for subgroup participation in MVPs. For 
example, for the CY 2023 performance period/2025 MIPS payment year, 
individual clinicians and groups that choose to participate as 
subgroups would only know their preliminary eligibility at the time of 
subgroup registration. We noted that we believe that by using the 
preliminary eligibility information, clinicians and groups could assess 
their ability to participate as subgroups early in the performance 
period and we do not wish to limit subgroup participation for groups 
that are otherwise eligible based on an eligibility assessment that is 
not made until after registration is completed. Therefore, in the CY 
2023 PFS proposed rule (87 FR 46270 and 46271), we proposed to add at 
Sec.  414.1318(a)(4) that CMS will apply the low-volume

[[Page 70043]]

threshold criteria for a subgroup as described under Sec.  
414.1318(a)(1) using information from the initial 12-month segment of 
the applicable MIPS determination period. Under this proposal, an 
individual eligible clinician or group determined to be MIPS eligible 
based on the low-volume threshold determination under Sec.  414.1305 
during the initial 12-month segment of the MIPS determination period 
would continue to be eligible for an applicable performance period 
regardless of the results of the second segment of the low-volume 
threshold determination. Additionally, we proposed to make conforming 
changes at Sec.  414.1318(a)(1) to state that, except as provided under 
paragraph (a)(2) of this section and subject to (a)(4) of this section, 
for a MIPS payment year, determinations of meeting the low-volume 
threshold criteria and special status for a subgroup is determined at 
the group level in accordance with Sec. Sec.  414.1305 and 414.1310. We 
noted that we were not proposing to make any further changes to the 
application of low-volume threshold and special status as described 
under Sec.  414.1318(a)(1).
    In summary, to form a subgroup under our proposal, we noted that a 
group would need to be eligible to participate in MIPS as a group and 
have at least one MIPS eligible clinician in the subgroup who was also 
a MIPS eligible clinician during the initial 12-month segment of the 
MIPS determination period. Such an individual eligible clinician or 
group would continue to be identified as such for the applicable MIPS 
payment year regardless of the results of the second segment of the 
MIPS determination period. A subgroup may thus include an individual 
clinician who does not exceed the low-volume threshold during the first 
segment of the MIPS determination period only if the subgroup has at 
least one MIPS eligible clinician during the first 12-month segment of 
the MIPS determination period and the affiliated group also meets the 
low-volume threshold during the first 12-month segment of the MIPS 
determination period. We noted that we believe this would also allow 
practices to identify and place clinicians in appropriate subgroups, 
choose the measures and activities relevant to subgroups, make 
administrative changes to their workflows and EHR systems, and 
comprehensively capture clinician performance through subgroups. Using 
the first segment of the MIPS determination period would also be 
consistent with the use of the first segment of the MIPS determination 
period for virtual groups (see Sec.  414.1315(c)(1)(ii); 83 FR 59743 
and 59744).
    We sought public comment on these proposals.
    The following is a summary of the public comments received for our 
proposal to apply the low-volume threshold for clinician participation 
in subgroups using the eligibility from the first 12-month segment of 
the 24-month MIPS determination period and our responses:
    Comment: A few commenters supported the proposal to apply the low-
volume threshold for clinician participation in subgroups using the 
initial 12-month segment of the 24-month MIPS determination period.
    Response: We thank the commenters for their support.
    After consideration of the public comments, we are finalizing our 
proposal to add at Sec.  414.1318(a)(4) that CMS will apply the low-
volume threshold criteria for a subgroup as described under Sec.  
414.1318(a)(1) using information from the initial 12-month segment of 
the applicable MIPS determination period. We are also finalizing 
conforming changes at Sec.  414.1318(a)(1) as proposed.
(4) Subgroup Reporting and Scoring
(a) Subgroups Reporting the APM Performance Pathway (APP)
    We refer readers to section IV.A.5.b of this final rule for our 
policies related to subgroups reporting the APP.
(b) Subgroup Scores for Administrative Claims Measures and Cost 
Measures
    In the CY 2022 PFS final rule, we established at Sec.  
414.1318(c)(2) that subgroups will have their performance assessed at 
the subgroup level across all the MIPS performance categories (86 FR 
65414 and 65415). We also established in the quality performance 
category that subgroups are scored on each selected population health 
measure that does not have a benchmark or meet the case minimum 
requirement based on their affiliated group score, if available (86 FR 
65421 and 65422). In establishing this policy, we noted our concern 
about the ability of subgroups to meet the case minimum for an 
administrative claims measure and our interest in including population 
health measures in the subgroup's score for the MVP.
    In establishing our policies for scoring the cost performance 
category in MVPs, we noted in the CY 2022 PFS final rule that we had 
received a comment that expressed concern that multi-specialty groups 
may take advantage of the option to report at the subgroup level to 
avoid being assessed on cost measures (86 FR 65422). We stated that 
while we intend to monitor subgroup implementation and assess the 
potential for gaming, we acknowledge the risk of a multi-specialty 
group forming subgroups in order to avoid being measured in the cost 
performance category.
    As previously established at Sec.  414.1325(a)(2)(i), measures in 
the cost performance category, as well as population health measures 
(which are part of the foundational layer of MVPs) and outcomes-based 
administrative claims measures in the quality performance category, are 
not reported directly by clinicians. Instead, CMS calculates these 
measures based on Medicare administrative claims data. Each measure 
includes an attribution and risk adjustment methodology within the 
specifications, which are available for review at https://qpp.cms.gov/. 
These measures are created and tested for validity and reliability 
using Medicare administrative claims data, which includes the 
identification of the TIN and the clinician's NPI. However, because 
subgroups are established exclusively for the purpose of participation 
in the Quality Payment Program, we are unable to identify a subgroup 
using existing or future claims data, and therefore, it may not be 
possible to test these measures for validity and reliability for 
subgroups using claims data. While we believe in general that subgroups 
can be measured in the same manner as we measure groups, there are 
complications related to the establishment of subgroups. Subgroups 
differ from groups in a couple of key ways: First, the creation of a 
subgroup does not change the nature of the group, so a patient could be 
attributed to both a group and a subgroup. In addition, a group TIN is 
not required to allocate all clinicians into subgroups. This affects 
measures in different ways depending on the attribution methodology of 
a measure. For example, in the total per capita cost measure, months 
are attributed to a particular group TIN or TIN-NPI based on specific 
primary care services. In this measure, costs are assigned to a single 
group TIN for the purpose of measuring the group TIN and a single TIN-
NPI for the purpose of measuring the TIN-NPI. We stated in the CY 2023 
PFS proposed rule (87 FR 46271) that we believe we could assign a 
patient to a single subgroup, as we have also proposed to limit NPIs to 
a single subgroup per TIN. However, we stated that since we do not have 
an existing data source for subgroup composition, we are unable to

[[Page 70044]]

examine the data to determine if performance on the measure is reliable 
and valid at the subgroup level.
    For these reasons, we proposed in the CY 2023 PFS proposed rule (87 
FR 46271 and 46272) to assess subgroups on measures in the cost 
performance category, and population health measures and outcomes-based 
administrative claims measures in the quality performance category, 
based on their affiliated group. We proposed to modify Sec.  
414.1365(d)(3)(i)(A)(1) to read that a subgroup is scored on each 
selected population health measure based on their affiliated group 
score, if available, and that if the subgroup's affiliated group score 
is not available, each such measure is excluded from the subgroup's 
total measure achievement points and total available measure 
achievement points. We also proposed to add Sec.  
414.1365(d)(3)(i)(B)(1) so that a subgroup is scored on each selected 
outcomes-based administrative claims measure based on its affiliated 
group score, if available, and that if the subgroup's affiliated group 
score is not available, each such measure will receive zero measure 
achievement points. In addition, we proposed to add Sec.  
414.1365(d)(3)(ii)(A) to state that a subgroup is scored on each cost 
measure included in the MVP that they select and report based on its 
affiliated group score for each such measure, if available. If the 
subgroup's affiliated group score is not available for a measure, the 
measure is excluded from the subgroup's total measure achievement 
points and total available measure achievement points, as described 
under Sec.  414.1380(b)(2)(i) through (v).
    We noted that we are concerned that measuring subgroups based on 
their affiliated group score for these measures may detract from our 
efforts to generate more clinically relevant and granular information 
about clinician performance (87 FR 46271). We stated that for this 
reason, we intend to pursue potential technical solutions to these 
issues in the future, to enable us to measure clinicians in subgroups 
on these measures at the subgroup level. We further stated that even if 
we address these technical issues, we still would be concerned that 
clinicians may use the opportunity to form subgroups to avoid being 
measured on cost as discussed in the public comment we received on our 
CY 2022 PFS proposal (86 FR 65422). We stated that if we are able to 
address the technical limitations in the future and evaluate 
performance at the subgroup level, we would anticipate developing 
policies similar to our existing policy for population health measures 
to use the affiliated group score if we are unable to calculate the 
measures for the subgroup. This would allow us to focus our measurement 
at the subgroup level but limit the opportunity of groups to use the 
formation of subgroups to avoid being measured in the cost performance 
category. Since we were uncertain if we would be able to address these 
technical issues, we did not propose a policy in the CY 2023 PFS 
proposed rule.
    We also noted that we believe the registration information we 
receive from subgroups for CY 2023 performance period/2025 MIPS payment 
year will help us to learn more about the nature of subgroups and 
better test our measures (87 FR 46271).
    We sought public comment on these proposals.
    The following is a summary of the public comments received on our 
proposals to score subgroups on certain measures based on their 
affiliated group and our responses:
    Comment: Several commenters supported our proposal to assess 
subgroups on measures in the cost performance category, and population 
health measures and outcomes-based administrative claims measures in 
the quality performance category, based on their affiliated group 
score.
    Response: We thank the commenters for their support.
    Comment: Many commenters opposed our proposal to assess subgroups 
on measures in the cost performance category, and population health 
measures and outcomes-based administrative claims measures in the 
quality performance category, based on their affiliated group. Many of 
these commenters expressed concern that measuring subgroups on the 
basis of the performance of the affiliated group would detract from the 
intention and focus of subgroup reporting. One commenter suggested that 
it would be very unlikely that subgroup reporting would be used to 
avoid assessment in the cost performance category. Many of these 
commenters suggested an alternative scoring methodology in which 
measures would be calculated for both the subgroup and affiliated 
group, and the higher score would be used.
    Response: We agree with some of the concerns identified by the 
commenters. As noted in the proposed rule, we are concerned that 
measuring subgroups based on their affiliated group score for these 
measures may detract from our efforts to generate more clinically 
relevant and granular information about clinician performance. However, 
we believe that the technical issues related to testing and attribution 
in particular need to be examined in more detail before we can move 
forward with measuring clinicians on these measures at the subgroup 
level. We appreciate the alternative suggestion provided by the 
commenters but note that we would need additional information to 
determine if subgroups would be advantaged or disadvantaged by 
calculating measures based on administrative claims at the subgroup 
level. Establishing a scoring hierarchy or requiring the scoring of 
such measures at the subgroup level would not be appropriate until we 
are able to learn more about the scoring of these measures in subgroups 
and may determine how to best mitigate the risks that may arise from 
subgroup scoring of these measures. We will continue to investigate 
ways to ensure that subgroups are measured at the subgroup level as 
much as possible while ensuring that measurement is fair and does not 
allow clinicians to improve performance merely by reporting as part of 
a subgroup.
    After consideration of the comments, we are finalizing our proposal 
to assess subgroups on measures in the cost performance category, and 
population health measures and outcomes-based administrative claims 
measures in the quality performance category, based on their affiliated 
group by modifying Sec.  414.1365(d)(3)(i)(A)(1) to read that a 
subgroup is scored on each selected population health measure based on 
their affiliated group score, if available, and that if the subgroup's 
affiliated group score is not available, each such measure is excluded 
from the subgroup's total measure achievement points and total 
available measure achievement points; adding Sec.  
414.1365(d)(3)(i)(B)(1) so that a subgroup is scored on each selected 
outcomes-based administrative claims measure based on its affiliated 
group score, if available, and that if the subgroup's affiliated group 
score is not available, each such measure will receive zero measure 
achievement points; and adding Sec.  414.1365(d)(3)(ii)(A) to state 
that a subgroup is scored on each cost measure included in the MVP that 
they select and report based on its affiliated group score for each 
such measure, if available. If the subgroup's affiliated group score is 
not available for a measure, the measure is excluded from the 
subgroup's total measure achievement points and total available measure 
achievement points, as described under Sec.  414.1380(b)(2)(i) through 
(v).

[[Page 70045]]

(c) Scoring for Subgroups That Register but Do Not Report
    As described in the CY 2022 PFS final rule (86 FR 65415 through 
65418), groups interested in participating as subgroups for reporting 
the measures and activities in an MVP must adhere to the registration 
process established at Sec.  414.1365(b). To be assessed on their 
performance at a subgroup level, clinicians participating as subgroups 
must meet the reporting requirements outlined at Sec.  414.1365(c). We 
expect subgroups to register with the intent to submit data for the 
measures and activities in an MVP because they wish to be assessed 
based on their performance at the subgroup level. We also believe there 
will be instances where a subgroup would register but not submit data 
for the applicable performance period or clinicians in a registered 
subgroup would choose to participate in MIPS via a different reporting 
option instead of reporting as a subgroup. We considered whether we 
should assign a score for a subgroup regardless of their submission 
status. In the CY 2023 PFS proposed rule (87 FR 46272), we stated that 
at this point in time, we want to encourage groups to explore the 
subgroup reporting option and not penalize subgroups that do not submit 
data. During the voluntary years of subgroup reporting, we do not 
intend to assign a subgroup score in instances when we do not receive 
any MVP data for clinicians in registered subgroups. However, we expect 
that MIPS eligible clinicians in registered subgroups would participate 
in MIPS via another available reporting option as they would be subject 
to the MIPS payment adjustment under the TIN. Under the existing 
scoring hierarchy established in the CY 2022 PFS final rule (86 FR 
65536 and 65537), a clinician is assigned the highest of the available 
final scores associated with the clinician's TIN/NPI.
    For these reasons, in the CY 2023 PFS proposed rule (87 FR 46272), 
we proposed at Sec.  414.1318(b)(1) that we will not assign a final 
score for a subgroup that registers and does not submit data as a 
subgroup for the applicable performance period. Additionally, we 
proposed to make conforming changes at Sec.  414.1318(b) to state that, 
except as provided under Sec.  414.1317(b) and paragraph (b)(1) of this 
section, each MIPS eligible clinician in the subgroup receives a final 
score based on the subgroup's combined performance. We noted that we 
intend to continue monitoring the participation trends for subgroup 
reporting and reevaluate scoring for registered subgroups that do not 
submit data as we move towards mandatory subgroup reporting in the 
future.
    The following is a summary of the public comments received on our 
proposal to not assign a final score for a subgroup that registers but 
does not submit data for the applicable performance period and our 
responses:
    Comment: A few commenters supported our proposal to not calculate a 
score for a subgroup that registers but does not report data, stating 
that groups would be more likely to register as subgroups if they could 
change that status after it is completed.
    Response: We thank the commenters for their support.
    After consideration of the public comments, we are finalizing our 
proposal at Sec.  414.1318(b)(1) to not assign a final score for a 
subgroup that registers and does not submit data as a subgroup for the 
applicable performance period. We are also finalizing conforming 
changes at Sec.  414.1318(b) as proposed.
(d) Subgroup Examples
    In the CY 2023 PFS proposed rule, we included a series of tables 
intending to demonstrate how scores would be calculated for clinicians 
participating in different configurations of groups and subgroups (87 
FR 46272 through 46275). We included these examples to better 
illustrate the interplay of our finalized policies and proposals. We 
anticipate including similar information in educational material that 
can be found at https://qpp.cms.gov/resources/resource-library.
9. APM Performance Pathway
a. Overview
    In the CY 2021 PFS final rule (85 FR 84859 through 84866), we 
finalized the APM Performance Pathway (APP) at Sec.  414.1367 beginning 
in performance year 2021, which was designed to provide a predictable 
and consistent MIPS reporting option to reduce reporting burden and 
encourage continued APM participation.
b. APP Reporting Options
    Under the APP, MIPS eligible clinicians in an APM Entity that 
participates in a MIPS APM may report to MIPS and be scored (subject to 
certain limitations) at the individual clinician, group, or APM Entity 
level (85 FR 84859 through 84866). In that rule, we excluded Virtual 
Groups from reporting the APP. At that time, the concept of MIPS Value 
Pathway (MVP) subgroup reporting, through which a subset of MIPS 
eligible clinicians within a group TIN may report and be scored as a 
standalone MVP Participant, had not yet been introduced; however, we 
note that our subsequent use of the term ``subgroup'' may have caused 
confusion in light of its use in MVPs. In the CY 2022 PFS final rule, 
we codified policies related to subgroups at Sec.  414.1318 
((Sec. Sec.  414.1318 and 414.1365; 86 FR 65671), by which we meant the 
reporting of the APP by a subset of MIPS eligible clinicians within an 
APM Entity. In that rule, we stated that because we already identify 
the MIPS eligible clinicians who are MIPS APM participants based on 
Participation Lists for each APM, it is unnecessary to require MIPS APM 
participants to register as subgroups for purposes of reporting the APP 
(86 FR 65397 and 65398). We stated that beginning with performance year 
2023, we will use Participation Lists to identify the MIPS eligible 
clinicians within a group TIN that should be included in the subgroup 
of APM participants for purposes of reporting the APP (86 FR 65398). We 
also codified at Sec.  414.1318(c)(2) that subgroups would be scored 
according to the applicable MVP or APP scoring rules. However, under 
Sec.  414.1367, which governs APP reporting and scoring, no changes 
were made to reflect the introduction of subgroup-level reporting of 
the APP.
    Recognizing that there is ambiguity in our current rules, we 
proposed in the CY 2023 PFS proposed rule (87 FR 46275) to modify the 
text at Sec.  414.1318(c)(2) to remove the reference to subgroup 
scoring of the APP, and therefore, disallow reporting of the APP by a 
subset of a group. As discussed in the proposed rule, the change is not 
intended as a change in policy; it is not our intent to permit MIPS 
eligible clinicians within an APM entity to be scored at a level in 
between a group and the individual clinician.
    Notwithstanding the foregoing, we stated that we recognize that 
MIPS eligible clinicians may have an interest in reporting as subgroups 
in the APP, and as we described later in that section of the propose 
rule, we considered as an alternative to the proposed conforming change 
whether to permit subgroups as a level of reporting the APP, and to 
modify Sec.  414.1367 accordingly. We noted that we believe there could 
be scenarios where a group may have an interest in reporting the APP 
through subgroups. For example, if a large multi-specialty TIN had 
specialists of different types participating in MIPS APMs, and, 
therefore, who are eligible for APP scoring, it would be possible that 
a subgroup within that TIN--perhaps primary care providers working out 
of a single EHR or practice site--would be interested in reporting the 
APP using

[[Page 70046]]

only the data generated by MIPS eligible clinicians in that subgroup. 
Additionally, particularly after MVP reporting is more widely 
performed, we recognized that clinicians using subgroup reporting for 
MVPs may have an easier time joining APMs and reporting the APP if they 
are able to maintain their reporting at the same level, thereby 
strengthening MVPs as a glide path to APM participation.
    To permit subgroup reporting of the APP, we noted that we would 
need to enable a subgroup registration option for APP reporters, which 
would inevitably introduce additional administrative burden for the 
subgroups that would report. Aside from needing to register in order to 
be recognized as a subgroup, all other aspects of APP reporting for 
subgroups under the alternative proposal would be the same as for other 
reporting levels as established at Sec.  414.1367. We requested 
comments on the proposed conforming change and the alternative we 
considered. In particular, we requested comments on which option would 
best balance the reporting flexibilities with administrative burdens, 
with the understanding that it may be necessary to revisit these 
policies in future rulemaking as MVP and APP policies continue to 
develop, we sought comment on the proposal.
    The following is a summary of the public comments received on the 
proposed revisions to the regulation text, the alternative we 
considered, and our responses:
    Comment: One commenter expressed general support for the 
alternative proposal to allow subgroup reporting of the APP.
    Response: We appreciate the commenter taking time to note their 
support of this alternative policy. We understand that allowing 
subgroup reporting would create additional flexibility for reporting, 
particularly among groups that have participants in more than one model 
or of more than one practice type. Only one commenter indicated a 
preference for the alternative policy approach, and while we understand 
that the flexibility that approach offers could be valued by some 
participants, we do not believe that there is currently any need for 
the implementation of this policy in the short term. However, as MVPs 
become more widely available and multispecialty groups begin reporting 
on more diverse measure sets, there may be more demand for subgroup 
reporting of the APP in the future.
    After consideration of the public comments, we are finalizing the 
proposed modification to Sec.  414.1318(c)(2) to remove the reference 
to subgroup scoring of the APP policy as proposed. Therefore, we will 
remove the references to subgroup reporting of the APP in from Sec.  
414.1318(c)(2) to conform with current policy. We may revisit this 
policy in future rulemaking.
10. MIPS Performance Category Scoring
a. Quality Performance Category
    As discussed in section III.G.4.\459\ and elsewhere in the proposed 
rule (87 FR 46155 through 46157, 46275 through 46276), we sought 
comment on the potential addition of new Consumer Assessment of 
Healthcare Providers and Systems (CAHPS) for the Merit-based Incentive 
Payment System (MIPS) Survey Questions.
---------------------------------------------------------------------------

    \459\ Erroneously cited as section III.J.4 in the proposed rule.
---------------------------------------------------------------------------

    In the proposed rule (87 FR 46154 through 46155, 46275 through 
46276), we sought feedback on the potential future inclusion of two new 
measures in the APP measure set: MUC21-136: Screening for Social 
Drivers of Health and MUC21-134: Screen Positive Rate for Social 
Drivers of Health. The National Quality Forum (NQF) provided 
conditional support for these two social determinants of health 
measures during the 2021-2022 cycle and indicated the measures would be 
appropriate for consideration in the Shared Savings Program.\460\ The 
measure MUC21-136: Screening for Social Drivers of Health assesses the 
percentage at which providers screen their adult patients for health-
related social needs, which is consistent with the priorities of the 
agency and program including Meaningful Measures 2.0 priority 
areas.\461\ The measure MUC21-134: Screen Positive Rate for Social 
Drivers of Health assesses the percentage of patients who screened 
positive for health-related social needs.
---------------------------------------------------------------------------

    \460\ https://www.qualityforum.org/setting_priorities/partnership/map_final_reports.aspx.
    \461\ https://www.cms.gov/meaningful-measures-20-moving-measure-reduction-modernization.
---------------------------------------------------------------------------

    We encouraged readers to review the Social Determinants of Health 
Measure and Future Measure Development--Request for Information (RFI) 
discussed at section III.G.4. of the proposed rule. We refer readers to 
sections XX (Shared Savings Program) and XX (MIPS quality performance 
category) of this final rule for further discussion of the addition of 
the Social Determinants of Health measures.
    We did not receive any additional comments specific to the 
potential future incorporation of these measures into the APP.
b. Improvement Activities Performance Category
    Section 414.1367(c)(3) provides that the improvement activities 
performance category score for MIPS eligible clinicians, groups, and 
APM Entities reporting via the APP is calculated in accordance with 
Sec.  414.1380(b)(3) based on the activities required by the MIPS APM 
that are included in the MIPS final inventory of improvement 
activities. We assign scores to each MIPS eligible clinician in the 
improvement activity performance category for participating in MIPS 
APMs, and MIPS eligible clinicians must earn 40 points in order to 
receive full credit in this performance category. On an annual basis, 
we conduct a review of the governing documentation of all MIPS APMs to 
determine the Improvement Activities that are required by each such 
APM, and have in all cases found that each MIPS APM requires 
participants to engage in such Improvement Activities as would earn 
participants a performance category score of no less than 40 points, 
which as discussed previously in the proposed rule is the maximum score 
for this performance category (Sec.  414.1380(a)(1)(iii)). The list of 
required activities for each MIPS APM is compared to the MIPS list of 
improvement activities and the MIPS APM's participants that report the 
APP are scored in accordance with MIPS to determine if the APM meets 
the requirements for awarding full credit (40 points) for Improvement 
Activities to the participants in the MIPS APM.
    We clarified that, even though Sec.  414.1367(c)(3) permits the 
reporting of additional improvement activities, such reporting would 
not supersede the automatic award of the maximum score described 
previously in this section of the proposed rule. Because the reporting 
of additional improvement activities does not serve any Improvement 
Activity scoring purpose, we would not use any Improvement Activity 
performance category submissions for scoring under the APP where the 
participants were already entitled to full credit for this performance 
category. This clarification is particularly relevant in instances 
where an APM Entity is eligible for reweighting of the two remaining 
performance categories of quality and promoting interoperability. We 
noted that we understand it is possible that, for example, a data 
submission from the Application Programming Interface (API) of a TIN or 
individual within an APM Entity could contain incidental Improvement 
Activity performance information that was collected automatically, 
though not

[[Page 70047]]

for the purpose of a MIPS submission or scoring. We clarified that the 
submission of Improvement Activity performance information in this type 
of circumstance would not constitute a submission of data for the 
purpose of scoring the improvement activities performance category 
under the APP. Therefore, incidental submissions such as the type in 
this example would never be the sole basis for an APM Entity to be 
scored under the APP.
c. MIPS Performance Category Measures and Activities
(1) Quality Performance Category
(a) Background
    Section 1848(q)(1)(A)(i) and (ii) of the Act requires the Secretary 
to develop a methodology for assessing the total performance of each 
MIPS eligible clinician according to certain specified performance 
standards and, using such methodology, to provide for a final score for 
each MIPS eligible clinician. Section 1848(q)(2)(A)(i) of the Act 
provides that the Secretary must use the quality performance category 
in determining each MIPS eligible clinician's final score, and section 
1848(q)(2)(B)(i) of the Act describes the measures that must be 
specified under the quality performance category.
    We refer readers to Sec. Sec.  414.1330 through 414.1340 and the CY 
2017 and CY 2018 Quality Payment Program final rules (81 FR 77097 
through 77162 and 82 FR 53626 through 53641, respectively), and the CY 
2019, CY 2020, CY 2021, and CY 2022 PFS final rules (83 FR 59754 
through 59765, 84 FR 63949 through 62959, 85 FR 84866 through 84877, 
and 86 FR 65431 through 65445, respectively) for a description of 
previously established policies and statutory basis for policies 
regarding the quality performance category.
    In the CY 2023 PFS proposed rule (87 FR 46276 through 46280), we 
proposed to:
     Amend the definition of the term ``high priority measure'' 
to include quality measurement pertaining to health equity.
     Replace the ``Asian language survey completion'' variable 
with ``language other than English spoken at home,'' ``Spanish language 
spoken at home,'' and ``Asian language spoken at home'' variables in 
the case-mix adjustment model for the Consumer Assessment of Healthcare 
Providers and Systems (CAHPS) for MIPS Survey.
     Increase the data completeness criteria threshold to at 
least 75 percent for CY 2024 and CY 2025 performance periods/2026 and 
2027 MIPS payment years.
     Modify the MIPS quality measure set as described in 
Appendix 1 of the CY 2023 PFS proposed rule, including through the 
addition of new measures, updates to specialty sets, the removal of 
existing measures, and substantive changes to existing measures.
(b) Quality Data Submission Criteria
(i) Submission Criteria for Quality Measures, Excluding the CAHPS for 
MIPS Survey Measure
    The Meaningful Measures Initiative provides for the identification 
of high priority areas for quality measurement and quality improvement, 
which identifies the core quality of care issues that advances our work 
to improve patient outcomes (83 FR 59719). In order to further identify 
priority areas for MIPS quality measurement, we defined the term high 
priority measure at Sec.  414.1305, for years beginning with the CY 
2019 performance period/2021 MIPS payment year, as an outcome 
(including intermediate-outcome and patient-reported outcome), 
appropriate use, patient safety, efficiency, patient experience, care 
coordination, or opioid-related quality measure (83 FR 59761). 
Generally, if an applicable outcome measure is not available, a MIPS 
eligible clinician must report a high priority measure (Sec.  
414.1335(a)(1)). To incentivize the voluntary adoption of high priority 
measures, a MIPS eligible clinician may earn bonus points for reporting 
such a measure (Sec.  414.1380(b)(1)(v)(A)). As significant and 
persistent inequities in healthcare outcomes exist in the United 
States, we are committed to developing innovative solutions that 
support access to high quality care and promote health equity, 
including the exploration of solutions to measure health equity within 
MIPS. Health equity is a priority area across CMS programs, including 
MIPS.
    Thus, in the CY 2023 PFS proposed rule, we proposed to amend the 
definition of the term high priority measure to include health equity 
measures. Specifically, starting with the CY 2023 performance period, 
we proposed to amend the definition of the term high priority measure 
at Sec.  414.1305 to mean an outcome (including intermediate-outcome 
and patient-reported outcome), appropriate use, patient safety, 
efficiency, patient experience, care coordination, opioid, or health 
equity-related quality measure (87 FR 46276 and 46277). As noted in the 
CY 2023 PFS proposed rule, we believe that it is imperative to include 
quality measures pertaining to health equity as high priority measures 
in order to incentivize the adoption of health equity measures by MIPS 
eligible clinicians (87 FR 46277).
    We solicited public comment on the proposal to amend the definition 
of the term high priority measure to include the recognition of health 
equity-related quality measures. The following is a summary of the 
public comments received.
    Comment: Most commenters supported the proposal to amend the 
definition of the term high priority measure to include health equity-
related measures starting with the CY 2023 performance period.
    Response: We appreciate the support from commenters.
    Comment: Many commenters recommended that CMS outline specific 
guidance indicating what characteristics would classify a measure as 
health-equity related. Commenters inquired whether measures with 
outcomes indicating variation among patient populations could be 
classified as health-equity related, along with measures specifically 
aimed at addressing equity. A few commenters recommended that health 
equity-related measures include measures that evaluate social risk 
factors and demographic data, and track varying degrees of access to 
care based on social determinants, as measured by factors such as 
insurance coverage, healthcare benefits, and the types of specialties 
and settings of care available to a patient.
    Response: We appreciate commenters' request for additional guidance 
regarding what classifies a measure as a ``health equity-related 
measure'' for the purpose of a high priority designation. We recognize 
that a health equity-related measure may vary in structure, in which a 
measure could be structured to directly address health equity or 
structured to include elements or factors that address an aspect of 
health equity. We are focusing on a person-centric approach as part of 
an overarching CMS Quality Strategy, which strives toward creating a 
care journey that is free from inequity while optimizing opportunities 
and access for underserved populations. We are identifying measurable 
interventions to close gaps in quality care and health outcomes. As we 
consider the inclusion of additional health-equity related measures 
under MIPS, we note that we have defined the term ``health equity'' as 
``the attainment of the highest level of health for all people, where 
everyone has a fair and just opportunity to attain their optimal health 
regardless of race, ethnicity, disability, sexual orientation, gender 
identify, socioeconomic status,

[[Page 70048]]

geography, preferred language, and other factors that affect access to 
care and health outcomes.'' We intend to use this definition as we 
consider potential measures for future use in MIPS.
    Comment: One commenter recommended that measures which fall under 
the definition of a high priority measure be validated, tested, and 
endorsed by the National Quality Forum (NQF).
    Response: As we have previously stated (83 FR 53636; 84 FR 62954), 
we request that interested parties consider when submitting a quality 
measure for possible inclusion whether the measure is ``beyond the 
measure concept phase of development and [has] started testing, at a 
minimum, with strong encouragement and preference for measures that 
have completed or are near completion of reliability and validity 
testing.'' While we consider whether or not a measure is fully tested, 
it is not the only relevant standard. Separately, we note that we opt 
to participate in the pre-rulemaking process that assesses and 
evaluates measures from the Measures Under Consideration (MUC) List for 
the potential implementation of such measures in MIPS under section 
1890A of the Act, which may not result in a consensus-base entity (CBE) 
endorsement (for example, NQF endorsement). Nonetheless, this process 
provides a comprehensive review of the measures from multi-stakeholder 
workgroups.
    Comment: A few commenters suggested that in addition to the 
proposal to amend the definition of the term high priority measure to 
include health equity-related measures, CMS should provide technical 
assistance pertaining to identifying and measuring health care 
disparities in electronic medical records.
    Response: We appreciate the feedback from commenters. As we 
increase the number of health equity-related quality measures under 
MIPS, we intend to explore approaches to technical assistance. Also, we 
intend to collaborate with The Office of the National Coordinator for 
Health Information Technology (ONC), which has efforts focused on the 
development of standards and capabilities within certified health 
information technology supporting the capture and sharing of data that 
can provide insights into health disparities.
    After consideration of public comments, and for the reasons stated 
above and in the CY 2023 PFS proposed rule (87 FR 46276 and 46277), we 
are finalizing, as proposed, the proposal in Sec.  414.1305 to amend 
the definition of the term high priority measure to mean an outcome 
(including intermediate-outcome and patient-reported outcome), 
appropriate use, patient safety, efficiency, patient experience, care 
coordination, opioid, or health equity-related quality measure.
(ii) Submission Criteria for the CAHPS for MIPS Survey Measure
    The CAHPS for MIPS Survey measures patients' experience of care 
within a group, virtual group, and APM Entity, including Shared Savings 
Program ACOs. The survey measures ten dimensions of patient experience 
of care, known as summary survey measures, for which patients may be 
the best, if not only source of information. The CAHPS for MIPS Survey 
is optional for all groups, virtual groups, and APM Entities of 2 or 
more eligible clinicians reporting via traditional MIPS, and is 
required for Shared Savings Program ACOs reporting via the APM 
Performance Pathway (APP).
(A) CAHPS for MIPS Survey Measure Case-Mix Adjustment Model
    Under the CAHPS for MIPS Survey measure, we adjust summary survey 
measure scores for case-mix to promote meaningful comparison of the 
performance of MIPS groups despite differences in their patient 
populations (81 FR 77120). The case-mix adjustment model for CAHPS for 
MIPS Survey measure includes the following case-mix adjustors as of the 
CY 2022 performance period: age; education; self-reported general 
health status; self-reported mental health status; proxy response; 
Medicaid dual eligibility; eligibility for Medicare's low-income 
subsidy; and Asian language survey completion (86 FR 65444 and 65445).
    Only a small percentage of CAHPS for MIPS Survey participants who 
report speaking a language other than English at home actually complete 
the survey in that language. We believe that collecting information on 
the language spoken by the participant at home as a case-mix adjustor 
rather than the language used by the respondent to complete the survey 
is likely to capture language preference more accurately, as well as 
response patterns of participants with similar experiences, for a more 
meaningful comparison of performance between MIPS groups. Furthermore, 
more accurately capturing preferred language aligns with CMS's effort 
to provide culturally and linguistically appropriate services (CLAS), 
which are intended to advance health equity, improve quality, and help 
eliminate health care disparities.\462\ Other CMS-administered CAHPS 
Surveys, such as the Hospital CAHPS Survey, include preferred language 
variables rather than survey language variables for case-mix 
adjustment. Furthermore, analysis of CY 2019 performance period measure 
data for the CAHPS for MIPS Survey found that adding case-mix adjustors 
for Spanish language spoken at home, Asian language(s) spoken at home, 
and other language spoken at home has minimal impacts on scoring for 
most groups, and slightly positively impacts the scores of groups with 
substantial patient populations who speak a language other than English 
at home. Therefore, we proposed in the CY 2023 PFS proposed rule to 
revise the CAHPS for MIPS Survey measure case-mix adjustment model to 
remove the existing adjustor for Asian language survey completion and 
to add adjustors for Spanish language spoken at home, Asian language 
spoken at home, and other language spoken at home (87 FR 46277).
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    \462\ Centers for Medicare & Medicaid Services. Achieving Health 
Equity. Available at https://www.cms.gov/Outreach-and-Education/MLN/WBT/MLN1857916-OMH-AHE/OMHAHE/ahe/lesson01/09/index.html.
---------------------------------------------------------------------------

    We solicited public comment on the proposal to revise the CAHPS for 
MIPS Survey measure case-mix adjustment model.
    Comment: Several commenters supported our proposal to revise the 
CAHPS for MIPS Survey measure case-mix adjustment model to remove the 
existing adjustor for Asian language survey completion and to add 
adjustors for Spanish language spoken at home, Asian language spoken at 
home, and other language spoken at home. Commenters noted that this 
change will capture more culturally appropriate data and more 
accurately capture language preference.
    Response: We agree that revising the CAHPS for MIPS Survey measure 
case-mix model to include adjustors for Spanish language spoken at 
home, Asian language spoken at home, and other language spoken at home 
on clinician profile pages will capture more culturally appropriate 
data and more accurately capture language preference, while also 
providing for a more meaningful comparison of performance between MIPS 
groups.
    Comment: One commenter noted that their support is contingent on us 
providing sufficient data demonstrating that the revised scoring better 
reflects the quality of care provided. In particular, the commenter 
requested more detail on how this revision would

[[Page 70049]]

improve the validity and reliability of the scores.
    Response: We agree that any revision to the scoring of the CAHPS 
for MIPS Survey measure should better reflect the quality of care 
given, and at a minimum, maintain the reliability and validity of the 
scores. Based on internal analysis of existing CAHPS for MIPS data, 
this change to the case-mix adjustment model did not have a substantial 
impact on scores for most groups and had a small positive impact on 
scores for groups with a large proportion of patients reporting 
speaking a language other than English at home, which suggests a slight 
improvement in measurement of patient experience by the survey. 
Regarding the validity of the measure, we believe that language other 
than English spoken at home more accurately captures language 
preference than language of survey completion. Regarding measure 
reliability, analyses of existing CAHPS for MIPS data showed that 
across all of the summary survey measures, changes in reliability were 
extremely small.
    After consideration of public comments, and for the reasons stated 
above and in the CY 2023 PFS proposed rule (87 FR 46277), we are 
finalizing the proposal to revise the CAHPS for MIPS Survey measure 
case-mix adjustment model.
(aa) Adding Items Related to Health Disparity and Price Transparency to 
the CAHPS for MIPS Survey Measure
    We are interested in gathering information directly from patients 
related to health disparities and price transparency. In the CY 2023 
PFS proposed rule (87 FR 46155 through 46157), we requested information 
regarding the future consideration of additional and modified questions 
related to health disparities and price transparency to the CAHPS for 
MIPS Survey measure. Specifically, we solicited public comment on the 
following items: (1) the potential future inclusion of health 
disparities and price transparency questions and whether there are 
other questions that should be considered for potential future 
inclusion in the CAHPS for MIPS Survey measure; and (2) the potential 
for creating a shortened version of the CAHPS for MIPS Survey measure 
such that it would be more applicable to specialty groups. We thank 
commenters for their responses regarding this request for information. 
We may consider the information provided by commenters to inform future 
rulemaking.
(iii) Data Completeness Criteria
    In the CY 2017 and CY 2018 Quality Payment Program final rules and 
the CY 2020 PFS final rule, we noted that we would increase the data 
completeness criteria threshold over time (81 FR 77121, 82 FR 53632, 
and 84 FR 62951). For the CY 2017 performance period/2019 MIPS payment 
year (first year of the implementation of MIPS), the data completeness 
criteria threshold was established to reflect a threshold of at least 
50 percent (81 FR 77125). The data completeness criteria threshold 
increased from at least 50 percent to at least 60 percent for the CY 
2018 performance period/2020 MIPS payment year (81 FR 77125 and 82 FR 
53633) and was maintained at a threshold of at least 60 percent for the 
CY 2019 performance period/2021 MIPS payment year (82 FR 53633 and 
53634). For the CY 2020 performance period/2022 MIPS payment year, the 
data completeness criteria threshold was increased from at least 60 
percent to at least 70 percent (84 FR 62952). The data completeness 
criteria threshold of at least 70 percent was maintained for the CY 
2021, CY 2022, and CY 2023 performance periods/2023, 2024, and 2025 
MIPS payment years (86 FR 65435 through 65438). We continue to believe 
that it is important to incrementally increase the data completeness 
criteria as MIPS eligible clinicians, groups, and virtual groups gain 
experience with MIPS.
    We believe that the incorporation of higher data completeness 
thresholds in future years ensures a more accurate assessment of a MIPS 
eligible clinician's performance on quality measures and prevent 
selection bias to the extent possible (81 FR 77120, 82 FR 53632, 83 FR 
59758, and 86 FR 65436). We have encouraged all MIPS eligible 
clinicians to perform the quality actions associated with the quality 
measures on their patients (82 FR 53632 and 86 FR 65436). The data 
submitted for each measure is expected to be representative of the 
individual MIPS eligible clinician, group, or virtual group's overall 
performance for that measure. The data completeness threshold of less 
than 100 percent is intended to reduce burden and accommodate 
operational issues that may arise during data collection during the 
initial years of the program (82 FR 53632 and 86 FR 65436).
    We previously noted concerns raised regarding the unintended 
consequences of accelerating the data completeness thresholds too 
quickly, which may jeopardize a MIPS eligible clinicians' ability to 
participate and perform well under MIPS (81 FR 77121, 82 FR 53632, and 
84 FR 62951). We want to ensure that an appropriate, yet achievable, 
data completeness threshold is applied to all eligible clinicians 
participating in MIPS. Based on our analysis of data completeness rates 
from data submission for the CY 2017 performance period (as described 
in the CY 2020 PFS final rule (84 FR 62951), the average data 
completeness rates were as follows: for individual eligible clinicians, 
it was 76.14; for groups, it was 85.27; and for small practices, it was 
74.76), we believe that it is feasible for eligible clinicians and 
groups to achieve a higher data completeness threshold without 
jeopardizing their ability to participate and perform well under MIPS.
    In the CY 2023 PFS proposed rule, we proposed to increase the data 
completeness criteria from 70 percent to 75 percent for the CY 2024 and 
CY 2025 performance periods/2026 and 2027 MIPS payment years. 
Specifically, we proposed in Sec.  414.1340(a)(4) that, for the CY 2024 
and CY 2025 performance periods/2026 and 2027 MIPS payment years, a 
MIPS eligible clinician or a group submitting quality measures data on 
QCDR measures, MIPS CQMs, eCQMs must submit data on at least 75 percent 
of the MIPS eligible clinician or group's patients that meet the 
measure's denominator criteria, regardless of payer (87 FR 46277 and 
46278). Similarly, we proposed in Sec.  414.1340(b)(4), for the CY 2024 
and CY 2025 performance periods/2026 and 2027 MIPS payment years, that 
a MIPS eligible clinician or a group submitting quality measures data 
on Medicare Part B claims measures would need to submit data on at 
least 75 percent of the MIPS eligible clinician or group's patients 
seen during the corresponding performance period to which the measure 
applies (87 FR 46277 and 46278). As noted in the CY 2023 PFS proposed 
rule, we believe that increasing the data completeness criteria 
threshold to 75 percent for the CY 2024 performance period/2026 MIPS 
payment year and the CY 2025 performance period/2027 MIPS payment year 
provides MIPS eligible clinicians with ample time prepare for a higher 
standard as most clinicians already meet or exceed this standard.
    We solicited public comment on the proposals to increase the data 
completeness criteria threshold from at least 70 percent to at least 75 
percent for the CY 2024 and CY 2025 performance periods/2026 and 2027 
MIPS payment years. The following is a summary of the public comments 
received.
    Comment: Many commenters supported the proposal to increase the 
data completeness criteria threshold

[[Page 70050]]

from at least 70 percent to at least 75 percent for the CY 2024 and CY 
2025 performance periods/2026 and 2027 MIPS payment years.
    Response: We appreciate the support from commenters.
    Comment: Several commenters opposed the proposal to increase the 
data completeness criteria threshold from at least 70 percent to at 
least 75 percent for the CY 2024 and CY 2025 performance periods/2026 
and 2027 MIPS payment years. Commenters indicated that increasing the 
data completeness threshold would unnecessarily increase reporting 
burdens for individual MIPS clinicians, groups, and virtual groups. A 
few commenters emphasized that some clinicians are still recovering 
from the ongoing COVID-19 PHE. A few other commenters indicated that 
clinicians are being held to a higher standard in MIPS compared to 
other quality programs. One commenter expressed concern that 
subregulatory guidance is generally not available late in the 
performance year, which could result in a change in reporting strategy 
that makes it challenging to satisfy data completeness requirements. 
One commenter recommended that the data completeness criteria threshold 
be maintained to at least 75 percent for at least 5 years and not 
exceed a threshold of at least 80 percent.
    Response: We disagree with commenters that increasing the data 
completeness criteria threshold would unnecessarily increase the 
reporting burden for individual MIPS eligible clinicians, groups, and 
virtual groups. Individual MIPS eligible clinicians, groups, and 
virtual groups will have had 4 years of a maintained data completeness 
criteria threshold of at least 70 percent before transitioning to an 
increased data completeness criteria threshold of at least 75 percent 
and will have more than 12 months to prepare for an increased data 
completeness criteria threshold before such threshold becomes effective 
for the CY 2024 and CY 2025 performance periods/2026 and 2027 MIPS 
payment years.
    We recognize that some individual MIPS eligible clinicians, groups, 
and virtual groups continue to experience the effects from the COVID-19 
public health emergency. For this reason, in the CY 2022 PFS final rule 
(86 FR 65437 through 65438), we maintained the data completeness 
criteria threshold of at least 70 percent for the CY 2023 performance 
period/2025 MIPS payment in response to concerns from commenters 
regarding an increase to the data completeness criteria threshold 
amidst the COVID-19 public health emergency. Maintaining the data 
completeness criteria threshold of at least 70 percent was intended to 
reduce burden and provide additional time for MIPS eligible clinicians, 
groups, and virtual groups to adopt the final policy changes and 
recover fiscally from the pandemic. In establishing data completeness 
criteria thresholds in advance of an applicable performance period, we 
believe it is advantageous to delineate the expectations for MIPS 
eligible clinicians, groups, and virtual groups in order for them 
prepare for a transition to higher data completeness criteria 
threshold, particularly the increase in data completeness criteria 
threshold of at least 75 percent for the CY 2024 and CY 2025 
performance periods/2026 and 2027 MIPS payment years.
    We recognize that other CMS quality programs may have different 
data completeness criteria thresholds. While the commenter did not 
specify a CMS quality program or outline specific reporting 
requirements regarding data completeness that differ from MIPS, we 
believe that reporting requirements for CMS quality programs such as 
data completeness criteria, data validation, patient population 
eligible for a measure, measure specification requirements, case 
minimum standards, or measure exclusions or exceptions may not be 
directly comparable. Therefore, we believe that it is not accurate to 
conclude that the overall reporting burden of a CMS quality program is 
less than another CMS quality program merely because the former CMS 
quality program has a lower data completeness criteria threshold than 
the latter program. We note that reporting requirements may not only 
differ across CMS quality programs, but reporting requirements may 
differ by measure within a program. Thus, we believe that the reporting 
requirements such as the data completeness criteria threshold under 
other CMS quality programs should not be dispositive when determining 
the data completeness threshold for MIPS as reporting requirements for 
other CMS quality programs may not be directly comparable to the 
reporting requirements established under MIPS.
    In response to the comment indicating that subregulatory guidance 
not being available until late in the performance period and may cause 
challenges in satisfying data completeness criteria requirements, we 
note that all reporting requirements for the quality performance 
category are established through the rulemaking process and published 
in the applicable calendar year PFS final rule. Although the commenter 
did not specify the type of subregulatory guidance that is published 
late in a performance period potentially impacting a MIPS eligible 
clinician, group, or virtual group from meeting the data completeness 
criteria requirements, we note that there are instances in which we 
publish subregulatory guidance toward the latter part of a performance 
period such as the list of MIPS quality measures that will be 
suppressed or truncated for the applicable performance period, which is 
published before the end of the performance period; and the list of 
MIPS quality measures impacted by ICD-10 coding changes that become 
effective October 1 of an applicable performance period, which is 
published prior to the applicable performance period. We recognize that 
the publication of MIPS quality measures impacted by ICD-10 coding 
changes, which would result in truncation or suppression, is in the 
latter part of a performance period. We note that it is not technically 
feasible for us to publish such information prior to October 1 of an 
applicable performance period given that such coding changes are not 
effective until October 1 of a calendar year. We strive to provide 
subregulatory guidance as soon as technically feasible.
    Furthermore, we believe that it is critical to increase data 
completeness thresholds over time to more accurately assess a MIPS 
eligible clinician's performance on quality measures and prevent any 
selection bias. A data completeness criteria threshold of less than 100 
percent reduces burden and accommodates operational issues that may 
arise during data collection within the initial years of the program. 
We have previously provided notice to MIPS eligible clinicians in order 
for them to take the necessary steps to prepare for higher data 
completeness criteria thresholds in future years (82 FR 53632, 83 FR 
59758, and 84 FR 62951). We want to ensure that an appropriate, yet 
achievable, data completeness criteria threshold is applied to all 
eligible clinicians participating in MIPS.
    Comment: Several commenters expressed concern regarding the 
proposal to increase the data completeness criteria threshold from at 
least 70 percent to at least 75 percent for the CY 2024 and CY 2025 
performance periods/2026 and 2027 MIPS payment years due to potential 
issues with taxpayer identification numbers (TINs), which include more 
than one site of service. Commenters emphasized that in many cases, 
specialties may provide services across multiple sites, but not all 
sites participate in MIPS or use the same registry or EHR that the 
clinician

[[Page 70051]]

chooses to use for MIPS reporting, and such clinician would face 
challenges if data from these additional sites need to be included to 
meet the data completeness threshold. Some commenters indicated that 
the data completeness criteria threshold should not increase until EHR 
reporting is more widely adopted and integrated across clinicians and 
settings. A few commenters noted that the proposal would have a 
disproportionately negative impact on small and rural practices, which 
are significantly less likely to have an EHR. One commenter raised the 
concern that clinicians continue to lack access to timely notifications 
when a patient is included in the denominator of a quality measure. The 
commenter encouraged CMS to establish a process that will allow 
practices to verify which patients should be in the denominator of a 
selected measure on a timely basis, including when clinicians have a 
scheduled service with regular updates occurring monthly at minimum.
    Response: We acknowledge the concerns from commenters regarding 
certain eligible clinicians that may face different systems for 
capturing and reporting information across sites of services. However, 
we believe in the importance of incrementally increasing the data 
completeness criteria threshold, and believe that by finalizing the 
policy as proposed for the CY 2024 and CY 2025 performance periods/2026 
and 2027 MIPS payment years, eligible clinicians who may face this 
issue will have had sufficient time to address data collection across 
sites of service where they may practice. We believe that the use of 
EHRs and eCQMs can reduce burden associated with meeting higher data 
completeness standards, as collection of eCQM data within the EHR can 
allow eligible clinicians to report on 100 percent of the eligible 
population with data in the EHR for a measure. We continue to encourage 
individual MIPS eligible clinicians, groups, and virtual groups, 
including small and rural practices, to explore EHR adoption and 
reporting of eCQMs to reduce burden. However, where individual MIPS 
eligible clinicians, groups, and virtual groups continue to engage in 
other means of data collection for MIPS CQMs, including the collection 
of MIPS CQM data reported by registries and/or Qualified Clinical Data 
Registries (QCDRs), we believe this incremental increase in the data 
completeness threshold would not present a substantial burden.
    In regard to the comment encouraging CMS to establish a process 
that will allow practices to verify which patients should be in the 
denominator of a selected measure on a timely basis, including when 
clinicians have a scheduled service with regular updates occurring 
monthly at minimum, we note that CMS does not collect real-time 
information from MIPS eligible clinicians regarding patient encounters, 
and future patient encounters, that would allow for a determination or 
estimation of whether a patient is in the denominator of a selected 
measure. We encourage eligible clinicians to work with their health IT 
vendors, or other intermediaries including registries and QCDRs to 
explore such functionality.
    Also, we recognize that the increase in the data completeness 
criteria threshold would impact APM Entities such as Medicare Shared 
Savings Program ACOs that are preparing to transition to reporting MIPS 
CQMs or CQMs under the APP, and face additional considerations around 
the aggregation of data across ACO participant sites. We recognize that 
Medicare Shared Savings Program ACOs are developing workflows and the 
necessary infrastructure for data aggregation across systems in order 
to be able to report all-payer for MIPS CQMs and eCQMs. We recognize 
that an increase in the data completeness criteria threshold would 
increase the amount of data Medicare Shared Savings Program ACOs are 
required to aggregate across ACO participants; however, we believe that 
while Medicare Shared Savings Program ACOs are developing data 
aggregation approaches, they would be able to target the increased data 
completeness criteria threshold of at least 75 percent as part of their 
planning activities.
    Comment: A few commenters recommended that CMS consider 
establishing different data completeness thresholds for different types 
of measures.
    Response: We disagree with the commenters that there should be 
differing data completeness thresholds for different types of measures. 
We believe that not having a consistent data completeness threshold 
across the MIPS quality measures would create confusion and increase 
undue burden because individual MIPS eligible clinicians, groups, 
virtual groups, and APM Entities (Medicare Shared Savings Program ACOs) 
reporting on multiple measures with varying data completeness 
thresholds may inadvertently report data at the incorrect data 
completeness criteria threshold for one or more measures and would 
experience additional data aggregation complexities in having their 
EHRs, registries, and/or QCDRs account for various data completeness 
criteria thresholds per measure across all sites within a TIN(s).
    Comment: A few commenters recommended that CMS converse with 
interested parties and quality measurement experts when establishing 
the target ceiling for the data completeness criteria threshold and the 
timeline for achieving such threshold.
    Response: CMS has adopted and will continue to adopt updates to the 
data completeness criteria threshold through regulation, which affords 
the public, including all interested parties and quality measure 
experts, the opportunity to comment. We appreciate the comments we 
receive and may consider such information to inform future rulemaking.
    Comment: One commenter requested that CMS provide the rationale for 
increasing the data completeness criteria threshold and the data used 
to inform such decision.
    Response: We refer the reader to our discussion above and in prior 
rulemaking regarding our belief that the incorporation of higher data 
completeness thresholds ensures a more accurate assessment of a MIPS 
eligible clinician's performance on quality measures and prevents 
selection bias to the extent possible (81 FR 77120, 82 FR 53632, 83 FR 
59758, and 86 FR 65436). As we have previously noted, we want to ensure 
that an appropriate, yet achievable, data completeness threshold is 
applied to all eligible clinicians participating in MIPS. Based on our 
analysis of data completeness rates from data submission for the CY 
2017 performance period (as described in the CY 2020 PFS final rule (84 
FR 62951), the average data completeness rates were as follows: for 
individual eligible clinicians, it was 76.14; for groups, it was 85.27; 
and for small practices, it was 74.76). As MIPS eligible clinicians, 
groups, and virtual groups have gained experience participating in 
MIPS, particularly meeting the data completeness criteria threshold 
over the last 6 years (from CY 2017 performance period to CY 2022 
performance period), we believe that such experience has prepared MIPS 
eligible clinicians, groups, and virtual groups to be able to meet 
incremental increases in the data completeness criteria threshold. CMS 
will have maintained the data completeness criteria threshold at 70 
percent for four years by CY 2024, and we believe that the signaling of 
our intent to continue to raise the threshold in the future (see 81 FR 
77120, 82 FR 53632, 83 FR 59758, and 86 FR 65436) has provided adequate 
time for MIPS eligible clinicians, groups, and virtual

[[Page 70052]]

groups to transition from a data completeness criteria threshold of at 
least 70 percent to at least 75 percent for the CY 2024 and CY 2025 
performance periods/2026 and 2027 MIPS payment years. Therefore, we 
believe that it is feasible for eligible clinicians, groups, and 
virtual groups to achieve a higher data completeness threshold of at 
least 75 percent, for the CY 2024 and CY 2025 performance periods/2026 
and 2027 MIPS payment years without jeopardizing their ability to 
participate and perform well under MIPS.
    Comment: One commenter requested for CMS to explain how the 
achieved percent of data completeness would be validated, given that 
the denominator is for all payers.
    Response: All-payer data is required to be reported for MIPS CQMs 
and eCQMs under MIPS. Each MIPS CQM and eCQM reported must meet the 
data completeness criteria. In order to access the Quality Payment 
Program system for data submission, users are required to attest that 
they agree to the Statement of Truth. The Statement of Truth requires 
that a user certifies that to the best of their knowledge that all the 
information that they will be submitting will be true, accurate, and 
complete. If a user becomes aware that any submitted information is not 
true, accurate, and complete, the user must correct such information 
promptly. As part of the Statement of Truth, a user acknowledges their 
understanding that the knowing omission, misrepresentation, or 
falsification of any submitted information may be punishable by 
criminal, civil, or administrative penalties, including fines, civil 
damages, and/or imprisonment. If it is determined that an individual 
MIPS eligible clinician, group, or virtual group did not adhere to the 
terms of the Statement of Truth during an audit, the individual MIPS 
eligible clinician, group, or virtual group not only violated the terms 
of the Statement of Truth and may be subject to penalty, but did not 
meet the reporting requirements under MIPS. As part of our data 
validation verification process, we conduct audits.
    After consideration of public comments, and for the reasons stated 
above and in the CY 2023 PFS proposed rule (87 FR 46277 and 46278), we 
are finalizing, as proposed, the proposals in Sec. Sec.  414.1340(a)(4) 
and 414.1340(b)(4) as follows:
     For the CY 2024 and CY 2025 performance periods/2026 and 
2027 MIPS payment years, a MIPS eligible clinician or a group 
submitting quality measures data on QCDR measures, MIPS CQMs, eCQMs 
must submit data on at least 75 percent of the MIPS eligible clinician 
or group's patients that meet the measure's denominator criteria, 
regardless of payer.
     For the CY 2024 and CY 2025 performance periods/2026 and 
2027 MIPS payment years, that a MIPS eligible clinician or a group 
submitting quality measures data on Medicare Part B claims measures 
must submit data on at least 75 percent of the MIPS eligible clinician 
or group's patients seen during the corresponding performance period to 
which the measure applies.
(c) Selection of MIPS Quality Measures
    Section 1848(q)(2)(D)(i) of the Act requires the Secretary, through 
notice and comment rulemaking, to establish an annual final list of 
quality measures from which MIPS eligible clinicians may choose for the 
purpose of assessment under MIPS. Section 1848(q)(2)(D)(i)(II) of the 
Act requires that the Secretary annually update the list by removing 
measures from the list, as appropriate; adding to the list, as 
appropriate, new measures; and determining whether measures that have 
undergone substantive changes should be included on the updated list.
    Previously finalized MIPS quality measures can be found in the CY 
2022 PFS final rule (86 FR 65687 through 65968); CY 2021 PFS final rule 
(85 FR 85045 through 85377); CY 2020 PFS final rule (84 FR 63205 
through 63513); CY 2019 PFS final rule (83 FR 60097 through 60285); CY 
2018 Quality Payment Program final rule (82 FR 53966 through 54174); 
and CY 2017 Quality Payment Program final rule (81 FR 77558 through 
77816). Proposed changes to the MIPS quality measure set, as described 
in Appendix 1 of the CY 2023 PFS proposed rule, include the following: 
the addition of new measures; updates to specialty sets; removal of 
existing measures, and substantive changes to existing measures. For 
the CY 2023 performance period, we proposed a measure set of 194 MIPS 
quality measures in the inventory (87 FR 46278 through 46279).
    The new MIPS quality measures that we proposed to include in MIPS 
for the CY 2023 performance period and future years can be found in 
Table Group A of Appendix 1 of the CY 2023 PFS proposed rule. For the 
CY 2023 performance period, we proposed 9 new MIPS quality measures, 
which includes 1 administrative claims measure; 1 composite measure; 5 
high priority measures, and 2 patient-reported outcome measures).
    In addition to the establishment of new individual MIPS quality 
measures, we also develop and maintain specialty measure sets to assist 
MIPS eligible clinicians with selecting quality measures that are most 
relevant to their scope of practice. We proposed modifications to 
existing specialty sets and new specialty sets as described in Table 
Group B of Appendix 1 of the CY 2023 PFS proposed rule. Specialty sets 
may include: new measures, previously finalized measures with 
modifications, previously finalized measures with no modifications, the 
removal of certain previously finalized quality measures, or the 
addition of existing MIPS quality measures. Specialty and subspecialty 
sets are not inclusive of every specialty or subspecialty.
    On January 3, 2022, we announced that we would be accepting 
recommendations for potential new specialty measure sets or revisions 
to existing specialty measure sets for year 7 of MIPS under the Quality 
Payment Program.\463\ These recommendations were based on the MIPS 
quality measures finalized in the CY 2021 PFS final rule and the 2021 
Measures Under Consideration List; the recommendations include the 
addition or removal of current MIPS quality measures from existing 
specialty sets, or the creation of new specialty sets. All specialty 
set recommendations submitted for consideration were assessed and 
vetted, and as a result, the recommendations that we agree with were 
proposed in the CY 2023 PFS proposed rule.
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    \463\ Message to the Quality Payment Program listserv on January 
3, 2022, entitled: ``The Centers for Medicare & Medicaid Services 
(CMS) is Soliciting Stakeholder Recommendations for Potential 
Consideration of New Specialty Measure Sets and/or Revisions to the 
Existing Specialty Measure Sets for the 2023 Performance Year of the 
Merit-based Incentive Payment System (MIPS).''
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    In addition to establishing new individual MIPS quality measures 
and modifying existing specialty sets and new specialty sets as 
described in Tables Group A and Group B of Appendix 1 of the CY 2023 
PFS proposed rule (87 FR 46458 through 46471; 87 FR 46471 through 
46713), we refer readers to Table Group C of Appendix 1 of the CY 2023 
PFS proposed rule for a list of quality measures and rationales for 
measure removal (87 FR 46714 through 46722). We have previously 
specified certain criteria that will be used when we are considering 
the removal of a measure (81 FR 77136 and 77137; 83 FR 59763 through 
59765; 84 FR 62957 through 62959). For the CY 2023 performance period, 
we proposed to remove 15 MIPS quality measures and partially remove 2 
MIPS quality measures that are proposed for removal from traditional 
MIPS and proposed for retention for use

[[Page 70053]]

in MVPs. We refer readers to Table Group DD of Appendix 1 of the CY 
2023 PFS proposed rule for further information regarding the proposals 
to retain such measures for retention for use in relevant MVPs (87 FR 
46789 through 46792). Of the 15 MIPS quality measures proposed for 
removal, the following pertains to such measures: 1 MIPS quality 
measure is duplicative to a proposed new MIPS quality measure; 4 
quality measures are duplicative of current measures; 7 MIPS quality 
measures that do not align with the Meaningful Measure Initiative (that 
is, measures that are unable to produce a benchmark or have limited 
adoption, or are a standard of care); 2 MIPS quality measures that are 
under the topped out lifecycle; and 1 measure is extremely topped out. 
We have continuously communicated to interested parties our desire to 
reduce the number of process measures within the MIPS quality measure 
set (83 FR 59763 through 59765). We noted our belief that the proposal 
to remove the quality measures described in Table Group C of the CY 
2023 PFS proposed rule would lead to a more parsimonious inventory of 
meaningful, robust measures in the program, and that our approach to 
removing measures should occur through an iterative process that 
includes an annual review of the quality measures to determine whether 
they meet our removal criteria (87 FR 46714).
    Also, we proposed substantive changes to several MIPS quality 
measures, which can be found in Table Group D of Appendix 1 of the CY 
2023 PFS proposed rule (87 FR 46724 through 46788). We have previously 
established criteria that would apply when we are considering making 
substantive changes to a quality measure (81 FR 77137, and 86 FR 65441 
and 65442). We proposed substantive changes to 75 MIPS quality 
measures, which includes 2 quality measures proposed to be retained for 
utilization under MVPs (we refer readers to Table Group DD of Appendix 
1 of the proposed rule for such measures that are proposed for 
retention for use in relevant MVPs). On an annual basis, we review the 
established MIPS quality measure inventory to consider updates to the 
measures. Possible updates to measures may be minor or substantive.
    Lastly, we proposed substantive changes to CMS Web Interface 
measures that are available as a collection and submission type for 
Medicare Shared Savings Program ACOs meeting reporting requirements 
under the APP. The substantive changes to the CMS Web Interface 
measures can be found in Table Group E of Appendix 1 of the CY 2023 PFS 
proposed rule (87 FR 46792 through 46799). Relatedly, in the CY 2023 
PFS proposed rule (87 FR 46148 through 46150), we proposed to establish 
CMS Web Interface benchmark policies for the APP under Medicare Shared 
Savings Program (at Sec.  425.512) that would be applied retroactively 
starting with performance year 2022. The CMS Web Interface benchmark 
policies previously established at Sec.  425.502(b) under the Medicare 
Shared Savings Program were revised in the CY 2021 PFS final rule, in 
which the provisions under Sec.  425.502(b) were sunset with 
performance year 2022 and not applied to the APP under the Medicare 
Shared Savings Program. For performance year 2021, we stated in the CY 
2021 PFS final rule that the CMS Web Interface measure benchmarks 
developed for the Medicare Shared Savings Program for performance year 
2020 would be utilized (85 FR 84724). However, we inadvertently failed 
to consider the policies that would apply for purposes of establishing 
benchmarks for the CMS Web Interface measures applicable to the APP 
starting with performance year 2022, and as a result, benchmark 
policies for the CMS Web Interface measures were not established for 
the APP under the Medicare Shared Savings Program. We noted that the 
absence of benchmark policies for the APP under the Medicare Shared 
Savings Program impacts MIPS. Section 414.1380(b)(1)(ii)(B) provides 
that MIPS benchmarks for the CMS Web Interface collection type uses 
benchmarks from the corresponding reporting year of the Shared Savings 
Program. Due to the absence of benchmark policies for the APP under the 
Medicare Shared Savings Program, CMS Web Interface measure benchmarks 
were not established starting with performance year 2022. As described 
in the CY 2023 PFS proposed rule (87 FR 46148 through 46150), we 
proposed to establish CMS Web Interface benchmark policies for the APP 
under Medicare Shared Savings Program, in which the retroactive 
adoption of benchmark policies previously established at Sec.  
425.502(b) would be applied for performance year CY 2022 (and future 
performance years as applicable under the Medicare Shared Savings 
Program). Thus, for the CY 2022 performance period/2024 MIPS payment 
year (the last year for which the CMS Web Interface is available as a 
collection and submission type under traditional MIPS for groups, 
virtual groups, and APM Entities), the CMS Web Interface benchmarks 
created for the APP under the Medicare Shared Savings Program would be 
utilized under MIPS.
    In this final rule, we are further elaborating on the impact of the 
retroactive adoption of benchmark policies previously established at 
Sec.  425.502(b) for the APP under the Medicare Shared Savings Program 
would have on MIPS for the CY 2022 performance period/2024 MIPS payment 
year. In the CY 2023 PFS proposed rule (87 FR 46148 through 46150), we 
proposed to correct our inadvertent indication that a Medicare Shared 
Savings Program benchmark would not be created for the Preventative 
Care and Screening: Tobacco Use: Screening and Cessation Intervention 
(Quality ID#226). In the CY 2022 PFS final rule (86 FR 65262), we noted 
the CMS Web Interface measure Preventative Care and Screening: Tobacco 
Use: Screening and Cessation Intervention (Quality ID#226) and two 
other CMS Web Interface measures did not have benchmarks for 
performance year 2022 and would not be scored. Pursuant to Sec.  
414.1380(b)(1)(ii)(B) and absent this correction, the CMS Web Interface 
measure, Preventive Care and Screening: Tobacco Use: Screening and 
Cessation Intervention (Quality ID#226), would not have a benchmark and 
would not be scored under MIPS the CY 2022 performance period/2024 MIPS 
payment year. With the establishment of a benchmark for the CY 2022 
performance period/2024 MIPS payment year, the CMS Web Interface 
measure, Preventive Care and Screening: Tobacco Use: Screening and 
Cessation Intervention (Quality ID#226), will be scored under MIPS.
    We believe that the scoring of the CMS Web Interface measure, 
Preventive Care and Screening: Tobacco Use: Screening and Cessation 
Intervention (Quality ID#226), would likely be beneficial to the 
overall quality performance category score for a group, virtual group, 
or APM Entity given that there would be an opportunity to earn more 
achievement points as an additional CMS Web Interface measure would be 
scored; and would not result in additional administrative burden given 
that groups, virtual groups, and APM Entities are already required to 
report on all CMS Web Interface measures, including CMS Web Interface 
measures without benchmarks. We refer readers to section III.G.4.c.(2) 
of this final rule for the discussion regarding the rationale for 
establishing a benchmark and scoring the CMS Web Interface measure, 
Preventive Care and Screening: Tobacco Use: Screening and Cessation 
Intervention (Quality ID#226)

[[Page 70054]]

for the APP under the Medicare Shared Savings Program.
    Lastly, we recognize that some groups, virtual groups, and APM 
Entities intending to report on the CMS Web Interface measures for the 
CY 2022 performance period/2024 MIPS payment year may continue to be 
impacted by the COVID-19 public health emergency or may be affected by 
other extreme and uncontrollable circumstances (EUC) (such as a Federal 
Emergency Management Agency (FEMA)-designated major disaster). Groups, 
virtual groups, and APM Entities may apply for the 2022 MIPS EUC 
Exception if an EUC affects their ability to collect data for a 
specific MIPS performance category or categories.\464\ The EUC policy 
provides for the reweighting of one or more performance categories (see 
Sec.  414.1380(c)(2)).
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    \464\ The deadline to submit the 2022 MIPS EUC Exception 
application is Tuesday, January 3, 2023, by 8:00 p.m. Eastern Time. 
To apply, sign into your Quality Payment Program account, select 
``Exceptions Application'' on the left-hand navigation and then 
select ``Extreme and Uncontrollable Circumstances.''
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    We solicited public comment on the proposals to modify the quality 
performance category measure set.
    We refer readers to Table Groups A through E of Appendix 1 of this 
final rule for a summary of public comments received regarding the 
proposed modifications to the MIPS quality measure set for the CY 2023 
performance period and the discussion regarding final decisions. We 
refer readers to section III.G.4.c.(2) of this final rule regarding the 
finalized, as proposed, policy that establishes benchmark policies for 
the APP under the Medicare Shared Savings Program.
    After consideration of public comments, and for the reasons stated 
above (and in the aforementioned Table Groups A through E of Appendix 1 
of this final rule) and in the CY 2023 PFS proposed rule (87 FR 46278 
and 46279), we are finalizing with modification a measure set of 198 
MIPS quality measures in the inventory for the CY 2023 performance 
period, which includes the following:
     Implementation of 9 new MIPS quality measures: 1 
administrative claims measure;1 composite measure; 5 high priority 
measures, and 2 patient-reported outcome measures;
     Removal of 11 MIPS quality measures: 1 quality MIPS 
measure is duplicative to a new quality measure; 4 MIPS quality 
measures are duplicative to current quality measures; 3 MIPS quality 
measures do not align with the Meaningful Measures Initiative (that is, 
measures that are unable to produce a benchmark or have limited 
adoption, or are a standard of care); 2 MIPS quality measures are under 
the topped-out lifecycle; and 1 MIPS quality measure is extremely 
topped out;
     Partial removal of 2 MIPS quality measures: 2 MIPS quality 
measures removed from traditional MIPS and retained for use in MVPs; 
and
     Substantive changes to 76 MIPS quality measures.
(i) Screening for Social Drivers of Health Proposed Measure
    Established evidence demonstrates that factors beyond the clinical 
realm are directly associated with patient health outcomes as well as 
healthcare utilization, costs, and performance in quality-based payment 
programs.465 466 Specifically, social risk factors account 
for 50 to 70 percent of health outcomes.467 468 469 Indeed, 
the Physicians Foundation surveyed 8,500 physicians in 2018 and found 
that almost 90 percent of respondents reported their patients had a 
serious health problem linked to poverty or other social 
conditions.\470\
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    \465\ Zhang, Y., Li, J., Yu, J., Braun, R.T., Casalino, L.P. 
(2021). Social Determinants of Health and Geographic Variation in 
Medicare per Beneficiary Spending. JAMA Network Open. 
2021;4(6):e2113212. doi:10.1001/jamanetworkopen.2021.13212.
    \466\ Khullar, D., Schpero, W.L., Bond, A.M., Qian, Y., & 
Casalino, L.P. (2020). Association Between Patient Social Risk and 
Physician Performance Scores in the First Year of the Merit-based 
Incentive Payment System. JAMA, 324(10), 975-983. Available at 
https://doi.org/10.1001/jama.2020.13129.
    \467\ Kaiser Family Foundation. (2021). Racial and Ethnic Health 
Inequities and Medicare. Available at https://www.kff.org/medicare/report/racial-and-ethnic-health-inequities-and-medicare/.
    \468\ Khullar, D. (September, 2020). Association Between Patient 
Social Risk and Physician Performance American academy of Family 
Physicians. Addressing Social Determinants of Health in Primary Care 
Team-Based Approach for Advancing Health Equity.
    \469\ The Physicians Foundation. (2021). Viewpoints: Social 
Determinants of Health. Available at https://physiciansfoundation.org/wp-content/uploads/2019/08/The-Physicians-Foundation-SDOH-Viewpoints.pdf.
    \470\ The Physicians Foundation. (2019). Viewpoints: Social 
Determinants of Health. Available at https://physiciansfoundation.org/wp-content/uploads/2019/08/The-Physicians-Foundation-SDOH-Viewpoints.pdf.
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    Health-related social needs (HRSNs), which we have previously 
defined as individual-level, adverse social conditions that negatively 
impact a person's health or healthcare, are significant risk factors 
associated with worse health outcomes as well as increased healthcare 
utilization.\471\ In 2017, the CMS Innovation Center launched the 
Accountable Health Communities (AHC) Model to test the impact of 
addressing the HRSNs of Medicare and Medicaid 
beneficiaries.472 473 474 475 Although there are other 
models of care that address HRSNs, the AHC Model is one of the first 
Federal pilots to test whether systematically identifying and 
addressing core HRSNs--through screening, referral, and community 
navigation--improves healthcare costs, utilization, and outcomes.\476\ 
Moreover, as described in the CMS Equity Plan for Improving Quality in 
Medicare, complex interactions among individual need, clinician 
practice/behavior, and availability of community resources 
significantly impact healthcare access, quality, and ultimately 
costs.477 478
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    \471\ Centers for Medicare & Medicaid Services. (2021). A Guide 
to Using the Accountable Health Communities Health-Related Social 
Needs Screening Tool: Promising Practices and Key Insights. June 
2021. Available at https://innovation.cms.gov/media/document/ahcm-screeningtool-companion.
    \472\ Centers for Medicare & Medicaid Services. (June, 2021). A 
Guide to Using the Accountable Health Communities Health-Related 
Social Needs Screening Tool: Promising Practices and Key Insights. 
Available at https://innovation.cms.gov/media/document/ahcm-screeningtool-companion.
    \473\ Alley, D.E., Asomugha, C.N., Conway, P.H., & Sanghavi, 
D.M. 2016. Accountable Health Communities--Addressing Social Needs 
through Medicare and Medicaid. The New England Journal of Medicine 
374(1):8-11. Available at https://doi.org/10.1056/NEJMp1512532.
    \474\ Billioux, A., Verlander, K., Anthony, S., & Alley, D. 
(2017). Standardized Screening for Health-Related Social Needs in 
Clinical Settings: The Accountable Health Communities Screening 
Tool. NAM Perspectives, 7(5). Available at https://doi.org/10.31478/201705b.
    \475\ Centers for Medicare & Medicaid Services. (2021). 
Accountable Health Communities Model. Accountable Health Communities 
Model [verbarlm] CMS Innovation Center. Available at https://innovation.cms.gov/innovation-models/ahcm.
    \476\ RTI International. (2020). Accountable Health Communities 
(AHC) Model Evaluation. Available at https://innovation.cms.gov/data-and-reports/2020/ahc-first-eval-rpt.
    \477\ Centers for Medicare & Medicaid Services. (2021). Paving 
the Way to Equity: A Progress Report. Available at https://www.cms.gov/files/document/paving-way-equity-cms-omh-progress-report.pdf.
    \478\ Centers for Medicare & Medicaid Services, Office of 
Minority Health. (2021). The CMS Equity Plan for Improving Quality 
in Medicare. 2015-2021. Available at https://www.cms.gov/About-CMS/Agency-Information/OMH/OMH_Dwnld-CMS_EquityPlanforMedicare_090615.pdf.
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    Conceptually, HRSNs exist along a continuum with other equity-
related terms--such as ``social determinants of health'' and ``social 
risk factors''--used to describe upstream factors that can adversely 
affect the health of individuals and communities. Often conflated and 
even used interchangeably, the variety of terms has created confusion, 
as well as concern, prompting leaders in the field to adopt ``drivers 
of health'' (DOH) instead.\479\

[[Page 70055]]

Hereafter, we utilize DOH terminology to more holistically capture 
aforementioned and related concepts, while minimizing potential 
misinterpretation and/or negative connotation.
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    \479\ ``What We Need To Be Healthy--And How To Talk About It,'' 
Health Affairs Blog, May 3, 2021. doi:10.1377/hblog20210429.335599. 
Available at https://www.healthaffairs.org/do/10.1377/forefront.20210429.335599/.
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    We believe that consistently addressing DOH will have two 
significant benefit for MIPS . First, because DOH disproportionately 
impact individuals and communities that are disadvantaged and/or 
underserved by the healthcare system, the promotion of screening for 
these factors would support clinician practices and health systems in 
actualizing an expressed commitment to address disparities in care, 
implementing associated equity measures to track progress, and 
improving overall health equity.\480\
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    \480\ American Hospital Association. (December, 2020). Health 
Equity, Diversity & Inclusion Measures for Hospitals and Health 
System Dashboards. Available at https://ifdhe.aha.org/system/files/media/file/2020/12/ifdhe_inclusion_dashboard.pdf.
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    Second, patient-level DOH data through screening is essential in 
the long-term to encourage meaningful collaboration among clinicians 
and community-based organizations, and implement and evaluate related 
innovations in healthcare and social service delivery.
    As a first step towards addressing DOH to close health equity gaps 
among patients served by MIPS-eligible clinicians, we propose the 
adoption of an evidence-based DOH measure (we refer readers to Table 
Group A.3 of Appendix 1 of the CY 2023 PFS proposed rule for the 
proposed measure information (87 FR 46460 and 46461) that would support 
identification of specific DOH associated with inadequate healthcare 
access and adverse health outcomes among patients. We noted that the 
measure would enable systematic collection of DOH data. This 
standardized measure would enable clinicians to systematically address 
DOH affecting individual patients; thereby, improving not only early 
identification of risk and/or need, but also prompt referral to 
relevant resources as well as stronger clinical-community linkages. 
Further, collecting DOH data could promote more focused collaboration 
between clinicians/health systems and appropriate community-based 
organizations to guide cross-sector resource allocation and ultimately 
improved patient outcomes.
    The ``Screening for Social Drivers of Health'' measure assesses the 
percent of patients who are 18 years or older screened for food 
insecurity, housing instability, transportation problems, utility 
difficulties, and interpersonal safety. Under our Meaningful Measures 
Framework,\481\ the measure addresses the quality priority of ``Work 
with Communities to Promote Best Practices of Healthy Living'' through 
the Meaningful Measures Area of ``Equity of Care.'' Additionally, 
pursuant to Meaningful Measures 2.0, this measure addresses the 
``healthcare equity'' priority area and aligns with our commitment to 
introduce plans to close equity gaps and promote health equity through 
quality measures, including to ``develop and implement measures that 
reflect social and economic determinants.'' \482\ The development and 
proposal of this measure also aligns with the CMS strategic pillar to 
advance health equity by addressing the health disparities that 
underlie our health system \483\ and the 5 CMS health equity priorities 
for reducing disparities in health: \484\
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    \481\ Centers for Medicare & Medicaid Services. Meaningful 
Measures Framework. Available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityInitiativesGenInfo/CMS-Quality-Strategy.
    \482\ Centers for Medicare & Medicaid Services. Meaningful 
Measures 2.0: Moving from Measure Reduction to Modernization. 
Available at https://www.cms.gov/medicare/meaningful-measures-framework/meaningful-measures-20-moving-measure-reduction-modernization. We note that Meaningful Measures 2.0 is still under 
development.
    \483\ Brooks-LaSure, C. (2021). My First 100 Days and Where We 
Go From Here: A Strategic Vision for CMS. Available at https://www.cms.gov/blog/my-first-100-days-and-where-we-go-here-strategic-vision-cms.
    \484\ Centers for Medicare & Medicaid Services, CMS Framework 
for Health Equity 2022-2032. Available at https://www.cms.gov/files/document/cms-framework-health-equity.pdf.
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    Priority 1: Expand the Collection, Reporting, and Analysis of 
Standardized Data.
     Priority 2: Assess Causes of Disparities Within CMS 
Programs, and Address Inequities in Policies and Operations to Close 
Gaps.
     Priority 3: Build Capacity of Health Care Organizations 
and the Workforce to Reduce Health and Health Care Disparities.
     Priority 4: Advance Language Access, Health Literacy, and 
the Provision of Culturally Tailored Services.
     Priority 5: Increase All Forms of Accessibility to Health 
Care Services and Coverage.
    We solicited public comment regarding the proposal to include and 
implement the ``Screening for Social Drivers of Health'' measure as 
part of the CY 2023 performance period MIPS quality measure inventory 
(87 FR 46279 and 46280). For a summary of the public comments received 
regarding the proposal, we refer readers to Table Groups A of Appendix 
1 of this final rule. After consideration of public comments, and for 
the reasons stated above and in the CY 2023 PFS proposed rule (87 FR 
46279 and 46280), we are finalizing the implementation of the 
``Screening for Social Drivers of Health'' measure as proposed (we 
refer readers to Table Group A of Appendix 1 of this final rule for the 
discussion pertaining to this MIPS quality measure).
(d) MIPS Quality Performance Category Health Equity Request for 
Information
    The CY 2023 PFS proposed rule contained a request for information 
pertaining to health equity within the quality performance category, 
which focused on aspects of the development and implementation of 
health equity measures (that is, solicited comment on measure concepts; 
and implementation challenges and barriers) for the quality performance 
category as we seek to enhance and increase the number of MIPS quality 
measures in future years that address and/or incorporate factors 
pertaining to health equity (87 FR 46280 through 46282).
    We thank commenters for their responses regarding this request for 
information. We may consider the information provided by commenters to 
inform future rulemaking.
(e) Developing Quality Measures That Address Amputation Avoidance in 
Diabetic Patients Request for Information
    The CY 2023 PFS proposed rule contained a request for information 
regarding the development of MIPS quality measures that address 
amputation avoidance in diabetic patients, which focused on the 
identification of measure concepts around this topic that would lead to 
improved patient outcomes, and proactive care in an attempt to avoid 
amputation (87 FR 46282 through 46283).
    We thank commenters for their responses regarding this request for 
information. We may consider the information provided by commenters to 
inform future rulemaking.
(2) Cost Performance Category
(a) Background
    We refer readers to the CY 2017 and CY 2018 Quality Payment Program 
final rules, and the CY 2019, CY 2020, CY 2021, and CY 2022 PFS final 
rules (81 FR 77162 through 77177, 82 FR 53641 through 53648, 83 FR 
59765 through

[[Page 70056]]

59776, 84 FR 62959 through 62979, 85 FR 84877 through 84881, and 86 FR 
65445 through 65461, respectively) for a description of the statutory 
basis for and existing policies pertaining to the cost performance 
category.
    In the CY 2023 PFS proposed rule (87 FR 46283 and 46284), we 
proposed to update the operational list of care episode and patient 
condition groups and codes by adding the Medicare Spending Per 
Beneficiary (MSPB) Clinician cost measure as a care episode group.
(b) Revisions to the Operational List of Care Episode and Patient 
Condition Groups and Codes
    Section 1848(r) of the Act specifies a series of steps and 
activities for the Secretary to undertake to involve physicians, 
practitioners, and other interested parties in enhancing the 
infrastructure for cost measurement, including for purposes of MIPS and 
APMs. Section 1848(r)(2) of the Act requires the development of care 
episode and patient condition groups, and classification codes for such 
groups, and provides for care episode and patient condition groups to 
account for a target of an estimated one-half of expenditures under 
Parts A and B (with this target increasing over time as appropriate). 
Sections 1848(r)(2)(E) through (G) of the Act require the Secretary to 
post on the CMS website a draft list of care episode and patient 
condition groups and codes for solicitation of input from interested 
parties, and subsequently, post an operational list of such groups and 
codes. Section 1848(r)(2)(H) of the Act requires that not later than 
November 1 of each year (beginning with 2018), the Secretary shall, 
through rulemaking, revise the operational list as the Secretary 
determines may be appropriate, and that these revisions may be based on 
experience, new information developed under section 1848(n)(9)(A) of 
the Act, and input from physician specialty societies and other 
interested parties. For more information about past revisions to the 
operational list, we refer readers to 84 FR 62968 through 62969 and 86 
FR 65452 through 65453. The current operational list is available at 
the MACRA Feedback page at https://www.cms.gov/Medicare/Quality-Payment-Program/Quality-Payment-Program/Give-Feedback. Additionally, as 
required by section 1848(r)(2)(I) of the Act, information on resource 
use (or cost) measures currently in use in MIPS, cost measures under 
development and the time-frame for such development, potential future 
cost measure topics, a description of engagement with interested 
parties, and the percent of expenditures under Medicare Parts A and B 
that are covered by cost measures must be provided on the website of 
CMS not later than December 31 of each year.
    In prior rulemaking, we have included episode-based measures that 
focus on specific procedures and conditions in the operational list of 
care episode and patient condition groups and codes (84 FR 62968 
through 62969 and 86 FR 65452 through 65453). Section 1848(r)(2)(D)(ii) 
of the Act specifies that in establishing the care episode groups, we 
must take into account the patient's clinical problems at the time 
items and services are furnished during an episode of care, such as the 
clinical conditions or diagnoses, whether or not inpatient 
hospitalization occurs, and the principal procedures or services 
furnished, as well as other factors we determine appropriate. Section 
1848(r)(2)(D)(iii) of the Act specifies that in establishing the 
patient condition groups, we must take into account the patient's 
clinical history at the time of a medical visit, such as the patient's 
combination of chronic conditions, current health status, and recent 
significant history (such as hospitalization and major surgery during a 
previous period, such as 3 months), as well as other factors we 
determine appropriate. Currently, in the operational list there are 21 
care episode groups, which served as the basis for the 15 procedural 
episode-based measures and the 6 acute inpatient medical episode-based 
measures that have been established for the cost performance category 
(83 FR 59767 through 59773, 84 FR 62962 through 62968, and 86 FR 65446 
through 65453), and 2 patient condition groups, which served as the 
basis for the 2 chronic condition episode-based measures that have been 
established for the cost performance category (86 FR 65446 through 
65453). Given that population-based measures, such as the MSPB 
Clinician and total per capita cost measures, focus on a broader range 
of patient care, CMS and interested parties have considered them to be 
distinct from episode-based measures. Therefore, we did not include 
these two population-based measures in the operational list after they 
were comprehensively re-evaluated in 2019 and revised for use in MIPS 
beginning with the CY 2020 performance period/CY 2022 MIPS payment year 
(84 FR 62974 through 62977). This distinction between episode-based 
measures and population-based measures also reflects development status 
as episode-based measures were developed specifically for use in MIPS, 
while the original versions of the MSPB Clinician and total per capita 
cost measures were first used in the Value Modifier (VM) program before 
being adapted for MIPS for the CY 2017 performance period/CY 2019 MIPS 
payment year (81 FR 77166 through 77168). For additional background on 
the population-based measures currently in use in MIPS please refer to 
84 FR 62969 through 62977.
    We proposed to add the MSPB Clinician measure to the operational 
list as a care episode group. Consistent with section 1848(r)(2)(D)(ii) 
of the Act, the MSPB Clinician measure takes into account the patient's 
clinical diagnoses at the time of an inpatient hospitalization and 
includes the costs of various items and services furnished during an 
episode of care. The MSPB Clinician measure is constructed using many 
aspects of the same logic as episode-based measures based on the care 
episode groups currently on the operational list. Both the MSPB 
Clinician and the episode-based measures are based on clearly-defined 
episodes and include the services that are clinically related to the 
clinician's role in the care being assessed. Further, the MSPB 
Clinician measure attributes episodes under medical Medicare Severity--
Diagnosis Related Groups (MS-DRGs) to clinician groups billing at least 
30 percent of evaluation and management (E/M) services during an 
inpatient stay, which is the same attribution logic as the one used for 
acute inpatient medical episode-based measures. Therefore, designating 
the MSPB Clinician measure as a care episode group alongside the 
episode-based measures would ensure that these similarities are 
reflected in the operational list. For more information on the MSPB 
Clinician measure, we referred readers to the CY 2020 PFS final rule 
(84 FR 62974 through 62977) and to the measure specification documents 
that are available on the QPP Resource Library at https://qpp.cms.gov/about/resource-library.
    In the CY 2023 PFS proposed rule (87 FR 46284), we noted that at 
this time we did not propose to add the total per capita cost measure 
to the operational list as a care episode group or patient condition 
group. The measure is not constructed based on episodes of care; 
rather, it includes all costs after a primary care-type relationship 
has been identified. It also does not focus on specific patient 
conditions as it aims to include all patients where this clinician-
patient relationship has been identified. More detailed information on 
the total per capita cost measure is included in

[[Page 70057]]

the measure specifications documents available at the Quality Payment 
Program Resource Library website at https://qpp.cms.gov/resources/resource-library.
    In the CY 2023 PFS proposed rule (87 FR 46284), we noted that we 
did not intend for the proposal to detract from the importance of 
episode-based measures or affect our plans to continue developing 
episode-based measures for potential use in MIPS. There are 7 episode-
based measures under development and 4 anticipated episode-based 
measures to begin development this year. The operational list as 
revised to reflect the proposal is available on the MACRA Feedback Page 
at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-Feedback.html. We sought public comment on the proposal.
    The following is a summary of the public comments received on the 
proposed revisions to the operational list of care episode and patient 
condition groups and codes and our responses:
    Comment: Several commenters expressed support for the proposal to 
add the MSPB Clinician measure to the operational list as a care 
episode group, stating that they support any changes to cost measures 
that would improve meaningful and accurate measurement. A couple of 
commenters expressed concern that this proposal would create further 
complexity and administrative burden for clinicians, with one commenter 
suggesting that a delay in implementation of this proposal would allow 
clinicians to provide their feedback on the MSPB Clinician measure.
    Response: The proposal was not intended to modify the MSPB 
Clinician measure itself or change the way in which the measure is 
attributed to clinicians. We do not believe the proposal would create 
any additional burden for clinicians or result in any additional 
complexities for the cost performance category or MIPS in general. We 
also note that the MSPB Clinician measure has been in use in the MIPS 
program since 2020 (84 FR 62974 through 62977), and underwent extensive 
testing and received considerable stakeholder input prior to its 
implementation in the program. Additionally, since the measure's 
implementation in the MIPS program, stakeholders have continued to have 
the opportunity to provide feedback on the measure via the QPP Help 
Desk for CMS's future consideration. Therefore, we believe that it is 
not necessary to delay the finalization of this proposal by a year to 
gather stakeholder feedback, as suggested by the commenter.
    Comment: Several commenters expressed concern that designating the 
MSPB Clinician measure as a care episode group would detract CMS from 
developing new episode-based cost measures. A few commenters further 
urged CMS to continue developing new episode-based cost measures. One 
commenter expressed support for the Emergency Medicine episode-based 
cost measure that was recently developed, noting that there currently 
are limited MIPS cost measures for emergency physicians.
    Response: The development of episode-based cost measures that focus 
on specific procedures and conditions continues to be one of the CMS's 
priorities for the cost performance category. Our proposal to add the 
MSPB Clinician measure to the operational list as a care episode group 
would have no impact on CMS's plans to continue developing episode-
based cost measures for potential inclusion in the MIPS program in 
future years, as noted in the CY 2023 PFS proposed rule (87 FR 46284). 
Five episode-based measures (including Depression, Emergency Medicine, 
Heart Failure, Low Back Pain, and Psychoses and Related Conditions 
episode-based measures) were developed recently, and five additional 
episode-based measures (including Chronic Kidney Disease [CKD], End-
Stage Renal Disease [ESRD], Kidney Transplant Management, Prostate 
Cancer, and Rheumatoid Arthritis episode-based measures) are currently 
under development. Please refer to the MACRA Feedback Page (https://www.cms.gov/Medicare/Quality-Payment-Program/Quality-Payment-Program/Give-Feedback) for more detail on the episode-based measure development 
activities.
    Comment: One commenter requested clarification as to whether the 
case minimum of the MSPB Clinician measure would change from 35 
episodes to 20 episodes, if the proposal is finalized. The commenter 
did not note concerns about the proposal if the case minimum and 
measure construction remained the same, but expressed concerns that a 
lower case minimum would have impact on attribution. Another commenter 
requested clarification on whether the scoring for the cost performance 
category would change if the MSPB Clinician measure is added to the 
operational list as a care episode group. Finally, another commenter 
urged CMS to share the relevant data on the new MSPB Clinician measure 
with physicians and seek their feedback on that data and the measure 
itself prior to implementing the measure.
    Response: We did not propose to modify the MSPB Clinician measure's 
specifications, including the previously established case minimum. 
Therefore, the measure's 35-episode case minimum that was finalized in 
the CY 2017 Quality Payment Program final rule (81 FR 77171) and 
codified under Sec.  414.1350(c)(2) would not change. Additionally, 
this proposal would not have an impact on the scoring methodology for 
the cost performance category. We further note that given that the 
measure is calculated with administrative claims data and does not 
require data submission from clinicians, the measure does not result in 
any additional burden for clinicians.
    Regarding the comment requesting data on the measure, prior to 
implementation, CMS gathered extensive feedback from clinicians and 
other stakeholders on the measure specifications and testing results 
through many different avenues, as described in the CY 2020 PFS final 
rule (84 FR 62974 through 62977). Since the measure implementation, 
clinicians have received data on the MSPB Clinician measure, described 
in the 2021 MIPS Performance Feedback Patient-Level Data Reports 
Supplement document available for download at https://qpp-cm-prod-content.s3.amazonaws.com/uploads/2036/2021%20MIPS%20Performance%20Feedback%20Patient-Level%20Data%20Reports%20Supplement.pdf.
    After consideration of the public comments we received, we are 
finalizing our proposal to update the operational list of care episode 
and patient condition groups and codes by adding the MSPB Clinician 
cost measure as a care episode group as proposed.
(3) Improvement Activities Performance Category
(a) Background
    For previous discussions on the general background of the 
improvement activities performance category, we refer readers to the CY 
2017 Quality Payment Program final rule (81 FR 77177 and 77178), the CY 
2018 Quality Payment Program final rule (82 FR 53648 through 53661), 
the CY 2019 PFS final rule (83 FR 59776 and 59777), the CY 2020 PFS 
final rule (84 FR 62980 through 62990), CY 2021 PFS final rule (85 FR 
84881 through 84886) and the CY 2022 PFS final rule (86 FR 65462 
through 65466). We also refer readers to 42 CFR 414.1305 for the 
definitions of

[[Page 70058]]

improvement activities and attestation, Sec.  414.1320 for standards 
establishing the performance period, Sec.  414.1325 for the data 
submission requirements, Sec.  414.1355 for standards related to the 
improvement activity performance category generally, Sec.  414.1360 for 
data submission criteria for the improvement activity performance 
category, and Sec.  414.1380(b)(3) for improvement activities 
performance category scoring.
    We did not propose any changes to the traditional MIPS improvement 
activities policies for the CY 2023 performance period/2025 MIPS 
payment year. However, we proposed changes to the improvement 
activities Inventory for the CY 2023 performance period/2025 MIPS 
payment year and future years as follows: adding four new improvement 
activities; modifying five existing improvement activities; and 
removing six previously adopted improvement activities.
(b) Improvement Activities Inventory
(i) Annual Call for Activities Background
    In the CY 2017 Quality Payment Program final rule (81 FR 77190), 
for the transition year of MIPS, we implemented the initial improvement 
activities Inventory consisting of approximately 95 activities (81 FR 
77817 through 77831). We took several steps to ensure the Inventory was 
inclusive of activities in line with statutory and program 
requirements. We discussed that we had conducted numerous interviews 
with highly performing organizations of all sizes and had conducted an 
environmental scan to identify existing models, activities, or measures 
that met all or part of the improvement activities performance 
category, including the patient-centered medical homes, the 
Transforming Clinical Practice Initiative (TCPI), CAHPS surveys, and 
AHRQ's Patient Safety Organizations. In addition, we reviewed the CY 
2016 PFS final rule with comment period (80 FR 71259) and the comments 
received in response to the MIPS and APMs RFI in relation to the 
improvement activities performance category, which sought input on what 
activities could be classified as clinical practice improvement 
activities according to the definition under section 
1848(q)(2)(C)(v)(III) of the Act.
    For the CY 2018 performance period/2020 MIPS payment year, we 
provided an informal process for submitting new improvement activities 
or modifications for potential inclusion in the comprehensive 
improvement activities Inventory for the Quality Payment Program CY 
2018 performance period/2020 MIPS payment year and future years through 
subregulatory guidance.\485\ In the CY 2018 Quality Payment Program 
final rule (82 FR 53656 through 53659), for the CY 2019 performance 
period/2021 MIPS payment year and for future years, we finalized a 
formal Annual Call for Activities process for the addition of possible 
new activities and for possible modifications to current activities in 
the improvement activities Inventory. This process included the 
requirement to submit a nomination form similar to the one we utilized 
for CY 2018 performance period/2020 MIPS payment year (82 FR 53656 
through 53659). In order to submit a request for a new activity or a 
modification to an existing improvement activity, the interested 
parties must submit a nomination form (OMB control # 0938-1314) 
available at www.qpp.cms.gov during the Annual Call for Activities.
---------------------------------------------------------------------------

    \485\ CMS, Annual Call for Measures and Activities: Fact Sheet, 
https://www.cms.gov/Medicare/Quality-IniCtiatives-Patient-Assessment-Instruments/MMS/Downloads/Annual-Call-for-Measures-and-Activities-for-MIPS_Overview-Factsheet.pdf.
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(ii) Changes to the Improvement Activities Inventory
    In the CY 2018 Quality Payment Program final rule (82 FR 53660), we 
finalized that we would establish improvement activities through 
notice-and-comment rulemaking. We refer readers to Table H in the 
Appendix to the CY 2017 Quality Payment Program final rule (81 FR 77177 
through 77199), Tables F and G in the Appendix to the CY 2018 Quality 
Payment Program final rule (82 FR 54175 through 54229), Tables A and B 
in the Appendix 2 to the CY 2019 PFS final rule (83 FR 60286 through 
60303), Tables A, B, and C in the Appendix 2 to the CY 2020 PFS final 
rule (84 FR 63514 through 63538), Tables A, B, and C in the Appendix 2 
to the CY 2021 PFS final rule (85 FR 85370 through 85377), and Tables 
A, B, and C in the Appendix 2 to the CY 2022 PFS final rule (86 FR 
65969 through 65997) for our previously finalized improvement 
activities Inventories. We also refer readers to the Quality Payment 
Program website under Explore Measures and Activities at https://qpp.cms.gov/mips/explore-measures?tab=improvementActivities&py=2020 for 
a complete list of the current improvement activities. In the CY 2017 
Quality Payment Program final rule (81 FR 77539), we codified the 
definition of improvement activities at Sec.  414.1305 to mean an 
activity that relevant MIPS eligible clinicians, organizations, and 
other relevant interested parties identify as improving clinical 
practice or care delivery and that the Secretary determines, when 
effectively executed, is likely to result in improved outcomes.
    We proposed to add four new improvement activities, modify five 
existing improvement activities, and remove six previously adopted 
improvement activities for the CY 2023 performance period/MIPS payment 
year and future years. We refer readers to Appendix 2 of the CY 2023 
PFS proposed rule (87 FR 46800 through 46812) for more details.
    All the new improvement activities that we proposed are responsive 
to the Administration's goal of advancing health equity for all, as 
outlined in the President's January 20, 2021, Executive Order 13985, 
``Advancing Racial Equity and Support for Underserved Communities 
Through the Federal Government'' (https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-through-the-federal-government/). Additionally, all the proposed new improvement activities 
address Priorities for Reducing Disparities in Health, as described in 
the CMS Framework for Health Equity (https://www.cms.gov/About-CMS/Agency-Information/OMH/equity-initiatives/framework-for-health-equity).
    The first proposed new improvement activity, IA_AHE_XX titled ``Use 
Security Labeling Services Available in Certified Health Information 
Technology (IT) for Electronic Health Record (EHR) Data to Facilitate 
Data Segmentation'' would promote the adoption of technology certified 
to the Security tags--summary of care-send and Security tags--summary 
of care-receive criteria at 45 CFR 170.315(b)(7) and (b)(8) in the ONC 
Health IT Certification Program (87 FR 46285).486 487 ONC 
finalized updated versions of these criteria as part of the ONC 21st 
Century Cures Act Final Rule (85 FR 25702), which are available for 
certification by health IT developers. Security tagging allows sharing 
of certain portions of an EHR while not sharing others, such as 
sensitive information related to drivers of health. We referred readers 
to the 2015 Edition final rule (80 FR 62647) for further details. As 
proposed, the improvement

[[Page 70059]]

activity would involve clinicians working with their EHR vendors to 
implement technology meeting the security tags criteria in practice 
systems and clinic workflows. We noted that we believe that 
implementing this technology would improve interoperability while 
protecting patient privacy, thus improving care delivery and patients' 
care experience (87 FR 46286).\488\ We also noted that we believe this 
activity is likely to improve patient outcomes because protection of 
patient privacy and increased interoperability helps improve patient 
care delivery. As proposed, the improvement activity would address the 
CMS Framework for Health Equity Priority 1, Expand the Collection, 
Reporting, and Analysis of Standardized Data.\489\
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    \486\ For more information see: HealthIT.gov. (2020). Sec.  
.(b)() Security tags--summary of care-receive. https://www.healthit.gov/test-method/data-segmentation-privacy-receive#cures_ccg.
    \487\ For more information see: HealthIT.gov. (2020). Sec.  
.(b)() Security tags--summary of care-send. https://www.healthit.gov/test-method/data-segmentation-privacy-send#cures_ccg.
    \488\ For information about the standards in the certification 
criteria as well as other standards supporting security tags, see: 
HealthIT.gov. Security tags for sensitive information. https://www.healthit.gov/isa/security-tags-sensitive-information.
    \489\ Centers for Medicare and Medicaid Services. (2022). CMS 
framework for health equity. https://www.cms.gov/About-CMS/Agency-Information/OMH/equity-initiatives/framework-for-health-equity.
---------------------------------------------------------------------------

    The proposed new improvement activity IA_AHE_XX titled ``Create and 
Implement a Plan to Improve Care for Lesbian, Gay, Bisexual, 
Transgender, and Queer Patients'' supports both CMS Framework for 
Health Equity Priority 1 and Priority 3, Build Capacity of Health Care 
Organizations and the Workforce to Reduce Health and Health Care 
Disparities (87 FR 46286). Eligible clinicians would receive 
improvement activity credit for creating and implementing a plan to 
improve care for lesbian, gay, bisexual, transgender, and queer 
(LGBTQ+) patients by understanding and addressing health disparities 
for this population, which may include analysis of sexual orientation 
and gender identity (SO/GI) data to identify and address disparities in 
care. Actions to implement this activity may include identifying target 
goals for addressing disparities in care, collecting and using 
patients' pronouns and chosen names, training clinicians and staff on 
SO/GI terminology (including as supported by certified health IT and 
ONC's United States Core Data for Interoperability [USCDI] as finalized 
at 45 CFR 170.213), identifying risk factors or behaviors specific to 
LGBTQ+ individuals, communicating SO/GI data security and privacy 
practices with patients, and/or utilizing anatomical inventories when 
documenting patient health histories. LGBTQ+ individuals face health 
disparities and challenges navigating and accessing 
healthcare.490 491 We refer readers to the ONC USCDI website 
at https://www.healthit.gov/isa/united-states-core-data-interoperability-uscdi for further information. Due to lack of 
clinician training about providing culturally competent and sensitive 
care for LGBTQ+ individuals, several studies indicate that LGBTQ+ 
patients, especially gender minority patients, have high rates of 
negative healthcare experiences.492 493 494 This improvement 
activity would fill a gap in the Inventory, which does not currently 
include an activity focused on improving care for LGBTQ+ patients. We 
believe this activity has the potential to improve clinical practice 
and care delivery because training clinicians about working with LGBTQ+ 
patients may lead to more positive care experiences and health outcomes 
(87 FR 46286).\495\
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    \490\ Bosse, J.D., Leblanc, R.G., Jackman, K., & Bjarnadottir, 
R.I. (2018). Benefits of implementing and improving collection of 
sexual orientation and gender identity data in electronic health 
Records. Computers, Informatics, Nursing, 36(6), 267-274. https://doi.org/10.1097/CIN.0000000000000417.
    \491\ Zatloff, J.P., von Esenwein, S.A., Cook, S.C., Schneider, 
J.S., & Haw, J.S. (2021). Transgender-competent health care: Lessons 
from the community. Southern Medical Journal, 114(6), 334-338. 
https://doi.org/10.14423/SMJ.0000000000001261.
    \492\ Chisolm-Straker, M., Jardine, L., Bennouna, C., Morency-
Brassard, N., Coy, L., Egemba, M.O., & Shearer, P.L. (2017). 
Transgender and gender nonconforming in emergency departments: A 
qualitative report of patient experiences. Transgender Health, 2(1), 
8-16. https://doi.org/10.1089/trgh.2016.0026.
    \493\ Samuels, E.A., Tape, C., Garber, N., Bowman, S., & Choo, 
E.K. (2018). ``Sometimes you feel like the freak show'': A 
qualitative assessment of emergency care experiences among 
transgender and gender-nonconforming patients [Article]. Annals of 
Emergency Medicine, 71(2), 170-182. https://doi.org/10.1016/j.annemergmed.2017.05.002.
    \494\ Kronk, C.A., Everhart, A.R., Ashley, F., Thompson, H.M., 
Schall, T.E., Goetz, T.G., Hiatt, L., Derrick, Z., Queen, R., Ram, 
A., Guthman, E.M., Danforth, O.M., Lett, E., Potter, E., Sun, 
S.E.D., Marshall, Z., & Karnoski, R. (2021). Transgender data 
collection in the electronic health record: Current concepts and 
issues. Journal of the American Medical Informatics Association: 
JAMIA. https://doi.org/10.1093/jamia/ocab136.
    \495\ Lund,E. M., & Burgess, C.M. (2021). Sexual and gender 
minority health care disparities: Barriers to care and strategies to 
bridge the gap. Primary Care, 48(2), 179-189. https://doi.org/10.1016/j.pop.2021.02.007.
---------------------------------------------------------------------------

    Another proposed new improvement activity, IA_EPA_XX titled 
``Create and Implement a Language Access Plan'' directly responds to 
the CMS Framework for Health Equity Priority 4, Advance Language 
Access, Health Literacy, and the Provision of Culturally Tailored 
Services (87 FR 46286). This activity involves eligible clinicians' 
creating and implementing a language access plan to address 
communication barriers for individuals with limited English 
proficiency. The language access plans should align with standards for 
communication and language assistance defined in the National Standards 
for Culturally and Linguistically Appropriate Services (CLAS) in Health 
and Health Care. We believe that accurate patient-clinician 
communication, delivered and received in a culturally competent manner, 
is an essential aspect of improving equity in healthcare and patient 
outcomes (87 FR 46286).496 497 The proposed improvement 
activity would fill a gap in the Inventory, which does not currently 
include an activity focused on language access. We noted that we 
believe the proposed improvement activity has the potential to improve 
clinical practice and care delivery and is likely to result in improved 
patient outcomes, because research indicates the importance of accurate 
clinical communication in achieving positive patient outcomes.\498\
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    \496\ Regenstein, M., Huang, J., West, C., Mead, H., Trott, J., 
& Stegun, M. (2008). In any language: Improving the quality and 
availability of language services in hospitals. Robert Wood Johnson 
Foundation (RWJF). https://www.ahrq.gov/downloads/pub/advances2/vol2/Advances-Regenstein_54.pdf.
    \497\ Green, A.R., & Nze, C. (2017). Language-based inequity in 
health care: Who is the ``Poor Historian''? AMA journal of ethics, 
19(3), 263-271. https://doi.org/10.1001/journalofethics.2017.19.3.medu1-1703.
    \498\ Wasserman, M., Renfrew, M.R., Green, A.R., Lopez, L., Tan-
McGrory, A., Brach, C., & Betancourt, J.R. (2014). Identifying and 
preventing medical errors in patients with limited English 
proficiency: Key findings and tools for the field. Journal for 
Healthcare Quality, 36(3), 5-16. https://doi.org/10.1111/jhq.12065.
---------------------------------------------------------------------------

    The fourth proposed new improvement activity, IA_ERP_XX titled 
``COVID-19 Vaccine Promotion for Practice Staff'' supports CMS 
Framework for Health Equity Priority 3. COVID-19 vaccination rates in 
the U.S. can be improved significantly, particularly in underserved 
communities (87 FR 46286).\499\ Disparities in COVID-19 vaccination 
rates have been observed specifically among healthcare workers, with 
physicians and advanced practiced staff being more likely to be 
vaccinated than nurses and support staff. Also, it has been reported 
that Black and younger health care workers have lower vaccination rates 
than other groups of

[[Page 70060]]

healthcare workers.\500\ The proposed improvement activity would fill a 
gap in the Inventory, which does not currently include an activity 
focused on COVID-19 vaccination. We noted that we believe this activity 
has the potential to improve clinical practice and is likely to result 
in improved outcomes and public health, as research indicates the 
importance of vaccination in reducing the severity and spread of COVID-
19 (87 FR 46286 through 46287).\501\
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    \499\ Diesel, J., Sterrett, N., Dasgupta, S., Kriss, J.L., 
Barry, V., Esschert, K.V., Whiteman, A., Cadwell, B.L., Weller, D., 
Qualters, J.R., Harris, L., Bhatt, A., Williams, C., Fox, L.M., 
Delman, D.M., Black, C.L., Barbour, K.E., Vanden Esschert, K., & 
Meaney Delman, D. (2021). COVID-19 vaccination coverage among 
adults--United States, December 14, 2020-May 22, 2021. MMWR: 
Morbidity and Mortality Weekly Report, 70(25), 922-927. https://doi.org/10.15585/mmwr.mm7025e1.
    \500\ Farah W, Breeher L, Shah V, Hainy C, Tommaso CP, Swift MD. 
Disparities in COVID-19 vaccine uptake among health care workers. 
Vaccine. 2022 Apr 26;40(19):2749-2754. doi: 10.1016/
j.vaccine.2022.03.045. Epub 2022 Mar 25. PMID: 35361500; PMCID: 
PMC8947975.
    \501\ Johnson, A.G., Amin, A.B., Ali, A.R., Hoots, B., Cadwell, 
B.L., Arora, S., Avoundjian, T., Awofeso, A.O., Barnes, J., Bayoumi, 
N.S., Busen, K., Chang, C., Cima, M., Crockett, M., Cronquist, A., 
Davidson, S., Davis, E., Delgadillo, J., Dorabawila, V. (2022). 
COVID-19 incidence and death rates among unvaccinated and fully 
Vaccinated adults with and without booster doses during periods of 
delta and omicron variant emergence--25 U.S. jurisdictions, April 4-
December 25, 2021. Morbidity and Mortality Weekly Report (MMWR), 
71(4), 132-138. https://doi.org/10.15585/mmwr.mm7104e2.
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    We also proposed a number of modifications focused on combining 
activities where possible and other administrative changes (87 FR 
46287). A particularly important proposed modification to an existing 
activity is focused on Priority 1 of the CMS Framework for Health 
Equity, Expand the Collection, Reporting, and Analysis of Standardized 
Data. We proposed to: (1) recategorize the IA_CC_14 improvement 
activity, currently titled ``Practice improvements that engage 
community resources to support patient health goals,'' from the Care 
Coordination subcategory to the Achieving Health Equity subcategory, 
and (2) re-name and re-focus the improvement activity on obtaining and 
acting on drivers of health data (87 FR 46287). More specifically, the 
proposed updated improvement activity with a new ID, IA_AHE_XX, would 
be titled ``Practice Improvements that Engage Community Resources to 
Address Drivers of Health.'' We proposed to modify this improvement 
activity description to include `drivers of health' terminology, which 
better encompasses both `social determinants of health (SDOH)' and 
`health-related social needs (HSRN)' concepts (87 FR 46287). We also 
proposed to update the list of these factors in the description to 
reflect a more comprehensive array of drivers of health. The proposed 
modifications build on ongoing efforts to advance health equity in 
accordance with the Advance Equity Pillar of the CMS Strategic Plan 
(https://www.cms.gov/cms-strategic-plan). We noted that we believe the 
proposed modifications will better enable eligible clinicians to not 
only improve clinical practice by screening for and addressing drivers 
of health, but to also receive credit for their efforts (87 FR 46287). 
Furthermore, we anticipated such efforts will be associated with 
improved clinical outcomes because of the potential impact of social 
drivers of health and other upstream factors on both healthcare and 
health status.502 503 Finally, the proposed modifications 
would also more clearly align this activity with available evidence and 
other CMS work in this area, including the CMS Innovation Center's 
Accountable Health Communities (AHC) Model, designed to test how 
``addressing health-related social needs through enhanced clinical-
community linkages can improve health outcomes and reduce costs.'' 
\504\
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    \502\ Raphael, K., Frakt, A., Jha, A., & Glied, S. (2019). 
Social and health-systems factors that affect health: What's known 
and knowable? A review of literature. https://driversofhealth.org/wp-content/uploads/SDH.whitepaper_v8.pdf.
    \503\ G[oacute]mez, C.A., Kleinman, D.V., Pronk, N., Wrenn 
Gordon, G.L., Ochiai, E., Blakey, C., Johnson, A., & Brewer, K.H. 
(2021). Addressing health equity and social determinants of health 
through healthy people 2030. Journal of Public Health Management and 
Practice, 27, S249-S257. https://doi.org/10.1097/phh.0000000000001297.
    \504\ Accountable Health Communities Model [verbar] CMS 
Innovation Center.
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    The following is a brief summary of the public comments received on 
the proposed revisions to the improvement activities Inventory:
    Comments were generally supportive of the proposed revisions to the 
improvement activities Inventory. We received many comments that were 
particularly supportive of the proposals' focus and potential impact on 
advancing health equity. Feedback was received in support of each of 
the proposed new activities individually, with a very large number of 
commenters expressing appreciation for the proposed new activity, 
Create and Implement a Plan to Improve Care for Lesbian, Gay, Bisexual, 
Transgender, and Queer Patients. Commenters also supported the proposed 
new activity, Adopt Certified Health Information Technology for 
Security Tags for Electronic Health Record Data, with one stating that 
``security labeling for this purpose is essential to the provision of 
equitable care.'' We received one comment regarding the proposed 
improvement activity titled ``COVID-19 Vaccine Achievement for Practice 
Staff'' that suggested we provide an exclusion for staff that have a 
medical contraindication to the vaccination and a comment that 
questioned the use of the phrase ``fully vaccinated.''
    After consideration of the public comments, we are finalizing all 
proposals as proposed except for the following: for one proposed new 
activity, ``COVID-19 Vaccine Achievement for Practice Staff,'' we have 
made changes to the activity description in response to the public 
comments, as follows: Demonstrate that the MIPS eligible clinician's 
practice has maintained or achieved a rate of 100 percent of office 
staff in the MIPS eligible clinician's practice staying up-to-date with 
COVID-19 vaccinations in accordance with the Center for Disease Control 
and Prevention (https://www.cdc.gov/coronavirus/2019-ncov/vaccines/stay-up-to-date.html). Please note that those who are determined to 
have a medical contraindication specified by CDC recommendations are 
excluded from this activity. For one proposed activity modification, 
IA_PSPA_7, Use of QCDR data for ongoing practice assessment and 
improvements, we are finalizing as proposed with the exception of 
making one formatting change to the activity description, changing the 
`or' to `OR,' to make it clear that the requirements of the activity 
have not increased. We refer readers to Appendix 2 to this final rule 
for the public comments we received on our proposals and our detailed 
responses.
(4) Promoting Interoperability Performance Category
(a) Background
    Section 1848(q)(2)(A) of the Act includes the meaningful use of 
certified electronic health record technology (CEHRT) as a performance 
category under the MIPS. We refer to this performance category as the 
Promoting Interoperability performance category (and in past 
rulemaking, we referred to it as the advancing care information 
performance category). For our previously established policies 
regarding the Promoting Interoperability performance category, we refer 
readers to Sec.  414.1375 and the CY 2017 Quality Payment Program final 
rule (81 FR 77199-77245), CY 2018 Quality Payment Program final rule 
(82 FR 53663 through 53688), CY 2019 PFS final rule (83 FR 59785 
through 59820), CY 2020 PFS final rule (84 FR 62991 through 63006), CY 
2021 PFS final rule (85 FR 84886 through 84895), and CY 2022 PFS final 
rule (86 FR 65466-65490).

[[Page 70061]]

(b) Promoting Interoperability Performance Category Performance Period
    As finalized in the CY 2021 PFS final rule at Sec.  414.1320(g)(1) 
(85 FR 84886) (subsequently re-designated as Sec.  414.1320(h)(1) (86 
FR 65671)), for the 2024 MIPS payment year, and each subsequent MIPS 
payment year, the performance period for the Promoting Interoperability 
performance category is a minimum of any continuous 90-day period 
within the calendar year that occurs 2 years prior to the applicable 
MIPS payment year, up to and including the full calendar year. Thus, 
for the CY 2025 MIPS payment year, the performance period for the 
Promoting Interoperability performance category is a minimum of any 
continuous 90-day period within CY 2023, up to and including the full 
CY 2023 (January 1, 2023 through December 31, 2023). We did not propose 
any changes to the Promoting Interoperability performance category 
performance period that we established under Sec.  414.1320(h)(1).
(c) CEHRT Requirements
    The Promoting Interoperability Program and the QPP require the use 
of CEHRT as defined at 42 CFR 495.4 and 414.1305, respectively. Since 
2019, in general, this has consisted of EHR technology (which could 
include multiple technologies) certified under the Office of the 
National Coordinator for Health Information Technology (ONC) Health IT 
Certification Program that meets the 2015 Edition Base EHR definition 
(as defined at 45 CFR 170.102) and has been certified to certain other 
2015 Edition health IT certification criteria as specified in the 
definition.
    The ``21st Century Cures Act: Interoperability, Information 
Blocking, and the ONC Health IT Certification Program'' final rule 
(also referred to as the ``ONC 21st Century Cures Act final rule''), 
published in the May 1, 2020 Federal Register (85 FR 25642 through 
25961), finalized a number of updates to the 2015 Edition of health IT 
certification criteria (also referred to as the 2015 Edition Cures 
Update) and introduced new 2015 Edition certification criteria. In 
connection with these updates, ONC also finalized that health IT 
developers have 24 months from the publication date of the final rule 
(until May 2, 2022) to make technology available that is certified to 
the updated, or new criteria. In response to additional calls for 
flexibility in response to the public health emergency (PHE) for COVID-
19, ONC published an interim final rule with comment period on November 
4, 2020 entitled, ``Information Blocking and the ONC Health IT 
Certification Program: Extension of Compliance Dates and Timeframes in 
Response to the COVID-19 Public Health Emergency'' (hereinafter the 
``ONC interim final rule'') (85 FR 70064). In this interim final rule, 
ONC finalized extended compliance dates for certain 2015 Edition 
certification criteria. Specifically, where the ONC 21st Century Cures 
Act final rule provided that developers of certified health IT have 24 
months from the publication date of the final rule to make technology 
certified to new or updated criteria available, ONC extended the 
timeline until December 31, 2022 (and until December 31, 2023 for 45 
CFR 170.315(b)(10), ``electronic health information ((EHI) export'').
    In the CY 2021 PFS final rule (85 FR 84815 through 84825), we 
finalized that the technology used by health care providers to satisfy 
the definitions of CEHRT at Sec. Sec.  495.4 and 414.1305 must be 
certified under the ONC Health IT Certification Program, in accordance 
with the updated 2015 Edition certification criteria as finalized in 
the ONC 21st Century Cures Act final rule (85 FR 25642). We further 
finalized aligning the transition period during which health care 
providers participating in the Promoting Interoperability Program or 
QPP may use technology certified to either the existing or updated 2015 
Edition certification criteria, with the December 31, 2022 date 
established in the ONC interim final rule for health IT developers to 
make updated certified health IT available. After this date, health 
care providers will be required to use only certified technology 
updated to the 2015 Edition Cures Update for an EHR reporting period or 
performance period in CY 2023. We did not propose any changes to this 
final policy.
    We remind readers that health care providers would not be required 
to demonstrate that they are using updated technology to meet the CEHRT 
definitions immediately upon the transition date of December 31, 2022. 
In accordance with the EHR reporting period and performance period 
established for the Medicare Promoting Interoperability Program and the 
MIPS Promoting Interoperability performance category, participants are 
only required to use technology meeting the CEHRT definitions during a 
self-selected EHR reporting period or performance period of a minimum 
of any consecutive 90 days in CY 2023, including the final 90 days of 
2023 (86 FR 45460 through 45462 and 86 FR 65466, respectively). The 
eligible hospital, CAH, or MIPS eligible clinician is not required to 
demonstrate meaningful use of technology meeting the 2015 Edition Cures 
Update until the EHR reporting period or performance period they have 
selected.
(d) Promoting Interoperability Performance Category Measures for MIPS 
Eligible Clinicians
i. Changes to the Query of Prescription Drug Monitoring Program Measure 
Under the Electronic Prescribing Objective
(A) Measure Background
    We have adopted a Query of Prescription Drug Monitoring Program 
(PDMP) measure under the Electronic Prescribing objective. For 
background on this measure, we refer readers to the CY 2019 PFS final 
rule (83 FR 59800 through 59803) and the CY 2020 PFS final rule (84 FR 
62992 through 62994). In the CY 2021 PFS final rule (85 FR 84887 
through 84888), we finalized that the Query of PDMP measure will remain 
optional and eligible for 10 bonus points for the CY 2021 performance 
period/CY 2023 MIPS payment year. In the CY 2022 PFS final rule (86 FR 
65466 through 65467), we finalized that the Query of PDMP measure will 
remain optional and eligible for 10 bonus points for the CY 2022 
performance period/2024 MIPS payment year.
(B) State PDMPs' Progress and Previous Interested Parties' Feedback
    In the CY 2020, CY 2021, and CY 2022 PFS final rules (84 FR 62992 
through 62994, 85 FR 84887 through 84888 and 86 FR 65467), we described 
the concerns expressed by interested parties that they believed it was 
premature for the Promoting Interoperability performance category to 
require the Query of PDMP measure and score it based on performance. In 
the CY 2022 PFS proposed rule (86 FR 39410) we discussed our support of 
efforts to expand the use of PDMPs, describing Federally supported 
activities aimed at developing a more robust and standardized approach 
to EHR-PDMP integration, and additional discussions on the feedback we 
have received from health IT vendors and MIPS eligible clinicians thus 
far. For more detailed information, we refer readers to the CY 2022 PFS 
proposed rule (86 FR 39410).
    We heard extensive feedback from EHR developers that effectively 
incorporating the ability to count the number of PDMP queries in the 
EHR would require more robust measurement specifications. These 
interested parties stated that EHR

[[Page 70062]]

developers may face significant cost burdens if they fully develop 
numerator and denominator calculations and are then required to change 
the specification at a later date. Interested parties have stated that 
the costs of additional development would likely be passed on to health 
care providers without additional benefit, as this development would be 
solely for the purpose of calculating the measure, rather than 
furthering the clinical goal of the measure. While we recognize that a 
numerator/denominator-based measure remains challenging, we also note 
(as discussed in more detail later in this section) that the widespread 
availability of PDMPs across the country, and recent progress toward 
solutions for connecting PDMPs with health care provider EHR systems, 
has made use of PDMPs feasible through a wide variety of approaches.
(C) Current Status of PDMP Adoption
    Today, all 50 States and several localities host PDMPs.\505\ The 
final State to establish a PDMP, the State of Missouri, passed 
legislation to address this issue in 2021, and is currently working to 
make its PDMP operational. A 2021 American Medical Association report 
found that physicians and others used State PDMPs more than 910 million 
times in 2020.\506\ An assessment of PDMPs conducted by the PDMP 
Training and Technical Assistance Center (TTAC) at the Institute for 
Intergovernmental Research (IIR) found an increase in the number of 
PDMPs that are integrated with Health Information Exchanges (HIEs), 
EHRs, and/or Pharmacy Dispensing Systems (PDSs), with 44 PDMPs 
integrated in 2021 reflecting an increase from 28 PDMPs with at least 
one type of integration in 2017. We refer readers to Table 90 for the 
report's findings on the type of integration and the number of PDMPs 
that have implemented that type of integration in 2021.
---------------------------------------------------------------------------

    \505\ Prescription Drug Monitoring Program Training and 
Technical Assistance Center, PDMP Policies and Capabilities: Results 
From 2021 State Assessment, September 2021, https://www.pdmpassist.org/pdf/PDMP%20Policies%20and%20Capabilities%202021%20Assessment%20Results_20210921.pdf.
    \506\ American Medical Association, 2021 Overdose Epidemic 
Report, https://www.ama-assn.org/system/files/ama-overdose-epidemic-report.pdf.
[GRAPHIC] [TIFF OMITTED] TR18NO22.123

    Moreover, a number of enhancements to PDMPs are occurring across 
the country, including enhancements to RxCheck, which is a free, 
Federally supported interstate exchange hub for PDMP data. RxCheck is 
connected to 50 out of 54 PDMPs in states and territories and does not 
require clinicians to pay to have the PDMP data integrated into the 
EHR.
    The goal of the project is to allow any health care provider who is 
live on the eHealth Exchange to use that existing connection to query a 
patient's record on the RxCheck Hub, which routes the query to 
individual State PDMPs that are also live on RxCheck. This solution 
enables health care providers to query PDMPs via existing connections 
to health information exchange networks. Most States use either RxCheck 
or Prescription Monitoring Program (PMP) InterConnect or both to 
facilitate the sharing of PDMP information between States, allowing 
health care providers to query other States' PDMP information from 
within their own State PDMP.\507\
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    \507\ GAO-21-22, Prescription Drug Monitoring Programs: Views on 
Usefulness and Challenges of Programs.
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    We also note that the Substance Use-Disorder Prevention that 
Promotes Opioid Recovery and Treatment (SUPPORT) for Patients and 
Communities Act (Pub. L. 115-271), enacted in 2018, has focused on ways 
to address the nation's opioid epidemic. The SUPPORT for Patients and 
Communities Act included new requirements for PDMP enhancement and 
integration, to help reduce opioid misuse and overprescribing and 
promote the effective prevention and treatment of opioid use disorder 
beginning in October of 2021. Enhanced Federal matching funds were 
available to States to support related PDMP design, development, and 
implementation activities during FYs 2019 and 2020.
(D) Changes to the Query of PDMP Measure and Related Policies
(aa) Change to the Query of PDMP Measure Description
    The description of the Query of PDMP measure provides that for at 
least one Schedule II opioid electronically prescribed using CEHRT 
during the performance period, the MIPS eligible clinician uses data 
from CEHRT to conduct a query of a PDMP for prescription drug history, 
except where prohibited and in accordance with applicable law. In the 
CY 2023 PFS proposed rule (87 FR 46289), beginning with the performance 
period in CY 2023, we proposed to require the Query of PDMP measure for 
MIPS eligible clinicians participating in the Promoting 
Interoperability performance category. In the CY 2023 PFS proposed rule 
(87 FR 46291 through 46292), we noted that should we finalize our 
proposal to require the Query of PDMP measure beginning with CY 2023, 
we proposed

[[Page 70063]]

two exclusions beginning with the performance period in CY 2023: (1) 
Any MIPS eligible clinician who is unable to electronically prescribe 
Schedule II opioids and Schedule III and IV drugs in accordance with 
applicable law during the performance period, and (2) Any MIPS eligible 
clinician who writes fewer than 100 permissible prescriptions during 
the performance period.
    We noted in the CY 2023 PFS proposed rule (87 FR 46289) that should 
we finalize the proposals to require the Query of PDMP measure and the 
associated exclusions, we believe the inclusion of the phrase ``except 
where prohibited and in accordance with applicable law'' in the 
description of the Query of PDMP measure and in the language of the 
exclusion would be duplicative and potentially cause confusion. 
Therefore, we proposed to remove the phrase ``except where prohibited 
in accordance with applicable law'' from the measure description should 
our proposals to require the Query of PDMP measure and the associated 
exclusions be finalized. In the CY 2023 PFS proposed rule (87 FR 
46289), we referred readers to our proposed measure description that 
would reflect this proposed change and additional proposed policy 
changes for the Query of PDMP measure.
    We invited comment on this proposal, but we did not receive any 
comments.
(ab) Requiring the Query of PDMP Measure
    In the CY 2022 PFS final rule (86 FR 65466 through 65467), we noted 
that the decision to maintain the Query of PDMP as an optional measure 
for CY 2022 considered the current efforts to improve the technical 
foundation for EHR-PDMP integration, the continued implementation of 
the SUPPORT for Patients and Communities Act, our ongoing review of 
alternative measure approaches, and concerns from interested parties 
about the current readiness across States for implementation of the 
existing measure. We also noted that this measure can play an important 
role in helping health care providers to improve clinical decision 
making by utilizing this information to identify potential opioid use 
disorders, inform the development of care plans, and develop effective 
interventions (86 FR 65467); maintaining it as an optional measure with 
bonus points signals to the clinician and vendor community that this is 
an important measure which can help spur development and innovation to 
reduce barriers and challenges (86 FR 65467).
    We continue to believe that PDMPs play an important role in patient 
safety by assisting in the identification of patients who have multiple 
prescriptions for controlled substances or may be misusing or overusing 
them. Querying the PDMP is important for tracking dispensed controlled 
substances and improving prescribing practices. Efforts to expand the 
use of PDMPs and integrate PDMPs with health information technology 
systems are supported by Federal interested parties including ONC, the 
Centers for Disease Control and Prevention (CDC), the Department of 
Justice (DOJ), and the Substance Abuse and Mental Health Services 
Administration (SAMHSA). The Query of PDMP measure offers a way to 
reward health care providers who participate in current PDMP 
initiatives, including those supported by Federal partners.
    While work continues to improve standardized approaches to PDMP and 
EHR interoperability, we believe that it is feasible at this time to 
require MIPS eligible clinicians to report the current Query of PDMP 
measure, which requires reporting a ``yes/no'' response. Given our 
policies for the Query of PDMP measure that included increasing the 
eligible bonus points to reward MIPS eligible clinicians that could 
report the measure, as well as the recent progress in the availability 
of PDMPs in all 50 States, and solutions which support accessibility of 
PDMPs to health care providers, we believe MIPS eligible clinicians 
have had time to grow familiar with what this measure requires of them, 
even as technical approaches to the use of PDMPs continue to advance. 
By requiring a ``yes/no'' response the measure allows MIPS eligible 
clinicians to use a variety of technical solutions to conduct a query 
of the PDMP and receive credit for the measure.
    Therefore, beginning with the performance period in CY 2023, we 
proposed to require MIPS eligible clinicians to report the Query of 
PDMP measure (which requires reporting a ``yes/no'' response) for the 
Promoting Interoperability performance category (87 FR 46289). We noted 
that we would maintain the associated points at 10 points and referred 
readers to the CY 2023 PFS proposed rule (87 FR 46298 through 46307) 
and section IV.A.6.c.(4)(d)(i) of this final rule for further 
discussion of our scoring methodology and concurrent finalized changes. 
As a result of the proposal, the maximum total points available for the 
Electronic Prescribing Objective would remain at 20 points for CY 2023.
    We solicited public comment on this proposal, and also sought 
feedback on ways CMS can ensure coordination and alignment with varying 
State requirements for PDMPs. Additionally, we invited public comment 
on what information returned from the PDMP query would be clinically 
significant. The following is a summary of the comments received.
    Comment: Several commenters supported our proposal to require the 
Query of PDMP measure. One commenter thanked CMS for keeping the 
measure optional until the ecosystem was developed enough to allow 
widespread use, without adding additional technical burdens. A few 
commenters supported this proposal stating that this policy will help 
address and combat the opioid epidemic, and bring awareness to 
prescribers.
    Response: We agree that after several years as an optional measure, 
and given the more widespread use and availability of PDMPs, requiring 
the Query of PDMP measure is viable at this time. We also appreciate 
that commenters continue to recognize our efforts towards combatting 
the opioid epidemic.
    Comment: Several commenters did not support our proposal to require 
the Query of PDMP measure. A few commenters stated that our proposal 
would be administratively burdensome, as well as costly for those MIPS 
eligible clinicians facing various challenges with EHR-PDMP 
integration. Other commenters stated that this requirement would be 
challenging for those MIPS eligible clinicians who lack an integrated 
PDMP, or for those whose EHR technology remains under development. 
Another commenter expressed that without standards across state lines, 
there is wide variation with PDMP implementation and the integration 
with CEHRT. Some commenters stated that many States and clinicians are 
continuing to make enhancements to their EHRs, to include RxCheck 
functionality, and asked that CMS postpone requiring the measure one 
additional year to further advance and integrate their EHR technology. 
Another commenter stated that many MIPS eligible clinicians are 
incapable of interconnecting their EHR with a PDMP, making this measure 
impossible to complete, especially in a State where such integrated 
functionality is not practical or possible.
    Response: We appreciate the concerns raised by the commenters. We 
agree with the commenters that not all MIPS eligible clinicians have a 
fully operational statewide PDMP or a fully integrated EHR-PDMP. We 
recognize that without full integration, it is possible that the 
actions required to

[[Page 70064]]

satisfy the Query of PDMP measure could be time-consuming for 
clinicians and potentially cause clinical disruption. For these 
reasons, we are adopting an additional exclusion for the Query of PDMP 
that will be available only for the CY 2023 performance period/2025 
MIPS payment year. As stated in section IV.A.6.c.(4)(d)(iii) of this 
final rule, the exclusion allows any MIPS eligible clinician for whom 
querying a PDMP would impose an excessive workflow or cost burden prior 
to the start of the performance period they select in CY 2023, to 
exclude the Query of PDMP measure. We expect that this time-limited 
exclusion will allow MIPS eligible clinicians time to resolve any 
remaining barriers to reporting the measure.
    Comment: Several commenters did not support our proposal, stating 
that there is limited evidence supporting the overall relationship 
between querying a PDMP and a reduction in opioid-related consequences. 
One commenter stated that despite the rise in usage and availability of 
PDMPs, the overall drug-related mortality rates are also rising, 
leading to an inverse relationship between the measure and the intended 
outcome.
    Response: We recognize that the Query of PDMP measure by itself 
will not resolve the opioid epidemic, but we believe the measure is an 
important step for MIPS eligible clinicians to gain additional 
awareness when prescribing Schedule II opioids, and Schedule III and IV 
drugs to their patients. It will give prescribing clinicians insight 
into the broader clinical picture and prescribing history of their 
patient, and ultimately, improve the safety and quality of care.
    Comment: One commenter expressed concern that patients may suffer 
harm as the proposal would place undue administrative burden on MIPS 
eligible clinicians having to query a PDMP for patients based on 
medications prescribed, taking away from clinical time. Another 
commenter stated that the proposed policy could have unintended 
consequences, as patients requiring the use of opioids would be further 
stigmatized, leaving them less likely to receive the care they need, 
and ultimately, denial of care and patient mistreatment.
    Response: We reiterate that the Query of PDMP measure requires a 
minimum of one query of a PDMP during the 90-day performance period 
selected by the clinician. Additionally, our goal is not to alter 
clinical standards, deviate from clinically appropriate prescribing 
practices, nor replace clinical time with administrative 
responsibilities. Rather, we believe that requiring the measure is one 
step towards increasing overall awareness when prescribing Schedule II 
opioids and Schedule III and IV drugs. We do not believe that the act 
of querying a PDMP should have unintended consequences on the patient, 
or result in the denial of clinically appropriate care or the 
mistreatment of patients. Instead, we believe that this measure may aid 
prescribing clinicians in early identification of patients who have 
multiple prescriptions for controlled substances or may be misusing or 
overusing them. We view this measure as an important step in ensuring 
safe prescribing practices, and potentially avoiding unintended 
consequences from overprescribing.
(ii) Changes to the Query of PDMP Measure To Include Schedules II, III 
and IV
    The Query of PDMP measure was adopted in the CY 2019 PFS final rule 
(83 FR 59800 through 59803) as one of two measures under the Electronic 
Prescribing Objective intended to support HHS initiatives related to 
the treatment of opioid and substance use disorders by helping health 
care providers avoid inappropriate prescriptions, improving 
coordination of prescribing amongst health care providers, and focusing 
on the advanced use of CEHRT. The measure description for the Query of 
PDMP measure is as follows: for at least one Schedule II opioid 
electronically prescribed using CEHRT during the performance period, 
the MIPS eligible clinician uses data from CEHRT to conduct a query of 
a PDMP for prescription drug history, except where prohibited and in 
accordance with applicable law (83 FR 59800 through 59803).
    Under the Controlled Substances Act (CSA),\508\ the Drug 
Enforcement Administration classifies drugs, substances, and certain 
chemicals used to make drugs into five distinct categories or schedules 
depending upon the drug's acceptable medical use and the drug's abuse 
or dependency potential. A drug's abuse rate is a factor used to 
determine its classification; for example, Schedule I medications have 
the highest abuse potential while medications in Schedule V have a low 
abuse potential. We refer readers to Table 91 for information on each 
Schedule, including abuse potential, medicinal use, if any, and drug 
examples. For additional information, we refer readers to the listing 
of drugs and their schedule located at CSA Scheduling at https://www.deadiversion.usdoj.gov/schedules/orangebook/c_cs_alpha.pdf.\509\
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    \508\ Public Law 91-513, tit. II, 84 Stat. 1236, 1242-84 (1970); 
codified, as amended, at 21 U.S.C. 801 et seq.
    \509\ See also https://www.dea.gov/sites/default/files/2020-04/Drugs%20of%20Abuse%202020-Web%20Version-508%20compliant-4-24-20_0.pdf.

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[[Page 70065]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.124

    PDMPs are operated at the State level and individual State 
requirements for reporting and use differ from State to State.\510\ 
Currently, every State collects data on schedules II, III, and IV.\511\ 
Some States collect information about certain non-controlled substances 
that are potentially subject to abuse or on all prescription 
drugs.\512\ While State laws vary, we note that most State PDMPs 
require physicians and dispensing pharmacists to review a patient's 
prescribing information for the past 12 months prior to prescribing or 
dispensing any Schedule II, III, and IV controlled substances.\513\
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    \510\ For additional information, we refer readers to https://www.cdc.gov/drugoverdose/pdf/Leveraging-PDMPs-508.pdf; https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4605194/; and https://www.pdmpassist.org/Policies/Legislative/StatutesAndRegulations.
    \511\ https://www.pdmpassist.org/State.
    \512\ GAO report, GAO-21-22 Prescription Drug Monitoring 
Programs.
    \513\ https://www.pdmpassist.org/State.
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    PDMPs play an important role in patient safety by assisting in the 
identification of patients who have multiple prescriptions for 
controlled substances or may be misusing or overusing them. As stated 
in the CY 2023 proposed rule (87 FR 46290), we believe that expanding 
the requirements of the Query of PDMP measure to include Schedule III 
and IV drugs in addition to Schedule II opioids will further support 
HHS initiatives related to the treatment of opioid and substance use 
disorders by expanding the types of drugs included in the Query of PDMP 
measure while aligning with the PDMP requirements in a majority of 
States. We also stated that we believe this expansion to include 
additional Scheduled drugs would facilitate more informed prescribing 
practices and improve patient outcomes. Therefore, beginning with the 
performance period in CY 2023, we proposed to expand the Query of PDMP 
measure to include Schedule III and IV drugs in addition to Schedule II 
opioids (87 FR 46290 through 46291).
    Proposed Measure Description: For at least one Schedule II opioid 
or Schedule III or IV drug electronically prescribed using CEHRT during 
the performance period, the MIPS eligible clinician uses data from 
CEHRT to conduct a query of a PDMP for prescription drug history.
    To align with policy for the Query of PDMP measure with regard to 
Schedule II opioids, we proposed that the query of the PDMP for 
prescription drug history must occur prior to the electronic 
transmission of an electronic prescription for a Schedule II opioid or 
Schedule III or Schedule IV drug (87 FR 46290 and 46291). We also noted 
that this measure would include all permissible prescriptions and 
dispensing of Schedule II opioids and Schedule III or IV drugs, no 
matter the dosage prescribed during an encounter in order for MIPS 
eligible clinicians to identify multiple health care provider episodes 
(physician shopping), prescriptions of dangerous combinations of drugs, 
and controlled substances prescribed in high quantities. We also noted 
that multiple prescriptions for Schedule II opioids or Schedule III and 
IV drugs prescribed on the same date, by the same MIPS eligible 
clinician would not require multiple queries of the PDMP and only one 
query would have to be performed for this measure. MIPS eligible 
clinicians would have flexibility to query the PDMP using data from 
CEHRT in any manner allowed under State law.
    We invited public comment on these proposals, and the following is 
a summary of the comments received.
    Comment: Several commenters supported our proposal to include 
Schedule III and IV drugs in addition to Schedule II opioids in the 
Query of PDMP measure. Some commenters stated that including Schedule 
III and IV drugs would balance PDMP engagement with minimizing 
compliance burden. One commenter stated that limiting the Query of PDMP 
to Schedule II opioids alone causes additional burden on the MIPS 
eligible clinician as they would need to focus on one class of drugs 
versus several, and therefore, this proposal would reduce overall 
clinician burden. One commenter stated that our proposal to include 
Schedule III and IV drugs would reduce organizational and developer 
burden by minimizing the need to build specialty logic reports into 
their existing EHRs.
    Response: We agree that the proposal to include Schedule III and IV 
drugs in addition to Schedule II opioids should reduce burden by 
eliminating the need

[[Page 70066]]

to limit the query to only Schedule II opioids.
    Comment: One commenter asked that CMS provide additional detail 
regarding which specific drugs would be included in the Query of PDMP 
measure.
    Response: We refer readers to Table 83: Controlled Substance 
Schedule, Descriptions, and Examples in the CY 2023 PFS proposed rule 
(87 FR 46291), and in Table 91 where we outline the schedule drug 
classes, along with examples of drugs specific to that schedule (in 
other words, the schedule is inclusive of, but not limited to, those 
drugs). Clinicians should be able to determine which specific drugs 
would be included in the measure by referencing the schedules.
    Comment: A few commenters did not support our proposal to include 
Schedule III and IV drugs in the Query of PDMP measure. A few 
commenters stated their concerns about simultaneously proposing to both 
require and expand this measure, amidst clinical best practices 
continuing to be developed with PDMPs in general. One commenter stated 
that implementing additional proposals such as this may prove costly 
and burdensome. One commenter did not support our proposal, stating 
that including Schedules III and IV drugs would not be clinically 
appropriate, nor would their inclusion achieve CMS's goal of addressing 
the opioid epidemic.
    Response: We do not agree that expanding the scope of which 
scheduled drugs are included in the Query of PDMP measure would lead to 
additional burden. We believe that expanding the scope would reduce 
burden because MIPS eligible clinicians would query additional drug 
options instead of focusing their time and effort on querying one class 
of drugs, which would minimize the need to create specialty reports 
within their EHR specific to capturing one class of drugs We appreciate 
and understand the comment regarding continued challenges some MIPS 
eligible clinicians face with EHR-PDMP integration. For the reasons 
discussed in our response to comments in section IV.A.6.c.(4)(d)(iii), 
we are adopting an additional exclusion for the Query of PDMP measure 
that will allow any MIPS eligible clinician for whom querying a PDMP 
would impose an excessive workflow or cost burden prior to the start of 
the performance period they select in CY 2023 to exclude the Query of 
PDMP measure for the CY 2023 performance period/2025 MIPS payment year.
(iii) Exclusions
    In CY 2019 PFS proposed rule, we proposed an exclusion for MIPS 
eligible clinicians from reporting the Query of PDMP measure beginning 
with CY 2020 when the measure would have been required by the Promoting 
Interoperability performance category (83 FR 35922 through 35923). The 
proposed exclusion was: Any MIPS eligible clinician who is unable to 
electronically prescribe Schedule II opioids in accordance with 
applicable law during the performance period. In the CY 2019 PFS final 
rule, we finalized the Query of PDMP measure as optional for CY 2019, 
and thus we did not finalize the proposed exclusion (83 FR 59803). We 
also stated that we would propose policy for CY 2020 in future 
rulemaking. To date, we have not adopted any exclusions for this 
measure because it has remained optional for CY 2020 (84 FR 62992 
through 62994), CY 2021 (85 FR 84887 through 84888), and CY 2022 (86 FR 
65466 through 65467).
    In the CY 2023 PFS proposed rule (87 FR 46289 through 46290), we 
proposed to require MIPS eligible clinicians to report the Query of 
PDMP measure for the Promoting Interoperability performance category 
beginning with the performance period in CY 2023. We noted in the 
proposed rule that should we finalize our proposal to require the Query 
of PDMP measure beginning with CY 2023, we believe that an exclusion 
for the measure would be needed for MIPS eligible clinicians (87 FR 
46291 and 46292). Therefore, we stated that we have revisited the 
exclusion we proposed in the CY 2019 PFS proposed rule (83 FR 35922 
through 35923) and proposed a modified version in the CY 2023 PFS 
proposed rule (87 FR 46291 and 46292). Specifically, we noted that if 
we were to finalize the proposal to require the Query of PDMP measure, 
we proposed the following exclusion beginning with the performance 
period in CY 2023: Any MIPS eligible clinician who is unable to 
electronically prescribe Schedule II opioids and Schedule III and IV 
drugs in accordance with applicable law during the performance period. 
In addition, we noted that if we finalize the proposal to require the 
Query of PDMP measure, we proposed a second exclusion beginning with 
the performance period in CY 2023: Any MIPS eligible clinician who 
writes fewer than 100 permissible prescriptions during the performance 
period. We adopted this same exclusion previously for the e-Prescribing 
measure (82 FR 53679). We believe this exclusion is also applicable to 
the Query of PDMP measure based on similar feedback we received from 
prior rulemaking, where fewer than 100 encounters were supported as an 
appropriate cutoff number (82 FR 53680). We also proposed that if a 
MIPS eligible clinician claims an exclusion for the Query of PDMP 
measure, we would redistribute the points associated with the Query of 
PDMP measure to the e-Prescribing measure under the Electronic 
Prescribing objective (87 FR 46292).
    We invited public comment on these proposals, and the following is 
a summary of the comments received.
    Comment: Some commenters supported our proposed exclusions for the 
Query of PDMP measure. One commenter stated that the proposed 
exclusions reasonably balance the need to prevent inappropriate 
prescribing against potential cost and administrative burdens.
    Response: We thank the commenters for their support.
    Comment: Some commenters supported our proposed exclusions for the 
Query of PDMP measure, but urged CMS to consider adding an additional 
exclusion for those MIPS eligible clinicians who do not have an 
integrated EHR-PDMP, who are unable to meet the requirements, or who 
are in the process of advancing their technology. Two commenters asked 
that CMS consider adopting an exclusion for patients receiving opioids 
for chronic conditions, chronic treatment plans, long-established 
illnesses, and certain medical diagnoses. One commenter asked that CMS 
consider adopting an exclusion that allows the MIPS eligible clinician 
to decide which patients should trigger a query of the PDMP based on 
the clinician-patient relationship.
    Response: We thank the commenters for their feedback. While the 
Query of PDMP measure requires at least one query of a PDMP, it does 
not require that MIPS eligible clinicians query the PDMP for all 
patients, nor are there specifications indicating which disease process 
or patient type to query. Therefore, we do not agree that we should 
include a disease, condition, or patient-specific exclusion. As we 
discussed in our response to comments in section IV.A.6.c.(4)(d)(i) 
above, we are adopting an additional exclusion for the Query of PDMP 
measure that will allow any MIPS eligible clinician for whom querying a 
PDMP would impose an excessive workflow or cost burden prior to the 
start of the performance period they select in CY 2023 to exclude the 
Query of PDMP measure for the CY 2023 performance period/2025 MIPS 
payment year.

[[Page 70067]]

    After consideration of the public comments, we are finalizing our 
proposal to require MIPS eligible clinicians to report the Query of 
PDMP measure (which requires reporting a ``yes/no'' response) for the 
Promoting Interoperability performance category, beginning with the CY 
2023 performance period. The measure will be worth 10 points, but they 
will no longer be bonus points because the measure will be required. We 
are finalizing our proposal to remove the phrase ``except where 
prohibited in accordance with applicable law'' from the measure 
description. We are finalizing our proposal to expand the Query of PDMP 
measure to include Schedule III and IV drugs in addition to Schedule II 
opioids. As such, the new measure description will read:
    Measure Description: For at least one Schedule II opioid or 
Schedule III or IV drug electronically prescribed using CEHRT during 
the performance period, the MIPS eligible clinician uses data from 
CEHRT to conduct a query of a PDMP for prescription drug history.
    To align with policy for the Query of PDMP measure with regard to 
Schedule II opioids, we are finalizing that the query of the PDMP for 
prescription drug history must occur prior to the electronic 
transmission of an electronic prescription for a Schedule II opioid or 
Schedule III or Schedule IV drug. This measure includes all permissible 
prescriptions and dispensing of Schedule II opioids and Schedule III or 
IV drugs, no matter the dosage prescribed during an encounter in order 
for MIPS eligible clinicians to identify multiple health care provider 
episodes (physician shopping), prescriptions of dangerous combinations 
of drugs, and controlled substances prescribed in high quantities. We 
are finalizing that multiple prescriptions for Schedule II opioids or 
Schedule III and IV drugs prescribed on the same date, by the same MIPS 
eligible clinician do not require multiple queries of the PDMP and only 
one query needs to be performed for this measure. MIPS eligible 
clinicians have flexibility to query the PDMP using data from CEHRT in 
any manner allowed under State law.
    We also are finalizing our proposal to include the following two 
exclusions for the Query of PDMP measure: (1) Any MIPS eligible 
clinician who is unable to electronically prescribe Schedule II opioids 
and Schedule III and IV drugs in accordance with applicable law during 
the performance period; (2) Any MIPS eligible clinician who writes 
fewer than 100 permissible prescriptions during the performance period. 
After consideration of the comments we have received, we are finalizing 
a third exclusion for the Query of PDMP measure: (3) Any MIPS eligible 
clinician for whom querying a PDMP would impose an excessive workflow 
or cost burden prior to the start of the performance period they select 
in CY 2023. Exclusion (3) is available only for the CY 2023 performance 
period/2025 MIPS payment year. If a MIPS eligible clinician claims an 
exclusion for the Query of PDMP measure, we would redistribute the 
points associated with the Query of PDMP measure to the e-Prescribing 
measure under the Electronic Prescribing objective.
(e) Health Information Exchange (HIE) Objective: Addition of an 
Alternative Measure for Enabling Exchange Under the Trusted Exchange 
Framework and Common Agreement (TEFCA)
(i) Background on the Health Information Exchange Objective
    The Health Information Exchange (HIE) objective and its associated 
measures for MIPS eligible clinicians hold particular importance 
because of the role they play within the care continuum. In addition, 
these measures encourage and leverage interoperability on a broader 
scale and promote health IT-based care coordination. The Health 
Information Exchange objective currently includes three measures: 
Support Electronic Referral Loops by Sending Health Information; 
Support Electronic Referral Loops by Receiving and Reconciling Health 
Information; and Health Information Exchange Bi-Directional Exchange. 
For background on this objective and its associated measures, we refer 
readers to the CY 2019 PFS final rule (83 FR 59807 through 59812) and 
the CY 2021 PFS final rule (85 FR 84888 through 84893).
    In the CY 2021 PFS final rule (85 FR 84888 through 84893), we 
finalized the HIE Bi-Directional Exchange measure, under the Health 
Information Exchange objective. The HIE Bi-Directional Exchange measure 
is worth 40 points, the maximum number of points of the Health 
Information Exchange objective, and was finalized as an alternative to 
reporting on the two existing Health Information Exchange objective 
measures: The Support Electronic Referral Loops by Sending Health 
Information measure and the Support Electronic Referral Loops by 
Receiving and Reconciling Health Information measure. To meet the 
measure requirements, MIPS eligible clinicians must attest to the 
following statements:
     Statement 1: I participate in an HIE to enable secure, bi-
directional exchange to occur for every patient encounter, transition 
or referral and record stored or maintained in the EHR during the 
performance period in accordance with applicable law and policy;
     Statement 2: The HIE that I participate in is capable of 
exchanging information across a broad network of unaffiliated exchange 
partners including those using disparate EHRs, and not engaging in 
exclusionary behavior when determining exchange partners; and
     Statement 3: I use the functions of CEHRT to support bi-
directional exchange with an HIE.
    We stated that by enabling bi-directional exchange of information 
between health care providers and aggregating data across health care 
providers with disparate systems, HIEs (including a wide range of 
organizations facilitating health information exchange) can bring 
together the information needed to create a true longitudinal care 
record and support improved care coordination by facilitating timely 
access to robust health information across care settings (CY 2021 PFS 
proposed rule, 85 FR 50300). We further described how participation in 
HIEs can amplify health care providers' capacity to share information 
beyond what a health care provider can achieve through the sending and 
receiving actions described in the existing measures under the Health 
Information Exchange objective, for instance, by facilitating 
information exchange when a health care provider is unaware of another 
health care provider's need to receive information about a patient (CY 
2021 PFS proposed rule, 85 FR 50300). By finalizing this measure for 
MIPS eligible clinicians, we sought to ensure that health care 
providers participating in the Promoting Interoperability performance 
category would be rewarded for connecting to exchange arrangements that 
can enable this type of robust information sharing.
(ii) Background on TEFCA
    Section 4003(b) of the 21st Century Cures Act (Pub. L. 114-255), 
enacted in 2016, amended section 3001(c) of the Public Health Service 
Act (42 U.S.C. 300jj-11(c)), and required HHS to take steps to advance 
interoperability for the purpose of ensuring full network-to-network 
exchange of health information. Specifically, Congress directed the 
National Coordinator to ``develop or support a trusted exchange 
framework, including a common agreement among health information 
networks nationally.'' Since the enactment of the 21st Century Cures 
Act, HHS has pursued development of a Trusted

[[Page 70068]]

Exchange Framework and Common Agreement, or TEFCA. ONC's goals for 
TEFCA are: \514\
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    \514\ See https://www.healthit.gov/buzz-blog/interoperability/321tefca-is-go-for-launch.
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     Goal 1: Establish a universal policy and technical floor 
for nationwide interoperability;
     Goal 2: Simplify connectivity for organizations to 
securely exchange information to improve patient care, enhance the 
welfare of populations, and generate health care value; and
     Goal 3: Enable individuals to gather their health care 
information.
    Since we adopted the HIE Bi-Directional Exchange measure, important 
additional developments have occurred with respect to TEFCA.\515\ On 
January 18, 2022. ONC announced a significant TEFCA milestone by 
releasing the Trusted Exchange Framework \516\ and Common Agreement 
Version 1.\517\ The Trusted Exchange Framework is a set of non-binding 
principles for health information exchange, and the Common Agreement 
for Nationwide Health Information Interoperability Version 1 (also 
referred to as the Common Agreement) is a contract that advances those 
principles. The Common Agreement and the Qualified Health Information 
Network (QHIN) Technical Framework Version 1 (QTF),\518\ which is 
incorporated by reference in the Common Agreement, establish the 
technical infrastructure model and governing approach for different 
health information networks and their users to securely share clinical 
information with each other--all under commonly agreed-to terms. The 
Common Agreement is a legal contract that QHINs\519\ can sign with the 
ONC Recognized Coordinating Entity (RCE),\520\ a private-sector entity 
that implements the Common Agreement and ensures QHINs comply with its 
terms.
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    \515\ For more information on current developments related to 
TEFCA, we refer readers to www.HealthIT.gov/TEFCA.
    \516\ Trusted Exchange Framework (Jan. 2022), https://www.healthit.gov/sites/default/files/page/2022-01/Trusted_Exchange_Framework_0122.pdf.
    \517\ Common Agreement for Nationwide Health Information 
Interoperability Version 1 (Jan. 2022), https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
    \518\ Qualified Health Information Network (QHIN) Technical 
Framework (QTF) Version 1.0 (Jan. 2022), https://rce.sequoiaproject.org/wp-content/uploads/2022/01/QTF_0122.pdf.
    \519\ The Common Agreement defines a QHIN as ``to the extent 
permitted by applicable SOP(s), a Health Information Network that is 
a U.S. Entity that has been Designated by the RCE and is a party to 
the Common Agreement countersigned by the RCE.'' See Common 
Agreement for Nationwide Health Information Interoperability Version 
1, at 10 (Jan. 2022), https://www.healthit.gov/sites/default/files/page/2022-.
    \520\ In August 2019, ONC awarded a cooperative agreement to The 
Sequoia Project to serve as the initial RCE. The RCE will 
operationalize and enforce the Common Agreement, oversee QHIN-
facilitated network operations, and ensure compliance by 
participating QHINs. The RCE will also engage interested parties to 
create a roadmap for expanding interoperability over time.
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    The technical and policy architecture of how exchange occurs under 
TEFCA follows a network-of-networks structure, which allows for 
connections at different levels and is inclusive of many different 
types of entities at different levels, such as health information 
networks, care practices, hospitals, public health agencies, and 
Individual Access Services (IAS) \521\ Providers.\522\ QHINs connect 
directly to each other to facilitate nationwide interoperability, and 
each QHIN can connect Participants, which can connect 
Subparticipants.\523\ Compared to most nationwide exchange today, the 
Common Agreement also includes an expanded set of Exchange Purposes 
\524\ beyond Treatment to include Individual Access Services, Payment, 
Health Care Operations, Public Health, and Government Benefits 
Determination--all built upon common technical and policy requirements 
and to meet key needs of the U.S. health care system. This flexible 
structure allows interested parties to participate in the way that 
makes the most sense for them, while also supporting simplified, 
seamless exchange.
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    \521\ The Common Agreement defines Individual Access Services 
(IAS) as ``with respect to the Exchange Purposes definition, the 
services provided utilizing the Connectivity Services, to the extent 
consistent with Applicable Law, to an Individual with whom the QHIN, 
Participant, or Subparticipant has a Direct Relationship to satisfy 
that Individual's ability to access, inspect, or obtain a copy of 
that Individual's Required Information that is then maintained by or 
for any QHIN, Participant, or Subparticipant.'' See Common Agreement 
for Nationwide Health Information Interoperability Version 1, at 7 
(Jan. 2022), https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
    \522\ The Common Agreement defines ``IAS Provider'' as: ``Each 
QHIN, Participant, and Subparticipant that offers Individual Access 
Services.'' See Common Agreement for Nationwide Health Information 
Interoperability Version 1, at 7 (Jan. 2022), https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
    \523\ For the Common Agreement definitions of QHIN, Participant, 
and Subparticipant, see Common Agreement for Nationwide Health 
Information Interoperability Version 1, at 8-12 (Jan. 2022), https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
    \524\ Exchange Purpose(s): means the reason, as authorized by 
[the] Common Agreement including the Exchange Purposes SOP, for a 
Request, Use, Disclosure, or Response transmitted via QHIN-to-QHIN 
exchange as one step in the transmission. Authorized Exchange 
Purposes are: Treatment, Payment, Health Care Operations, Public 
Health, Government Benefits Determination, Individual Access 
Services, and any other purpose authorized as an Exchange Purpose by 
the Exchange Purposes SOP, each to the extent permitted under 
Applicable Law, under all applicable provisions of [the] Common 
Agreement, and, if applicable, under the implementation SOP for the 
applicable Exchange Purpose. See Common Agreement for Nationwide 
Health Information Interoperability Version 1, at 6 (Jan. 2022), 
https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
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    The QTF,\525\ which was developed and released by the RCE, 
describes the functional and technical requirements that a Health 
Information Network (HIN)\526\ must fulfill to serve as a QHIN under 
the Common Agreement. The QTF specifies the technical underpinnings for 
QHIN-to-QHIN exchange and certain other responsibilities described in 
the Common Agreement. The technical and functional requirements 
described in the QTF enable information exchange modalities, including 
querying and message delivery across participating entities.
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    \525\ Qualified Health Information Network (QHIN) Technical 
Framework (QTF) Version 1.0 (Jan. 2022), https://rce.sequoiaproject.org/wp-content/uploads/2022/01/QTF_0122.pdf.
    \526\ ``Health Information Network'' under TEFCA has the meaning 
assigned to the term ``Health Information Network or Health 
Information Exchange'' in the information blocking regulations at 45 
CFR 171.102.
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    In general, the information to be exchanged within the TEFCA 
ecosystem allows for the use of Health Level Seven (HL7[supreg]) 
Implementation Guide for Clinical Document Architecture (CDA[supreg]) 
Release 2: Consolidated CDA Templates for Clinical Notes (US Realm) 
Draft Standard for Trial Use Release 2.1 (C-CDA 2.1) document format, 
including data defined as part of U.S. Core Data for Interoperability 
(USCDI), with allowance for flexibility to further expand the content 
to support a multitude of use cases.\527\ The Common Agreement and the 
QTF do not require HL7[supreg] Fast Healthcare Interoperability 
Resource (FHIR[supreg]) based exchange. TEFCA allows for the optional 
exchange of FHIR content using more traditional, established standards 
to enable the transport of that content. However, TEFCA can nonetheless 
be a strong catalyst for network enablement of FHIR maturation. To that 
end, the RCE released a 3-year FHIR Roadmap for TEFCA Exchange, which 
lays out a

[[Page 70069]]

deliberate strategy to add FHIR-based exchange under TEFCA in the near 
future.\528\
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    \527\ User's Guide to the Trusted Exchange Framework and Common 
Agreement--TEFCA (Jan 2022), https://rce.sequoiaproject.org/wp-content/uploads/2022/01/Common-Agreement-Users-Guide.pdf.
    \528\ FHIR[supreg] Roadmap for TEFCA Exchange Version 1 (Jan. 
2022), https://rce.sequoiaproject.org/wp-content/uploads/2022/01/FHIR-Roadmap-v1.0_updated.pdf.
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(iii) Enabling Exchange Under TEFCA Measure
    In 2022, prospective QHINs are anticipated to begin signing the 
Common Agreement and applying for designation. The RCE will then begin 
onboarding and designating QHINs to share information. In 2023, HHS 
expects interested parties across the care continuum to have increasing 
opportunities to enable exchange under TEFCA. Specifically, this would 
mean such interested parties would be: (1) signatories to either the 
Common Agreement or an agreement that meets the flow-down requirements 
of the Common Agreement (called a Framework Agreement\529\ under the 
Common Agreement); (2) in good standing (that is, not suspended) under 
that agreement; and (3) enabling secure, bi-directional exchange of 
information to occur, in production. TEFCA is expected to give 
individuals and entities easier, more efficient access to more health 
information. The Common Agreement requires strong privacy and security 
protections for all entities who elect to participate, including 
entities not covered by the Health Insurance Portability and 
Accountability Act (HIPAA).\530\
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    \529\ The Common Agreement defines ``Framework Agreement(s)'' 
as: ``any one or combination of the Common Agreement, a Participant-
QHIN Agreement, a Participant-Subparticipant Agreement, or a 
Downstream Subparticipant Agreement, as applicable.'' See Common 
Agreement for Nationwide Health Information Interoperability Version 
1, at 6 (Jan. 2022) https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
    \530\ Common Agreement for Nationwide Health Information 
Interoperability Version 1, at 8-12 (Jan. 2022), https://
www.healthit.gov/sites/default/files/page/2022-
---------------------------------------------------------------------------

    By connecting to a network that connects to a QHIN or directly to a 
QHIN, a MIPS eligible clinician can share health information in the 
same manner as described in the attestation statements previously 
finalized for the HIE Bi-Directional Exchange measure in the CY 2021 
PFS final rule 85 FR 84888 through 84893). By connecting to an entity 
that connects to a QHIN, or connecting directly to a QHIN, that 
supports sharing information on patients as part of a Framework 
Agreement\531\, a MIPS eligible clinician would be thereby enabling bi-
directional exchange with other health care providers as described in 
Statement 1 of the HIE Bi-Directional Exchange measure. Since 
participation in a Framework Agreement as a QHIN, Participant, or Sub-
participant will be open to all qualifying entities and will not be 
restricted by use of a single vendor, a connection via a Framework 
Agreement would also satisfy the requirements of Statement 2 of the HIE 
Bi-Directional Exchange measure. Finally, as discussed above, the 
technical requirements for exchanging information by entities through 
the Common Agreement and Framework Agreements utilize standards 
included in certified technology referenced under the CEHRT definition 
(see 42 CFR 414.1305), including the ability to exchange and receive 
data using the C-CDA standard (see certification criteria at 45 CFR 
170.315(b)(1) and (b)(2)), thus health care providers participating in 
a Framework Agreement can use the functions of CEHRT to support bi-
directional exchange with an HIE.
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    \531\ The Common Agreement defines ``Framework Agreement(s)'' 
as: ``any one or combination of the Common Agreement, a Participant-
QHIN Agreement, a Participant-Subparticipant Agreement, or a 
Downstream Subparticipant Agreement, as applicable.'' See Common 
Agreement for Nationwide Health Information Interoperability Version 
1, at 6 (Jan. 2022) https://www.healthit.gov/sites/default/files/page/2022-01/Common_Agreement_for_Nationwide_Health_Information_Interoperability_Version_1.pdf.
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    To offer health care providers more opportunities to earn credit 
for the Health Information Exchange objective, and given the alignment 
between enabling exchange under TEFCA and the existing HIE Bi-
Directional Exchange measure, in the CY 2023 PFS Proposed rule, we 
proposed to add an additional measure through which a MIPS eligible 
clinician could earn credit for the Health Information Exchange 
objective by connecting to an entity that connects to a QHIN or 
connecting directly to a QHIN. Specifically, we proposed to add the 
following new measure to the Health Information Exchange objective 
beginning with the performance period in CY 2023: Enabling Exchange 
Under TEFCA measure (87 FR 46292 through 46295). We proposed MIPS 
eligible clinicians would have three reporting options for the Health 
Information Exchange objective: (1) report on both the Support 
Electronic Referral Loops by Sending Health Information measure (or the 
exclusion, if applicable) and the Support Electronic Referral Loops by 
Receiving and Reconciling Health Information measure (or the exclusion, 
if applicable); (2) report on the HIE Bi-Directional Exchange measure; 
or (3) report on the proposed Enabling Exchange Under TEFCA measure.
    We proposed the Enabling Exchange Under TEFCA measure would be 
worth the total amount of points available for the Health Information 
Exchange objective. Under the current scoring methodology finalized in 
the CY 2021 PFS final rule, the Health Information Exchange objective 
is worth a total of 40 points (85 FR 84894). We noted in CY 2023 PFS 
proposed rule (87 FR 46298 through 46307), the proposed changes to the 
scoring methodology beginning with the performance period in CY 2023 
such that the Health Information Exchange objective would be worth no 
more than 30 points. Therefore, under the proposal, the proposed 
Enabling Exchange Under TEFCA measure would be worth 30 points. We 
proposed this change to the scoring methodology as a result of our 
proposal in the CY 2023 PFS proposed rule (87 FR 46289 through 46290) 
to make the Query of PDMP measure required and worth 10 points. 
However, should we not finalize the Query of PDMP measure proposal, we 
proposed the Enabling Exchange Under TEFCA measure would be worth 40 
points (the current total point value of the Health Information 
Exchange objective). In no case could more than 40 points, total, be 
earned for the Health Information Exchange objective.
    We noted that we believe the new measure for Enabling Exchange 
Under TEFCA that we proposed in the CY 2023 PFS proposed rule (87 FR 
46292 through 46295) would incentivize MIPS eligible clinicians to 
exchange information by connecting directly or indirectly to a QHIN and 
support health information exchange at a national level. We also noted 
that we believe that fulfillment of this measure is an extremely high 
value action. The overall TEFCA goal of establishing a universal floor 
of interoperability across the country aligns with our commitment to 
promoting and prioritizing interoperability and exchange of healthcare 
data. Incentivizing health care providers to enable exchange under 
TEFCA is a critical component to advancing healthcare data exchange 
nationwide. We proposed a MIPS eligible clinician would report the 
Enabling Exchange Under TEFCA measure by attestation, and the measure 
would require a ``yes/no'' response. A ``yes'' response would enable a 
MIPS eligible clinician to earn the proposed 30 points allotted to the 
Health Information Exchange objective. We proposed that a MIPS eligible 
clinician would attest to the following:
     Participating as a signatory to a Framework Agreement (as 
that term is

[[Page 70070]]

defined by the Common Agreement for Nationwide Health Information 
Interoperability as published in the Federal Register and on ONC's 
website) in good standing (that is, not suspended) and enabling secure, 
bi-directional exchange of information to occur, in production, for 
every patient encounter, transition or referral, and record stored or 
maintained in the EHR during the performance period, in accordance with 
applicable law and policy; and
     Using the functions of CEHRT to support bi-directional 
exchange of patient information, in production, under this Framework 
Agreement.
    Similar to the HIE Bi-Directional Exchange measure, to successfully 
attest to this measure, we stated that a MIPS eligible clinician must 
use the capabilities of CEHRT to support bi-directional exchange under 
a Framework Agreement, which includes capabilities that support 
exchanging the clinical data within the Common Clinical Data Set (CCDS) 
or the United States Core Data for Interoperability (USCDI). This is 
consistent with the other measures under the Health Information 
Exchange objective, which point to the use of CEHRT to support the 
exchange of the clinical data within the CCDS or the USCDI.
    We noted in the CY 2023 PFS proposed rule (87 FR 46292 through 
46295) that we believe there are numerous certified health IT 
capabilities that can support bi-directional exchange under a Framework 
Agreement. For instance, participants may exchange information under a 
Framework Agreement by using technology certified to the criterion at 
45 CFR 170.315(b)(1), ``Care coordination--Transitions of care,'' to 
transmit C-CDAs across a network. Where supported, participants could 
also utilize API technology certified to either the criterion at 45 CFR 
170.315(g)(8), ``Design and performance--Application access--data 
category request,'' or (g)(10), ``Design and performance--Standardized 
API for patient and population services,'' as finalized in the ONC 21st 
Century Cures Act final rule (85 FR 25742), to enable exchange of data 
in the CCDS or USCDI from a participant's EHR. Additional certified 
health IT modules may also support exchange of information under a 
Framework Agreement for transitions of care, including modules 
certified to certification criteria at 45 CFR 170.315(g)(7), ``Design 
and performance--Application access--patient selection,'' and (g)(9), 
``Design and performance--Application access--all data request,'' which 
support information exchange via API; the certification criterion at 45 
CFR 170.315(e)(1), ``Patient engagement--View, download, and transmit 
to 3rd party,'' which supports patient access to their information; and 
the certification criterion at 45 CFR 170.315(g)(6), ``Design and 
performance--Consolidated CDA creation performance,'' which supports 
creation of a summary of care record. We recognized that entities that 
will connect directly or indirectly to a QHIN are currently interacting 
with health care providers using certified health IT in a variety of 
ways, and, as with the Bi-Directional HIE Exchange measure, noted that 
we believe that we should allow for substantial flexibility in how 
health care providers use certified health IT to exchange data under a 
Framework Agreement.
    The Enabling Exchange Under TEFCA measure could offer health care 
providers an alternative to earn credit for the Health Information 
Exchange objective. The Enabling Exchange Under TEFCA measure would not 
require a MIPS eligible clinician to assess whether they participate in 
a health information exchange that meets the attributes of attestation 
Statement 2 under the HIE Bi-Directional Exchange measure regarding 
exchange across a broad network of unaffiliated exchange partners 
including those using disparate EHRs. These attributes are key to the 
goals of TEFCA, which aims to offer health care providers a uniform set 
of expectations around information sharing regardless of which network 
for information exchange they participate in.
    We invited public comment on these proposals, and the following is 
a summary of the comments received:
    Comment: Many commenters supported our proposal to add the Enabling 
Exchange Under TEFCA measure under the Health Information Exchange 
objective. Several commenters stated that this measure is an important 
step towards fostering interoperability and nationwide data exchange, 
aiding to fill information gaps, and to reduce burdens placed on MIPS 
eligible clinicians. Many commenters supported our proposal sharing 
that they applaud CMS' efforts to improve information exchange, engage 
in efforts toward implementation, and prioritize a commitment to 
advancing healthcare data exchange nationwide. Several commenters 
supported our proposal stating that this measure will minimize costly 
and unnecessary administrative burdens on MIPS eligible clinicians and 
their care teams. Another commenter stated that this measure will build 
alignment across vendors, allowing interoperable data exchange across 
the healthcare continuum. One commenter stated their appreciation for a 
measure that applies to MIPS eligible clinicians as opposed to 
capabilities and capacities of their chosen vendor. Some commenters 
supported our proposal stating that this measure will lend itself to a 
seamless and coordinated approach to improving care for patients, 
allowing for a more accurate exchange of health information. A few 
commenters supported our proposal, emphasizing their appreciation for 
offering this as an additional option requiring a yes/no response, 
versus a measure utilizing a numerator-denominator approach.
    Response: We thank commenters for their feedback and agree that our 
proposal to add the Enabling Exchange Under TEFCA measure is an 
important step towards our efforts to improve the exchange of health 
information, promote interoperability, and offer options that best 
serve MIPS eligible clinicians individually. We believe the addition of 
this third measure option will aid in reducing administrative burden on 
MIPS eligible clinicians by offering an additional option that may work 
best with their chosen approach to information exchange. We appreciate 
that commenters support our commitment to advancing healthcare data 
exchange. Enabling the exchange of health information across the 
continuum is fundamental to the Promoting Interoperability performance 
category, so we appreciate that commenters recognize and support these 
efforts.
    Comment: Some commenters did not support our proposal to add the 
Enabling Exchange Under TEFCA measure under the Health Information 
Exchange objective. One commenter stated that some networks do not yet 
facilitate the live exchange of production data, therefore CMS should 
consider postponing this measure as an option, so as not to place 
additional burden on EHR vendor support staff. Another commenter stated 
concerns with implementation burden on small or independent practices, 
limiting rural MIPS eligible clinicians and small practices from 
participating. This commenter further stated that this measure fails to 
account for the clinical relevance of the information used at the point 
of care, as they see no value in querying for data at all times. 
Lastly, this commenter stated that MIPS eligible clinicians are often 
unaware of their health system's engagement with TEFCA, placing 
additional burden on the MIPS eligible clinician having to

[[Page 70071]]

defer to others who have this information.
    Response: We thank commenters for their feedback, but disagree that 
this measure will create additional burden on MIPS eligible clinicians, 
and instead believe that we are reducing burden by offering an 
additional option to satisfy the Health Information Exchange objective. 
Given this is one of three options to complete the objective, MIPS 
eligible clinicians can choose the measure option that works best for 
their practice, with their chosen vendor. We appreciate the commenters' 
concerns related to clinical relevance of the information exchanged via 
health information networks, but we disagree because the measure 
requirements specify that while exchange must be enabled for the 
specified patients, they do not require data to be exchanged if there 
is no clinical reason to do so. We believe that this measure offers 
MIPS eligible clinicians another alternative towards our larger effort 
to continue to promote interoperability by allowing the exchange of 
health information with minimal administrative burden on MIPS eligible 
clinicians and their support staff.
    In the CY 2023 PFS proposed rule (87 FR 46295), we requested 
comment on other ways that TEFCA can advance CMS policy and program 
objectives, including how TEFCA can support exchange of information 
required under other measures in the Promoting Interoperability 
performance category. For instance, we asked how can TEFCA support 
exchange of information specified under the Public Health and Clinical 
Data Exchange and the Patient Access to their Health Information 
objectives. We would like to thank commenters for their feedback in 
response to our request for information on other ways that TEFCA can 
advance CMS policy and program objectives. We may consider these 
suggestions in future rulemaking.
    After consideration of the public comments, we are finalizing our 
proposal to add the following new measure to the Health Information 
Exchange objective beginning with the performance period in CY 2023: 
Enabling Exchange Under TEFCA measure. MIPS eligible clinicians will 
have three reporting options for the Health Information Exchange 
objective: (1) report on both the Support Electronic Referral Loops by 
Sending Health Information measure (or the exclusion, if applicable) 
and the Support Electronic Referral Loops by Receiving and Reconciling 
Health Information measure (or the exclusion, if applicable); (2) 
report on the HIE Bi-Directional Exchange measure; or (3) report on the 
Enabling Exchange Under TEFCA measure. We finalized our proposal to 
require the Query of PDMP measure above in section IV.A.6.c.(4)(d)(i) 
of this final rule; therefore, we are also finalizing our proposal that 
the Enabling Exchange Under TEFCA measure will be worth 30 points, the 
total amount of points available for the Health Information Exchange 
Objective. We are finalizing our proposal that a MIPS eligible 
clinician will report the Enabling Exchange Under TEFCA measure by 
attestation, and the measure will require a ``yes/no'' response; a 
``yes'' response would enable a MIPS eligible clinician to earn the 30 
points allotted to the Health Information Exchange Objective. We are 
finalizing our proposal that a MIPS eligible clinician will attest to 
the following:
     Participating as a signatory to a Framework Agreement (as 
that term is defined by the Common Agreement for Nationwide Health 
Information Interoperability as published in the Federal Register and 
on ONC's website) in good standing (that is, not suspended) and 
enabling secure, bi-directional exchange of information to occur, in 
production, for every patient encounter, transition or referral, and 
record stored or maintained in the EHR during the performance period, 
in accordance with applicable law and policy; and
     Using the functions of CEHRT to support bi-directional 
exchange of patient information, in production, under this Framework 
Agreement.
(f) Modifications to the Public Health and Clinical Data Exchange 
Objective
(i) Background
    The Promoting Interoperability performance category for MIPS 
eligible clinicians has been an important mechanism for encouraging 
healthcare data exchange for public health purposes through the Public 
Health and Clinical Data Exchange objective. Effective responses to 
public health events, such as the COVID-19 PHE, require a fast, 
accurate exchange of data between health care providers and Federal, 
State, and local public health agencies (PHAs). Health care providers 
collect these data for patient care, and PHAs need them to protect the 
public, whether to track an outbreak, initiate contact tracing, find 
gaps in vaccine coverage, or pinpoint the source of a foodborne 
outbreak.
    There are five measures under the Public Health and Clinical Data 
Exchange objective: Immunization Registry Reporting; Syndromic 
Surveillance Reporting; Electronic Case Reporting; Public Health 
Registry Reporting; and Clinical Data Registry Reporting. For 
background on this objective and its associated measures, we refer 
readers to the CY 2019 PFS final rule (83 FR 59795, 59815 through 
59817). In the CY 2022 PFS final rule (86 FR 65469 through 65475), we 
finalized the requirement for MIPS eligible clinicians to report two of 
the five measures associated with the Public Health and Clinical Data 
Exchange objective, beginning with the performance period in CY 2022: 
Immunization Registry Reporting; and Electronic Case Reporting. These 
two measures will put PHAs on better footing for future health threats 
and a long-term COVID-19 pandemic recovery by strengthening two 
important public health functions: (1) case surveillance; and (2) 
vaccine uptake. Requiring these measures will enable nationwide 
automated case reporting for fast public health response; and local and 
national visibility on immunization uptake so PHAs can tailor vaccine 
distribution strategies. (See https://www.cdc.gov/coronavirus/2019-ncov/hcp/electronic-case-reporting.html https://www.healthit.gov/topic/safety/safer-guides.)
(ii) Revisions to Active Engagement
(A) Background
    The Promoting Interoperability performance category has been an 
important mechanism for encouraging data exchange between health care 
providers and public health agencies through the Public Health and 
Clinical Data Exchange objective. We believe requiring MIPS eligible 
clinicians to report on the Immunization Registry Reporting measure and 
Electronic Case Reporting measure will motivate EHR vendors to 
implement the necessary capabilities in their products and encourage 
MIPS eligible clinicians to engage in the reporting activities 
described in the measures.
    Despite these gains, ensuring that the nation's thousands of MIPS 
eligible clinicians implement and initiate data production for these 
vital public health capabilities remains an ongoing and important 
effort. The Promoting Interoperability performance category provides an 
opportunity to continue strengthening the incentives for MIPS eligible 
clinicians to engage in these essential reporting activities. Without 
adequate incentives, it will be difficult to attain the comprehensive 
data exchange needed to ensure fast,

[[Page 70072]]

complete, actionable data in response to future public health threats.
    In the EHR Incentive Program Stage 3 final rule (80 FR 62862 
through 62864), beginning with the EHR reporting period in 2016, we 
established a definition for active engagement under the Public Health 
and Clinical Data Registry Reporting objective (subsequently renamed 
for MIPS the Public Health and Clinical Data Exchange objective, see 83 
FR 59815 through 59817). Active engagement is defined as when an 
eligible professional (now a MIPS eligible clinician) is in the process 
of moving towards sending ``production data'' to a public health agency 
or clinical data registry, or is sending production data to a public 
health agency or clinical data registry. We noted that the term 
``production data'' refers to data generated through clinical processes 
involving patient care and it is used to distinguish between this data 
and ``test data'' which may be submitted for the purposes of enrolling 
in and testing electronic data transfers. We established the following 
three options for eligible professionals to demonstrate active 
engagement:
     Option 1--Completed registration to submit data: The 
eligible professional registered to submit data with the PHA or, where 
applicable, the clinical data registry (CDR) to which the information 
is being submitted; registration was completed within 60 days after the 
start of the EHR reporting period; and the eligible professional is 
awaiting an invitation from the PHA or CDR to begin testing and 
validation. Eligible professionals that have registered in previous 
years do not need to submit an additional registration to meet this 
requirement for each EHR reporting period;
     Option 2--Testing and validation: The eligible 
professional is in the process of testing and validation of the 
electronic submission of data. The eligible professional must respond 
to requests from the PHA or, where applicable, the CDR within 30 days; 
failure to respond twice within an EHR reporting period would result in 
the eligible professional not meeting the measure; and
     Option 3--Production: The eligible professional has 
completed testing and validation of the electronic submission and is 
electronically submitting production data to the PHA or CDR.
    For more information about the current options for active 
engagement, we refer readers to the EHR Incentive Program Stage 3 final 
rule (80 FR 62862 through 62864).
(B) Revisions to Options for Active Engagement
    The three active engagement options provided flexibility for 
eligible professionals and MIPS eligible clinicians to meet the 
measures under the Public Health and Clinical Data Registry Reporting 
objective/Public Health and Clinical Data Exchange objective in a 
variety of ways, but they did not provide an incentive to move through 
the options and get to option 3, production, where there is the ongoing 
electronic submission of data. Option 1, completed registration to 
submit data, was an important option in 2016 as many PHAs and CDRs were 
starting to come online, and thus the provision of this option 
recognized that many eligible professionals were just beginning to 
engage in electronic data exchange with PHAs and CDRs. Now, many years 
have passed, and we believe that MIPS eligible clinicians have had 
ample time to complete option 1.
    Thus, we proposed in the CY 2023 PFS proposed rule (87 FR 46296 
through 46297) to consolidate current options 1 and 2 into one option 
beginning with the performance period in CY 2023, as follows:
     Proposed Option 1. Pre-production and Validation (a 
combination of current option 1, completed registration to submit data, 
and current option 2, testing and validation). The MIPS eligible 
clinician must first register to submit data with the PHA or, where 
applicable, the clinical data registry (CDR) to which the information 
is being submitted. Registration must be completed within 60 days after 
the start of the performance period,\532\ while awaiting an invitation 
from the PHA or CDR to begin testing and validation. MIPS eligible 
clinicians that have registered in previous years do not need to submit 
an additional registration for subsequent performance periods. Upon 
completion of the initial registration, the MIPS eligible clinician 
must begin the process of testing and validation of the electronic 
submission of data. The MIPS eligible clinician must respond to 
requests from the PHA or, where applicable, the CDR within 30 days; 
failure to respond twice within a performance period would result in 
the MIPS eligible clinician not meeting the measure.
---------------------------------------------------------------------------

    \532\ In the CY 2023 PFS proposed rule (87 FR 46296), we 
inadvertently referred to the EHR reporting period instead of the 
performance period.
---------------------------------------------------------------------------

    MIPS eligible clinicians could select this option if they have 
previously completed the initial registration (existing Option 1). They 
could also select this option if they are currently in the process of 
testing and validation (existing Option 2).
     Proposed Option 2. Validated Data Production (current 
option 3, production). The MIPS eligible clinician has completed 
testing and validation of the electronic submission and is 
electronically submitting production data to the PHA or CDR.
    Under this proposal, a MIPS eligible clinician must demonstrate 
their level of active engagement at either proposed Option 1 (pre-
production and validation) or proposed Option 2 (validated data 
production) to fulfill each measure.
    We invited public comment on these proposals, and the following is 
a summary of the comments received.
    Comment: Many commenters supported the proposal to modify the 
active engagement options under the Public Health and Clinical Data 
Exchange objective. A few commenters expressed their support for 
consolidating the active engagement options, stating that the original 
option 1 (completed registration to submit data) requires very little 
effort from the clinician to achieve, does little to promote public 
health reporting, and is often used by clinicians to simply ``check the 
box'' and get measure credit. Some commenters supported the proposal 
because they believe it forces health care providers to truly engage in 
efforts to achieve a status of validated data production. Other 
commenters supported CMS' goal that all health care providers 
nationwide be actively sending public health data to registries so that 
future public health threats can be monitored.
    Response: We believe that it is crucial to have all clinicians 
actively submitting production data to immunization and electronic case 
reporting registries. We have consulted with CDC and they believe that 
immunization and electronic case reporting registries are ready to 
accept registrations and are able to move clinicians from registration 
to testing almost immediately. Thus, we believe the proposed option 1--
pre-production and validation more accurately reflects the current 
environment.
    Comment: Several commenters supported our proposal stating that 
CMS' increased emphasis on promoting public health and clinical data by 
better capturing this data presents a critical opportunity to prevent 
devastating consequences and misdiagnoses. Other commenters stated that 
this proposal would enable MIPS eligible clinicians to monitor future 
public health threats, assess geographic gaps, and ensure

[[Page 70073]]

active engagement through adherence to the measure requirements.
    Response: We agree that this is an opportunity for MIPS eligible 
clinicians to be more involved and engaged with the data exchange 
process. We agree that with engagement comes awareness, and the ability 
to improve existing processes.
    Comment: Some commenters did not support the proposal to modify the 
active engagement options under the Public Health and Clinical Data 
Exchange objective stating that the PHE is still ongoing and many 
practices/MIPS eligible clinicians have had to re-tool their practices 
just to function during this challenging time. The commenters requested 
CMS revisit this proposal after the COVID-19 PHE is over. Another 
commenter urged CMS to reconsider this proposal and supported the 
measure as currently structured, with separate options for pre-
production and validation. The commenter stated that the separate 
options for pre-production and validation give practices more time to 
negotiate and test new and changing technical integration policies that 
are often needed to bring reporting up to the production stage.
    Response: We understand the burdens MIPS eligible clinicians 
presently face due to the COVID-19 PHE. We do not believe that it is 
important to differentiate between those MIPS eligible clinicians who 
have registered and those who have begun testing and validation. Based 
on input from CDC, we understand that in general, many clinicians who 
register are immediately invited to begin testing and validation.
(C) Reporting Requirement for Level of Engagement
    MIPS eligible clinicians currently are not required to report their 
level of active engagement for any of the measures associated with the 
Public Health and Clinical Data Exchange objective. We believe that 
this information would be helpful as it would enable HHS to identify 
registries and PHAs which may be having difficulty onboarding MIPS 
eligible clinicians and moving them to the Validated Data Production 
phase. During the recent COVID-19 PHE, we recognized the importance of 
public health reporting (as discussed further the CY 2023 PFS proposed 
rule, 87 FR 46295 and 46296), and we believe that knowing the level of 
active engagement that a MIPS eligible clinician selects would provide 
information on the types of registries and geographic areas with health 
care providers in the Pre-production and Validation stage. Our goal is 
for all health care providers nationwide to be at the Validated Data 
Production stage so that data will be actively flowing, and public 
health threats can be monitored. Therefore, for the Public Health and 
Clinical Data Exchange objective, in addition to submitting responses 
for the required measures and any optional measures a MIPS eligible 
clinician chooses to report, we proposed in the CY 2023 PFS proposed 
rule (87 FR 46296 through 46297) to require MIPS eligible clinicians to 
submit their level of active engagement, either Pre-production and 
Validation or Validated Data Production (as proposed in section 
IV.A.6.c.(4)(f)(ii)), for each measure they report beginning with the 
performance period in CY 2023. We noted in the proposed rule that if 
our proposal to reduce the three current options of active engagement 
to two options is not finalized, we proposed to require MIPS eligible 
clinicians to submit one of the three current options of active 
engagement for each measure they report.
    We invited public comment on these proposals, and the following is 
a summary of the comments received.
    Comment: Several commenters supported our proposal to require MIPS 
eligible clinicians to report their level of active engagement for 
measures in the Public Health and Clinical Data Exchange objective 
stating they understood CMS' need to capture engagement information.
    Response: We thank commenters for their support.
    Comment: A commenter asked for clarification on what to submit if 
clinicians in a group are at different levels of active engagement.
    Response: If MIPS eligible clinicians who are choosing to report 
for MIPS as a group are at different levels of active engagement, the 
group should consider submitting the level of active engagement that 
best reflects the composition of the group (for example, the level that 
reflects the status of the majority of the MIPS eligible clinicians in 
the group).
    Comment: Several commenters did not support our proposal to require 
MIPS eligible clinicians to report their level of active engagement for 
measures in the Public Health and Clinical Data Exchange objective, 
stating that this additional reporting requirement is burdensome, 
especially during the COVID-19 PHE.
    Response: We do understand that many MIPS eligible clinicians 
remain affected by the COVID-19 PHE, however, we believe the burden of 
submitting the level of active engagement is very small, and we 
estimate in section V.B.9.g. that it will take 30 seconds to submit the 
level of active engagement.
(D) Changes to the Duration of Active Engagement Options
    MIPS eligible clinicians currently are not required to advance from 
one option of active engagement to the next within a certain period of 
time. Beginning with the performance period in CY 2023, we proposed in 
the CY 2023 PFS proposed rule (87 FR 46297) that MIPS eligible 
clinicians may spend only one performance period at the Pre-production 
and Validation level of active engagement per measure, and that they 
must progress to the Validated Data Production level in the next 
performance period for which they report a particular measure. For 
example, under this proposal, if a MIPS eligible clinician submits the 
Immunization Registry Reporting measure for the performance period in 
CY 2023 at the level of active engagement for proposed Option 1 (Pre-
production and Validation), the clinician must submit the Immunization 
Registry Reporting measure at the level of active engagement for 
proposed Option 2 (Validated Data Production phase) for the next 
performance period in CY 2024, or they would fail to satisfy the Public 
Health and Clinical Data Exchange objective. To use an optional measure 
as an example to illustrate this proposal, if a MIPS eligible clinician 
chooses to submit the Syndromic Surveillance Reporting measure for the 
performance period in CY 2023 at the level of active engagement for 
proposed Option 1 (Pre-production and Validation) and then chooses to 
submit the Syndromic Surveillance Reporting measure for a later 
performance period, the clinician would have to submit the measure at 
the level of active engagement for proposed Option 2 (Validated Data 
Production phase) for the next performance period for which they choose 
to submit the measure. The options for active engagement assume the 
same PHA or CDR is used by the MIPS eligible clinician. In the event a 
MIPS eligible clinician chooses to switch between one or more CDRs or 
PHAs, we proposed they would be permitted to spend one additional 
performance period at the Pre-production and Validation phase to assist 
with onboarding to the new CDR or PHA. As electronic transmission of 
high-quality data is achieved at the Validated Data Production phase, 
we want all MIPS eligible clinicians to reach this level.

[[Page 70074]]

    We invited public comment on these proposals, and the following is 
a summary of the comments received.
    Comment: One commenter did not support our proposal to limit the 
amount of time a MIPS eligible clinician may spend in Option 1 (Pre-
production and Validation) to one performance period, before 
progressing to Option 2 (Validated Data Production). This commenter 
stated that CMS should leave the measure requirements the same for the 
CY 2023 performance period, allowing MIPS eligible clinicians 
additional time for testing and validation.
    A few commenters asked CMS to consider exclusions for those MIPS 
eligible clinicians who attempt to move from option 1 to option 2 after 
one year but are unable do so due to circumstances outside of their 
control. Another commenter stated that staffing and resource 
constraints faced by public health agencies have made it challenging 
for MIPS eligible clinicians to complete the onboarding, testing, and 
validation processes necessary to fulfill the requirements. One 
commenter stated that public health agencies offer a limited amount of 
time for MIPS eligible clinicians to move from invitation to testing, 
making this requirement difficult. A few commenters recommended a delay 
in the effective date for this policy for 6-12 months to account for 
circumstances such as unexpected staff shortage or backlog (for 
example, in case a public health agency is unable to accommodate 
everyone who wants to be on board).
    Response: We acknowledge commenters' concerns regarding the lack of 
control MIPS eligible clinicians may have when moving through the 
levels of active engagement. We recognize that MIPS eligible 
clinicians' successful progression through the levels of engagement is 
partially dependent on the readiness, resources and capabilities of the 
PHAs to which they report. We further recognize that public health 
capacity remains somewhat variable and constrained--particularly as 
PHAs continue to direct resources to the COVID-19 PHE response efforts. 
For these reasons, we are delaying by one year the implementation of 
the proposed requirement that MIPS eligible clinicians may spend only 
one performance period at the Pre-production and Validation level of 
active engagement per measure, such that it will apply beginning with 
the performance period in CY 2024. We believe that this delay will 
provide MIPS eligible clinicians the additional time needed and thus 
believe that it is not necessary to adopt additional exclusions.
    After consideration of the public comments we received, we are 
finalizing proposed Option 1 (Pre-production and Validation) and 
proposed Option 2 (Validated Data Production) as proposed. A MIPS 
eligible clinician must demonstrate their level of active engagement at 
either Option 1 (Pre-production and Validation) or Option 2 (Validated 
Data Production) to fulfill each measure beginning with the CY 2023 
performance period. We are also finalizing our proposal to require MIPS 
eligible clinicians to submit their level of active engagement, either 
Option 1 (Pre-production and Validation) or Option 2 (Validated Data 
Production), for each measure they report beginning with the 
performance period in CY 2023. We are also finalizing the proposal that 
MIPS eligible clinicians may spend only one performance period at the 
Pre-production and Validation (Option 1) level of active engagement per 
measure, and that they must progress to the Validated Data Production 
(Option 2) level in the next performance period for which they report a 
particular measure. We are finalizing this proposal with a modification 
that the policy will apply beginning with the CY 2024 performance 
period. We are also finalizing the proposal that in the event a MIPS 
eligible clinician chooses to switch between one or more CDRs or PHAs, 
they will be permitted to spend one additional performance period at 
the Pre-production and Validation phase to assist with onboarding to 
the new CDR or PHA.
(E) Public Health Reporting and Information Blocking
    The ONC 21st Century Cures Act final rule (85 FR 25642) implemented 
policies related to information blocking as authorized under section 
4004 of the 21st Century Cures Act. The 21st Century Cures Act final 
rule established a regulatory definition of information blocking, under 
which information blocking is, in general, a practice by a health IT 
developer of certified health IT, health information network, health 
information exchange, or health care provider (actors) \533\ that, 
except as required by law or covered by an exception in 45 CFR part 
171, subparts B or C, is likely to interfere with (as defined in 45 CFR 
171.102) access, exchange, or use of EHI.534 535 For a 
health care provider (as defined in 45 CFR 171.102), information 
blocking (see 45 CFR 171.103) means a practice (except as required by 
law or covered by an exception defined in 45 CFR part 171) that is 
likely to interfere with access, exchange, or use of EHI that the 
health care provider knows is unreasonable and is likely to interfere 
with access, exchange, or use of electronic health 
information.536 537
---------------------------------------------------------------------------

    \533\ Actor is defined in 45 CFR 171.102 as ``health care 
provider, health IT developer of certified health IT, health 
information network or health information exchange.''
    \534\ For purposes of the definition of information blocking, 
for the period before October 6, 2022, electronic health information 
is defined in 45 CFR 171.103(b). As of that date, electronic health 
information will be defined as it is in 45 CFR 171.102.
    \535\ In order for a practice to be considered information 
blocking, additional requirements at 45 CFR 171.103(a)(2) or (a)(3) 
apply, depending on the type of actor engaging in the practice.
    \536\ For other types of actors (health IT developers of 
certified health IT and health information networks or health 
information exchanges, as defined in 45 CFR 171.102), the definition 
of ``information blocking'' (see 45 CFR 171.103) specifies that the 
actor ``knows, or should know, that such practice is likely to 
interfere with access, exchange, or use of electronic health 
information.''
    \537\ The exceptions to the definition of information blocking 
(practices that are required by law or covered by an exception in 45 
CFR part 171, subparts B or C) described in the previous sentence 
apply to this definition as well.
---------------------------------------------------------------------------

    ONC recently released an information blocking frequently asked 
question (FAQ) (IB.FAQ43.1.2022FEB) that highlights important points 
about public health reporting and information blocking.\538\ 
Specifically, if an actor is required to comply with another law that 
relates to the access, exchange, or use of EHI, failure to comply with 
that law may implicate the information blocking regulations. As an 
example, where a law requires actors to submit EHI to public health 
authorities, an actor's failure to submit EHI to public health 
authorities could be considered an interference under the information 
blocking regulations. For example, many States legally require 
reporting of certain diseases and conditions to detect outbreaks and 
reduce the spread of disease. Should an actor that is required to 
comply with such a law fail to report, the failure could be an 
interference with access, exchange, or use of EHI under the information 
blocking regulations. Practices would be evaluated to determine whether 
the unique facts and circumstances constitute information blocking, 
consistent with additional ONC frequently asked questions.\539\
---------------------------------------------------------------------------

    \538\ See https://www.healthit.gov/curesrule/faq/would-not-complying-another-law-implicate-information-blocking-regulations.
    \539\ See https://www.healthit.gov/curesrule/faq/how-would-any-claim-or-report-information-blocking-be-evaluated.

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

[[Page 70075]]

(g) Changes to the Scoring Methodology for the Performance Period in CY 
2023
    For ease of reference, Table 92 lists the objectives and measures 
for the Promoting Interoperability performance category for the CY 2023 
performance period/2025 MIPS payment year as revised to reflect the 
policies finalized in this final rule.
BILLING CODE 4150-28-P
[GRAPHIC] [TIFF OMITTED] TR18NO22.125


[[Page 70076]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.126


[[Page 70077]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.127


[[Page 70078]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.128


[[Page 70079]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.129


[[Page 70080]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.130

BILLING CODE 4150-28-C
    In the CY 2023 PFS proposed rule, we made various proposals that 
would affect the scoring of the objectives and measures for the 
performance period in CY 2023 (87 FR 46298 through 46309).
    In proposing to make the Query of PDMP measure required, we noted 
we would retain the 10 points associated with it, which are allocated 
as bonus points for the performance period in CY 2022. To accommodate 
this change if our proposal is finalized, we proposed to reduce the 
points associated with the Health Information Exchange objective 
measures from the current 40 points to 30 points beginning with the CY 
2023 performance period. (CY 2023 PFS proposed rule, 87 FR 46289 
through 46290).
    The Public Health and Clinical Data Exchange objective, with its 
two required measures, is currently worth only 10 points. Despite 
requiring certain measures to make the objective more effective in 
promoting public health data electronic exchange, the total number of 
points did not change between CY 2021 and CY 2022. We noted that we 
believe that increasing the point value of the Public Health and 
Clinical Data Exchange objective would create a more meaningful 
incentive for MIPS eligible clinicians to engage in the electronic 
reporting of public health information and recognize the importance of 
public health systems affirmed by the COVID-19 pandemic. Increasing the 
point value would make the Public Health and Clinical Data Exchange 
objective a more central piece of the Promoting Interoperability 
performance category and better incentivize MIPS eligible clinicians to 
implement these essential public health data exchange capabilities. 
Without adequate incentives, there remains a risk that MIPS eligible 
clinicians will simply not prioritize implementing these capabilities, 
which are essential to ongoing efforts to address COVID-19 and will be 
indispensable for responding to future public health threats and 
emergencies. Increasing the point value would more appropriately 
incentivize MIPS eligible clinicians to engage in the electronic 
reporting of public health information and would align the value of the 
objective with the objective's importance and the effort necessary to 
meet the required measures.
    Thus, we proposed to increase the points allocated to the Public 
Health and Clinical Data Exchange objective from 10 to 25 points to 
better align with the true value of this objective beginning with the 
CY 2023 performance period. We noted that we believe assigning 25 
points to the objective reflects the importance of comprehensive, 
nationwide health care data exchange between MIPS eligible clinicians 
and public health agencies. Nationwide health care data exchange would 
provide immense value to the public by improving the speed and 
effectiveness of public health responses, as well as to MIPS eligible 
clinicians, since better public health response reduces pressure on 
clinicians, which can be overwhelmed in a public health crisis. To 
balance the increase in the points associated with the Public Health 
and Clinical Data Exchange objective, we proposed to reduce the points

[[Page 70081]]

associated with the Provide Patients Electronic Access to Their Health 
Information measure from the current 40 points to 25 points beginning 
with the CY 2023 performance period. We proposed to revise the 
regulatory text for scoring the Promoting Interoperability performance 
category at Sec.  414.1380(b)(4)(ii)(B) and (C) to reflect the 
proposals for scoring the objectives and measures. (CY 2023 PFS 
proposed rule, 87 FR 46305 through 46306)
    We invited public comment on these proposals, and the following is 
a summary of the comments received:
    Comment: Several commenters supported our proposals to modify the 
existing scoring methodology for the Query of PDMP measure, the Health 
Information Exchange objective measures, the Public Health and Clinical 
Data Exchange objective, and the Provide Patients Access to their 
Health Information measure. One commenter stated that these 
modifications would be less cumbersome, easier to understand, and more 
effectively highlight important objectives. One commenter stated that 
they support our proposal to increase the number of points allocated to 
the Public Health and Clinical Data Exchange Objective, as this shows 
CMS's recognition of the important efforts that should continue in 
order to effectively move clinicians and health care organizations 
toward electronically submitting data to public health agencies.
    Response: We thank commenters for their support. We appreciate that 
commenters recognize our efforts towards further reducing 
administrative burden and highlighting objectives that are integral to 
the Promoting Interoperability performance category. We agree with 
commenters that moving MIPS eligible clinicians and health care 
organizations towards a more interoperable state is an important step 
towards interoperability.
    Comment: Some commenters supported our proposal to modify the 
scoring methodology to reflect our proposal to require the Query of 
PDMP measure. One commenter stated that the scoring revision will help 
address the opioid crisis, which has not gone away during the COVID-19 
PHE. Another commenter stated that they support changing the scoring 
methodology from optional bonus points to an assigned 10 points, making 
the Electronic Prescribing objective worth a total of 20 points.
    Response: We believe that after offering bonus points for several 
performance periods and increasing the bonus points from 5 to 10 points 
in the CY 2021 PFS final rule (85 FR 84887 and 84888), 10 points 
reflects the importance of this measure as a tool to help combat the 
opioid epidemic. Therefore, increasing the number of points allocated 
to the objective by requiring the Query of PDMP measure (such that the 
points allocated to the measure would no longer be bonus points) 
demonstrates our continued commitment to combatting the opioid 
epidemic.
    Comment: Some commenters did not support our proposal to modify the 
scoring methodology for the Query of PDMP measure. One commenter stated 
that CMS should not finalize this proposal, as they are also not 
supportive of requiring the Query of PDMP measure. Another commenter 
stated that with many MIPS eligible clinicians are incapable of 
interconnecting their EHR technology with PDMP systems, CMS should not 
require the Query of PDMP measure, and therefore, not finalize 
converting the 10 bonus points to assigned points.
    Response: We agree with the commenters that not all MIPS eligible 
clinicians have a fully operational statewide PDMP or a fully 
integrated EHR-PDMP. We recognize that without full integration, it is 
possible that the actions required to satisfy the Query of PDMP measure 
could be time-consuming for clinicians and potentially cause clinical 
disruption. For these reasons, we are adopting an additional exclusion 
for the Query of PDMP that will be available only for the CY 2023 
performance period/2025 MIPS payment year, as explained in section 
IV.A.6.c.(4)(a)(iii), above. We do not agree with commenters that the 
10 points should remain as bonus points. As we have previously stated, 
more MIPS eligible clinicians are able to successfully complete the 
requirements of the measure versus those who cannot, and as we 
discussed in section IV.A.6.c.(4)(a)(i) of this final rule we believe 
it is important to require the Query of PDMP measure.
    Comment: Some commenters did not support our proposal to reduce the 
number of points associated with the Health Information Exchange 
objective measures from the current 40 points to 30 points. One 
commenter stated that the 10 points for the Query of PDMP measure 
should not be reassigned from the Health Information Exchange 
objective, given the current efforts towards supporting information 
exchange.
    Response: We thank commenters for their feedback. The Health 
Information Exchange objective remains fundamental to the Promoting 
Interoperability performance category. However, we believe that 
finalizing an additional reporting option, the Enabling Exchange under 
TEFCA measure (section IV.A.6.c.(4)(e)(iii)) will reduce the 
administrative efforts for MIPS eligible clinicians with regard to the 
Health Information Exchange objective, and the point reduction reflects 
this. We want to express our commitment to combatting the opioid 
epidemic, therefore we disagree that the points should not be 
redistributed to the Query of PDMP measure.
    Comment: A few commenters supported our proposal to increase the 
points allocated to the Public Health and Clinical Data Exchange 
objective. One commenter stated that this represents an important step 
to improving our nation's public health information infrastructure. 
Another commenter stated that increasing the points allocated to this 
objective will better incentivize MIPS eligible clinicians to implement 
these essential public health data exchange capabilities, bolstering 
the interoperability and robustness of data exchange between healthcare 
and public health, and will make the objective a more central piece of 
the Promoting Interoperability performance category.
    Response: We thank commenters for their support. As the COVID-19 
PHE revealed, public health data is vital in combating PHEs and 
increasing the points allocated to the objective clearly reflects the 
importance of this information.
    Comment: Some commenters do not support our proposal to increase 
the points allocated to the Public Health and Clinical Data Exchange 
objective. One commenter urged CMS to continue working with the CDC to 
ensure public health agencies are capable of receiving data before 
changing the existing point distribution. This commenter further stated 
that funding and implementation schedules have an impact on working 
with public health agencies that are capable of receiving data, and 
that these barriers should be resolved before any additional changes 
are made to the point distribution. One commenter stated that an ``all 
or nothing'' approach to the Public Health and Clinical Data Exchange 
objective requirements has a negative impact on MIPS eligible 
clinicians' success with the Promoting Interoperability performance 
category.
    Response: We will continue to work in close collaboration with the 
CDC. With regard to the ``all or nothing'' approach, we agree that 
failure to comply with the objective's requirements could have a 
potential negative impact on a MIPS eligible

[[Page 70082]]

clinician's success. We reiterate that the Public Health and Clinical 
Data Exchange objective will continue to be an important objective 
particularly as we may find ourselves having to combat future 
pandemics. In response to those commenters who have concerns that PHAs 
are not capable of receiving data, CDC is working with PHAs to ensure 
that they will be ready to receive data.
    After consideration of the public comments, we are finalizing our 
proposals to reduce the points associated with the Health Information 
Exchange objective measures from the current 40 points to 30 points 
beginning with the CY 2023 performance period, increase the points 
allocated to the Public Health and Clinical Data Exchange objective 
from 10 to 25 points, and reduce the number of points associated with 
the Provide Patients Electronic Access to Their Health Information 
measure from the current 40 points to 25 points. We note that we are 
finalizing the proposal to require the Query of PDMP measure, as 
discussed in section IV.A.6.c.(4)(d)(i) of this final rule, thereby 
finalizing the point value for the measure at 10 points.
    Table 93 reflects the scoring methodology for the Promoting 
Interoperability performance category for the performance period in CY 
2023.
BILLING CODE 4150-28-P
[GRAPHIC] [TIFF OMITTED] TR18NO22.131

    The maximum points available in Table 93 do not include the points 
that will be redistributed in the event an exclusion is claimed. For 
ease of reference, Table 94 shows how points will be redistributed 
among the objectives and measures for the performance period in CY 2023 
in the event a MIPS eligible clinician claims an exclusion.

[[Page 70083]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.132

    For ease of reference, Table 95 lists the objectives and measures 
for the Promoting Interoperability performance category for the 
performance period in CY 2023 and the 2015 Edition certification 
criteria.

[[Page 70084]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.133


[[Page 70085]]


BILLING CODE 4150-28-C
(h) Additional Considerations
(i) Nurse Practitioners, Physician Assistants, Clinical Nurse 
Specialists, and Certified Registered Nurse Anesthetists
    We established a policy at Sec.  414.1380(c)(2)(i)(A)(4)(ii) for 
the performance periods in CY 2017 through 2022 (2019 through 2024 MIPS 
payment years) under section 1848(q)(5)(F) of the Act to assign a 
weight of zero to the Promoting Interoperability performance category 
in the MIPS final score if there are not sufficient measures applicable 
and available to NPs, PAs, CRNAs, and CNSs. We will assign a weight of 
zero only in the event that an NP, PA, CRNA, or CNS does not submit any 
data for any of the measures specified for the Promoting 
Interoperability performance category, but if they choose to report, 
they will be scored on the Promoting Interoperability performance 
category like all other MIPS eligible clinicians and the performance 
category will be given the weighting prescribed by section 
1848(q)(5)(E) of the Act.
    As in past years, we intend to use data from prior performance 
periods to further evaluate the participation of NPs, PAs, CRNAs, and 
CNSs in the Promoting Interoperability performance category and 
consider for subsequent years whether the measures specified for this 
category are applicable and available to these MIPS eligible 
clinicians. We analyzed the data submitted for the CY 2017 performance 
period for the Promoting Interoperability performance category and 
discovered that the vast majority of MIPS eligible clinicians submitted 
data as part of a group. Although we are pleased that MIPS eligible 
clinicians utilized the option to submit data as a group, it does limit 
our ability to analyze data at the individual NPI level. For the CY 
2017 performance period, approximately 4 percent of MIPS eligible 
clinicians who are NPs, PAs, CRNAs, or CNSs submitted data individually 
for MIPS, and more than two-thirds of them did not submit data for the 
Promoting Interoperability performance category. For the CY 2018 
performance period, of the MIPS eligible clinicians who are NPs, PAs, 
CRNAs, or CNSs and submitted data individually for MIPS, we initially 
found approximately 34 percent submitted data individually for the 
Promoting Interoperability performance category. However, after further 
review and the refinement of our analytics, we found that this 
percentage was 24 percent, not 34 percent. For the CY 2019 performance 
period, of the MIPS eligible clinicians who are NPs, PAs, CRNAs, or 
CNSs and submitted data individually for MIPS, approximately 30 percent 
submitted data individually for the Promoting Interoperability 
performance category, a modest increase from 2018. For the CY 2020 
performance period, of the MIPS eligible clinicians who are NPs, PAs, 
CRNAs, or CNSs and submitted data individually for MIPS, approximately 
27.5 percent submitted data individually for the Promoting 
Interoperability performance category, a modest decrease from 2019. For 
the CY 2021 performance period, of the MIPS eligible clinicians who are 
NPs, PAs, CRNAs, or CNSs and submitted data individually for MIPS, 
approximately 21.3 percent submitted data individually for the 
Promoting Interoperability performance category, a decrease from 2020.
    Due to the continued relatively low numbers of NPs, PAs, CRNAs, or 
CNSs that submitted data individually for the Promoting 
Interoperability performance category for prior performance periods, we 
did consider proposing to extend the reweighting policy at Sec.  
414.1380(c)(2)(i)(A)(4)(ii) for another year (for the CY 2023 
performance period/2025 MIPS payment year, CY 2023 PFS proposed rule, 
87 FR 46309 through 46310). However, we noted that we believe that 
incentivizing more of these types of MIPS eligible clinicians to adopt 
and use CEHRT and submit data for the Promoting Interoperability 
performance category is important for increased interoperability and 
data exchange nationwide. We adopted the reweighting policy beginning 
with the first year of MIPS (the CY 2017 performance period/2019 MIPS 
payment year), and we believe that there has been sufficient time for 
NPs, PAs, CRNAs, and CNSs to adopt and implement CEHRT. At this point 
in the program's maturity, we are concerned that the reweighting policy 
itself might be serving as a disincentive to these types of MIPS 
eligible clinicians adopting and using CEHRT, which would be an 
unintended consequence. We believe it is possible that these clinician 
types are now able to submit data individually on the measures for the 
Promoting Interoperability performance category, but they are choosing 
not to because they would prefer for the performance category to be 
reweighted and not to contribute to their final score. Further, we 
believe that there are sufficient measures applicable and available in 
the Promoting Interoperability performance category for NPs, PAs, 
CRNAs, and CNSs. The measures that may not apply to these clinician 
types, such as the e-Prescribing measure, have exclusions that can be 
claimed if applicable. We considered the impact that not extending the 
policy may have on MIPS eligible clinicians in small practices, but we 
believe that the policy we established in the CY 2022 PFS final rule at 
Sec.  414.1380(c)(2)(i)(A)(4)(ii)) to automatically assign a weight of 
zero to the Promoting Interoperability performance category for MIPS 
eligible clinicians in a small practice will result in very few NPs, 
PAs, CRNAs, and CNSs being affected. Further, we reminded readers that 
a MIPS eligible clinician who meets the criteria for a significant 
hardship may submit a hardship exception application to reweight the 
Promoting Interoperability performance category based on a significant 
hardship, such as lack of control over the availability CEHRT and 
insufficient internet access (81 FR 77240 through 77243, 82 FR 53680 
through 53686, 82 FR 53783 through 53785, and 85 FR 84984).
    For these reasons, we did not propose to continue the reweighting 
policy at Sec.  414.1380(c)(2)(i)(A)(4)(ii) to assign a weight of zero 
to the Promoting Interoperability performance category in the MIPS 
final score for NPs, PAs, CRNAs, or CNSs for the CY 2023 performance 
period/2025 MIPS payment year. However, we requested public comment on 
whether we should continue this policy for the CY 2023 performance 
period/2025 MIPS payment year. We noted particular interest in comments 
on potential barriers to CEHRT adoption and implementation that may 
impact one or more of these clinician types, as well as comments on the 
applicability of the Promoting Interoperability performance category 
measures to NPs, PAs, CRNAs, or CNSs.
    The following is a summary of the public comments received on not 
continuing the current reweighting policy for NPs, PAs, CRNAs, or CNSs 
and our responses:
    Comment: Many commenters supported our decision not to continue the 
reweighting policy for NPs, PAs, CRNAs, or CNSs starting with the 
performance period in CY 2023. One commenter stated that it is critical 
to expand health care provider participation in the Promoting 
Interoperability performance category so that data from NPs, PAs, 
CRNAs, or CNSs is included in public health reporting.
    Response: We agree that data from all MIPS eligible clinician types 
will make

[[Page 70086]]

the information available through public health reporting more robust.
    Comment: One commenter requested that CMS provide exceptions to 
small practices and CRNAs in rural areas.
    Response: We currently do not have a policy to reweight the 
Promoting Interoperability performance category for MIPS eligible 
clinicians in rural areas, though we may consider this feedback in 
future rulemaking. In the CY 2022 PFS final rule (86 FR 65485 through 
65487, Sec.  414.1380(c)(2)(i)(C)(9)), we finalized a reweighting 
policy to assign a weight of zero to the Promoting Interoperability 
performance category in the MIPS final score for MIPS eligible 
clinicians in small practices.
    Comment: Several commenters did not support our choice not to 
continue the reweighting policy for NPs, PAs, CRNAs, or CNSs. A few of 
these commenters stated that this is very problematic for those 
clinicians not reporting as a group because it makes them individually 
responsible for submitting data for the Promoting Interoperability 
performance category. A couple commenters stated that this was an 
unnecessary change during the COVID-19 PHE.
    Response: We appreciate the commenters' concerns but believe that 
the sharing of electronic health information from all MIPS eligible 
clinicians through CEHRT will improve patient care. MIPS eligible 
clinicians who do report as a group may be in small practices and 
eligible for reweighting under the policy at Sec.  
414.1380(c)(2)(i)(C)(9). While we understand that the COVID-19 PHE has 
caused stress for many MIPS eligible clinicians, we believe the value 
of the information in CEHRT will help MIPS eligible clinicians deliver 
higher quality healthcare. To achieve this, the information from all 
MIPS eligible clinician types needs to be available for electronic 
sharing.
    After consideration of the public comments, we are not continuing 
the reweighting policy at Sec.  414.1380(c)(2)(i)(A)(4)(ii) to assign a 
weight of zero to the Promoting Interoperability performance category 
in the MIPS final score for NPs, PAs, CRNAs, or CNSs for the CY 2023 
performance period/2025 MIPS payment year.
(ii) Physical Therapists, Occupational Therapists, Qualified Speech-
Language Pathologists, Qualified Audiologists, Clinical Psychologists, 
and Registered Dieticians or Nutrition Professionals
    In the CY 2019 PFS final rule (83 FR 59819 through 59820), we 
established that we will apply the same reweighting policy for the 
Promoting Interoperability performance category that we adopted 
previously for NPs, PAs, CNSs, and CRNAs to other types of MIPS 
eligible clinicians who are non-physician practitioners (physical 
therapists, occupational therapists, qualified speech-language 
pathologists, qualified audiologists, clinical psychologists, and 
registered dieticians or nutrition professionals) for the CY 2019 
performance period. The reweighting policy for physical therapists, 
occupational therapists, qualified speech-language pathologists, 
qualified audiologists, clinical psychologists, and registered 
dieticians or nutrition professionals is codified at Sec.  
414.1380(c)(2)(i)(A)(4)(i).We stated that because many of these 
clinician types were or are not eligible to participate in the Medicare 
or Medicaid Promoting Interoperability Program, we have little evidence 
as to whether there are sufficient measures applicable and available to 
them under the Promoting Interoperability performance category. We 
extended this policy for the performance periods in CY 2020 (84 FR 
63003 through 63004), CY 2021 (85 FR 84895), and CY 2022 (86 FR 65488 
through 65489). We analyzed the data from the CY 2019 performance 
period/2021 MIPS payment year, and approximately 18.4 percent of 
occupational therapists, 2 percent of physical therapists, and 1 
percent of clinical psychologists who submitted data individually for 
MIPS, submitted data individually for the Promoting Interoperability 
performance category. For qualified speech-language pathologists, 
qualified audiologists, and registered dieticians/nutrition 
professionals, approximately 18.8 percent of those who submitted data 
individually for MIPS also submitted data individually for the 
Promoting Interoperability performance category. We analyzed the data 
from the CY 2020 performance period/2022 MIPS payment year, and 
approximately 3.3 percent of occupational therapists, 1.4 percent of 
physical therapists, and 0.6 percent of clinical psychologists who 
submitted data individually for MIPS, submitted data individually for 
the Promoting Interoperability performance category. For qualified 
speech-language pathologists, qualified audiologists, and registered 
dieticians/nutrition professionals, 0 percent (rounded from 16 total 
clinicians) of those who submitted data individually for MIPS also 
submitted data individually for the Promoting Interoperability 
performance category. We analyzed the data from the CY 2021 performance 
period/2023 MIPS payment year, and 0 percent of occupational 
therapists, 0.3 percent of physical therapists, 0.5 percent of clinical 
psychologists who submitted data individually for MIPS, submitted data 
individually for the Promoting Interoperability performance category. 
For qualified speech-language pathologists, qualified audiologists, and 
registered dieticians/nutrition professionals, 6.7 (6.66) percent of 
those who submitted data individually for MIPS also submitted data 
individually for the Promoting Interoperability performance category.
    Based on low participation, it is possible that these clinician 
types may be finding that there are not sufficient measures that are 
applicable to them. As with NPs, PAs, CRNAs, and CNSs, however, it is 
also possible that the reweighting policy itself might be serving as a 
disincentive to these types of MIPS eligible clinicians adopting and 
using CEHRT, and that they are choosing not to submit data individually 
on the measures because they would prefer for the performance category 
to be reweighted and not to contribute to their final score. Because 
these clinician types were added to the definition of a MIPS eligible 
clinician under Sec.  414.1305 more recently than NPs, PAs, CRNAs, and 
CNSs, we believe it would be appropriate to continue the existing 
reweighting policy for them for one more year. Therefore, we proposed 
to continue the existing policy of reweighting the Promoting 
Interoperability performance category for physical therapists, 
occupational therapists, qualified speech-language pathologists, 
qualified audiologists, clinical psychologists, and registered 
dieticians or nutrition professionals only for the CY 2023 performance 
period/2025 MIPS payment year (CY 2023 PFS proposed rule, 87 FR 46310) 
and to revise Sec.  414.1380(c)(2)(i)(A)(4)(i) to reflect the proposal. 
We want to continue to encourage these types of MIPS eligible 
clinicians to adopt and use CEHRT, which would contribute to increased 
interoperability and data exchange nationwide; therefore, we do not 
anticipate proposing in future rulemaking to extend the policy for 
additional years.
    We invited comments on this proposal, and the following is a 
summary of the public comments received on our proposal to continue the 
existing policy of reweighting the Promoting Interoperability 
performance category for physical therapists, occupational therapists, 
qualified speech-language pathologists, qualified audiologists, 
clinical psychologists, and registered dieticians or nutrition

[[Page 70087]]

professionals for the CY 2023 performance period and our responses:
    Comment: The majority of commenters supported our proposal to 
continue the reweighting policy for physical therapists, occupational 
therapists, qualified speech-language pathologists, qualified 
audiologists, clinical psychologists, and registered dieticians or 
nutrition professionals for the CY 2023 performance period/2025 MIPS 
payment year.
    Response: We appreciate the support for this proposal.
    Comment: Many commenters expressed concern about our statement that 
we did ``not anticipate proposing in future rulemaking to extend the 
policy for additional years'' (87 FR 46310). Some stated that these 
clinician types were not eligible to participate in the Medicare and 
Medicaid EHR Incentive Programs and do not have the resources to adopt 
CEHRT. Other commenters recommended that CMS continue to offer hardship 
exceptions that would result in the reweighting of the Promoting 
Interoperability performance category. A few commenters asked that we 
delay the discontinuation of reweighting until CY 2025 to give these 
MIPS eligible clinicians more time.
    Response: We appreciate these concerns and may take this feedback 
under consideration for future rulemaking. While we do understand that 
these clinicians were not eligible for EHR incentives, we believe that 
the value of interoperable electronic health information is great. We 
will continue to review the number of physical therapists, occupational 
therapists, qualified speech-language pathologists, qualified 
audiologists, clinical psychologists, and registered dieticians or 
nutrition professionals who submit data for the Promoting 
Interoperability performance category.
    After consideration of the public comments, we are finalizing the 
proposal to continue the existing policy of reweighting the Promoting 
Interoperability performance category for physical therapists, 
occupational therapists, qualified speech-language pathologists, 
qualified audiologists, clinical psychologists, and registered 
dieticians or nutrition professionals only for the CY 2023 performance 
period/2025 MIPS payment year and the corresponding revisions to Sec.  
414.1380(c)(2)(i)(A)(4)(i).
(iii) Clinical Social Workers
    In the CY 2022 PFS final rule (86 FR 65387 through 65389), we added 
clinical social workers to the definition of a MIPS eligible clinician 
under Sec.  414.1305, beginning with the CY 2022 performance period/
2024 MIPS payment year. This clinician type was not eligible to 
participate in the Medicare Promoting Interoperability Program to earn 
incentive payments for meaningful use of CEHRT or receive reduced 
Medicare payments for failing to meaningfully use CEHRT. Clinical 
social workers also were not eligible for Medicaid EHR incentive 
payments. We stated that clinical social workers may lack experience 
with the adoption or use of CEHRT, and that we believed there may not 
be sufficient Promoting Interoperability performance category measures 
that are applicable and available to them (86 FR 65489). For the CY 
2022 performance period/2024 MIPS payment year, we established that we 
will apply to clinical social workers the same reweighting policy for 
the Promoting Interoperability performance category that we adopted 
previously for NPs, PAs, CNSs, CRNAs, and other types of MIPS eligible 
clinicians who are non-physician practitioners (86 FR 65489). The 
reweighting policy for clinical social workers is codified at Sec.  
414.1380(c)(2)(i)(A)(4)(iii).
    CY 2022 is the first year that clinical social workers are 
considered MIPS eligible clinicians, and thus we do not yet have any 
performance period data that we could use to evaluate whether the 
Promoting Interoperability performance category measures are applicable 
and available to this type of MIPS eligible clinician. We proposed to 
continue the existing policy of reweighting the Promoting 
Interoperability performance category for clinical social workers for 
the CY 2023 performance period/2025 MIPS payment year and to revise 
Sec.  414.1380(c)(2)(i)(A)(4)(iii) to reflect the proposal (CY 2023 PFS 
proposed rule, 87 FR 46310 through 46311). We noted we would evaluate 
whether the policy should be continued for future years when we have 
performance period data available.
    We invited comment on this proposal, but we did not receive any 
comments. For the reasons stated in the CY 2023 proposed rule (87 FR 
46310 and 46311) and above, we are finalizing the proposal to continue 
the existing policy of reweighting the Promoting Interoperability 
performance category for clinical social workers for the CY 2023 
performance period/2025 MIPS payment year and the corresponding 
revisions to Sec.  414.1380(c)(2)(i)(A)(4)(iii).
(i) Patient Access to Health Information Measure--Request for 
Information (RFI)
    The CY 2023 PFS proposed rule contained an RFI on a measure of 
patient access to their health information (87 FR 46311 through 46312).
    We thank commenters for their responses to this request for 
information. We may consider this information to inform future 
rulemaking.
(5) APM Entity Level Participation for MIPS Eligible Clinicians 
Participating in MIPS APMs
(a) Overview
    In the CY 2021 PFS final rule (85 FR 84896), we finalized our 
policy to terminate the APM scoring standard effective January 1, 2021, 
and to retain certain APM Entity group reporting policies that were 
established and finalized for reporting and scoring under MIPS 
beginning with the CY 2021 MIPS performance period. Therefore, we 
redesignated, in part, the regulation that describes APM Entity group 
determinations, from Sec.  414.1370(e) to Sec.  414.1317, and titled 
that section ``APM Entity Groups.''
(b) APM Entity Level Reporting of Promoting Interoperability 
Performance Category
    In the CY 2021 PFS final rule (85 FR 84896), we finalized a policy 
to allow APM Entities to report to traditional MIPS using any available 
MIPS reporting pathway, including the APM Performance Pathway (APP), 
traditional MIPS and, in the future, MIPS Value Pathways (MVPs).
    We finalized that APM Entities that do not report through the APP 
will continue to have the cost performance category reweighted to zero 
percent of their MIPS final score, but will be required to report and 
be scored on the three remaining MIPS performance categories, including 
quality, IA, and promoting interoperability. We explained in that rule 
that the PI performance category would continue to be scored for multi-
TIN APM Entities using the promoting interoperability roll-up 
calculation described at Sec.  414.1317(b)(1) (85 FR 84897).
    It has come to our attention through feedback from interested 
parties that many of the workstream modifications, as well as data 
aggregation and integration tools that are likely to be used by multi-
TIN APM Entities, such as use of the FHIR API or hiring vendors to 
complete the more complex reporting activities required for reporting 
APM Entity level eCQMs could also be used to collect data and submit 
for the promoting interoperability performance category at the APM 
Entity level.
    It is also our understanding that it is possible that an APM Entity 
may

[[Page 70088]]

represent only a single practice site or specialty within a larger 
multi-specialty TIN. We believe that in these circumstances the APM 
Entity may have both the ability and desire to report on the promoting 
interoperability performance category at the APM Entity level, thereby 
excluding data generated by the rest of the larger TIN, in cases where 
the APM Entity itself performed above average relative to the rest of 
that TIN.
    Therefore, we proposed to introduce a voluntary reporting option 
for APM Entities to report the promoting interoperability performance 
category at the APM Entity level beginning with the 2023 performance 
period. Multi-TIN APM Entities that do not choose this proposed new 
reporting option would continue to be scored using the roll-up 
calculation described at Sec.  414.1317(b)(1). We sought comment on 
this proposal.
    We did not receive any comments on this proposal. For the reasons 
stated previously in this section and in the proposed rule (87 FR 
46257), we are finalizing as proposed the voluntary reporting option 
for APM Entities to report the promoting interoperability performance 
category at the APM Entity level beginning with the 2023 performance 
period.
e. MIPS Final Score Methodology
(1) Performance Category Scores
(a) Background
    Section 1848(q)(1)(A)(i) and (ii) of the Act provides, in relevant 
part, that the Secretary shall develop a methodology for assessing the 
total performance of each MIPS eligible clinician according to certain 
specified performance standards for a performance period and use such 
methodology to provide for a composite performance score for each such 
clinician for each performance period.
    For the CY 2023 performance period/2025 MIPS payment year, we 
intend to continue to build on the scoring methodology we finalized for 
prior years. We believe that this scoring methodology allows for 
accountability and alignment across the performance categories and 
minimizes burden on MIPS eligible clinicians. In the CY 2023 PFS 
proposed rule (87 FR 46313), we proposed to update our scoring policies 
consistent with this framework. Specifically, we proposed to--
     Amend the benchmarking policy to score administrative 
claims measures in the quality performance category using a benchmark 
calculated from performance period data.
     Clarify the topped out measure policy and update the 
topped out measure life cycle for scoring topped out measures in the 
quality performance category.
     Establish a maximum cost improvement score of 1 percentage 
point out of 100 percentage points available for the cost performance 
category beginning with the CY 2022 performance period/2024 MIPS 
payment year.
    We refer readers to section IV.A.6.c.(4)(g) of this final rule for 
a discussion of the changes to the scoring methodology for the 
Promoting Interoperability performance category. We did not propose 
changes to scoring policies for the improvement activities performance 
category.
    We refer readers to Sec.  414.1380 for our current policies on 
scoring.
(b) Scoring the Quality Performance Category for the Following 
Collection Types: Medicare Part B Claims Measures, eCQMs, MIPS CQMs, 
QCDR Measures, the CAHPS for MIPS Survey Measure and Administrative 
Claims Measures
    We referred readers to Sec.  414.1380(b)(1) for our current 
policies regarding quality measure benchmarks, calculating total 
measure achievement and measure bonus points, calculating the quality 
performance category score, including achievement and improvement 
points, and the small practice bonus (81 FR 77276 through 77308, 82 FR 
53716 through 53748, 83 FR 59841 through 59855, 84 FR 63011 through 
63018, 85 FR 84898 through 84913). In the CY 2022 PFS final rule we 
finalized policies to simplify scoring in MIPS as we transition to MVPs 
and to incentivize the selection of new, potentially high-value 
measures (86 FR 65496 through 65507).
(i) Scoring Administrative Claims Measures in the Quality Performance 
Category Using Performance Period Benchmarks
    In the 2023 PFS proposed rule (87 FR 46313), we referred readers to 
the CY 2017, CY 2018, CY 2019, CY 2020, and CY 2021 Quality Payment 
Program final rules and PFS final rules (81 FR 77277 through 77282, 82 
FR 53699 through 53718, 83 FR 59841 through 59842, 84 FR 63014 through 
63016, and 85 FR 84901 through 84904, respectively) for our previously 
established benchmarking policies.
    In the CY 2017 Quality Payment Program final rule (81 FR 77276 
through 77282), we finalized a rule providing that we will use MIPS 
eligible clinicians' performance in the baseline period to set 
benchmarks for the quality performance category, with the exception of 
new quality measures, quality measures that lack historical data, or 
quality measures where we do not have comparable data from the baseline 
period. In these cases, we explained that we will calculate benchmarks 
using data submitted during the applicable performance period. We 
defined the baseline period to be the 12-month CY that is 2 years prior 
to the performance period for the MIPS payment year. For example, for 
the CY 2023 performance period/2025 MIPS payment year, the baseline 
period two performance periods prior would be the CY 2021 performance 
period (81 FR 77276 and 77277). Additionally, in the CY 2019 PFS final 
rule (83 FR 59842), we amended Sec.  414.1380(b)(1)(ii) to align our 
benchmark policy with concurrently made changes to our data submission 
terminology. These changes removed references to each individual 
benchmark and instead stated that benchmarks will be based on measure 
collection type, from all available sources, including MIPS eligible 
clinicians and APMs, to the extent feasible, during the applicable 
baseline or performance period.
    Additionally, in the 2023 PFS proposed rule, we (87 FR 46313) 
referred readers to the CY 2017 Quality Payment Program final rule and 
the CY 2021 PFS final rule (81 FR 77130 through 77136 and 85 FR 84871 
through 84873 respectively) and Sec.  414.1325(a)(2)(i) for our 
previously established policies regarding administrative claims 
measures in the quality performance category.
    The policy at Sec.  414.1325 provides that there is no data 
submission requirement for cost measures or administrative claims 
measures in the quality performance category as these measures are 
calculated on behalf of participants by CMS using administrative claims 
data. In the CY 2017 Quality Payment Program final rule (81 FR 77130), 
we finalized a policy that clinicians would be scored on applicable 
administrative claims-based global or population health (henceforth 
referred to only as population health measures) in addition to the six 
required submitted measures. Additionally, we established exclusions to 
the case minimum policy of 20 cases. It was found that the all-cause 
hospital readmission (ACR) measure was not reliable for cases under 200 
and for groups of fewer than ten clinicians. As a result, we 
established exceptions to the case minimum policy for this measure and 
others as specified in the MIPS final list of quality measures through 
rule making

[[Page 70089]]

(Sec.  414.1380(b)(1)(iii)). In the CY 2021 PFS final rule (85 FR 84989 
through 84901), we finalized a policy starting in the CY 2021 
performance period/2023 MIPS payment year that would allow for 
performance periods longer than the standard 12-month performance 
period for administrative claims measures in the cost and quality 
performance categories as specified through rulemaking.
    In the CY 2023 PFS proposed rule (87 FR 46313 and 46314), we 
proposed that, beginning with the CY 2023 performance period/2025 MIPS 
payment year, we would score administrative claims measures using 
benchmarks calculated using performance period benchmarks. We stated 
that we believe that using a performance period benchmark to score 
these measures would allow for scores that are more reflective of 
current performance, while adding no additional burden to clinicians. 
For the reasons described below, we believe it is more appropriate in 
certain circumstances to evaluate clinicians against current 
performance benchmarks. As previously noted, they do not require the 
submission of data by or on behalf of clinicians and may have a 
measure-specific performance period to ensure appropriate sample sizes. 
Additionally, in instances where these measures do not meet the case 
minimum or benchmark requirements, they are excluded from a MIPS-
eligible clinician's quality performance category score.
    The use of performance period benchmarks for such measures would 
help us to improve quality measurement. For example, the Risk-
standardized Complication Rate (RSCR) Following Elective Primary Total 
Hip Arthroplasty (THA) and/or Total Knee Arthroplasty (TKA) has a 3-
year performance period (consecutive 36-month timeframe) \540\ that 
would start on October 1 of the calendar year 3 years prior to the 
applicable performance year and conclude on September 30 of the 
calendar year of the applicable performance year, proceeding with a 3-
month numerator assessment period (capturing complication outcomes) 
followed by a 2-month claims run-out period. For the CY 2023 
performance period/2025 MIPS payment year, the 3-year (36 consecutive 
months) performance period for this measure would span from October 1, 
2020 to September 30, 2023 with a 90-day numerator assessment period 
followed by a 60-day claims run-out period. This means that according 
to standard scoring policy, the corresponding baseline would include 
data from October 1, 2018 to September 30, 2021. We believe that 
comparison to data that precedes that standard 2-year baseline period 
may limit the usefulness of this measure. By comparing performance to 
data that was collected 5 years prior, this measure does not account 
for changes to the healthcare landscape and improvements in care that 
might have been made in the timeframe.
---------------------------------------------------------------------------

    \540\ Section 414.1320(e)(1) provides in relevant part that, 
beginning with the 2023 MIPS payment year, the performance period 
for the quality and cost performance categories is the full calendar 
year that occurs 2 years prior to the applicable MIPS payment year, 
except as otherwise specified for administrative claims-based 
measures.
---------------------------------------------------------------------------

    We noted that we do not believe using performance period benchmarks 
would increase burden to clinicians. We noted that we believe that 
clinicians prefer to have historical benchmarks to aid in measure 
selection and have performance targets. Additionally, population health 
administrative claims measures in MIPS are not subject to case minimum 
policies reducing the risk in being scored on these measures.
    Accordingly, we proposed to add a paragraph at Sec.  
414.1380(b)(1)(ii)(D) to state that, beginning with the CY 2023 
performance period/2025 MIPS payment year, CMS will calculate a 
benchmark for an administrative claims-based quality measure using the 
performance on the measure during the current performance period. We 
noted that we do not intend this proposal to modify our existing 
policies regarding case minimums and measures for which no benchmark 
may be calculated. Specifically, measures would remain subject to case 
minimum requirements described in paragraph (b)(1)(iii) and benchmark 
requirements in paragraph (b)(1)(ii)(A) of this section. Measures that 
cannot have a benchmark calculated or meet case minimum requirements 
would still be deducted from the eligible clinician's total measure 
achievement points consistent with paragraph (b)(1)(i)(A)(2)(ii).
    We sought public comment on the proposal to score administrative 
claims measures in the quality performance category using performance 
period benchmarks.
    Comment: Many commenters supported our proposal to score 
administrative claims measures in the quality performance category 
using performance period benchmarks, agreeing that the use of 
performance period benchmarks would allow for scores that are more 
reflective of current performance and national practice. One commenter 
further noted that, as demonstrated during the COVID-19 PHE, the 
collection of administrative claims data can often change year to year 
and historical data is not always representative of the current 
environment, and by calculating a measure score based on performance 
period benchmarks, CMS can better compare performance or cost with more 
representative data. Another commenter noted that same-year scoring is 
especially helpful for clinicians in tracking their status, as well as 
measure stewards in maintaining their measures.
    Response: We agree that using performance period benchmarks would 
be more reflective of current national practices will help clinicians 
track their progress over years and measure stewards maintain their 
measures. Through scoring administrative claims measures using 
performance period benchmarks, clinicians will be scored in a landscape 
that considers the most up-to-date guidance, practice, environmental 
effects. As these measures are calculated by CMS on behalf of the 
clinicians requiring no data submission, providing scores using 
performance period benchmarks will allow for the calculation of more 
representative scores that better track clinician performance and 
progress over time to aid in the quality improvement process.
    Comment: A few commenters did not support our proposal to score 
administrative claims measures using performance period benchmarks 
based on concerns that using performance period benchmarks would 
negatively impact clinicians' ability to gauge their performance during 
the performance period by eliminating their ability to project quality 
performance category scores. Commenters noted that without historical 
benchmarks, it would be difficult to estimate scores and determine 
performance improvement opportunities. One commenter noted that using 
performance year benchmarks would make it impossible for clinicians to 
know ahead of time what each measure's performance benchmark is, and 
therefore, may make it more difficult to improve performance on the 
measure year after year.
    Response: Administrative claims measures are calculated on behalf 
of clinicians and do not require additional submissions to MIPS to be 
calculated. We believe clinician efforts to estimate their performance 
on administrative claims with historical benchmarks are of limited use 
as the calculation of the measure may require data that is not easily 
accessible to the clinician. Moving from historical benchmarks to 
performance period benchmarks will not change this. We believe scoring

[[Page 70090]]

these measures using performance period benchmarks can help clinicians 
track progress over time by providing scores that are representative of 
current national trends thus aiding in identifying quality improvement 
opportunities in clinical practice overall and would not hinder in year 
to year comparisons.
    Comment: While some commenters supported our proposal to score 
administrative claims measures using performance period benchmarks 
because they agreed the changes to timeframes would likely better 
represent current clinical care; they also expressed concerns that the 
proposal did not address their ongoing concerns with using a 
representative sample of historical data for quality measures of other 
submission types. In particular, these commenters noted that many of 
the baseline periods will include data from 2019, 2020, and 2021, all 
of which are impacted by the COVID-19 pandemic, and urged CMS to avoid 
using these data for benchmarking purposes. One commenter sought 
clarity on how much the pandemic impacted the historical information. 
To account for the impact of COVID-19 PHE on quality measure 
benchmarks, another commenter suggested that instead of using 
performance period benchmarks, CMS should instead calculate both 
historical benchmarks and current period benchmarks, and use the lower 
benchmark for each quality measure.
    Response: We understand the concerns about the appropriateness of 
using data affected by the COVID-19 PHE to calculate historical 
benchmarks for quality measures. However, in the CY 2022 PFS final rule 
(86 FR 65494), we described our analysis of 2019 and 2020 data quality 
performance data, which found this data are suitable for benchmarking 
purposes. We maintain that this data is sufficiently representative and 
we will use this data to calculate benchmarks for Medicare Part B 
claims measures, eCQMs, MIPS CQMs, and QCDR measures. For this reason, 
we did not propose any changes to the calculation of benchmarks of 
quality measures of other submission types and will continue to provide 
historical benchmarks for such measures in order to aid clinicians in 
quality improvement efforts using these performance targets.
    After consideration of public comments and for the reasons stated 
above and in the CY 2023 PFS proposed rule (87 FR 46313 and 46314), we 
are finalizing our proposals to score administrative claims measures in 
the quality performance category using performance period benchmarks as 
proposed.
(ii) Assigning Measure Achievement Points for Topped Out Measures
    Section 1848(q)(3)(B) of the Act requires that, in establishing 
performance standards with respect to measures and activities, the 
Secretary consider, among other things, the opportunity for continued 
improvement. As part of our implementation of section 1848(q)(3)(B) of 
the Act, we established our topped out measure policy, which is 
intended to encourage clinicians to focus on areas where clinical 
improvement is possible by capping the points received for reporting on 
MIPS measures where meaningful distinctions in clinical performance are 
no longer measurable. We refer readers to Sec.  414.1380(b)(1)(iv)(B) 
for our policies regarding the scoring of topped out measures. Under 
Sec.  414.1380(b)(1)(iv), we identify topped out measures in the 
benchmarks published for each performance year. Under Sec.  
414.1380(b)(1)(iv)(B), beginning with the CY 2019 performance period/
2021 MIPS payment year, measure benchmarks (except for measures in the 
CMS Web Interface) that are identified as topped out for 2 or more 
consecutive years will receive a maximum of 7 measure achievement 
points beginning in the second year the measure is identified as topped 
out (82 FR 53726 and 53727).
    We finalized in the CY 2017 Quality Payment Program final rule (81 
FR 77286) that we would define topped out process measures as those 
with a median performance rate of 95 percent or higher (Sec.  
414.1305). We defined topped out non-process measures using a 
definition similar to the definition used in the Hospital Value-Based 
Purchasing (VBP) Program: a measure where the truncated coefficient of 
variation is less than 0.10 and the 75th and 90th percentiles are 
within 2 standard errors (81 FR 77286). When a measure is topped out, a 
large majority of clinicians submitting the measure perform at or very 
near the top of the distribution; therefore, there is little or no room 
for the majority of MIPS eligible clinicians who submit the measure to 
improve. We noted that we understand that each measure we have 
identified as topped out may offer room for improvement for some MIPS 
eligible clinicians; however, we believe asking clinicians to submit 
measures that we have identified as topped out and measures for which 
the vast majority of MIPS eligible clinicians already excel is an 
unnecessary burden that does not add value or improve beneficiary 
outcomes.
    In the CY 2018 Quality Payment Program final rule, we finalized 
that, beginning in the CY 2019 performance period/2021 MIPS payment 
year, each measure (excluding measures in the CMS Web Interface) that 
is identified as topped out for two or more consecutive years can 
receive no more than 7 points in the second year that is it identified 
as topped out and beyond (82 FR 53726 through 53727). A measure is 
identified as topped out for a given performance period by assessing 
its historical benchmark. Two consecutive historical benchmarks must be 
labeled as topped out for the 7-point cap to be applied for a given 
performance period. For example, for the CY 2023 performance period/
2025 MIPS payment year, a measure is considered topped out if the 
historical benchmark calculated from data submitted in the CY 2021 
performance period has a median performance of 95 percent or higher in 
the case of process measures or the truncated coefficient of variation 
is less than 0.10 and the 75th and 90th percentiles are within two 
standard errors in the case of non-process measures. If this same 
measure is identified as topped out again for the CY 2024 performance 
period/2026 MIPS payment year from data from the historical baseline 
period from CY 2022, this measure would be labeled as topped out and 
have the 7-point cap applied until the historical baseline period shows 
that the measure is no longer topped out or the measure is removed from 
the program. We noted that we believe this methodology incentivizes 
MIPS eligible clinicians to begin submitting non-topped out measures 
without performing below the median score. The methodology also does 
not impact scoring for those MIPS eligible clinicians that do not 
perform near the top of the measure, and therefore, have significant 
room to improve on the measure.
    In the CY 2021 PFS final rule (85 FR 84989 through 84901), we 
finalized a policy at Sec.  414.1380(b)(1)(vii)(A) that consolidated 
previously established scoring flexibilities regarding the truncation 
of a quality measure's performance period to 9-months of data from the 
CY 2018 Quality Payment Program final rule (82 FR 52714 through 53716) 
and the measure suppression policy established in the CY 2019 PFS final 
rule (FR 59845 through 59847). The updated scoring flexibilities policy 
stated that, beginning with the CY 2021 performance period/2023 MIPS 
payment year, CMS would truncate the performance period or suppress a

[[Page 70091]]

quality measure if CMS determined that revised clinical guidelines, 
measure specifications, or codes impacted a clinician's ability to 
submit information on the measure or may lead to potentially misleading 
results (85 FR 84899 through 84901). We stated that, based on the 
timing of the changes to clinical guidelines, measure specifications or 
codes, we will assess the measure on 9 months of data, and if 9 
consecutive months of data are not available, we will suppress the 
measure by reducing the total available measure achievement points from 
the quality performance category by 10 points for each measure 
submitted that is impacted (85 FR 84899). In the CY 2022 PFS final rule 
(86 FR 65491 and 65492), the scope of the truncation and suppression 
policy was expanded to include errors that are outside the control of 
the clinician, such as an incorrect coding status.
    As discussed in the CY 2023 PFS proposed rule (87 FR 46314 and 
46315), we clarified the interaction of our topped-out measure policy 
and our measure truncation and measure suppression policies. First, we 
noted that not all instances in which a measure lacks a benchmark 
affect the scoring of the measure equally. For example, when a measure 
is suppressed in the baseline period for the incorrect inclusion of an 
inactive status code in the measure specifications, the measure could 
resume to be scored comparably once the measure specifications are 
accurate in both the baseline and applicable performance period. 
Conversely, a measure that was suppressed or had its performance period 
truncated because it underwent a substantive change could not be 
comparably scored to past data. In a case like the former, it is not 
until the suppressed or otherwise affected data is in the baseline 
period that the topped-out measure lifecycle is affected. A measure 
that lacks a benchmark for a performance period due to the suppression 
of data in the measure's baseline period will not have the 7-point cap 
applied for that performance period. This is because the measure lacks 
the two topped out historical performance periods necessary for the 
application of the cap. This does not preclude, however, CMS 
determining that the measure is topped out for the performance period. 
In the case of a measure that lacks a baseline period, CMS may base the 
benchmark on performance during the applicable performance period (see 
Sec.  414.1380(b)(1)(ii)). Determining the measure was topped out 
during the performance period would thus require only that MIPS 
eligible clinician data for the performance period met the topped- out 
measure standard. In such a case, the 7-point cap could next be applied 
as soon as the following year.
    Where a measure was suppressed or had its performance period 
truncated because of a substantive change or a change in clinical 
guidelines, the topped-out measure resets entirely the year following 
the change as there is no longer a historical benchmark with which to 
compare the measure for the purpose of determining whether it is topped 
out.
(c) Cost Performance Category Score
(i) Improvement Scoring Methodology
    In the CY 2018 Quality Payment Program final rule, we established 
policies related to measuring improvement in the cost performance 
category at the measure level, an improvement scoring methodology for 
the cost performance category, and a formula for calculating the cost 
performance category score \541\ to include achievement and improvement 
(82 FR 53748 through 53752). These policies were to apply beginning 
with the CY 2018 performance period/2020 MIPS payment year. We codified 
these policies under Sec.  414.1380(b)(2)(iii) and (iv) (82 FR 53748 
through 53752, 53957). Subsequent to the publication of that final 
rule, the Bipartisan Budget Act of 2018 (BBA 18) (Pub. L. 115-123, 
enacted February 9, 2018) was enacted. Section 51003(a)(1)(B) of the 
BBA 18 modified section 1848(q)(5)(D) of the Act such that the cost 
performance category score shall not take in to account the improvement 
of the MIPS eligible clinician for each of the second, third, fourth, 
and fifth years for which the MIPS applies to payments. In the CY 2019 
PFS proposed rule, we stated that we do not believe this statutory 
change requires us to remove our existing methodology for scoring 
improvement in the cost performance category (see 82 FR 53749 through 
53752), but it does prohibit us from including an improvement component 
in the cost performance category score for each of the CY 2020 through 
2023 MIPS payment years (83 FR 35956). Therefore, we proposed to revise 
Sec.  414.1380(b)(2)(iv)(E) to provide that the maximum cost 
improvement score for the CY 2020, 2021, 2022, and 2023 MIPS payment 
years is zero percentage points (83 FR 35956). We stated that under our 
existing policy (82 FR 53751 through 53752), the maximum cost 
improvement score for the CY 2020 MIPS payment year is 1 percentage 
point, but due to the statutory changes and under the proposal, the 
maximum cost improvement score for the CY 2020 MIPS payment year would 
be zero percentage points (83 FR 35956). We also proposed at Sec.  
414.1380(a)(1)(ii) to modify the performance standards to reflect that 
the cost performance category score will not take in to account 
improvement until the CY 2024 MIPS payment year (83 FR 35956). In the 
CY 2019 PFS final rule, we finalized these proposals as proposed (83 FR 
59856).
---------------------------------------------------------------------------

    \541\ In the CY 2022 PFS final rule, we changed the term 
``performance category percentage score'' to ``performance category 
score'' (86 FR 65490 through 65491). As a result of such terminology 
change in the CY 2022 PFS final rule, this final rule uses the term 
``performance category score'' in all descriptions of the cost 
improvement scoring proposal and finalized policy.
---------------------------------------------------------------------------

    In prior rulemaking, we inadvertently failed to address what the 
maximum cost improvement score would be under Sec.  
414.1380(b)(2)(iv)(E) beginning with the CY 2022 performance period/
2024 MIPS payment year. As we stated previously in the CY 2019 PFS 
proposed and final rules (83 FR 35956 and 83 FR 59856, respectively), 
we do not believe the changes made to section 1848(q)(5)(D) of the Act 
by section 51003(a)(1)(B) of the BBA 18 required us to remove our 
existing methodology for scoring improvement in the cost performance 
category. Thus, in the CY 2019 PFS final rule, we maintained the 
methodology we had previously established under Sec.  
414.1380(b)(2)(iii) and (iv), while modifying Sec.  
414.1380(b)(2)(iv)(E) to reflect the statutory change made by section 
51003(a)(1)(B) of the BBA 18. Section 1848(q)(5)(D) of the Act requires 
us to take in to account the improvement of the MIPS eligible clinician 
when scoring the cost performance category for the sixth year of MIPS 
(the CY 2022 performance period/2024 MIPS payment year) and for 
subsequent years. In the CY 2023 PFS proposed rule (87 FR 46315 through 
46316), we proposed to establish a maximum cost improvement score of 1 
percentage point for the cost performance category beginning with the 
CY 2022 performance period/2024 MIPS payment year. A maximum cost 
improvement score of 1 percentage point was the policy we established 
previously, before the amendments made by section 51003(a)(1)(B) of the 
BBA 18 with respect to the second, third, fourth, and fifth years of 
MIPS. In the CY 2023 PFS proposed rule (87 FR 46316), we stated that we 
believe that this policy is still appropriate at this time because 
although there are many

[[Page 70092]]

opportunities for clinicians to actively work on improving their 
performance on cost measures, such as through more active care 
management or reductions in certain services, we recognize that many 
clinicians are still learning about cost measurement under MIPS. We aim 
to continue to educate clinicians about cost measurement and develop 
opportunities for robust feedback and measures that better recognize 
the role of clinicians. Clinicians are navigating and overcoming the 
obstacles of the COVID-19 public health emergency while having to 
familiarize themselves with new policies we have adopted for MIPS, such 
as the establishment of MVPs as a voluntary means for participation 
starting with the CY 2023 performance period that could become a 
mandatory means of participation, the opportunity for subgroup 
participation and reporting, the sunset of the CMS Web Interface as a 
collection/submission type and transition to other collection and 
submission types for CMS Web Interface users starting with the CY 2023 
performance period, and the implementation of new cost measures. As the 
CY 2022 performance period/2024 MIPS payment year is the first program 
year we will be measuring improvement for the cost performance 
category, we stated that we believe it would be appropriate to begin 
gradually with a maximum cost improvement score of 1 percentage point--
a policy clinicians already would be familiar with from prior 
rulemaking. In a future year, we may consider and assess the 
possibility of increasing the maximum cost improvement score.
    As we stated in the CY 2023 PFS proposed rule, to the extent that 
the proposed change constitutes a change to the MIPS scoring or payment 
methodology for the CY 2024 MIPS payment adjustment after the start of 
the CY 2022 performance period, we believe that, consistent with 
section 1871(e)(1)(A)(i) of the Act, it is necessary to comply with the 
requirement of section 1848(q)(5)(D) of the Act that we take in to 
account the improvement of the MIPS eligible clinician when scoring the 
cost performance category for the sixth year of MIPS (the CY 2022 
performance period/2024 MIPS payment year) (87 FR 46316). Also, we 
stated that we believe that, consistent with section 1871(e)(1)(A)(ii) 
of the Act, it would be contrary to the public interest not to fill the 
gap in our existing methodology for scoring improvement in the cost 
performance category for the CY 2022 performance period/2024 MIPS 
payment year (87 FR 46316). Currently, the improvement scoring 
methodology for the cost performance category under Sec.  
414.1380(b)(2)(iv)(E) does not include a maximum cost improvement score 
for the CY 2022 performance period/2024 MIPS payment year. We stated 
(87 FR 46316) that the proposal would correct this deficiency by 
establishing a maximum cost improvement score of 1 percentage point 
beginning with the CY 2022 performance period/2024 MIPS payment year. 
In addition, we stated that it would be contrary to the public interest 
not to comply the statutory requirement of section 1848(q)(5)(D) of the 
Act to take in to account improvement when scoring the cost performance 
category for the sixth year of MIPS (the CY 2022 performance period/
2024 MIPS payment year).
    In the CY 2023 PFS proposed rule, we proposed corresponding changes 
to Sec.  414.1380(b)(2)(iv)(E) to reflect the proposal (87 FR 46316). 
We solicited public comment on the proposal to establish a maximum cost 
improvement score of 1 percentage point for the cost performance 
category starting with the CY 2022 performance period/2024 MIPS payment 
year. The following is a summary of the public comments received.
    Comment: Several commenters supported the proposal to establish a 
maximum cost improvement score of 1 percentage point for the cost 
performance category starting with the CY 2022 performance period/2024 
MIPS payment year to satisfy statutory requirements. Commenters stated 
that the proposal would clarify improvement scoring policy and 
appreciated the recognition from CMS that many physicians continue to 
adapt to cost measurement under MIPS.
    Response: We appreciate the support from commenters.
    Comment: One commenter expressed support for the proposal, but 
encouraged CMS to delay increasing the maximum cost improvement score 
in future years in order to allow clinicians further flexibility while 
they become accustomed to the cost measures and continue to navigate 
practicing throughout the ongoing COVID-19 pandemic.
    Response: We appreciate the support from the commenter. We 
recognize that the COVID-19 PHE may have continued to impact some MIPS 
eligible clinicians, groups, and virtual groups more than others during 
the CY 2022 performance period/2024 MIPS payment year. We will consider 
whether to increase the maximum cost improvement score above 1 
percentage point in future rulemaking.
    Comment: One commenter expressed appreciation for the ongoing 
refinement of the cost performance category, but requested that CMS 
elaborate on how the maximum cost improvement score of 1 percentage 
point would be implemented under MIPS.
    Response: In the CY 2018 Quality Payment Program final rule, we 
noted that we will calculate a cost improvement score only when data 
sufficient to measure improvement is available (82 FR 53749 and 53750). 
We consider sufficient data to be available when a MIPS eligible 
clinician participates in MIPS using the same identifier in 2 
consecutive performance periods and is scored on the same cost 
measure(s) for 2 consecutive performance periods (82 FR 53749 and 
53750) (for example, in the CY 2022 performance period/2024 MIPS 
payment year and the CY 2023 performance period/2025 MIPS payment 
year). If the cost improvement score cannot be calculated due to 
sufficient data not being available, we assign a cost improvement score 
of zero percentage points (82 FR 53749 and 53750). We quantify 
improvement in the cost performance category by comparing the number of 
cost measures with a significant improvement in performance 
(statistically significant change) and the number of cost measures with 
a significant decline in performance (statistically significant change) 
(82 FR 53750 through 53752). To determine whether there was a 
significant improvement or decline in performance between the two 
performance periods, we apply a common standard statistical test, a t-
test (82 FR 53750 through 53752). To determine the cost improvement 
score, we subtract the number of cost measures with a significant 
decline from the number of cost measures with a significant 
improvement, then divide the result by the number of cost measures for 
which the MIPS eligible clinician or group was scored for 2 consecutive 
performance periods, and then multiply the result by the maximum 
improvement score (82 FR 53750 through 53752). The cost improvement 
score cannot be lower than zero percentage points (82 FR 53750 through 
53752).
    Under our proposal, the maximum cost improvement score available in 
the cost performance category would be 1 percentage point out of 100 
percentage points available for the cost performance category score. If 
a clinician is measured on only one cost measure consistently from one 
performance period to the next and met the requirements for improvement 
(statistically significant levels of

[[Page 70093]]

change), the clinician would receive one improvement percentage point 
in the cost performance category score. If a clinician were measured on 
2 cost measures consistently, improved significantly on one cost 
measure, and did not demonstrate significant improvement on the other 
cost measure (as measured by a t-test), the clinician would receive 0.5 
improvement percentage points (82 FR 53751).
    We calculate the overall cost performance category score with the 
assessment of achievement and improvement based on the following 
formula.
     (Cost Achievement Points/Available Cost Achievement 
Points) + (Cost Improvement Score) = (Cost Performance Category Score).
    In Table 96, we provide an example of cost performance category 
scores along with the determination of improvement or decline (82 FR 
53752). The example pertains to group-level reporting where a group is 
measured on both the Total Per Capita Cost measure and the Medicare 
Spending Per Beneficiary (MSPB) Clinician \542\ measure for 2 
consecutive performance periods.
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    \542\ In the CY 2020 PFS final rule, the name of this cost 
measure was changed from ``Medicare Spending Per Beneficiary 
(MSPB)'' to ``Medicare Spending Per Beneficiary (MSPB) Clinician'' 
(84 FR 62974 through 62977). The example outlined in this final rule 
was previously outlined in the CY 2018 Quality Payment Program final 
rule (82 FR 53572); however, the name of this cost measure in this 
final rule reflects the name change as outlined in the CY 2020 PFS 
final rule (84 FR 62974 through 62977).
[GRAPHIC] [TIFF OMITTED] TR18NO22.134

    In the example, there are 20 total possible measure achievement 
points and 14.6 measure achievement points earned by the group, and the 
group improved on one measure but not the other, with both measures 
being scored in each performance period. The first part of the formula 
is calculating (Cost Achievement Points/Available Cost Achievement 
Points) which is 14.6/20, which equals 0.730 and can be represented as 
73.0 percent. The cost improvement score will be determined as follows: 
((1 measure with significant improvement--zero measures with 
significant decline)/2 measures) * 1 percentage point = 0.5 percentage 
points. Under the formula, the cost performance category score will be 
(14.6/20 or 73.0 percent) + 0.5 percent = 73.5 percent. To determine 
how many points the cost performance category contributes to the final 
score, we will multiply the performance category score (73.5 percent) 
by the weight of the cost performance category (10 percent of the final 
score) and by 100 to determine the points to the final score. The group 
would have 73.5 percent x 10 percent x 100 = 7.35 points for the cost 
performance category contributed towards the final score.
    Comment: One commenter did not support the proposal to establish a 
maximum cost improvement score of 1 percentage point for the cost 
performance category beginning with the CY 2022 performance period/2024 
MIPS payment year. The commenter requested that CMS increase the 
maximum cost improvement score to at least 5 percentage points due to 
the cost performance category's significant impact on a clinician's 
total MIPS final score.
    Response: The cost performance category composes 10 percent of the 
MIPS final score.
    As individual MIPS eligible clinicians, groups, and virtual groups 
continue to become acquainted with the cost measures and gain 
experience in understanding their cost performance, we believe that 
establishing a maximum cost improvement score of 1 percentage point for 
the cost performance category is appropriate at this juncture. In a 
future year, we may consider and assess the possibility of increasing 
the maximum cost improvement score.
    After consideration of public comments, we are finalizing our 
proposal to establish a maximum cost improvement score of 1 percentage 
point for the cost performance category starting with the CY 2022 
performance period/2024 MIPS payment year as well as the corresponding 
revisions to Sec.  414.1380(b)(2)(iv)(E).
(2) Calculating the Final Score
    For a description of the statutory basis and our policies for 
calculating the final score for each MIPS eligible clinician, we refer 
readers to Sec.  414.1380(c) and the discussion in the CY 2017 and CY 
2018 Quality Payment Program final rules, and the CY 2019, CY 2020, CY 
2021, and CY 2022 PFS final rules (81 FR 77319 through 77329, 82 FR 
53769 through 53785, 83 FR 59868 through 59878, 84 FR 63020 through 
63031, 85 FR 84908 through 84917, 86 FR 65509 through 65527, 
respectively) on final score calculations, performance category 
weights, reweighting the performance categories, and the complex 
patient bonus.
    As described in more detail in the following sections, in the CY 
2023 PFS proposed rule (87 FR 46316 through 46319), we:
     Proposed that a facility-based MIPS eligible clinician 
would be eligible to receive the complex patient bonus.
     Requested information on which additional risk indicators 
and data sources we should consider for use within the complex patient 
bonus formula to better assess the social and medical complexity for 
the patients of MIPS eligible clinicians.
     Proposed that virtual groups would be eligible for 
facility-based measurement.

[[Page 70094]]

     Proposed changes to the definition of a facility-based 
MIPS eligible clinician.
(a) Complex Patient Bonus
(i) Background
    Section 1848(q)(1)(G) of the Act requires us to consider risk 
factors in our MIPS scoring methodology. Specifically, it provides that 
the Secretary, on an ongoing basis, shall, as the Secretary determines 
appropriate and based on an individual's health status and other risk 
factors, assess appropriate adjustments to quality measures, cost 
measures, and other measures used under MIPS; and assess and implement 
appropriate adjustments to payment adjustments, final scores, scores 
for performance categories, or scores for measures or activities under 
MIPS. In doing so, the Secretary is required to take into account the 
relevant studies conducted under section 2(d) of the Improving Medicare 
Post-Acute Care Transformation Act of 2014 (IMPACT Act) (Pub. L. 113-
185, October 6, 2014) and, as appropriate, other information, including 
information collected before completion of such studies and 
recommendations. In the CY 2018 Quality Payment Program final rule, 
under the authority in section 1848(q)(1)(G) of the Act, we established 
at Sec.  414.1380(c)(3) a complex patient bonus of up to 5 points to be 
added to the final score for the CY 2020 MIPS payment year (82 FR 53771 
through 53776). In subsequent rulemaking, we continued the complex 
patient bonus at Sec.  414.1380(c)(3) for the CY 2021, 2022, and 2023 
MIPS payment years (83 FR 59870, 84 FR 63023, and 85 FR 84910, 
respectively). Additionally, we finalized for the CY 2022 and 2023 MIPS 
payment years at Sec.  414.1380(c)(3)(iv) that the complex patient 
bonus will be calculated under the existing formulas in paragraphs 
(c)(3)(i) and (ii), and the resulting numerical value will then be 
multiplied by 2, but cannot exceed 10.0 (85 FR 84911 through 84913 and 
86 FR 65510 and 65511, respectively). Finally, beginning with the CY 
2022 performance period/2024 MIPS payment year, we revised the complex 
patient bonus by: (1) limiting the bonus to clinicians who have a 
median or higher value for at least one of the two risk indicators 
(Hierarchical Condition Category (HCC)and dual proportion); (2) 
standardizing the distribution of the two risk indicators so that the 
policy can target clinicians who have a higher share of socially and/or 
medically complex patients; and (3) providing one overall complex 
patient bonus cap at 10 bonus points (86 FR 65511 through 65519). We 
refer readers to the final rules cited above for additional details on 
the background, statutory authority, policy rationale, and calculation 
of the complex patient bonus.
(ii) Eligibility for the Complex Patient Bonus
    In the CY 2018 Quality Payment Program final rule, we finalized at 
Sec.  414.1380(c)(3) a complex patient bonus for MIPS eligible 
clinicians, groups, APM Entities, and virtual groups that submit data 
for at least one MIPS performance category during the applicable 
performance period, which will be added to the final score (82 FR 53771 
through 53776). In the CY 2018 Quality Payment Program proposed rule, 
we proposed that a MIPS eligible clinician, group, virtual group or APM 
Entity must submit data on at least one measure or activity in a 
performance category during the performance period to receive the 
complex patient bonus (82 FR 30138). We stated that under this 
proposal, MIPS eligible clinicians would not need to meet submission 
requirements for the quality performance category to receive the bonus 
(they could instead submit improvement activities or Promoting 
Interoperability performance category measures only or submit fewer 
than the required number of measures for the quality performance 
category). In the CY 2018 Quality Payment Program final rule, we also 
established facility-based measurement for certain MIPS eligible 
clinicians under the authority in section 1848(q)(2)(C)(ii) of the Act, 
which provides that the Secretary may use measures used for a payment 
system other than for physicians, such as measures for inpatient 
hospitals, for purposes of the quality and cost performance categories 
(82 FR 53752 through 53767). We did not address whether facility-based 
MIPS eligible clinicians would be eligible to receive the complex 
patient bonus. Under the scoring methodology for facility-based 
measurement under Sec.  414.1380(e), there are no data submission 
requirements for individual clinicians to be scored under facility-
based measurement (Sec.  414.1380(e)(4)). In the CY 2023 PFS proposed 
rule (87 FR 46317), we stated that although individual facility-based 
MIPS eligible clinicians are not required to submit data for at least 
one MIPS performance category, and it is possible they may choose not 
to submit data voluntarily, we believe they should be eligible to 
receive the complex patient bonus. As with other MIPS eligible 
clinicians who submit data for the quality performance category, we are 
able to score this performance category for facility-based MIPS 
eligible clinicians based on quality measure data available to us 
pursuant to the methodology described under Sec.  414.1380(e). Thus, we 
proposed that beginning with the CY 2023 performance period/2025 MIPS 
payment year, a facility-based MIPS eligible clinician would be 
eligible to receive the complex patient bonus, even if they do not 
submit data for at least one MIPS performance category (87 FR 46317). 
We proposed corresponding revisions to Sec.  414.1380(c)(3). We sought 
comments on the proposal.
    The following is a summary of the public comments received on the 
proposal that a facility-based MIPS eligible clinician would be 
eligible to receive the complex patient bonus, even if they do not 
submit data for at least one MIPS performance category and our 
responses:
    Comment: Many commenters supported our proposal that, beginning 
with the CY 2023 performance period/2025 MIPS payment year, a facility-
based MIPS eligible clinician would be eligible to receive the complex 
patient bonus, even if the clinician does not submit data for at least 
one MIPS performance category. A few commenters specifically supported 
this policy proposal because they stated that policies such as this can 
help to reduce access to care issues, advance health equity by 
recognizing physicians who work harder to treat more complex patients, 
and ultimately improve patient care. One commenter encouraged CMS to 
continue to identify additional opportunities to reward care that is 
provided to complex patients.
    Response: We agree with the noted benefits of the policy and note 
that CMS continues to identify additional opportunities to reward care 
that is provided to complex patients. We refer readers to CY 2023 PFS 
proposed rule in which we have a request for information on risk 
indicators within the complex patient bonus formula to continue to 
align with CMS's approach to operationalizing health equity (87 FR 
46317 through 46319).
    After consideration of public comments, we are finalizing our 
proposal that beginning with the CY 2023 performance period/2025 MIPS 
payment year, a facility-based MIPS eligible clinician is eligible to 
receive the complex patient bonus, even if they do not submit data for 
at least one MIPS performance category, and the corresponding revisions 
to at Sec.  414.1380(c)(3).

[[Page 70095]]

(iii) Request for Information on Risk Indicators for the Complex 
Patient Bonus Formula
    The CY 2023 PFS proposed rule contained a request for information 
on risk indicators within the complex patient bonus formula to continue 
to align with CMS's approach to operationalizing health equity (87 FR 
46317 through 46319).
    We thank commenters for their responses to this request for 
information. We may consider this information to inform future 
rulemaking.
(b) Facility-Based Measurement
(i) Background
    Section 1848(q)(2)(C)(ii) of the Act provides that the Secretary 
may use measures used for a payment system other than for physicians, 
such as measures for inpatient hospitals, for purposes of the quality 
and cost performance categories. In the CY 2018 Quality Payment Program 
final rule (82 FR 53752 through 53767), we established facility-based 
measurement under the authority in section 1848(q)(2)(C)(ii) of the Act 
for certain MIPS eligible clinicians. We established facility-based 
measurement to better align incentives between facilities and the MIPS 
eligible clinicians who provide services there (82 FR 53753). Scoring 
under facility-based measurement was available for clinicians beginning 
with the CY 2019 performance period/2021 MIPS payment year. In the CY 
2022 PFS final rule, we finalized at Sec.  414.1380(e)(6)(vi)(B) that 
for clinicians and groups eligible for facility-based measurement, 
beginning with the CY 2022 performance period/2024 MIPS payment year, 
the MIPS quality and cost performance category scores for such 
clinicians and groups will be based on the facility-based measurement 
scoring methodology unless a clinician or group receives a higher MIPS 
final score through another MIPS submission (86 FR 65526 and 65527). 
For more background on facility-based measurement, we refer readers to 
the CY 2018 Quality Payment Program final rule (82 FR 53752 through 
53767), the CY 2019 PFS final rule (83 FR 59856 and 59867), the CY 2020 
PFS final rule (84 FR 63018 through 63020), and the CY 2022 PFS final 
rule (86 FR 65526 and 65527).
(A) Eligibility for Facility-Based Measurement
    In the CY 2018 Quality Payment Program final rule (82 FR 53756 and 
53757), we finalized individual eligibility criteria for facility-based 
measurement at Sec.  414.1380(e)(2)(i). We established that a MIPS 
eligible clinician who furnishes 75 percent or more of his or her 
covered professional services in sites of service identified by the 
place of service (POS) codes used in the Health Insurance Portability 
and Accountability Act of 1996 (HIPAA) standard transaction as an 
inpatient hospital or emergency room based on claims for a period prior 
to the performance period as specified by CMS is eligible as an 
individual for facility-based measurement. We specified that we would 
use the definition of professional services provided in section 
1848(k)(3)(A) of the Act in applying this standard (82 FR 53756). In 
the CY 2019 PFS final rule, we added the on-campus outpatient hospital 
(POS code 22) to the list of sites of service we consider when 
determining eligibility for facility-based measurement (83 FR 59857 
through 59860). Additionally, we required that clinicians bill at least 
one covered professional service in a site of service identified by the 
POS codes for inpatient hospital or the emergency room in order to be 
eligible for facility-based measurement. We codified these standards in 
Sec.  414.1380(e)(2)(i)(A) and (B). We also finalized that we must be 
able to attribute a clinician to a particular facility that has a 
value-based purchasing score under the methodology specified in Sec.  
414.1380(e)(5) in order for the clinician to be eligible for facility-
based measurement (Sec.  414.1380(e)(2)(i)(C)).
    Separately, in the CY 2018 Quality Payment Program final rule (82 
FR 53759), we defined a facility-based group as a group in which 75 
percent or more of its eligible clinician NPIs billing under the 
group's TIN meet the requirements described above.
    As we clarified and expanded our definition of a facility-based 
MIPS eligible clinician, we intended to allow MIPS eligible clinicians 
participating in virtual groups to be eligible for facility-based 
measurement using the same standards applicable to individual MIPS 
eligible clinicians and groups. We intended this because, just like 
individual clinicians and groups, some virtual groups may predominantly 
practice within a hospital setting and their MIPS eligible clinicians 
may otherwise be eligible for facility-based measurement based on the 
eligibility standards established at Sec.  414.1380(e)(2)(i)(A) through 
(C) were they to participate in MIPS individually or as a group. 
However, we did not specify at Sec.  414.1380(e)(2) that virtual groups 
may be eligible for facility-based measurement. Therefore, we proposed 
in the CY 2023 PFS proposed rule to revise Sec.  414.1380(e)(2) to 
permit facility-based measurement of a virtual group so long as it 
meets the specified eligibility standards beginning with the CY 2023 
performance period/CY 2025 MIPS payment year (87 FR 46319). 
Additionally, we also proposed to revise Sec.  414.1380(e)(2) to 
specify, consistent with our prior discussion of the matter (82 FR 
53757), that a MIPS eligible clinician is eligible for facility-based 
measurement only if CMS determines it eligible to be facility-based. We 
sought comments on these proposals.
    The following is a summary of the public comments received on the 
proposals regarding eligibility for facility-based measurement and our 
responses:
    Comment: A few commenters supported our proposal to permit 
facility-based measurement of a virtual group so long as it meets the 
specified eligibility standards beginning with the CY 2023 performance 
period/2025 MIPS payment year.
    Response: We thank the commenters for their support.
    After consideration of the public comments and for the reasons 
stated above and in the proposed rule (87 FR 46319), we are finalizing 
our proposal to revise Sec.  414.1380(e)(2) to permit facility-based 
measurement of a virtual group beginning with the CY 2023 performance 
period/2025 MIPS payment year as proposed. Additionally, we are also 
finalizing our proposal to revise Sec.  414.1380(e)(2) to specify that 
a MIPS eligible clinician is eligible for facility-based measurement 
only if CMS determines it eligible to be facility-based as proposed.
(B) Definition of Facility-Based MIPS Eligible Clinician
    In the CY 2018 Quality Payment Program final rule, we finalized the 
definition of a facility-based MIPS eligible clinician at Sec.  
414.1305 (82 FR 53578). In the CY 2019 PFS final rule, we finalized 
additions to the determination of eligibility for facility-based 
measurement as reflected in the regulation text at Sec.  
414.1380(e)(2)(i)(A), (B), and (C) (83 FR 59856 through 59860); 
however, we inadvertently did not update the definition of a facility-
based MIPS eligible clinician at Sec.  414.1305 to reflect these 
additions. Therefore, we proposed in the CY 2023 PFS proposed rule (87 
FR 46320) to revise the facility-based MIPS eligible clinician 
definition at Sec.  414.1305 to align with the current policies at 
Sec.  414.1380(e)(2)(i)(A), (B), and (C). We also proposed to revise 
the terminology within Sec.  414.1380(e) to align with the

[[Page 70096]]

terminology used in the definition of a facility-based MIPS eligible 
clinician at Sec.  414.1305. We sought comments on the proposals.
    We did not receive any comments on our proposal to revise the 
terminology within Sec.  414.1305 to align with the current policies at 
Sec.  414.1380(e)(2)(i)(A), (B), and (C). We also did not receive any 
comments on our proposal to revise the terminology within Sec.  
414.1380(e) to align with the terminology used in the definition of a 
facility-based MIPS eligible clinician at Sec.  414.1305 and for the 
reasons stated above and in the proposed rule (87 FR 46319), we are 
finalizing the revisions as proposed.
e. MIPS Payment Adjustments
(1) Background
    For our previously established policies regarding the final score 
used to determine MIPS payment adjustments, we refer readers to the CY 
2022 PFS final rule (86 FR 65527 through 65537), CY 2021 PFS final rule 
(85 FR 84917 through 84926), CY 2020 PFS final rule (84 FR 63031 
through 63045), CY 2019 PFS final rule (83 FR 59878 through 59894), CY 
2018 Quality Payment Program final rule (82 FR 53785 through 53799), 
and CY 2017 Quality Payment Program final rule (81 FR 77329 through 
77343). In the CY 2023 PFS proposed rule (87 FR 46319 through 46323), 
we proposed to establish the performance threshold for the CY 2025 MIPS 
payment year using CY 2019 MIPS payment year data. In addition, we 
included information about our timing for providing MIPS performance 
feedback to clinicians for the performance period in 2021.
(2) Establishing the Performance Threshold
    Under section 1848(q)(6)(D)(i) of the Act, for each year of MIPS, 
the Secretary shall compute a performance threshold with respect to 
which the final scores of MIPS eligible clinicians are compared for 
purposes of determining the MIPS payment adjustment factors under 
section 1848(q)(6)(A) of the Act for a year. The performance threshold 
for a year must be either the mean or median (as selected by the 
Secretary, and which may be reassessed every 3 years) of the final 
scores for all MIPS eligible clinicians for a prior period specified by 
the Secretary.
    Section 1848(q)(6)(D)(iii) of the Act included a special rule for 
the initial 2 years of MIPS, which required the Secretary, prior to the 
performance period for such years, to establish a performance threshold 
for purposes of determining the MIPS payment adjustment factors under 
section 1848(q)(6)(A) of the Act and an additional performance 
threshold for purposes of determining the additional MIPS payment 
adjustment factors under section 1848(q)(6)(C) of the Act, each of 
which shall be based on a period prior to the performance period and 
take into account data available for performance on measures and 
activities that may be used under the performance categories and other 
factors determined appropriate by the Secretary. Section 51003(a)(1)(D) 
of the Bipartisan Budget Act of 2018 (Pub. L. 115-123, February 9, 
2018) amended section 1848(q)(6)(D)(iii) of the Act to extend the 
special rule to apply for the initial 5 years of MIPS instead of only 
the initial 2 years of MIPS.
    In addition, section 51003(a)(1)(D) of the Bipartisan Budget Act of 
2018 added a new clause (iv) to section 1848(q)(6)(D) of the Act, which 
includes an additional special rule for the third, fourth, and fifth 
years of MIPS (the CY 2021 through CY 2023 MIPS payment years). This 
additional special rule provides, for purposes of determining the MIPS 
payment adjustment factors under section 1848(q)(6)(A) of the Act, in 
addition to the requirements specified in section 1848(q)(6)(D)(iii) of 
the Act, the Secretary shall increase the performance threshold for 
each of the third, fourth, and fifth years to ensure a gradual and 
incremental transition to the performance threshold described in 
section 1848(q)(6)(D)(i) of the Act (as estimated by the Secretary) 
with respect to the sixth year (the CY 2024 MIPS payment year) to which 
the MIPS applies.
    We applied these special rules for the first 5 years of MIPS to 
provide for a gradual and incremental transition to the performance we 
estimated for the sixth year of MIPS (the CY 2024 MIPS payment year). 
In the CY 2022 PFS final rule, we set the performance threshold at 75 
points for the CY 2024 MIPS payment year (86 FR 65532). For further 
information on the performance threshold policies, we refer readers to 
the CY 2017 Quality Payment Program final rule (81 FR 77333 through 
77338), CY 2018 Quality Payment Program final rule (82 FR 53787 through 
53794), CY 2019 PFS final rule (83 FR 59880 through 59883), CY 2020 PFS 
final rule (84 FR 63031 through 63037), CY 2021 PFS final rule (85 FR 
84919 through 84923), and CY 2022 PFS final rule (86 FR 65527 through 
65532). We codified the performance thresholds for each of the first 6 
years of MIPS at Sec.  414.1405(b)(4) through (9), as shown in Table 
97.
[GRAPHIC] [TIFF OMITTED] TR18NO22.135

    Beginning with the CY 2024 MIPS payment year, section 
1848(q)(6)(D)(i) of the Act requires the performance threshold to be 
the mean or median (as selected by the Secretary) of the final scores 
for all MIPS eligible clinicians with respect to a prior period 
specified by the Secretary. That section also provides that the 
Secretary may reassess the selection of the mean or median every 3 
years. In the CY 2022 PFS final rule (86 FR 65527 through 65532), we

[[Page 70097]]

selected the mean as the methodology for determining the performance 
threshold for each of the CY 2024, 2025, and 2026 MIPS payment years. 
We intend to reassess and establish the methodology (mean or median) 
that we will use to determine the performance threshold for each of the 
next 3 years (CY 2027 MIPS payment year, CY 2028 MIPS payment year, and 
CY 2029 MIPS payment year) in future rulemaking.
    In the CY 2023 PFS proposed rule (87 FR 46320), we stated that 
while we identified the mean as our methodology for determining the 
performance threshold for MIPS payment years CY 2024 through 2026, we 
have not specified which prior period's mean final score we would use 
for the CY 2025 MIPS payment year's performance threshold. We stated 
that from our review of the data available to us, we identified the 
mean final scores for each of the CY 2019 through 2022 MIPS payment 
years, as shown in Table 98. We stated that these four values represent 
the mean final scores for all MIPS eligible clinicians from prior 
periods that are available for consideration for the CY 2025 MIPS 
payment year performance threshold. We stated that the final scores for 
the CY 2021 performance period/2023 MIPS payment year were not 
finalized in time for the CY 2023 PFS proposed rule; thus, the mean 
final score for the CY 2023 MIPS payment year was not listed and 
considered as a potential performance threshold value for the CY 2025 
MIPS payment year.
[GRAPHIC] [TIFF OMITTED] TR18NO22.136

    As shown in Table 98, the mean final scores available for 
consideration for the CY 2025 MIPS payment year performance threshold 
cover a range of values from 74.65 points to 89.47 points (rounded to 
75 points and 89 points, respectively). In the CY 2023 PFS proposed 
rule (87 FR 46321), we proposed to use the CY 2019 MIPS payment year as 
the prior period for the purpose of determining the performance 
threshold for the CY 2025 MIPS payment year for several reasons. We 
noted that we expect the mean final score for the CY 2023 performance 
period/2025 MIPS payment year to be lower than the mean final scores 
from the CY 2018 through 2020 performance periods/2020 through 2022 
MIPS payment years. In the CY 2022 PFS final rule (86 FR 65491 through 
65507), we removed transition policies such as quality bonus points 
that had been established for scoring the quality performance category 
for the CY 2018 through 2020 performance periods/2020 through 2022 MIPS 
payment years. Additionally, for the CY 2019 through 2021 performance 
periods/CY 2021 through 2023 MIPS payment years, we applied certain 
extreme and uncontrollable circumstances policies described under Sec.  
414.1380(c)(2)(i) to MIPS eligible clinicians nationwide due to the 
COVID-19 Public Health Emergency (PHE), which resulted in the 
reweighting of some performance categories if data were not submitted 
for a MIPS eligible clinician. In setting the performance threshold for 
the CY 2025 MIPS payment year, we stated that we believe we should 
consider the elimination of those transition policies, as well as the 
possibility that the performance categories will not be reweighted for 
as many MIPS eligible clinicians for the CY 2023 performance period/
2025 MIPS payment year. Further, we stated that continuing to use the 
mean final score from the CY 2019 MIPS payment year to determine the 
performance threshold for the CY 2025 MIPS payment year would maintain 
stability in the program. We stated that we believe continuing to use 
the mean final score from the CY 2019 MIPS payment year would provide 
predictability to MIPS eligible clinicians during a program year in 
which they might be affected by those prior policy changes, as well as 
potentially scored on performance categories that were previously 
reweighted due to the PHE.
    In the CY 2023 PFS proposed rule (87 FR 46321), we stated that the 
Regulatory Impact Analysis (RIA) estimates that approximately a third 
of MIPS eligible clinicians who engage in MIPS would receive a negative 
payment adjustment for the CY 2023 performance period/2025 MIPS payment 
year if the proposed policies are finalized and the performance 
threshold is equal to 75 points. However, we stated that we estimated 
that final scores for many clinicians for the CY 2023 performance 
period/2025 MIPS payment year would be close to the proposed 
performance threshold of 75 points; therefore, the actual observed 
percentage of clinicians receiving negative payment adjustments may 
slightly differ from the RIA estimates. We referred readers to the 
alternatives considered in the proposed rule RIA (87 FR 46428). The RIA 
of this final rule as described in section VII.E.16. estimates the 
impact of the policies finalized in this rule, including finalizing the 
proposed performance threshold of 75 points, and incorporates updated 
data sources. The estimate that approximately a third of MIPS eligible 
clinicians would receive a negative payment adjustment remains 
unchanged. We refer readers to the alternatives considered in the RIA 
in section VII.F.6. of this final rule where we present the impact of 
using data from alternative years to determine the performance 
threshold for the CY 2025 MIPS payment year. We intend to revisit in 
future rulemaking whether we should use a different prior period to 
establish the performance threshold for future MIPS payment years.
    Under our proposal to use the CY 2019 MIPS payment year as the 
prior period for the purpose of determining the performance threshold 
for the CY 2025 MIPS payment year (87 FR 46321), as well as the 
methodology we established previously at Sec.  414.1405(g), the 
performance threshold for the CY 2025 MIPS payment year would be the 
mean of the final scores for all MIPS eligible clinicians for the CY 
2019 MIPS payment year, which is 75 points (rounded from 74.65 points). 
We proposed corresponding changes to Sec.  414.1405(b)(9) to reflect 
this proposal (87 FR 46321). We requested public comments on this 
proposal, as well as whether we should use data from alternative years 
to set the performance threshold for the CY 2025 MIPS payment year, 
which we considered and discussed in the RIA of the CY 2023 PFS 
proposed rule (87 FR 46428). The

[[Page 70098]]

following is a summary of the comments received and our responses.
    Comment: Many commenters supported the proposal to use the mean 
from the CY 2019 MIPS payment year and to set the performance threshold 
at 75 points for the CY 2025 MIPS payment year. Several commenters 
stated that maintaining the performance threshold at 75 points is 
needed due to the challenges of the PHE, which made prioritizing MIPS 
performance and reporting for clinicians difficult, especially for 
small practices. A few commenters expressed that sustaining the 75-
point performance threshold would motivate eligible clinicians and 
groups to report for MIPS because the commenters believed there would 
likely be more funds available for redistribution. One commenter stated 
that a prospective increase in MIPS reporting would help to close any 
gaps in data quality due to the observed decline in reporting from the 
PHE. Another commenter stated that this may be the first time since the 
PHE that many clinicians will be reporting for MIPS and therefore 
maintaining the performance threshold at 75 points is appropriate.
    Response: We agree that setting the performance threshold to the 
lowest of the available possible values (75 points), using the CY 2019 
MIPS payment year final score mean, would alleviate performance burden 
and promote stability as clinicians handle the demands of the COVID-19 
PHE. We appreciate the commenters' observations regarding the expected 
increase in participation and hope our policies encourage MIPS eligible 
clinicians to submit data for MIPS.
    Comment: Several commenters indicated that using data from prior to 
the PHE is important and would provide stability and predictability for 
MIPS eligible clinicians, allowing time for recovery from the PHE 
before increased minimum thresholds are introduced. While supportive of 
the proposed performance threshold, one commenter stated that data from 
the CY 2019 through CY 2021 MIPS performance periods would be 
inappropriate for CMS to use to determine future performance thresholds 
due to the application of the extreme and uncontrollable circumstances 
policies for those years, which the commenter believed caused fewer 
clinicians to submit MIPS data. The commenter asserted that many 
clinicians who might have received a score below the performance 
threshold for those years did not submit data due to the automatic 
extreme and uncontrollable circumstances policy, and therefore, the 
commenter asserted that the mean and median values for those years are 
artificially high. The commenter recommended CMS take action to lessen 
the impact of a high performance threshold, especially given the 
removal of transition policies, such as the additional positive 
adjustment for exceptional performance and bonuses within the quality 
performance category.
    Response: We acknowledge the commenter's concern with using the CY 
2019 through CY 2021 performance period data and the possible 
implications of the application of the extreme and uncontrollable 
circumstances policies under Sec.  414.1380(c)(2)(i)(A)(8) and 
(c)(2)(i)(C)(3), and Sec.  414.1380(c)(2)(i)(A)(6) and (c)(2)(i)(C)(2). 
The application of these policies meant that the performance categories 
could be reweighted for many MIPS eligible clinicians, and we agree 
that this may have caused some clinicians to not report data for MIPS. 
As we explained in the CY 2023 PFS proposed rule (87 FR 46321), this 
was one reason why we proposed to use the mean final score from the CY 
2017 MIPS performance period/2019 MIPS payment year. We may take the 
commenter's concerns into consideration as we continue to reassess 
yearly which prior period to use to determine the performance 
threshold.
    Comment: A few commenters suggested that CMS continue monitoring 
yearly changes in mean and median final scores as future performance 
thresholds are determined and requested more detailed information on 
how different specialties and practices would be impacted by any change 
in the performance threshold. The commenters also requested that CMS 
provide the latest performance period data for determining future 
performance thresholds as early as possible and continue using the 
lowest available mean or median final score given that the commenters 
believed that MIPS is a constantly evolving program and scores will 
likely be lower than the early years.
    Response: We understand the importance of examining how different 
specialties are performing in MIPS relative to the established 
performance threshold. We expect to continue to regularly report the 
performance period data used to determine the performance threshold 
value for future years. Information on a prior year's final scores can 
be found in the corresponding Quality Payment Program Experience Report 
while specialty-specific information can be found in the Public Use 
File in the QPP resource library (https://qpp.cms.gov/resources/resource-library).
    Comment: One commenter suggested CMS develop a strategy for 
providing support for re-entry into MIPS after the conclusion of the 
extreme and uncontrollable circumstances policies described under Sec.  
414.1380(c)(2)(i) that were applied to MIPS eligible clinicians 
nationwide due to the COVID-19 PHE. In addition, the commenter 
recommended CMS require groups to supply sufficient documentation to 
support their significant hardship application for the Promoting 
Interoperability performance category and their application for extreme 
and uncontrollable circumstances for other MIPS performance categories; 
noting that although automatic extreme and uncontrollable circumstances 
policies may provide widespread burden relief, they discourage quality 
improvement at the local and national level.
    Response: We appreciate the commenter's suggestions to develop a 
strategy for providing support for re-entry into MIPS and to require 
groups to provide sufficient documentation of hardship. Although 
documentation is not required to be submitted with the extreme and 
uncontrollable circumstance application, we do review clinicians' 
ability to collect and submit data for each performance category, 
considering the event circumstances and the length of time the 
clinicians were impacted. We detail the criteria and circumstances for 
the extreme and uncontrollable circumstances policies and Promoting 
Interoperability performance category hardship policies at https://qpp.cms.gov/mips/exception-applications?py=2022#extremeCircumstancesException-2022. We will 
continue to ensure the appropriate education and resources are 
available to help guide clinicians and practices through the 
application process and through the resumption of data reporting.
    Comment: Several commenters did not support the proposal to set the 
performance threshold to 75 points for the CY 2025 MIPS payment year 
and asked CMS to explore ways to use its authority to lower the 
performance threshold starting in the CY 2023 performance period and to 
extend the $500 million of funding available under section 
1848(q)(6)(F)(iv) of the Act. One commenter requested CMS apply the 
automatic extreme and uncontrollable circumstances policy for the CY 
2022 performance period and conduct targeted outreach and education to 
assist clinicians and group practices due to the belief that clinicians 
continue to face challenges stemming from the

[[Page 70099]]

impacts of the COVID-19 public health emergency.
    Response: As previously discussed, the statute requires us to set 
the performance threshold at the mean or median of a prior period's 
final scores. The mean final score from the CY 2017 performance period/
2019 MIPS payment year is the lowest of the available possible values 
for setting the performance threshold for the CY 2025 MIPS payment 
year. As stated in the CY 2023 PFS proposed rule (87 FR 46321), we 
proposed to use the mean final score from the CY 2017 performance 
period/2019 MIPS payment year to provide predictability to MIPS 
eligible clinicians during a program year in which they might be 
affected by the removal of transition policies for the first time and 
potentially scored on performance categories that were previously 
reweighted due to the COVID-19 PHE. We do not have the statutory 
authority to extend the $500 million of funding under section 
1848(q)(6)(F)(iv) of the Act. To the commenter who suggested that we 
apply the automatic extreme and uncontrollable circumstances policy for 
the CY 2022 performance, we note that MIPS eligible clinicians may 
request reweighting for any or all performance categories due to an 
extreme and uncontrollable circumstance or public health emergency 
through the MIPS application based extreme and uncontrollable exception 
and further guidance on how to apply may be found at https://qpp.cms.gov/mips/exception-applications?py=2022#extremeCircumstancesException-2022. We refer 
readers to Sec.  414.1380(c)(2)(i)(A)(6) and (c)(2)(i)(C)(2) where we 
detail the extreme and uncontrollable circumstances policies.
    Comment: Several commenters stated that the proposed performance 
threshold of 75 points is a significant increase from the previous 
performance threshold of 30 points for the CY 2019 performance period/
2021 MIPS payment, the year prior to the COVID-19 PHE. The commenters 
urged CMS to reduce the performance threshold to avert more clinicians 
receiving negative payment adjustments, assist small practices 
reporting data, foster a better re-entry into MIPS, and encourage more 
participation by clinicians and/or practices that may not have 
submitted data due to the automatic and application-based extreme and 
uncontrollable circumstances policies. A few commenters stated that the 
75-point threshold is unfairly punitive and may place disproportionate 
undue burden on small practices and/or clinicians who continue to 
struggle because of the PHE.
    Response: As noted in the CY 2023 PFS proposed rule (87 FR 46320), 
section 1848(q)(6)(D)(i) of the Act requires the performance threshold 
to be the mean or median (as selected by the Secretary) of the final 
scores for all MIPS eligible clinicians with respect to a prior period 
specified by the Secretary. We proposed to use the CY 2019 MIPS payment 
year as the prior period for determining the performance threshold for 
the CY 2025 MIPS payment year for multiple reasons (87 FR 46321), such 
as the fact that MIPS eligible clinicians may be scored on performance 
categories that were reweighted during the COVID-19 PHE and the 
performance threshold of 75 points offers predictability. The CY 2019 
MIPS payment year final score mean is also the lowest final score mean 
compared to the other prior periods available for the purpose of 
determining the performance threshold for the CY 2025 MIPS payment 
year.
    We encourage the commenters to look at our estimates of how our 
finalized policies will affect the payment adjustments, broken down by 
practice size, for the CY 2025 MIPS payment year in our regulatory 
impact analysis (see section VII.E.16. of this final rule). As shown in 
the impact analysis, we expect approximately a third of clinicians who 
submit data for MIPS will receive a negative payment adjustment, and we 
do not observe a large discrepancy in payment adjustments between large 
and small practices as a cumulative result of our policies. The 
regulatory impact analysis for the CY 2022 performance period (86 FR 
65637 through 65647) reported similar results. For these reasons, we 
believe maintaining the performance threshold at 75 points is 
reasonable.
    Comment: A few commenters requested that CMS consider how this 
threshold may affect new Medicare providers and suggested that CMS 
allow new clinicians a trial-run after their grace period year, such as 
providing a mock score (rather than penalizing them) and additional 
resources on how to improve performance.
    Response: We appreciate the commenters' suggestions for onboarding 
new clinicians into the program. As noted, under our existing grace 
period policy, new Medicare-enrolled eligible clinicians, as defined at 
Sec.  414.1305, are not to be treated as a MIPS eligible clinician 
until the subsequent year and the performance period for such 
subsequent year. During that period, these clinicians have the option 
to voluntarily report measures and activities for MIPS prior to being 
treated as MIPS eligible clinicians. A MIPS payment adjustment factor 
will not be applied to payments for items and services furnished by an 
eligible clinician who voluntarily reports on applicable measures and 
activities under MIPS. We believe that a one-year grace period with the 
opportunity to voluntarily report provides clinicians with opportunity 
to receive a score without penalty while still ensuring participation 
in future years. We will continue to provide resources to support new 
clinicians in navigating the MIPS program at https://qpp.cms.gov/.
    Comment: A few commenters opposed the proposal to set the 
performance threshold at 75 points because they believe that the data 
from the past few years may be unreliable. They stated that only high 
performers may have chosen to submit data for MIPS and the data may no 
longer be representative of MIPS eligible clinicians. One commenter 
questioned whether CMS could remove points that clinicians may have 
received due to transition policies or the COVID-19 PHE, in previous 
year's data when evaluating the mean and median final scores from prior 
years since it may be unrealistic for clinicians to meet the same 
standard after those policies end. Another commenter recommended using 
the mean or median final score from the CY 2021 performance period when 
it becomes available since it may provide a more accurate 
representation of MIPS eligible clinicians' performance.
    Response: We acknowledge the commenters' concern that the data from 
the past several years may not be representative of true performance in 
MIPS if only a certain portion of MIPS eligible clinicians 
(specifically MIPS eligible clinicians who expect to receive high final 
scores) may have submitted data for MIPS. If only MIPS eligible 
clinicians who expected high final scores submitted data for MIPS, then 
the expected mean final scores may be higher than when a larger 
proportion of MIPS eligible clinicians submitted data for MIPS. This 
was one reason that we proposed to use the data from a year prior to 
the PHE (the CY 2017 performance period, which corresponds to the CY 
2019 MIPS payment year) to set the performance threshold for the CY 
2023 MIPS performance period/CY 2025 MIPS payment year. We appreciate 
the commenters' suggestion to remove points that clinicians may have 
received due to transition policies or the COVID-19 PHE when 
calculating the mean or median final scores to set the performance 
threshold. Section

[[Page 70100]]

1848(q)(6)(D)(i) of the Act requires the performance threshold for a 
year to be the mean or median (as selected by the Secretary) of the 
composite performance scores for all MIPS eligible clinicians with 
respect to a prior period specified by the Secretary. We refer to the 
composite performance score as the final score as defined under Sec.  
414.1305 (81 FR 77319 through 77320). We do not believe that we have 
discretion under the statute to alter the final scores from a prior 
period for the purpose of establishing the performance threshold. We 
plan to consider the CY 2021 performance period data for determining 
the performance threshold for future rulemaking once it is available 
for consideration.
    Comment: Several commenters expressed concern about the 
reasonableness of the proposed performance threshold due to the lack of 
specialist-specific measures or MVPs and that some clinicians who may 
qualify for reweighting of performance categories may only have topped-
out measures to report. A few commenters further expressed concern 
about the magnitude of positive payment adjustments and the impact on 
clinicians who do not meet the proposed performance threshold, with one 
commenter expressing concern about other economic pressures like 
inflation.
    Response: We understand different specialties sometimes face 
challenges with not being able to report measures and activities for 
every performance category. We agree the final scores of these 
clinicians may be based on fewer categories than they would be for a 
clinician reporting all 4 performance categories. However, we remind 
clinicians that even if their final score is based on fewer than 4 
performance categories, they still can score anywhere from 0 to 100 
points for their final score, just as a clinician reporting all 4 
performance categories would, due to our reweighting policies. In this 
way, we do not believe a performance threshold of 75 points is 
disadvantageous to clinicians reporting fewer than 4 performance 
categories. Regarding the commenter's concerns on the specialty 
measures available, we identify specialty measurement gaps through the 
annual publication of the CMS Quality Measure Development Plan (MDP) 
and the MDP Annual Report (https://www.cms.gov/Medicare/Quality-Payment-Program/Measure-Development/Measure-development). In addition, 
we solicit interested party recommendations for new specialty measure 
sets and revisions to existing specialty sets on an annual basis. We 
urge interested parties to work with their specialty societies to 
provide recommendations during the specialty measure set solicitation 
process (for more information please see the QPP resource library at 
http://www.qpp.cms.gov). We are also developing MIPS Value Pathways 
(MVPs) to provide clinicians with a simplified method to report 
measures that are relevant to their practice, and we encourage them to 
report an MVP when one that is relevant to their scope of practice is 
available. We remind the commenters who were concerned about the 
magnitude or distribution of the positive payments adjustments that 
MIPS is a budget neutral program by statute. Generally stated, it is 
designed to balance the positive payment adjustments of clinicians who 
score above the performance threshold against the negative payment 
adjustments of clinicians whose scores are below the performance 
threshold. Therefore, a larger proportion of clinicians receiving a 
negative payment adjustment generally would result in larger positive 
payment adjustments for those above the performance threshold. We 
encourage the commenters to look at our estimates of how our finalized 
policies will affect the payment adjustments, broken down by practice 
size, for the CY 2025 MIPS payment year in our regulatory impact 
analysis (see section VII.E.16. of this final rule). We present the 
expected size of the budget neutral pool available for redistribution 
and the expected maximum positive payment adjustment for clinicians 
with a final score of 100 for the CY 2023 performance period/2025 MIPS 
payment year.
    Comment: A few commenters stated their belief that the proposed 75-
point performance threshold may be unachievable for some clinicians, 
and paired with other impending Medicare payments cuts, clinicians 
might opt-out of Medicare entirely, thereby creating a gap in access to 
care for an already stressed system and a vulnerable patient 
population.
    Response: We appreciate commenters' concerns that some clinicians 
may not be able to achieve a 75-point performance threshold and note 
that we are setting the performance threshold to the lowest of the 
available possible values by using the CY 2019 MIPS payment year final 
score mean. The RIA of this final rule as described in section 
VII.E.16. estimates approximately a third of MIPS eligible clinicians 
would receive a negative payment adjustment if the proposed policies 
are finalized after updating the data sources. Because many clinicians' 
scores are close to the performance threshold, many of these 
clinician's payment adjustments are fairly small and many negative 
adjustments are much lower in magnitude than the statutory maximum 
negative adjustment of 9 percent. In the RIA of this final rule as 
described in section VII.E.16. the average positive payment adjustment 
among MIPS eligible clinicians who submit data for MIPS is 3.71 percent 
and the average negative payment adjustment among MIPS eligible 
clinicians who submit data for MIPS is -1.84 percent. Only 8.46 percent 
of MIPS eligible clinicians receive a final score less than 50 points 
and therefore a negative payment adjustment of more than -3 percent.
    After consideration of public comments, we are finalizing our 
proposal to use the CY 2019 MIPS payment year as the prior period for 
the purpose of determining the performance threshold for the CY 2025 
MIPS payment year and to set the performance threshold at 75 points, as 
well as the proposed corresponding changes to Sec.  414.1405(b)(9).
(3) Example of Adjustment Factors
    Figure 4 provides an illustrative example of how various final 
scores will be converted to a MIPS payment adjustment factor using the 
statutory formula and based on our finalized policies for the CY 2025 
MIPS payment year. In Figure 4, the performance threshold is set at 75 
points. The applicable percentage is 9 percent for the CY 2025 MIPS 
payment year. The MIPS payment adjustment factor is determined on a 
linear sliding scale from zero to 100, with zero being the lowest 
possible score which receives the negative applicable percentage 
(negative 9 percent for the CY 2025 MIPS payment year) and resulting in 
the lowest payment adjustment, and 100 being the highest possible score 
which receives the highest positive applicable percentage and resulting 
in the highest payment adjustment. However, there are two modifications 
to this linear sliding scale. First, there is an exception for a final 
score between zero and one-fourth of the performance threshold (zero 
and 18.75 points based on the performance threshold of 75 points for 
the CY 2025 MIPS payment year). All MIPS eligible clinicians with a 
final score in this range will receive the lowest negative applicable 
percentage (negative 9 percent for the CY 2025 MIPS payment year). 
Second, the linear sliding scale line for the positive MIPS payment 
adjustment factor is adjusted by the scaling factor, which cannot be 
higher than 3.0.

[[Page 70101]]

    If the scaling factor is greater than zero and less than or equal 
to 1.0, then the MIPS payment adjustment factor for a final score of 
100 will be less than or equal to 9 percent. If the scaling factor is 
above 1.0 but is less than or equal to 3.0, then the MIPS payment 
adjustment factor for a final score of 100 will be greater than 9 
percent. Only those MIPS eligible clinicians with a final score equal 
to 75 points (which is the finalized performance threshold for the CY 
2025 MIPS payment year) will receive a neutral MIPS payment adjustment. 
Beginning with the CY 2025 MIPS payment year, the additional MIPS 
payment adjustment for exceptional performance described in section 
1848(q)(6)(C) of the Act will no longer be available. For this reason, 
Figure 4 no longer illustrates an additional adjustment factor for MIPS 
eligible clinicians with final scores at or above the additional 
performance threshold described in section 1848(q)(6)(D)(ii) of the 
Act.
[GRAPHIC] [TIFF OMITTED] TR18NO22.137


    Note: The adjustment factor for final score values above the 
performance threshold is illustrative. For MIPS eligible clinicians 
with a final score of 100, the adjustment factor will be 9 percent 
times a scaling factor greater than zero and less than or equal to 
3.0. The scaling factor is intended to ensure budget neutrality (BN) 
but cannot be higher than 3.0. This example is illustrative as the 
actual payment adjustments may vary based on the distribution of 
final scores for MIPS eligible clinicians.

    Table 99 illustrates the changes in payment adjustment based on the 
final policies from the CY 2022 PFS final rule (86 FR 65527 through 
65536) for the CY 2024 MIPS payment year and the finalized policies for 
the CY 2025 MIPS payment year, as well as the applicable percent 
required by section 1848(q)(6)(B) of the Act.
BILLING CODE 4150-28-P

[[Page 70102]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.138

BILLING CODE 4150-28-C
f. Review and Correction of MIPS Final Score
(1) Feedback and Information To Improve Performance
    Under section 1848(q)(12)(A)(i) of the Act, we are at a minimum 
required to provide MIPS eligible clinicians with timely (such as 
quarterly) confidential feedback on their performance under the quality 
and cost performance categories beginning July 1, 2017, and we have 
discretion to provide such feedback regarding the improvement 
activities and Promoting Interoperability performance categories. In 
the CY 2018 Quality Payment Program final rule (82 FR 53799 through 
53801), we finalized that on an annual basis, beginning July 1, 2018, 
performance feedback will be provided to MIPS eligible clinicians and 
groups for the quality and cost performance categories, and if 
technically feasible, for the improvement activities and advancing care 
information (now called the Promoting Interoperability) performance 
categories.
    As we explained previously, we aim to provide performance feedback 
on or around July 1 of each year, but due to the PHE and COVID-19, it 
is possible that we might provide performance feedback later (85 FR 
50321). We made performance feedback available for the CY 2019 
performance period on August 5, 2020; for the CY 2020 performance 
period on August 2 and September 27, 2021; and for the CY 2021 
performance period on August 22, 2022. We direct readers to qpp.cms.gov 
for more information.
g. Third Party Intermediaries General Requirements
(1) General Requirements
(a) Background
    Flexible reporting options will provide eligible clinicians with 
options to accommodate different practices and make measurement 
meaningful. We believe that allowing eligible clinicians to participate 
in MIPS through the use of third party intermediaries that will collect 
or submit data on their behalf, will help us accomplish our goal of 
implementing a flexible program (82 FR 53806).

[[Page 70103]]

    We refer readers to Sec. Sec.  414.1305 and 414.1400, the CY 2017 
Quality Payment Program final rule (81 FR 77362 through 77390), the CY 
2018 Quality Payment Program final rule (82 FR 53806 through 53819), 
the CY 2019 PFS final rule (83 FR 59894 through 59910), the CY 2020 PFS 
final rule (84 FR 63049 through 63080), the May 8th COVID-19 IFC (85 FR 
27594 and 27595), the CY 2021 PFS final rule (85 FR 84926 through 
84947), and the CY 2022 PFS final rule (86 FR 65538 through 65550) for 
our previously established policies regarding third party 
intermediaries.
    In the CY 2023 PFS proposed rule (87 FR 46324), we proposed to 
update the definition of a third party intermediary at Sec.  414.1305 
and to make other minor conforming technical edits to the regulation 
text governing third party intermediaries set forth in Sec.  414.1400. 
We also proposed to revise Qualified Clinical Data Registry (QCDR) 
measure self-nomination and measure approval requirements, including to 
delay the QCDR measure testing requirement for traditional MIPS by an 
additional year, until the CY 2024 performance period/2026 MIPS payment 
year (87 FR 46324 and 46325). We also proposed to revise remedial 
action and termination of third party intermediaries' policies (87 FR 
46325 through 46328). Finally, we included two RFIs on third party 
intermediary support of MIPS value pathways (MVPs) and national 
Continuing Medical Education (CME) organizations becoming a new type of 
third party intermediary (87 FR 46327 through 46329).
(b) Definition of a Third Party Intermediary
    In the CY 2022 PFS final rule (86 FR 65542 through 65545), we 
finalized at Sec.  414.1400(a)(1) that MIPS data may be submitted on 
behalf of a MIPS eligible clinician, group, virtual group, subgroup, or 
Alternative Payment Model (APM) Entity by any of the following third 
party intermediaries: QCDR; qualified registry; health IT vendor; or 
CMS approved survey vendor. In that rule, we added APM Entities to 
Sec.  414.1400(a)(1), expanding the general participation requirements 
of third party intermediaries reporting MIPS on behalf of APM Entities 
(86 FR 65542). We also revised Sec.  414.1400(a)(1) to allow for QCDRs, 
qualified registries, health IT vendors, and CAHPS for MIPS survey 
vendors to support subgroup reporting, a recently adopted option for 
MIPS eligible clinicians reporting MIPS Value Pathways (86 FR 65544 
through 65545). One of our strategic goals in developing MIPS included 
developing a program that is meaningful, understandable, and flexible 
for participating MIPS eligible clinicians. We discussed that one way 
we believe this could be accomplished is through flexible reporting 
options, including allowing MIPS eligible clinicians the flexibility of 
using third party intermediaries to collect or submit data on their 
behalf. In the CY 2019 PFS final rule (83 FR 59894) we finalized at 
Sec.  414.1305 to define a third party intermediary as an entity that 
has been approved under Sec.  414.1400 to submit data on behalf of a 
MIPS eligible clinician, group, or virtual group for one or more of the 
quality, improvement activities, and Promoting Interoperability 
performance categories.
    In the CY 2023 PFS proposed rule (87 FR 46324), we proposed to 
update the definition of a third party intermediary at Sec.  414.1305 
to include subgroups and APM Entities and to make minor edits for 
technical clarity. We proposed the revised definition would state that 
a third party intermediary means an entity that CMS has approved under 
Sec.  414.1400 to submit data on behalf of a MIPS eligible clinician, 
group, virtual group, subgroup, or APM Entity for one or more of the 
quality, improvement activities, and Promoting Interoperability 
performance categories. We requested comments on the proposal.
    The following is a summary of the comments we received on our 
proposal and our responses.
    Comment: One commenter opposed the requirement that third party 
intermediaries be required to support subgroup reporting, expressing 
concern that frequent transitions among clinicians in practices could 
be difficult to track year to year for third party intermediaries.
    Response: We note that while we proposed a change in the definition 
of third party intermediary to include subgroups, we did not propose a 
new requirement for third party intermediaries to support subgroup 
reporting. We previously finalized in the CY 2022 PFS rule (See Sec.  
414.1400(a)(1); 86 FR 65544) a requirement that third party 
intermediaries support subgroup reporting beginning with the CY 2023 
performance period. We note that we separately finalized the definition 
of the term subgroup (86 FR 65398 through 65400), as well as the 
requirements for subgroup registration (86 FR 65417 and 65418). In the 
requirements for subgroup registration, we finalized that at the time 
of registration, a subgroup identifier will be established by CMS. We 
also clarify that the same subgroup identifier will be used year to 
year, unless the composition of the group changes, in which case a new 
identifier would be issued.
    After consideration of the public comments and for the reasons 
stated above and in the proposed rule (87 FR 46324), we are finalizing 
our proposal to revise the definition a third party intermediary as 
proposed and are revising Sec.  414.1305.
(2) Requirements Specific to QCDRs
(a) Background
    As described at Sec.  414.1305, a QCDR is an entity that 
demonstrates clinical expertise in medicine and quality measurement 
development experience and collects medical or clinical data on behalf 
of a MIPS eligible clinician for the purpose of patient and disease 
tracking to foster improvement in the quality of care provided to 
patients. Section 1848(q)(5)(B)(ii) of the Act provides, that the 
Secretary shall encourage MIPS eligible professionals to report on 
applicable measures through the use of certified EHR technology and 
qualified clinical data registries.
    We believe QCDRs and QCDR measures further health equity through 
the expansion of data collection, reporting, and analysis. QCDR 
measures data can be used not only to identify gaps in the standard of 
care, but also to determine solutions to disparate impacts on different 
populations. We anticipate growth in the number of QCDR measures that 
address health equity in upcoming performance years. We refer readers 
to Sec.  414.1400(b)(4), the CY 2017 Quality Payment Program final rule 
(81 FR 77374 and 77375), the CY 2018 Quality Payment Program final rule 
(82 FR 53813 and 53814), the CY 2019 PFS final rule (83 FR 59900 
through 59906), the CY 2020 PFS final rule (84 FR 63058 through 63074), 
the May 8th COVID-19 IFC (85 FR 27594 and 27595), the CY 2021 PFS final 
rule (85 FR 84937 through 84944) and the CY 2022 PFS final rule (86 FR 
65540 through 65550) for previously finalized standards and criteria 
for QCDRs and QCDR measure requirements.
(b) QCDR Measure Self-Nomination Requirements
    As part of QCDR measure self-nomination, Sec.  414.1400(b)(4)(i) 
and (b)(4)(i)(B) require the nominating QCDR to publicly post the QCDR 
measure specifications (including the CMS-assigned QCDR measure ID) and 
provide CMS with a link to where this information is posted no later 
than 15 calendar days following CMS approval. We typically notify a 
QCDR of its measure's approval prior to our posting

[[Page 70104]]

of the approved measure specifications. While we require QCDRs to post 
their approved measure specifications, as their websites are an 
important source for clinicians, we want to limit the chance of 
discrepancies between CMS's posting and QCDRs' postings.
    To avoid confusion, in the CY 2023 PFS proposed rule we proposed to 
revise Sec.  414.1400(b)(4)(i)(B) to clarify requirements for publicly 
posting the approved measure specifications (87 FR 46324 and 46325). 
Specifically, we proposed to revise the language such that entities 
must publicly post measure specifications no later than 15 calendar 
days following CMS's posting of approved QCDR measure specifications on 
a CMS website and that QCDRs need to confirm that the measure 
specifications they post align with the measure specifications posted 
by CMS. We proposed to revise Sec.  414.1400(b)(4)(i)(B) to state that, 
for a QCDR measure, the entity must submit for CMS approval measure 
specifications including the Name/title of measure, National Quality 
Forum (NQF) number (if NQF- endorsed), descriptions of the denominator, 
numerator, and when applicable, denominator exceptions, denominator 
exclusions, risk adjustment variables, and risk adjustment algorithms. 
In addition, no later than 15 calendar days following CMS posting of 
all approved specifications for a QCDR measure, the entity must 
publicly post the CMS-approved measure specifications for the QCDR 
measure (including the CMS- assigned QCDR measure ID) and provide CMS 
with a link to where this information is posted. We requested comments 
on this proposal.
    The following is a summary of the comments we received on our 
proposal and our responses.
    Comment: A few commenters supported the clarifications outlined in 
the QCDR measure self-nomination proposal.
    Response: We thank the commenters for their support.
    Comment: A few commenters expressed concern regarding the timing of 
the approved measure specifications posting that CMS requires of QCDRs. 
One commenter expressed concern that QCDRs are only given 15 calendar 
days to post their measure specifications following CMS's posting of 
the approved measure specifications. Given that the timing of the 
posting often falls around the end of the year and the holidays, the 
commenter suggested allowing QCDRs 21 calendar days to ensure that 
their posting follows requirements. One commenter suggested that QCDRs 
should not be required to post measure specifications until the PFS 
final rule has been released and the previous program year has ended.
    Response: QCDRs are required to post approved measure 
specifications no later than 15 days following our posting because 
measure specifications need to be posted by January 1st of the 
performance period. This provides clinicians who start collecting data 
for that year with important information on relevant measures as most 
clinicians view their vendor's website and may not specifically view 
the CMS posting. Additionally, we believe that 15 days offers 
sufficient time to post given that QCDRs are notified after their 
specifications are approved and, therefore, already have the final 
version of the measure specifications ready.
    Comment: One commenter stated their belief that QCDRs should not 
have to publicly post risk adjustment algorithms. The commenter 
explained that it often creates confusion for those who have not worked 
directly with the measure development team.
    Response: If a measure is going to be used as part of a public 
program such as the Quality Payment Program, those clinicians who are 
to be measured must have the opportunity to fully review and understand 
the measure specifications, which include any risk adjustment 
algorithms included in the measure.
    After consideration of the public comments and for the reasons 
stated above and in the proposed rule (87 FR 46324), we are finalizing 
our proposal to clarify the requirements for publicly posting the 
approved measure specifications as proposed and are revising Sec.  
414.1400(b)(4)(i)(B).
(c) QCDR Measure Approval Criteria
    We refer readers to Sec.  414.1400(b)(4)(iii), the CY 2017 Quality 
Payment Program final rule (81 FR 77374 through 77375), the CY 2018 
Quality Payment Program final rule (82 FR 53813 through 53814), the CY 
2019 PFS final rule (83 FR 59900 through 59906), the CY 2020 PFS final 
rule (84 FR 63058 through 63074), the May 8th COVID-19 IFC (85 FR 27594 
and 27595), the CY 2021 PFS final rule (85 FR 84937 through 84942), and 
the CY 2022 PFS final rule (86 FR 65540 through 65542) for previously 
finalized standards and criteria for QCDRs, specifically QCDR measure 
requirements.
    We refer readers to the CY 2020 PFS final rule where we finalized 
requirements for QCDR measure testing (84 FR 63065 through 63067). 
Based on our goal that all measures available in MIPS are reliable and 
valid, we finalized in the CY 2020 PFS final rule a requirement for all 
QCDR measures to be fully developed and tested with complete testing 
results at the clinician level beginning with the CY 2021 performance 
period/2023 MIPS payment year (84 FR 63065 through 63067).\543\ In 
consideration of the burden of collecting data as part of QCDR measure 
testing on clinicians and hospitals on the front lines of the COVID-19 
pandemic, in the May 8th COVID-19 IFC and CY 2021 PFS final rule, we 
delayed the requirement for fully developed and tested QCDR measures by 
a year, to begin with the CY 2022 performance year (85 FR 27594 and 85 
FR 84938 through 84939). Separately, to incorporate feedback from 
interested parties into the CY 2021 PFS final rule, we finalized an 
incremental approach to the QCDR measure testing requirements beginning 
with the CY 2022 performance year. Specifically, we finalized a policy 
that a QCDR measure must be face valid prior to being self-nominated 
for the CY 2022 performance year (85 FR 84939). For new QCDR measures 
to be approved, we must verify they are face valid for the initial 
performance year and fully tested for any subsequent performance year 
(85 FR 84939). Thus, a QCDR measure that we approve for the CY 2022 
performance year; does not have to be fully tested until the CY 2023 
performance year (85 FR 84939).
---------------------------------------------------------------------------

    \543\ We refer readers to the Blueprint for the CMS Measures 
Management System for additional details and guidance on QCDR 
measure testing. Available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MMS-Blueprint.
---------------------------------------------------------------------------

    We recognized concerns expressed by interested parties regarding 
the burden of full measure testing and the continuing impact of the 
COVID-19 PHE (86 FR 65540 and 65541). Data collection efforts pose a 
challenge given the myriad disruptions to the health care system caused 
by the PHE, including clinicians' need to prioritize care for COVID-19 
patients (and deprioritize data collection), and lost data due to the 
delay and cancelation of elective procedures. In particular, the COVID-
19 extreme and uncontrollable circumstances exception decreased the 
number of groups reporting to MIPS through QCDRs. Without data from 
clinicians, QCDRs cannot complete their measure assessments, and 
delaying for one year will reduce the burden placed on QCDRs and 
clinicians. Despite these challenges, we believe QCDRs will soon be 
able to work with clinicians on full measure testing. Fully developed 
and tested measures improve measure reliability and validity thereby 
increasing clinician usability. Full

[[Page 70105]]

measure testing also prevents instances where QCDRs may discover that a 
measure is not feasible part way through data collection (84 FR 63066). 
Therefore, we proposed in the CY 2023 PFS proposed rule to revise our 
QCDR measure approval requirements again by delaying the requirement 
for a QCDR measure to be fully developed and tested with complete 
testing results at the clinician level until the CY 2024 performance 
year (87 FR 46325). As proposed, a QCDR measure approved for the CY 
2023 performance year or earlier would not need to be fully developed 
and tested until the CY 2024 performance year. A new QCDR measure 
proposed for the CY 2024 performance year would be required to meet 
face validity. We would require full testing at the clinician level 
before the QCDR measure can continue in the program beyond the first 
year. We proposed to amend Sec.  414.1400(b)(4)(iii)(A)(3) to state 
that beginning with the CY 2022 performance period/2024 MIPS payment 
year, CMS may approve a QCDR measure only if the QCDR measure meets 
face validity. Beginning with the CY 2024 performance period/2026 MIPS 
payment year, a QCDR measure approved for a previous performance year 
must be fully developed and tested, with complete testing results at 
the clinician level, prior to self-nomination. We requested comments on 
this proposal.
    The following is a summary of the comments we received on our 
proposal and our responses.
    Comment: Several commenters supported the proposed delay in the 
requirement for full measure testing citing the continuing impacts of 
the PHE. These commenters stated that resources required to complete 
full measure testing have been challenged by budget cuts, staffing 
shortages, and lower QCDR participation rates resulting from the PHE 
and stated that they appreciated the additional time to implement full 
measure testing.
    Response: We thank the commenters for their support.
    Comment: A few commenters suggested that it would be beneficial for 
CMS to provide clearer guidance for measure testing requirements. They 
suggested that there was confusion about the guidance for reliability 
and validity testing thresholds, as well as what it means to be ``fully 
tested at the clinician level.'' One commenter suggested that CMS 
develop a publicized process for evaluating testing measures including 
how insufficient data is determined, providing feedback to QCDRs, and 
allowing appeals. Additionally, a few commenters suggested that it 
would be helpful for QCDRs to review testing protocols with CMS prior 
to testing to clarify the amount of thoroughness expected by CMS and to 
avoid preventable mistakes and expenses.
    Response: As discussed in the proposed rule (87 FR 46325), we 
referred readers to the CMS Blueprint for the CMS Measures Management 
System (available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/MMS/MMS-Blueprint) for tools regarding 
measure testing guidance. The website provides information on the full 
measure testing process and specific evaluation criteria. Additionally, 
the Measure Evaluation Criteria Guidance document (available at https://mmshub.cms.gov/measure-lifecycle/measure-testing/overview) provides a 
detailed outline for evaluating reliability and validity.
    We regularly host training and support sessions throughout the year 
that address issues relevant to QCDRs and QRs. A repository of past 
webinars is available at https://qpp.cms.gov/resources/webinars. It is 
mandatory for QCDRs to attend the annual QCDR Measure Workgroup as well 
as the annual QCDR/QR Kickoff where we review all testing requirements. 
Webinars are followed by a question and answer session where attendees 
may ask questions and receive feedback from our subject matter experts 
regarding measure testing. Additionally, QCDRs/QRs can schedule a 
measure concept preview call where we will preview measure concepts and 
provide feedback prior to self-nomination.
    Comment: A few commenters suggested that the delay should apply not 
only to MIPS, but also to measures included in an MVP to maintain 
consistency between MIPS and MVPs. They stated their belief that 
without a comparable delay, the number of quality measures available in 
MVPs will decrease and thus increase the burden for MVP participants 
who need more measures to report on which could ultimately lead to an 
overall reduction in MVP reporting.
    Response: As we have previously discussed (85 FR 84937 through 
84943), precisely because there may be a smaller number of measures 
available in MVPs, which tend to be focused on specific clinical 
topics, we believe that those QCDR measures available in MVPs should be 
of the highest quality and can be relied upon to support quality 
reporting on behalf of MVP Participants. We also believe that despite 
the delay for full measure testing for MIPS, there are some QCDRs that 
have been testing their measures and those fully tested QCDR measures 
may be ready to be considered for inclusion within an MVP.
    Comment: A few commenters expressed concerns about the burden of 
CMS's measure testing requirements. These commenters stated their 
belief that the measure testing requirements place a significant burden 
on physicians and QCDRs and that the cost associated with the 
requirements will decrease measure development or even force QCDRs to 
stop all measure development and leave the program entirely. These 
commenters suggested that the burden of these standards 
disproportionately affects small QCDRs and specialty-specific measures 
which will likely play an important role as MVP and sub-group reporting 
increases. A few commenters suggested changes in CMS's measure testing 
requirements to reduce these burdens. One suggested allowing QCDR 
statisticians who are familiar with sample sizes and population to 
determine the appropriate level of testing (clinician, facility, or 
group). One commenter suggested that we allow measure stewards to 
determine their own testing plan to meet CMS's data standards.
    Response: Over multiple years, we have expressed our intention to 
improve the quality and reliability of QCDR measures that are available 
for reporting within the MIPS program. In the CY 2018 Quality Payment 
Program proposed rule (82 FR 30160), we described our goal and sought 
comment on having fully tested QCDR measures. In the CY 2019 PFS final 
rule, we gave notice that we were considering requiring reliability and 
feasibility testing as an additional criterion for QCDR measures (83 FR 
59901 through 59902). Ultimately, in the CY 2020 PFS final rule (84 FR 
63065 through 63067), we finalized that beginning with the 2021 
performance period, all QCDR measures must be fully developed and 
tested, with complete testing results at the clinician level, prior to 
submitting the QCDR measure at the time of self-nomination. As 
described in the CY 2020 PFS final rule (84 FR 63066), while we 
understand the increased time and cost burdens associated with measure 
testing for the QCDR, we believe the benefits of full measure testing 
outweigh the burdens. However, in recognition of those burdens and the 
PHE, the implementation of this policy was delayed by 1 year, until the 
2022 performance period, in the May 8th COVID-19 IFC (85 FR 27594 
through 27595). Most recently, in the CY 2023 PFS proposed rule, we 
proposed to

[[Page 70106]]

further delay the requirement for a QCDR measure to be fully developed 
and tested with complete testing results at the clinician level until 
the CY 2024 performance year (87 FR 46325). Given our longstanding 
objectives and our efforts to accommodate the disruption placed on the 
healthcare system caused by the COVID-19 PHE, we believe that 
interested parties have now had sufficient time and notice to prepare 
for full measure testing by CY 2024.
    Additionally, we believe that implementing full measure testing 
will help reduce the burden on clinicians rather than increase it. In 
past performance years, there have been several instances where QCDRs 
have had issues with a measure mid performance period, and thus could 
not support the reporting of the impacted QCDR measure. This has forced 
clinicians to quickly find alternative measures to report to satisfy 
the quality reporting requirements of the MIPS program. Many of these 
issues could be avoided if the measures had gone through reliability 
and feasibility testing.
    We note in response to the suggestions for changes in our testing 
requirements that we believe we offer flexibility in measure testing to 
demonstrate reliability and validity but require testing at the 
clinician level because the Quality Payment Program measures clinicians 
at the individual level in addition to the group and other levels. More 
broadly, we require uniform testing standards to help ensure that 
clinicians and groups are able to select from an array of measures that 
are consistently reliable, feasible, and provide meaningful 
measurement.
    Comment: A few commenters expressed concern with the timing of the 
announcement of the delay for the full measure testing requirement. The 
commenters noted that the CY 2023 PFS final rule would not be posted 
until a few months after the self-nomination deadline, so commenters 
are unclear about whether QCDR measures need to be fully tested for CY 
2023. Some commenters suggested that this confusion has led some QCDRs 
and registries to consider leaving the program and would negatively 
impact MVPs since QCDR measures must be fully tested prior to inclusion 
in an MVP. A few commenters asked CMS to release guidance and 
expectations through another medium regarding full measure testing.
    Response: We understand the potential for confusion, however, our 
effort to change the timeline for the full measure testing requirement 
required proposing the change in the CY 2023 PFS proposed rule. 
However, we are delaying all QCDR measure decisions until after the 
publication of the final rule. Additionally, QCDRs that have been fully 
testing measures will be well prepared and practiced in completing the 
requirements for self-nomination for the CY 2024 performance period.
    Comment: A few commenters suggested extending the delay for the 
measure testing requirement more than one year given that the PHE has 
led to decreased participation in MIPS and less reported data, which 
makes it more difficult to establish benchmarks. One commenter 
recommended that CMS extend the delay until 2 years after the end of 
the PHE. Other commenters proposed that new measures could have 2 years 
before full measure testing requirements instead of one.
    Response: The full measure testing requirement was already delayed 
due to the PHE in the May 8th COVID-19 IFC (85 FR 27594 through 27595). 
In the CY 2021 PFS final rule, we finalized further changes, such that 
QCDR measures must be face valid prior to being self-nominated for the 
CY 2022 performance year (85 FR 84939) and does not have to be fully 
tested until the CY 2023 performance year (85 FR 84939). Given previous 
delays and the implementation of a gradual approach to requiring full 
measure testing, we believe that QCDRs will have had a reasonable 
amount of time in advance of the CY 2024 performance period requirement 
to prepare.
    Comment: One commenter expressed concern about the delay of the 
full measure testing requirement and recommended implementing the full 
measure testing requirement sooner. The commenter noted that the delay 
in the requirement for MIPS will limit the availability of QCDR 
measures for inclusion in an MVP given that QCDR measures must be fully 
tested prior to inclusion in an MVP. Another commenter supported the 
requirement that all QCDR measures be fully tested before inclusion in 
an MVP.
    Response: We have been balancing the need to have fully tested, 
valid, and reliable measures in the MIPS program with the challenges 
posed by the PHE and the general time and resources required to fully 
test QCDR measures. Based on the feedback from interested parties, we 
proposed delaying the requirement for full measure testing for 1 more 
year; however, we do not intend to further delay the implementation of 
this requirement (87 FR 46325). We strongly believe that all measures 
in a pay-for-performance quality program such as MIPS should be 
reliable, feasible, valid, and implementable as they impact performance 
determinations and thusly, payment adjustments.
    After consideration of the public comments and for the reasons 
stated above and in the proposed rule (87 FR 46325), we are finalizing 
our proposal to delay QCDR measure approval requirements by delaying 
the requirement for a QCDR measure to be fully developed and tested 
with complete testing results at the clinician level until the CY 2024 
performance year and are revising Sec.  414.1400(b)(4)(iii)(A)(3) as 
proposed.
(3) Remedial Action and Termination of Third Party Intermediaries
    We refer readers to Sec.  414.1400(e), the CY 2017 Quality Payment 
Program final rule (81 FR 77386 through 77389), the CY 2019 PFS final 
rule (83 FR 59908 through 59910), the CY 2020 PFS final rule (84 FR 
63077 through 63080), the CY 2021 PFS final rule (85 FR 84947), and the 
CY 2022 PFS final rule (86 FR 65542 and 65550) for previously finalized 
policies for remedial action and termination of third party 
intermediaries.
    In the CY 2023 PFS proposed rule (87 FR 46325 and 46326), we 
proposed a few changes to the regulations relating to remedial actions 
and terminations set forth in Sec.  414.1400(e). These included one 
revised and one new requirement for Corrective Action Plans (CAPs), and 
proposed termination of certain approved QCDRs and Qualified Registries 
that continue to fail to submit performance data.
    Section 414.1400(e)(1) provides that, after providing written 
notice, CMS may take remedial action if CMS determines that a third 
party intermediary has ceased to meet one or more of the applicable 
criteria for approval, has submitted a false certification under 
paragraph (a)(3) of this section, or has submitted data that are 
inaccurate, unusable, or otherwise compromised. As described in Sec.  
414.1400(e)(1)(i) and (ii), the remedial actions CMS may take against a 
third party intermediary include requiring the third party intermediary 
to submit to CMS by a date specified by the agency a corrective action 
plan (CAP) and publicly disclosing an entity's data error rate on the 
CMS website until the data error rate falls below 3 percent.
    As described in Sec.  414.1400(e)(2), CMS may immediately or with 
advance notice terminate the ability of a third party intermediary to 
submit MIPS data on behalf of a MIPS eligible clinician, group, or 
virtual group for one or more of the following reasons: CMS has grounds 
to impose remedial action;

[[Page 70107]]

CMS has not received a CAP within the specified time-period or the CAP 
is not accepted by CMS; or the third party intermediary fails to 
correct the deficiencies or data errors by the date specified by CMS.
    Therefore, we proposed a technical correction in Sec.  
414.1400(e)(3), to include the missing introductory text of, ``A data 
submission that,'' which we inadvertently failed to include when 
finalizing our proposal to revise and redesignate existing language 
from former Sec.  414.1400(f)(3)(ii) to paragraph (e)(3) in the CY 2022 
PFS final rule (86 FR 65550) (87 FR 46325 and 46326). As proposed, the 
technical correction to the provision at Sec.  414.1400(e)(3) would 
read, ``A data submission that contains data inaccuracies affecting the 
third party intermediary's total clinicians may lead to remedial 
action/termination of the third party intermediary for future program 
year(s) based on CMS discretion.''
    The following is a summary of the comments we received on our 
proposal and our responses.
    Comment: In the context of determining whether a corrective action 
plan would be required, one commenter asked whether qualified 
registries are responsible for reviewing or validating data submitted 
to them and for additional operational details.
    Response: Qualified registries are required to have data validation 
plans. We finalized our policy for the requirements for a data 
validation audit in the CY 2021 PFS rule (85 FR 84930 through 84937). 
We direct the reader to that section for a further discussion of the 
requirements and the rationale. We also direct readers to the self-
nomination toolkit for QCDRs and registries that is available at 
qpp.cms.gov/resources/resource-library in which we offer more guidance 
for the data validation audit.
    After consideration of the public comments and for the reasons 
stated above and in the proposed rule (87 FR 46325 and 46326), we are 
finalizing our proposal to revise Sec.  414.1400(e)(3) to begin ``A 
data submission that'' as proposed.
(a) Revised Corrective Action Plan (CAP) Requirements
    As described in Sec.  414.1400(e)(1)(i), the remedial actions CMS 
may take against a third party intermediary include requiring the third 
party intermediary to submit to CMS by a date specified by the agency a 
corrective action plan (CAP). As finalized in the CY 2021 PFS final 
rule and specified at Sec. Sec.  414.1400(e)(1)(i)(A) through (D), 
unless different or additional information is specified by CMS, the CAP 
must address the following issues: (A) the issues that contributed to 
the non-compliance; (B) the impact to individual clinicians, groups, or 
virtual groups, regardless of whether they are participating in the 
program because they are MIPS eligible, voluntary participating, or 
opting in to participating in the MIPS program; (C) the corrective 
actions to be implemented by the third party intermediary to ensure 
that the non-compliance has been resolved and will not recur in the 
future; and (D) a detailed timeline for achieving compliance with the 
applicable requirements.
    In the CY 2023 PFS proposed rule, we proposed to revise the scope 
of affected parties impacted by the second CAP requirement at Sec.  
414.1400(e)(1)(i)(B) (87 FR 46326). As finalized in the CY 2021 PFS 
final rule at Sec.  414.1400(e)(1)(i)(B), we explained that, depending 
on the circumstances, non-compliance by a third party intermediary may 
affect an uncertain number of clinicians and groups and has the 
potential to implicate substantial program dollars. We noted our belief 
that the information regarding the scope of harms was necessary for the 
agency to assess the full program impact of the non-compliance, as well 
as our belief that it was important for the CAP to include this impact 
information regardless of the clinician's participation status, because 
non-compliance may have programmatic implications even if it does not 
affect payment, such as for data posted on the Physician Compare 
website (now Care Compare) (85 FR 84947).
    We discussed in the CY 2023 PFS proposed rule that we have become 
aware that in some cases, QCDRs granted licenses to the measures of 
another QCDR upon which a CAP has been imposed may be directly impacted 
by the issues that led to the CAP. We proposed to broaden the scope of 
affected parties under the CAP requirement at Sec.  
414.1400(e)(1)(i)(B) to also identify impacts to any QCDRs that were 
granted licenses to the measures of the affected QCDR, rather than 
limit the identification of impacts to clinicians only (87 FR 46326). 
We also proposed a technical correction in Sec.  414.1400(e)(1)(i)(B) 
to correct the word ``voluntary'' to ``voluntarily.'' Accordingly, we 
proposed to revise the CAP requirement at Sec.  414.1400(e)(1)(i)(B) to 
require the third party intermediary to address in its CAP the impact 
to individual clinicians, groups, virtual groups, subgroups, or APM 
Entities, regardless of whether they are participating in the program 
because they are MIPS eligible, voluntarily participating, or opting in 
to participating in the MIPS program, and any QCDRs that were granted 
licenses to the measures of a QCDR upon which a CAP has been imposed.
    We also proposed to add a new CAP requirement to require the third 
party intermediary to notify the parties identified in proposed Sec.  
414.1400(e)(1)(i)(B) of the impact to these parties by submitting a 
communication plan. We noted that the intent of this proposal is to 
enable affected parties to better understand and prepare for any 
operational and other challenges as needed. We noted our belief that 
having third party intermediaries submit a communication plan as part 
of their CAP would ensure third party intermediaries directly 
communicate the situation and its impact to these parties in a timely 
and consistent manner. Accordingly, we proposed to add Sec.  
414.1400(e)(1)(i)(E) to require the third party intermediary to develop 
a communication plan for communicating the impact to the parties 
identified in proposed Sec.  414.1400(e)(1)(i)(B). Specifically, as 
proposed, this would include individual clinicians, groups, virtual 
groups, subgroups, or APM Entities, regardless of whether they are 
participating in the program because they are MIPS eligible, 
voluntarily participating, or opting in to participating in the MIPS 
program, and any QCDRs that were granted licenses to the measures of a 
QCDR upon which a CAP has been imposed. We requested comments on the 
proposals.
    We did not receive any public comments on our proposals to revise 
Sec.  414.1400(e)(1)(i)(B). For the reasons stated above and in the PFS 
proposed rule (87 FR 46326), we are finalizing our proposed revisions 
to Sec.  414.1400(e)(1)(i)(B) and to add new paragraph (e)(1)(i)(E) as 
proposed.
(b) Termination of Approved QCDRs and Qualified Registries That Have 
Not Submitted Performance Data
    In the CY 2022 PFS final rule, we noted that we had identified a 
number of QCDRs and qualified registries that had continued to self-
nominate to become a third party intermediary for the MIPS program but 
had not submitted clinician, group, or virtual group data to CMS (86 FR 
65545). We further noted as the MIPS program continues to mature, we 
wished to reduce the number of vendors that self-nominate to become a 
qualified vendor but do not actively participate in the MIPS program 
(Id.). We also noted that our goal was to decrease the operational

[[Page 70108]]

burden on CMS and those vendors that do not submit MIPS data to CMS (86 
FR 65546). Accordingly, we finalized requirements for approved QCDRs 
and qualified registries that have not submitted performance data to 
submit a participation plan as part of their self-nomination process 
(Id.). We finalized an incremental approach to addressing this issue. 
First, we established a participation plan requirement, which requires 
a QCDR or qualified registry that was approved but did not submit data 
for any of the CY 2019 through 2023 payment years to submit a 
participation plan in order to be approved for the CY 2023 performance 
period/2025 MIPS payment year (Sec.  414.1400(b)(3)(vii)). Second, a 
QCDR or qualified registry that was approved but did not submit any 
MIPS data for either of the 2 years preceding the applicable self-
nomination period must submit a participation plan in order for it to 
be approved for the CY 2024 performance period/2026 MIPS payment year 
or for a future performance period/payment year (Sec.  
414.1400(b)(3)(viii)).
    Even with the participation requirements in place, we noted that we 
remained concerned about the administrative burden created by QCDRs and 
qualified registries that submit the required participation plans 
during the self-nomination process and continue as an approved QCDR or 
qualified registry yet continue not to submit MIPS data to CMS. 
Maintaining these vendors that do not actively participate does not 
provide a benefit to the MIPS program, rather it creates confusion for 
interested parties by including these vendors in our qualified postings 
(86 FR 65545).
    Our goal is also to decrease the operational burden on CMS and 
interested parties. CMS would decrease its operational burden by 
eliminating the need to screen these entities. Removing QCDRs and 
qualified registries who do not actively participate from our qualified 
postings would also decrease the administrative burden for clinicians 
trying to identify an active participating QCDR or qualified registry.
    Accordingly, we proposed in the CY 2023 PFS proposed rule that, 
beginning with the CY 2024 performance period, in the we would 
terminate those QCDRs and qualified registries that are required to 
submit participation plans during the applicable self-nomination period 
under Sec.  414.1400(b)(3)(viii) because they did not submit any MIPS 
data for either of the 2 years preceding the applicable self-nomination 
period, and continue to not submit MIPS data to CMS for the applicable 
performance period (87 FR 46327). For example, if a QCDR or qualified 
registry is required to submit a participation plan during the self-
nomination process for the CY 2024 performance period under Sec.  
414.1400(b)(3)(viii) because they did not submit any MIPS data for the 
CY 2022 and 2023 performance periods, and CMS approves their 
participation plan, but the QCDR or qualified registry continues to not 
submit MIPS data for the CY 2024 performance period (CY 2024 
performance data is submitted by March 2025), then under our proposed 
policy, that QCDR or qualified registry would be terminated.
    Specifically, we proposed to add a new ground for termination at 
Sec.  414.1400(e)(5) stating that, beginning with the CY 2024 
performance period/2026 MIPS payment year, a QCDR or qualified registry 
that submits a participation plan as required under Sec.  
414.1400(b)(3)(viii), but does not submit MIPS data for the applicable 
performance period for which they self-nominated under Sec.  
414.1400(b)(3)(viii), will be terminated (87 FR 46327). We requested 
comments on the proposal.
    Finally, in conjunction with the proposal to amend the definition 
of ``third party intermediary'' to refer to subgroups and APM Entities 
(87 FR 46327), we proposed a conforming change to Sec.  414.1400(e)(2), 
which currently stated that CMS may immediately or with advance notice 
terminate ``the ability of a third party intermediary to submit MIPS 
data on behalf of MIPS eligible clinician, group or virtual group'' 
under certain circumstances. Rather than amend this provision to add 
references to subgroups and APM Entities, we proposed to revise Sec.  
414.1400(e)(2) by removing the previously quoted phrase to read that 
CMS may immediately or with advance notice ``terminate a third party 
intermediary'' under the specified circumstances. We requested comments 
on this proposal.
    The following is a summary of the comments we received on our 
proposals and our responses.
    Comment: A few commenters opposed our proposal to terminate QCDRs 
and qualified registries that do not submit any MIPS data, noting that 
recent years have been affected by flexibilities in MIPS participation 
related to the PHE that reduced the likelihood of clinicians using 
these QCDRs or qualified registries to report data. One commenter 
recommended that termination not be considered until there is more 
traction in MVP reporting.
    Response: While we acknowledge that the PHE has had many effects on 
how clinicians have participated in MIPS, we note that our proposal 
does not include a termination of a QCDR or qualified registry until 
the CY 2024 performance period, for which data may be submitted in 
2025. We believe that there is ample time for a registry or QCDR to 
gather participants and submit data in the coming years. We also 
believe that waiting until such time that MVPs are more available would 
not be appropriate because clinicians need the tools to participate in 
MVPs when they first become available.
    Comment: One commenter opposed our proposal to terminate QCDRs and 
qualified registries that do not report data because they noted that 
QCDR status allows them access to Medicare claims data and to serve as 
a vetting tool for their own data.
    Response: While we hope that QCDRs and qualified registries can be 
used to support broader quality improvement efforts, we maintain the 
requirements for QCDRs for the purpose of participation in the Quality 
Payment Program. As stated in the proposed rule, we believe that having 
a vendor on a list that does not actively submit data offers confusion 
to clinicians and other interested parties.
    Comment: One commenter noted that they did not oppose the proposal 
but recommended that terminated qualified registries and QCDRs be given 
the opportunity to reapply for participation in the future.
    Response: A third party intermediary that has been terminated may 
apply again in the future.
    After consideration of the public comments and for the reasons 
stated above and in the proposed rule (87 FR 46327), we are finalizing 
our proposals as proposed to terminate those QCDRs and qualified 
registries that are required to submit participation plans during the 
applicable self-nomination period under Sec.  414.1400(b)(3)(viii) 
because they did not submit any MIPS data for either of the 2 years 
preceding the applicable self-nomination period, and continue to not 
submit MIPS data to CMS for the applicable performance period and are 
revising Sec.  414.1400(e)(2).
(4) Auditing of Entities Submitting MIPS Data
(a) Background
    In the CY 2017 Quality Payment Program final rule (81 FR 77389 
through 77390), we finalized that third party intermediaries submitting 
MIPS data must comply with auditing procedures as a condition of 
qualification and approval to participate in MIPS, including the 
requirement to make

[[Page 70109]]

available to CMS the contact information of each MIPS eligible 
clinician or group on behalf of whom it submits data (Sec.  
414.1400(f)(1)).
(b) Revisions to the Requirement To Make Contact Information Available
    In conjunction with our proposal to revise the definition of a 
third party intermediary to update the definition of a third party 
intermediary include subgroups and APM Entities (87 FR 46324), we 
proposed to revise the requirements codified at Sec.  414.1400(f)(1) to 
account for third party intermediaries reporting on behalf of subgroups 
and APM Entities (87 FR 46327). Additionally, we also proposed to 
update the requirement to apply to third party intermediaries 
submitting data on behalf of virtual groups. Therefore, we proposed to 
update Sec.  414.1400(f)(1) to require that the entity must make 
available to CMS the contact information of each MIPS eligible 
clinician, group, virtual group, subgroup, or APM Entity on behalf of 
whom it submits data. The contact information must include, at a 
minimum, the MIPS eligible clinician, group, virtual group, subgroup, 
or APM Entity phone number, address, and, if available, email. We 
invited public comment on the proposal.
    We did not receive any public comments on these proposals. For the 
reasons stated above and in the proposed rule (87 FR 46327), we are 
finalizing the proposed revisions to Sec.  414.1400(f)(1) as proposed.
(5) Requests for Information
(a) Request for Information on Third Party Intermediary Support of MVPs
    We requested input on aspects of how third party intermediaries 
could support MVPs in the CY 2023 PFS proposed rule (87 FR 46327). We 
requested input on flexibility in measure selection in MVPs for third 
party intermediaries, barriers/burdens for third party intermediaries 
in supporting all measures, and whether there were technical resources 
CMS could provide that would be helpful for these third party 
intermediaries.
    We thank the commenters for their input on these questions and will 
use the information gathered in consideration for future rulemaking.
(b) Request for Information on National Continuing Medical Education 
(CME) Accreditation Organizations Submitting Improvement Activities
    In the CY 2023 PFS proposed rule (87 FR 46327 and 46328) we sought 
feedback on the value to clinicians of adding CME accreditation 
organizations as third party intermediaries. We requested input on the 
general value of adding such organizations, as well as input on the 
criteria we should use in evaluating such organizations. We thank the 
commenters for their input on these issues and will use the information 
gathered in consideration for future rulemaking.
h. Public Reporting on the Compare Tools Hosted by HHS
    In the CY 2023 PFS proposed rule (87 FR 46329 through 46330), we 
proposed to add a telehealth indicator to clinician and group profile 
pages, as technically feasible. Along with the indicator, we proposed 
to include a statement caveating, in a user-friendly way based on 
consumer testing, that the clinician or group only provides some, not 
all, services via telehealth. We proposed using Place of Service (POS) 
Code 02 (indicating telehealth) on paid physician & ancillary service 
(that is, carrier) claims, or modifier 95 appended on paid claims to 
identify telehealth services rendered. To keep the indicator current, 
we proposed using a 6-month lookback period and refresh the telehealth 
indicator on clinician profile pages bi-monthly.
    Additionally, we proposed to publicly report Medicare procedural 
utilization data on the Compare tool clinician and group profile pages 
in a way that is understandable to patients and caregivers, based on 
user testing, and helps them make healthcare decisions (87 FR 46330 
through 46331). Specifically, we proposed to: collapse Healthcare 
Common Procedure Coding System (HCPCS) codes using the Restructured 
Berenson-Eggers Type of Service (BETOS) Codes Classification System 
into procedural categories; use a 12-month lookback period and refresh 
data bi-monthly, as technically feasible. We also proposed publicly 
reporting this information no earlier than CY 2023.
    For previous discussions on public reporting, we refer readers to 
the CY 2016 PFS final rule (80 FR 71116 through 71123), the CY 2017 
Quality Payment Program final rule (81 FR 77390 through 77399), the CY 
2018 Quality Payment Program final rule (82 FR 53819 through 53832), 
the CY 2019 PFS final rule (83 FR 59910 through 59915), the CY 2020 PFS 
final rule (84 FR 63080 through 63083), the CY 2022 PFS final rule (86 
FR 65550 through 65554) and the Care Compare: Doctors and Clinicians 
Initiative Page at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Compare-DAC. We also note that as 
finalized at Sec.  414.1305 ``Physician Compare'' is defined as the 
Physician Compare internet website of CMS (or a successor website). As 
discussed in prior rulemaking, we note the current website is the 
Compare Tools hosted by the U.S. Department of Health and Human 
Services (HHS), referred to as ``compare tool'' throughout the final 
rule (86 FR 39466).
(1) Telehealth Indicator
    Prior to the start of the COVID-19 public health emergency (PHE) in 
March 2020, Medicare paid for telehealth under limited circumstances, 
with telemedicine services restricted to rural or health professional 
shortage areas, established patients, or certain types of health care 
providers. In response to the ongoing PHE, we expanded Medicare payment 
for telemedicine services to increase access to care. According to the 
September 2021 Medicare Telemedicine Snapshot,\544\ telehealth services 
have increased more than 30-fold since the start of the PHE and have 
been utilized by more than half of the Medicare population. With the 
increase in patients seeking telehealth due to the ongoing PHE, and CMS 
finalizing and expanding coverage of certain more permanent Category 1 
and time-limited Category 3 telehealth services codes, adding an 
indicator to clinician and group profile pages would clarify for 
website users which clinicians offer telehealth services.
---------------------------------------------------------------------------

    \544\ CMS, Medicare Telemedicine Snapshot: March 2020-Feb. 2021 
(2021), https://www.cms.gov/files/document/medicare-telemedicine-snapshot.pdf. See also Medicare Telemedicine Snapshot Data File, 
https://www.cms.gov/files/zip/medicare-telemedicine-snapshot-data-file.zip.
---------------------------------------------------------------------------

    The Compare tool includes information on how beneficiaries may 
access care. Our research suggests that the addition of a telehealth 
indicator would meet a gap in the current information we provide on 
access to care and that such an indicator would be well understood by 
users. Keyword searches from the legacy Physician Compare website 
showed that, historically, website users search for telehealth 
information. Additionally, user testing we conducted with Medicare 
beneficiaries and caregivers showed that users accurately understood 
the meaning of a telehealth indicator and some even expressed an 
interest in knowing which services, specifically, might be offered via 
telehealth. Most users found the telehealth indicator to be important 
and useful when selecting a clinician. Telehealth is also one of 
beneficiaries' primary service requests the Medicare Call Center 
receives on a monthly basis.

[[Page 70110]]

    We also believe that publicly reporting a telehealth indicator on 
clinician and group profile pages would further CMS's health equity 
goals. According to the aforementioned Medicare Telemedicine Snapshot, 
more than half of the Medicare population in almost every racial/ethnic 
group regardless of sex or Medicare and Medicaid status are utilizing 
telehealth services. Given the exponential increase in Medicare 
telehealth usage by Medicare users over the past 2 years, particularly 
by those in areas with limited healthcare access, and those who cannot 
physically access a clinician's office, publicly reporting information 
on which clinicians furnish services via telehealth would aid in more 
widely applicable health care provider selection across the Medicare 
and dually eligible Medicare and Medicaid populations, since some 
beneficiaries have preferences for, or limitations preventing them from 
seeing a clinician in-person. For these reasons, we proposed adding a 
telehealth indicator to clinician and group profile pages, as 
technically feasible. Along with the indicator, we proposed including a 
statement on the profile page caveating, in a user-friendly way based 
on consumer testing, that the clinician or group only provides some, 
not all, services via telehealth.
    To develop the indicator that would display on the Compare tool 
clinician and group profile pages, we proposed to identify clinicians 
who perform telehealth services using POS Code 02 (indicating 
telehealth) on paid physician & ancillary service (that is, carrier) 
claims, or modifier 95 appended on paid claims. To keep the indicator 
current and address concerns that some telehealth codes are time-
limited, we proposed using a 6-month lookback period and refresh the 
telehealth indicator on clinician profile pages bi-monthly, which is 
the same cadence in which we update other clinician directory 
information. Frequently updating the telehealth indicator information 
would ensure that when a time-limited Category 3 codes expires, a 
clinician who only bills telehealth services under that code would no 
longer have a telehealth indicator on their profile page.
    We sought comment on all aspects of the proposals to add a 
telehealth indicator to clinician and group profile pages, as 
technically feasible, including the proposed approach to identifying 
clinicians and groups furnishing telehealth services and the proposed 
6-month lookback period and bi-monthly data refresh frequency. The 
following is a summary of the public comments received on the proposed 
Telehealth Indicator provisions and our responses:
    Comment: All comments received on this proposal supported adding a 
telehealth indicator to clinician profile pages. The commenters noted 
the importance of the growth in the provision and usage of telehealth 
services throughout the PHE and that adding a telehealth indicator to 
profile pages would increase transparency and help patients, especially 
those who live in rural areas or are unable travel, find clinicians who 
may meet their needs. Two of the commenters noted the importance of a 
telehealth indicator for clinician types providing such services, even 
though some specialties, such as anesthesiology or emergency medicine, 
may not provide as many other telehealth services as others.
    One of the commenters also supported our proposal to add a user-
friendly statement, based on consumer testing, alongside the telehealth 
indicator, that not all services provided may be rendered via 
telehealth. This commenter also suggested adding an acknowledgment that 
individual patient access to telehealth services may be restricted due 
to limitations relating to interstate licensure.
    Two commenters specifically supported the proposed approach for 
identifying clinicians and groups furnishing telehealth services using 
POS Code 02 (indicating telehealth) or modifier 95 appended on paid 
physician and ancillary service (that is, carrier) claims. One of these 
commenters also recommended using newly added POS Code 10. One 
commenter supported the proposed 6-month lookback period for 
identifying telehealth services and bi-monthly data refresh frequency 
for updating profile pages.
    Response: We appreciate commenters' support and recommendations for 
the telehealth indicator and process for identifying and updating 
telehealth service information on clinician profile pages. We agree 
that knowing whether a clinician offers services via telehealth would 
be useful to patients and caregivers generally, beyond the PHE, 
particularly for those who have access to care barriers. We also agree 
that not all services may be provided via telehealth, sometimes due to 
interstate licensure restrictions, and will conduct consumer testing of 
such statements for inclusion on profile pages.
    Additionally, we appreciate the suggestion to use the newly 
available POS Code 10 in addition to the proposed POS Code 02 and 
modifier 95 appended on paid physician and ancillary service claims to 
identify telehealth services. Upon review, we agree with the 
recommendation. We had proposed to use POS Code 02 to broadly capture 
the provision of services via telehealth, including in the patient's 
home. At the time of the proposed rule, we were not aware of a recent 
update made to POS Code 02 revising the description from ``telehealth'' 
to ``telehealth provided other than in patient's home'' for locations 
in which telehealth services were furnished. In connection with this 
change to POS Code 02, newly added POS Code 10, telehealth provided in 
patient's home, was adopted by Medicare to more specifically identify 
the provision of telehealth in the patient's home. Since many 
telehealth visits occur in patients' homes, we believe it is 
appropriate and consistent with the intent of our proposal to use POS 
10 in addition to POS 02 to identify clinicians providing telehealth 
services.
    Regarding the comment that the telehealth indicator may not apply 
to all specialties, we proposed that the telehealth indicator would 
only show on profile pages for clinicians in which we identify 
telehealth services using the appropriate POS codes or modifier 95 on 
paid physician and ancillary claims (see 87 FR 46329 and 46330). That 
is, no telehealth indicator will show on a clinician's profile page if 
we do not identify telehealth services rendered using these criteria.
    After consideration of the public comments, as well as coding 
review and operational updates since the time of the proposed rule, we 
are finalizing these Telehealth Indicator proposals with several 
modifications. We proposed publicly reporting a telehealth indicator on 
clinician and group profile pages, however we are finalizing publicly 
reporting the indicator on clinician profile pages only. While we 
recognize that publishing telehealth indicators on both clinician and 
group profile pages may be helpful to consumers, it is not 
operationally feasible at this time to publish telehealth indicators on 
group profile pages with accuracy, given clinician turnover at group 
practices and resulting data implications. We believe that including 
the telehealth indicator on clinician profile pages only will provide 
the most accurate and current information for consumers.
    Upon review of the changes to POS 02 to include telehealth 
furnished in locations other than a patient's home and Medicare's 
adoption of the newly added POS Code 10 for telehealth services 
rendered on patients receiving such services from home, we are 
finalizing use of POS 10 in addition to

[[Page 70111]]

using POS Code 02 or modifier 95 appended on paid physician and 
ancillary service claims.
    We are also finalizing our proposals to use a 6-month lookback 
period and bi-monthly update frequency, as technically feasible.
(2) Publicly Reporting Utilization Data on Profile Pages
    Section 104(a) of MACRA provides that, beginning with 2015, the 
Secretary shall make publicly available on an annual basis, in an 
easily understandable format, information with respect to physicians 
and, as appropriate, other eligible professionals, on items and 
services furnished to Medicare beneficiaries. The information made 
available must be similar to the physician and other supplier 
utilization data we have historically made available and shall include 
information on the number of services furnished by the physician or 
other eligible professional under Medicare, which may include 
information on the most frequent services furnished or groupings of 
services. Section 104(e) of MACRA requires that we integrate this data 
into the Compare tool.
    To satisfy section 104(e), we implemented a policy of including 
utilization data in a downloadable format from late 2017 using the most 
currently available data and that the specific codes to be included 
were determined using data analysis and reported at the eligible 
clinician level (80 FR 71130). We also finalized a policy of continuing 
to include utilization data in the downloadable database (81 FR 77398). 
This information continues to be available today in the Medicare 
Provider Data Catalog (PDC) available at https://data.cms.gov/provider-data/topics/doctors-clinicians. Separately, we have reported on the 
Compare tool clinician training information as well as a clinician's 
primary and secondary specialties.\545\
---------------------------------------------------------------------------

    \545\ CMS, Physician Compare Report to Congress 36 (2014), 
available at https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/physician-compare-initiative/Downloads/Physician-Compare-Report-to-Congress.pdf.
---------------------------------------------------------------------------

    In the CY 2022 PFS proposed rule, we solicited comments on publicly 
reporting utilization data on clinician and group profile pages (86 FR 
39466 through 39469). We received four responses, none of which 
directly addressed our Request for Information (RFI) questions. We 
stated in the CY 2023 PFS proposed rule (87 FR 46330 through 46331) 
that we believe it would be useful to patients and their caregivers, 
when making healthcare decisions, if a subset of procedures performed 
were publicly reported on clinician profile pages in an understandable 
and meaningful way. To date, we have gathered utilization data for 
procedures from physician/supplier Medicare Part B non-institutional 
claims on certain services and procedures and published it in the 
public use file (PUF) file entitled ``Physician and Other Supplier 
Data.'' These data are useful to the healthcare industry, healthcare 
researchers, and other interested parties who have the expertise to 
accurately interpret these data and use them in meaningful analyses. 
However, this information is presented in a technical manner that is 
not easily accessible or usable by patients, who do not frequently 
visit data.cms.gov or understand medical procedure coding. 
Additionally, the amount of information available in the PUF may 
overwhelm patients and caregivers.
    As explained in the proposed rule, we envision that reporting 
utilization data on patient-facing clinician profile pages would 
provide two main areas of benefit. The first is to allow for more 
granular clinician searches. Patients would not only be able to find 
specific types of clinicians but also those clinicians who have 
performed specific types of procedures. The second is to provide 
categories of utilization data in a plain language display that is more 
usable to patients and their caregivers than what is available in the 
PDC.
    In order to publicly report procedural utilization data in a 
meaningful way to patients and caregivers, rather than showing 
thousands of rows of individual HCPCS data, as we do for the research 
community in the PDC, we proposed to collapse HCPCS codes using the 
Restructured Berenson-Eggers Type of Service (BETOS) Codes 
Classification System into procedural categories. Restructured BETOS is 
a taxonomy that allows for the grouping of health care services codes 
for Medicare Part B into clinically meaningful categories and 
subcategories. Additional Restructured BETOS information is available 
at https://data.cms.gov/provider-summary-by-type-of-service/provider-service-classifications/restructured-betos-classification-system.
    For example, applying categories would enable us to list that a 
clinician performs knee arthroplasties, which we could further simplify 
to knee replacements for understandability instead listing each of nine 
unique procedure codes indicating the specifics of exactly which bones 
and implants were utilized. We explained that we would exclude non-
specific procedure codes, such as evaluation and management (E&M) codes 
for office visits which do not provide context about the care provided 
and low complexity procedures such as basic wound care or administering 
a vaccine because these codes encompass many types of care and are not 
specific enough about the services covered. For procedures in which no 
Restructured BETOS categories are available, we proposed to utilize 
procedure code sources used in MIPS, such as the procedure categories 
already defined for MIPS cost or quality measures.
    Prior to publishing this data, we explained that we would conduct 
user testing with patients and caregivers to determine which procedures 
are of most importance, as well as how to best display and plain 
language utilization data on profile pages. User testing would also 
inform the appropriate context necessary to display utilization data in 
a meaningful way that ensures it is interpreted accurately. We noted 
that the utilization data shown on profile pages would only reflect 
Medicare claims data. Though this would provide information to patients 
and caregivers about which procedures are covered by Medicare, the 
utilization data would not include procedures performed for patients 
who have other types of insurance. For this reason, we noted that we 
would include a disclaimer on profile pages that the utilization data 
only represents the care that has been provided to Medicare 
beneficiaries and does not include those of patients with other forms 
of insurance.
    In summary, we proposed publicly reporting Medicare procedural 
utilization data on the Compare tool clinician and group profile pages 
in a way that is understandable to patients and caregivers, based on 
user testing, and helps them make healthcare decisions. We proposed 
publicly reporting procedural utilization data no earlier than CY 2023 
and using a 12-month lookback period and bi-monthly data refresh 
frequency, as technically feasible. We sought comment on all aspects of 
the proposal, including the proposed approaches to identifying the most 
relevant and understandable procedural categories.
    The following is a summary of the public comments received on the 
proposed Publicly Reporting Utilization Data on Profile Pages 
provisions and our responses:
    Comment: Some commenters supported the utilization data proposal, 
noting that publicly reporting this information promotes greater

[[Page 70112]]

transparency and will help patients find the right clinicians for 
specific procedures.
    Response: We agree that publicly reporting utilization data on 
clinician profile pages will promote transparency and help patients 
find clinicians who can better serve their needs, while also fulfilling 
sections 104(a) and (e) of the MACRA.
    Comment: Many commenters opposed publicly reporting utilization 
data on procedures performed on clinician profile pages. These 
commenters' concern related to patient understanding of the 
information, including incorrectly equating higher volume of procedures 
to higher quality of care and better outcomes, especially for more 
complex, rare procedures. One of these commenters suggested adding a 
disclaimer that the volume of procedures performed does not always 
indicate higher quality of care. Commenters also expressed concern that 
patients could misinterpret that the clinician only performs the 
procedures shown on the profile page or not understand the coding data 
in its entirety. One commenter thought these data may be too confusing 
for patients to understand even with a disclaimer stating that listed 
information only includes Medicare data and therefore may not be 
reflective of the physician's total volume of a specified procedure. 
Even with these concerns, most emphasized the need for rigorous 
consumer testing to ensure accurate understanding of the information, 
if CMS moves forward with finalizing this policy. Another commenter 
suggested conducting clinician pilot testing.
    Response: To clarify, we intend to start the reporting of 
utilization data on patient-facing clinician profile pages on a rolling 
basis (no sooner than CY 2023) and to expand the reporting of procedure 
categories over time. When we referred to conducting user testing to 
determine which ``procedures are of most importance'' to users (87 FR 
46331), we meant that we would prioritize the publication of such 
procedures as public reporting begins. We appreciate and understand the 
concern that a higher volume of procedures does not always correlate to 
better quality of care and successful outcomes. Therefore, we are 
modifying the criteria that we will use to prioritize the publication 
of commonly performed procedures to better take this into account. Such 
procedures will meet one or more of the following criteria: have 
evidence of a positive relationship between volume and quality in the 
published peer reviewed clinical research; are affiliated with existing 
MIPS measures indicating importance to CMS; represent care that a 
patient might shop for a clinician to provide; and/or is a U.S. 
Department of Health and Human Services (HHS) priority. We will not 
initially prioritize complex, rare procedures.
    Regarding concerns that utilization data may confuse or mislead 
patients, we note that we will not display individual procedure codes 
on clinician profile pages, rather we will group them using 
Restructured BETOS categories, as discussed in this section. 
Furthermore, since the time of the proposed rule, we have started 
comprehensive user testing of plain language descriptions for several 
procedure categories as well as for other statements, some of which are 
based on public comments received, to help patients accurately 
understand the information, including explanations that: the data do 
not reflect all procedures the clinicians perform; the information 
shown only reflects procedures performed on patients with Medicare; and 
that the utilization data on their own are not the only indicator of 
quality. Preliminary findings show that patients and caregivers: 
understand this language; would not select a provider based on this 
information alone; and find the information helpful but would like the 
procedure volume to also reflect patients with other insurance if 
possible. We plan to continue testing including plain language 
regarding how to interpret the utilization information in the context 
of quality, rural vs. non-rural locations, and other information 
available on the profile page. We will explore, based on user testing, 
adding procedures for patients with other insurance, such as Medicare 
Advantage (MA) and Medicaid, in the future.
    We have never conducted clinician pilot testing of information 
publicly reported on clinician and group profile pages, since the 
primary users are patients and caregivers, such as family members of 
patients looking for a provider. However, we appreciate the suggestion 
and may consider ways of engaging with clinicians in the future.
    Comment: Two commenters recommended having a clinician review and 
correction process that would allow clinicians to update and correct 
procedural and other information listed on their profiles if needed.
    Response: Since claims are the data source for identifying 
procedures performed, we encourage clinicians to first look into any 
billing errors. However, as with any other questions or concerns 
regarding the information on clinician and group profile pages on the 
Compare tool, interested parties may contact the Quality Payment 
Program at 1-866-288-8292 or by email at [email protected]. Those who are 
hard of hearing can dial 711 to be connected to a Telecommunications 
Relay Service (TRS) Communications Assistant. We also encourage 
clinicians to ensure their information is current in the Provider 
Enrollment, Chain, and Ownership System (PECOS) and to visit the 
Doctors and Clinicians initiative page for more information https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Care-Compare-DAC-Initiative.
    Comment: One commenter suggested using longer than a 12-month 
lookback period, since it may disadvantage clinicians who perform a 
particular procedure infrequently but have years of practice. The 
commenter did not suggest a specific length of time to use instead of 
12-months.
    Response: We understand there are a number of reasons a clinician 
may not have performed a certain procedure within the previous year. 
However, we believe the 12-month lookback period is appropriate for 
three main reasons. First, based on preliminary user testing conducted 
since the time of the proposed rule, early findings show that most 
patients and caregivers believe 12 months is an appropriate timeframe, 
since they want to make decisions based on clinicians' recent 
experience. Second, although the 12-month timeframe would capture some 
procedures a clinician hasn't performed recently (for instance if there 
is a seasonality component related to the number of procedures 
performed), showing procedural experience over a longer timeframe may 
mislead patients. For example, if we displayed coronary artery bypass 
graft (CABG) procedures over the last five years on a clinician profile 
page, it may be less desirable to the patient if most were from three 
years ago, prior to the PHE. Third, the procedure information in the 
PUF reflects a calendar year (that is, a 12-month period), which 
provides operational efficiency in keeping utilization data consistent 
on both the Compare tool and in the PDC.
    With these considerations in mind, and as discussed earlier in this 
section, we will continue conducting comprehensive and robust user 
testing of all utilization data, including the lookback period, to 
ensure appropriate interpretation of the information.
    Comment: Two commenters expressed concern that BETOS is outdated, 
has broad categories and, as a result, may lead to errors that mislead 
patients. Furthermore, one of these commenters stated there is no 
standard

[[Page 70113]]

or systematic way to group procedures by Common Procedural Terminology 
(CPT) or HCPCS codes beyond the BETOS system. One of these commenters 
also expressed concern that Restructured BETOS does not contain all 
procedure codes.
    Response: In response to the concern that BETOS is outdated, we 
note that we proposed using Restructured BETOS, not original BETOS (87 
FR 46330 and 46331). Restructured BETOS data are updated annually first 
released in 2020, the most recent of which are from 2021. As stated on 
the website, available at https://data.cms.gov/provider-summary-by-type-of-service/provider-service-classifications/restructured-betos-classification-system, Restructured BETOS provides ``information that 
allows researchers to group Medicare Part B healthcare service codes 
into clinically meaningful categories and subcategories.'' While we did 
consider the Clinical Classifications Software (CCS) classification 
system, Restructured BETOS categories represented the most appropriate 
level of detail to reflect patient and caregiver needs. We are not 
aware of any other more recent or available sources of this type of 
categorization and did not receive any recommendations of other sources 
in response to our proposal. We also did not receive any source 
suggestions in response to the Utilization Data RFI in the CY 2022 PFS 
Proposed Rule (86 FR 39468 and 39469).
    Regarding the concern about Restructured BETOS not containing all 
procedures, we acknowledge that while the system classifies many 
commonly performed procedures, it does not classify all of them. For 
this reason, we proposed that we would utilize procedure code sources 
used in MIPS, such as the procedure categories already defined for MIPS 
cost or quality measures, for procedures in which no Restructured BETOS 
categories are available (87 FR 46331). For these reasons, we believe 
Restructured BETOS is the most appropriate procedure code 
categorization system available at this time. We will also use plain 
language to describe each category on profile pages in an effort to 
prevent confusion about which procedures are included and excluded.
    Comment: One commenter noted that ``incident to'' billing may limit 
procedure attribution for certain clinicians, such as nurse 
practitioners (NPs) and physician assistants (PAs).
    Response: We agree that if a clinician, such as a NP or PA, bills 
Medicare incident to a physician, then we would attribute a procedure 
billed in this way to the physician listed on the claim. However, we 
believe such attribution is appropriate, since the billing physician 
supervised and is accountable for the procedure billed. Additionally, 
we note that the attribution concern is a non-issue for clinicians who 
only bill Medicare incident to a supervising physician, since these 
clinicians would not have a Compare tool profile page upon which we 
could display utilization data. Only clinicians who bill Medicare 
directly have Compare tool profile pages.
    Moreover, a number of NPs and PAs do bill Medicare directly and 
therefore, have profile pages. As a result, we expect that some of 
these types of clinicians may have procedural data available to show on 
profile pages. Data analyses and consumer testing will evaluate 
procedural information for a range of clinician types, so we will 
include this type of information on profile pages, including for non-
physician clinicians, as appropriate and technically feasible. We also 
note that some utilization data for NPs and PAs is already available in 
the PDC, available at https://data.cms.gov/provider-data/topics/doctors-clinicians.
    We did not receive any comments on our proposal to exclude non-
specific procedure codes, such as evaluation and management (E&M) codes 
and low-complexity services. We also did not receive comments on our 
proposal to utilize procedure code sources used in MIPS cost or quality 
measures for procedures in which no Restructured BETOS categories are 
available.
    After consideration of the public comments and operational updates 
since the time of the proposed rule, we are finalizing these proposals 
with one modification. We proposed publicly reporting utilization data 
on clinician and group profile pages, however we are finalizing 
publicly reporting this information on clinician profile pages only. 
While we recognize that publishing utilization data on both clinician 
and group profile pages may be helpful to consumers, it is not 
operationally feasible at this time to publish utilization data on 
group profile pages with accuracy, given clinician turnover at group 
practices and resulting data implications. We believe that including 
utilization data on clinician profile pages will provide the most 
accurate and current information for consumers.
    We are finalizing our proposals to publicly report Medicare 
procedural utilization data on the Compare tool clinician profile pages 
in a way that is meaningful to patients and caregivers, based on user 
testing. We are finalizing using Restructured BETOS to categorize 
procedures in an understandable way and that, for procedures in which 
no Restructured BETOS categories are available, we will utilize 
procedure code sources used in MIPS, such as the procedure categories 
already defined for MIPS cost or quality measures. We are also 
finalizing publicly reporting procedural utilization data no earlier 
than CY 2023 and using a 12-month lookback period and bi-monthly data 
refresh frequency, as technically feasible. Specifically, prior to each 
data refresh, we will use the preceding 12 months with a 3-month claims 
runout period. For example, we would use claims received between 
January 1, 2023 and March 31, 2024 for dates of service between January 
1, 2023 and December 31, 2023 for a spring 2024 data refresh.
    To address concerns raised related to patient understanding of 
publicly reported procedure categories, we are modifying the criteria 
we will use to prioritize the publication of commonly performed 
procedures. Priority procedures will meet one or more of the following 
criteria: have evidence of a positive relationship between volume and 
quality in the published peer reviewed clinical research; are 
affiliated with existing MIPS measures indicating importance to CMS; 
represent care that a patient might shop for a clinician to provide; 
and/or are an HHS priority. We will not initially prioritize complex, 
rare procedures. Patients and caregivers have displayed understanding 
of plain language procedure category descriptions in recent testing. We 
will continue conducting comprehensive and robust consumer testing to 
better ensure this information is both interpreted correctly and 
meaningful to patients and their caregivers when making healthcare 
decisions.
11. Overview of the APM Incentive
a. Overview
    Under the Quality Payment Program, an eligible clinician who is a 
Qualifying APM Participant (QP) for a performance year earns an APM 
Incentive Payment, which is made in the corresponding payment year for 
payment years 2019 through 2024. As provided in our regulation at Sec.  
414.1450(d), this payment is made based on the clinician's QP status in 
the QP Performance Period that is 2 years prior (for example, the 2022 
APM Incentive Payment will correspond to the 2020 performance year), 
and at Sec.  414.1450(b)(1) the APM Incentive Payment is equal to 5 
percent of the eligible clinician's estimated aggregate payments for 
covered professional services in the base period (the year

[[Page 70114]]

between the QP performance and payment years).
b. APM Incentive Payment Recipient
    In the CY 2017 Quality Payment Program final rule (81 FR 77008, 
77487), we initially finalized a policy that the APM Incentive Payment 
is made to the TIN associated with the APM Entity through which an 
eligible clinician becomes a QP during the QP Performance Period. In 
the CY 2021 PFS final rule (85 FR 84472, 84949 through 84950), we 
revised our approach to identifying the TIN or TINs to which we make 
the APM Incentive Payment at Sec.  414.1450(c) to use a stepwise 
hierarchy to identify an appropriate payee TIN or TINs.
c. Public Notice
    As specified in Sec.  414.1450(c)(8), we notify QPs for whom we are 
unable to identify an appropriate TIN to which to make the APM 
Incentive Payment through a notice published annually in the Federal 
Register. In that notice, we include information on how the QP can 
update their information to enable CMS to make the APM Incentive 
Payment. Under our current policy, the deadline for providing CMS with 
updated information is the later of November 1 of each payment year or 
60 days from the date on which we make the initial round of APM 
Incentive Payments for such year.
    Section 414.1450(d) specifies that we make APM Incentive Payments 
as soon as practicable following calculation and validation of the APM 
Incentive Payment amount, but in no event later than 1 year after the 
incentive payment base period, defined in Sec.  414.1305 as the 
calendar year prior to the year in which CMS disburses the APM 
Incentive Payment. Based on our experience and lessons learned in 
disbursing APM Incentive Payments, we have determined that the November 
1 cutoff date for QPs to provide us with updated information does not 
leave sufficient time for us to process the information provided and 
make payments within the timeframe established in Sec.  414.1450(d). In 
addition, we made operational adjustments beginning in the 2021 payment 
year that allowed us to make the initial round of APM Incentive 
Payments earlier in the calendar year than was possible in the first 2 
payment years. Because we are now able to notify QPs for whom we have 
not identified a TIN to which to make the APM Incentive Payment through 
the Federal Register notice earlier in the payment year, and because we 
have found that we need additional time to process the updated 
information we receive in response to the notice, we proposed to change 
the specified cutoff date from November 1 to September 1 of the payment 
year, or 60 days from the date on which we make the initial round of 
payments, whichever is later. As is the case under the current policy, 
after the specified cutoff date, we will no longer accept updated 
information from QPs or their representatives, and any claims to an APM 
Incentive Payment for such QPs for the payment year will be forfeited.
    As discussed in the proposed rule, we believe this change to the 
cutoff date for response to the public notice would allow us to 
disburse APM Incentive Payments more efficiently and effectively, 
reducing the time within which we make the remaining APM Incentive 
Payments for the payment year. This change would also improve our 
ability to make all APM Incentive Payments within the timeframe 
established under Sec.  414.1450(d), and therefore, affected QPs would 
not have to wait as long to receive their payments.
    We sought comment on the proposal to amend Sec.  414.1450(c)(8) to 
change the cutoff date for response to the public notice from November 
1 to September 1 of each payment year, or 60 days from the date on 
which we make the initial round of APM Incentive Payments, whichever is 
later.
    We did not receive any comments on the proposed revisions to the 
public notice provisions. For reasons stated previously in this section 
and in the proposed rule (87 FR 46332), we are finalizing theses 
revisions to the public notices provisions as proposed.
d. Request for Information on Quality Payment Program Incentives 
Beginning in Performance Year 2023
    Section 1833(z)(1) of the Act provides for APM Incentive Payments 
in each year for eligible clinicians who are QPs with respect to a year 
from 2019 through 2024. Specifically, for each of the specified payment 
years, in addition to the amount of payment that would otherwise be 
made for covered professional services furnished by an eligible 
clinician who is a QP for such year, there is an additional lump sum 
APM Incentive Payment equal to 5 percent of the eligible clinician's 
estimated aggregate payment amounts for such covered professional 
services for the preceding year. Covered professional services is 
defined at Sec.  414.1305, with reference to the statutory definition 
at section 1848(k)(3) of the Act, as services for which payment is made 
under, or based on, the PFS and which are furnished by an eligible 
clinician (physician; practitioner as defined in section 1842(b)(18)(C) 
of the Act; PT, OT, or speech-language pathologist; or qualified 
audiologist as defined under section 1861(ll)(4)(B) of the Act.
    In the CY 2017 Quality Payment Program final rule (81 FR 77445), we 
established a policy that, beginning with the 2017 QP Performance 
Period, the QP Performance Period would be the calendar year that is 2 
calendar years before the payment year for the APM Incentive Payment. 
Thus, we established that the first QP Performance Period would begin 
on January 1, 2017, the first ``base year'' (established at 81 FR 77481 
and 77482) for which we would use claims for professional services to 
calculate the 5 percent APM Incentive Payment amount would be in 2018, 
and the first payment year for the APM Incentive Payment would be in 
2019 as required by the statute. The QP Performance Period, base year, 
and payment year continue in this fashion through payment year 2024, 
which is the final year for which the statute authorizes an APM 
Incentive Payment.
    After performance year 2022, which correlates with payment year 
2024, there is no further statutory authority for a 5 percent APM 
Incentive Payment for eligible clinicians who become QPs for a year. In 
performance year 2023, which correlates with payment year 2025, the 
statute does not provide for any type of incentive for eligible 
clinicians who become QPs. Beginning with performance year 2024, which 
correlates with payment year 2026, section 1848(d)(1) of the Act 
provides for the application of two different PFS conversion factors 
depending on whether the services are furnished by an eligible 
clinician who is a QP for the year. The PFS conversion factor is the 
fixed-dollar constant, updated each year in accordance with statute, 
that is used to convert the RVUs (relative value units) for a service, 
after application of geographic practice cost indices to adjust for 
cost variations, into PFS payment amounts. Section 1848(d)(20) of the 
Act specifies that, beginning in CY 2026 (which is the payment year 
that correlates with the 2024 QP Performance Period under the Quality 
Payment Program), the update to the ``qualifying APM conversion 
factor'' (hereafter, ``QP conversion factor'') that applies for 
eligible clinicians who are QPs with respect to the payment year is 
0.75 percent, and the update to the ``non-qualifying APM conversion 
factor'' (hereafter, ``general conversion factor'') that applies for 
eligible clinicians who are not QPs with respect to the year (as well 
as other types of

[[Page 70115]]

suppliers that are not eligible clinicians under the Quality Payment 
Program) is 0.25 percent. With the differentially higher 0.75 percent 
update to the QP conversion factor compounding each year beginning with 
CY 2026, compared to the 0.25 percent update to the general conversion 
factor in each year, the two PFS conversion factors will continue to 
diverge with each year, as illustrated in Figure 5.
    Beginning in payment year 2025, the statutory incentive structure 
under the Quality Payment Program for eligible clinicians who 
participate in Advanced APMs stands in contrast to the incentives for 
MIPS eligible clinicians. Specifically, as described in 87 FR 46333 of 
the proposed rule, we anticipate that the maximum potential positive 
payment adjustment that could be applied under MIPS for payment years 
beginning in 2025 will be at or above 6.9 percent, and the 
corresponding maximum negative payment adjustment will be 9 percent. 
While only some MIPS eligible clinicians could earn the maximum 
positive payment adjustment, there is nonetheless a significant range 
of potential positive payment adjustments under MIPS that would exceed 
the differentially higher QP conversion factor beginning in payment 
year 2026 and for many years to come. As illustrated in Figure 5, the 
QP conversion factor, with the compounded differentially higher 0.75 
percent update in each year, is not expected to equate to the 
anticipated maximum available positive payment adjustment under MIPS 
until after CY 2035.
BILLING CODE 4150-28-P
[GRAPHIC] [TIFF OMITTED] TR18NO22.139

BILLING CODE 4150-28-C
    We note again that the statute does not provide for any financial 
incentives for eligible clinicians who achieve QP status in QP 
Performance Period 2023/payment year 2025. Because section 
1848(q)(1)(C)(ii)(I) of the Act explicitly excludes eligible clinicians 
who are QPs for a year from being considered as MIPS eligible 
clinicians, eligible clinicians who are QPs for a year are not subject 
to MIPS for that year, and thus, cannot receive MIPS payment 
adjustments. As such, eligible clinicians who are determined to be QPs 
in performance year 2023 will be paid under the PFS in payment year 
2025 at the same rate as any other eligible clinicians who are not 
subject to MIPS and suppliers that are not subject to the Quality 
Payment Program at all.
    We recognize that the lack of any available financial incentive 
under the Quality Payment Program for QPs for the 2025 payment year 
could affect the willingness of some eligible clinicians to participate 
in Advanced APMs in performance year 2023. Moreover, we recognize that 
the substantial difference between the QP conversion factor that will 
apply for QPs beginning in CY 2026 and maximum positive payment 
adjustment available under MIPS might affect the willingness of 
eligible clinicians to participate in Advanced APMs for several years 
to come. We recognize that there are other factors that affect an 
eligible clinician's decision whether to participate in an Advanced 
APM, including the avoidance of MIPS reporting requirements and the 
availability of shared savings and other incentives within the various 
Advanced APMs.
    However, as explained in the proposed rule (87 FR 46333), we are 
concerned that the statutory incentive structure under the Quality 
Payment Program beginning in the 2023 performance year and 
corresponding 2025 payment year could potentially lead to a drop in 
Advanced APM

[[Page 70116]]

participation, and a corresponding increase in MIPS participation as 
eligible clinicians may believe their payments would be higher if they 
receive the MIPS payment adjustment. While it has been CMS's goal to 
increase MIPS participation, we continue to believe MIPS should be a 
first step on a glide path towards Advanced APM participation. 
Furthermore, we are concerned that a significant reduction in Advanced 
APM participation stemming from changes in financial incentives under 
the Quality Payment Program could potentially bias the CMS Innovation 
Center's model tests of voluntary Advanced APMs by leading clinicians 
who have performed well in Advanced APMs on both cost and quality 
metrics, to leave participation in the Advanced APM in which they 
currently participate, or decide not to apply for and participate in 
Advanced APMs, thereby interfering with the evaluation of current model 
tests and interfering with potential participation in future models.
    We explained in the proposed rule that we also are concerned that a 
shift of eligible clinicians into MIPS and out of Advanced APMs would 
be likely to affect the availability and distribution of funds in the 
budget-neutral MIPS payment pool. The average MIPS final score for MIPS 
eligible clinicians who were participants in MIPS APMs in 2020 was 
96.24 points while the average MIPS final score for all other MIPS 
eligible clinicians was 84.42 points. Given these statistics, we can 
reasonably anticipate that eligible clinicians who would shift away 
from participation in Advanced APMs and into MIPS would increase the 
relative number of high-performing MIPS eligible clinicians likely to 
earn a positive MIPS payment adjustment. As a result of more MIPS 
eligible clinicians earning a positive MIPS payment adjustment, we 
would expect to see a corresponding reduction in the average and 
maximum positive MIPS payment adjustment due to the statutory 
requirement under section 1848(q)(6)(F)(ii) of the Act to maintain 
budget neutrality in MIPS.
    We have considered a range of potential administrative actions 
within our authority that might address these concerns. For example, we 
explored options for modifying the Advanced APM criteria or the 
requirements for current and future Advanced APMs to permit some degree 
of flexibility for eligible clinicians to choose whether to be 
considered under either the MIPS or the Advanced APM track of the 
Quality Payment Program. We have found it difficult to conceive of 
potential administrative options that would increase flexibility for 
eligible clinicians without drastically modifying characteristics of 
Advanced APMs, including CEHRT use, quality-based payment, and 
financial risk. After further consideration, we have concluded that it 
would be more prudent to forego administrative action for the 2023 
performance period and 2025 payment year, and instead sought public 
input that we will consider in identifying potential options for the 
2024 performance period and 2026 payment year of the Quality Payment 
Program (and potentially beyond). Specifically, we sought public 
comment on whether administrative action is needed beginning in the 
2024 performance period and 2026 payment year, and if so, what would be 
the best approach to address the multi-faceted issues that arise with 
the end of statutory authority for an APM Incentive Payment for QPs and 
the transition to the differential QP and general conversion factors 
beginning in payment year 2026, which correlates to the 2024 
performance year.
    Taking into account that the current statute: (1) requires us to 
make QP determinations for eligible clinicians participating in 
Advanced APMs; (2) defines Advanced APMs as those APMs that require 
CEHRT use, sets payment based on MIPS-comparable quality measures, and 
assumption of more than nominal financial risk, as described at Sec.  
414.1415; and (3) specifically excludes QPs from being MIPS eligible 
clinicians, we are seeking input on what, if any, administrative 
actions eligible clinicians and APM Entities would potentially find 
helpful to better balance the payment incentives within the Quality 
Payment Program going forward, while continuing to encourage eligible 
clinicians and APM Entities to participate in APMs that align with the 
broader goals of CMS.
    We noted that we are particularly interested in public comments in 
response to the questions asked in the proposed rule, which will help 
us to gauge options going forward. We also noted that we considered 
holding a public listening session in the near future to gather 
additional feedback on these questions and ideas.
    We thank commenters for providing feedback on this topic through 
this RFI and for participation in our public listening session. We will 
continue monitoring this issue and we will continue to engage with the 
public on this topic.
e. Advanced APMs
(1) Advanced APM Criteria
(a) General Overview
    In the CY 2017 Quality Payment Program final rule (81 FR 77408), we 
finalized the criteria that define an Advanced APM based on the 
requirements set forth in sections 1833(z)(3)(C) and (D) of the Act. An 
Advanced APM is an APM that:
     Requires its participants to use certified EHR technology 
(CEHRT) (81 FR 77409 through 77414);
     Provides for payment for covered professional services 
based on quality measures comparable to measures under the quality 
performance category under MIPS (81 FR 77414 through 77418); and
     Either requires its participating APM Entities to bear 
financial risk for monetary losses that are in excess of a nominal 
amount, or is a Medical Home Model expanded under section 1115A(c) of 
the Act (81 FR 77418 through 77431). We refer to this criterion as the 
financial risk criterion.
    In this section, we address policies regarding several aspects of 
the Advanced APM criteria. We provide a clarification around payment 
based on quality measures and a proposal to modify the period of 
applicability for the generally applicable nominal amount standard.
(b) Payment Based on Quality Measures
    In the CY 2017 Quality Payment Program final rule, we finalized the 
requirement for Advanced APMs that payment be based on quality measures 
at Sec.  414.1415(b). In the CY 2019 PFS final rule (83 FR 59915 
through 59938), we revised Sec.  414.1415(b)(2) to clarify, effective 
January 1, 2020, that at least one of the quality measures upon which 
an Advanced APM bases payment must either be finalized on the MIPS 
final list of measures, as described in Sec.  414.1330; endorsed by a 
consensus-based entity; or determined by CMS to be evidenced-based, 
reliable, and valid. We also revised the requirement at Sec.  
414.1415(b)(3) that the quality measures upon which an Advanced APM 
bases payment must include at least one outcome measure (unless there 
are no available or applicable outcome measures included in the MIPS 
final quality measures list for the Advanced APM's first QP Performance 
Period) to provide, effective January 1, 2020, that at least one such 
outcome measure must either be finalized on the MIPS final list of 
measures as described in Sec.  414.1330; endorsed by a consensus-based 
entity; or determined by CMS to be evidence-based, reliable, and valid.

[[Page 70117]]

    It has come to our attention that it may not be clear whether the 
two criteria at Sec.  414.1415(b) require different quality measures. 
That is, interested parties have questioned whether two separate 
measures are required with one to meet each criterion, or whether it is 
sufficient that a single quality measure meets both of the criteria. 
Therefore, we proposed to revise the regulation at Sec.  414.1415(b)(3) 
and proposed to add paragraph (b)(4) to clarify that the requirement 
for Advanced APMs that payment must be based on quality measures as 
specified at Sec.  414.1415(b)(1) can be met through the use of a 
single quality measure that meets the criteria under both Sec.  
414.1415(b)(2) and (b)(3). Likewise, consistent with our practice of 
aligning Advanced APM and Other Payer Advanced APM policies to the 
extent feasible and appropriate, we also proposed to revise Sec.  
414.1420(c)(3)(ii) and to add paragraph (c)(4) to clarify that the 
requirement for Other Payer Advanced APMs that payment must be based on 
quality measures as specified at Sec.  414.1420(c)(1) can be met 
through the use of a single quality measure that meets the criteria at 
Sec.  414.1420(c)(2) and (c)(3). We sought public comment on the 
proposals. We did not receive any comments on the proposed revisions to 
payment based on quality measures. For the reasons stated previously in 
this section and in the proposed rule (87 FR 46335), we are finalizing 
these revisions to the payment based on quality measures provisions as 
proposed.
(c) Generally Applicable Nominal Amount Standard
    In the CY 2017 Quality Payment Program final rule, we finalized the 
amount of the generally applicable revenue-based nominal amount 
standard at 8 percent for the first two QP Performance Periods only, 
and we sought comment on what the revenue-based nominal amount standard 
should be for the third and subsequent QP Performance Periods. 
Specifically, we sought comment on setting the revenue-based standard: 
(1) for 2019 and later at up to 15 percent of revenue; or (2) at 10 
percent so long as risk is equal to at least 1.5 percent of expected 
expenditures for which an APM Entity is responsible under an APM (81 FR 
77427).
    In the CY 2018 Quality Payment Program final rule, we finalized at 
Sec.  414.1415(c)(3)(i)(A) our proposal to maintain the generally 
applicable revenue-based nominal amount standard at 8 percent for the 
2019 and 2020 QP Performance Periods. We also specified that the 
standard is based on the average estimated total Medicare Parts A and B 
revenue of all providers and suppliers in participating APM Entities. 
We stated that we would address the nominal amount standard for QP 
Performance Periods after 2020 in future rulemaking (82 FR 53838).
    In the CY 2019 PFS final rule (83 FR 59922 through 59923), we 
revised Sec.  414.1415(c)(3)(i)(A) to maintain the generally applicable 
revenue-based nominal amount standard at 8 percent of the average 
estimated total Medicare Parts A and B revenue of all providers and 
suppliers in participating APM Entities for QP Performance Periods 2021 
through 2024.
    At the same time, we established the generally applicable revenue-
based nominal amount standard for Other Payer Advanced APMs at Sec.  
414.1420(d)(3)(i) to reflect the same 8 percent standard for QP 
Performance Periods for years 2021 through 2024, but based on the total 
combined revenues from the payer to providers and other entities under 
the payment arrangement.
    We proposed to amend Sec.  414.1415(c)(3)(i)(A) to permanently 
establish the generally applicable revenue-based nominal amount 
standard at 8 percent of the average estimated total Medicare Parts A 
and B revenue of all providers and suppliers in participating APM 
Entities for the QP Performance Period. We proposed this change because 
the nominal amount standard of 8 percent has worked well and we noted 
that we are making the change permanent to provide continuity in policy 
into the future.
    We also proposed to amend Sec.  414.1420(d)(3)(i) to permanently 
establish the generally applicable revenue-based nominal amount 
standard at 8 percent of the total combined revenues from the payer to 
providers and other entities under the payment arrangement, consistent 
with our longstanding practice of aligning Advanced APM policies with 
Other Payer Advanced APM policies to the extent feasible and 
appropriate. We proposed to amend these regulations to remove the 
specified end date of the 2024 QP Performance Period, such that the 8 
percent standard would apply for all future performance years beginning 
with the 2023 QP Performance Period. The proposal would not change the 
current generally applicable revenue-based nominal amount standard. 
While we will continue to evaluate the generally applicable revenue-
based nominal amount standard going forward and may determine at some 
point that it would be appropriate to propose to change the generally 
applicable revenue-based nominal amount standard, we noted that we 
believe that the current standard of 8 percent continues to be 
appropriate at this time for both the Advanced APM and Other Payer 
Advanced APM financial risk criteria.
    We sought public comment on the proposals to amend Sec.  
414.1415(c)(3)(i)(A) and 414.1420(d)(3)(i) to make permanent the 8 
percent level of the generally applicable revenue-based nominal amount 
standard such that it would apply to all future QP Performance Periods 
beginning January 1, 2023.
    The following is a summary of the public comments received on the 
proposed revisions to Generally applicable nominal amount standard and 
our responses:
    Comment: Some commenters suggested that rather than freeze the 
generally applicable revenue-based nominal amount standard at 8 
percent, we should reduce that risk threshold to a figure closer to the 
financial risk standard used for Medical Home Models. Some commenters 
indicated that such a change would be likely to induce more 
participation in these models.
    Response: We understand that some eligible clinicians and practices 
may be hesitant to join an Advanced APMs in part because of the 
financial risk involved. However, section 1833(z)(2)(iii)(II)(cc) of 
the Act generally requires that, to be an Advanced APM, to the APM 
require participants to take on more than nominal financial risk. 
Reducing that financial risk standard to a point where participants are 
no longer concerned about the financial implications of poor 
performance under the model is, by definition, nominal. We believe that 
the 8 percent standard that was set in the initial years of the program 
should not be increased at present because there are still some 
geographic regions and specialties that have not yet had the 
opportunity to join an Advanced APM under the current, relatively low, 
risk standard. and we continue to believe that maintaining the current 
standard is appropriate.
    Comment: Several commenters expressed support for continuing the 8 
percent generally applicable revenue-based nominal amount standard for 
all future years.
    Response: We thank commenters for their support.
    After considering public comments, we are finalizing the policy as 
proposed.
(d) Medical Home Model 50 Eligible Clinician Limit
    In the 2017 Quality Payment Program final rule (81 FR 77428), we 
finalized a policy for the Medical Home Model

[[Page 70118]]

nominal financial risk criterion to set a limit of 50 on the number of 
eligible clinicians in an organization that participates in an Advanced 
APM through a Medical Home Model.
    At that time, we described the way in which we would identify APM 
Entities that meet this standard as looking for ``APM Entities that 
participate in Medical Home Models and that have 50 or fewer eligible 
clinicians in the organization through which the entity is owned and 
operated.'' We defined organizational size as measured based on the 
size of the ``parent organization'' rather than the size of the APM 
Entity itself. We recognized that there would be ``additional but [. . 
.] achievable'' burden to correctly identify parent organizations and 
their size (81 FR 77428).
    In the 2017 Quality Payment Program final rule, we responded to the 
many comments we had received in opposition to the proposal (81 FR 
77429), where commenters expressed opinions that identifying eligible 
entities in this way was arbitrary, or that it would unfairly 
discriminate between similarly situated organizations. We finalized the 
proposal despite these concerns because we believed we could identify 
organizations that were or were not reasonably capable of taking on the 
generally applicable level of financial risk by identifying the 
ultimate size of the parent organization, and in so doing, identify 
organizations that should be excluded from the Medical Home Model 
financial risk standard.
    After several years of implementation and upon closer analysis of 
our results under the Medical Home Model standard, we have gained 
experience about the composition of parent organizations and that there 
is a wide variation in how practices are organized and proposed a 
change in our policy. These changes are based on a re-evaluation of two 
assumptions we used in finalizing the 50 eligible clinician limit, 
codified at Sec.  414.1415(c)(7), have not borne out in practice.
    Our belief that we could easily gather accurate data about the size 
and composition of ``parent organizations'' through disclosures from 
the APM Entities affiliated with them was misplaced. To accurately 
understand the numerous and varied ways in which a parent organization 
(itself a complex concept) may enter into contractual relationships 
with other subsidiary entities that have Taxpayer Identification 
Numbers (TINs), which otherwise might have no apparent relationship 
with one another, would require insight and access to private contracts 
do not have. The administration of QPP is not the same as the 
administration of an individual APM and we are not party to the 
contracts between those private entities. Based on the information 
about these relationships, we are unable to confidently say that, under 
the parent organization approach we had finalized, all similarly 
situated organizations are being treated in the same manner. On the 
other hand, we believe we have a good understanding of APM Entities and 
how they will manage financial risk from our time implementing the QPP 
and various APMs.
    Based on this insight and experience implementing the 50 eligible 
clinician limit for the Medical Home Model financial risk standard, we 
proposed to amend our methodology for identifying which eligible 
clinicians are to be included under the 50 eligible clinician limit.
    Specifically, we proposed to amend Sec.  414.1415(c)(7) to apply 
the 50 eligible clinician limit directly to the APM Entity 
participating in the Medical Home Model, and to no longer look to the 
parent organization for the APM Entity. We would identify the eligible 
clinicians in the APM Entity by using the TIN/NPIs on the participation 
list of the APM Entity on each of the three QP determination dates 
(March 31, June 30, and August 31). As discussed in the proposed rule, 
the proposal, if finalized, would become effective beginning in 
Performance Year 2023. We noted that we believe the change would 
address the challenges we have faced in implementing this policy, as 
discussed in the proposed rule.
    We also proposed to amend Sec.  414.1420(d)(8) to apply the 50 
eligible clinician limit directly to the APM Entity participating in 
Aligned Other Payer Medical Home Model and Medicaid Medical Home Model, 
and to no longer look to the parent organization for the APM Entity, 
consistent with our longstanding practice of aligning Advanced APM 
policies with Other Payer Advanced APM policies to the extent feasible 
and appropriate.
    In order to continue to achieve our aim of reducing the possibility 
for an APM Entity to potentially manipulate their numbers of eligible 
clinicians to inappropriately take advantage of participation in an 
Advanced APM that is a Medical Home Model, we proposed that the Medical 
Home Model financial risk and nominal amount standards under Sec.  
414.1415(c)(2) and (c)(4) would apply only if the APM Entity remains 
below the 50 eligible clinician limit on all three QP determination 
dates during the QP Performance Period. If the number of eligible 
clinicians in the APM Entity is above 50 on any of the three QP 
determination dates, the Medical Home Model financial risk and nominal 
amount standards will not apply for that APM Entity for the QP 
Performance Period. Should an APM Entity exceed the 50 eligible 
clinician limit on any of the three snapshot dates, no eligible 
clinicians would achieve or retain QP status through that APM Entity 
for the QP Performance Period and corresponding payment year, 
regardless of the outcome of QP determinations made at another QP 
determination date. We proposed to amend the regulation text to says 
that an APM Entity's Participation List will be used to determine if 
the 50 eligible clinician limit requirement has been met three times a 
year, for each of the three QP determination dates (March 31, June 30, 
and August 31).
    In addition, we proposed to amend Sec.  414.1440(e)(2) to require 
APM Entities or eligible clinician requesting a QP determination under 
the All-Payer Combination Option through participation in an Aligned 
Other Payer Medical Home Model or Medicaid Medical Home Model to supply 
information and certify that the 50 eligible clinician limit is being 
met for any Aligned Other Payer Medical Home Model or Medicaid Medical 
Home Model in which they participate and for the applicable time period 
in which the APM Entity or eligible clinician QP determination is made 
under the All-Payer Combination Option, as specified in the proposed 
revised Sec.  414.1420(d)(8). Note, a practice exceeding the 50 
eligible clinician limit under the Medicare Option would not preclude 
an eligible clinician or APM Entity from seeking a QP determination 
based on an Aligned Other Payer Medical Home Model or Medicaid Medical 
Home Model.
    We explained that we believe the modification to the methodology 
used to apply the 50 eligible clinician limit would better identify the 
eligible clinicians and APM Entities that should be included in QP 
determinations for participation in Advanced APMs under the Medical 
Home Model financial risk standard, and therefore continue to encourage 
movement into value based payment arrangements. The methodology would 
not attempt the complex task of gathering information on parent 
organizations, and we believe it would treat similarly situated 
entities similarly.
    We sought public comment on these proposals.
    The following is a summary of the public comments received on the

[[Page 70119]]

proposed revisions to the Medical Home Model 50 Eligible Clinician 
Limit and our responses:
    Comment: Several commenters suggested that we should eliminate the 
50 eligible clinician Limit entirely, rather than simply modifying the 
methodology used to identify clinicians to be counted.
    Response: While we understand that the 50clinician limit may have 
the effect of limiting QP status for participants in larger practices 
under the Medical Home Model standard, we believe that this limitation 
is necessary to ensure that the benefits of the Medical Home Model 
financial risk standard are being made available only to those APM 
Entities and groups for whom a higher degree of risk is a less viable 
option. Specifically, we believe that a group practice that contains 50 
or more eligible clinicians is of a sufficient size to bear the more 
significant financial risk under the generally applicable financial 
risk standard, and so should not be receiving the benefits of QP status 
for participation in an Advanced APM through which they took on a lower 
amount of risk as permitted for Medical Home Models.
    Comment: Some commenters supported our proposed methodology to 
better identify the participants within the APM Entity who are taking 
on the financial risk under the Medical Home Model financial risk 
standard and using the size of that practice to determine whether the 
50 Eligible Clinician Limit has been exceeded.
    Response: We thank commenters for their support of this proposal.
    After considering public comments, we are finalizing this policy as 
proposed.
(2) Qualifying APM Participant Determination
(a) General Overview
    In the CY 2017 Quality Payment Program final rule (81 FR 77439 
through 77448), we finalized our policy at Sec.  414.1425(b) for 
Qualifying APM Participant (QP) determinations. For the purposes of 
making QP determinations, an eligible clinician must be present on the 
Participation List of an APM Entity in an Advanced APM on one of the 
``snapshot dates'' (March 31, June 30, or August 31) for the QP 
Performance Period. An eligible clinician included on a Participation 
List on any one of such dates is included in the APM Entity group even 
if that eligible clinician is not included on that Participation List 
at one of the prior- or later-listed dates. We perform QP 
determinations for the eligible clinicians in an APM entity group three 
times during the QP Performance Period using claims data for services 
furnished from January 1 through each of the respective QP snapshot 
dates of that year. An eligible clinician can be determined to be a QP 
only if they appear on the Participation List on a snapshot date that 
we use to identify the APM Entity group and to calculate Threshold 
Scores and make QP determinations at the APM Entity level based on 
participation in the Advanced APM. For eligible clinicians who appear 
on a Participation List with more than one APM Entity, but do not to 
achieve QP status based on any APM Entity group-level determinations, 
we make most QP determinations at the individual level as described in 
Sec.  414.1425(c)(4). Likewise, for eligible clinicians who appear on 
an Affiliated Practitioner list for an Advanced APM we make QP 
determinations at the individual level three times during the QP 
Performance Period using claims data for services furnished from 
January 1 through each of the respective QP determination snapshot 
dates as described in Sec.  414.1425(b)(2).
(b) Request for Information: Potential Transition to Individual QP 
Determinations Only
    In the CY 2017 Quality Payment Program final rule (81 FR 77439 
through 77440), we discussed our reasons for establishing a policy to 
calculate Threshold Scores and make most QP determinations at the APM 
Entity group level, rather than at the individual eligible clinician 
level. At that time, we believed that this policy promoted 
administrative simplicity and collaboration among group members instead 
of imposing barriers or burden. We recognized that while many 
beneficiaries are attributed to an APM Entity based on the services 
rendered by one eligible clinician, many of the eligible clinicians 
participating in the APM Entity play a role in the actual diagnosis, 
treatment, and management of the many beneficiaries in the APM Entity's 
patient population. Each of these individual eligible clinicians can 
potentially be viewed as being instrumental to providing quality care 
to the beneficiary in alignment with the objectives of the APM, 
regardless of whether the specific services they furnish are used for 
purposes of APM-specific attribution methods. We noted that an APM 
Entity faces the risks and rewards of participation in an Advanced APM 
as a single unit and generally is responsible for performance metrics 
that are aggregated to the level of that APM Entity. The policy is 
based on the premise that entire organizations commit to participating 
in an Advanced APM and focusing on the attendant cost and quality goals 
as a whole.
    Under the current policy at Sec.  414.1425(b), for most eligible 
clinicians participating in Advanced APMs, QP determinations are made 
at the APM Entity level. As described in Sec.  414.1435, the Threshold 
Score for an APM Entity or eligible clinician is calculated in one of 
two ways, either the payment amount method or patient count method. The 
threshold score using the payment count method is calculated by 
dividing: (1) the aggregate of payments for Medicare Part B covered 
professional services furnished by the APM Entity group to attributed 
beneficiaries during the QP Performance Period; by (2) aggregate of 
payments for Medicare Part B covered professional services furnished by 
the APM Entity group to all attribution-eligible beneficiaries during 
the QP Performance Period. The Threshold Score using the patient count 
method is calculated by dividing: (1) the number of attributed 
beneficiaries to whom the APM Entity group furnishes Medicare Part B 
covered professional services; by (2) the number of attribution-
eligible beneficiaries to whom the APM Entity group or eligible 
clinician furnish Medicare Part B covered professional services. 
Attributed beneficiaries are generally determined from each Advanced 
APM Entity's attributed beneficiary lists generated by each Advanced 
APM's specific attribution methodology.
    The current policy for QP determinations under the All-Payer 
Combination Option at Sec.  414.1440(d) establishes a process that is 
similar to the QP determination participating in Advanced APMs, but 
accounts for participation in Other Payer Advanced APMs. Under the All-
Payer Combination Option, an eligible clinician may request the QP 
determination be made at the individual or APM Entity level, and an APM 
Entity may request that the QP determination made at the individual, 
TIN or APM Entity level. Further, Sec.  414.1440(d) specifies that CMS 
uses data at the same level for the Medicare and other payer portions 
of Threshold Score calculations under the All-Payer Combination Option. 
When QP determinations are made at the eligible clinician or, at the 
TIN level when all clinicians who have reassigned billing rights to the 
TIN are included in a single APM Entity; and if the Medicare Threshold 
Score for the APM Entity group is higher than when calculated for the 
eligible clinician or TIN, CMS makes QP determinations

[[Page 70120]]

using a weighted Medicare Threshold Score that is factored into an All-
Payer Combination Option Threshold Score.
    We requested public comment on the idea of transitioning away from 
an APM Entity level QP determination and instead calculating Threshold 
Scores and making QP determinations at the individual eligible 
clinician level for all eligible clinicians in Advanced APMs and Other 
Payer Advanced APMs. We explained that we believe making QP 
determinations at the individual eligible clinician level may have 
several benefits over the current policy. First, as explained in the 
proposed rule, we believe that making all QP determinations at the 
individual eligible clinician level would substantially reduce the 
practice of APM Entities removing specialists from their participation 
lists. Second, the change to make all QP determinations at the 
individual eligible clinician level would increase the number of 
eligible clinicians who are determined to be QPs for whom their 
individual participation would qualify them, but whose APM Entities did 
not qualify because other eligible clinicians in the APM Entity reduced 
its Threshold Score. Third, if we were to begin making all QP 
determinations at the individual eligible clinician level, that 
approach would eliminate the number of eligible clinicians who become 
QPs for a year, but whose individual participation in their Advanced 
APM(s) is well below the Threshold Score. Under our current policy to 
make most QP determinations at the APM Entity level, many eligible 
clinicians who would not meet the Threshold Score individually but 
whose APM Entities met the Threshold Score are able to gain QP status. 
For at least some of those eligible clinicians, a significant portion 
of the covered professional services they furnish may occur outside of 
the Advanced APM. When such eligible clinicians receive QP status, they 
may receive a financial windfall because their APM Incentive Payments 
are calculated based on all of the covered professional services they 
furnish during the base year, not just the services they furnish as 
part of the APM Entity in the Advanced APM.
    We noted that this potential for receiving a financial windfall is 
possible through the 2022 QP Performance Period (which correlates to 
payment year 2024), but this will change beginning in the 2023 QP 
Performance Period (which correlates to payment year 2025) because the 
current statute does not provide for any APM Incentive Payment for that 
year. As such, there will be no further potential windfall in the form 
of the APM Incentive Payment.
    However, there could be a similar windfall beginning in CY 2026 
(which corresponds to the 2024 QP Performance Period) because eligible 
clinicians who achieve QP status beginning in that year will be paid 
under the PFS using the differentially higher QP conversion factor for 
the year, which will apply to all the covered professional services the 
eligible clinician furnishes in the year. In addition, beginning in 
payment year 2025 there are competing incentives under the QPP between 
the MIPS and APM track which are discussed in detail 87 FR 46332 of the 
proposed rule.
    Because the APM Entity Threshold Scores (using the payment amount 
and patient count methods) that are used to make APM Entity-level QP 
determinations are based on an aggregate calculation across all 
eligible clinicians participating in the APM Entity group, eligible 
clinicians in the APM Entity group who furnish proportionally fewer 
services that lead to attribution of patients or payment amounts to the 
APM Entity are likely to lower the APM Entity's Threshold Score. For 
example, primary care physicians may furnish proportionally more 
evaluation and management (office visit) services which are frequently 
the basis for attribution of patients and payment amounts to the 
numerator of the APM Entity's Threshold Score; whereas specialist 
physicians may furnish proportionally more diagnostic tests and 
surgical procedures which are not usually part of the attribution basis 
to the APM Entity.
    We noted that we have received reports from Advanced APM 
participants that some APM Entities have taken steps to reduce the 
number of such eligible clinicians on their Participation Lists. 
Specifically, to achieve higher QP Threshold Scores, some APM Entities 
have taken steps to exclude from their APM Entity groups (and 
consequently from their Participation Lists) eligible clinicians who 
furnish proportionally fewer services that lead to the attribution of 
patients or payment amounts for purposes of calculating threshold 
scores for APM Entity-level QP determinations. There are important 
reasons that it is not beneficial for an APM Entity to exclude 
specialists and other eligible clinicians who furnish relatively fewer 
services that lead to attribution. In both the Medicare Shared Savings 
Program and in models tested by the Innovation Center that the meet the 
criteria to be Advanced APMs, CMS seeks to promote patient-centered 
care that is integrated across the continuum of care. The inclusion of 
specialists in APM Entities is essential for achieving this goal. For 
example, a comprehensive network that includes a range of specialists 
is central to the success of an ACO in the Medicare Shared Savings 
Program for its intended purpose in patient-centered care that 
coordinates items and services for Medicare FFS beneficiaries, a key 
aim of value-based care and practice transformation.\546\ The 
methodology used in beneficiary assignment for the Shared Savings 
Program is deliberately constructed such that assignment is largely 
based on primary care, rather than specialty care, which results in 
specialists contributing proportionately less in terms of payment 
amounts and patient counts to the ACO's QP numerator.
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    \546\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/about.
---------------------------------------------------------------------------

    Similarly, it was not our intent to create a policy wherein 
eligible clinicians who are seeing most or all of their Medicare 
patients through an Advanced APM may remain unable to achieve QP status 
because the APM Entity with which they participate in the Advanced APM 
includes eligible clinicians who furnish very few services through the 
Advanced APM. It has always been one of the goals of the APM track of 
the Quality Payment Program for the availability of QP status to 
incentivize eligible clinicians to join Advanced APMs. But, as 
discussed in the proposed rule, under our current policy to make most 
QP determinations at the APM Entity level, there is the potential that 
eligible clinicians who are fully engaged in an Advanced APM may still 
be unable to earn QP status.
    We carefully considered our policy to make most QP determinations 
at the APM Entity level, and believed it was the best approach at the 
time. However, we did not intend for the policy to create potentially 
conflicting incentives for APM Entities between the goal for their 
eligible clinicians to achieve QP status under the Quality Payment 
Program, and their full participation in an Advanced APM with a group 
of eligible clinicians that can deliver a full spectrum of care.
    Finally, we noted concern that, under our current policy to make 
most QP determinations a the APM Entity level, some eligible clinicians 
who furnish relatively fewer of their services through an APM Entity 
may receive a disproportionate financial benefit because they achieve 
QP status as a result of the care furnished by other eligible 
clinicians in the APM Entity, while their APM Incentive Payment is 
calculated based on all of the covered professional services they 
furnish

[[Page 70121]]

during the base year--both as part of the APM Entity and elsewhere. Our 
policy to make most QP determinations at the APM Entity level allows 
these windfall financial rewards because we calculate the Threshold 
Scores using the aggregate of payment amounts or patient counts for 
attributed patients based on Medicare Part B covered professional 
services furnished by all the eligible clinicians in the APM Entity, 
whether they furnished a few or many of such services. Once an eligible 
clinician receives QP status for a year, the APM Incentive Payment is 
calculated based on paid claims for that individual QP's covered 
professional services across all their TINs in the base year. This can 
allow an eligible clinician with minimal Advanced APM participation to 
receive a large APM Incentive Payment, which we do not believe aligns 
with the intent of the Quality Payment Program. Though, as we note 
above, QPs for payment year 2025 (QP Performance Period 2023) will not, 
by statute, receive a financial incentive for achieving such status, 
beginning in payment 2026 (QP Performance Period 2024) financial 
incentives once again will apply in the form of the enhanced QP 
conversion factor, which in turn compounds each year after that, and 
therefore, increases over time.
    We requested input from interested parties on the possibility of 
discontinuing our policy to calculate Threshold Scores and make most QP 
determinations at the APM Entity level, and instead to make all QP 
determinations at the individual eligible clinician level. We noted 
that we believe this would avoid the potential incentive for APM 
Entities to limit or exclude specialists and other eligible clinicians 
who furnish services that are an important part of the health care 
spectrum, but less likely to be attributed to the APM Entity for 
purposes of calculating Threshold Scores for QP determinations. While 
the exclusion from an APM Entity of such specialists and other eligible 
clinicians can serve to improve the Threshold Scores for an APM Entity, 
it would not necessarily serve the central goals of many of our 
Advanced APMs, such as the statutory charge to Medicare Shared Savings 
Program ACOs to encourage groups of doctors, hospitals, and other 
health care providers to work together to manage and coordinate care 
for Medicare fee-for-service beneficiaries through an ACO.
    In light of this potential conflict between Advanced APM goals and 
the existing QP Threshold Score calculation methodology, we considered 
whether it would be better to make all QP determinations at the 
individual eligible clinician level using the unique National Provider 
Identifier (NPI) associated with an eligible clinician participating in 
an Advanced APM. Under that approach, we would calculate a Threshold 
Score for each eligible clinician, identified by their NPI, based on 
all the covered professional services furnished by that individual 
eligible clinician, including services billed across all of the TINs to 
which the individual has reassigned their Medicare billing rights. This 
Threshold Score calculated at the individual eligible clinician level 
would provide a more specific measurement of each such eligible 
clinician's level of participation in one or more Advanced APMs. This 
methodology to calculate Threshold Scores and make QP determinations at 
the individual eligible clinician level would ensure that only those 
eligible clinicians (NPIs) who individually meet or exceed the 
applicable Threshold Score would receive QP status. At the same time, 
it would allow APM Entities to make decisions about which eligible 
clinicians to include on their Participation Lists based on the scope 
of eligible clinicians needed to furnish services to their patient 
populations under the Advanced APM, and to include those eligible 
clinicians who furnish proportionally fewer services that lead to 
patient attribution to the APM Entity under the current QP 
determination policy, without potentially affecting the QP status of 
other eligible clinicians in the APM Entity group. Because APM Entities 
no longer would have a need to consider how each eligible clinician may 
affect their aggregate Threshold Score for the APM Entity group, they 
would be able to include any eligible clinician who they believe can 
help them meet the patient-centered care goals of the Advanced APM(s) 
they are participating in. Therefore, we considered whether a change to 
make QP determinations at the individual eligible clinician level would 
have a positive health equity impact by ensuring that incentives under 
the Quality Payment Program would hold ACOs ``accountable for the 
quality, cost, and experience of care of an assigned Medicare fee-for-
service (FFS) beneficiary population.'' \547\
---------------------------------------------------------------------------

    \547\ Ibid.
---------------------------------------------------------------------------

    Additionally, an analysis conducted by CMS found that many eligible 
clinicians do in fact frequently provide covered professional services 
to beneficiaries attributed to other APM Entities. These types of 
services and relationships are not necessarily accounted for or 
rewarded under the current methodology that makes QP determinations 
predominantly at the APM Entity level because they are outside the APM 
Entity participating in the Advanced APM, but would be if QP 
determinations were made at the individual eligible clinician level 
because all of the relevant covered professional services furnished by 
that eligible clinician would be counted in the QP determination. While 
our initial decision to calculate Threshold Scores and make most QP 
determinations at the APM Entity level was appropriate and, at the 
time, preferable to achieve the policy goals as stated in the CY 2017 
proposed rule and reiterated above, for the reasons we identify here, 
we also believe that a change to calculate Threshold Scores and make QP 
determinations at the individual eligible clinician level may be 
preferable.
    We requested public feedback on whether an individual level QP 
determination approach is an avenue we should continue exploring in 
future years to better identify and reward individual eligible 
clinicians with substantial engagement in Advanced APMs.
    We received several comments on this RFI which provided us with 
meaningful insight into how the changes described could impact 
participation in Advanced APMs and QPP. We thank commenters for 
submitting these comments and we will keep them in mind as we continue 
to consider future changes to QPP.
(c) QP Thresholds and Partial QP Thresholds
    Section 1833(z)(2) of the Act specifies the thresholds for the 
level of participation in Advanced APMs required for an eligible 
clinician to become a QP for a year. The Medicare Option, based on Part 
B payments for covered professional services or counts of patients 
furnished covered professional services under Part B, has been 
applicable since payment year 2019. The All-Payer Combination Option, 
which uses the Medicare Option, as well as an eligible clinician's 
participation in Other Payer Advanced APMs, is applicable beginning in 
the payment year 2021. In the CY 2017 Quality Payment Program final 
rule (81 FR 77433 through 77439), we finalized our policy for QP and 
Partial QP Thresholds for the Medicare Option as codified at Sec.  
414.1430(a) and for the All-Payer Combination Option at Sec.  
414.1430(b).
    In the CY 2022 PFS final rule (86 FR 65557 through 65558), we 
finalized policies to implement section 114(a) of Subtitle B of Title I 
of Division CC of the

[[Page 70122]]

CAA (referred to herein as section 114(a) of Division CC of the CAA), 
which amended section 1833(z)(2)(B) of the Act with regard to payment 
years 2023 and 2024 (which correspond respectively to performance years 
2021 and 2022), by freezing for such years the applicable payment 
amount and patient count thresholds for an eligible clinician to 
achieve QP status. However, we neglected to fully amend our regulations 
at Sec.  414.1430(a) and (b) to reflect these changes, and therefore, 
we proposed conforming changes to Sec.  414.1430(a) and (b) in the 
proposed rule.
    Specifically, section 114(a) of Division CC of the CAA amended 
section 1833(z)(2)(B) of the Act to continue the QP payment amount 
thresholds that apply in payment years 2021 and 2022 for payment years 
2023 and 2024. Additionally, section 114(a) of Division CC of the CAA 
amended section 1833(z)(2)(D) of the Act to require that, for payment 
years 2023 and 2024, the Secretary must use the same percentage 
criteria for the QP patient count threshold that are applied in payment 
year 2022. As such, the Medicare Option QP thresholds for payment years 
2023 and 2024 (performance years 2021 and 2022) will remain at 50 
percent for the payment amount method and 35 percent for the patient 
count method. Section 114(b) of Division CC of the CAA amended section 
1848(q)(1)(C)(iii) of the Act to extend through payment year 2024 the 
Partial QP thresholds that are established for payment years 2021 and 
2022. Therefore, the Partial QP thresholds for payment years 2023 and 
2024 (performance years 2021 and 2022) will remain at 40 percent for 
the payment amount method and 25 percent for the patient count method. 
For performance years beginning with 2023 (corresponding to payment 
years beginning with 2025) the statute prescribes the QP thresholds for 
the payment amount method, and the QP thresholds we established for the 
patient count method at Sec.  414.1430 will take effect. Specifically, 
for performance years beginning with 2023, the Medicare Option QP 
Thresholds will be 75 percent for the payment amount method and 50 
percent for the patient count method. The Partial QP Thresholds under 
the Medicare Option will be 50 percent for the payment amount method 
and 35 percent for the patient count method.
    Under the All-Payer Combination Option, the QP thresholds for 
performance years 2021 and 2022 (corresponding to payment years 2023 
and 2024) will be 50 percent for the payment amount method and 35 
percent for the patient count method. The Partial QP thresholds for 
performance years 2021 and 2022 (corresponding to payment years 2023 
and 2024) will be 40 percent for the payment amount method and 25 
percent for the patient count method. The Partial QP thresholds for 
performance year 2023 and later (corresponding to payment years 2025 
and later) will be 50 percent for the payment amount method and 35 
percent for the patient count method. In order to become a QP through 
the All-Payer Combination Option, eligible clinicians must first meet 
certain threshold percentages under the Medicare Option. For 
performance years 2021 and later (corresponding to payment year 2023 
and later), the minimum Medicare Option threshold an eligible clinician 
must meet for the All-Payer Combination Option is 25 percent for the 
payment amount method or 20 percent under the patient count method.
BILLING CODE 4150-28-P

[[Page 70123]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.140

BILLING CODE 4150-28-C
    We did not receive any comments on the proposed revisions to the QP 
Thresholds and Partial QP Thresholds. For the reasons stated previously 
in this section and in the proposed rule (87 FR 46337), we are 
finalizing these revisions to the QP Threshold and Partial QP Threshold 
regulations as proposed.

V. Finalizing Provisions From Interim Final Rules

A. Finalizing the CY 2022 Methadone Payment Exception for Opioid 
Treatment Programs

1. Background
    CMS issued an interim final rule with comment period (IFC) 
regarding the payment rate for methadone under the Medicare OTP benefit 
for CY 2022, titled ``Medicare Program; Opioid Treatment Programs: CY 
2022 Methadone Payment Exception'' (hereafter referred to as 
``Methadone IFC''), which appeared in the November 19, 2021 Federal 
Register (86 FR 66031). In the Methadone IFC, we froze the payment rate 
to Opioid Treatment Programs (OTPs) for methadone in CY 2022 at the CY 
2021 rate because we believed would not have been appropriate to 
implement a decrease to the payment rate when substance use and 
overdoses had increased during the Coronavirus Disease 2019 (COVID-19) 
pandemic. In this final rule, we are responding to the comments 
received in response to the request for public comments in the 
Methadone IFC and establishing final policies with respect to payment 
to OTPs for methadone during CY 2022.
a. Methadone
    The Food and Drug Administration (FDA) has approved three 
medications for the treatment of opioid use disorder (OUD): methadone, 
buprenorphine, and naltrexone. These are referred to as medications for 
opioid use disorder (MOUD). The combination of MOUD with counseling and 
behavioral therapies to provide a ``whole-patient'' approach to OUD 
care is referred to as medication-assisted treatment (MAT). OTPs are 
clinically driven and tailored to meet each patient's needs.\548\ MOUD 
are also used to prevent or reduce opioid overdose. These medications 
are safe to use for months, years, or even a lifetime.\549\
---------------------------------------------------------------------------

    \548\ https://www.samhsa.gov/medication-assisted-treatment.
    \549\ https://www.samhsa.gov/medication-assisted-treatment.
---------------------------------------------------------------------------

    As discussed in the CY 2020 PFS final rule (84 FR 62630), when used 
to treat those with a confirmed diagnosis of OUD, methadone cannot be 
dispensed by a pharmacy like certain other MOUD treatments (that is 
buprenorphine, buprenorphine-naloxone combination products, or 
naltrexone products) and therefore is not covered under Medicare Part 
D. Methadone is a schedule II controlled substance that is highly 
regulated because it has a potential for misuse and serious adverse 
effects if taken by opioid-na[iuml]ve individuals. Methadone is also 
used as an analgesic to treat chronic pain. When used for the treatment 
of OUD, methadone is taken daily and is available in tablet, tablet for 
suspension, and solution forms and can only be dispensed and 
administered by an OTP as provided under section 303(g)(1) of the 
Controlled Substances Act (21 U.S.C. 823(g)(1)) and 42 CFR part 8. In 
the CY 2020 PFS final rule, we noted that approximately 74 percent of

[[Page 70124]]

patients receiving services from OTPs receive methadone for OUD 
treatment, with the vast majority of the remaining patients receiving 
buprenorphine (84 FR 62631).\550\ In monitoring utilization of OTP 
services furnished under the new Medicare benefit, we have observed the 
percentage of Medicare beneficiaries receiving methadone to be closer 
to 95 percent.
---------------------------------------------------------------------------

    \550\ https://www.cdc.gov/drugoverdose/deaths/index.html.
---------------------------------------------------------------------------

    According to SAMHSA's website, MAT has been shown to improve 
patient survival and increase retention in treatment.\551\ Several 
studies indicate that retention in MAT is associated with lower 
mortality rates. One study stated that ``Retention in MAT of over one 
year was associated with a lower mortality rate than that with 
retention of less than one year. Improved coverage and adherence to MAT 
and post-treatment follow-up are crucial to reduce the mortality.'' 
\552\
---------------------------------------------------------------------------

    \551\ https://www.samhsa.gov/medication-assisted-treatment.
    \552\ Ma, J., Bao, YP., Wang, RJ. et al. Effects of medication-
assisted treatment on mortality among opioids users: a systematic 
review and meta-analysis. Mol Psychiatry 24, 1868-1883 (2019). 
https://doi.org/10.1038/s41380-018-0094-5.
---------------------------------------------------------------------------

b. Effects of the COVID-19 Pandemic on the Opioid Crisis
    During the development of the final OTP payment rates for CY 2022, 
CMS became concerned that a reduction in the payment to Opioid 
Treatment Programs for methadone in CY 2022 would limit access to MOUD 
for Medicare beneficiaries amidst a worsening opioid crisis further 
exacerbated by social and economic stressors stemming from the COVID-19 
pandemic. In the Methadone IFC, we explained that the United States is 
now facing a fourth wave of the overdose crisis as a result of rising 
polysubstance use, such as the co-use of opioids and psychostimulants 
(for example, methamphetamine, cocaine). Recent CDC estimates of 
overdose deaths now exceed 96,000 for the 12-month period to March 
2021,\553\ with overdose death rates surging among Black and Latino 
Americans.\554\ While overdose deaths were already increasing in the 
months preceding the COVID-19 pandemic, the latest numbers available at 
the time of the Methadone IFC suggested that overdose deaths had 
accelerated during the pandemic, particularly among racial and ethnic 
health inequities. Public comments received in response to the CY 2022 
PFS proposed rule highlighted the recent increases in overdose deaths. 
One commenter stated that drug overdose deaths have reached historic 
highs in this country. According to the commenter, these spikes in 
substance use and overdose deaths reflect a combination of increasingly 
deadly illicit drug supplies, as well as treatment disruptions, social 
isolation, and other hardships imposed by the COVID-19 pandemic, but 
they also reflect the longstanding inadequacy of our medical 
infrastructure when it comes to preventing and treating substance use 
disorders (SUD) (for example, alcohol, tobacco, cannabis, opioids). We 
also noted in the IFC that even before the COVID-19 pandemic began, 
more than 21 million Americans aged 12 or over in 2019 needed treatment 
for a SUD in the past year, but only about 4.2 million of them received 
any treatment or ancillary services for it.\555\ The concerns described 
in these public comments and additional evidence showing an increased 
rate of overdose deaths and rising disparities in access to treatment 
for OUD strongly informed the policies in the Methadone IFC.
---------------------------------------------------------------------------

    \553\ https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm.
    \554\ Drake, J., Charles, C., Bourgeois, J.W., Daniel, E.S., & 
Kwende, M. (January 2020). Exploring the impact of the opioid 
epidemic in Black and Hispanic communities in the United States. 
Drug Science, Policy and Law. doi:10.1177/2050324520940428.
    \555\ Substance Abuse and Mental Health Services Administration. 
(2020). Key substance use and mental health indicators in the United 
States: Results from the 2019 National Survey on Drug Use and Health 
(HHS Publication No. PEP20-07-01-001, NSDUH Series H-55). Rockville, 
MD: Center for Behavioral Health Statistics and Quality, Substance 
Abuse and Mental Health Services Administration. Retrieved from 
https://www.samhsa.gov/data/.
---------------------------------------------------------------------------

c. Opioid Use Disorders (OUDs) in the Medicare Population
    In addition to the adverse effects of the COVID-19 pandemic on the 
worsening opioid crisis, the rising incidence of OUD among the Medicare 
population further informed CMS's decision to issue the Methadone IFC. 
As stated in the Methadone IFC, nearly one million adults aged 65 and 
older live with a SUD, as reported in 2018 data.\556\ According to a 
Data Highlight published by CMS' Office of Minority Health, Medicare 
beneficiaries represent a growing proportion of individuals with OUD. 
Overall, 2.8 percent of Medicare Fee-for-Service (FFS) beneficiaries 
had an opioid use disorder (OUD) in 2018 out of a total of 38,665,082 
Medicare FFS beneficiaries.\557\ The problems associated with OUD in 
the Medicare population are compounded by chronic pain-associated 
conditions more common in later life, as well as the increased 
prevalence of multiple comorbidities and polypharmacy risks that exist 
among older adults.\558\ Before issuing the Methadone IFC, CMS received 
a public comment in response to the CY 2022 PFS proposed rule that 
referred to increases in overdose deaths in individuals over age 65, 
stating that data from the CDC indicates that drug overdose deaths are 
increasing across all age groups, including those over age 65. 
Additionally, as we noted in the Methadone IFC (86 FR 66032), a recent 
Office of Inspector General (OIG) analysis of Medicare data reports 
that opioid overdoses have resulted in more than 200,000 deaths among 
Medicare beneficiaries nationwide since 2015. From 2016 to 2019, 
Medicare Part D saw a steady decline in opioid use, along with an 
increased use of drugs for treatment of OUD. OIG also noted that COVID-
19 poses specific dangers for people using opioids, as respiratory 
diseases like COVID-19 can increase the risk of fatal overdose among 
those taking opioids and those with OUD are more likely to contract 
COVID-19 and suffer complications. With the onset of COVID-19 and the 
new dangers it poses for beneficiaries taking opioids, the OIG report 
states that it is imperative that HHS closely monitor opioid use during 
this unprecedented time. We also noted that during the first 8 months 
of 2020, about 5,000 Medicare Part D beneficiaries per month had an 
opioid overdose.\559\ For these reasons, we concluded that implementing 
a reduction in methadone payments to OTPs would not have been 
appropriate given the growing proportion of the Medicare population 
diagnosed with OUD who also faced various challenges as a result of the 
COVID-19 pandemic.
---------------------------------------------------------------------------

    \556\ https://www.drugabuse.gov/publications/substance-use-in-older-adults-drugfacts.
    \557\ https://www.cms.gov/research-statistics-data-systems/cms-program-statistics/2018-medicare-enrollment-section.
    \558\ https://www.cms.gov/files/document/oud-disparities-prevalence-2018-medicare-ffs-dh-002.pdf.
    \559\ Opioid Use in Medicare Part D During the Onset of the 
COVID-19 Pandemic. U.S. Department of Health and Human Services 
Office of Inspector General. Data Snapshot, OEI-02-20-00400. 
Published February 2021.
---------------------------------------------------------------------------

2. Methadone Pricing
    As discussed in the Methadone IFC, in the CY 2020 PFS final rule 
(84 FR 62667), we finalized a policy in Sec.  410.67(d)(2)(i) under 
which the payment for the drug component of episodes of care will be 
updated annually using the most recent data available from the 
applicable pricing mechanism at the time of ratesetting for the 
applicable calendar year. Under the policy finalized at Sec.  
410.67(d)(2)(i)(B),

[[Page 70125]]

for oral medications, if ASP data are available, the payment amount is 
100 percent of ASP, which will be determined based on ASP data that 
have been calculated consistent with the provisions in 42 CFR part 414, 
subpart J and voluntarily submitted by drug manufacturers. If ASP data 
are not available, the payment amount for methadone will be based on 
the TRICARE rate. We indicated that the payment amount for methadone 
furnished by OTPs during an episode of care in CY 2021 was $37.38,\560\ 
which was 100 percent of ASP, as determined based on voluntarily 
submitted ASP data for the methadone.
---------------------------------------------------------------------------

    \560\ https://www.cms.gov/files/document/otp-billing-and-payment-fact-sheet.pdf.
---------------------------------------------------------------------------

    We explained that quarterly ASP pricing files are typically posted 
on the CMS website prior to the beginning of the quarter in which 
Medicare payments will be effective, which allows drug manufacturers 
that are required to submit their sales data to review and identify any 
issues. Due to the timing of CY PFS rulemaking and because ASP drug 
pricing file data is updated on a quarterly basis, the most recent ASP 
drug pricing file data available for the CY 2022 PFS final rule was the 
October 2021 update, which was posted on September 9, 2021.
    In the Methadone IFC (86 FR 66033), we noted that in early 
September 2021, while gathering available manufacturer-reported ASP 
data for the annual update to the OTP drug pricing for CY 2022, we 
found that the volume-weighted ASP for oral methadone had decreased by 
just over 50 percent compared to the rate used for CY 2021, from $37.38 
to $17.64.\561\ This reduction was due to inclusion of newly reported 
ASP data for methadone tablets, whereas previously the manufacturer-
reported ASP data reflected only sales of the methadone oral 
concentrate. We explained that the ASP is volume-weighted; however, ASP 
reporting is not required for oral methadone and only a small subset of 
methadone manufacturers voluntarily submit ASP data. Of the nearly 50 
available NDCs for oral methadone preparations with available pricing 
in the Red Book[supreg] compendia, voluntarily submitted ASP data was 
available for only three of these NDCs. We noted that pricing for oral 
methadone is distinct from most other drug pricing based on ASP because 
oral methadone is not separately payable as a drug or biological under 
Medicare Part B, and manufacturers are not subject to ASP reporting 
requirements under section 1927(b)(3)(A)(iii) of the Act for those 
NDCs. Additionally, we noted that we did not, at the time of the 
Methadone IFC, have utilization data on the different forms of 
methadone that can be dispensed or administered at OTPs. That is, at 
that time, we did not have data showing whether OTPs utilize oral 
methadone concentrate or tablets more often, or if the two formulations 
are utilized equally. When we researched OTP practice patterns as we 
were preparing to implement the new benefit for OUD treatment services 
furnished in OTPs, we received anecdotal reports that several OTPs used 
the oral concentrate exclusively.
---------------------------------------------------------------------------

    \561\ The TRICARE rate for the drug portion of its weekly 
bundled payment for methadone treatment is $24.04 for 2022, which 
would also be a decrease from the CY 2021 payment rate under 
Medicare and cannot be used to set the Medicare payment rate for 
methadone in CY 2022 under Sec.  410.67(d)(2)(i)(B) because ASP data 
is available for methadone.
---------------------------------------------------------------------------

    For these reasons, we had questions as to whether the ASP data 
available at the time of the CY 2022 rulemaking, which reflects 
voluntarily reported data from only a very small subset of methadone 
manufacturers, is representative of utilization of the two forms of 
oral methadone by the Medicare beneficiaries receiving OUD treatment 
services in OTPs.
    We stated that given recent reports regarding the effects of the 
public health emergency (PHE) for COVID-19 on individuals with SUD, 
including OUD, and the questions we had related to whether the 
available ASP data for methadone is reflective of OTP utilization due 
to the distinct nature of methadone pricing, as described above, we 
believed it would be in the public's best interest not to implement a 
significant decrease in the payment rate for methadone furnished by 
OTPs as part of OUD treatment services without first having an 
opportunity to review the issue, seek input from the OTP stakeholder 
community regarding utilization of methadone oral concentrate compared 
to utilization of methadone tablets, and consider how this information 
should factor into the determination of the payment rate for methadone 
furnished by OTPs. We noted that section 1834(w)(2) of the Act allows 
for flexibility to consider the scope of services furnished, the 
characteristics of the individuals receiving services, and such other 
factors as the Secretary determines appropriate, in determining the 
rates paid to OTPs under Medicare.
    Therefore, in the Methadone IFC (86 FR 66031 through 66036), we 
established a limited exception to the existing methodology for 
determining the payment amount for the drug component of an episode of 
care in order to freeze the payment amount for methadone furnished 
during an episode of care in CY 2022 at the payment amount that was 
determined for CY 2021. We also revised the regulation at Sec.  
410.67(d)(2)(i)(B), which governs the determination of the payment 
amount for oral medications, to reflect this exception and to make a 
conforming change to the reference to 42 CFR part 414, subpart J.
    Under this exception, the payment amount for the drug component of 
the methadone bundle described by HCPCS code G2067 (Medication assisted 
treatment, methadone; weekly bundle including dispensing and/or 
administration, substance use counseling, individual and group therapy, 
and toxicology testing, if performed (provision of the services by a 
Medicare-enrolled Opioid Treatment Program)) and the methadone add-on 
code described by HCPCS code G2078 (Take-home supply of methadone; up 
to 7 additional day supply (provision of the services by a Medicare-
enrolled Opioid Treatment Program); List separately in addition to code 
for primary procedure) was maintained at the CY 2021 rate of $37.38 for 
the duration of CY 2022. We applied the annual update to the non-drug 
component of HCPCS G2067 for CY 2022 as required under Sec.  
410.67(d)(4)(iii). We noted that we believed maintaining the payment 
amount for methadone at the CY 2021 rate during CY 2022 would allow 
time for CMS to study the issue further and, if appropriate, to develop 
an alternative payment methodology for methadone that could be proposed 
through notice-and-comment rulemaking for CY 2023.
    We solicited comment on the exception to the payment methodology 
for the drug component of an episode of care that we were adopting in 
the Methadone IFC in order to maintain the payment rate for methadone 
at the CY 2021 payment amount during CY 2022.
    We received public comments on the exception to the payment 
methodology to freeze the payment rate for methadone at the CY 2021 
payment amount for the duration of CY 2022. The following is a summary 
of the comments we received and our responses.
    Comment: We received several comments from individual commenters, 
medical associations, and national associations representing OTPs. The 
majority of commenters expressed support for the exception to the 
payment methodology for the drug component of an episode of care to 
maintain the payment rate for methadone at the CY 2021 payment amount 
for the duration of CY 2022.

[[Page 70126]]

Some commenters reiterated that this payment exception was important 
during a time of increased opioid-related overdose deaths that have 
accelerated during the COVID-19 pandemic. In this regard, commenters 
noted that reducing the payment amount for methadone to providers who 
specialize in treatment of OUD could impact access to methadone and 
adequate retention of providers administering these services and other 
related OUD treatment services. One commenter also cited data showing 
that a large majority of treatment services furnished in conjunction 
with methadone are offered through telemedicine, including medication 
management and psychosocial therapy. The commenter stated that if 
methadone reimbursement is reduced, beneficiary access to telemedicine 
may be limited. Additionally, another commenter expressed support for 
the methadone payment exception adopted in the Methadone IFC, stating 
that it would provide CMS additional time to consider utilization of 
different methadone formulations, which may inform alternative 
reimbursement methodologies that better reflect methadone utilization.
    Response: We thank the commenters for the support expressed in 
their comments. We agree that this payment exception was important in 
order to promote treatment accessibility for MOUD during a worsening 
opioid crisis and to allow for the additional time needed to evaluate 
utilization of different forms of methadone for purposes of informing 
the payment rate for methadone furnished in OTPs for CY 2023 and future 
years.
    Comment: Although the majority of commenters expressed support for 
freezing the payment rates for methadone furnished by OTPs in CY 2022, 
a few commenters noted concerns that freezing the payment rate for 
methadone at the CY 2021 level may still result in unanticipated 
negative outcomes. One commenter indicated that supply chain and other 
logistical issues have driven up global drug prices alongside 
widespread inflation, such that an increase in payment rates may be 
necessary. Another commenter noted that if Medicare reimbursement for 
methadone falls well below OTPs' costs of acquiring and administering 
the medication, OTPs may have no choice but to prescribe a much more 
expensive medication (buprenorphine or naloxone) as part of MOUD. The 
commenter noted this might increase costs for the Medicare program and 
taxpayers, while not necessarily improving care due to different 
clinical and situational indications for other types of medications 
utilized in MOUD.
    Response: We acknowledge and continue to track commenters' concerns 
about the payment rate for methadone furnished in OTPs. We believe 
these comments further demonstrate the importance of the payment freeze 
adopted in the Methadone IFC in order to allow CMS time to investigate 
methadone payment rates further and to seek feedback from the public in 
order to inform potential future payment methodologies that better 
capture costs of furnishing methadone. We took the feedback received in 
response to the Methadone IFC into consideration in developing and 
proposing a new methodology for methadone pricing that would stabilize 
payment to OTPs for methadone and maintain access to OUD treatment 
services. Under the proposed methodology, which we are finalizing in 
this final rule, we will base the payment amount for the drug component 
of HCPCS codes G2067 and G2078 for CY 2023 and subsequent years on the 
payment amount for methadone in CY 2021 and update this amount annually 
to account for inflation using the PPI for Pharmaceuticals for Human 
Use (Prescription). For a detailed discussion of the final policy for 
methadone pricing for CY 2023 and subsequent years, see section 
III.F.2. of this final rule.
    In the Methadone IFC (86 FR 66033), we also solicited comment on 
OTP utilization patterns for methadone, particularly, the frequency 
with which methadone oral concentrate is used compared to methadone 
tablets in the OTP setting, including any applicable data on this 
topic. We noted that because the OTP benefit is still fairly new under 
Medicare, we have not yet had the opportunity to fully understand how 
changes in the payment rates may affect OTP operations and beneficiary 
access to treatment. However, we stated our intent to continue to 
refine our payment policies in order to best meet the needs of Medicare 
beneficiaries.
    We received public comments on OTP utilization patterns for 
methadone, particularly, the frequency with which methadone oral 
concentrate is used compared to methadone tablets in the OTP setting. 
The following is a summary of the comments we received and our 
responses.
    Comment: Several commenters provided input on the frequency of 
utilization for methadone oral concentrate compared to methadone 
tablets. One commenter reported surveying dozens of OTPs in their 
region and found that the majority of OTPs utilized oral concentrate 
exclusively and none utilized methadone tablets exclusively. The same 
commenter identified that among OTPs that distributed both formulations 
of methadone to a single patient, the tablet formulation was preferable 
in situations in which accommodation of a patient's travel is 
necessary. Moreover, another commenter reported that almost all of its 
patients receive oral concentrate because it has shown to lead to 
better clinical outcomes, thus the oral concentrate is the preferred 
formulation amongst both practitioners and patients.
    Response: We thank the commenters for their comments regarding the 
higher frequency of utilization for methadone oral concentrate compared 
to methadone tablets. We note that the 2021 payment amount for 
methadone which we also used for 2022, and which forms the basis for 
the payment rate for methadone for CY 2023 and subsequent years is 
based on average sales price data for methadone oral concentrate. We 
will consider the information on methadone utilization shared by the 
commenters as we continue to evaluate the drug pricing methodology for 
methadone going forward.
    Comment: One commenter noted that the National Association of State 
Alcohol and Drug Abuse Directors (NASADAD), in conjunction with the 
State Opioid Treatment Authorities (SOTAs), conducted a survey that was 
distributed to the 1,800 OTPs throughout the United States. As of 
December 31, 2021, NASADAD and the SOTAs had collected data from 1,550 
OTPs. These data include the number of patients being treated at OTPs 
as of January 1, 2021, including the number of patients using one of 
the three FDA-approved medications to treat opioid use disorder 
(methadone, buprenorphine, and extended-release naltrexone) and the 
specific forms of the medication being used. The commenter further 
noted that the data is currently being analyzed by NASADAD staff.
    Response: We thank the commenter for this information and are 
looking forward to seeing the survey results.
    In the Methadone IFC, we indicated that we would consider the 
comments received in response to the IFC in deciding how best to 
determine the payment rate for methadone in CY 2023, including whether 
we should propose changes in future rulemaking to the structure of OTP 
coding and payment in order to account for differences in pricing and 
utilization for the different formulations of methadone. The following 
is a summary of the comments we received on these issues and our 
responses.

[[Page 70127]]

    Comment: Several commenters stated that oral concentrate methadone 
is more costly to provide to patients than methadone tablets. 
Commenters raised various cost considerations for administering oral 
concentrate that they believe should be reflected in pricing for 
methadone. For example, commenters noted that extra effort is required 
from nurses in administering doses that require more complex technology 
and precision in measurement to ensure patient safety. Additionally, 
commenters noted that some states require full-time pharmacists to be 
present for dosing the oral concentrate formulation. Moreover, 
commenters stated that supplies used in dispensing the oral 
concentrate, such as electric pumps and pipettes, and their related 
software, require maintenance, replacement, acquisition, and storage, 
which result in additional costs to OTPs.
    Response: We thank commenters for raising these additional factors 
that impact the cost of administering methadone oral concentrate as 
opposed to methadone tablets. We may consider addressing these issues 
in future rulemaking. However, we note that in section III.F.2 of this 
final rule, we are finalizing a change to the drug pricing methodology 
for methadone for CY 2023 and future years to provide that payment 
amount for methadone will be the payment amount determined for CY 2021 
updated by the PPI for Pharmaceuticals for Human Use (Prescription) 
(WPUSI07003). We believe that this PPI is an appropriate factor by 
which to adjust the payment rate for methadone to reflect the changes 
in methadone costs for OTPs over time. We are also revising Sec.  
410.67(d)(2)(i)(B)(2) to reflect this new drug pricing methodology for 
methadone. Please see the discussion in section III.F.2 of this final 
rule for additional information regarding the final polices for 
methadone pricing for CY 2023 and future years under the Medicare OTP 
benefit.
    Comment: One commenter suggested CMS use the TRICARE rate for oral 
methadone concentrate reimbursement and create separate payment codes 
for tablet methadone and oral concentrate methadone.
    Response: We thank the commenter for this suggestion. The 
regulation at Sec.  410.67(d)(2)(i)(B)(1) states that if ASP data are 
not available, the payment amount for methadone will be based on the 
TRICARE rate. However, when CMS was establishing the methadone payment 
rate for CY 2022, we found that the TRICARE rate would have also 
decreased the payment amount for methadone by $13.34 compared to the CY 
2021 payment rate. Thus, using the TRICARE rate would have still 
decreased the payment amount for methadone during both the COVID-19 
pandemic and a worsening opioid overdose crisis, which may have created 
access barriers to treatment for beneficiaries. This further 
demonstrated the need for an interim final rule to freeze methadone 
payment for CY 2022 at the CY 2021 rate in order to provide the agency 
more time to reconsider methadone payment methodologies. Please see the 
discussion in section III.F.2 of this final rule regarding the final 
polices for methadone pricing for 2023 and future years under the 
Medicare OTP benefit.
    Regarding the comment on creating separate payment codes for tablet 
methadone and oral concentrate, we thank the commenter for this 
recommendation. We may consider this recommendation through future 
rulemaking at such a time that more robust ASP data for the different 
formulations of methadone is available.
    In summary, after consideration of the public comments, we are 
finalizing without modification the revisions made in the Methadone IFC 
to the regulation text at Sec.  410.67(d)(2)(i)(B), which governs the 
determination of the payment amount for oral medications, to reflect 
this exception for CY 2022 and to make a conforming change to the 
reference to 42 CFR part 414, subpart J.

B. Medicare and Medicaid Programs; Policy and Regulatory Revisions in 
Response to the COVID-19 Public Health Emergency (CMS-1744-IFC)

    In this final rule, we are responding to public comments and 
stating our final policies for certain provisions in the IFC titled 
``Medicare and Medicaid Programs; Policy and Regulatory Revisions in 
Response to the COVID-19 Public Health Emergency'' (CMS-1744-IFC), 
which appeared in the April 6, 2020 Federal Register ((85 FR 19230); 
hereinafter referred to as the April 6, 2020 IFC).
1. Improving Access to Virtual Communication Services Furnished by 
Rural Health Clinics (RHC) and Federally Qualified Health Centers 
(FQHC)
    In the April 6, 2020 IFC (85 FR 19253-19254), we implemented on an 
interim final basis the expansion of services that can be included in 
the payment for virtual communications in RHCs and FQHCs. We explained 
that in order to minimize risks associated with exposure to COVID-19, 
and to provide the best care possible during the PHE for the COVID-19 
pandemic, we believed that RHCs and FQHC practitioners, like many other 
health care providers, should explore the use of interactive 
communications technology in the place of services that would have 
otherwise been furnished in person and reported and paid under the 
established methodologies. To that end, we included the following 
services in the payment of virtual communications: CPT code 99421 
(Online digital evaluation and management service, for an established 
patient, for up to 7 days, cumulative time during the 7 days; 5-10 
minutes); 99422 (Online digital evaluation and management service, for 
an established patient, for up to 7 days, cumulative time during the 7 
days; 11-20 minutes); and 99423 (Online digital evaluation and 
management service, for an established patient, for up to 7 days, 
cumulative time during the 7 days; 21 or more minutes).
    Prior to the COVID-19 PHE, HCPCS code G0071 was set at the average 
of the national non-facility PFS payment rates for HCPCS code G2012 
(communication technology-based services) and HCPCS code G2010 (remote 
evaluation services), updated annually based on the PFS national non-
facility payment rate for these codes. Furthermore, prior to services 
being furnished under HCPCS code G0071, patient consent was required 
both prior to the service being furnished and before these services 
were billed.
    Effective for services furnished on or after March 1, 2020 and 
throughout the PHE for the COVID pandemic, we finalized on an interim 
final basis the payment rate for HCPCS code G0071 as the average of the 
PFS national non-facility payment rate for HCPCS code G2012 
(communication technology-based services), HCPCS code G2010 (remote 
evaluation services), CPT code 99421, CPT code 99422, and CPT code 
99423. The RHC and FQHC face-to-face requirements do not apply to these 
services.
    Additionally, in order to ensure these services would be available 
to beneficiaries who otherwise would not have access to clinically 
appropriate in-person treatment, we placed in our interim final rule a 
provision stating that all virtual communication services billed by 
HCPCS code G0071 would be available to new patients not seen by the RHC 
or FQHC within the previous months. Lastly, CMS changed requirements 
regarding when patient consent was required for these services, in 
order to promote timely provision of care. Specifically, we allowed 
consent to be obtained when the services were furnished instead of 
prior to the service

[[Page 70128]]

being furnished and before the services were billed. Consent could also 
be acquired by staff under the general supervision of the RHC or FQHC 
practitioner for the virtual communication codes during the COVID-19 
PHE.
    As a result of these changes made on an interim final basis, we 
received several comments related to these policies.
    Comment: The majority of commenters were supportive of these 
additional flexibilities granted during the COVID-19 PHE. Commenters 
stated that use of online digital assessment services would provide 
additional flexibilities and allow providers to better meet patients' 
needs and ensure access to care during the pandemic. One commenter 
noted that the flexibility to bill HCPCS code G0071 for new patients 
would better help Urban Indian Organizations (UIOs) serve AI/AN 
communities. The commenter noted that this patient population often 
faces challenges in accessing medical professionals regularly within a 
12-month span since they need to travel longer distances to reach 
dispersed reservation-based Indian Health Services (IHS) or tribal 
health services.
    Response: We appreciate the commenters' support for these policies 
during the COVID-19 pandemic, especially in regards to positive impacts 
these flexibilities had on underserved communities, including AI/AN 
communities.
    Comment: A few commenters asked that the flexibilities for virtual 
communication services be extended beyond the COVID-19 PHE in order to 
continuously allow providers to furnish services in ways that best meet 
the needs of their patients.
    Response: We appreciate the commenters' support of this policy 
during the COVID-19 PHE. We continue to believe that outside of the 
context of the COVID-19 PHE, our standard policies regarding virtual 
communication services furnished by RHCs and FQHCs would continue to be 
appropriate. Therefore, once the COVID-19 PHE ends, we do not intend to 
further extend these flexibilities. Moreover, sections 1834(m)(7) and 
(m)(8) of the Act restrict payment for many RHC/FQHC telehealth 
services to a period that ends on the 151st day after the end of the 
PHE. We note that we will continue to evaluate the effectiveness of 
these flexibilities granted during the pandemic in promoting access to 
timely, quality care for Medicare beneficiaries. In the event that 
future circumstances warrant additional flexibilities, we will 
reconsider these issues in future rulemaking.
    Comment: A few commenters recommended that CMS increase the payment 
rate for HCPCS code G0071 in order to help RHCs and FQHCs support the 
uptake in resource costs needed to expand and maintain updated 
telehealth systems, which was needed to increase capacity during the 
pandemic.
    Response: CMS acknowledges that many providers were required to 
invest in telecommunication systems in order to continue to provide 
care during the pandemic amidst rising infection rates that limited in-
person visits; however, we believe that the reimbursement is adequate.
    Comment: A few commenters encouraged CMS to allow FQHCs and RHCs to 
furnish remote therapeutic monitoring (RTM) and remote patient 
monitoring (RPM) services in combination to the services reflected in 
HCPCS code G0071, so that they could monitor patient-generated health 
data for patients diagnosed with COVID-19.
    Response: Although out-of-scope for this interim final rule, we 
would like to thank commenters for this suggestion. We note that for 
FQHCs and RHCs, RPM and RTM services are not stand[hyphen]alone 
billable services. However, when these services are furnished incident 
to an FQHC or RHC visit, payment is included in the FQHC PPS rate or 
RHC all-inclusive AIR rate whose costs are reflected in cost reports.
    Given the public comments we received, we are finalizing the 
provisions of the April 6, 2020 IFC without modification. Accordingly, 
these policies will terminate at the end of the COVID-19 PHE. 
Therefore, when the COVID-19 PHE ends, CPT codes 99421, 99422 and 99423 
will no longer be included in the payment for HCPCS code G0071, virtual 
communication services will only be available to patients that have 
been seen in the RHC or FQHC within the previous 12 months, and 
beneficiary consent for these services must be acquired under direct 
supervision and prior to the services being furnished.
2. Revision of Home Health Agency Shortage Area Requirements for 
Furnishing Visiting Nursing Services by RHCs and FQHCs
    In the April 6, 2020 IFC (85 FR 19254 and 19255), we implemented, 
on an interim final basis, changes to the requirements for visiting 
nursing services furnished in the home by RHCs and FQHCs. We refer 
readers to the April 6, 2020 IFC for a more detailed overview of that 
policy.
    Prior to the COVID-19 PHE, visiting nursing services were only 
covered if an RHC or FQHC was located in an area designated by the 
Secretary to have a shortage of HHAs. In addition to this requirement, 
these services were only paid if rendered to a homebound individual. 
Other conditions establishing payable visiting nursing services can be 
found at Sec.  405.2416. However, as a result of the COVID-19 PHE, we 
believed the need for visiting nursing services furnished by RHCs and 
FQHCs would increase, as would the need for services in historically 
underserved communities. To address an increased need for these 
medically necessary services, on an interim basis for the duration of 
the COVID-19 PHE, we determined that any area typically served by the 
RHC, and any area that is included in the FQHCs service area plan, was 
determined to have a shortage of HHAs with no request for this 
determination required. However, as an additional requirement, we 
mandated RHCs and FQHCs to check the HIPAA Eligibility Transaction 
System (HETS) before providing visiting nursing services to ensure that 
the patient was not already under a home health plan of care. If a 
patient was under a home health plan of care, the HHA had to provide 
optimal care to achieve the goals and outcomes identified in the 
patient's plan of care, for each patient's medical, nursing, and 
rehabilitative needs (Sec.  484.105). RHC and FQHC visiting nursing 
services could not be covered by Medicare if such services were found 
to overlap with a 30-day period of home health care.
    Finally, we revised, on an interim basis, Sec.  405.2416 to add 
paragraph (a)(5), to state that during the PHE for the COVID-19 
pandemic, an area typically served by the RHC, and an area that is 
included in the FQHC's service area plan, is determined to have a 
shortage of HHAs, and no request for this determination is required.
    We received a few comments related to this policy.
    Comment: One commenter expressed support for expanding access to 
home health services within RHC and FQHC service areas. However, the 
same commenter was concerned that expanding these services would 
exacerbate existing shortages of home healthcare professionals since 
the policy broadened eligible service areas, and consequently the 
number of patients within these areas needing these services.
    Response: We appreciate the commenter's general support of this 
policy and we also want to acknowledge the existing shortage of home 
healthcare

[[Page 70129]]

workers and the PHE's impact on underserved rural and urban 
communities. We believe this flexibility is important for patient 
access to nursing services in the home and the potential for HHAs that 
may be overwhelmed during COVID-19 PHE.
    Given the public comments we received, we are finalizing the 
provisions of the April 6, 2020 IFC without modification. Accordingly, 
this policy will terminate when the COVID-19 PHE ends and the 
regulations at 42 CFR 405.2416(a)(5) will be removed in future 
rulemaking once the PHE has ended. After the COVID-19 PHE ends, 
visiting nurse services will only be covered if the RHC or FQHC is 
located in an area designated by the Secretary to have a shortage of 
HHAs and, and the services meet the other conditions set out at Sec.  
405.2416.

C. Medicare and Medicaid Programs, Basic Health Program, and Exchanges; 
Additional Policy and Regulatory Revisions in Response to the COVID-19 
Public Health Emergency and Delay of Certain Reporting Requirements for 
the Skilled Nursing Facility Quality Reporting Program (CMS-5531-IFC)

    In this final rule, we are also responding to public comments and 
stating our final policies for certain provisions in the IFC titled 
``Medicare and Medicaid Programs, Basic Health Program, and Exchanges; 
Additional Policy and Regulatory Revisions in Response to the COVID-19 
Public Health Emergency and Delay of Certain Reporting Requirements for 
the Skilled Nursing Facility Quality Reporting Program'' (CMS-5531-
IFC), which appeared in the May 8, 2020 Federal Register ((85 FR 
27550); hereinafter referred to as the May 8, 2020 IFC).
1. Revision of Bed Count Methodology for Determining Provider-Based 
RHCs' Exemption From the RHC Payment Limit
    In the May 8, 2020 IFC (85 FR 27569), we implemented a policy on an 
interim final basis related to calculation of the bed count methodology 
that determined when a provider-based RHC was exempted from the 
national RHC per-visit payment limit. We refer readers to the May 8, 
2020 IFC for a more detailed overview of that policy (85 FR 27569).
    An RHC that is provider-based to a hospital with fewer than 50 beds 
is excepted from the national RHC per-visit payment limit and is 
reimbursed based on actual reasonable costs. However, due to the COVID-
19 PHE, many hospitals had to increase inpatient bed capacity to 
address the surge in need for inpatient care. This could have affected 
payment for provider-based RHCs if their associated hospital had 
expanded their number of beds beyond 50, which would have then made 
them ineligible for the limit exception. CMS did not want to discourage 
hospitals from increasing bed capacity to meet patient needs and hoped 
to allow provider-based RHCs to continue to receive payment amounts 
they would otherwise receive in the absence of the COVID-19 PHE. As a 
result, on an interim basis, we revised the period of time used to 
determine the number of beds in a hospital at Sec.  412.105(b) for 
purposes of determining which provider-based RHCs would be subject to 
the payment limit. Instead, CMS utilized the number of beds from the 
cost reporting period prior to the start of the COVID-19 PHE as the 
official hospital bed count for determining provider-based RHCs 
exempted from the RHC payment limit. This meant RHCs with provider-
based status that were exempt from the national per-visit payment limit 
in the period prior to the effective date of the COVID-19 PHE (January 
27, 2020) would continue to be exempt for the duration of the COVID-19 
PHE, as defined at Sec.  400.200.
    After the publication of the May 8, 2020 IFC, section 130 of the 
Consolidated Appropriations Act of 2021 was passed and referred to this 
IFC's provision under section 1833(f)(3)(B) of the Act as a 
consideration for the bed count criterion. We note that the criteria in 
section 1833(f)(3)(B)(i) of the Act specified a hospital with less than 
50 beds; therefore, beginning April 1, 2021, we applied the bed 
definition at Sec.  412.105(b) exclusively. As we stated in the CY 2022 
PFS final rule (86 FR 65203), we adopted an interim final policy to use 
the number of beds from the cost reporting period prior to the start of 
the COVID-19 PHE as the official hospital bed count for application of 
this policy. As such, RHCs with provider-based status that were 
excepted from the national statutory payment limit in the period prior 
to the effective date of the COVID-19 PHE (January 27, 2020) would 
continue to be excepted from the bed count requirement for the duration 
of the PHE for the COVID-19 pandemic, as defined at Sec.  400.200, even 
if the hospital raised its bed count above 50. Once the COVID-19 PHE 
ends, a hospital will need to lower its bed count to less than 50 beds 
to maintain the RHC exception. We received one comment related to this 
policy.
    Comment: One commenter, representing RHCs and provider-based RHCs, 
commented on changes in utilization and settings of care during the 
pandemic, which may artificially reduce the RHC's all-inclusive rate 
(AIR). Specifically, the commenter noted that a minimum productivity 
standard, based on visits per FTE for different types of practitioners, 
is applied to the AIR rate. The commenter raised that this standard 
does not include telehealth visits as encounters that would be 
designated as visits under the minimum productivity standard. The 
commenter stated that RHCs and provider-based RHCs experienced an 
uptake in telehealth visits and a drop in in-person visits due to the 
pandemic, which may artificially lower the minimum productivity 
standard and AIR rate to RHCs. The commenter further mentioned that 
RHCs as a whole faced a drop in all visits even after accounting for 
telehealth visits. As a result of these changes in utilization, the 
commenter asked for CMS to waive the minimum productivity standard for 
a period of months after the COVID-19 PHE officially ends to allow time 
for patients to re-engage with providers.
    Response: While this comment is out-of-scope since it relates to 
the methodology for the calculation of the minimum productivity 
standard instead of the bed-count methodology, we thank the commenter 
for raising this issue. We note that in the Medicare Benefit Policy 
Manual, Chapter 13, Section 80.4, ``RHC Productivity Standards'', RHCs 
may receive an exception to this productivity standard. The MAC has the 
discretion to make an exception to the productivity standard based on 
individual circumstances and CMS issued guidance to this effect in the 
MLN Matters SE20016, titled New & Expanded Flexibilities for RHCs & 
FQHCs during the COVID-19 PHE.\562\
---------------------------------------------------------------------------

    \562\ https://www.cms.gov/files/document/se20016-new-expanded-flexibilities-rhcs-fqhcs-during-covid-19-phe.pdf.
---------------------------------------------------------------------------

    In this final rule, we are finalizing the provisions of the May 8, 
2020 IFC without modification. Accordingly, this policy will terminate 
when the COVID-19 PHE ends. As such, when Medicare Administrative 
Contractors (MACs) apply the rate setting process described in Sec.  
405.2464(a), they will no longer use the number of beds from the cost 
reporting period prior to the start of the PHE as the official hospital 
bed count when determining if a RHC retains its specified provider-
based RHC status for purposes of section 1833(f)(3)(B)(i) of the Act. 
That is, an RHC will retain its specified provider-based status until 
the hospital which they are affiliated submits a cost report with more 
than 50 beds. An RHC will no longer retain its

[[Page 70130]]

specified provider-based status nor be eligible for specified status in 
the future once the hospital which they are affiliated submits a cost 
report with more than 50 beds.

E. Origin and Destination Requirements Under the Ambulance Fee Schedule

    Section 1861(s)(7) of the Act establishes an ambulance service as a 
Medicare Part B service where the use of other methods of 
transportation is contraindicated by the individual's condition, but 
only to the extent provided in regulations. We have established 
regulations at Sec.  410.40 that govern Medicare coverage of ambulance 
services. Under Sec.  410.40(e)(1), Medicare Part B covers ground (land 
and water) and air ambulance transport services only if they are 
furnished to a Medicare beneficiary whose medical condition is such 
that other means of transportation are contraindicated. The 
beneficiary's condition must require both the ambulance transportation 
itself and the level of service provided for the billed services to be 
considered medically necessary.
    Under Sec.  410.40 (e)(1), nonemergency transportation by ambulance 
is appropriate if either the beneficiary is bed-confined, and it is 
documented that the beneficiary's condition is such that other methods 
of transportation are contraindicated; or, if his or her medical 
condition, regardless of bed confinement, is such that transportation 
by ambulance is medically required. That section further provides that 
bed confinement is not the sole criterion in determining the medical 
necessity of ambulance transportation but is one factor that is 
considered in medical necessity determinations. For a beneficiary to be 
considered bed-confined, Sec.  410.40 (e)(1) states that all of the 
following criteria must be met: (1) the beneficiary is unable to get up 
from bed without assistance, (2) the beneficiary is unable to ambulate, 
and (3) the beneficiary is unable to sit in a chair or wheelchair.
    The origin and destination requirements for coverage of ambulance 
services are addressed in our regulations at Sec.  410.40(f). As 
provided in that section, Medicare covers the following ambulance 
transportation:
     From any point of origin to the nearest hospital, critical 
access hospital (CAH), or skilled nursing facility (SNF) that is 
capable of furnishing the required level and type of care for the 
beneficiary's illness or injury. The hospital or CAH must have 
available the type of physician or physician specialist needed to treat 
the beneficiary's condition;
     From a hospital, CAH, or SNF to the beneficiary's home;
     From a SNF to the nearest supplier of medically necessary 
services not available at the SNF where the beneficiary is a resident, 
including the return trip; and
     For a beneficiary who is receiving renal dialysis for 
treatment of ESRD, from the beneficiary's home to the nearest facility 
that furnishes renal dialysis, including the return trip.
    We continue to believe that our current regulatory requirements 
governing coverage of ambulance services are appropriate under normal 
circumstances. However, in the context of the PHE for the COVID-19 
pandemic, we recognized that providers and suppliers furnishing ground 
ambulance services and other health care professionals are faced with 
new challenges regarding potential exposure risks, for Medicare 
beneficiaries and for members of the community at large. We recognized 
that this was a particularly emerging situation at the early phase of 
the PHE for COVID-19 when health care facilities and ground ambulance 
providers and suppliers were adapting to the COVID-19 pandemic, facing 
evolving facility capacity limits and service locations, and 
establishing new safety and health protocols for employees, volunteers, 
and beneficiaries.
    In the interim final rule with comment period (85 FR 19276), on an 
interim basis, we expanded the list of destinations at Sec.  410.40(f) 
for which Medicare covers ambulance transportation to include all 
destinations, from any point of origin, that are equipped to treat the 
condition of the patient consistent with Emergency Medical Services 
(EMS) protocols established by State and/or local laws where the 
services will be furnished. The EMS protocols are recognized operating 
procedures that all emergency service professionals such as emergency 
medical technicians (EMTs) and paramedics must follow for patient 
assessment, treatment, transportation and delivery to definitive care. 
These protocols are designed by national, State and/or local medical 
authorities and institutions. Based on these protocols, a patient 
suspected of having COVID-19 that requires a medically necessary 
transport may be transported to a testing facility to get tested for 
COVID-19 instead of a hospital in an effort to prevent possible 
exposure to other patients and medical staff.
    These destinations may include, but are not limited to: any 
location that is an alternative site determined to be part of a 
hospital, CAH or SNF, community mental health centers, FQHCs, RHCs, 
physicians' offices, urgent care facilities, ambulatory surgery centers 
(ASCs), any location furnishing dialysis services outside of an ESRD 
facility when an ESRD facility is not available, and the beneficiary's 
home. This expanded list of destinations applies to medically necessary 
emergency and non-emergency ground ambulance transports of 
beneficiaries during the PHE for the COVID-19 pandemic. Consistent with 
section 1861(s)(7) of the Act, there must be a medically necessary 
ground ambulance transport of a patient in order for an ambulance 
service to be covered.
    In the interim final rule with comment period (85 FR 19276), we 
revised Sec.  410.40 that added a new paragraph (f)(5), to state that 
during the PHE for the COVID-19 pandemic only, a covered destination 
includes a ground ambulance transport from any point of origin to a 
destination that is equipped to treat the condition of the patient 
consistent with State and local EMS protocols where the services will 
be furnished. These destinations include, but are not limited to, any 
location that is an alternative site determined to be part of a 
hospital, CAH or SNF, community mental health centers, FQHCs, RHCs, 
physician offices, urgent care facilities, ASCs, any location 
furnishing dialysis services outside of an ESRD facility when an ESRD 
facility is not available, and the beneficiary's home. Home may be an 
appropriate destination for a COVID-19 patient who is discharged from 
the hospital to home to be under quarantine (as noted above, there must 
be a medically necessary ground ambulance transport of a patient in 
order for an ambulance service to be covered).
    Comment: We received 17 comments in support of the temporary 
expansion of the list of covered ground ambulance destinations during 
the PHE for the COVID-19 only. Two commenters stated that this is 
exceptional and provides welcome relief to ambulance providers and 
suppliers who are working collaboratively with their local partners to 
preserve scarce healthcare resources. Another commenter applauded CMS 
for recognizing that during the duration of crisis it is important to 
allow ground ambulance organizations to transport patients to 
destinations other than hospitals, CAHs, and nursing homes. The 
commenter further stated that in addition to reducing hospital surge 
and reducing the risk of exposure, covering and reimbursing transports 
to alternative destinations is also likely to reduce the

[[Page 70131]]

overall Medicare costs and coinsurance obligations for these patients.
    Response: We recognize that providers and suppliers furnishing 
ground ambulance services during the PHE for the COVID-19 pandemic have 
been faced with new challenges regarding potential exposure risks, for 
Medicare beneficiaries and for members of the community at large.
    Comment: Two commenters questioned if it is a correct 
interpretation of the temporary expanded list of covered destinations 
that it would apply to any beneficiary, not only beneficiaries 
experiencing a COVID-19 related clinical presentation.
    Response: The expanded list of covered ground ambulance transports 
during the PHE for the COVID-19 applies to any beneficiary with or 
without a COVID-19 related clinical presentation.
    Comment: Two commenters noted that the beneficiary's home is listed 
as an appropriate alternate destination. The commenters inquired that 
since a medically necessary ambulance transportation to a beneficiary's 
home is already a covered destination, does including the beneficiary's 
home as an appropriate alternate destination mean that a clinically 
appropriate `Treatment in Place' determination as contemplated in CMS' 
Emergency Triage, Treatment and Transport (ET3) payment model, where 
the beneficiary can be appropriately managed in the home, without 
ambulance transport, is a covered benefit.
    Response: Consistent with section 1861(s)(7) of the Act, there must 
be a medically necessary ground ambulance transport of a patient in 
order for an ambulance service to be covered, and this interim 
regulation spoke to certain of those circumstances.
    Separately, section 9832 of the American Rescue Plan Act of 2021 
provides the Secretary with authority to implement a waiver applicable 
to ground ambulance services during the PHE for the COVID-19. Effective 
March 1, 2020 through the end of the PHE for the COVID-19, we are 
waiving the requirement under sections 1861(s)(7) and 1834(l) of the 
Act that an ambulance service include the transport of an individual to 
the extent necessary to allow payment for ground ambulance services 
furnished in response to a 911 call (or the equivalent in areas without 
a 911 call system) in cases in which an individual would have been 
transported to a destination permitted under Sec.  410.40(f) but such 
transport did not occur as a result of community-wide emergency medical 
service (EMS) protocols due to the PHE for the COVID-19. We would refer 
the reader to the COVID-19 Frequently Asked Questions (FAQs) on 
Medicare Fee-for-Service (FFS) Billing document for further information 
at https://www.cms.gov/files/document/03092020-covid-19-faqs-508.pdf.
    Comment: While three commenters supported the temporary revision to 
expand covered ground ambulance destinations during the PHE for the 
COVID-19 only, the commenters also recommended that CMS evaluate the 
effectiveness of this interim expansion and consider developing 
permanent revisions that can address broader issues. One commenter 
stated that an appropriate flexibility would provide alternatives to 
transporting a patient to a hospital emergency department when a lower 
level of care would meet patient needs safely, more efficiently, and at 
reduced cost to the beneficiary. The commenter further stated that 
hospital emergency departments are routinely overburdened, even before 
the current pandemic, often with patients not in need of emergency 
care. One commenter stated that given the likelihood that this policy 
change will result in a better patient care experience, a lower cost of 
care, and improved efficiencies for fire departments and EMS agencies, 
suggested CMS to make this change permanent.
    Response: The CMS Innovation Center currently has an Emergency 
Triage, Treatment and Transport (ET3) Model which is a voluntary, 5-
year payment model that will pay participants to transport to an 
alternative destination partner or initiate and facilitate treatment in 
place with a qualified health care partner, either at the scene of the 
911 emergency response or via telehealth. We continue to believe that 
this model is well designed to evaluate the potential benefits 
described by the commenters in a broader set of circumstances that are 
not ascribed to a public health emergency. Due to the urgency of 
establishing the flexibility, we were unable to develop tracking 
mechanisms for such an analysis. To reduce burden so the focus would be 
on patient care, we instructed ground ambulance providers and suppliers 
to report the existing ambulance modifiers instead of developing new 
modifiers for each for covered destination.
    We continue to believe that our current regulatory requirements 
governing coverage of ambulance services are appropriate under non-PHE 
circumstances. Therefore, we are finalizing our interim final policy 
that the expanded list of covered destinations for ground ambulance 
transports was for the duration of the PHE for the COVID-19 only. These 
destinations include, but are not limited to, any location that is an 
alternative site determined to be part of a hospital, CAH or SNF, 
community mental health centers, FQHCs, RHCs, physician offices, urgent 
care facilities, ASCs, any location furnishing dialysis services 
outside of an ESRD facility when an ESRD facility is not available, and 
the beneficiary's home.
    When the PHE for the COVID-19 ends, our regulations will reflect 
the long-standing ambulance services coverage for the following 
destinations: hospital; CAH; rural emergency hospital (REH) (effective 
with services on or after January 1, 2023); SNF; beneficiary's home; 
and dialysis facility for an end-stage renal disease (ESRD) patient who 
requires dialysis. Any future refinements to the list of covered ground 
ambulance destinations will be addressed in rulemaking with an 
opportunity for the public to comment.

VI. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et 
seq.), 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. For the purposes of the PRA and 
this section of the preamble, collection of information is defined 
under 5 CFR 1320.3(c) of OMB's implementing regulations.
    To fairly evaluate whether an information collection should be 
approved by OMB, PRA section 3506(c)(2)(A) requires that we solicit 
comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our burden estimates.
     The quality, utility, and clarity of the information to be 
collected.
     Our effort to minimize the information collection burden 
on the affected public, including the use of automated collection 
techniques.
    In our April 6, 2020 IFC (85 FR 19230), November 19, 2021 IFC (86 
FR 66031), and July 29, 2022 proposed rule (87 FR 45860), we solicited 
public comment on each of the required issues under section 
3506(c)(2)(A) of the PRA for the following information collection 
requirements. The comments received are responded to in the sections 
below.

[[Page 70132]]

A. Wage Estimates

    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' May 2021 National Occupational Employment and Wage 
Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm). In this regard, Table 101 presents BLS' mean hourly wage, 
our estimated cost of fringe benefits and overhead (calculated at 100 
percent of salary), and our adjusted hourly wage. There are many 
sources of variance in the average cost estimates, 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. Therefore, we believe that doubling the hourly 
wage to estimate the average cost for the purpose of calculating total 
cost is a reasonably accurate estimation method.
[GRAPHIC] [TIFF OMITTED] TR18NO22.141

    In the data from the U.S. Bureau of Labor Statistics' May 2021 
National Occupational Employment and Wage Estimates for all salary 
estimates (http://www.bls.gov/oes/current/oes_nat.htm), there is no 
single occupational code that we could use for ``Physician'' wage data. 
As shown in Table 102, in order to estimate the burden for Physicians, 
we are using a rate of $259.98/hr which is the average of the mean wage 
rates for Anesthesiologists; Family Medicine Physicians; General 
Internal Medicine Physicians; Obstetricians and Gynecologists; 
Pediatricians, General; Physicians, All Other; Psychiatrists; 
Orthopedic Surgeons, Except Pediatric; Pediatric Surgeons; Surgeons, 
All Other; and Surgeons, Except Ophthalmologists [($318.44/hr + 
$226.86/hr + $232.88/hr + $284.82/hr + $190.80/hr + $222.60/hr + 
$240.16/hr + $294.44/hr + $279.14/hr + $286.34/hr + $283.20/hr) / 11]. 
In the average
[GRAPHIC] [TIFF OMITTED] TR18NO22.142


[[Page 70133]]


    As indicated, we adjusted BLS' hourly wage estimates by a factor of 
100 percent to obtain the adjusted hourly wage estimate. 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, we believe that doubling the hourly wage to 
estimate total cost is a reasonably accurate estimation method.

B. Information Collection Requirements (ICRs)

    The following ICRs are listed in the order of their appearance in 
sections II., III., IV., and V. of this final rule.
1. ICRs Requiring Manufacturers of Certain Single-Dose Container or 
Single-Use Package Drugs To Provide Refunds With Respect to Discarded 
Amounts (Sec.  414.940)
    The following changes will be submitted to OMB for approval under 
control number 0938-New (CMS-10835).
    As discussed in section III.A.7. of this final rule, as a part of 
implementing section 1847A(h) of the Act, as added by section 90004 of 
the Infrastructure Act, we recognize the need for establishing a 
dispute resolution process because of the nature of determining the 
estimated total allowed charges for a given calendar quarter and the 
methods by which the estimated refund amount is determined. We are 
finalizing that each manufacturer has an opportunity to dispute the 
report, described in section III.A.4. of this final rule, by submitting 
an error report.
    We are finalizing that to assert that there have been one or more 
errors in the report, a manufacturer must submit a dispute with each 
asserted error. The dispute must include the following information: (1) 
Manufacturer name and address; (2) The name, telephone number, and 
email address of one or more employees or representatives of the 
manufacturer with whom the Secretary may discuss the claimed errors; 
(3) For a mathematical calculation error, the specific calculation 
element(s) that the manufacturer disputes and its proposed corrected 
calculation; and (4) For any other asserted error, an explanation of 
the nature of the error, how the error affects the refund calculation, 
an explanation of how the manufacturer established that an error 
occurred, the proposed correction to the error, and an explanation of 
why the Secretary should use the proposed corrected data instead.
    As discussed in section VII.E.1. of this final rule, our estimates 
show a projected 25 billing and payment codes meeting the definition of 
refundable single-dose container or single-use package drug with 10 
percent or more discarded units, which is the applicable percentage 
specified in section 1847A(h)(3) of the Act. Therefore, we anticipate a 
similar number of drugs could owe a refund pursuant section 90004 of 
the Infrastructure Act. Since each of these billing and payment codes 
is a single source drug code, each code represents 1 manufacturer and 
we expect disputes from fewer than 10 manufacturers per year.
    Consistent with the estimated annual burden per response/
recordkeeper for similar error reports utilized to implement the 
Branded Prescription Drug Fee (76 FR 51310), we estimate the annual 
time per respondent/recordkeeper to be 40 hours. As we anticipate no 
more than 10 disputes per year, we estimate a total annual reporting 
and recordkeeping burden of 400 hours (10 error reports per year x 40 
hr per response) at a cost of $15,800 ($39.50/hr x 400 hr).
2. ICRs Regarding the Clinical Laboratory Fee Schedule: Data Reporting 
by Laboratories
    As described in section III.C.5. of this final rule, under the 
Clinical Laboratory Fee Schedule, ``reporting entities'' must report to 
CMS during a ``data reporting period'' ``applicable information'' 
collected during a ``data collection period'' for their component 
``applicable laboratories'' and we revised the regulations at Sec.  
414.504(a)(1) to account for a delay in reporting until January 1, 2023 
through March 31, 2023. As stated in section 1834A(h)(2) of the Act 
chapter 35 of title 44 U.S.C., which includes such provisions as the 
PRA does not apply to information collected under section 1834A of the 
Act. Consequently, we are not setting out any requirements or burden 
for public review and OMB approval as prescribed under the PRA.
3. ICRs Regarding the Medicare Shared Savings Program
    Section 1899(e) of the Act provides that chapter 35 of title 44 
U.S.C., which includes such provisions as the PRA, shall not apply to 
the Shared Savings Program. Accordingly, we are not setting out burden 
under the authority of the PRA. Please refer to section VII.E.7. of 
this final rule for a discussion of the impacts associated with the 
changes to the Shared Savings Program as described in section III.G. of 
this final rule.
4. ICRs for Medical Necessity and Documentation Requirements for 
Nonemergency, Scheduled, Repetitive Ambulance Services (Sec.  
410.40(e)(2)(ii))
    In section III.I. of this final rule, we discuss our clarifications 
to Sec.  410.40(e)(2)(ii) that reorganize existing language and state 
that the PCS and additional documentation from the beneficiary's 
medical record may be used to support a claim that transportation by 
ground ambulance is required. We are also clarifying that the PCS and 
additional documentation must provide detailed explanations, that are 
consistent with the beneficiary's current medical condition, that 
explains the beneficiary's need for transport by an ambulance. Finally, 
we are clarifying that coverage includes observation or other services 
rendered by qualified ambulance personnel. We do not expect that our 
proposal will yield a change in the information collection requirements 
or burden that is currently approved by OMB under control number 0938-
1380 (CMS-10708) and 0938-0969 (CMS-10417) as this policy does not 
require providers and suppliers to submit additional information. We 
are simply clarifying existing policy requirements. We did not receive 
any comments on our proposed clarifications and are finalizing as-
proposed.
5. ICRs for Medicare Provider and Supplier Enrollment Changes (Sec.  
424.518)
    This rule revises Sec.  424.518 as follows:
     Add provider or supplier ownership changes as provider 
enrollment transactions falling within the scope of Sec.  424.518. (As 
explained in section III.J. of this final rule, the applicable owner(s) 
will have to submit fingerprints and be subject to a fingerprint-based 
criminal background check if the provider or supplier is in the 
``high'' level of categorical screening.)
     State that any screening level adjustment to ``high'' also 
applies to all other enrolled and prospective providers and suppliers 
that have the same legal business name and tax identification number as 
the provider or supplier that originally triggered the screening level 
increase.
     Moves SNFs from the ``limited'' level of categorical 
screening to the ``high'' screening level.
    These changes will result in an increase in the annual number of 
providers and suppliers that must submit the fingerprints for a 
national background check (via FBI Applicant Fingerprint Card FD-258) 
of all individuals who maintain a 5 percent or

[[Page 70134]]

greater direct or indirect ownership interest in the provider or 
supplier. The burden is currently approved by OMB under control number 
1110-0046. We are not scoring the burden under this ICR section since 
the fingerprint card is not owned by CMS. However, an analysis of the 
impact of this requirement can be found in the RIA section of this 
rule.
    None of our other Medicare provider enrollment provisions implicate 
information collection requirements.
6. ICRs for State Options for Implementing Medicaid Provider Enrollment 
Affiliation Provision
    We do not anticipate any information collection burden associated 
with our revision to Sec.  455.107(b), for the latter merely involves 
giving the states somewhat greater flexibility in executing the 
provisions of Sec.  455.107.
7. ICRs Requirement for Electronic Prescribing for Controlled 
Substances for a Covered Part D Drug Under a Prescription Drug Plan or 
an MA-PD Plan (Section 2003 of the SUPPORT Act)
    In section III.L. of this final rule, we extended the existing 
compliance action of sending letters to non-compliant prescribers from 
the CY 2023 EPCS program implementation year (January 1, 2023 through 
December 31, 2023) to the CY 2024 year (January 1, 2024 through 
December 31, 2024). Additionally, effective January 1, 2023, we changed 
the year from which PDE data is used from the preceding year to the 
current evaluated year when CMS determines whether a prescriber 
qualified for an exception based on the number of Part D controlled 
substance prescriptions (Sec.  423.160(a)(5)(ii)). We also will 
determine whether a prescriber qualifies for the emergency or disaster 
exception (Sec.  423.160(a)(5)(iii)) based on the prescriber's valid 
address in PECOS (Medicare Provider Enrollment, Chain, and Ownership 
System), instead of the NCPDP Pharmacy Database address, and for 
prescribers who are not enrolled or do not have a valid PECOS address, 
we will use the address in the National Plan and Provider Enumeration 
System (NPPES) data. We do not expect that our finalized policies will 
yield a change in the information collection burdens described in CY 
2022 PFS final rule (86 FR 65562 through 65564). We would like to 
clarify that the data collections discussed in CY 2022 PFS final rule 
will now be submitted through the standard PRA process under a new PRA 
package (OMB control number pending, CMS-10834) rather than submitted 
under OMB control number 0938-1396 (CMS-10755) as we stated in the CY 
2022 PFS final rule (86 FR 65562). The standard PRA process includes 
the publication of 60- and 30-day Federal Register notices that will 
provide the public with opportunities for public review and comment.
8. ICRs Regarding the Medicare Ground Ambulance Data Collection System 
(Sec.  414.626)
    Section 1834(l)(17) of the Act requires that the Secretary develop 
a ground ambulance data collection system that collects cost, revenue, 
utilization, and other information determined appropriate by the 
Secretary with respect to providers of services and suppliers of ground 
ambulance services (ground ambulance organizations). Section 
1834(l)(17)(I) of the Act states that the PRA does not apply to the 
collection of information required under section 1834(l)(17) of the 
Act. Accordingly, this collection of information section does not set 
out any burden for the provisions. Please see section VII. of this 
preamble for a discussion of the estimated impacts.
    We did not receive any public comments on our claim that the 
provision is exempt from the PRA and are finalizing that claim as 
proposed.
9. The Quality Payment Program (QPP) (42 CFR Part 414 and Section IV. 
of This Final Rule)
    The following QPP-specific ICRs reflect this final rule's policy 
changes as well as adjustments to the policies that have been finalized 
in the CY 2017 and CY 2018 Quality Payment Program final rules (81 FR 
77008 and 82 FR 53568, respectively), CY 2019, CY 2020, CY 2021, and CY 
2022 PFS final rules (83 FR 59452, 84 FR 62568,85 FR 84472, and 86 FR 
64996, respectively) due to revised assumptions based on updated 
available at the time of the publication of this final rule.
a. Background
(1) ICRs Associated With MIPS and Advanced APMs
    There is a series of ICRs associated with the Quality Payment 
Program, including for MIPS and Advanced APMs. The following sections 
describe the changes in the estimated burden for the information 
collections relevant to the revisions in the policies associated with 
the CY 2023 PFS final rule and the finalized revisions to our currently 
approved information requests for MIPS and Advanced APM ICRs. The 
finalized estimated burden will be submitted to OMB under control 
number OMB 0938-1314 (CMS-10621). We note that CMS has already received 
approvals for the collection of information associated with the CAHPS 
for MIPS survey under OMB control number 0938-1222 (CMS-10450) and the 
virtual group election process under OMB control number 0938-1343 (CMS-
10652).
(2) Summary of Quality Payment Program Changes: MIPS
    We have included the change in estimated burden for the CY 2023 
performance period/2025 MIPS payment year due to the finalized policies 
and information collections in this final rule. The finalized policies 
in this rule impact the burden estimates for the CY 2023 MIPS 
performance period/2025 MIPS payment year.
    The following six MIPS ICRs show changes in burden due to the 
finalized policies in this rule: (1) Quality performance category data 
submission by Medicare Part B claims collection type; (2) Quality 
performance category data submission by QCDR and MIPS CQM collection 
type; (3) Quality performance category data submission by eCQM 
collection type; (4) MVP quality performance category submission; (5) 
MVP registration, and (6) Promoting Interoperability performance 
category data submission. In aggregate, we estimate the finalized 
policies will result in a net decrease in burden of 3,708 hours and 
$405,213 for the CY 2023 performance period/2025 MIPS payment year. The 
remaining changes to our currently approved burden estimates are 
adjustments due to the revised burden assumptions based on the updated 
data available at the time of publication of this final rule. As 
discussed in section IIV.E.16.a. of this final rule, we are basing our 
estimates on the newly available CY 2021 MIPS performance period data.
    We have added one new ICR, ``third party intermediary plan 
audits,'' in section VI.B.9.c. of this rule for third party 
intermediaries to distinctly capture the burden related to: (1) QCDR 
and qualified registry targeted audits as established under the 
conditions for approval at Sec.  414.1400(b)(3)(vi) through (viii); and 
(2) all the requirements for remedial action and termination at Sec.  
414.1400(e). For simplicity, we added this ICR to capture the 
requirements and burden for third party intermediaries to submit 
additional requirements for compliance with both the conditions of 
approval and remedial action and termination criteria under one ICR. We 
note that the addition of this ICR is not due to policy changes in this 
rule, but rather it is a change in our approach to representing the 
currently approved estimated burden for the ICRs related to the third 
party intermediaries in the CY

[[Page 70135]]

2022 PFS final rule. (86 FR 65569 through 65576).
    We are not making any changes or adjustments to the following ICRs: 
Registration for virtual groups; CAHPS survey vendor applications; 
group registration for CAHPS for MIPS survey; CAHPS for MIPS survey 
beneficiary participation; subgroups registration; call for Promoting 
Interoperability measures; nomination of improvement activities and 
opt-out of performance data display on Compare Tools for voluntary 
participants. See section VI.B.9. of this final rule for a summary of 
the ICRs, the overall burden estimates, and a summary of the assumption 
and data changes affecting each ICR.
    The accuracy of our estimates of the total burden for data 
submission under the quality, Promoting Interoperability, and 
improvement activities performance categories may be impacted by two 
primary factors. First, we are unable to predict with absolute 
certainty who will be a QP for the CY 2023 performance period/2025 MIPS 
payment year. New eligible clinician participants in Advanced APMs who 
become QPs will be excluded from MIPS reporting requirements and 
payment adjustments, and as such, are unlikely to report under MIPS; 
while some current Advanced APM participants may end participation such 
that the APM Entity's eligible clinicians may not be QPs for a year 
based on Sec.  414.1425(c)(5), and thus be required to report under 
MIPS. Second, it is difficult to predict what Partial QPs, who can 
elect whether to report to MIPS, will do in the CY 2023 performance 
period/2025 MIPS payment year compared to the CY 2021 performance 
period/2023 MIPS payment year, and therefore, the actual number of 
Advanced APM participants and how they elect to submit data may be 
different than our estimates. However, we believe our estimates are the 
most appropriate given the available data. Additionally, we will 
continue to update our estimates annually as data becomes available.
(3) Summary of Quality Payment Program Changes: Advanced APMs
    For these ICRs (identified above under, ``ICRs Associated with MIPS 
and Advanced APMs''), the changes to currently approved burden 
estimates are adjustments based on updated projections for the CY 2023 
performance period/2025 MIPS payment year. We did not implement any 
changes to the Other Payer Advanced APM identification: Payer Initiated 
and Eligible Clinician Initiated Processes; and submission of Data for 
QP determinations under the All-Payer Combination Option.
(4) Framework for Understanding the Burden of MIPS Data Submission
    Because of the wide range of information collection requirements 
under MIPS, Table 103 presents a framework for understanding how the 
organizations permitted or required to submit data on behalf of 
clinicians vary across the types of data, and whether the clinician is 
a MIPS eligible clinician or other eligible clinician voluntarily 
submitting data, MIPS APM participant, or an Advanced APM participant. 
As shown in the first row of Table 103, MIPS eligible clinicians and 
other clinicians voluntarily submitting data will submit data either as 
individuals, groups, or virtual groups for the quality, Promoting 
Interoperability, and improvement activities performance categories. 
Note that virtual groups are subject to the same data submission 
requirements as groups, and therefore, we will refer only to groups for 
the remainder of this section unless otherwise noted. Beginning with 
the CY 2023 performance period/2025 MIPS payment year, clinicians could 
also participate as subgroups for reporting measures and activities in 
a MIPS Value Pathway (MVP). We note that the subgroup reporting option 
is not available for clinicians participating in traditional MIPS.
    Because MIPS eligible clinicians are not required to submit any 
additional information for assessment under the cost performance 
category, the administrative claims data used for the cost performance 
category is not represented in Table 103.
    For MIPS eligible clinicians participating in MIPS APMs, the 
organizations submitting data on behalf of MIPS eligible clinicians 
will vary between performance categories and, in some instances, 
between MIPS APMs. We previously finalized in the CY 2021 PFS final 
rule that the APP is available for both ACO participants and non-ACO 
participants to submit quality data (85 FR 84859 through 84866). Due to 
data limitations and our inability to determine who will use the APM 
Performance Pathway versus the traditional MIPS submission mechanism 
for the CY 2023 performance period/2025 MIPS payment year, we assume 
ACO APM Entities will submit data through the APM Performance Pathway, 
using the CMS Web Interface option, and non-ACO APM Entities will 
participate through traditional MIPS, thereby submitting as an 
individual or group rather than as an entity. We also want to note that 
as finalized in the CY 2022 PFS final rule (86 FR 65259 through 65263), 
the CMS Web Interface collection type is available through the CY 2024 
performance period/2026 MIPS payment year only for clinicians 
participating in the Shared Savings Program. Per section 1899 of the 
Act (42 U.S.C. 1395jjj), submissions received from eligible clinicians 
in ACOs are not included in burden estimates for this final rule 
because quality data submissions to fulfill requirements of the Shared 
Savings Program are not subject to the PRA.
    For the Promoting Interoperability performance category, group TINs 
may submit data on behalf of eligible clinicians in MIPS APMs, or 
eligible clinicians in MIPS APMs may submit data individually. As 
described in section IV.A.6.c.(5)(b) of this final rule, we finalized 
the introduction of a voluntary reporting option for APM Entities to 
report the Promoting Interoperability performance category at the APM 
Entity level beginning with the CY 2023 performance period/2025 MIPS 
payment year. For the improvement activities performance category, we 
will assume no reporting burden for MIPS APM participants. In the CY 
2017 QPP final rule, we described that for MIPS APMs, we compare the 
requirements of the specific MIPS APM with the list of activities in 
the improvement activities Inventory and score those activities in the 
same manner that they are otherwise scored for MIPS eligible clinicians 
(81 FR 77185). Although the policy allows for the submission of 
additional improvement activities if a MIPS APM receives less than the 
maximum improvement activities performance category score, to date all 
MIPS APM have qualified for the maximum improvement activities score. 
Therefore, we assume that no additional submission will be needed.
    Eligible clinicians who attain Partial QP status may incur 
additional burden if they elect to participate in MIPS, which is 
discussed in more detail in the CY 2018 PFS final rule (82 FR 53841 
through 53844).
BILLING CODE 4150-28-P

[[Page 70136]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.143

BILLING CODE 4150-28-C
    The policies finalized in the CY 2017 and CY 2018 Quality Payment 
Program final rules (81 FR 77008 and 82 FR 53568), the CY 2019, CY 
2020, CY 2021,

[[Page 70137]]

and CY 2022 PFS final rules (83 FR 59452, 84 FR 62568, 85 FR 84472 and 
86 FR 64996), and continued in this final rule create some additional 
data collection requirements not listed in Table 103. These additional 
data collections, some of which are currently approved by OMB under the 
control numbers 0938-1314 (Quality Payment Program, CMS-10621) and 
0938-1222 (CAHPS for MIPS, CMS-10450), are as follows:
    Additional ICRs related to MIPS third-party intermediaries (see 
section VI.B.9. of this final rule):
     Self-nomination of new and returning QCDRs (81 FR 77507 
through 77508, 82 FR 53906 through 53908, and 83 FR 59998 through 
60000) (OMB 0938-1314).
     Self-nomination of new and returning registries (81 FR 
77507 through 77508, 82 FR 53906 through 53908, and 83 FR 59997 through 
59998) (OMB 0938-1314)
     Third party intermediary plan audits (New)
     Approval process for new and returning CAHPS for MIPS 
survey vendors (82 FR 53908) (OMB 0938-1222).
     Open Authorization Credentialing and Token Request Process 
(OMB 0938-1314) (85 FR 84969 through 84970).
    Additional ICRs related to the data submission and the quality 
performance category (see section VI.B.9. of this final rule):
     CAHPS for MIPS survey completion by beneficiaries (81 FR 
77509, 82 FR 53916 through 53917, and 83 FR 60008 through 60009) (OMB 
0938-1222).
     Quality Payment Program Identity Management Application 
Process (82 FR 53914 and 83 FR 60003 through 60004) (OMB 0938-1314).
    Additional ICRs related to the Promoting Interoperability 
performance category (see section VI.B.9.g. of this final rule):
     Reweighting Applications for Promoting Interoperability 
and other performance categories (82 FR 53918 and 83 FR 60011 through 
60012) (OMB 0938-1314).
    Additional ICRs related to call for new MIPS measures and 
activities (see sections VI.B.9.f., VI.B.9.h., VI.B.9.j., and VI.B.9.k. 
of this final rule):
     Nomination of improvement activities (82 FR 53922 and 83 
FR 60017 through 60018) (OMB 0938-1314).
     Call for new Promoting Interoperability measures (83 FR 
60014 through 60015) (OMB 0938-1314).
     Call for MIPS quality measures (83 FR 60010 through 60011) 
(OMB 0938-1314).
     Nomination of MVPs (85 FR 84990 through 84991) (OMB 0938-
1314)
    Additional ICRs related to MIPS (see section VI.B.9.o. of this 
final rule):
     Opt out of performance data display on Compare Tools for 
voluntary reporters under MIPS (82 FR 53924 through 53925 and 83 FR 
60022) (OMB 0938-1314).
    Additional ICRs related to APMs (see sections VI.B.9.m. and 
VI.B.9.n. of this final rule):
     Partial QP Election (81 FR 77512 through 77513, 82 FR 
53922 through 53923, and 83 FR 60018 through 60019) (OMB 0938-1314).
     Other Payer Advanced APM determinations: Payer Initiated 
Process (82 FR 53923 through 53924 and 83 FR 60019 through 60020) (OMB 
0938-1314).
     Other Payer Advanced APM determinations: Eligible 
Clinician Initiated Process (82 FR 53924 and 83 FR 60020) (OMB 0938-
1314).
     Submission of Data for All-Payer QP Determinations (83 FR 
60021) (OMB 0938-1314).
b. ICRs Regarding the Virtual Group Election (Sec.  414.1315)
    This rule does not create any new or revised collection of 
information requirements or burden related to the virtual group 
election. The virtual group election requirements and burden are 
currently approved by OMB under control number 0938-1343 (CMS-10652). 
Consequently, we are not making any changes under that control number.
c. ICRs Regarding Third Party Intermediaries (Sec.  414.1400)
    The following changes will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621).
    In the CY 2022 PFS final rule, for the burden related to the third 
party intermediaries, we combined the burden associated with the 
submission of: targeted audits, corrective action plans, participation 
plans and transition plans under the ICRs for QCDR and qualified 
registry self-nomination process (86 FR 65569 through 65576). In the CY 
2023 PFS proposed rule, we proposed changes in our existing approach to 
capture the estimated burden for third party intermediaries (87 FR 
46346). We proposed to separate the burden for submission of the 
targeted audits and other plans listed above under the ICR for third 
party intermediary plan audits. We stated that the change more 
accurately captures the associated burden for the QCDR and qualified 
registry self-nomination process because not every QCDR or qualified 
registry that submits a self-nomination application will also submit a 
targeted audit, corrective action plan (CAP), participation plan, or a 
transition plan. We are finalizing the proposed addition of the new 
ICR. This change is not due to any finalized policies related to third 
party intermediaries in this rule, rather it is a change in 
representing the estimated burden from adopted policies.
    In section IV.A.6.g.(1)(b) of this rule, we finalized the proposed 
updates to the definition of a third party intermediary at Sec.  
414.1305, and to make other minor conforming technical edits to the CFR 
governing third party intermediaries set forth in Sec.  414.1400. We 
also finalized our proposal to revise QCDR measure self-nomination and 
measure approval requirements to delay the QCDR measure testing 
requirement for traditional MIPS by an additional year, until the CY 
2024 performance period/CY 2026 MIPS payment year.
(1) Background
    Under MIPS, the quality, Promoting Interoperability, and 
improvement activities performance category data may be submitted via 
relevant third party intermediaries, such as qualified registries, 
QCDRs, and health IT vendors. Data on the CAHPS for MIPS survey, which 
counts as either one quality performance category measure, or towards 
an improvement activity, can be submitted via CMS-approved survey 
vendors. Entities seeking approval to submit data on behalf of 
clinicians as a qualified registry, QCDR, or survey vendor must 
complete a self-nomination process annually.\563\ The processes for 
self-nomination of entities seeking approval as qualified registries 
and QCDRs are similar with the exception that QCDRs have the option to 
nominate QCDR measures for approval for the reporting of quality 
performance category data. Therefore, differences between QCDRs and 
qualified registry self-nomination are associated with the preparation 
of QCDR measures for approval.
---------------------------------------------------------------------------

    \563\ As stated in the CY 2019 PFS final rule (83 FR 59998), 
health IT vendors are not included in the burden estimates for MIPS.
---------------------------------------------------------------------------

(2) QCDR Self-Nomination Applications
    As described below, in this rule we are adjusting the number of 
self-nomination applications used to calculate our burden estimates 
based on current data (from 84 to 63) from the CY 2022 QCDR self-
nomination period for the CY 2023 performance period/2025 MIPS payment 
year. We are also adjusting our estimates for the number of existing or 
borrowed QCDR measures submitted for consideration by each

[[Page 70138]]

QCDR at the time of self-nomination and the average time required to 
submit information for each QCDR measure. We refer readers to the CY 
2017 and CY 2018 Quality Payment Program final rules (81 FR 77507 
through 77508, and 82 FR 53906 through 53908, respectively), and the CY 
2019, CY 2020, CY 2021 and CY 2022 PFS final rules (83 FR 59998 through 
60000, 84 FR 63116 through 63121, 85 FR 84964 through 84969, and 86 FR 
65569 through 65573, respectively) for our previously finalized 
requirements and estimated burden for self-nomination of QCDRs and 
nomination of QCDR measures.
(a) Self-Nomination Process and Other Requirements
    In this rule, as explained below due to availability of updated 
data, we are adjusting: (1) the number of self-nomination applications 
(from 84 to 63) and (2) the estimated time required for QCDRs to submit 
a self-nomination application for the simplified (from 9.5 hours to 8.1 
hours) and full self-nomination process (from 11.5 hours to 10.1 hours) 
due to an adjustment in the estimated weighted average time required 
for each QCDR to submit a measure (from 0.75 to 0.63 hours). In section 
IV.A.6.g.(1)(b) of this rule, we discuss our updates to the definition 
of a third party intermediary at Sec.  414.1305 to align with existing 
policies and to make other minor conforming technical edits to the 
regulation text governing third party intermediaries set forth in Sec.  
414.1400. We assume that the revised definition of a (third party 
intermediary) and the conforming technical edits do not require 
additional information or change any of our active burden estimates 
during the self-nomination process. Therefore, we are not making such 
revisions under the aforementioned OMB control number.
(b) QCDR Measure Requirements
    We previously finalized QCDR measure self-nomination requirements 
at Sec.  414.1400(b)(4)(i), including the requirement at Sec.  
414.1400(b)(4)(i)(B) that entities must publicly post the measure 
specifications for QCDR measures no later than 15 calendar days 
following CMS' approval of any QCDR measure specifications.
    In section IV.A.6.g.(2)(b) of this rule, we are finalizing our 
proposed revision to Sec.  414.1400(b)(4)(i)(B) that clarifies 
requirements for publicly posting the QCDR measure specifications. 
Specifically, we are finalizing our proposal to revise QCDR measure 
self-nomination and measure approval requirements, including to delay 
the QCDR measure testing requirement for traditional MIPS by an 
additional year, until the CY 2024 performance period/2026 MIPS payment 
year. We are finalizing our proposal to continue delaying this 
requirement based on our recognition of the continuing impact of the 
COVID-19 public health emergency on the ability of QCDRs to test 
measures. We will not revise or adjust our active requirements or 
burden estimates as a result of this clarification because the 
finalized policy will only delay measure testing requirements and it 
will not substantively change the estimated average weighted time of 
0.63 hours (discussed below in section) required for a QCDR to submit 
information for a QCDR measure at the time of self-nomination.
    Additionally, in section IV.A.6.g.(2)(c) of this rule, we finalized 
our proposal to amend Sec.  414.1400(b)(4)(iii)(A)(3) to delay the 
requirement for QCDR measure full testing until the CY 2024 performance 
period/2026 MIPS payment year. We will not revise or adjust our active 
requirements or burden estimates as result of this change because we 
assume that the delay does not meaningfully change the existing 
requirements, or the time required for a QCDR to submit information for 
a QCDR measure at the time of self-nomination.
    Based on the number of QCDR measures submitted for consideration 
during the CY 2022 QCDR self-nomination period for the CY 2023 
performance period/2025 MIPS payment year, we continue to estimate that 
each QCDR will submit 12 measures, on average. However, we are 
adjusting our estimated number of new (from 2 to 1) and existing or 
borrowed measures from 10 to 11 based on the number of QCDRs that 
borrowed measures during the CY 2022 QCDR self-nomination period. Due 
to this change, we are also adjusting the estimated weighted average 
time required for each QCDR to submit a measure from 0.75 hours to 0.63 
hours [((1 new measure x 2 hr) + (11 existing or borrowed measures x 
0.5 hr))/total # of measures (12)] (a change of 0.12 hours). We note 
that we are not revising or adjusting our active estimated per response 
time for a QCDR to submit a new measure (2 hr/response) and an existing 
or borrowed measure (0.5 hr/response).
    Based on the actual number of applications received during the CY 
2022 self-nomination period for the CY 2023 performance period/2025 
MIPS payment year, we are adjusting the number of QCDRs that will 
submit self-nomination applications in the CY 2023 PFS proposed rule 
(87 FR 46347) from 90 to 63 (a decrease of 27 self-nomination 
applications). Based on the updated data, this will result in a 
decrease of 21 self-nomination applications (from 84 to 63) from the 
currently approved number of QCDR self-nomination applications.
    We note that we are not making any changes to the currently 
approved time of 0.5 hours required for the QCDR simplified self-
nomination process and 2.5 hours for the full self-nomination process. 
For QCDRs that submit measures as part of their self-nomination 
process, due to the estimated increase in the number of existing or 
borrowed QCDR measures and a decrease in the number of new QCDR 
measures submitted with the self-nomination application discussed 
above, we are adjusting our estimated time for the QCDR self-nomination 
process from a minimum of 8.1 hours [0.5 hr for the simplified self-
nomination process + (12 measures x 0.63 hr/measure for QCDR measure 
submission)] to a maximum of 10.1 hours [2.5 hr for the full self-
nomination process + (12 measures x 0.63 hr/measure for QCDR measure 
submission)]. In this regard the minimum time has decreased by 1.4 
hours (from 9.5 to 8.1) while the maximum time has decreased by 1.4 
hours (from 11.5 to 10.1).
    Based on the above assumptions, we provide an estimate of the total 
annual burden associated with a QCDR self-nominating to be considered 
``qualified'' to submit quality measures results and numerator and 
denominator data on behalf of MIPS eligible clinicians.
    As shown in Table 104, we assume that the staff involved in the 
QCDR self-nomination process will continue to be computer systems 
analysts or their equivalent, who have an average adjusted labor rate 
of $98.28/hr. We estimate the burden per response will range between 
S796.06 (8.1 hr x $98.28/hr) for the simplified self-nomination process 
and $992.63 (10.1 hr x $98.28/hr) for the full self-nomination process. 
In aggregate, the estimated annual burden for the simplified and full-
self nomination process for 63 QCDRs will range from 510 hours (63 
responses x 8.1 hr) to 636 hours (63 responses x 10.1 hr)at a cost 
ranging from $50,152 (63 responses x $796.06/hr) to $62,536 63 
responses x $992.63).

[[Page 70139]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.144

    As shown in Table 105, we use the currently approved burden as the 
baseline for calculating the net change in burden for the QCDR self-
nomination process. For the CY 2023 performance period/2025 MIPS 
payment year, the change in the representation of burden for this ICR 
described above and the estimated decrease of 21 respondents results in 
a change of minus 408 hours and minus $40,069 for the simplified self-
nomination process (or minimum burden) and minus 540 hours and minus 
$53,041 for the full self-nomination process (or maximum burden). We 
note that the decrease in burden accounts for the change due to 
separating the estimated burden for targeted audits, CAPs, and 
participation plans and including that burden under a new ICR for third 
party intermediary plan audits (see Table 109).
    We note that for the purpose of scoring the impact of this rule, we 
use only the maximum burden estimate in Tables 142, 143, and 145 of 
this rule.
[GRAPHIC] [TIFF OMITTED] TR18NO22.145

    We did not receive any comments on our proposed requirements and 
burden estimates for the QCDR self-nomination process. As discussed 
above in this section, we adjusted the burden estimates from the CY 
2023 PFS proposed rule (87 FR 46346 through 46348) due to the 
availability of updated data.
(3) Qualified Registry Self-Nomination Process and Other Requirements
    We refer readers to Sec.  414.1400 which states that qualified 
registries interested in submitting MIPS data to us on behalf of MIPS 
eligible clinicians, groups, or virtual groups need to complete a self-
nomination process to be considered for approval to do so.
    In section IV.A.6.g.(1)(b) of this rule, we finalized the updated 
definition of a third party intermediary at Sec.  414.1305 to include 
subgroups and APM Entities and to make minor edits for technical 
clarity. The revised definition of a third party intermediary will 
update the CFR to align with existing policy and does not create and 
new or revised requirements or burden. The number of respondents is 
unaffected by this change.
    Based on the actual number of applications received during the CY 
2022 self-nomination period for the CY 2023 performance period/2025 
MIPS payment year, we are adjusting the number of qualified registries 
that will submit self-nomination applications in the CY 2023 PFS 
proposed rule (87 FR 46348), from 160 to 132. For this final rule, we 
estimate that 132 qualified registries will submit applications for 
self-nomination for the CY 2023 performance period/2025 MIPS payment 
year, a decrease of 15 applications from the currently approved 
estimate of 147 (86 FR 65574). We note that we are not making any 
changes to our currently approved per response time estimate of 0.5 
hours for the simplified qualified registry self-

[[Page 70140]]

nomination process and 2 hours for the full qualified registry self-
nomination process (86 FR 65574 through 65575).
    As shown in Table 106, we assume that the staff involved in the 
qualified registry self-nomination process will continue to be computer 
systems analysts or their equivalent, who have an average labor rate of 
$98.28/hr. Using the change in estimated number of respondents, 
combined with the estimated time required for a self-nomination process 
ranging from a minimum of 0.5 hours to a maximum of 2 hours, we 
estimate that the burden ranges from a minimum of 66 hours (132 
responses x 0.5 hr) and $6,487 (132 hr x $98.28/hr) to a maximum of 264 
hours (132 applications x 2 hr) to $25,946 (264 hr x $98.28/hr), 
respectively.
    Both the minimum and maximum burden shown in Table 106 reflect the 
updates in the estimated burden due to availability of more recent 
data. Based on the assumptions discussed in this section, we provide an 
estimate of the total annual burden associated with a qualified 
registry self-nominating to be considered ``qualified'' to submit 
quality measures results and numerator and denominator data on MIPS 
eligible clinicians.
[GRAPHIC] [TIFF OMITTED] TR18NO22.146

    As shown in Table 107, for the CY 2023 performance period/2025 MIPS 
payment year, the change in the representation of burden for this ICR 
described above in this section and the estimated decrease in 15 
respondents results in a change of -325 hours at a cost of -$31,940 for 
the simplified self-nomination process (or minimum burden) and -577 
hours at a cost of -$56,707 for the full self-nomination process (or 
maximum burden). We note that the decrease in burden accounts for the 
change due to separating the estimated burden for targeted audits and 
participation plans and including that burden under a new ICR for third 
party intermediary plan audits (see Table 109).
    We note that for the purposes of calculating estimated change in 
burden in Tables 142, 143, and 145 of this rule, we use only the 
maximum burden estimate.
[GRAPHIC] [TIFF OMITTED] TR18NO22.147

    We did not receive any comments on our proposed requirements and 
burden estimates for the qualified registry self-nomination process.
(4) Third Party Intermediary Plan Audits
    The following finalized requirements and burden associated with 
developing the plans and audits by QCDRs and qualified registries will 
be submitted to OMB for approval under control number 0938-1314 (CMS-
10621).
    As discussed previously in this section of the final rule, we are 
finalizing the addition of a new ICRto distinctly capture the burden 
for requirements related to QCDR and

[[Page 70141]]

qualified registry targeted audits at Sec.  414.1400(b)(3)(vi) through 
(viii) and the requirements for remedial action and termination of 
third party intermediaries at Sec.  414.1400(e) during the third party 
intermediary self-nomination process. We note that we capture the 
estimated burden for third party intermediaries to submit additional 
requirements for compliance with both the conditions of approval and 
remedial action and termination criteria under one ICR.
    In the CY 2022 PFS final rule, we combined the burden associated 
with the submission of the targeted audits, corrective action plans, 
participation plans and transition plans with the ICR for QCDR self-
nomination process and other requirements (86 FR 65569 through 65573) 
and the ICR for qualified registry self-nomination process and other 
requirements (86 FR 65573 through 65576). For the purposes of this ICR, 
we refer to these audits and plans collectively as ``plan audits.'' For 
this final rule, we determined that it is necessary to set forth a new 
ICR to separately estimate the burden for QCDR and qualified registry 
targeted audits from self-nomination application burden because it will 
more accurately represent the burden.
    In section IV.A.6.g.(3) of this rule, we finalized the proposed 
changes to the requirements for remedial actions and terminations set 
forth in Sec.  414.1400(e). These include one revised and one new 
requirement for Corrective Action Plans (CAPs), and termination of 
certain approved QCDRs and qualified registries that continue to fail 
to submit performance data. The burden associated with these finalized 
policies is discussed below.
(a) Targeted Audits
    In the CY 2022 PFS final rule (86 FR 65547 through 65548), we 
finalized that beginning with the CY 2021 performance period/CY 2023 
MIPS payment year, the QCDR or qualified registry must conduct targeted 
audits in accordance with requirements at Sec.  414.1400(b)(3)(vi). 
Consistent with our assumptions in the CY 2022 PFS final rule for the 
QCDRs (86 FR 65574) and qualified registries (86 FR 65571) that will 
submit targeted audits, we estimate that the time required for a QCDR 
or qualified registry to submit a targeted audit ranges between 5 and 
10 hours for the simplified and full self-nomination process, 
respectively. We assume that the staff involved in submitting the 
targeted audits will continue to be computer systems analysts or their 
equivalent, who have an average labor rate of $98.28/hr.
    For this final rule, we received updated data and as a result, we 
estimate that 32 third party intermediaries (13 QCDRs and 19 qualified 
registries) will submit targeted audits for the CY 2023 performance 
period/2025 MIPS payment year (See Table 108). We note that we are 
adjusting the number of third party intermediaries that will submit 
targeted audits from our estimate of 70 targeted audits in the CY 2023 
PFS proposed rule (87 FR 46350) based on the actual number of targeted 
audits submitted by QCDRs and qualified registries during the CY 2022 
self-nomination period. We estimate that the cost for a QCDR or a 
qualified registry to submit a targeted audit will range from $491.40 
(5 hours x $98.28/hr) to $982.80 (10 hours x $98.28/hr). In aggregate, 
the total impact associated with QCDRs and qualified registries 
completing targeted audits will range from 160 hours (32 responses x 5 
hr/audit) and $18,673 (32 responses- x $491.40/response $98.28/hr) to 
minus 320 hours (32 responses x 10 hr/audit) and $31,450 (32 responses 
x $982.80/response) for the simplified and full self-nomination 
process, respectively (see Table 109 for the cost per audit).
(b) Participation Plans
    In the CY 2022 PFS final rule (86 FR 65546), we finalized 
requirements for approved QCDRs and qualified registries that did not 
submit performance data and therefore will need to submit a 
participation plan as part of their self-nomination process. We refer 
readers to Sec.  414.1400(e) for current policies for remedial action 
and termination of third-party intermediaries.
    In section IV.A.10.g.(3)(b) of this final rule, we finalized a new 
termination policy for approved QCDRs and qualified registries which 
are required to submit participation plans during the applicable self-
nomination period under Sec.  414.1400(b)(3)(viii). We finalized the 
termination of those QCDRs and qualified registries that are required 
to submit participation plans during the applicable self-nomination 
period under Sec.  414.1400(b)(3)(viii) because they did not submit any 
MIPS data for either of the 2 years preceding the applicable self-
nomination period and continue to not submit MIPS data to CMS for the 
applicable performance period. Specifically, we finalized the addition 
of a new ground for termination at Sec.  414.1400(e)(5) stating that, 
beginning with the CY 2024 performance period/CY 2026 MIPS payment 
year, a QCDR or qualified registry that submits a participation plan as 
required under paragraph (b)(3)(viii), but does not submit MIPS data 
for the applicable performance period for which they self-nominated 
under paragraph (b)(3)(viii), will be terminated. As a result of this 
policy, CMS will terminate the qualified registry or QCDR as applicable 
under Sec.  414.1400(e)(5) and we assume that it will not require 
additional requirements for interested parties to submit their 
information during the qualified registry and QCDR self-nomination 
process. (86 FR 65574). We refer readers to section IV.A.10.g.(3)(b) of 
this rule for additional details related to these finalized policies.
    Consistent with our assumptions in the CY 2022 PFS final rule for 
the QCDRs (86 FR 65574) and qualified registries (86 FR 65571) that 
will submit participation plans, we estimate that it will take 3 hours 
for a QCDR or qualified registry to submit a participation plan during 
the self-nomination process. We assume that the staff involved in 
submitting a participation plan will continue to be computer systems 
analysts or their equivalent, who have an average labor rate of $98.28/
hr.
    As shown in Table 108, we estimate that 75 third party 
intermediaries [5 self-nomination participation plans (2 QCDRs and 3 
qualified registries) and 70 QCDR measure participation plans] will 
submit participation plans for the CY 2023 performance period/2025 MIPS 
payment year. We note that we adjusted the number of third party 
intermediaries that will submit participation plans from the estimate 
of 29 in the CY 2023 PFS proposed rule (87 FR 46350) due to a 
significant increase in the number of QCDR measure participation plans 
required for the CY 2023 performance period/2025 MIPS payment year.
    As shown in Table 109, we estimate that the cost for a QCDR or a 
qualified registry to submit a participation plan is $294.84 (3 hours x 
$98.28/hr). In aggregate, we estimate the total impact associated with 
QCDRs and qualified registries to submit participation plans will be 
225 hours (75 responses x 3 hr/plan) at a cost of $66,339 (75 responses 
hr x $294.84/response). (See Table 109 for the cost per audit).
(c) Corrective Action Plans (CAPs)
    In section IV.A.10.g.(3)(a) of this rule, we finalized the proposed 
revision of the CAP requirement at Sec.  414.1400(e)(1)(i)(B) to 
require the third party intermediary to address in its CAP the impact 
to individual clinicians, groups, or virtual groups, subgroups, or APM 
Entities, regardless of whether they are participating in the program 
because they are MIPS eligible, voluntarily participating, or opting in 
to

[[Page 70142]]

participating in the MIPS, and any QCDRs that were granted licenses to 
the measures of a QCDR upon which a CAP has been imposed. We also 
finalized the proposed addition of a new CAP requirement to require the 
third-party intermediary to notify the parties identified in Sec.  
414.1400(e)(1)(i)(B) of the impact to these parties by submitting a 
communication plan. We also finalized the proposed addition at Sec.  
414.1400(e)(1)(i)(E) to require the third party intermediary to develop 
a communication plan for communicating the impact to the parties 
identified in Sec.  414.1400(e)(1)(i)(B). The intent of this policy is 
to enable affected parties to better understand and prepare for any 
operational and other challenges as needed. We believe having third 
party intermediaries submit a communication plan as part of their CAP 
will ensure third party intermediaries directly communicate the 
situation and its impact to these parties in a timely and consistent 
manner. However, due to the relatively low number of CAPs (an average 
of 10 responses) that we expect to receive from QCDRs and qualified 
registries for the CY 2023 performance period/2025 MIPS payment year, 
we are unable to estimate the burden associated with the development of 
a communication plan.
    We are not making any changes to our currently approved estimates 
for the QCDRs and qualified registries that will submit CAPs. We 
continue to estimate that 10 third party intermediaries will submit 
CAPs for the CY 2023 performance period/2025 MIPS payment year and that 
it will take 3 hours for a QCDR or qualified registry to submit a CAP. 
We also assume that the staff involved in submitting the CAP will 
continue to be computer systems analysts or their equivalent, who have 
an average labor rate of $98.28/hr. As shown in Table 109, we estimate 
that the cost for a QCDR or a qualified registry to submit a CAP is 
$294.84 (3 hours x $98.28/hr). Therefore, we estimate the total impact 
associated with QCDRs and qualified registries to CAPs will be 30 hours 
(10 responses x 3 hr/plan) at a cost of $2,948 (10 responses x $294.84/
response). (See Table 109 for the cost per audit).
(d) Transition Plans
    In the CY 2020 PFS final rule (84 FR 63052 through 63053), we 
established a policy at Sec.  414.1400(a)(4)(vi) that a condition of 
approval for the third party intermediary is to agree that prior to 
discontinuing services to any MIPS eligible clinician, group or virtual 
group during a performance period, the third party intermediary must 
support the transition of such MIPS eligible clinician, group, or 
virtual group to an alternate third party intermediary, submitter type, 
or, for any measure on which data has been collected, collection type 
according to a CMS approved transition plan. In the CY 2020 PFS final 
rule (84 FR 63115), we did not estimate the total burden associated 
with the development of CMS approved transition plans because of the 
uncertain, but low frequency (less than 10 per year historically) with 
which third party intermediaries have elected to discontinue services 
during a performance period. We received updated data for the 
transition plans submitted by the registries and QCDRs. Based on the 
actual number of transition plans received during the CY 2022 self-
nomination period, we believe that we overestimated the number of 
transition plans in the CY 2023 PFS proposed rule (87 FR 46351). 
Therefore, we are adjusting the estimated number of third party 
intermediaries that will submit transition plans for the CY 2023 
performance period/2025 MIPS payment year from 15 to 10. As a result, 
we estimate that we will receive 10 transition plans for the CY 2023 
performance period/2025 MIPS payment year We estimate that it will take 
approximately 1 hour for a computer system analyst or their equivalent 
at a labor rate of $98.28/hr to develop a transition plan on behalf of 
each QCDR or qualified registry during the self-nomination period. 
However, we are unable to estimate the burden for implementing the 
actions in the transition plan because the level of effort may vary for 
each QCDR or qualified registry. We did not receive any comments on the 
estimated burden for a QCDR or qualified registry to submit a 
transition plan. Therefore, we estimate the impact associated with 
qualified registries completing transition plans is 10 hours (10 
transition plans x 1 hr/plan) and minus $983 (10 hr x $98.28/hr). We 
refer readers to section VII.E.16.e.(2)(c) of this final rule where we 
discuss our impact analysis for the transition plans submitted by QCDRs 
and qualified registries.
    In section IV.A.6.g.(3) of this rule, we finalized the proposal to 
revise conforming changes to Sec.  414.1400(e)(2), which currently 
states that CMS may immediately or with advance notice terminate the 
ability of a third party intermediary to submit MIPS data on behalf of 
a MIPS eligible clinician, group, or virtual group under certain 
circumstances. Rather than amend this provision to add references to 
subgroups and APM Entities, we finalized the revision of Sec.  
414.1400(e)(2) to state that that CMS may immediately or with advance 
notice ``terminate a third party intermediary'' under the specified 
circumstances. The revision will simply provide that CMS may 
immediately or with advance notice ``terminate a third party 
intermediary' under the specified circumstances. The change is intended 
to revise the CFR in conjunction with the finalized policies in section 
IV.A.6.g.(1)(b) of this rule to amend the definition of a ``third party 
intermediary'' to refer to subgroups and APM Entities, and do not 
require additional information from QCDRs and qualified registries 
during the self-nomination process.
    In section IV.A.6.g.(4)(b) of this rule, we finalized the proposed 
update at Sec.  414.1400(f)(1) to require that the entity must make 
available to CMS the contact information of each MIPS eligible 
clinician, group, virtual group, subgroup, or APM Entity on behalf of 
whom it submits data. The contact information must include, at a 
minimum, the MIPS eligible clinician, group, virtual group, subgroup, 
or APM Entity phone number, address, and, if available, email. The 
change is intended to update the CFR to align it with the updates to 
the definition of a ``third party intermediary'' at Sec.  414.1305 and 
to account for third party intermediaries reporting on behalf of 
subgroups and APM entities. We do not expect to receive additional 
information from QCDRs and qualified registries during the self-
nomination process due to this finalized policy. Additionally, we refer 
readers to section VII.E.16.e.(2)(c) of this final rule where we 
discuss the details in our impact analysis for these finalized 
policies.
e. Final Burden for Third Party Intermediary Plan Audits
    In aggregate, as shown in Table 108, we assume that 127 third party 
intermediaries will submit plan audits (32 targeted audits, 75 
participation plans, 10 CAPs, and 10 transition plans).

[[Page 70143]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.148

    As shown in Table 109, we assume that the staff involved in the 
submission of the plan audits during the third party intermediary self-
nomination process will continue to be computer systems analysts or 
their equivalent, who have an average labor rate of $98.28/hr. For the 
CY 2023 performance period/2025 MIPS payment year, in aggregate, the 
estimated annual burden for the simplified (or minimum) and full (or 
maximum) self-nomination process will range from 425 hours (see Table 
109, row i) to 585 hours (see Table 109, row i)) at a cost ranging from 
$41,769 (425 hr x $98.28/hr) and $57,494 (585 hr x $98.28/hr), 
respectively.
[GRAPHIC] [TIFF OMITTED] TR18NO22.149

    As shown in Table 110, for the CY 2023 performance period/2025 MIPS 
payment year, the addition of this ICR for third party intermediary 
plan audits results in a change of +425 hours at a cost of +$41,769 for 
the simplified self-nomination process (or minimum burden) and +585 
hours at a cost of +$57,494 for the full self-nomination process (or 
maximum burden).
    We note that for the purposes of calculating proposed estimated 
change in burden in Tables 142, 143, and 145 of this rule, we use only 
the maximum burden estimate.

[[Page 70144]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.150

    We did not receive any comments on our proposed addition of the ICR 
and burden estimates for the third party intermediary plan audits. As 
discussed above in this section, we finalized the addition of this ICR 
and adjusted the burden estimates from the CY 2023 PFS proposed rule 
(87 FR 46349 through 46352) due to the availability of updated data.
(5) Survey Vendor Requirements
    This rule does not create any new or revised collection of 
information requirements or burden related to CAHPS Survey vendors. The 
requirements and burden for CAHPS survey vendors to submit data for 
eligible clinicians are currently approved by OMB under control number 
0938-1222 (CMS-10450). Consequently, we are not making any changes 
under that control number.
d. ICRs Regarding Open Authorization (OAuth) Credentialing and Token 
Request Process
    The requirements and burden associated with the OAuth Credentialing 
and token request process will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621). We refer readers to the CY 2021 
and the CY 2022 PFS final rules (85 FR 84969 through 85 FR 84970 and 86 
FR 65576) for our previously finalized requirements and burden 
estimates for the information collection related to the OAuth 
credentialing and token request process.
    This rule does not create any new or revised collection of 
information requirements or burden related to the OAuth credentialing 
and token request process. However, beginning with the CY 2023 MIPS 
performance period/2025 MIPS payment year, we made administrative 
changes in the process for interested parties to submit their 
application for OAuth credentialing and token process. Based on the 
changes to the workflows, the CMS Office of Information Technology 
(OIT) has centralized Okta Administrator privileges. In previous years, 
the Quality Payment Program maintained the privileges for Administrator 
roles. As a result of this administrative change, interested parties 
that will submit their information for OAuth Credentialing and Token 
request process are now required to meet with both Quality Payment 
Program and OIT for final approvals to have their applications 
integrated with the CMS Okta production environment. Therefore, we are 
revising our estimates that it will take 2 hours for a computer systems 
analyst (or their equivalent) to provide documentation and any follow-
up communication via email. This is an increase of 1 hour from the 
currently approved estimated time of 1 hour for interested parties to 
provide their documentation and any follow-up communication via email.
    As shown in Table 111, we are not making any changes to our 
currently approved estimate of 15 respondents that will complete this 
process for the CY 2023 performance period/2025 MIPS payment year. In 
aggregate, accounting for the increase in time required for a computer 
systems analyst (or their equivalent) to complete the token request 
process, we estimate a revised annual burden of 30 hours (15 vendors x 
2 hr) at a cost of $2,948 (30 hr x $98.28/hr).
[GRAPHIC] [TIFF OMITTED] TR18NO22.151

    As shown in Table 112, using our unchanged currently approved 
number of respondents (86 FR 65576), the increase in the amount of time 
required for the OAuth credentialing and token request process results 
in a change of +15 hours (+15 responses x 1 hr/response) at a cost of 
+$1,474 (+15 hr x $98.28/hr) from our currently approved burden of 15 
hours (15 responses x 1 hr/response) at a cost of $1,474 (15 hr x 
$98.28/hr) for the CY 2023 performance period/2025 MIPS payment year.

[[Page 70145]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.152

    We did not receive any comments on our proposed requirements and 
burden estimates for the OAuth Credentialing and Token Request process. 
As discussed above in this section, we adjusted the currently approved 
burden estimates due to the administrative change in the OAuth 
credentialing and token request process.
e. ICRs Regarding Quality Data Submission (Sec. Sec.  414.1318, 
414.1325, 414.1335, and 414.1365)
(1) Background
    We refer readers to the CY 2017 and CY 2018 Quality Payment Program 
final rules (81 FR 77502 through 77503 and 82 FR 53908 through 53912, 
respectively), the CY 2019, CY 2020, CY 2021, and CY 2022 PFS final 
rules (83 FR 60000 through 60003, 84 FR 63121 through 63124, 85 FR 
84970 through 84974, and 86 FR 65576 through 65588, respectively) for 
our previously finalized estimated burden associated with data 
submission for the quality performance category.
    Under our current policies, two groups of clinicians must submit 
quality data under MIPS: those who submit data as MIPS eligible 
clinicians, and those who submit data voluntarily but are not subject 
to MIPS payment adjustments. Clinicians are ineligible for MIPS payment 
adjustments if they are newly enrolled to Medicare; are QPs; are 
partial QPs who elect to not participate in MIPS; are not one of the 
clinician types included in the definition for MIPS eligible clinician; 
or do not exceed the low-volume threshold as an individual or as a 
group.
(2) Changes and Adjustments to Quality Performance Category Respondents
    To determine which QPs should be excluded from MIPS, we used the 
Advanced APM payment and patient percentages from the APM Participant 
List for the third snapshot date for the 2021 QP Performance period. 
From this data, we calculated the QP determinations as described in the 
Qualifying APM Participant (QP) definition at Sec.  414.1305 for the CY 
2023 performance period/2025 MIPS payment year. Due to data 
limitations, we could not identify specific clinicians who have not yet 
enrolled in APMs, but who may become QPs in the future for the CY 2023 
performance period/2025 MIPS payment year (and therefore will no longer 
need to submit data to MIPS); hence, our model may underestimate or 
overestimate the number of respondents.
    In the CY 2019 PFS final rule, we finalized limiting the Medicare 
Part B claims collection type to small practices beginning with the CY 
2019 performance period/2021 MIPS payment year and allowing clinicians 
in small practices to report Medicare Part B claims as a group or as 
individuals (83 FR 59752). In the CY 2023 proposed rule, we noted that 
we continued to use CY 2019 performance period/CY 2021 MIPS payment 
year data to estimate the number of respondents (87 FR 46354). We note 
that in this final rule, we have adjusted the number of respondents 
from 27,006 to 14,736 (a change of minus 12,270 respondents) based on 
the submissions received for the CY 2021 performance period/2023 MIPS 
payment year.
    We assume that 100 percent of ACO APM Entities will submit quality 
data to CMS as required under their models. While we do not believe 
there is additional reporting for ACO APM entities, consistent with 
assumptions used in the CY 2021 and CY 2022 PFS final rules (85 FR 
84972 and 86 FR 65567), we include all quality data voluntarily 
submitted by MIPS APM participants at the individual or TIN-level in 
our respondent estimates. As stated in section VI.B.9.a.(4) of this 
final rule, we assume non-ACO APM Entities will participate through 
traditional MIPS and submit as an individual or group rather than as an 
entity. To estimate who will be a MIPS APM participant in the CY 2023 
performance period/2025 MIPS payment year, we used the Advanced APM 
payment and patient percentages from the APM Participant List for the 
final snapshot date for the 2021 QP performance period. We elected to 
use this data source because the overlap with the data submissions for 
the CY 2019 performance period/CY 2021 MIPS payment year enabled the 
exclusion of Partial QPs that elected to not participate in MIPS and 
required fewer assumptions as to who is a QP or not. Based on this 
information, if we determine that a MIPS eligible clinician will not be 
scored as a MIPS APM, then their reporting assumption is based on their 
reporting as a group or individual for the CY 2021 performance period/
CY 2023 MIPS payment year.
    Our burden estimates for the quality performance category do not 
include the burden for the quality data that APM Entities submit to 
fulfill the requirements of their APMs. The associated burden is 
excluded from this collection of information section but is discussed 
in the regulatory impact analysis section of this final rule because 
sections 1899(e) and 1115A(d)(3) of the Act (42 U.S.C. 1395jjj(e) and 
1315a(d)(3), respectively) state that the Shared Savings Program and 
the testing, evaluation, and expansion of Innovation Center models 
tested under section 1115A of the Act (or section 3021 of the 
Affordable Care Act) are not subject to the PRA.\564\
---------------------------------------------------------------------------

    \564\ Our estimates do reflect the burden on MIPS APM 
participants of submitting Promoting Interoperability performance 
category data, which is outside the requirements of their APMs.
---------------------------------------------------------------------------

    For the CY 2023 performance period/2025 MIPS payment year, 
respondents will have the option to submit quality performance category 
data via Medicare Part B claims, direct, and log in and upload 
submission types. We estimate the burden for collecting data via 
collection type: Medicare Part B claims, QCDR and MIPS CQMs, and eCQMs. 
Additionally, we capture the burden for clinicians who choose to submit 
via these collection types for the quality

[[Page 70146]]

performance category of MVPs. We believe that, while estimating burden 
by submission type may be better aligned with the way clinicians 
participate with the Quality Payment Program, it is more important to 
reduce confusion and enable greater transparency by maintaining 
consistency with previous rulemaking.
    Because MIPS eligible clinicians may submit data for multiple 
collection types for a single performance category, the estimated 
numbers of individual clinicians and groups to collect via the various 
collection types are not mutually exclusive and reflect the occurrence 
of individual clinicians or groups that collected data via multiple 
collection types during the CY 2021 performance period/CY 2023 MIPS 
payment year. We captured the burden of any eligible clinician that may 
have historically collected via multiple collection types, as we assume 
they will continue to collect via multiple collection types and that 
our MIPS scoring methodology will take the highest score where the same 
measure is submitted via multiple collection types.
    Table 113 uses methods similar to those described above to estimate 
the number of clinicians that will submit data as individual clinicians 
via each collection type in the CY 2023 performance period/2025 MIPS 
payment year. For the CY 2023 performance period/2025 MIPS payment 
year, we estimate that approximately 14,736 clinicians will submit data 
as individuals using the Medicare Part B claims collection type; 
approximately 11,458 clinicians will submit data as individuals using 
MIPS CQM and QCDR collection type; and approximately 18,362 clinicians 
will submit data as individuals using eCQMs collection type. Based on 
performance data from the CY 2021 performance period/CY 2023 MIPS 
payment year, these are decreases of 10,691, 24,998, and 18,039 
respondents from the currently approved estimates of 25,427, 36,456, 
and 36,401 for the Medicare Part B claims, MIPS CQM and QCDR, and eCQM 
collection types, respectively.
[GRAPHIC] [TIFF OMITTED] TR18NO22.153

    Consistent with the policy finalized in the CY 2018 Quality Payment 
Program final rule that for MIPS eligible clinicians who collect 
measures via Medicare Part B claims, MIPS CQM, eCQM, or QCDR collection 
types and submit more than the required number of measures (82 FR 53735 
through 54736), we will score the clinician on the required measures 
with the highest assigned measure achievement points and thus, the same 
clinician may be counted as a respondent for more than one collection 
type. Therefore, our columns in Table 113 are not mutually exclusive.
    Table 114 provides our estimated counts of groups or virtual groups 
that will submit quality data on behalf of clinicians for each 
collection type in the CY 2023 performance periods/2025 MIPS payment 
year. We assume that clinicians who submitted quality data as groups in 
the CY 2021 performance period/CY 2023 MIPS payment year will continue 
to submit quality data either as groups, or virtual groups for the same 
collection types for the 2023 performance period/2025 MIPS payment 
years. We used the same methodology described in the CY 2022 PFS final 
rule (86 FR 65577) on our assumptions related to the use of an 
alternate collection type for groups that submitted data via the CMS 
Web Interface collection type for the CY 2021 performance period/2023 
MIPS payment year.
    As shown in Table 114, for the CY 2023 performance period/2025 MIPS 
payment year we estimate that 6,458 groups and virtual groups will 
submit data for the MIPS CQM and QCDR collection type and 5,527 groups 
and virtual groups will submit for eCQM collection types. These are 
decreases of 3,976 and 1.845 respondents from the currently approved 
estimates of 10,434, and 7,372 for the groups and virtual groups that 
will submit data using MIPS CQM and QCDR, and eCQM collection types, 
respectively.
    As the data does not exist for APM performance pathway or MIPS 
quality measures for non-ACO APM entities, we assume non-ACO APM 
Entities will participate through traditional MIPS and base our 
estimates on submissions received in the CY 2021 performance period/CY 
2023 MIPS payment year.

[[Page 70147]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.154

    The burden associated with the submission of quality performance 
category data has some limitations. We believe it is difficult to 
quantify the burden accurately because clinicians and groups may have 
different processes for integrating quality data submission into their 
practices' workflows. Moreover, the time needed for a clinician to 
review quality measures and other information, select measures 
applicable to their patients and the services they furnish, and 
incorporate the use of quality measures into the practice workflows is 
expected to vary along with the number of measures that are potentially 
applicable to a given clinician's practice and by the collection type. 
For example, clinicians submitting data via the Medicare Part B claims 
collection type need to integrate the capture of quality data codes for 
each encounter whereas clinicians submitting via the eCQM collection 
types may have quality measures automated as part of their EHR 
implementation.
    We believe the burden associated with submitting quality measures 
data will vary depending on the collection type selected by the 
clinician, group, or third-party. As such, we separately estimated the 
burden for clinicians, groups, and third parties to submit quality 
measures data by the collection type used. For the purposes of our 
burden estimates for the Medicare Part B claims, MIPS CQM and QCDR, and 
eCQM collection types, we also assume that, on average, each clinician 
or group will submit 6 quality measures. Additionally, as finalized in 
the CY 2022 PFS final rule (86 FR 65394 through 65397), group TINs 
could also choose to participate as subgroups for MVP reporting 
beginning with the CY 2023 performance period/2025 MIPS payment year. 
we refer readers to the CY 2022 PFS final rule for additional details 
on MVP quality reporting requirements (86 FR 65411 through 65412).
    In terms of the quality measures available for clinicians and 
groups to report for the CY 2023 performance period/2025 MIPS payment 
year, we finalized a measure set of 198 quality measures. The new MIPS 
quality measures finalized for inclusion in MIPS for the CY 2023 
performance period/2025 MIPS payment year and future years are found in 
Table Group A of Appendix 1; MIPS quality measures with substantive 
changes can be found in Table Group D of Appendix 1; and MIPS quality 
measures finalized for removal can be found in Table Group C of 
Appendix 1. These measures are stratified by collection type in Table 
115, as well as counts of new, removed, and substantively changed 
measures. There are no changes to the remaining measures not included 
in Appendix 1. We refer readers to section IV.A.6.c.(1) of this final 
rule for additional information.

[[Page 70148]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.155

    For the CY 2023 performance period/2025 MIPS payment year, we are 
finalizing 198 measures, a net reduction of 2 quality measures across 
all collection types compared to the currently approved estimate of 200 
measures. Specifically, as discussed in section IV.A.6.c.(1)(c) of this 
rule, we are finalizing to add 9 new MIPS quality measures, remove 11 
MIPS quality measures, partially remove 2 MIPS quality measures that 
are proposed for removal from traditional MIPS and proposed for 
retention for use in MVPs, and make substantive updates to 76 MIPS 
quality measures. We do not anticipate that our provision to remove 
these measures will increase or decrease the reporting burden on 
clinicians and groups as respondents generally are still required to 
submit quality data for 6 measures.
(3) Quality Payment Program Identity Management Application Process
    This rule does not create any new or revised collection of 
information requirements or burden related to the identity management 
application process. We are adjusting our currently approved estimates 
based on the updated data received for the number of respondents that 
will submit their information to obtain new user accounts in the HARP 
system for the CY 2023 performance period/2025 MIPS payment year. The 
finalized requirements and burden discussed below will be submitted to 
OMB under control number 0938-1314 (CMS-10621).
    Based on historical trends for the number of eligible clinicians, 
groups, or third parties that register for new accounts, we noticed 
that we inadvertently underestimated our assumptions in the CY 2022 PFS 
final rule (86 FR 65582). In order to accurately capture the 
incremental change in the number of respondents in previous years, we 
are using a rolling average of the number of respondents that will 
register for obtaining new accounts. Therefore, we proposed to adjust 
our estimates from 3,741 to 6,500 for the number of respondents that 
will submit their information to obtain new user accounts in the HARP 
system for the CY 2023 performance period/2025 MIPS payment year. This 
will result in an increase of 2,759 respondents. We did not propose to 
adjust the currently approved estimated time of 1 hour per response to 
obtain a new account. As shown in Table 116, it will take 1 hour at 
$98.28/hr for a computer systems analyst (or their equivalent) to 
obtain an account for the HARP system. In aggregate we estimate an 
annual burden of 6,500 hours (6,500 registrations x 1 hr/registration) 
at a cost of $638,820 (6,500 hr x $98.28/hr).
[GRAPHIC] [TIFF OMITTED] TR18NO22.156

    As shown in Table 117, we used the currently approved burden 
estimate to calculate the net change in burden for the ICR. In 
aggregate, using the currently approved time per response, the increase 
of 2,759 respondents from 3,741 to 6,500 for the CY 2023 performance 
period/2025 MIPS payment year will result in an estimated

[[Page 70149]]

increase of 2,759 hours (+2.759 responses x 1hr/response) at a cost of 
$271,155 (2,759 hr x 98.28/hr).
[GRAPHIC] [TIFF OMITTED] TR18NO22.157

    We did not receive any comments on our proposed requirements and 
burden estimates for the Quality Payment Program Identity Management 
application process. As discussed above in this section, we adjusted 
the burden estimates from the CY 2023 PFS proposed rule (87 FR 46356 
through 46357) due to the availability of updated data.
(4) Quality Data Submission by Clinicians: Medicare Part B Claims-Based 
Collection Type
    The following changes will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621).
    While rule does not propose any new or revised collection of 
information requirements or burden related to the submission of 
Medicare Part B claims data for the quality performance category, We 
received updated data for the quality data submissions from clinicians 
using the Medicare Part B Claims-based collection type Therefore, we 
are adjusting our currently approved burden estimates based on our 
changes in assumptions for calculating the data. We refer readers to 
Table 126 of this section for the change in associated burden related 
to the submission of Medicare Part B claims data for the MVP quality 
performance category in the CY 2023 performance period/2025 MIPS 
payment year.
    We refer readers to the CY 2017 and CY 2018 Quality Payment Program 
final rules (81 FR 77501 through 77504 and 82 FR 53912, respectively), 
the CY 2019, CY 2020, CY 2021 and CY 2022 PFS final rules (83 FR 60004 
through 60005, 84 FR 63124 through 63126, 85 FR 84975 through 84976, 
and 86 FR 65582 through 65584, respectively) for our previously 
finalized requirements and burden for quality data submission via the 
Medicare Part B claims collection type.
    As noted in Table 113, based on updated data from the CY 2021 
performance period/2023 MIPS payment year, we estimate that 14,736 
individual clinicians will collect and submit quality data via the 
Medicare Part B claims collection type, a decrease of 10,691 from the 
currently approved estimate of 25,427 (86 FR 65583).
    As shown in Table 113, consistent with our currently approved per 
response time figures, we continue to estimate that the burden of 
quality data submission using Medicare Part B claims will range from 
0.15 hours (9 minutes) for a computer systems analyst at a cost of 
$14.74 (0.15 hr x $98.28/hr) to 7.2 hours for a computer systems 
analyst at a cost of $707.61 (7.2 hr x $98.28/hr). The burden also 
accounts for the effort needed to become familiar with MIPS quality 
measure specifications.
    Consistent with our currently approved per response time estimates, 
we believe that the start-up cost for a clinician's practice to review 
measure specifications is 7 hours, consisting of 3 hours at $115.22/hr 
for a medical and health services manager, 1 hour at $259.98/hr for a 
physician, 1 hour at $49.86/hr for an LPN, 1 hour at $98.28/hr for a 
computer systems analyst, and 1 hour at $41.10/hr for a billing and 
posting clerk.
    As shown in Table 118, considering both data submission and start-
up requirements for our adjusted number of clinicians, the estimated 
time (per clinician) ranges from a minimum of 7.15 hours (0.15 hr + 7 
hr) to a maximum of 14.2 hours (7.2 hr + 7 hr). In aggregate, the total 
annual time for the CY 2023 performance period/2025 MIPS payment year 
ranges from 105,362 hours (7.15 hr x 14,736 clinicians) to 209,251 
hours (14.2 hr x 14,736 clinicians). The estimated annual cost (per 
clinician) ranges from $809.62 [(0.15 hr x $98.28/hr) + (3 hr x 
$115.22/hr) + (1 hr x $98.28/hr) + (1 hr x $49.86/hr) + (1 hr x $41.10/
hr) + (1 hr x $259.98/hr)] to a maximum of $1,502.49 [(7.2 hr x $98.28/
hr) + (3 hr x $115.22/hr) + (1 hr x $98.28/hr) + (1 hr x $49.86/hr) + 
(1 hr x $41.10/hr) + (1 hr x $259.98/hr)]. The total annual cost for 
the CY 2023 performance period/2025 MIPS payment year ranges from a 
minimum of $11,930,560 (14,736 clinicians x $810) to a maximum of 
$22,140,693 (14,736 clinicians x $1,502.49).

[[Page 70150]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.158

    As shown in Table 119, we used the currently approved burden as the 
baseline to calculate the net burden for the quality data submissions 
from clinicians using the Medicare Part B Claims-based collection type. 
In aggregate, using our currently approved per response time estimates, 
the decrease in number of responses from 25,427 to 16,746 (-10,691) 
results in a total maximum adjustment of -151,812 hours (-10,691 
responses x 14.2 hr/response) at a cost of -$16,063,120 (-10,691 
response x $1,502.49/response). For purposes of calculating total 
burden associated with this final rule as shown in Tables 142, 143, and 
145, only the maximum burden is used.

[[Page 70151]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.159

    We did not receive any comments on our proposed requirements and 
burden estimates for clinicians to submit data for the quality 
performance category via the Medicare Part B claims collection type. As 
discussed above in this section, we adjusted the burden estimates from 
the CY 2023 PFS proposed rule (87 FR 46357 through 46359) due to the 
availability of updated data.
(5) Quality Data Submission by Individuals and Groups Using MIPS CQM 
and QCDR Collection Types
    The following requirements and burden will be submitted to OMB for 
approval under control number 0938-1314 (CMS-10621).
    We refer readers to the CY 2017 and CY 2018 Quality Payment Program 
final rules (81 FR 77504 through 77505 and 82 FR 53912 through 53914, 
respectively), the CY 2019, CY 2020, CY 2021 and CY 2022 PFS final 
rules (83 FR 60005 through 60006, 84 FR 63127 through 63128, 85 FR 
84977 through 84979, and 86 FR 65584 through 65586, respectively) for 
our previously finalized requirements and burden for quality data 
submission via the MIPS CQM and QCDR collection types. We refer readers 
to Table 126 for the estimated change in associated burden for quality 
data submission using MIPS CQM and QCDR collection types related to MVP 
and subgroup reporting in the CY 2023 performance period/2025 MIPS 
payment year.
    As noted in Tables 113 and 114, based on updated data from the CY 
2021 performance period/2023 MIPS payment year, for the CY 2023 
performance period/2025 MIPS payment year, we assume that 17,916 
clinicians (11,458 individuals and 6,458 groups and virtual groups) 
will submit quality data as individuals or groups using MIPS CQM or 
QCDR collection types. This is a decrease of 24,998 individuals and a 
decrease of 3,976 groups from the currently approved estimates of 
36,456 individuals and the 10,434 groups provided in the CY 2022 PFS 
final rule (86 FR 65585). Given that the number of measures required 
for clinicians and groups is the same, we expect the burden to be the 
same for each respondent collecting data via MIPS CQM or QCDR, whether 
the clinician is participating in MIPS as an individual or group.
    Under the MIPS CQM and QCDR collection types, the individual 
clinician or group may either submit the quality measures data directly 
to us, log in and upload a file, or utilize a third-party intermediary 
to submit the data to us on the clinician's or group's behalf. We 
estimate that the burden associated with the QCDR collection type is 
similar to the burden associated with the MIPS CQM collection type; 
therefore, we discuss the burden for both together below. For MIPS CQM 
and QCDR collection types, we estimate an additional time for 
respondents (individual clinicians and groups) to become familiar with 
MIPS quality measure specifications and, in some cases, specialty 
measure sets and QCDR measures. Therefore, we believe that the burden 
for an individual clinician or group to review measure specifications 
and submit quality data is total of 9 hours at a cost of $982.65 per 
response. This consists of 3 hours at $98.28/hr for a computer systems 
analyst (or their equivalent) to submit quality data along with 2 hours 
at $115.22/hr for a medical and health services manager, 1 hour at 
$98.28/hr for a computer systems analyst, 1 hour at $49.86/hr for a 
LPN, 1 hour at $41.10/hr for a billing clerk, and 1 hour at $259.98/hr 
for a physician to review measure specifications. Additionally, 
clinicians and groups who do not submit data directly will need to 
authorize or instruct the qualified registry or QCDR to submit quality 
measures' results and numerator and denominator data on quality 
measures to us on their behalf. We estimate that the time and effort 
associated with authorizing or instructing the quality registry or QCDR 
to submit this data will be approximately 5 minutes (0.083 hr) at 
$98.28/hr for a computer systems analyst at a cost of $8.15 (0.083 hr x 
$98.28/hr). Overall, we estimate 9.083 hr/response (3 hr + 2 hr + 1 hr 
+ 1 hr + 1 hr + 1 hr + 0.083 hr) at a cost of $982.65/response [(3 hr x 
$98.28/hr) + (2 hr x $115.22/hr) + (1 hr x $259.98/hr) + (1 hr x 
$98.28/hr) + (1 hr x $49.86/hr) + (1 hr x $41.10/hr) + (0.083 hr x 
$98.28/hr)].
    As shown in Table 120, For the CY 2023 performance period/2025 MIPS 
payment year, in aggregate, we estimate a burden of 162,731 hours 
[9.083 hr/response x (11,458 clinicians submitting as individuals + 
6,458 groups submitting via QCDR or MIPS CQM on behalf of individual 
clinicians, a total of 17,916 responses)] at a cost of $17,605,157 
(17,916 responses x $982.65/response).
BILLING CODE 4150-28-P

[[Page 70152]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.160

    As shown in Table 121, we calculated the net change in estimated 
burden for quality performance category submissions using the MIPS CQM 
and QCDR collection type by using the currently approved burden in the 
CY 2022 PFS final rule (86 FR 65584 through 65586). In aggregate, using 
the unchanged currently approved time per response estimate, the 
decrease of 28,974 respondents from 46,890 to 17,916 for the CY 2023 
performance period/CY 2025 MIPS payment year results in a decrease of 
263,171 hours (-28,974 responses x 9.083 hr/response) at a cost of -
$28,471,302 (-28,974 responses x $982.65/response).
[GRAPHIC] [TIFF OMITTED] TR18NO22.161


[[Page 70153]]


BILLING CODE 4150-28-C
    We did not receive any comments on our proposed requirements and 
burden estimates for clinicians to submit data for the quality 
performance category via the MIPS CQM and QCDR collection type. As 
discussed above in this section, we adjusted the burden estimates from 
the CY 2023 PFS proposed rule (87 FR 46359 through 46360) due to the 
availability of updated data.
(6) Quality Data Submission by Clinicians and Groups: eCQM Collection 
Type
    The following requirements and burden will be submitted to OMB for 
approval under control number 0938-1314 (CMS-10621).
    We refer readers to the CY 2017 Quality Payment Program final rule 
(81 FR 77505 through 77506), CY 2018 Quality Payment Program final rule 
(82 FR 53914 through 53915), CY 2019 PFS final rule (83 FR 60006 
through 60007), CY 2020 PFS final rule (84 FR 63128 through 63130), CY 
2021 PFS final rule (85 FR 84979 through 84980) and the CY 2022 PFS 
final rule (86 FR 65586 through 65588) for our previously finalized 
requirements and burden for quality data submission via the eCQM 
collection types. For the change in associated burden for quality data 
submission related to the provisions introducing MVP and subgroup 
reporting beginning in the CY 2023 performance period/2025 MIPS payment 
year, we refer readers to Table 126 of this section.
    Based on updated data from the CY 2021 performance period/CY 2023 
MIPS payment year data, we assume that 23,889 clinicians (18,362 
individual clinicians and 5,527 groups and virtual groups) will submit 
quality data using the eCQM collection type for the CY 2023 performance 
period/CY 2025 MIPS payment year. This is a decrease of 18,039 
individuals and a decrease of 1,845 groups from the estimates of 36,401 
individuals and 7,372 groups provided in the CY 2021 PFS final rule (86 
FR 65587). We assume the burden to be the same for each respondent 
using the eCQM collection type, whether the clinician is participating 
in MIPS as an individual or group.
    Under the eCQM collection type, the individual clinician or group 
may either submit the quality measures data directly to us from their 
eCQM, log in and upload a file, or utilize a third-party intermediary 
to derive data from their CEHRT and submit it to us on the clinician's 
or group's behalf.
    To prepare for the eCQM collection type, the clinician or group 
must review the quality measures on which we will be accepting MIPS 
data extracted from eCQMs, select the appropriate quality measures, 
extract the necessary clinical data from their CEHRT, and submit the 
necessary data to a QCDR/qualified registry or use a health IT vendor 
to submit the data on behalf of the clinician or group. We assume the 
burden for collecting quality measures data via eCQM is similar for 
clinicians and groups who submit their data directly to us from their 
CEHRT and clinicians and groups who use a health IT vendor to submit 
the data on their behalf. This includes extracting the necessary 
clinical data from their CEHRT and submitting the necessary data to a 
QCDR/qualified registry.
    We estimate that it will take no more than 2 hours at $98.28/hr for 
a computer systems analyst to submit the actual data file. The burden 
will also involve becoming familiar with MIPS quality measure 
specifications. In this regard, we estimate it will take 6 hours for a 
clinician or group to review measure specifications. Of that time, we 
estimate 2 hours at $115.22/hr for a medical and health services 
manager, 1 hour at $259.98/hr for a physician, 1 hour at $98.28/hr for 
a computer systems analyst, 1 hour at $49.86/hr for an LPN, and 1 hour 
at $41.10/hr for a billing clerk. Overall, we estimate a cost of 
$876.22/response [(2 hr x $98.28/hr) + (2 hr x $115.22/hr) + (1 hr x 
$259.98/hr) + (1 hr x $98.28/hr) + (1 hr x $49.86/hr) + (1 hr x $41.10/
hr)].
    As shown in Table 122, for the CY 2023 performance period/2025 MIPS 
payment year, in aggregate, we estimate a burden of 191,112 hours [8 hr 
x 23,889 (18,362 clinicians + 5,527 groups and virtual groups)] at a 
cost of $20,932,020 (23,889 responses x $876.22/response).

[[Page 70154]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.162

    In Table 123, we illustrate the net change in burden for 
submissions in the quality performance category using the eCQM 
collection type from the currently approved burden in the CY 2022 PFS 
final rule (86 FR 65586 through 65588). In aggregate, using our 
currently approved time per response burden estimate, the decrease of 
19,884 respondents from 43,773 to 23,889 for the CY 2023 performance 
period/2025 MIPS payment year results in a decrease of 159,072 hours (-
19,884 responses x 8 hr/response) at a cost of -$17,422,758 (-19,884 
responses x $876.22/response).
[GRAPHIC] [TIFF OMITTED] TR18NO22.163

    We did not receive any comments on our proposed requirements and 
burden estimates for clinicians to submit data for the quality 
performance category via the eCQM collection type. As discussed above 
in this section, we adjusted the burden estimates from the CY 2023 PFS 
proposed rule (87 FR 46361 through 46362) due to the availability of 
updated data.
(7) ICRs Regarding Burden for MVP Reporting
    The following changes will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621).

[[Page 70155]]

    Public comments were received with regard to our proposed burden 
estimates for MVP registration. See below for a summary of the comments 
and our response.
(a) Burden for MVP Reporting Requirements
    We refer readers to the CY 2022 PFS final rule (86 FR 65588 through 
65592) for our previously finalized burden and requirements for 
submission of data for the MVP quality performance category. In the CY 
2022 PFS final rule, we finalized an option for clinicians choosing to 
report MVPs to participate through subgroups beginning with the CY 2023 
performance period/2025 MIPS payment year (86 FR 65392 through 65394). 
We refer readers to the CY 2022 PFS final rule for our previously 
finalized assumptions on the estimated number of clinicians 
participating as subgroups in the CY 2023 performance period/2025 MIPS 
payment year (86 FR 65589).
    For the requirements related to MVP participants, we used the MIPS 
submission data from the CY 2021 performance period/2023 MIPS payment 
year. In Appendix 3: MVP Inventory of this rule, we finalized the 
proposal to revise the 7 MVPs finalized in Appendix 3: MVP Inventory of 
the CY 2022 PFS final rule (86 FR 65998 through 66031). Specifically, 
these revisions are based on the removal of certain improvement 
activities in section IV.A.6.(3)(b)(ii) of this rule, the addition of 
other relevant existing quality measures for MVP participants to select 
from and the addition of the ONC direct review attestation requirement 
in the Promoting Interoperability performance category to all 
previously finalized MVPs. Additionally, we finalized 5 new MVPs 
beginning with the CY 2023 performance period/CY 2025 MIPS payment 
year. Therefore, MVP participants will have a total of 12 MVPs 
available for the CY 2023 performance period/2025 MIPS payment year. 
Due to the availability of new MVPs and addition of relevant quality 
measures to existing MVPs, we expect an increase in the number of MVP 
participants. Therefore, we estimate that 12 percent of the clinicians 
will participate in MVP reporting in the CY 2023 performance period/
2025 MIPS payment year. This is an increase of 2 percentage points from 
the currently approved estimate of 10 percent in the CY 2022 PFS final 
rule (86 FR 65588 through 65589).
    We assume that the changes to the existing MVPs and the addition of 
new MVPs will not impact the currently approved number of subgroups. We 
expect that clinician participation in subgroups will be relatively low 
for the CY 2023 performance period/2025 MIPS payment year due the 
voluntary subgroup reporting option and the additional burden involved 
for groups to organize clinicians into subgroups. Therefore, we did not 
make any adjustments to our previously finalized assumption in the CY 
2022 PFS final rule (86 FR 65589) of 20 subgroups that will participate 
in MVP reporting.
    In section IV.A.4.e.(4)(b) of this rule, we finalized the 
modification of Sec.  414.1365(d)(3)(i)(A)(1) to read that subgroups 
are scored on each selected population health measure based on their 
affiliated group score, if available, and that if the subgroup's 
affiliated group score is not available, each such measure is excluded 
from the subgroup's total measure achievement points and total 
available measure achievement points. We also finalized the addition of 
Sec.  414.1365(d)(3)(i)(B)(1) so that subgroups are scored on each 
selected outcomes-based administrative claims measure based on their 
affiliated group score, if available, and that if the subgroup's 
affiliated group score is not available, each such measure will receive 
zero measure achievement points. We assume that the finalized policies 
are related to the subgroup scoring of administrative claim measures 
and do not impact clinician participation in subgroups. Therefore, we 
are not making any adjustments to our previously finalized assumptions 
for subgroup reporting burden of the MVP quality performance category 
in the CY 2022 PFS final rule (86 FR 65592). Furthermore, clinicians do 
not submit data for the administrative claims measures and hence, there 
is no associated burden relevant to these measures for clinicians 
participating as subgroups.
    Additionally, in section IV.A.4.e.(4)(c) of this rule, we finalized 
at Sec.  414.1318(b)(1) that we will not assign a score for a subgroup 
that registers and does not submit data for the applicable performance 
period. We also finalized the proposal to make conforming changes at 
Sec.  414.1318(b) to state that, except as provided under Sec.  
414.1317(b) and (b)(1), each MIPS eligible clinician in the subgroup 
receives a final score based on the subgroup's combined performance 
assessment. We assume that subgroups that register for MVP reporting 
intend to submit data for the measures and activities in an MVP. These 
policies are meant to clarify the scoring for subgroups in instances 
when a subgroup does not submit data as originally intended when 
registering as a subgroup. Therefore, we are not making any adjustments 
to our previously finalized assumptions for subgroup reporting burden 
of the MVP quality performance category in the CY 2022 PFS final rule 
(86 FR 65592).
(i) Burden for MVP Registration: Individuals, Groups and APM Entities
    We refer readers to the CY 2022 PFS final rule (86 FR 65589 through 
65590) for our previously finalized burden relevant to MVP registration 
for clinicians participating as an individual and/or group for MVP 
reporting.
    As discussed above, based on updated data from the CY 2021 
performance period/CY 2023 MIPS payment year, the changes to existing 
MVPs and the addition of new MVPs, we estimate that approximately 12 
percent of the clinicians that currently participate in MIPS will 
submit data for the measures and activities in an MVP. For the CY 2023 
performance period/2025 MIPS payment year, we assume that the total 
number of individual clinicians, groups, subgroups and APM Entities to 
complete the MVP registration process is 7,731. To further clarify, we 
estimate that we will receive a total of 7,731 submissions for the 
measures and activities included in MVPs. As shown in Table 124, we 
estimate that it will take 1,933 hours (7,731 responses x 0.25 hr/
response) at a cost of $189,975 (1,938 hr x 98.28/hr) for individual 
clinicians, groups and APM Entities to register for MVPs in the CY 2023 
performance period/2025 MIPS payment year.

[[Page 70156]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.164

    In Table 125, we illustrate the net change in burden for MVP 
registration using the currently approved burden in the CY 2022 PFS 
final rule (86 FR 65588 through 65589). In aggregate, for the CY 2023 
performance period/CY 2025 MIPS payment year, the adjustment in the 
number of respondents expected to register for MVP reporting from 
12,917 to 7,731 results in a decrease of 5,186 responses. In aggregate, 
when combined with the currently approved per response time estimate, 
this will result in a decrease of 1,296 hours (3,229 hours-1,933 hours) 
at a cost of -$127,371 (-1,296 hr x 98.28/hr).
[GRAPHIC] [TIFF OMITTED] TR18NO22.165

    The following is a summary of the comments received for our 
proposed burden estimates for MVP registration and our responses.
    Comment: One commenter shared their results from a clinician poll 
that 13 percent of practices will participate in MVP reporting for the 
CY 2023 performance period/CY 2023 MIPS payment year.
    Response: We thank the commenter for their feedback on MVP 
participation estimates for the CY 2023 performance period/2025 MIPS 
payment year. We note that the estimate received is slightly higher 
than our proposed estimate of 12 percent for MVP participant 
registration. However, we do not believe that we can make adjustments 
to our estimate of 12 percent for MVP participants based on this 
information as we do not have additional details (poll sample size, 
participant pool, etc.) of the poll.
    After consideration of the public comments received for our 
proposed requirements and burden estimates for the MVP registration 
process, we did not make any further changes. As discussed above in 
this section, we updated the burden estimates from the CY 2023 PFS 
proposed rule (87 FR 46362 through 46364) due to the availability of 
updated data.
(ii) Burden for Subgroup Registration
    We previously established at Sec.  414.1365(b) a registration 
process for clinicians who choose to report MVPs through a subgroup. We 
refer readers to the CY 2022 PFS final rule for our previously 
finalized burden relevant to subgroup registration for clinicians 
participating in MVP reporting (86 FR 65590).
    In section IV.A.4.e.(2) of this rule, we finalized our proposed 
update to the definition of a single specialty group at Sec.  414.1305 
to state that single specialty group means a group that consists of one 
specialty type as determined by CMS using Medicare Part B claims. We 
also finalized our proposed update to the definition of a 
multispecialty group at Sec.  414.1305 to state that multispecialty 
group means a group that consists of two or more specialty types as 
determined by CMS using Medicare Part B claims. We believe that these 
definitions will help groups understand their specialty determination. 
However, we will not adjust the subgroups burden relevant to these 
policies because we believe that these definitions will not impact the 
utilization of subgroups by groups and hence, would not change the way 
groups choose to organize clinicians in subgroups.
    In section IV.A.4.e.(3)(b) of this rule, we finalized that as part 
of the subgroup registration process, in addition to the previously 
established registration requirements, group TINs must provide a 
description of each subgroup that is registered. Under this policy, we 
will identify some key scenarios for subgroups to select from that we 
expect might reflect a typical subgroup, but also wish to offer an 
opportunity for group TINs to describe how they constructed their 
subgroups by providing a narrative in a text--only

[[Page 70157]]

field, if the options we provide do not correctly describe the 
subgroup. We assume that the burden associated with choosing a key 
scenario will minimize the time required for subgroups to provide a 
narrative description. Additionally, we anticipate the narratives to be 
short descriptions of the nature of a group practice and appropriately 
reflect the subgroup composition. Therefore, we are not adjusting the 
burden for subgroup registration because we assume that the narrative 
requirement will not add significant burden to the currently approved 
half an hour for subgroup registration in the CY 2022 PFS final rule 
(86 FR 65590). We refer readers to section IV.A.8.e.(3)(b) of this rule 
for examples of the subgroup narrative description.
    In section IV.A.4.f.(3)(d) of this rule, we finalized our proposed 
addition at Sec.  414.1318(a)(4) that CMS will apply the low-volume 
threshold criteria for a subgroup as described under Sec.  
414.1318(a)(1) using information from the initial 12-month segment of 
the applicable MIPS determination period. Additionally, we finalized 
the proposal to make conforming changes at Sec.  414.1318(a)(1) to 
state that, except as provided under paragraph (a)(2) of this section 
and subject to paragraph (a)(4) of this section, for a MIPS payment 
year, determinations of meeting the low-volume threshold criteria and 
special status for a subgroup is determined at the group level in 
accordance with Sec. Sec.  414.1305 and 414.1310. We assume that these 
policies will provide clarification for groups to identify their 
eligibility to form subgroups and also ensure that an individual 
eligible clinician or group will continue to be identified as such for 
the applicable MIPS payment year regardless of the results of the 
second segment of the MIPS determination period. This policy does not 
change the application of low-volume threshold and special status as 
described under Sec.  414.1318(a)(1) for clinicians in subgroups. 
Therefore, we are not adjusting the currently approved burden for 
subgroup registration.
    In section IV.A.4.e.(3)(c) of this rule, we finalized at Sec.  
414.1318(a)(3) that an individual eligible clinician, as represented by 
a TIN-NPI combination may register for no more than one subgroup within 
a group's TIN. We assume that the policy will limit the number of 
subgroups that a clinician could participate under a TIN and will not 
result in additional burden for clinicians to participate as subgroups. 
Therefore, we are not adjusting the number of subgroups and the 
currently approved burden for subgroup registration.
    As noted above, we are not making any changes to our previously 
finalized subgroup registration burden. The burden relevant to the 
subgroup registration requirement is currently approved by OMB under 
control number 0938-1314 (CMS-10621). Consequently, we are not making 
any changes pertaining to subgroup registration under that control 
number. Similar to our assumptions in the CY 2022 PFS final rule, we 
continue to capture the burden associated with subgroup quality 
reporting in the ICR for MVP quality performance category submission 
(directly below). The burden associated with subgroup submissions for 
Promoting Interoperability and improvement activities is included in 
the relevant ICRs (Promoting Interoperability data submission and 
improvement activities submission), and in sections VI.B.9.g.(3) and 
VI.B.9.i. of this rule.
(iii) Burden for MVP Quality Performance Category Submission.
    In the CY 2022 PFS final rule (86 FR 65411 through 65415), we 
previously finalized the reporting requirements for the MVP quality 
performance category at Sec.  414.1365(c)(1)(i). As discussed in 
section IV.A.8.b. of this rule, we did not propose new requirements to 
submit data for the quality performance category of MVPs. Therefore, we 
did not propose any changes to our currently approved per response time 
estimates for submitting the MVP quality performance category data.
    As described above in section VI.B.9.e. of this final rule, we 
estimate that 12 percent of the clinicians who participated in MIPS for 
the CY 2021 performance period/2023 MIPS payment year will submit data 
for the quality performance category of MVP in the CY 2023 performance 
period/2025 MIPS payment year. We also estimate that there will be 20 
subgroups reporters in the CY 2023 performance period/2025 MIPS payment 
year. As shown in Table 126, we estimate that 3,258 clinicians and 10 
subgroups will submit data using eCQMs collection type at $580.44/
response (see line q for eCQMs); 2,443 clinicians and 10 subgroups will 
submit data using MIPS CQM and QCDR collection type at $646.29/response 
(see line q for CQM and QCDRs); and 2,010 clinicians and 0 subgroups 
will submit data for the MVP quality performance category using the 
Medicare Part B claims collection type at $998.67/response (see line q 
for claims). For the CY 2023 performance period/2025 MIPS payment year, 
using our currently approved per response time estimates for the 
clinicians and subgroups submitting data for the MVP quality 
performance category, we estimate a burden of 17,320 hours [5.3 hr x 
3,268 (3,258 + 10) responses] at a cost of $1,896,878 (3,268 responses 
x $580.44/response) for the eCQM collection type, 14,644 hours [5.97 hr 
x 2,453 (2,443 + 10)] at a cost of $1,585,349 (2,453 responses x 
$646.29/responses) for the MIPS CQM and QCDR collection type, and 
18,974 hours (9.44 hr x 2,010 clinician responses) at a cost of 
$2,007,327 (2,010 responses x $998.67/response) for the Medicare Part B 
claims collection type.
BILLING CODE 4150-28-P

[[Page 70158]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.166

    Table 127 illustrates the changes in estimated burden for 
clinicians who will submit the MVP quality performance category 
utilizing the eCQM, MIPS CQM and QCDR, and claims collection types in 
the CY 2023 performance period/2025 MIPS payment year. We note that we 
used the currently approved burden in the CY 2022 PFS final rule (86 FR 
65590 through 65592) as the baseline to determine the net change in 
burden. In aggregate, when combined with our currently approved per 
response time estimate, the decrease in 5,166 respondents that will 
submit data for the MVP quality performance category will result in a 
decrease of 8,502 hours and $931,027 for the eCQM collection type, a 
decrease of 16,519 hours and $1,788,285 for the CQM and QCDR collection 
type, and a decrease of 7,714 hours and $813,916 for the claims 
collection type.

[[Page 70159]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.167

BILLING CODE 4150-28-C
    We did not receive any comments on our proposed requirements and 
burden estimates for the submission of measures in the MVP quality 
performance category. As discussed above in this section, we adjusted 
our burden estimates from the CY 2023 PFS proposed rule (87 FR 46365 
through 46367) due to the availability of updated data.
(8) Beneficiary Responses to CAHPS for MIPS Survey
    This rule does not create any new or revised collection of 
information requirements or burden related to the CAHPS for MIPS 
survey. The CAHPS for MIPS survey requirements and burden are currently 
approved by OMB under control number 0938-1222 (CMS-10450). 
Consequently, we are not making any CAHPS for MIPS Survey changes under 
that control number.
(9) Group Registration for CAHPS for MIPS Survey
    This rule does not create any new or revised collection of 
information requirements or burden related to the group registration 
for the CAHPS for MIPS Survey. The requirements and burden are 
currently approved by OMB under control number 0938-1222 (CMS-10450). 
Consequently, we are not making CAHPS for MIPS Survey registration 
changes under that control number.
f. ICRs Regarding the Call for MIPS Quality Measures
    The following changes will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621).
    This rule does not create any new or revised collection of 
information requirements or burden related to the call for MIPS quality 
measures. However, based on the actual number of quality measure 
submissions received for CMS consideration during the 2022 Annual Call 
for Quality Measures, we are adjusting our burden estimates for the CY 
2023 performance period/CY 2025 MIPS payment year.
    In this rule, we estimate that we will receive 29 quality measure 
submissions during the 2023 Annual Call for Quality Measures, an 
increase of 1 from the currently approved number of quality measure 
submissions for consideration (86 FR 65594 through 65596). We are not 
making any changes to the 5.5 hour (2.4 hr for practice administrator + 
3.1 hr for clinician) per response time estimate for quality measure 
submissions.
    As shown in Table 128, we estimate an annual burden of 160 hours 
(line f: 29 measure submissions x 5.5 hr/measure) at a cost of $31,392 
(line j: 29 measure submissions x [(2.4 hr x $115.22/hr) + (3.1 hr x 
$259.98/hr)]) for the CY 2023 performance period/2025 MIPS payment 
year.
[GRAPHIC] [TIFF OMITTED] TR18NO22.168


[[Page 70160]]


    In Table 129, we illustrate the net change in estimated burden for 
the call for quality measures using the currently approved burden in 
the CY 2022 PFS final rule (86 FR 65594 through 65596). In aggregate, 
the estimated increase in the number of quality measure submissions 
will result in an adjustment of +6 hours (+1 measure submission x 5.5 
hr/measure submission) at a cost of $1,083 (+1 measure submission x 
$1082.47/measure submission) for the CY 2023 performance period/2025 
MIPS payment year.
[GRAPHIC] [TIFF OMITTED] TR18NO22.169

    We did not receive any comments on our proposed requirements and 
burden estimates for the submission of applications to request 
reweighting for the Promoting Interoperability and other performance 
categories. As discussed above in this section, we adjusted the burden 
estimates from the CY 2023 PFS proposed rule (87 FR 46367) due to the 
availability of updated data.
g. ICRs Regarding Promoting Interoperability Data (Sec. Sec.  414.1375 
and 414.1380)
(1) Background
    For the CY 2023 performance period/2025 MIPS payment year, 
clinicians and groups can submit Promoting Interoperability data 
through direct, log in and upload, or log in and attest submission 
types. With the exception of submitters who elect to use the log in and 
attest submission type for the Promoting Interoperability performance 
category, which is not available for the quality performance category, 
we anticipate that individuals and groups will use the same data 
submission type for both of these performance categories and that the 
clinicians, practice managers, and computer systems analysts involved 
in supporting the quality data submission will also support the 
Promoting Interoperability data submission process. The following 
burden estimates show only incremental hours required above and beyond 
the time already accounted for in the quality data submission process. 
Although this analysis assesses burden by performance category and 
submission type, we emphasize that MIPS is a consolidated program and 
submission analysis, and decisions are expected to be made for the 
program as a whole.
(2) Reweighting Applications for Promoting Interoperability and Other 
Performance Categories
    The following changes will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621).
    We refer readers to the CY 2018 Quality Payment Program final rule 
(82 FR 53918 through 53919), and the CY 2019, CY 2020, CY 2021 and CY 
2022 PFS final rules (83 FR 60011 through 60012, 84 FR 63134 through 
63135, 85 FR 84984 through 84985, and 86 FR 65596 through 65598, 
respectively) for our previously finalized requirements and burden for 
reweighting applications for Promoting Interoperability and other 
performance categories.
    As established in the CY 2017 and CY 2018 Quality Payment Program 
final rules, MIPS eligible clinicians who meet the criteria for a 
significant hardship or other type of exception may submit an 
application requesting a zero percent weighting for the Promoting 
Interoperability, quality, cost, and/or improvement activities 
performance categories under specific circumstances (81 FR 77240 
through 77243, 82 FR 53680 through 53686, and 82 FR 53783 through 
53785). Respondents who apply for a reweighting of the quality, cost, 
and/or improvement activities performance categories have the option of 
applying for reweighting of the Promoting Interoperability performance 
category on the same online form. We assume that respondents applying 
for a reweighting of the Promoting Interoperability performance 
category due to extreme and uncontrollable circumstances will also 
request a reweighting of at least one of the other performance 
categories simultaneously and not submit multiple reweighting 
applications.
    In section IV.A.6.c.(4)(h) of this rule, we finalized the proposal 
to continue the existing policy of reweighting the Promoting 
Interoperability performance category for physical therapists, 
occupational therapists, qualified speech-language pathologist, 
qualified audiologists, clinical psychologists, and registered 
dieticians or nutrition professionals only for the CY 2023 performance 
period/CY 2025 MIPS payment year and to revise Sec.  
414.1380(c)(2)(i)(A)(4)(i) to reflect the proposal. We also finalized 
the proposal to continue the existing policy of reweighting the 
Promoting Interoperability performance category for clinical social 
workers for the CY 2023 performance period/2024 MIPS payment year and 
to revise Sec.  414.1380(c)(2)(i)(A)(4)(iii) to reflect the proposal. 
We are not adjusting the number of respondents submitting reweighting 
applications due to these proposals because it does not change the 
existing reweighting policy for these clinician types participating in 
MIPS in the CY 2023 performance period/2025 MIPS payment year.
    Table 130 summarizes the burden for clinicians to apply for 
reweighting of the Promoting Interoperability performance category to 
zero percent due to a significant hardship or as a result of a 
decertification of an EHR. Based on the number of reweighting 
applications received at the time of the publication of this rule for 
the CY 2022

[[Page 70161]]

performance period/2024 MIPS payment year, we are adjusting our burden 
estimates relevant to this ICR in the CY 2023 PFS proposed rule (87 FR 
46367 through 46369). In this rule, we estimate that we will receive a 
total of 5,439 reweighting applications for the CY 2023 performance 
period/2025 MIPS payment year. Out of the 5,439, we estimate that 986 
respondents (eligible clinicians or groups) will submit a request to 
reweight the Promoting Interoperability performance category to zero 
percent due to extreme and uncontrollable circumstances, insufficient 
internet connectivity, lack of control over the availability of CEHRT, 
or as a result of a decertification of an EHR. We estimate that the 
remaining 4,451 respondents will submit a request to reweight one or 
more of the quality, cost, Promoting Interoperability, or improvement 
activities performance categories due to an extreme or uncontrollable 
circumstance. Additionally, we estimate that 2 APM Entities will submit 
an extreme and uncontrollable circumstances exception application for 
the CY 2023 performance period/CY 2024 MIPS payment year. This 
adjustment results in a decrease of 37,388 respondents compared to our 
currently approved estimate of 42,827 respondents (86 FR 65597). This 
decrease is based on the actual number of reweighting applications 
submitted for the CY 2022 performance period/2024 MIPS payment year. 
Similar to the data used to estimate the number of respondents in the 
CY 2021 PFS final rule, our respondent estimate includes a significant 
number of applications submitted as a result of a data issue CMS was 
made aware of and is specific to a single third-party intermediary. 
While we do not anticipate similar data issues to occur in each 
performance period, we do believe future similar incidents may occur 
and are electing to use this data without adjustment to reflect this 
belief.
    Consistent with our assumptions in the CY 2022 PFS final rule (86 
FR 65596 through 65598), we continue to estimate it will take 0.25 
hours for a computer system analyst to complete and submit the 
application. As shown in Table 130, we estimate an annual burden of 
1,360 hours (5,439 applications x 0.25 hr/application) and $133,661 
(1,360 hr x $98.28/hr).
[GRAPHIC] [TIFF OMITTED] TR18NO22.170

    In Table 131, we illustrate the net change in estimated burden for 
submission of reweighting applications for Promoting Interoperability 
and other performance categories using the currently approved burden in 
the CY 2022 PFS final rule (86 FR 65596 through 65598). The adjustment 
in the estimated number of respondents, from 42,827 to 5,439 
respondents, results in a decrease of 37,388 respondents. In aggregate, 
using our currently approved per response time estimate, as shown in 
Table 131, the decrease in 37,388 respondents results in a decrease of 
9,347 hours (-37,388 responses x 0.25 hr/response) and $918,623 (-9,347 
hr x $98.28/hr) for the CY 2023 performance period/2025 MIPS payment 
year.
[GRAPHIC] [TIFF OMITTED] TR18NO22.171


[[Page 70162]]


    We did not receive any comments on our proposed requirements and 
burden estimates for the submission of applications to request 
reweighting for the Promoting Interoperability and other performance 
categories. As discussed above in this section, we adjusted the burden 
estimates from the CY 2023 PFS proposed rule (87 FR 46367 through 
46369) due to the availability of updated data.
(3) Submitting Promoting Interoperability Data
    The following changes will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621).
    We refer readers to the CY 2017 and CY 2018 Quality Payment Program 
final rules (81 FR 77509 through 77511, and 82 FR 53919 through 53920, 
respectively), and the CY 2019, CY 2020, CY 2021, and CY 2022 PFS final 
rules (83 FR 60013 through 60014, 84 FR 63135 through 63137, 85 FR 
84985 through 84987, and 86 FR 65598 through 65600, respectively) for 
our previously finalized requirements and burden for submission of data 
for the Promoting Interoperability performance category.
    In section IV.A.6.c.(4)(d)(i)(D)(ab) of this final rule, we 
finalized the proposal to require MIPS eligible clinicians to report 
the Query of PDMP measure (which requires reporting a ``yes/no'' 
response) for the Promoting Interoperability performance category. 
Additionally, we finalized two exclusions beginning with the 
performance period in CY 2023: (1) Any MIPS eligible clinician who is 
unable to electronically prescribe Schedule II opioids and Schedule III 
and IV drugs in accordance with applicable law during the performance 
period, (2) Any MIPS eligible clinician who writes fewer than 100 
permissible prescriptions during the performance period, and (3) Any 
MIPS eligible clinician for whom querying a PDMP would impose an 
excessive workflow or cost burden prior to the start of the performance 
period they select in CY 2023. Due to lack of sufficient data regarding 
the number of clinicians who voluntarily submitted data for optional 
measures in the Promoting Interoperability performance category, we 
have consistently been unable to estimate the associated burden for the 
reporting of such measures. Therefore, we did not make additional 
changes to the currently approved time required for clinicians to 
submit data for the Promoting Interoperability performance category 
because we are unable to account for any change in burden due to the 
finalized policy to require the currently optional Query of PDMP 
measure.
    In section IV.A.6.c.(4)(e) of this rule, we finalized the proposal 
to add an additional measure through which a MIPS eligible clinician 
could earn credit for the Health Information Exchange Objective by 
connecting to an entity that connects to a QHIN or connecting directly 
to a QHIN. Specifically, we finalized the proposal to add the following 
new measure to the Health Information Exchange Objective beginning with 
the performance period in CY 2023: Enabling Exchange Under TEFCA 
measure. We finalized that MIPS eligible clinicians will have three 
reporting options for the Health Information Exchange Objective: (1) 
report on both the Support Electronic Referral Loops by Sending Health 
Information measure (or the exclusion, if applicable) and the Support 
Electronic Referral Loops by Receiving and Reconciling Health 
Information measure (or the exclusion, if applicable); (2) report on 
the HIE Bi-Directional Exchange measure; or (3) report on the Enabling 
Exchange Under TEFCA measure. We believe that given the alignment 
between the Enabling Exchange under TEFCA measure and the existing HIE 
Bi-Directional exchange measure, adding this measure offers clinicians 
more opportunities to earn credit for the Health Information Exchange 
Objective. Because the addition of Enabling Exchange Under TEFCA 
measure is optional for the Health Information Exchange Objective, we 
are unable to estimate the number of clinicians that will report this 
measure. Therefore, we did not propose to adjust our currently approved 
burden for clinicians to submit data for the Promoting Interoperability 
performance category because we are unable to account for any change in 
burden due to the change.
    The following is a summary of the comments we received for our 
estimates on the measures in the Health Exchange Objective of the 
Promoting Interoperability performance category and our responses.
    Comment: One commenter supported CMS' recommendation to not adjust 
the estimated time required for a clinician to submit the measures in 
the Health Information Exchange Objective for the Promoting 
Interoperability performance category.
    Response: We thank the commenter for their support.
    In section IV.A.6.c.(4)(f)(ii) of this rule, we finalized proposed 
revisions to the three active engagement options. Specifically, we 
finalized the proposal to consolidate current options 1 and 2 into one 
option beginning with the performance period in CY 2023. Additionally, 
for the Public Health and Clinical Data Exchange Objective, in addition 
to submitting responses for the required measures and any optional 
measures a MIPS eligible clinician chooses to report, we finalized the 
proposal to require MIPS eligible clinicians to submit their level of 
active engagement, either Pre-production and Validation or Validated 
Data Production (as described in section IV.A.6.c.(4)(f)(ii)(C) of this 
final rule), for each measure they report beginning with the 
performance period in CY 2023. In the CY 2023 PFS proposed rule (87 FR 
46369), we estimated that it would add an additional 1 minute (0.02 hr) 
to the currently approved estimated time of 2.69 hours for MIPS 
eligible clinicians to submit their level of active engagement, 
resulting in a total estimated time of 2.71 hours (2.69 hr + 0.02 hr), 
for clinicians to submit data for the Promoting Interoperability 
performance category. In the FY 2023 Medicare Hospital Inpatient 
Prospective Payment System for Acute Care Hospitals and Long-term Care 
Hospital Prospective Payment System final rule (87 FR 49394), it was 
finalized that it would take an estimated time of 30 seconds (or 0.5 
minutes) for eligible hospitals and CAH (Critical Access Hospital) s to 
submit their level of active engagement. We assume that it will take a 
MIPS eligible clinician the same time estimated for a CAH or an 
eligible hospital to submit their level of active engagement. We 
recognize that our proposed estimate of 1 minute is an overestimate. 
Therefore, we are revising our estimate that it would take 0.5 minutes 
(0.0083 hr) for MIPS eligible clinicians to submit their level of 
active engagement, resulting in a total estimated time of 2.70 hours, 
for clinicians to submit data for the Promoting Interoperability 
performance category. We refer readers to the FY 2023 IPPS final rule 
(87 FR 49394) for additional details on the estimated burden relevant 
to the measure.
    We did not receive any comments on our proposed requirements and 
burden estimates for clinicians to submit their level of active 
engagement. As described above in this section, we adjusted the burden 
estimates from the CY 2023 PFS proposed rule (87 FR 46369) due to the 
availability of additional information.
    In section IV.A.6.c.(4)(f)(ii)(D) of this rule, we also finalized 
that beginning with the performance period in CY 2023, that MIPS 
eligible clinicians may spend only one performance period at the Pre-
production and Validation level

[[Page 70163]]

of active engagement per measure, and that they must progress to the 
Validated Data Production level in the next performance period for 
which they report a particular measure. We refer readers to sections 
IV.A.6.c.4.(d) and IV.A.6.c.(4)(g) of this rule for additional 
information on measure descriptions and changes to scoring 
methodologies in the Promoting Interoperability performance category.
    As shown in Table 132, based on updated data from the CY 2021 
performance period/2023 MIPS payment year, we are adjusting our 
proposed estimate in the CY 2023 PFS proposed rule (87 FR 46370) for 
the total number of respondents that will submit Promoting 
Interoperability data in the CY 2023 performance period/2025 MIPS 
payment year. We estimate that a total number of 30,107 respondents, 
consisting of 22,293 individual MIPS eligible clinicians, 7,794 groups 
and virtual groups, and 20 subgroups will submit data for the Promoting 
Interoperability performance category in the CY 2023 performance 
period/2025 MIPS payment year. We assume that MIPS eligible clinicians 
previously scored under the APM scoring standard, as described in the 
CY 2020 PFS final rule, will continue to submit Promoting 
Interoperability data (84 FR 63006) in a similar way through the APP. 
As a result, we do not anticipate any change in burden for APM 
Participants submitting data for the Promoting Interoperability 
performance category. In section IV.A.6.c.(5)(b) of this rule, we 
finalized the proposal to introduce a voluntary reporting option for 
APM Entities to report the Promoting Interoperability performance 
category at the APM Entity level beginning with the CY 2023 performance 
period/2025 MIPS payment year. Because the reporting of the Promoting 
Interoperability performance category is voluntary, we are unable to 
estimate the number of APM Entities that will submit data on behalf of 
their clinicians for this category. Therefore, we assume that each MIPS 
eligible clinician in an APM Entity reports data for the Promoting 
Interoperability performance category through either their group TIN or 
individual reporting. Sections 1899 and 1115A of the Act (42 U.S.C. 
1395jjj and 42 U.S.C. 1315a, respectively) state that the Shared 
Savings Program and the testing, evaluation, and expansion of 
Innovation Center models are not subject to the PRA. However, in the CY 
2019 PFS final rule, we established that MIPS eligible clinicians who 
participate in the Shared Savings Program are no longer limited to 
reporting for the Promoting Interoperability performance category 
through their ACO participant TIN (83 FR 59822 and 59823). Burden 
estimates for this rule assume group TIN-level reporting as we believe 
this is the most reasonable assumption for MIPS eligible clinicians 
participating in the Shared Savings Program, which requires that ACOs 
include full TINs as ACO participants.
[GRAPHIC] [TIFF OMITTED] TR18NO22.172

    As shown in Table 133, accounting for the change in our per 
response time estimate due to the requirement for clinicians to submit 
their level of active engagement for the Public Health and Clinical 
Data Exchange Objective and the decrease in the number of respondents 
from 51,667 to 30,107, we estimate that it will result in a total 
burden of 81,289 hours (30,107 responses x 2.70 incremental hr for a 
computer analyst's time above and beyond the physician, medical and 
health services manager, and computer system's analyst time required to 
submit quality data) and $7,989,083 (81,289 hr x $98.28/hr)) to submit 
data for the Promoting Interoperability performance category in the CY 
2023 performance period/2025 MIPS payment year.

[[Page 70164]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.173

    As shown in Table 134, accounting for the changed per response time 
estimate, the decreased number of respondents results in a change of 
minus 57,695 hours (-21,560 responses x 2.69 hr + 30,107 x 0.01 hr) at 
a cost of -$5,670,265 (-57,695 hr x $98.28/hr).
[GRAPHIC] [TIFF OMITTED] TR18NO22.174

    After consideration of the public comments received for our 
proposed requirements and burden estimates relevant to the submission 
of measures and objectives in the Promoting Interoperability 
performance, we did not make any further changes. As discussed above in 
this section, we adjusted the burden estimates from the CY 2023 PFS 
proposed rule (87 FR 46369 through 46371) due to the availability of 
updated data.
h. ICRs Regarding the Nomination of Promoting Interoperability (PI) 
Measures
    This rule does create any new or revised collection of information 
requirements or burden related to the nomination of Promoting 
Interoperability measures. The requirements and burden are currently 
approved by OMB under control number 0938-1314 (CMS-10621). 
Consequently, we are not making any changes under that control number.
i. ICRs Regarding Improvement Activities Submission (Sec. Sec.  
414.1305, 414.1355, 414.1360, and 414.1365)
    The following changes will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621).
    In section IV.A.6.c.(3)(b)(ii) of this rule, we finalized changes 
to the improvement activities Inventory for the CY 2023 performance 
period/2025 MIPS payment year and future years as follows: adding 4 new 
improvement activities; modifying 5 existing improvement activities; 
and removing 6 previously adopted improvement activities. We do not 
believe the changes will impact our currently approved time for 
interested parties to submit information, because MIPS eligible 
clinicians are still required to submit the same number of activities 
and the estimated per response time for each activity is uniform. 
Therefore, we did not propose to adjust our currently estimated time of 
5 minutes or 0.083 hours (per response) for improvement activities 
submission.
    In this rule, we are adjusting the estimates in the CY 2023 PFS 
proposed rule (87 FR 46372) due to availability of updated data. As 
represented in Table 133, based on data from the CY 2021 performance 
period/CY 2023 MIPS payment year, we estimate that a total of 44,136 
respondents consisting of 31,743 individual clinicians, 12,373 groups 
and 20 subgroups will submit improvement activities during the CY 2023 
performance period/CY 2025 MIPS payment year. This adjustment 
represents a decrease of 37,446 respondents (32,102 individuals, 5,344 
groups and 0 subgroups) from the currently approved estimate of 81,582 
respondents (63,845 individuals and 17,717 groups, and 20 subgroups) in 
the CY 2022 PFS final rule (86 FR 65603).
    As discussed in sections VI.B.9.e.(2) and VI.B.9.g.(3) of this 
final rule regarding our estimate of clinicians and groups submitting 
data for the quality and Promoting Interoperability

[[Page 70165]]

performance categories, we are updating our estimates for the number of 
clinicians and groups that will submit improvement activities data 
based on projections of the number of eligible clinicians that were not 
QPs or participating in an ACO in the CY 2021 performance period/2023 
MIPS payment year but will be QPs in the CY 2023 performance period/
2025 MIPS payment year, and will therefore not be required to submit 
improvement activities data.
[GRAPHIC] [TIFF OMITTED] TR18NO22.175

    Consistent with the CY 2022 PFS final rule, we continue to estimate 
that the time required per response per individual or group is 5 
minutes or 0.083 hours for a computer system analyst at a labor rate of 
$98.28/hr to submit by logging in and manually attesting that certain 
activities were performed in the form and manner specified by CMS with 
a set of authenticated credentials (86 FR 65603). As shown in Table 
136, we estimate an annual burden of 3,663 hours (44,136 responses x 
0.083 hr) at a cost of $360,000 (3,663 hr x $98.28/hr)) for the CY 2023 
performance period/2025 MIPS payment year.
[GRAPHIC] [TIFF OMITTED] TR18NO22.176

    In Table 137, we illustrate the net change in estimated burden for 
the submission of improvement activities using the currently approved 
burden in the CY 2022 PFS final rule (86 FR 65603). In aggregate, using 
our currently approved per response time estimate, the decrease in the 
number of respondents results in a decrease of 3,108 hours (-37,446 
responses x 0.083 hr/response) at a cost of -$305,454 (-3,108 hr x 
$98.28/hr) for the CY 2023 performance period/2025 MIPS payment year.

[[Page 70166]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.177

    We did not receive any comments on our proposed requirements and 
burden estimates for the submission of improvement activities. As 
discussed above in this section, we adjusted the burden estimates from 
the CY 2023 PFS proposed rule (87 FR 46371 through 46373) due to the 
availability of updated data.
j. ICRs Regarding the Nomination of Improvement Activities (Sec.  
414.1360)
    This rule does not create any new or revised collection of 
information requirements or burden related to the nomination of 
improvement activities. The requirements and burden are currently 
approved by OMB under control number 0938-1314 (CMS-10621). 
Consequently, we are not making any changes under that control number.
k. Nomination of MVPs
    The following changes will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621).
    We refer readers to the CY 2021 PFS and CY 2022 PFS final rules (85 
FR 84990 through 84991 and 86 FR 65605, respectively) for our 
previously finalized requirements and burden for collection of 
information relevant to nomination of MVPs for inclusion in the Quality 
Payment Program.
    In section IV.A.4.a.(2) of this rule, we finalized updates to the 
previously finalized policies for the MVP development and maintenance 
process in the CY 2021 and 2022 PFS final rules (85 FR 84849 through 
84856 and 86 FR 65410, respectively). Specifically, we finalized the 
proposal to modify the MVP development process such that we will 
evaluate a submitted candidate MVP through the MVP development process, 
and if we determine it is ``ready'' for feedback, we will post a draft 
version of the submitted candidate MVP on the Quality Payment Program 
website (https://qpp.cms.gov/) and solicit feedback for a 30-day 
period. Interested parties and general public will have the opportunity 
to submit feedback on the candidate MVP for CMS's consideration through 
an email inbox. We will review the feedback received and determine if 
any changes should be made to the candidate MVP prior to potentially 
including the MVP in a notice of proposed rulemaking. If we determined 
changes should be made to the candidate MVP, we will not notify the 
interested party who originally submitted the candidate MVP for CMS 
consideration in advance of the rulemaking process. We also finalized 
the proposal to modify the MVP maintenance process such that interested 
parties and the general public will be able to submit their 
recommendations for potential revisions to established MVPs on a 
rolling basis throughout the year. We will then review the submitted 
recommendations and determine whether any are potentially feasible and 
appropriate. If we identify any submitted recommendations that are 
potentially feasible and appropriate, we will host a public facing 
webinar, open to interested parties and the general public through 
which they may offer their feedback on the potential revisions we have 
identified. We will publish details related to the timing and 
registration process for the webinar through our Quality Payment 
Program Listserv. If we decide to make any revisions to an established 
MVP based on the recommendations submitted, we will adopt such 
revisions through notice and comment rulemaking.
    We also stated that these changes do not require additional steps 
to the MVP nomination process described in the CY 2021 PFS final rule 
(85 FR 84990 through 84991). Therefore, we did not make any changes to 
the currently approved 12 hours per response (86 FR 65605) time for 
interested parties to submit their MVP candidates utilizing a standard 
template. Additionally, we refer readers to section VII.E.16.e.(2)(a) 
of this final rule where we discuss our impact analysis for these 
proposals.
    In this rule, based on the actual number of respondents that 
submitted MVP nominations, we are adjusting the estimated number of MVP 
nominations in the CY 2023 PFS proposed rule (87 FR 46373 through 
46374). We estimate that we will receive approximately 10 MVP 
nominations for the CY 2023 performance period/2025 MIPS payment year. 
This adjustment will result in a decrease of 15 MVP nominations from 
our currently approved estimate of 25 nominations in the CY 2022 PFS 
final rule (86 FR 65605). As shown in Table 138, for the CY 2023 
performance period/2025 MIPS payment year, we continue to estimate that 
the per response time is 12 hours. This will result in an estimated 
annual burden of 120 hours (10 nominations x 12 hr/nomination) at a 
cost of $20,775 (10 x [(7.2 hr x $115.22/hr for a medical and health 
services manager) + (4.8 hr x $259.98/hr for a physician)]).

[[Page 70167]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.178

    In Table 139, we illustrate the net change in estimated burden for 
nomination of MVPs using the currently approved burden in the CY 2022 
PFS final rule (86 FR 65605). In aggregate, using our currently 
approved per response time estimate, the decrease in the number of 
respondents submitting MVP nominations results in a total annual 
adjustment of -180 hours (-15 responses x 12 hr/nomination) at a cost 
of -$31,162 (-15 x [(7.2 hr x $115.22/hr) + (4.8 hr x $259.98/hr)]) for 
the CY 2023 performance period/2025 MIPS payment year.
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    We did not receive any comments on our proposed requirements and 
burden estimates relevant to the MVP nomination process. As discussed 
above in this section, we adjusted the burden estimates from the CY 
2023 PFS proposed rule (87 FR 46373 through 46374) due to the 
availability of updated data.
l. ICRs Regarding the Cost Performance Category (Sec.  414.1350)
    The cost performance category relies on administrative claims data. 
The Medicare Parts A and B claims submission process (OMB control 
number 0938-1197; CMS-1500 and CMS-1490S) is used to collect data on 
cost measures from MIPS eligible clinicians. MIPS eligible clinicians 
are not required to provide any documentation by CD or hardcopy. 
Moreover, the policies in this rule do not result in the need to add or 
revise or delete any claims data fields. Consequently, we are not 
making any changes under that control number.
m. ICRs Regarding Partial QP Elections (Sec. Sec.  414.1310(b) and 
414.1430)
    This rule does not create any new or revised collection of 
information requirements or burden related to the Partial QP Elections 
to participate in MIPS as a MIPS eligible clinician. However, we 
proposed to adjust our currently approved burden estimates based on 
updated projections for the CY 2023 performance period/2025 MIPS 
payment year. We did not receive any public comments related to the 
proposed burden estimates for Partial QP election. We are not making 
any adjustments to the proposed burden estimate for the ICR in the CY 
2023 PFS rule (87 FR 46374 through 46375). The finalized adjusted 
burden will be submitted to OMB for approval under control number 0938-
1314 (CMS-10621).
    As shown in Table 140, based on our predictive QP analysis for the 
2023 QP performance period/2025 MIPS payment year, which accounts for 
historical response rates in the CY 2021 performance period/2023 MIPS 
payment year, we are finalizing to revise our estimate that a total of 
287 respondents (156 APM Entities and 131 individual eligible 
clinicians representing approximately 7,182 Partial QPs) will make the 
election to participate as a Partial QP in MIPS. This is an increase of 
37 from the 250 elections that are currently approved by OMB under the 
aforementioned control number. We continue to estimate it will take the 
APM Entity representative or eligible clinician 15 minutes (0.25 hr) to 
make this election. In aggregate, we are adjusting our estimated annual 
burden to 72 hours (287 responses x 0.25 hr/response) and $7,076 (72 hr 
x $98.28/hr).

[[Page 70168]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.180

    As shown in Table 141, using our currently approved per respondent 
time estimate (86 FR 65605), the increase in the number of Partial QP 
elections results in an adjustment of + 9 hours (+ 37 respondents x 
0.25 hr/election) at a cost of + $884 ($7,076-$6,192) for the CY 2023 
performance period/2025 MIPS payment year.
[GRAPHIC] [TIFF OMITTED] TR18NO22.181

    We received no comments on our proposed requirements and burden 
estimates for the partial QP election process. As discussed above in 
this section, we adjusted the currently approved burden estimates due 
to the availability of updated data.
n. ICRs Regarding Other Payer Advanced APM Determinations: Payer-
Initiated Process (Sec.  414.1445) and Eligible Clinician-Initiated 
Process (Sec.  414.1445)
    The following changes will be submitted to OMB for approval under 
control number 0938-1314 (CMS-10621).
(1) Payer-Initiated Process (Sec.  414.1445)
    This rule does not create any new or revised collection of 
information requirements related to the Payer-Initiated Process. The 
requirements and burden associated with this information collection are 
currently approved by OMB under control number 0938-1314 (CMS-10621). 
Consequently, we are not making any changes to the Payer- Initiated 
process under that control number.
(2) Eligible Clinician-Initiated Process (Sec.  414.1445)
    This rule does not create any new or revised collection of 
information requirements or burden related to the Eligible Clinician-
Initiated Process. The requirements and burden associated with this 
information collection are currently approved by OMB under control 
number 0938-1314 (CMS-10621). Consequently, we are not making any 
changes to the Eligible Clinician-Initiated Process under that control 
number.
(3) Submission of Data for QP Determinations Under the All-Payer 
Combination Option (Sec.  414.1440)
    This rule does not create any new or revised collection of 
information requirements or burden related to the Submission of Data 
for QP Determinations under the All-Payer Combination Option. The 
requirements and burden for the All-Payer Combination option are 
currently approved by OMB under control number 0938-1314 (CMS-10621). 
Consequently, we are not making any changes under that control number.
o. ICRs Regarding Voluntary Participants Election To Opt-Out of 
Performance Data Display on Compare Tools (Sec.  414.1395)
    This rule does not create any new or revised collection of 
information requirements or burden related to the election by voluntary 
participants to opt-out of public reporting on Compare Tools. The 
requirements and burden associated with this information collection are 
currently approved by OMB under control number 0938-1314 (CMS-10621). 
Consequently, we are not making any changes to the election of 
voluntary participants to opt-out of performance data display on 
Compare Tools under that control number.
p. Summary of Annual Quality Payment Program Burden Estimates
    Table 142 summarizes this final rule's total burden estimates for 
the Quality Payment Program for the CY 2023 performance period/2025 
MIPS payment year.
    In the CY 2022 PFS final rule, the total estimated burden for the 
CY 2023 performance period/2025 MIPS payment year (see Table 142, row 
a) was 1,383,049 hours at a cost of $139,501,770 (86 FR 65613). 
Accounting for updated wage rates and the subset of all Quality Payment 
Program ICRs discussed in this rule compared to the CY 2022 PFS final 
rule, the total estimated annual burden of continuing policies and 
information set forth in the CY 2022 PFS final rule into the CY 2023 
performance period/2025 MIPS payment year is 1,386,803 hours at a cost 
of $148,008,071 (see Table 142, row b). These represent an increase of 
3,754

[[Page 70169]]

hours and an increase of $8,506,301. To understand the burden 
implications of the policies in this rule, we provide an estimate of 
the total burden associated with continuing the policies and 
information collections set forth in the CY 2022 PFS final rule into 
the CY 2023 performance period/2025 MIPS payment year. This burden 
estimate of 714,352 hours at a cost of $76,092,343 (see Table 142, row 
c) reflects the availability of more accurate data to account for all 
potential respondents and submissions across all the performance 
categories and more accurately reflect the exclusion of QPs from all 
MIPS performance categories, a decrease of 672,451 hours and 
$71,915,728 (see Table 142, row d). This burden estimate is lower than 
the burden approved for information collection related to the CY 2022 
PFS final rule due to updated data and assumptions. Our total burden 
estimate for the CY 2023 performance period/2025 MIPS payment year is 
710,644 hours and $75,687,130 (see Table 142, row e), which represents 
a decrease of 676,159 hours and $72,320,941 from the CY 2022 PFS final 
rule (see Table 142, row f). The difference of -3,708 hours (672,451 
hours-676,159 hours) and -$405,213 ($71,915,728-$72,320,941) (see Table 
142, row g) between this estimate and the total burden shown in Table 
142 is the decrease in burden associated with impacts of the policies 
for the CY 2023 performance period/2025 MIPS payment year.
BILLING CODE 4150-28-P
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[[Page 70170]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.183

    Table 144 provides the reasons for changes in the estimated burden 
for information collections in the Quality Payment Program segment of 
this final rule. We have divided the reasons for our change in burden 
into those related to finalized policies and those related to 
adjustments in burden continued from the CY 2022 PFS final rule 
policies that reflect updated data and revised methods.

[[Page 70171]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.184


[[Page 70172]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.185

C. Summary of Annual Burden Estimates for Changes
[GRAPHIC] [TIFF OMITTED] TR18NO22.186

BILLING CODE 4150-28-C

VII. Regulatory Impact Analysis

A. Statement of Need

    In this final rule, we are finalizing payment and policy changes 
under the Medicare PFS and required statutory changes under the 
Consolidated Appropriations Act, 2021 (CAA, 2021); sections 301, 302, 
303, 304, and 305 under the Consolidated Appropriations Act, 2022 (CAA, 
2022); and sections 2003 and 2005 of the SUPPORT for Patients and 
Communities Act of 2018, section 90004 of the Infrastructure Investment 
and Jobs Act, and section 4 of the Protecting Medicare and American 
Farmers from Sequester Cuts Act. Our policies in this rule specifically 
address: changes to the PFS; other changes to Medicare Part B

[[Page 70173]]

payment policies to ensure that payment systems are updated to reflect 
changes in medical practice, the relative value of services, and 
changes in the statute; improvements to the Medicare Shared Savings 
Program (Shared Savings Program) requirements that promote health 
equity and strengthen financial incentives for participation; updates 
to the Quality Payment Program; updates to the Medicare coverage of 
opioid use disorder services furnished by opioid treatment programs; 
updates to certain Medicare provider enrollment policies; updates to 
electronic prescribing for controlled substances for a covered Part D 
drug under a prescription drug plan or an MA-PD plan (section 2003 of 
the SUPPORT Act); changes to the Medicare policies for laboratory 
specimen collection fees and travel allowance; and updates to the 
Medicare Ground Ambulance Data Collection System. The policies reflect 
CMS's stewardship of the Medicare program and overarching policy 
objectives for ensuring equitable beneficiary access to appropriate and 
quality medical care.
1. Statutory Provisions
a. Extension of Certain Medicare Telehealth Flexibilities, Under 
Section 1834(m) of the Act, as Amended by the Consolidated 
Appropriations Act, 2022
    Section II.D.1.e. of this final rule implements sections 301, 302, 
304, and 305, of the Consolidated Appropriations Act, 2022, which 
extended the geographic restrictions (section 301), extended the 
temporary expansion of practitioner types who are eligible to furnish 
Medicare telehealth (section 302), delayed the in-person requirements 
under Medicare for mental health services furnished through telehealth 
under the PFS (section 304), and extended audio-only flexibilities for 
certain telehealth services that will otherwise not be available via 
telehealth (section 305) after the expiration of the PHE to remain on 
the Medicare Telehealth Services List for a 151-day period beginning on 
the first day after the end of the public health emergency (PHE) for 
COVID-19. This provision is necessary to fulfill the statutory 
requirement to implement this extension until the 152nd day after the 
end of the PHE for COVID-19.
b. Requiring Manufacturers of Certain Single-Dose Container or Single-
Use Package Drugs Payable Under Medicare Part B To Provide Refunds With 
Respect to Discarded Amounts
    Section III.A. of this final rule implements section 90004 of the 
Infrastructure Investment and Jobs Act (Pub. L. 117-9, November 15, 
2021) which requires drug manufacturers to provide a refund to CMS for 
certain discarded amounts from a refundable single-dose container or 
single-use package drug. These provisions are necessary to fulfill the 
statutory requirement to implement this policy effective January 1, 
2023 and reduce unnecessary Medicare spending for discarded drug.
c. Rural Health Clinics (RHCs) and Federally Qualified Health Centers 
(FQHCs)
    Section III.B.3. of this final rule implements sections 303 and 304 
of the Consolidated Appropriations Act, 2022. Section 303 of the CAA, 
2022 amended section 1834(m)(8) of the Act to temporarily continue 
payment for telehealth services furnished by FQHCs and RHCs for the 
151-day period beginning on the first day after the end of the COVID-19 
PHE using the methodology established for telehealth services furnished 
by FQHCs and RHCs during the PHE, which, in accordance with section 
1834(m)(8)(B) of the Act, is based on payment rates that are similar to 
the national average payment rates for comparable telehealth services 
under the PFS.
    Section 304 of the CAA, 2022 delays the in-person requirements 
under Medicare for mental health services furnished through telehealth 
under the PFS and for mental health visits furnished by RHCs and FQHCs 
via telecommunications technology for a 151-day period beginning on the 
first day after the end of the public health emergency (PHE) for COVID-
19. These provisions are necessary to fulfill these statutory 
requirements.
    We also note in section III.B.3. of this final rule we discuss 
implementation of sections 301 and 305 of the CAA, 2022 that will apply 
to telehealth services (those that are not mental health visits) 
furnished by RHCs and FQHCs. That is, section 301 of the CAA, 2022 
extended the geographic restrictions and section 305 of the CAA, 2022 
extended audio-only flexibilities for certain telehealth services that 
will otherwise not be available via telehealth.
d. Clinical Laboratory Fee Schedule (CLFS)--Revisions Consistent With 
Recent Statutory Changes
    Section III.C.5. of this rule finalizes conforming regulations text 
changes for CLFS data reporting requirements due to the enactment of 
Protecting Medicare and American Farmers from Sequester Cuts Act 
(PMAFSCA). For clinical diagnostic laboratory tests (CDLTs) that are 
not advanced diagnostic laboratory tests (ADLTs), the PMAFSCA delays 
the next data reporting period by one year. Instead of taking place 
from January 1, 2022 through March 31, 2022, data reporting will now 
take place from January 1, 2023 through March 31, 2023, based on the 
original data collection period of January 1, 2019 through June 30, 
2019. Data reporting for these tests then resumes on a 3-year cycle 
(2026, 2029, etc.). Additionally, PMAFSCA amends the statutory 
provisions that phase in payment reductions resulting from private 
payor rate implementation to provide that for CYs 2023 through 2025, 
payment may not be reduced by more than 15 percent as compared to the 
amount established for the preceding year.
e. Requirement for Electronic Prescribing for Controlled Substances for 
a Covered Part D Drug Under a Prescription Drug Plan or an MA-PD Plan 
(Section 2003 of the SUPPORT Act)
    In the CY 2023 PFS proposed rule, we proposed changes to the 
electronic prescribing for controlled substances (EPCS) requirement 
specified in section 2003 of the SUPPORT Act (87 FR 46238 through 
46240). Previously finalized policies did not include actions for non-
compliance after the 2023 year. Additionally, previously finalized 
policies for exceptions may not have properly identified prescribers 
that are small prescribers during the compliance period and may have 
misidentified prescribers in locations with a recognized emergency or 
natural disaster. The provisions in this final rule define the action 
for non-compliance with the electronic prescribing of controlled 
substances requirement for the 2024 year and refine policies to better 
identify prescribers who qualify for the small prescriber and 
recognized emergency exceptions to the EPCS requirement.
f. Medicare Ground Ambulance Data Collection System
    Section 1834(l)(17)(A) of the Act requires the Secretary to develop 
a data collection system (which may include use of a cost survey) to 
collect cost, revenue, utilization, and other information determined 
appropriate by the Secretary for providers and suppliers of ground 
ambulance services. In this final rule, we are finalizing our proposed 
series of changes to the Medicare Ground Ambulance Data Collection 
System including the proposal to update Sec.  414.626(d)(1) and (e)(2) 
to give us the necessary flexibility to specify how ground ambulance

[[Page 70174]]

organizations should submit the hardship exemption requests and 
informal review requests, including to our web-based portal once that 
portal is operational, and proposed revisions to the Medicare Ground 
Ambulance Data Collection Instrument. The changes and clarifications 
aim to reduce burden on respondents, improve data quality, or both.
    Comment: We received one comment on the impacts. The commenter 
encouraged CMS to implement this proposal in a way that does not 
increase administrative burden and in a way that is revenue neutral 
given the increase in expenses to provide care to patients.
    Response: As we described in the CY 2020 PFS final rule (84 FR 
62868), we designed the Medicare Ground Ambulance Data Collection 
System to collect the information required in section 1834(l)(17)(A) of 
the Act while: (1) accommodating a wide range of ground ambulance 
organizations; and (2) minimizing respondent burden. Subsequent 
improvements in the Medicare Ground Ambulance Data Collection System in 
the CY 2022 PFS final rule (86 FR 65306), and those described in this 
final rule, aim to further streamline the Medicare Ground Ambulance 
Data Collection System and reduce burden.
g. Quality Payment Program
    This final rule is also necessary to make changes to the Quality 
Payment Program to move the Quality Payment Program forward to focus 
more on measurement efforts, refine how clinicians will be able to 
participate in a more meaningful way through the Merit-based Incentive 
Payment System (MIPS) Value Pathways (MVPs), and encourage 
participation in Advanced Alternative Payment Models (APMs). Authorized 
by MACRA, the Quality Payment Program is an incentive program that 
includes two participation tracks, MIPS and Advanced APMs. MIPS 
eligible clinicians are subject to a MIPS payment adjustment based on 
their performance in four performance categories: cost, quality, 
improvement activities, and Promoting Interoperability. Currently, 
reporting for MIPS is not required to be coordinated across performance 
categories. These policies are intended to promote better quality 
reporting to improve patient health outcomes by coordinating reporting 
for MIPS across performance categories, and make changes to scoring 
that will provide a better picture of clinicians' performance.
2. Discretionary Provisions
a. RHCs and FQHCs
    In section III.B.2. of this final rule, we are finalizing a policy 
to include chronic pain management (CPM) services in the general care 
management HCPCS code G0511 when these services are provided by RHCs 
and FQHCs. Since HCPCS code G3002 will be valued using a crosswalk to 
the PCM CPT code 99424, which is currently one of the CPT codes that 
comprise HCPCS code G0511, there is no change to the average used to 
calculate the G0511 payment rate.
    In addition, in section III.B.2. of this final rule we are 
finalizing coding and payment for general behavioral health integration 
(BHI) services (HCPCS code G0323). We explain that since clinical 
psychologists (CPs) and clinical social workers (CSWs) are considered 
practitioners that can provide services in RHCs/FQHCs, we acknowledge 
when CPs and CSWs provide the services described in HCPCS code G0323 in 
an RHC or FQHC, they can bill HCPCS code G0511.
    These provisions are necessary in that we evaluate coding 
provisions in this rule and their applicability to RHCs and FQHCs.
    Section III.B.4. of this final rule finalizes the clarification 
regarding the use of short-period cost reports vs 12-consecutive month 
cost reports to establish the payment limit for specified provider-
based RHCs. This provision is necessary to accurately reflect the costs 
of providing RHC services and will establish a more accurate base from 
which the payment limits will be upgraded going forward.
b. Clinical Laboratory Fee Schedule (CLFS) Specimen Collection and 
Travel Allowance
    As discussed in section III.C.6. of this rule we are finalizing 
revisions to the CLFS regulations to clarify and codify the CLFS 
specimen collection and travel allowance payment policies.
    In general, section 1833(h)(3) of the Act requires the Secretary to 
pay a nominal fee for specimen collection for laboratory testing and a 
fee to cover transportation and personnel expenses for trained 
personnel to collect specimens from homebound patients and inpatients 
(not in a hospital). CMS' longstanding instructions regarding the 
statutory requirements for CLFS specimen collection and travel 
allowance are described in Medicare Claims Processing manual guidance. 
OIG and other interested parties have expressed concerns regarding 
inconsistent MAC implementation of the payment policies as well as 
unclear or conflicting guidance to laboratories related to the CLFS 
travel allowance. In the CY 2022 PFS final rule we solicited comments 
regarding these two payment policies; commenters supported 
clarification to the existing policies and also made suggestions 
regarding possible refinements.
    The payment policies related to CLFS specimen collection fees and 
travel allowance finalized in this rule are necessary to clarify 
existing policy, address concerns expressed by interested parties, and 
reduce administrative burden. For the specimen collection policy, we 
are increasing the specimen collection fee amount to account for the 
increases in resource costs, including the impact of inflation, so as 
to continue to provide appropriate payment for the costs of collecting, 
drawing and handling the specimen.
c. Modifications Related to Medicare Coverage for Opioid Use Disorder 
(OUD) Treatment Services Furnished by Opioid Treatment Programs (OTPs)
    In section III.F. of this final rule, we explain that because of 
the limitations of the voluntarily reported ASP data for orally-
administered methadone, which reflects data from a small subset of 
methadone manufacturers, we do not believe this voluntarily reported 
ASP data currently provides a reliable source for pricing the methadone 
codes. We previously issued an interim final rule with comment period 
to establish a limited exception to the methodology for determining the 
payment amount for the drug component of an episode of care under the 
OTP benefit in order to freeze the payment amount for methadone 
furnished during an episode of care in CY 2022 at the payment amount 
that was determined for CY 2021. For CY 2023 and subsequent years, we 
are finalizing a revision to our methodology for pricing methadone 
under the OTP benefit, specifically, the drug component of the 
methadone weekly bundle and the add-on code for take-home supplies of 
methadone, so that it will not rely on voluntarily-submitted ASP data. 
We believe this policy change will stabilize the payment amount for 
methadone dispensed by OTPs during an episode of care and therefore 
maintain access to treatment with methadone in the OTP setting for 
Medicare beneficiaries. Additionally, in section III.F. of this final 
rule, we are finalizing a modification to the payment rate for the non-
drug component of the bundled payment for an episode of care to base 
the rate for individual therapy on a crosswalk code describing a longer

[[Page 70175]]

duration of psychotherapy compared to the current crosswalk code. We 
believe this modification is needed in order to more accurately reflect 
the resource costs involved with furnishing therapy in the OTP setting.
d. Medicare Part B Payment for Preventive Vaccine Administration 
Services
    Sections III.H.2. and 3. of this final rule discuss the 
implementation of policies that impact the payment amount for 
administration of preventive vaccines paid under the Part B vaccine 
benefit. Section III.H.4. of this final rule clarifies the timing of 
payment policies for COVID-19 vaccines and COVID-19 monoclonal antibody 
products. These provisions are necessary to provide stable payment for 
preventive vaccine administration to allow predictability for providers 
and suppliers to rely on for building and sustaining robust vaccination 
programs.
e. Medical Necessity and Documentation Requirements for Nonemergency, 
Scheduled, Repetitive Ambulance Services
    We proposed to modify nonemergency, repetitive, scheduled ambulance 
policy at Sec.  410.40(e)(2)(ii) by clarifying that (1) the physician 
certification statement and additional documentation must provide 
detailed explanations, that are consistent with the beneficiary's 
current medical condition, that explains the beneficiary's need for 
transport by an ambulance; and (2) that coverage includes observation 
or other services rendered by qualified ambulance personnel. Existing 
regulations at Sec.  410.40(e)(2) are interpreted too narrowly by some 
interested parties, excluding beneficiaries in need of monitoring. This 
language clarifies the intent of existing regulatory language by 
explicitly stating that beneficiaries who may not be in need of 
tangible services, but otherwise are in need of monitoring, qualify for 
this limited ambulance benefit. This is not a statutorily-mandated 
provision but addresses a longstanding ambiguity potentially affecting 
vulnerable populations. We did not receive any comments on this 
regulatory impact analysis and are finalizing as proposed.
f. Expansion of Coverage for Colorectal Cancer Screening and Reducing 
Barriers
    In CY 2019, the last year for which incidence data are available, 
colorectal cancer (CRC) accounted for the 4th highest rate of new 
cancer cases and 4th highest rate of cancer deaths in the United 
States.\565\ The Center for Disease Control and Prevention (CDC) 
advises, ``Colorectal cancer almost always develops from precancerous 
polyps (abnormal growths) in the colon or rectum. Screening tests can 
find precancerous polyps, so that they can be removed before they turn 
into cancer. Screening tests can also find colorectal cancer early, 
when treatment works best. Regular screening, beginning at age 45, is 
the key to preventing colorectal cancer and finding it early.'' \566\ 
This final rule will expand coverage for colorectal cancer screening 
tests by reducing the minimum age payment limitation for certain tests 
from 50 to 45 years of age. In addition, we proposed to expand the 
regulatory definition of CRC screening tests to include a follow-on 
screening colonoscopy after a Medicare covered non-invasive stool-based 
CRC screening test returns a positive result. Our provisions will 
update Medicare coverage and payment policies to align with our new 
understanding of CRC screening, the latest recommendations from the 
U.S. Preventive Services Task Force and recommendations from 
professional societies and other appropriate organizations. We proposed 
to expand coverage of colorectal cancer screening tests by exercising 
our authority under sections 1834(n) and 1861(pp)(1)(D) of the Act. We 
believe these provisions will expand access to quality care and improve 
health outcomes through prevention, early detection, more effective 
treatment and reduced mortality. Moreover, it will directly advance 
health equity by promoting access and removing barriers for much needed 
cancer prevention and early detection within rural communities and 
communities of color that are especially impacted by the incidence of 
CRC.
---------------------------------------------------------------------------

    \565\ https://gis.cdc.gov/Cancer/USCS/#/AtAGlance/.
    \566\ https://www.cdc.gov/cancer/colorectal/basic_info/screening/.
---------------------------------------------------------------------------

g. Removal of Selected National Coverage Determinations
    CMS periodically identifies and proposes to remove National 
Coverage Determinations (NCDs) that no longer contain clinically 
pertinent and current information, in other words those items and 
services that no longer reflect current medical practice, or that 
involve items and services that are used infrequently by beneficiaries. 
Since the CY 2021 PFS final rule (85 FR 84472), we have used notice and 
comment rulemaking to obtain public comment on removing outdated NCDs, 
replacing the prior subregulatory administrative process used on two 
occasions in 2013 and 2015. Eliminating an NCD that provides national 
coverage or non-coverage for items and services means that the item or 
service will no longer be automatically, nationally covered or non-
covered by Medicare (42 CFR 405.1060). Instead, the initial coverage 
determinations for those items and services will be made by local 
Medicare Administrative Contractors (MACs).
    As described in section III.E. of this final rule, we are removing 
as proposed, NCD 160.22 Ambulatory EEG Monitoring (06/12/1984), because 
the NCD contains outdated language that is inconsistent with, and 
contrary to current standards of care. We believe that allowing local 
contractor discretion to make coverage decision for this service better 
serves the needs of the Medicare program and its beneficiaries. We 
estimate there will be de minimis change to 2023 payments, compared to 
2021 because this is a long-established service for which the MACs 
already have LCDs and guidance articles. Therefore, we believe removing 
the NCD will allow MACs to update local coverage guidance for this 
established diagnostic test, but will not result in significant changes 
to utilization or payments.
h. Medicare Shared Savings Program
    As we seek to advance the overall value-based care strategy of 
growth, alignment, and equity, we are finalizing modifications to the 
Medicare Shared Savings Program to increase program participation by 
supporting organizations new to value-based care and shared savings, 
especially for organizations serving underserved populations, and 
providing greater flexibility in the progression to performance-based 
risk, allowing these organizations more time to redesign their care 
processes to be successful under risk arrangements. As part of this 
effort, we are establishing advance investment payments for new, low 
revenue ACOs that are inexperienced with performance-based risk 
Medicare ACO initiatives. To address the social needs of people with 
Medicare, these payments will increase with the number of beneficiaries 
who are enrolled in the Medicare Part D low-income subsidy (LIS), 
dually eligible for Medicare and Medicaid, and/or who live in areas 
with high deprivation (measured by the area deprivation index (ADI)) 
assigned to the ACO. We are also building on the existing Shared 
Savings Program benchmarking methodology by finalizing modifications to 
strengthen financial incentives for long term participation by reducing 
the impact of

[[Page 70176]]

ACOs' performance on their benchmarks, to address the impact of ACO 
market penetration on regional expenditures used to adjust and update 
benchmarks, and to strengthen the business case for participation for 
ACOs serving high-risk and high dually eligible populations, which will 
help sustain participation and grow the program. Additionally, we are 
finalizing modifications to the benchmarking methodology to mitigate 
bias in regional expenditure calculations that benefits ACOs electing 
prospective assignment. We are also finalizing changes to the quality 
reporting and the quality performance requirements to support the 
transition of ACOs to all payer quality measure reporting. These 
provisions include implementing a health equity adjustment to an ACO's 
MIPS quality performance category score to recognize high performing 
ACOs serving a high proportion of underserved beneficiaries. Finally, 
we are making changes that are important for improved operations of the 
Shared Savings Program, including policies to reduce ACO administrative 
burden while maintaining program integrity.
i. Provider Enrollment and DMEPOS Conditions of Payment
    This final rule is also needed to make regulatory enhancements to 
our provider enrollment policies and to our DMEPOS conditions of 
payments. These provisions focus on, but are not limited to: (1) 
expanding the bases for denying or revoking a provider's or supplier's 
Medicare enrollment; (2) subjecting a greater number of providers and 
suppliers, such as skilled nursing facilities, to the highest level of 
screening, which includes fingerprinting all 5 percent or greater 
owners of these providers and suppliers; and (3) denying payment to 
DMEPOS suppliers that are not appropriately licensed. These changes are 
necessary to help ensure that payments are made only to qualified 
providers and suppliers and that owners of these entities are carefully 
screened. As explained in section III.J. of this final rule, we believe 
that fulfilling both of these objectives will assist in protecting the 
Trust Funds and Medicare beneficiaries.
j. Proposed Revisions to HCPCS Level II Coding Policies for Skin 
Substitutes
    The HCPCS is a standardized coding system used to identify 
particular items and services on claims submitted to Medicare, 
Medicaid, and other health insurance programs in a consistent and 
orderly manner. The HCPCS is divided into two principal subsystems, 
referred to as HCPCS Level I and HCPCS Level II. The HCPCS Level I code 
set is comprised of Current Procedural Terminology (CPT[supreg]) codes, 
which are owned and maintained by the American Medical Association. The 
HCPCS Level II code set is used primarily to identify items, services, 
supplies, and equipment that are not identified by CPT[supreg] codes. 
CMS updates and maintains the HCPCS Level II code set on a periodic and 
routine basis.
    One of the categories of items and supplies that are typically 
described by HCPCS Level II codes are skin substitutes. After 
consideration of public comments, we are not finalizing the coding 
policies we proposed for skin substitute products under the PFS, as 
discussed in section III.N. of this final rule.

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). An RIA 
must be prepared for major rules with economically significant effects 
($100 million or more in any 1 year). We estimated, as discussed in 
this section, that the PFS provisions included in this final rule will 
redistribute more than $100 million in 1 year. Therefore, we estimate 
that this rulemaking is ``economically significant'' as measured by the 
$100 million threshold, and hence also a major rule under the 
Congressional Review Act. Accordingly, we prepared 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 
website 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 will not have a significant 
economic impact on a substantial number of small entities. The analysis 
must include a justification concerning the reason action is being 
taken, the kinds and number of small entities the rule affects, and an 
explanation of any meaningful options that achieve the objectives with 
less significant adverse economic impact on the small entities.
    Approximately 95 percent of practitioners, other providers, and 
suppliers are considered to be small entities, based upon the SBA 
standards. There are over 1 million physicians, other practitioners, 
and medical suppliers that receive Medicare payment under the PFS. 
Because many of the affected entities are small entities, the analysis 
and discussion provided in this section, as well as elsewhere in this 
final rule is intended to comply with the RFA requirements regarding 
significant impact on a substantial number of small entities.
    In addition, section 1102(b) of the Act requires us to prepare an 
RIA if a rule may have a significant impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 of the RFA. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area for Medicare 
payment regulations and has fewer than 100 beds. Medicare does not pay 
rural hospitals for their services under the PFS; rather, the PFS pays 
for physicians' services, which can be furnished by physicians and NPPs 
in a variety of settings, including rural hospitals. We did not prepare 
an analysis for section 1102(b) of the Act because we determined, and 
the Secretary certified, that this final rule will not have a 
significant impact on the operations of a substantial number of small 
rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated

[[Page 70177]]

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 2022, that threshold is approximately $165 million. This 
final rule will 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 final rule does not impose any costs on State 
or local governments, the requirements of Executive Order 13132 are not 
applicable.
    We prepared the following analysis, which together with the 
information provided in the rest of this preamble, meets all assessment 
requirements. The analysis explains the rationale for and purposes of 
this final rule; details the costs and benefits of the rule; analyzes 
alternatives; and presents the measures we will use to minimize the 
burden on small entities. As indicated elsewhere in this final rule, we 
discussed 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 
provisions of the statute. We provide information for each of the 
policy changes in the relevant sections of this final rule. We are 
unaware of any relevant Federal rules that duplicate, overlap, or 
conflict with this final rule. The relevant sections of this final rule 
contain a description of significant alternatives if applicable.

C. Changes in Relative Value Unit (RVU) Impacts

1. Resource-Based Work, PE, and MP RVUs
    Section 1848(c)(2)(B)(ii)(II) of the Act requires that increases or 
decreases in RVUs may not cause the amount of Medicare Part B 
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 
compared payment rates for CY 2022 with payment rates for CY 2023 using 
CY 2021 Medicare utilization. The payment impacts described in this 
final rule reflect averages by specialty based on Medicare utilization. 
The payment impact for an individual practitioner could vary from the 
average and will depend on the mix of services they furnish. The 
average percentage change in total revenues will 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 diagnostic laboratory tests 
that are paid under the Clinical Laboratory Fee Schedule (CLFS).
    The PFS update adjustment factor for CY 2023, as specified in 
section 1848(d)(19) of the Act, is 0.00 percent before applying other 
adjustments. In addition, the Protecting Medicare and American Farmers 
from Sequester Cuts Act provided a one-time 3.00 percent increase in 
PFS payment amounts for services furnished on or after January 1, 2022, 
and before January 1, 2023 and required that the supplementary increase 
shall not be taken into account in determining PFS payment rates for 
subsequent years. The expiration of this 3.00 percent increase in 
payment amounts will result in the CY 2023 conversion factor being 
calculated as though the 3.00 percent increase for the CY 2022 
conversion factor had never been applied.
    To calculate the CY 2023 PFS conversion factor (CF), we took the CY 
2022 conversion factor without the 1-year 3.00 percent payment increase 
provided by the Protecting Medicare and American Farmers from Sequester 
Cuts Act and multiplied it by the BN adjustment required as described 
in the preceding paragraphs. We estimate the CY 2023 PFS CF to be 
33.0607 which reflects the -1.60 percent BN adjustment under section 
1848(c)(2)(B)(ii)(II) of the Act, the 0.00 percent update adjustment 
factor specified under section 1848(d)(19) of the Act, and the 
expiration of the 3.00 percent payment increase for services furnished 
in CY 2022, as provided in the CAA. We estimate the CY 2023 anesthesia 
CF to be 20.6097 which reflects the same overall PFS adjustments with 
the addition of anesthesia-specific PE and MP adjustments.
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[[Page 70178]]


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    Table 148 shows the payment impact of the policies contained in 
this final rule on PFS services. To the extent that there are year-to-
year changes in the volume and mix of services provided by 
practitioners, the actual impact on total Medicare revenues will be 
different from those shown in Table 148 (CY 2023 PFS Estimated Impact 
on Total Allowed Charges by Specialty). The following is an explanation 
of the information represented in Table 148.
     Column A (Specialty): Identifies the specialty for which 
data are shown.
     Column B (Allowed Charges): The aggregate estimated PFS 
allowed charges for the specialty based on CY 2021 utilization and CY 
2022 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 2023 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 2023 impact on total allowed charges of the changes in the 
PE RVUs.
     Column E (Impact of MP RVU Changes): This column shows the 
estimated CY 2023 impact on total allowed charges of the changes in the 
MP RVUs.
     Column F (Combined Impact): This column shows the 
estimated CY 2023 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.
BILLING CODE 4150-28-P

[[Page 70179]]

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[[Page 70180]]


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    In recent years, we have received requests from interested parties 
for CMS to provide more granular information that separates the 
specialty-specific impacts by site of service. These interested parties 
have presented high-level information to CMS suggesting that Medicare 
payment policies are directly responsible for the consolidation of 
privately-owned physician practices and freestanding supplier 
facilities into larger health systems. Their concerns highlight a need 
to update the information under the PFS to account for current trends 
in the delivery of health care, especially concerning independent 
versus facility-based practices. We published an RFI in the NPRM this 
year to gather feedback on this issue and refer readers to section 
II.B. of this final rule. As part of our holistic review of how best to 
update our data, and offer interested parties additional information 
that addresses some of the concerns raised, we have recently improved 
our current suite of public use files (PUFs) by including a new file 
that shows estimated specialty payment impacts at a more granular 
level, specifically by showing ranges of impact for practitioners 
within a specialty. This file is available on the CMS website under 
downloads for the CY 2023 PFS final rule at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/PFS-Federal-Regulation-Notices.html.
    For this rulemaking cycle, we are providing an additional impact 
table that includes a facility/non-facility breakout of payment 
changes. The following is an explanation of the information represented 
in Table 149.
     Column A (Specialty): Identifies the specialty for which 
data are shown.
     Column B (Setting): Identifies the facility or nonfacility 
setting for which data are shown.
     Column C (Allowed Charges): The aggregate estimated PFS 
allowed charges for the specialty based on CY 2021 utilization and CY 
2022 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 D (Combined Impact): This column shows the 
estimated CY 2023 combined impact on total allowed charges.

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[[Page 70183]]


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BILLING CODE 4150-28-C
2. CY 2023 PFS Impact Discussion
a. Changes in RVUs
    The most widespread specialty impacts of the RVU changes are 
generally related to the changes to RVUs for specific services 
resulting from the misvalued code initiative, including RVUs for new 
and revised codes. The estimated impacts for some specialties, 
including infectious disease, internal medicine, geriatrics, diagnostic 
testing facility, and physical medicine reflect increases relative to 
other physician specialties. These increases can largely be attributed 
to the revaluation of the other E/M services and/or the second-year 
transition to updated clinical labor pricing. The services that make up 
these specialties rely primarily on E/M services or on clinical labor 
for their practice expense costs. These increases are also due to 
increases in value for particular services after considering the 
recommendations from the American Medical Association's (AMA) Relative 
Value Scale Update Committee (RUC) and CMS review, and increased 
payments resulting from updates to supply and equipment pricing.
    The estimated impacts for several specialties, including clinical 
social workers, clinical psychologists, radiology and interventional 
radiology, vascular surgery, and cardiac surgery, reflect decreases in 
payments relative to payment to other physician specialties which are 
largely the result of the redistributive effects of the revaluation of 
other E/M services and/or the second year transition to updated 
clinical labor pricing. The services that make up these specialties 
were also negatively affected by updated malpractice premium data for 
CY 2023, or rely primarily on supply/equipment items for their practice 
expense costs and therefore were affected negatively by the transition 
to updated clinical labor pricing under budget neutrality. These 
decreases are also due to the revaluation of individual procedures 
based on reviews, including consideration of AMA RUC review and 
recommendations, as well as decreases resulting from the continued 
phase-in implementation of the previously finalized updates to supply 
and equipment pricing. The estimated impacts also reflect decreases due 
to continued implementation of previously finalized code-level 
reductions that are being phased in over several years. For independent 
laboratories, it is important to note that these entities receive 
approximately 83 percent of their Medicare revenues from services that 
are paid under the CLFS.
    We often receive comments regarding the changes in RVUs displayed 
on the specialty impact table (Table 148), including comments received 
in response to the valuations. We remind interested parties that 
although the estimated impacts are displayed at the specialty level, 
typically the changes are driven by the valuation of a relatively small 
number of new and/or potentially misvalued codes. The percentage 
changes in Table 148 are based upon aggregate estimated PFS allowed 
charges summed across all services furnished by physicians, 
practitioners, and suppliers within a specialty to arrive at the total 
allowed charges for the specialty, and compared to the same summed 
total from the previous calendar year. Therefore, they are averages, 
and may not necessarily be representative of what is happening to the 
particular services furnished by a single practitioner within any given 
specialty.
    As discussed above, we have reviewed our suite of public use files 
and have worked on new ways to offer interested parties additional 
information that addresses some of the concerns raised about lack of 
granularity in our impact tables. To illustrate how impacts can vary 
within specialties, we created a public use file that models the 
expected percentage change in total RVUs per practitioner. Using CY 
2021 utilization data, Total RVUs change between -1 percent and 1 
percent for more than 36 percent of practitioners, representing 
approximately 35 percent of the changes in Total RVUs for all 
practitioners, with variation by

[[Page 70186]]

specialty. Specialties, such as chiropractic, hand surgery, 
ophthalmology, and optometry, exhibit little variation in changes in 
total RVUs per practitioner. For these specialties, more than 85 
percent of these practitioners will experience a change in Total RVUs 
between -1 percent and 1 percent. The specific service mix within a 
specialty may vary by practitioner, so individual practitioners may 
experience different changes in total RVUs. For example, Table 148 (CY 
2023 PFS Estimated Impact on Total Allowed Charges by Specialty) 
indicates a 4 percent increase in RVUs for the infectious disease 
specialty as a whole, however, only 32 percent of infectious disease 
specialty practitioners--representing over 46 percent of Total RVUs for 
the specialty--will experience a 5 percent or more increase in Total 
RVUs. Meanwhile, nearly 15 percent of infectious disease specialty 
practitioners will experience 1 percent or more decreases in Total 
RVUs, and these practitioners account for about 8 percent of Total RVUs 
for this specialty. We also note the code level RVU changes are 
available in the Addendum B public use file that we make available with 
each rule.
    Many interested parties have requested that CMS maintain the 3.00 
percent payment supplement to PFS payment amounts that was specified in 
the Protecting Medicare and American Farmers from Sequester Cuts Act 
for services furnished during CY 2022. We remind readers that this 
payment supplement was provided through a time-limited amendment to the 
statute, which CMS does not have legal authority to alter. The 
expiration of this 3.00 percent payment supplement to payment amounts 
will result in the CY 2023 conversion factor being calculated as though 
the 3.00 percent payment supplement for the CY 2022 conversion factor 
had never been applied. Several interested parties have requested 
clarification regarding whether the specialty impacts displayed in 
Table 148 reflected the expiration of the 3.00 percent payment 
supplement for CY 2023. We can clarify for the commenters that the 
specialty impacts displayed in Table 148 reflect changes that take 
place within the pool of total RVUs. The specialty impacts table 
therefore includes any changes in spending which result from finalized 
policies within BN (such as the revaluation of other E/M codes in CY 
2023 or the clinical labor pricing update in CY 2022) but does not 
include any changes in spending which result from finalized policies 
that are not subject to BN adjustment, and therefore, have a neutral 
impact across all specialties. The expiration of the 3.00 percent 
payment supplement for CY 2023 is a statutory change that takes place 
outside of BN, and therefore, is not captured in the specialty impacts 
displayed in Table 148.
b. Impact
    Column F of Table 148 displays the estimated CY 2023 impact on 
total allowed charges, by specialty, of all the RVU changes. A table 
showing the estimated impact of all of the changes on total payments 
for selected high volume procedures is available under ``downloads'' on 
the CY 2023 PFS final rule website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/. We selected these 
procedures for sake of illustration from among the procedures 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 website at http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/.
D. Changes Related to Telehealth Services
    In last year's final rule, we discussed various flexibilities that 
will expire at the end of the PHE. Further, we clarified certain 
policies that were initially implemented as temporary policies, and 
subsequently made permanent by provisions of the CAA, 2021 that amended 
section 1834(m) of the Act (refer to 86 FR 65055-65063). Also, we note 
that the CAA, 2022 includes provisions that further amend section 
1834(m) of the Act. For a detailed discussion of our implementation of 
the CAA, 2022 provisions refer to section II.B of this final rule.
    We note that the final day of the PHE remains uncertain, and it is 
possible that the CAA, 2022 transition period of 151 days following the 
final day of the PHE would occur during CY 2023. Because of this 
uncertainty, coupled with the possibility of a necessary mid-year 
transition in our policies related to the provision of Medicare 
telehealth services, we anticipate that Medicare telehealth utilization 
and non-telehealth utilization of E/M and Mental Health services may 
show anomalous shifts. CMS implemented many temporary policy changes 
during the PHE to facilitate continued safe access to care during the 
pandemic, and that those changes will end with the expiration of the 
PHE, or in the case of some policies, after 151 days following the end 
of the PHE; as specified in the relevant sections of the CAA, 2022. We 
would closely monitor for these patterns, but underscore that the low 
volume of services possibly impacted creates a two-pronged challenge 
with low numbers and confounders; we believe the impact would be minor, 
or rather, inappropriate to isolate and attribute to telehealth alone.
    Following the expiration of the flexibilities put in place during 
the PHE for COVID-19, the statutory and regulatory restrictions on 
payment for Medicare telehealth services under section 1834(m) of the 
Act and our regulations at Sec. Sec.  410.78 and 414.65 will likely 
apply once again. CAA 2022 provides exceptions to these the pre-PHE 
restrictions that allow Medicare telehealth services to be furnished 
without geographic limitations, to patients in their homes, and in some 
cases using audio-only technology, when the services are for the 
diagnosis, evaluation, or treatment of a mental health disorder 
(including a substance use disorder (SUD), including opioid misuse). 
There are also limited statutory exceptions for home dialysis monthly 
ESRD-related visits and for services for purposes of diagnosis, 
evaluation or treatment of symptoms of an acute stroke, to allow 
Medicare telehealth services to be furnished without geographic 
limitations, and to patients in their homes or certain other residence-
like locations.
    As such, after the expiration of the flexibilities put in place 
during the PHE, we expect a significant reduction in the volume of 
Medicare telehealth services overall, and a corresponding reduction in 
aggregate spending for Medicare telehealth services. However, because 
the provisions of the CAA, 2021 and CAA, 2022 required permanent 
changes to remove previous restrictions on the use of telehealth for 
the diagnosis, evaluation or treatment of a mental health disorder 
(including a substance use disorder (SUD), including opioid use 
disorder), we anticipate that volume and spending for Medicare 
telehealth mental health services will increase from pre-pandemic 
levels coming years.
    In this final rule, we finalized in section II.D. ``Payment for 
Medicare Telehealth Services Under Section 1834(m) of the Act'' to 
continue including on the Medicare Telehealth Services List, either 
permanently or temporarily through the end of CY 2023, many of the 
services added to the list during the PHE. However, after the 
expiration of the flexibilities put in place during the PHE, payment 
for Medicare telehealth services will be

[[Page 70187]]

subject to the statutory and regulatory limitations described 
previously in this section of the RIA. Compared to overall utilization 
of these services during the PHE, we do not expect new significant 
overall growth in Medicare telehealth services by aggregate volume. 
Further, we estimate that the addition of telehealth services added to 
the Medicare Telehealth Services List will have a negligible impact on 
PFS expenditures.
    We are also finalizing implementation of provisions of the CAA, 
2022 ((Pub. L. 117-103, March 15, 2022) amended section 1834(m) of the 
Act) that extend the application of certain Medicare telehealth 
flexibilities for an additional 151 days after the end of the PHE for 
COVID-19, including allowing Medicare telehealth services to be 
furnished to patients located anywhere within the U.S.; allowing the 
extended scope of eligible telehealth practitioners to include 
occupational therapists, physical therapists, speech-language 
pathologists, and audiologists; extending payment for telehealth 
services furnished by FQHCs and RHCs; and delaying the requirement that 
there be an in-person visit with the physician or practitioner within 6 
months before an initial mental health telehealth service. We 
anticipate that these provisions will result in continued utilization 
of Medicare telehealth services during the remainder of the PHE and the 
immediate subsequent 151 days at levels comparable to observed 
utilization of these services thus far during the PHE for COVID-19.
    Regarding our provision to retain on the Medicare Telehealth 
Services List until the end of CY 2023 many of the services that we 
added to the list on a temporary basis, we believe these provisions 
would provide clarity to interested parties, but will have a negligible 
impact on PFS expenditures, unless Congress further intervenes as they 
did with CAA 2022. For example, outside the circumstances and 
flexibilities available during the PHE, services that are permanently 
included on the Medicare Telehealth Services List are furnished via 
telehealth, on average, less than 0.1 percent of the time they are 
reported.\567\ The statutory and regulatory requirements for payment of 
Medicare telehealth services that apply outside the circumstances of 
the PHE have limited net increases in utilization.
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E. Other Provisions of the Regulation

1. Requiring Manufacturers of Certain Single-Dose Container or Single-
Use Package Drugs Payable Under Medicare Part B To Provide Refunds With 
Respect to Discarded Amounts
    Section 90004 of the Infrastructure Investment and Jobs Act (Pub. 
L. 117-9, November 15, 2021) amended section 1847A of the Act to 
require manufacturers to provide a refund to CMS for certain discarded 
amounts from a refundable single-dose container or single-use package 
drug. The refund amount is either as noted in section 1847A(b)(1)(B) of 
the Act in the case of a single source drug or biological or as noted 
in section 1847A(b)(1)(C) of the Act in the case of a biosimilar 
biological product, multiplied by the amount of discarded drug that 
exceeds an applicable percentage, which is required to be at least 10 
percent, of total charges (subject to certain exclusions) for the drug 
in a given calendar quarter. In section III.A of this final rule, we 
are finalizing implementation of this provision including: a definition 
of which drugs are subject to refunds (and exclusions), an applicable 
percentage for certain drugs reconstituted in hydrogel, how discarded 
amounts of drugs are determined, a refund calculation methodology, a 
dispute resolution process, and enforcement provisions. However, we are 
not finalizing that the initial reports will be sent no later than 
October 1, 2023. Although we are not finalizing the proposed timeline 
for sending reports to manufacturers, the effective date of the 
provision remains January 1, 2023, as required by statute, and reports 
will be sent for calendar quarters beginning on or after this date.
    For the CY 2023 PFS proposed rule (87 FR 46396 through 46397), we 
provided an analysis of JW modifier data from 2020 to estimate 
anticipated quarterly refund amounts due from manufacturers and 
displayed this information in Table 140 of the proposed rule.
    For this final rule, we reanalyzed JW modifier data from 2020 as if 
the data represented dates of service on or after the effective date of 
section 90004 of the Infrastructure Act (that is, January 1, 
2023).\568\ That is, to assess if there was a change in the status of 
the billing and payment codes that were identified in the proposed rule 
as met the definition of refundable single-dose container or single-use 
package drug and have 10 percent or more discarded units. We found one 
billing and payment code had a change in status from single source to 
multiple source. Therefore, we updated the analysis to reflect this 
change under the provisions finalized as proposed in section II.A. of 
the proposed rule and as provided in the upcoming section of this final 
rule.
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    Overall in the 2020 calendar year, Medicare paid nearly $720 
million for discarded amounts of drugs from a single-dose container or 
single-use package paid under Part B. In that year, there were 39 
billing and payment codes with 10 percent or more discarded units based 
on JW modifier data. Of these, 9 did not meet the definition of 
refundable single-dose container or single-use package drug in section 
1847A(h)(8) of the Act because they are multiple source drug codes; 5 
were excluded from the definition of refundable single-dose container 
or single-use package drug (as specified in section 1847A(h)(8)(B) of 
the Act) because they are identified as radiopharmaceuticals or imaging 
agents in FDA-approved labeling. After these exclusions, there were 25 
billing and payment codes that met the definition of refundable single-
dose container or single-use package drug and have 10 percent or more 
discarded units.
    We estimated refund amounts as described in section 1847A(h)(3) of 
the Act were calculated based on this data by subtracting the percent 
units discarded by 10 percent (the applicable percentage). Then, we 
multiplied that percentage by the CY 2020 total allowed amount to 
estimate the annual refund for a given billing and payment code. The 
quarterly refund was estimated by dividing the annual estimate by 4. 
Based on this data, there would be approximately $74.7 million in 
refunds due from manufacturers for the calendar year of 2020 ($18.68 
million each calendar quarter). See Table 150.
BILLING CODE 4150-28-P

[[Page 70188]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.196

BILLING CODE 4150-28-C
    There are several limitations to this analysis that could 
substantially affect the total quarterly refund. Since new drugs are 
continually being approved, this estimate does not consider newer drugs 
that will meet the definition of refundable single-dose container or 
single-use package drug on or after the effective date of January 1, 
2023. Since section 1847A(h)(8)(B)(iii) of the Act excludes drugs 
approved by FDA on or after November 15, 2021 and for which payment has 
been made under Part B for fewer than 18 months from this definition, 
we expect an impact on refund amounts after the 18-month exclusion has 
ended if the drug otherwise meets the definition. We also note that 
this estimate is based on CY 2020 data for discarded drug amounts, 
which, as discussed in section III.A. of this final rule, we believe to 
be an underestimate due to the frequent omission of the JW modifier. 
Once we begin to edit claims for both the JW and JZ modifiers, reported 
discarded drug amounts will likely increase. Other substantial changes 
to this estimate may occur if a billing and payment code no longer 
meets this definition. For example, if a generic version of one of 
these drugs is marketed, the billing and payment code will become a 
multiple source drug code and will no longer meet the definition of 
refundable single-dose container or single-use package drug. 
Subsequently, the manufacturers will not be responsible for refunds 
under this provision. There may be changes in the percent discarded 
units for a given refundable single-dose container or single-use 
package drug if the manufacturer introduces additional vial sizes or 
modifies the vial size to reduce the amount discarded. Lastly, since 
data from the CMS website only includes billing and payment codes on 
the ASP drug pricing file \569\ and implementation of section 90004 of 
the Infrastructure Act is not restricted to billing and payment codes 
included on the file, there may be other applicable data that was not 
assessed as part of this estimate.
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    \569\ https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Part-B-Drugs/McrPartBDrugAvgSalesPrice.

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[[Page 70189]]

a. Impacts Related to the Proposed Dispute Resolution Process
    As described in section VII.B.1. of this final rule, the 
information collection requirements, we estimate the annual burden per 
respondent/recordkeeper to be 40 hours. If we anticipate no more than 
10 disputes per year, the total annual reporting and/or recordkeeping 
burden will be 400 hours (10 error reports per year x 40 hours per 
respondent). We estimate an annual cost of this burden to be $15,800 
($39.50/hour x 400 hours).
2. Rural Health Clinics (RHCs) and Federally Qualified Health Centers 
(FQHCs)
    In section III.B.2. of this final rule, we are finalizing our 
policy to include chronic pain management services in the general care 
management HCPCS code G0511 when these services are provided by RHCs 
and FQHCs. Since HCPCS code G3002 will be valued using a crosswalk to 
the PCM CPT code 99424, which is currently one of the CPT codes that 
comprise HCPCS code G0511, there is no change to the average used to 
calculate the G0511 payment rate.
    In addition, in section III.B.2. of this final rule we are 
finalizing policies regarding coding and payment for general behavioral 
health integration services (HCPCS code G0323). We explain that since 
clinical psychologists (CPs) and clinical social workers (CSWs) are 
considered practitioners that can provide services in RHCs/FQHCs, we 
acknowledge when CPs and CSWs provide the services described in HCPCS 
code G0323 in an RHC or FQHC, they can bill HCPCS code G0511.
    In terms of estimated impacts to the Medicare program, expanding 
use of General Care Management HCPCS code G0511 to include chronic pain 
management services (G3002) and behavioral health integration services 
(G0323) for RHCs and FQHCs would have a negligible impact on Medicare 
spending because these services are already included in our 
calculations of overall expenditures.
    In section III.B.4. of this final rule, we provide a discussion and 
clarification regarding the use of short-period cost reports vs 12-
consecutive month cost reports to establish the payment limit for 
specified provider-based RHCs in accordance with section 1833(f)(3)(A) 
of the Act. We believe this clarification will have negligible impact 
on Medicare spending.
3. Clinical Laboratory Fee Schedule
    In section III.C.5. of this final rule, we discuss statutory 
revisions to the data reporting period and phase-in of payment 
reductions under the CLFS. In accordance with section 4(b) of the 
Protecting Medicare and American Farmers from Sequester Cuts Act 
(PMAFSCA) (Pub. L. 117-71, enacted December 10, 2021), we are 
finalizing certain conforming changes to the data reporting and payment 
requirements in our regulations at 42 CFR part 414, subpart G. 
Specifically, for CDLTs that are not ADLTs, we are updating certain 
definitions and revising Sec.  414.504(a)(1) to indicate that 
initially, data reporting begins January 1, 2017 and is required every 
3 years beginning January 2023. The PMAFSCA delays the next data 
reporting period under the CLFS for CDLTs that are not ADLTs by 1 year, 
that is, it requires the next data reporting period for these tests to 
take place during the period of January 1, 2023 through March 31, 2023. 
Subsequently, the next private payor rate-based CLFS update for these 
tests will be effective January 1, 2024 instead of January 1, 2023. In 
addition, we are making conforming changes to our requirements for the 
phase-in of payment reductions to reflect the PMAFSCA amendments. 
Specifically, we revising Sec.  414.507(d) to indicate that for CY 
2022, payment may not be reduced by more than 0.0 percent as compared 
to the amount established for CY 2021, and for CYs 2023 through 2025, 
payment may not be reduced by more than 15 percent as compared to the 
amount established for the preceding year.
    We recognize that private payor rates for CDLTs paid on the CLFS 
and the volumes paid at each rate for each test, which are used to 
determine the weighted medians of private payor rates for the CLFS 
payment rates, have changed since the first data collection period 
(January 1, 2016 through June 30, 2016) and data reporting period 
(January 1, 2017 through March 31, 2017). In addition, as discussed in 
section III.A. of this final rule, in the CY 2019 PFS final rule (83 FR 
59671 through 59676), we amended the definition of applicable 
laboratory to include hospital outreach laboratories that bill Medicare 
Part B using the CMS-1450 14x Type of Bill. As such, the PMAFSCA 
amendments to the data reporting period will delay using updated 
private payor rate data to set revised CLFS payment rates for CDLTs 
that are not ADLTs.
    Due to the unforeseen changes in private payor rates due to shifts 
in market-based pricing for laboratory tests and the unpredictable 
nature of test volumes and their impact on calculating updated CLFS 
payment rates based on the weighted median of private payor rates, it 
is uncertain whether the delay in data reporting will result in a 
measurable budgetary impact. In other words, to assess the impact of 
delayed reporting and subsequent implementation of updated CLFS rates, 
we will need to calculate weighted medians of private payor rates based 
on new data and compare the revised rates to the current rates. As 
such, we believe that we will only know the impact of the delay in data 
reporting after collecting actual updated applicable information from 
applicable laboratories, and calculating the updated CLFS rates.
    Regarding the conforming changes to our requirements for the phase-
in of payment reductions that we are finalizing in this rule, we note 
that for CYs 2023 through 2025, payment may not be reduced by more than 
15 percent as compared to the amount established for the preceding 
year.
    Based on data reported in the 2017 data collection period, we 
estimate 14.8 percent (191) of tests on the CLFS may be subject to the 
full 15 percent phase-in reduction in CY 2023.
    In section III.C.6. of this final rule, we are finalizing an 
increase to the general nominal specimen collection fee amount from 
$3.00 to $8.57 for CY 2023. We are also finalizing that beginning 
January 1, 2024, we will update the specimen collection fee amount of 
$8.57 for each calendar year by the percent change in the CPI-U (U.S. 
city average) for the 12-month period ending June 30th of the year 
preceding the update year. Additionally, as required by PAMA, we will 
increase this amount by $2 for those specimens collected from a 
Medicare beneficiary in a SNF or by a laboratory on behalf of an HHA, 
which will result in a $10.57 specimen collection fee for those 
beneficiaries.
    The estimated impact of this increase in the nominal fee for 
specimen collection from $3.00 to $8.57 in CY 2023 is an increase in 
spending of roughly $190 million. The estimated increase in the nominal 
fee from $5.00 to $10.57 for specimens collected from a Medicare 
beneficiary in a SNF or on behalf of an HHA in CY 2023 is an increase 
in spending of roughly $10 million.
4. Expansion of Coverage for Colorectal Cancer Screening and Reducing 
Barriers
    In section III.D. of this final rule, we proposed to expand CRC 
screening test coverage by modifying coverage and payment limitations 
of certain CRC screening tests to begin at age 45 instead of 50. An 
updated modeling study that accompanied the May 2021 updated USPSTF CRC 
screening

[[Page 70190]]

recommendation found that the most efficient strategy for CRC screening 
began for individuals at 45 years of age. The expected benefits include 
longer life and fewer new cases and total deaths from colorectal 
cancer.\570\ We considered the comparatively small population of 
traditional Medicare enrollees in the affected age group. The CMS 
website reports that total Medicare beneficiary enrollment in Part A 
and/or Part B aged 45-54 years in CY 2020 totaled only 1,956,634, 
whereas total Medicare beneficiary enrollment in Part A and/or Part B 
of all ages totaled 62,840,267.\571\
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    \570\ https://www.uspreventiveservicestaskforce.org/uspstf/document/final-modeling-study18/colorectal-cancer-screening.
    \571\ https://data.cms.gov/summary-statistics-on-beneficiary-enrollment/medicare-and-medicaid-reports/medicare-total-enrollment.
---------------------------------------------------------------------------

    In addition, we propose to expand CRC screening test coverage to 
include a follow-on screening colonoscopy after a Medicare covered non-
invasive stool-based CRC screening test returns a positive result. We 
anticipate the impact of beneficiary cost sharing no longer being 
applicable to the follow-on screening colonoscopy will be balanced, in 
part or in whole, by the benefits and savings of additional 
beneficiaries choosing a less expensive and non-invasive stool-based 
test as their first step in the CRC screening process.
    We anticipate that both provisions will result in some additional 
service utilization, but we also anticipate the additional utilization 
to be balanced, in part or in whole, by benefits and savings resulting 
from increased prevention, early detection (allowing for less invasive 
and more effective treatment) and reduced mortality. We do not 
anticipate expanding CRC screening test coverage (in accordance with 
recommendations by the USPSTF and in consultation with other 
appropriate organizations described earlier in our provision) to result 
in a significant impact on the Medicare program.
    An internal analysis by the CMS Office of the Actuary of CY 2019 
Medicare FFS CRC screening test claims confirmed our understanding that 
our provisions will not likely result in a significant impact on the 
Medicare program. Regarding our provision to expand CRC screening test 
coverage by modifying coverage and payment limitations of certain CRC 
screening tests to begin at age 45 instead of 50, we calculated CY 2019 
FFS CRC screening test spending and utilization for patients between 45 
and 55 years old from the Integrated Data Repository (IDR), estimated 
CY 2019 Medicare FFS member months by age from the IDR, and assumed 
that current colorectal screening test utilization for 45-49 year old 
patients will increase on a per enrollee basis to that of patients 
between 50-55. We estimated the impact from additional utilization to 
be approximately $5 million in additional spending.
    Similarly, regarding our provision to expand CRC screening test 
coverage to include a follow-on screening colonoscopy after a Medicare 
covered non-invasive stool-based CRC screening test returns a positive 
result, we matched CY 2019 FFS colonoscopy claims to Cologuard usage 
claims, identified colonoscopy claims as screening or diagnostic based 
on the presence of HCPCS modifier PT on the claims, assumed that all 
diagnostic colonoscopy claims with a prior Cologuard test had a 
positive test result, and calculated the applicable beneficiary cost 
sharing for those claims. The coinsurance and deductible liability from 
these claims were assumed to be non-applicable under the policy. We 
estimated the impact from additional utilization to be approximately $5 
million in additional spending.
    Each of these proposals is estimated to increase fee-for-services 
(FFS) spending in CY 2023 by roughly $5 million, therefore, the 
estimated impact of approximately $10 million total in CY 2023 is based 
on the convergence of the two CRC provisions, and does not reflect 
secondary effects of the policies, such as increased utilization of 
preventive screening services, additional follow-up services, and 
potential offsetting savings (including prevention, more effective 
treatment through early detection and avoidance of over-servicing of 
colonoscopies) that may result from these expansions, as these 
secondary effects are difficult to predict, and may, in part, offset 
one another.
5. Removal of Selected National Coverage Determinations (NCDs)
    As described in section III.E. of this final rule, we are removing 
as proposed, one older NCD that no longer contains clinically pertinent 
and current information. NCDs generally fall into one of two impact 
categories. First, eliminating an NCD for items and services that were 
previously nationally covered means that the item or service will no 
longer be automatically nationally covered by Medicare. Instead, the 
coverage determinations for those items and services will be made by 
Medicare Administrative Contractors (MACs). Second, if the previous 
national coverage determination barred coverage for an item or service 
under title XVIII, MACs will now be able to cover the item or service 
under local coverage authority if the MAC determines that such action 
is appropriate under the statute. We believe that allowing local 
contractor flexibility in these cases better serves the needs of the 
Medicare program and its beneficiaries.
    Removing NCD 160.22 Ambulatory EEG Monitoring means moving from 
positive national coverage to local coverage by the MACs. Claims data 
for 2021 shows that for the 20 CPT/HCPCS codes associated with this 
NCD, CMS paid 167,242 Medicare FFS claims for approximately 78,267 
unique beneficiaries totaling CMS payments of $48,702,876.00. We 
estimate there will be de minimis change to 2023 payments, compared to 
2021 because this is a long-established service for which the MACs 
already have LCDs and guidance articles. The NCD contains outdated 
language that is inconsistent with, and contrary to current standards 
of care. Therefore, removing the outdated NCD will allow MACs to update 
local coverage guidance for this established diagnostic test, but will 
not result in significant changes to utilization or payments.
6. Modifications Related to Medicare Coverage for Opioid Use Disorder 
(OUD) Treatment Services Furnished by Opioid Treatment Programs (OTPs)
    As discussed in section III.F. of this final rule, for CY 2023 and 
subsequent years, we are revising our methodology for pricing the drug 
component of the methadone weekly bundle and the add-on code for take-
home supplies of methadone. Under the revised methodology, we will base 
the payment amount for the drug component of HCPCS codes G2067 and 
G2078 for CY 2023 and subsequent years on the payment amount for 
methadone in CY 2021 and update this amount annually to account for 
inflation using the PPI for Pharmaceuticals for Human Use 
(Prescription). We are also finalizing our proposal to update the 
methadone payment amount for CY 2023 based on the projected increase in 
the PPI for Pharmaceuticals for Human Use (Prescription) to reflect the 
forecasted price growth for prescription drugs for the 2-year period 
from CY 2021 to 2022 and from CY 2022 to 2023. Because we froze the 
payment amount for methadone at the 2021 amount for CY 2022, we are 
accounting for the inflation for both CY 2022 and CY 2023 in setting 
the payment rate for CY 2023. Based on the third quarter 2022 forecast 
from IHS Global Inc. (IGI), the CY 2023

[[Page 70191]]

methadone payment amount will be $39.37, which is the CY 2022 payment 
amount of $37.38 increased by a projected 5.3 percent growth in the PPI 
for Pharmaceuticals for Human Use (Prescription) from CY 2021 to CY 
2023 ($37.38 * 1.053 = $39.37). IGI is a nationally recognized economic 
and financial forecasting firm with which CMS contracts to forecast 
various price proxies used in the CMS market baskets.
    Overall, CMS estimates that the impact of our revision to the OTP 
methadone pricing methodology will increase Medicare spending by 
roughly $2.5 million in CY 2023. This estimate is based on actual 
utilization of the OTP benefit by Medicare beneficiaries under Part B 
through CY 2021. The estimate does not reflect any additional 
utilization that may occur in CY 2023.
    Additionally, as discussed in section III.F. of this final rule, we 
are modifying the payment rate for the non-drug component of the 
bundled payment for an episode of care to base the rate for individual 
therapy on a crosswalk to CPT code 90834 (Psychotherapy, 45 minutes 
with patient), instead of a crosswalk to CPT code 90832 (Psychotherapy, 
30 minutes with patient), as is our current policy. We believe CPT code 
90834 most closely corresponds to a 50-minute therapy session, which 
interested parties have indicated is the typical amount of therapy 
received by patients in the first few months of treatment at an OTP. In 
the CY 2020 PFS final rule (84 FR 62658), we stated that we based the 
rate for individual therapy in the bundled payment on the 2019 non-
facility payment rate for CPT code 90832, which was $68.47. Therefore, 
to change the rate for individual therapy, we are substituting the 2019 
rate for CPT code 90832 included in the non-drug component of each of 
the bundled payments for an episode of care with the 2019 PFS non-
facility payment rate for CPT code 90834, which was $91.18, to 
determine an adjusted payment rate for CY 2020 for the non-drug 
component of each applicable HCPCS code. As described in Sec.  
410.67(d)(4)(iii), we then applied the Medicare Economic Index (MEI) 
updates for 2021, 2022, and 2023 to these adjusted payment rates to 
determine the CY 2023 payment amounts for the non-drug component of the 
bundled payments for an episode of care.
    The increase to the bundled rates to reflect longer individual 
therapy sessions results in an increase of $24.39 to the non-drug 
component of the weekly bundled payments for HCPCS codes G2067 through 
G2075 from CY 2022 to 2023. Based on utilization data from Medicare 
beneficiaries under the OTP benefit through CY 2021, the estimated 
impact of this policy is an increase in Medicare spending of 
approximately $25 million in CY 2023. This estimate does not reflect 
any additional utilization that may occur during CY 2023.
    Additionally, as discussed in section III.F. of this final rule, we 
are finalizing our proposal to allow the OTP intake add-on code to be 
furnished via two-way audio-video communications technology when billed 
for the initiation of treatment with buprenorphine, to the extent that 
the use of audio-video telecommunications technology to initiate 
treatment with buprenorphine is authorized by DEA and SAMHSA at the 
time the service is furnished. We are also permitting the use of audio-
only communication technology to initiate treatment with buprenorphine 
in cases where audio-video technology is not available to the 
beneficiary. We are also allowing periodic assessments to be furnished 
via audio-only communication when two-way audio-video communications 
technology is not available to the beneficiary through the end of CY 
2023, to the extent that it is authorized by SAMSHA and DEA at the time 
the service is furnished and all other applicable requirements are met.
    We believe the Part B cost impact of these flexibilities for the 
use of telecommunications policies will be minimal because we do not 
expect that these flexibilities will increase the frequency with which 
medically necessary assessments are furnished.
7. Medicare Shared Savings Program
a. General Impacts
    As of January 1, 2022, over 11 million people with Medicare receive 
care from at least one health care provider in one of the 483 ACOs 
participating in the Medicare Shared Savings Program (Shared Savings 
Program), the largest value-based payment program in the country. The 
policies we are adopting in this final rule for the Shared Savings 
Program advance Medicare's overall value-based care strategy of growth, 
alignment, and equity, with many provisions overlapping these 
categories. These final policies are designed to reverse recent trends 
where participation has plateaued in the Shared Savings Program, higher 
spending populations are increasingly underrepresented in the program 
since the change to regionally-adjusted benchmarks, and access to ACOs 
appears inequitable as evidenced by data indicating underserved 
populations are less likely to be assigned to a Shared Savings Program. 
The final policies are also designed to encourage growth of ACOs in 
underserved communities based, in part, on recent observations where 
the highest earning ACOs had a higher proportion of beneficiaries who 
were members of racial and ethnic minority communities and included a 
greater proportion of ESRD, disabled, and aged/dual eligible 
beneficiaries than the lowest earning ACOs.
    Stagnation in overall participation in the Shared Savings Program 
in recent years has coincided with increasing total shared savings 
outlays, driven by sharply higher shared savings payments to ACOs that 
were already low spending relative to their region electing to 
transition to risk in the ENHANCED track. While this type of selection 
was anticipated in estimating the impacts of the December 2018 final 
rule (83 FR 67816), it was also assumed that: (1) ACOs making the 
transition to risk would respond with stronger efforts to improve 
efficiency; and (2) a broader spectrum of relatively higher-spending 
ACOs would be influenced by the revised benchmarking methodology to 
drive down spending for their assigned beneficiaries while 
participating under the BASIC track glide path in order to ultimately 
achieve sustainable participation under risk in subsequent agreement 
periods.
    As we explained in the CY 2023 PFS proposed rule (87 FR 46400) the 
increase in shared savings payments to ACOs transitioning to the 
ENHANCED track appears to be driven largely by favorable regional 
benchmark adjustments and the ENHANCED track's higher sharing rate, 
calling into question whether ACOs selecting risk will further improve 
efficiency or simply be content to collect steady shared savings by 
maintaining their spending level relative to their region. Meanwhile, 
ACO Investment Model (AIM) participants--a subset of Track 1 ACOs that 
meaningfully outperformed peer ACOs in reducing spending and earning 
shared savings over the period from 2016 through 2018--have also 
dropped out at an elevated frequency before even attempting the risk-
free portion of the BASIC track glide path. The spending reductions 
achieved by AIM ACOs were found to be similar regardless of an AIM 
ACO's decision to continue or exit the program. Superior financial 
performance during an initial agreement period under a one-sided model 
therefore failed to provide sufficient incentive to overcome a 
pronounced

[[Page 70192]]

aversion to risk demonstrated by this otherwise-effective subset of 
ACOs.\572\
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    \572\ Trombley, MJ, et al. ACO Investment Model Produced 
Savings, But the Majority of Participants Exited when Faced with 
Downside Risk. Health Affairs. 2020; 138-146. doi:10.1377/
hlthaff.2020.01819.
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    We noted that without modification, the Shared Savings Program 
would be at high risk of increasing overall Medicare spending over the 
coming decade. ACOs serving patients with low spending would likely 
continue to dominate the roster of ACOs making the transition to risk. 
Shared savings payments to low-spending ACOs would increase alongside a 
growing disincentive for ACOs to serve higher spending populations for 
whom potential savings from care management would likely be 
greater.\573\ We also explained that this selective participation was 
in response to regional benchmark adjustments that have increased 
shared savings payments to low spending ACOs and has resulted in higher 
cost beneficiaries, who have the most need for ACO care management, 
being increasingly excluded from assignment to ACOs participating in 
the program. We stated that it appeared very unlikely that selective 
transition to downside risk under the current participation options and 
financial methodology would drive down spending enough to offset 
increased shared savings payments to ACOs with favorable regional 
benchmarks. Furthermore, we acknowledged that a growing subset of ACOs 
that elect prospective beneficiary assignment are finding their 
regional benchmarks to be artificially inflated because of a systematic 
bias in calculations based on regional FFS expenditures resulting from 
comparing expenditures for the ACO's own assigned beneficiary 
population identified based on the offset assignment window, and 
expenditures for the assignable population of beneficiaries in the 
ACO's region identified based on the calendar year assignment window. 
Therefore, the program's baseline trajectory was projected to increase 
net Medicare spending by approximately $4.2 billion over the period 
from 2024-2034, which spans two 5-year agreement periods for ACOs 
renewing or entering in 2024 and 2025. Absent any changes, the program 
was also projected to violate the statutory requirement that provisions 
implemented under authority of section 1899(i)(3) of the Act not 
increase spending.
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    \573\ McWilliams, JM, et al. Early Performance of Accountable 
Care Organizations in Medicare. New England Journal of Medicine. 
June 2016. 374:2357-2366. DOI: 10.1056/NEJMsa1600142.
---------------------------------------------------------------------------

    The policies we are finalizing in this final rule are designed to 
increase program participation for new ACOs through advance investment 
payments to promote health equity and provide ACOs greater choice in 
the pace of progression to performance-based risk; sustain program 
participation by reducing the effect of ACO performance on benchmark 
updates and benchmark rebasing; mitigate the bias in regional 
expenditure calculations that benefits ACOs electing prospective 
assignment; strengthen incentives for ACOs serving high risk and high 
dual populations; improve the risk adjustment methodology to better 
account for medically complex, high cost beneficiaries while continuing 
to guard against coding initiatives; increase opportunities for low 
revenue ACOs in the BASIC track to share in savings by allowing ACOs 
that do not meet the minimum savings rate (MSR) requirement to share in 
savings at a lower rate; encourage ACOs to transition more quickly to 
all-payer quality measure reporting; update the ACO beneficiary 
assignment methodology; and reduce administrative burden on ACOs.
    Reducing the cap on negative regional adjustments to high spending 
ACOs' benchmarks and offering eligible ACOs a shared savings-only BASIC 
track participation option for a full 5-year agreement period are 
expected to significantly re-engage participation for ACOs serving 
higher cost beneficiaries. While we are uncertain how large the group 
of new and re-entering ACOs will be and whether they will have a 
similar savings potential as the first implementation of Track 1, other 
incentives targeted to low revenue (typically physician-led) ACOs, like 
advance investment payments and paying partial shared savings to low-
revenue ACOs with savings under their MSR, as well as adjusting rebased 
benchmarks for prior savings are expected to improve the incentive for 
new ACOs to join the program and reduce spending to a greater extent 
than the incentive provided under Track 1. Table 151 shows the combined 
benchmark and the relative impact that 2024/2025 renewing and new ACOs 
are expected to have on average over the two 5-year agreement periods 
from 2024-2034. The Baseline columns show these projections under 
current program rules and the Final columns show the projections for 
performance under this final rule.
[GRAPHIC] [TIFF OMITTED] TR18NO22.197


[[Page 70193]]


b. Impacts for Renewing ACOs
    Renewing ACOs for the projected two 5-year agreement periods are 
anticipated at baseline to generate higher net shared savings earnings 
(2.8 percent of benchmark) than actual reductions in spending on claims 
(2.7 percent of benchmark). After also accounting for higher physician 
fee schedule payments to qualifying practitioners (QPs), totaling on 
average 0.3 percent of benchmark over 10 years, this cohort of ACOs is 
projected to increase net program spending by 0.4 percent of benchmark 
on average, or $2.9 billion over 10 years. For existing ACOs, the 
changes we are finalizing will help to retain more of the otherwise 
shrinking subset of ACOs that serve higher spending populations, will 
remove the bias favoring benchmarks for ACOs electing prospective 
assignment, and will marginally improve the incentive for efficiency 
via the use of a three-way blend of the Accountable Care Prospective 
Trend (ACPT)/national-regional growth rates to update benchmarks and 
the prior savings adjustment. As a result, overall savings on claims 
are projected to increase by a small margin to 2.8 percent of benchmark 
while average shared savings payments will be reduced to an average of 
2.1 percent of benchmark. The total 10-year impact for this cohort will 
flip from a $2.9 billion cost at baseline (range of $1.4 billion 
savings to $7.0 billion cost at 10th and 90th percentiles) to a $3.6 
billion savings under the final policies (range of $10 billion savings 
to $3 billion cost at the 10th and 90th percentiles).
c. Impacts for New ACOs and Re-Entering ACOs
    At baseline without the finalized changes, the cohort of new ACOs 
and re-entering ACOs starting in 2024 would be relatively small (only 
$11 billion in annual benchmark) and skewed toward ACOs serving 
beneficiary populations that are already low cost at baseline. Shared 
savings payments to this group would also be elevated by the bias 
inflating benchmarks for ACOs electing prospective assignment. At 
baseline this cohort would increase net program spending by an 
estimated 1.2 percent of benchmark or $1.3 billion over 10 years 
(ranging from an increase of $0.5 to $2.0 billion at the 10th and 90th 
percentiles). In contrast, under the changes in this final rule, the 
cohort of new and re-entering participants starting in 2024 is 
estimated to increase to $44 billion in combined benchmark per year. An 
anticipated influx of low revenue physician-led ACOs serving higher 
cost patients is expected to allow this cohort to produce significantly 
greater savings on claims (2.7 percent of benchmark) than will be paid 
out in shared savings (1.0 percent of benchmark) because these ACOs 
will be starting with lower relative benchmarks than existing low-
spending ACOs and they will predominantly be paid under the lower 40 
percent sharing rate offered in the BASIC track's one-sided models. 
After accounting for slightly higher physician fee schedule payments to 
QPs and the nominal net cost of advance investment payments, this 
cohort is projected to reduce net program spending about 1.6 percent of 
benchmark or $6.8 billion over a 10-year period (net savings range from 
$3.2 billion to $11 billion at the 90th and 10th percentiles).
    Average gross savings for this cohort (2.7 percent of benchmark) 
are projected to roughly match average gross savings for renewing ACOs 
(2.8 percent of benchmark) despite being less-experienced and heavily 
concentrated in the BASIC track both because they are serving higher-
spending patients presenting greater savings opportunities and because 
they are anticipated to predominantly include low-revenue ACOs for whom 
sharing-only incentives are relatively strong despite not being pushed 
toward risk in their first agreement period. As a percentage of 
benchmark, these projected gross savings rates are consistent with the 
savings range estimated for historical performance for the Shared 
Savings Program detailed in Regulatory Impact Analysis for the December 
2018 final rule (83 FR 68047 through 68050) and represent modest 
progression from the 1.3 to 2 percent savings estimated by MEDPAC using 
an ``intent to treat'' approach for evaluating performance through 
2016, which was dominated by participation in Track 1.\574\
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    \574\ Report to Congress: Medicare and the Health Delivery 
System (Chapter 6). MEDPAC publication dated June 2019. https://www.medpac.gov/wp-content/uploads/import_data/scrape_files/docs/default-source/reports/jun19_ch6_medpac_reporttocongress_sec.pdf.
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d. Annual Combined Impacts 2023-2034
    As described in Table 152, relative to baseline projections, the 
combined cohort entering or renewing for agreement periods beginning in 
2024 and 2025 is projected to add roughly $50 billion in annual 
benchmark, reduce claims costs by $15.5 billion, and on net increase 
aggregate shared savings payments by about $650 million. The changes in 
this final rule are estimated to reduce overall program spending by 
$14.8 billion over 12 years relative to the $4.2 billion cost 
anticipated for the trajectory of the program at baseline, or $10.6 
billion in absolute terms relative to a baseline without a Shared 
Savings Program in FFS Medicare. Approximately 80 percent of advance 
investment payments are anticipated to be recovered from shared savings 
payments by the middle of the second agreement period; the estimate 
shows $40 million in outstanding advance investment payments by the end 
of the projection period after an initial $210 million in initial 
funding. Approximately $60 million in net savings for 2023 is projected 
for retaining existing higher-spending ACOs that would otherwise have 
dropped out of the program if not offered the ability to remain in one-
sided risk for the remainder of their current agreement period.
    More importantly, the Shared Savings Program will increase 
participation from ACOs serving higher-spending beneficiaries by 
reducing the negative regional adjustment cap and creating a sharing-
only option covering an entire agreement period plus the first 2 years 
of the succeeding agreement period for eligible ACOs. Advance 
investment payments and partial shared savings payments for certain 
ACOs in the BASIC track with savings below their MSR will only 
marginally increase payments to ACOs while increasing overall program 
savings by drawing new participation from low revenue ACOs (typically 
physician-led ACOs), the type that performed well under Track 1. 
Including a prior savings adjustment as part of benchmark rebasing will 
broaden the incentive for ACOs to drive down spending over multiple 
agreement periods by mitigating the ratchet effect for high-spending 
ACOs, for ACOs in competitive markets with collectively low trend, and 
for ACOs under prospective assignment that may be concerned about the 
provision to remove the favorable bias in regional benchmark 
calculations. Modifications to the quality scoring system through 
adding a sliding scale approach to determining shared savings and 
offering bonus points to higher performing ACOs with a high proportion 
of underserved populations may increase shared savings payments 
marginally overall depending on how ACOs may otherwise have progressed 
in future years against what is still a relatively new quality rubric. 
The finalized changes are estimated to reduce overall program spending 
by $14.8 billion over 12 years relative to the $4.2 billion cost 
anticipated for the trajectory of the program at baseline, or $10.6 
billion in

[[Page 70194]]

absolute terms relative to a baseline without a Shared Savings Program 
in FFS Medicare. The impact estimate ranges from a reduction of $8.2 
billion to a reduction of $21.4 billion at the 10th an 90th 
percentiles.
BILLING CODE 4150-28-P
[GRAPHIC] [TIFF OMITTED] TR18NO22.198

BILLING CODE 4150-28-C
e. Discussion of Key Provisions and Related Assumptions
    The stochastic model and associated assumptions previously 
described in the December 2018 final rule (83 FR 67816) were updated to 
produce this estimate. The model continues to assume that high-revenue 
ACOs are on average only 50 percent as effective as low-revenue ACOs at 
reducing spending because high-revenue ACOs include a more 
comprehensive mix of hospitals and other providers and suppliers for 
whom the incentive to potentially share in a fraction of savings from 
preventing utilization is weak compared to the immediate revenue from 
utilization--an expectation that has been supported by evaluation of 
actual program performance.\575\ Updates included accounting for the 
current mix of participating ACOs in constructing the potential ACOs 
making up the renewing cohort and considering the population of exiting 
ACOs to build a sample of higher spending populations that may be added 
to the program under the provisions that are expected to boost interest 
in the program from potential ACOs associated with average and higher 
spending populations. New low-revenue ACOs were assumed to always 
prefer the extended glidepath unless they expected a regional benchmark 
at least 3 percent higher than baseline spending, in which case a one-
third probability was assigned for the entrant to opt for higher 
potential earnings under Level E of the BASIC track. The model was also 
updated to first decrease the baseline savings potential for existing 
and new ACOs under the current program rules by about 25 to 50 percent 
(to better match emerging actual performance from selective low-
spending ACO participation) which was then scaled up to estimate the 
impacts of the final policies to account for new incentives driven 
mainly by the ACPT and prior savings adjustment, taking the form of a 0 
to 50 percent increase in gross savings for low and average spending 
ACOs and a zero to 100 percent increase for new ACOs serving markedly 
high spending populations at baseline (at least 10 percent higher than 
their regional average benchmark spending level). The resulting savings 
ranges produced by the modeled participation are supported by the 
proximity to previous estimates of program savings under more balanced 
participation in Track 1, as noted previously in this section. Savings 
are expected to increase because of the many new features that will 
improve the incentive for ACOs to drive down spending over multiple 
agreement periods. Below is a further discussion of these factors.
---------------------------------------------------------------------------

    \575\ McWIlliams JM, et al. Medicare Spending After 3 Years of 
the Medicare Shared Savings Program. New England Journal of 
Medicine. Sept. 2018. 379:1139-1149. DOI: 10.1056/NEJMsa1803388.
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    Introducing a prospective 5-year growth rate to be blended with the 
existing retrospective benchmark trend will help to address the so-
called `rural glitch' complaint from ACOs and other interested parties 
and should at least marginally improve the incentive for ACOs to reduce 
spending, in particular when multiple ACOs are present in the same 
market and collectively driving

[[Page 70195]]

down regional spending. The approach that interested parties have 
floated for mitigating ACOs' effects on their region--effectively 
removing ACO assigned beneficiaries from the regional calculation--has 
multiple problems that would increase program spending. It would 
amplify the benefit to ACOs for selecting lower cost patients and 
avoiding higher needs groups and drive market consolidation, and still 
fail to mitigate the cited problem for cases where multiple ACOs work 
in combination to drive down regional spending. Furthermore, it would 
increase program spending to such a degree that compliance with the 
requirements of section 1899(i)(3) of the Act, to use other payment 
models, would be violated.
    We acknowledge a potential elevated risk; however, that uncertainty 
around external conditions related to the end of the PHE for COVID-19 
and economic conditions like emerging inflation could cause a 
prospective trend to differ materially from actual program-wide growth 
in per capita spending. Blending the ACPT as one-third of the overall 
update helps lower the risk that projection error will create problems 
with appropriateness of spending targets. Risk-bearing ACOs will have 
extra protection against exposure to ACPT projection error because they 
will be held harmless on the downside if the new method will charge 
them more in losses than the prior retrospective trend method. Modeling 
indicates this safeguard will reduce shared losses owed by ACOs by 
about $100 million over 10 years, but the net impact of this provision 
is likely to save several times that amount by retaining ACOs that 
would otherwise have dropped out of the program.
    The most important factor returning the program to net savings is 
attracting more ACOs into the BASIC track that serve higher spending 
populations, particularly low revenue physician-led ACOs for whom a 40 
percent sharing rate is a strong incentive for efficiency even absent 
downside risk. The most important provision for growing this 
participation is the policy change to allow ACOs to stay in a one-sided 
model (that is, Level A or Level B of the BASIC track) for a full 5-
year agreement period. Advance investment payments and the opportunity 
to receive partial shared savings payments for savings under the MSR 
will help to increase the share of these new ACOs that are low revenue. 
These exclusive provisions for low revenue ACOs are estimated to drive 
$3 billion in net savings over the projection period notwithstanding 
marginal increases in shared savings outlays. This analysis highlights 
that the savings gained from increasing participation from this type of 
ACO will greatly exceed the marginal increase in program outlays from 
paying partial shared savings under the MSR and advance investment 
payments, as combined incentive payments (consisting mainly of shared 
savings payments combined with slightly higher payments to clinicians 
achieving QP status) to new and reentering ACOs are only projected to 
reach about 1.1 percent of benchmark over the projection period in 
return for savings on benefits of 2.7 percent (as detailed in Table 
151).
    Another key provision for improving the financial impact of the 
program is establishing a separate ratebook to calculate county-level 
expenditures for ACOs selecting prospective assignment using an 
assignable population of beneficiaries that is identified based on the 
offset assignment window. This final policy will remove a bias that 
would otherwise artificially boost benchmarks and thereby account for 
$3.7 billion of the total savings projected above. Most existing ACOs 
currently benefiting from this bias will still expect to receive 
favorable regional adjustments at rebasing despite removal of the bias. 
The new adjustment to benchmarks for prior savings will help restore a 
positive benchmark adjustment for the subset of ACOs for whom removal 
of the prospective assignment bias will minimize their regional 
adjustments at rebasing. However, because the prior savings adjustment 
will only be applied if it produces a higher adjustment than the 
regional benchmark adjustment, it will not further increase benchmarks 
for ACOs already benefiting from the existing regional adjustment.
    Modifications to the quality scoring system through the addition of 
a sliding scale approach to determining shared savings for ACOs to 
allow for payment of scaled shared savings and a health equity 
adjustment under which ACOs that perform well on at least one or more 
measures while serving a high proportion of beneficiaries enrolled in 
the Medicare Part D low-income subsidy or dually eligible for Medicare 
and Medicaid or beneficiaries in areas with high Area Deprivation Index 
scores may earn health equity bonus points are projected to increase 
shared savings payments marginally overall depending on how ACOs may 
otherwise have progressed in future years against what is still a 
relatively new quality rubric. The costs of adding these new methods 
for improving quality performance scores and paying scaled shared 
savings are projected to add about $1.3 billion in program spending 
over 10 years. Other provisions related to assignment and risk 
adjustment are expected to have relatively nominal financial impacts on 
the program.
f. Compliance With Requirements of Section 1899(i)(3) of the Act
    Certain policies, including both existing policies and the new 
policies described in this final rule, rely upon the authority granted 
in section 1899(i)(3) of the Act to use other payment models that the 
Secretary determines will improve the quality and efficiency of items 
and services furnished under the Medicare program, and that do not 
result in program expenditures greater than those that would result 
under the statutory payment model. The following provisions require the 
use of our authority under section 1899(i) of the Act: allowing for 
advance investment payments; the modifications to the loss sharing rate 
under the ENHANCED track to allow for a sliding scale based on an 
alternative quality performance standard; use of the ACPT/national-
regional three-way blended benchmark update factor; expanding the 
criteria for certain low revenue ACOs participating in the BASIC track 
to qualify for shared savings in the event the ACO does not meet the 
MSR as required under section 1899(d)(1)(B)(i) of the Act; and 
exclusion of the new supplemental payment for IHS/Tribal hospitals and 
Puerto Rico hospitals from the determination of Medicare Parts A and B 
expenditures used in certain financial calculations under the Shared 
Savings Program. These changes to our payment methodology are expected 
to improve the quality and efficiency of care and are not expected to 
result in a situation in which the payment methodology under the Shared 
Savings Program, including all policies adopted under the authority of 
section 1899(i) of the Act, results in more spending under the program 
than would have resulted under the statutory payment methodology in 
section 1899(d) of the Act.
    A comparison was constructed between the projected impact of the 
payment methodology that incorporates all changes adopted in this final 
rule and a hypothetical baseline payment methodology that excludes the 
policies that require section 1899(i)(3) of the Act authority. The 
hypothetical baseline was assumed to be limited to a 50 percent upside-
only track rebased every three years but including adjustments allowed 
under section 1899(d)(1)(B)(ii) of the Act including the up to 50

[[Page 70196]]

percent weight used in calculating the regional adjustment to the ACO's 
rebased historical benchmark (capped on the upside or downside as 
detailed in this final rule) and the prior savings adjustment if 
producing a higher benchmark (also as detailed in this final rule). The 
stochastic model and associated assumptions described previously in 
this section were adapted to reflect a marginally reduced participation 
from low-revenue ACOs because the hypothetical baseline would lack 
advance investment payments and partial shared savings payments for 
certain BASIC track ACOs with savings under their MSR. Such analysis 
estimated approximately $4.9 billion greater average net program 
savings under the alternative payment model (with the modifications in 
this final rule) that includes all policies that require the authority 
of section 1899(i)(3) of Act than would be expected under the 
hypothetical baseline in total over the 2023 to 2034 projection period.
    Participation in performance-based risk in the ENHANCED track and 
the higher levels of the BASIC track is assumed to improve the 
incentive for ACOs to increase the efficiency of care for beneficiaries 
(similar to the assumptions used in the modeling of the impacts, 
described previously). Such added savings are partly offset by lower 
participation associated with the requirement to transition to 
performance-based risk. Despite the higher maximum sharing rate of 75 
percent in the ENHANCED track under the alternative payment model that 
includes all policies adopted under section 1899(i)(3) of the Act, 
relative to the 50 percent maximum sharing rate assumed for the single 
one-sided risk track under the hypothetical baseline, shared savings 
payments are expected to be reduced relative to the hypothetical 
baseline because of lower expected participation resulting from the 
eventual requirement to transition to risk in the second agreement 
period under the BASIC track and generally more accurate benchmarks due 
to the incorporation of regional factors into the calculation of 
benchmark updates for all ACOs.
    We will reexamine this projection in the future to ensure that the 
requirement under section 1899(i)(3)(B) of the Act that an alternative 
payment model not result in additional program expenditures continues 
to be satisfied. In the event that we later determine that the payment 
model that includes policies established under section 1899(i)(3) of 
the Act no longer meets the requirements of section 1899(i)(3), we 
would undertake additional notice and comment rulemaking to make 
adjustments to the payment model to assure continued compliance with 
the statutory requirements.
8. Medicare Part B Payment for Preventive Vaccine Administration 
Services
    In section III.H.2.c of this final rule, for CY 2023, we finalized 
our proposal to annually adjust the payment amount for administration 
of preventive vaccines to reflect geographic locality cost differences. 
That is, we will use the Geographic Adjustment Factor (GAF) described 
in Sec.  414.26 to adjust the payment to reflect the costs of 
administering preventive vaccines in each of the PFS fee schedule 
areas. Additionally, in section III.H.2.d of this final rule, for CY 
2023, we finalized our proposal to annually update the payment amount 
for the administration of preventive vaccines based upon the Medicare 
Economic Index (MEI). In section III.H.3.c. of this final rule, we 
finalized our proposal to continue the additional payment of $35.50 
when a COVID-19 vaccine is administered in a beneficiary's home under 
certain circumstances. Further, we will adjust and update the $35.50 by 
the GAF and MEI as we proposed for the preventive vaccine 
administration services.
    The estimated impact of updating the payment amount for the 
administration of preventive vaccines based upon the MEI (3.8%) in CY 
2023 is an increase in spending of roughly $40 million. Approximately 
$30 million of the increase represents the administration of the COVID-
19 vaccine, and the remaining $10 million represents the other 
preventive vaccines. The provision to adjust the payment amount for the 
administration of preventive vaccines by the GAF and the provision to 
continue the additional payment for at-home COVID-19 vaccinations will 
have a negligible impact on Medicare spending.
9. Medical Necessity and Documentation Requirements for Nonemergency, 
Scheduled, Repetitive Ambulance Services
    In section III.I. of this final rule, we proposed to clarify Sec.  
410.40(e)(2)(ii) by reorganizing existing language and stating that the 
PCS and additional documentation from the beneficiary's medical record 
may be used to support a claim that transportation by ground ambulance 
is required. We are also clarifying that the PCS and additional 
documentation must provide detailed explanations, that are consistent 
with the beneficiary's current medical condition, that explains the 
beneficiary's need for transport by an ambulance. Finally, we are 
clarifying that coverage includes observation or other services 
rendered by qualified ambulance personnel. While we believe that 
clarification of the regulatory provisions is needed and will be well 
received by interested parties, we do not believe that these 
clarifications will have any substantive monetary or impact the amount 
of time needed submit claims. We believe the primary benefit of the 
clarification will be for providers and suppliers in preparing and 
submitting claims. It is feasible the clarification could result in 
fewer claims being denied. However, hypothetically, these denials are 
likely a small subset of the ambulance claim denials and those denied 
for technical PCS issues are likely appealed and overturned.
10. Medicare Provider and Supplier Enrollment Changes
a. Expansion of Revocation Reasons
    As explained in section III.J. of this final rule, we proposed 
changes to two of our existing revocation reasons:
     We proposed to expand Sec.  424.535(a)(2) to permit 
revocation based on an OIG exclusion of the provider's or supplier's 
managing organization, corporate officer, or corporate director.
     We proposed to expand Sec.  424.535(a)(3) to permit 
revocation based on a felony conviction of the provider's or supplier's 
managing organization, corporate officer, or corporate director.
    We believe these two changes will result in an increase in the 
number of revocations that CMS imposes. However, we believe this number 
will be rather small. We currently impose only a limited number of 
revocations under Sec. Sec.  424.535(a)(2) and (a)(3). Accordingly, 
since our expansion of these revocation reasons will be fairly modest, 
we do not foresee more than a very slight increase in revocations 
thereunder.
    Table 153 outlines the number of revocations we estimate will ensue 
under our proposed revocation expansions. These numbers only account 
for additional revocations stemming from our changes:

[[Page 70197]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.199

    Internal CMS data indicates that the average provider/supplier that 
will be affected by these regulatory expansions receives roughly 
$50,000 in Medicare payments each year. (We used a similar $50,000 
annual payment estimate for our provider enrollment provisions in the 
CY 2022 PFS final rule) (86 FR 64995)). Providers/suppliers revoked 
under our proposed revocation expansions will thus not receive these 
payments. Hence, multiplying our $50,000 estimate by the revocation 
totals in Table 153 results in a projected transfer from these 
providers/suppliers to the Federal Government of $500,000 ($50,000 x 10 
revocations).
b. Expansion of Fingerprinting Requirements
    We proposed the following three revisions to Sec.  424.518:
     Adding provider or supplier ownership changes to the types 
of provider enrollment transactions falling within the scope of Sec.  
424.518. (As explained in section III.J. of this final rule, the 
affected owner(s) will have to submit fingerprints and be subject to a 
fingerprint-based criminal background check if the provider or supplier 
is in the ``high'' level of categorical screening.)
     Stating that any screening level adjustment to ``high'' 
also applies to all other enrolled and prospective providers and 
suppliers that have the same legal business name and tax identification 
number as the provider or supplier that originally triggered the 
screening level increase.
     Moving SNFs from the ``limited'' level of categorical 
screening to the ``high'' screening level.
    These changes will result in an increase in the annual number of 
providers and suppliers that must furnish fingerprints for their 5 
percent or greater direct or indirect owners. Based on existing 
enrollment statistics and our experience, we project that: (1) 29,726 
providers and suppliers per year will be required to submit the 
fingerprints of their owners (new or existing) pursuant to these 
changes; and (2) 29,726 owners per year will be fingerprinted (or one 
owner per provider/supplier, which is roughly consistent with prior 
estimates).
    Consistent with previous burden estimates we have made regarding 
fingerprinting, we estimate that it will take each owner approximately 
2 hours to be fingerprinted. According to the most recent BLS wage data 
for May 2021, the mean hourly wage for the general category of ``Top 
Executives'' (the most appropriate BLS category for owners) is $57.94. 
With fringe benefits and overhead, the figure is $115.88. This will 
result in an estimated annual burden involving our proposed changes to 
Sec.  424.518 of 59,452 hours at a cost of $6,889,298.
c. DMEPOS Payment Denials
    We also proposed to add a new DMEPOS condition of payment to Sec.  
424.57(b). It will require the DMEPOS supplier to be in compliance with 
all conditions of payment in Sec.  424.57(b), as well as with the 
licensure requirements of Sec.  424.57(c)(1)(ii)(A), at the time the 
item or service is furnished in order to receive payment. Based on data 
collected from our experience with the scenario our proposed change 
seeks to remedy, we project 6,100 claim denials per month associated 
with our provision involving $1.3 million in denied/unpaid claims. Over 
a 12-month period, this results in 73,200 claim denials and $15.6 
million in unpaid claims, the latter constituting our estimated annual 
transfer to the federal government. We welcomed comments on this 
estimate.
    We did not receive public comments on our fingerprinting or DMEPOS 
payment estimates. Therefore, we are finalizing these estimates as 
proposed.
11. State Options for Implementing Medicaid Provider Enrollment 
Affiliation Provision
    We do not anticipate any additional costs or savings associated 
with our proposed revision to Sec.  455.107(b), for the latter merely 
involves giving the states somewhat greater flexibility in executing 
the provisions of Sec.  455.107.
12. Requirement for Electronic Prescribing for Controlled Substances 
for a Covered Part D Drug Under a Prescription Drug Plan or an MA-PD 
Plan (Section 2003 of the SUPPORT Act)
    In section III.L. of this final rule, we extended the existing 
compliance action of sending letters to non-compliant prescribers from 
the CY 2023 EPCS program implementation year (January 1, 2023 through 
December 31, 2023) to the CY 2024 year (January 1, 2024 through 
December 31, 2024). Additionally, effective January 1, 2023, we are 
changing the year from which PDE data is used from the preceding year 
to the current evaluated year when CMS determines whether a prescriber 
qualified for an exception based on the number of Part D controlled 
substance prescriptions (Sec.  423.160(a)(5)(ii)). We will determine 
whether a prescriber qualifies for the emergency or disaster exception 
(Sec.  423.160(a)(5)(iii)) based on the prescriber's valid address in 
PECOS (Medicare Provider Enrollment, Chain, and Ownership System), 
instead of the NCPDP Pharmacy Database address, and for prescribers who 
are not enrolled or do not have a valid PECOS address, we will use the 
address in the National Plan and Provider Enumeration System (NPPES) 
data. We stated in the CY 2023 PFS proposed rule (87 FR 46406) that we 
understand that with continuing the compliance action of sending 
letters to non-compliant prescribers for another year, some prescribers 
may delay EPCS implementation, but we also believe that our education 
and outreach with these prescribers during this additional year may 
help increase adoption. Please see section III.L.4.a. of this final 
rule for our discussion, as we did receive public comment on the 
concern that a delay of further non-compliance action might delay EPCS 
adoption. We do not anticipate these provisions to have any incremental 
impact on the cost or time associated with prescriber compliance of the 
electronic prescribing for controlled substances requirement or the 
cost to interested parties. We did not receive any public comments on 
our impact assumptions.

[[Page 70198]]

13. Medicare Ground Ambulance Data Collection System
    In section III.K. of this final rule, we are finalizing a series of 
changes to the Medicare Ground Ambulance Data Collection System 
including the provision to update Sec.  414.626(d)(1) and (e)(2) to 
give us the necessary flexibility to specify how ground ambulance 
organizations should submit the hardship exemption requests and 
informal review requests, including to our web-based portal once that 
portal is operational, and proposed revisions to the Medicare Ground 
Ambulance Data Collection Instrument.
    The changes and clarifications aim to reduce burden on respondents, 
improve data quality, or both. We grouped our proposed changes and 
clarifications into four broad categories: editorial changes for 
clarity and consistency; updates to reflect the web-based system; 
clarifications responding to feedback from interested parties questions 
and testing and typos and technical corrections.
    While we believe that these changes and clarifications will be well 
received by the ground ambulance interested parties, we do not believe 
that these changes will have any substantive impact on the cost or time 
associated with completing the Medicare Ground Ambulance Data 
Collection Instrument. We note that the overall length of the Medicare 
Ground Ambulance Data Collection Instrument will be the same as 
previously finalized (84 FR 62888) with these changes. Additionally, 
some of the instructions which we proposed to add are intended to 
improve clarity and may therefore reduce the time the ground ambulance 
organizations spend addressing the questions.
14. HCPCS Level II Coding for Skin Substitutes
    We proposed several changes to our policies for skin substitute 
products. In addition to soliciting feedback on our key objectives 
related to our skin substitute policies, we proposed to change the 
terminology of skin substitutes to more accurately reflect how 
clinicians use these products, to treat these products as incident to 
supplies under section 1861(s)(2)(A) of the Act, and to pay for these 
products as incident to supplies under the PFS beginning on Jan 1, 
2024. Additionally, in section III.N. of this final rule, we discussed 
our proposal to revise our HCPCS coding procedures, the impacts related 
to these provisions are in section III.N.
    After consideration of public comments, we are not finalizing the 
proposed revisions to the payment methodology for skin substitutes. We 
are also not finalizing any change in terminology. Instead, we plan to 
host a townhall session in early CY 2023 to discuss alternative payment 
solutions and nomenclature ahead of CY 2024 rulemaking.
15. Effects of Medicare Parts A and B Payment for Dental Policy
    In section II.L.2. of the proposed rule, we: (1) proposed to 
clarify our interpretation of section 1862(a)(12) of the Act, and 
clarify and codify certain of our current Medicare FFS payment policies 
for medically necessary dental services; (2) proposed and solicited 
comment on payment for other dental services, such as dental 
examinations, including necessary treatment, performed as part of a 
comprehensive workup and certain diagnostic and treatment services 
prior to organ transplant surgery, or prior to cardiac valve 
replacement or valvuloplasty procedures, that are similarly 
inextricably linked to, and substantially related and integral to the 
clinical success of, certain covered medical services; and (3) 
requested comments on other types of clinical scenarios where the 
dental services may be inextricably linked to, and substantially 
related and integral to the clinical success of, other covered medical 
services, such as the treatment for head and neck cancers.
    If finalized, we stated that we did not believe the proposed 
codification of current payment policy would result in a significant 
payment impact because it would be a continuation of existing Medicare 
payment policy. We also stated that if we were to finalize the payment 
for an oral or dental examination, including necessary treatment, 
performed as part of a comprehensive workup prior to organ transplant 
surgery, or prior to cardiac valve replacement or valvuloplasty 
procedures, we did not anticipate any significant increase in 
utilization or payment impact for additional dental services given the 
historically low utilization of organ transplant, cardiac valve 
replacement and valvuloplasty surgeries.
    As discussed further in section II.L.2. of this final rule, we are 
finalizing effective beginning in CY 2023: (1) a clarification of our 
interpretation of section 1862(a)(12) of the Act and codification of 
certain of our current Medicare FFS payment policies for medically 
necessary dental services; (2) Medicare Parts A and B payment for 
dental services, such as dental examinations, including necessary 
treatment, performed as part of a comprehensive workup prior to organ 
transplant surgery, or prior to cardiac valve replacement or 
valvuloplasty procedures effective CY 2023; (3) for CY 2024, Medicare 
Parts A and B payment for dental services, such as dental examinations, 
including necessary treatments, performed as part of a comprehensive 
workup prior to the treatment for head and neck cancers which we 
indicated we may consider finalizing based on comments received on the 
proposed rule; (4) the establishment of a process to identify for our 
consideration and review submissions of additional dental services that 
are inextricably linked and substantially related and integral to the 
clinical success of other covered medical services, which we indicated 
we may consider finalizing in this CY 2023 final rule.
    In the proposed rule, we noted that if we were to finalize, as 
discussed in section II.L.2.c.(i) of this final rule, payment in other 
clinical scenarios for dental services inextricably linked to, and 
substantially related and integral to the clinical success of, certain 
covered medical services, we could adjust our estimates that were 
included in the proposed rule. As such, we are revising our estimated 
impact analysis to include scenarios where Medicare Parts A and B would 
provide payment for dental services prior to the treatment for head and 
neck cancers in CY 2024. This is in addition to the proposals, as 
discussed in section II.L.2 of the proposed rule, to clarify and codify 
certain of our current Medicare FFS payment policies for medically 
necessary dental services that are not subject to the payment 
preclusion under section 1862(a)(12) of the Act, and to establish 
additional clinical scenarios under which Medicare payment for dental 
services, such as dental examinations, including necessary treatment, 
performed as part of a comprehensive workup and certain diagnostic and 
treatment services prior to certain medical services such as organ 
transplant surgery, cardiac valve replacement, or valvuloplasty 
procedures beginning in CY 2023.
    To complete this analysis, and to ensure that we captured dental 
services that occurred prior to the covered medical service that 
occurred within CY 2019, we pulled claims data for which Medicare made 
payment for dental services from June 1, 2018 through December 31, 
2019. This allowed us to capture any dental services that were 
furnished prior to 90 days of a covered medical service and also 
allowed us to mirror the claims data range that was utilized in the 
proposed rule estimate. Further, we believed that the use of

[[Page 70199]]

these claims data would be more representative of future utilization 
patterns given the COVID-19 PHE. Based on this analysis, we estimated 
that there were roughly 190,000 additional services where Medicare 
could provide payment for dental services prior to organ transplants, 
cardiac valve replacement, valvuloplasty procedures beginning in CY 
2023, and an additional 29,000 services to accommodate the final policy 
to provide payment for dental services prior to the treatment for head 
and neck cancers. This represents a total of 219,000 additional 
services beginning in CY 2024. Based on claims data from this time 
period, the average cost of care remained the same between the proposed 
and final rule estimates. Our claims data showed that Medicare provided 
payment for dental services for 186 patients with an average cost of 
care of roughly $525 per person. The majority of these claims were for 
tooth extraction in patients undergoing radiation treatment of the 
mouth as opposed to transplant patients, and the range in costs was 
from $33 to $5,711 per patient. Based on a review of claims data for 
our existing payment policies and our review of current utilization for 
beneficiaries, we estimated that the effective rate of coverage of 
current utilization was less than 0.2 percent. We acknowledge that the 
actual take-up rate of services could be higher due to the 
clarification and codification of current policy, which may raise 
awareness that payment is available. Because of this, we also created 
impact estimates under the utilization assumptions of 0.2 percent and 
between 1-3 percent. We then applied these utilization ratios to 
estimate projected payments for dental exams and treatments prior to 
organ transplants, cardiac valve replacement, valvuloplasty procedures 
and treatments for head and neck cancers. We found that the estimated 
yearly impact beginning in CY 2024 to be roughly $230,000 per year with 
a 0.2 percent utilization assumption, and roughly $1-3 million per year 
adjusting for the utilization assumptions of 1-3 percent. This 
represents an increase from CY 2023 to CY 2024 of roughly $30,000-
450,000 for the inclusion payment for dental services prior to head and 
neck cancers beginning in CY 2024 when applying the utilization 
assumptions of 0.2, 1, 2, and 3 percent. Therefore, we do not 
anticipate a significant payment impact for these provisions.
    We received public comments, which were discussed earlier in this 
final rule, on payment for other dental services, such as dental 
examinations, including necessary treatment, performed as part of a 
comprehensive workup and certain diagnostic and treatment services 
prior to organ transplant surgery, prior to cardiac valve replacement, 
valvuloplasty procedures or the treatment for head and neck cancers, 
that are similarly inextricably linked to, and substantially related 
and integral to the clinical success of, certain covered medical 
services; and other types of clinical scenarios where the dental 
services may be inextricably linked to, and substantially related and 
integral to the clinical success of, other covered medical services. In 
response to our request for information, we received comments on the 
types of data sources for establishing Medicare payments for these 
services, the request to consult with medical and dental professional 
interested parties, the request to produce an impact analysis that is 
reproducible, and also detail on potential savings for the Medicare 
program. We thank commenters for the information they provided in 
response to this request for information and we will continue to 
contemplate the suggestions as we consider potential future rulemaking. 
As we receive additional data, we will strive to ensure that such 
evaluations will be comprehensive and include further information on 
the rationale and details used to conduct such determinations. Lastly, 
we will continue to review the comments we received in response to our 
request for information on the other provisions discussed in section 
II.L.2 of the proposed rule.
    We also received several comments requesting clarification on 
whether the estimated payment impact of these proposals would be 
incorporated into the budget neutrality adjustments to the conversion 
factor. Because we proposed to codify and update existing Medicare 
payment policies, these estimates were not incorporated in the budget 
neutrality adjustments to the conversation factor. Additionally, while 
the impact of access to these services to some individuals enrolled in 
Medicare may be very significant, we continue to not anticipate 
significant impact in the context of overall spending and utilization 
under the PFS nor do we anticipate significant utilization and spending 
impact of these policies finalized in section II.L.2 of this final 
rule.
    We acknowledge that the actual take-up rate of services could be 
higher than the utilization assumptions included within our current 
estimates. As discussed in the proposed rule, we remain open to 
adjusting any finalized policy through future rulemaking, and 
conducting further impact analysis while also providing an opportunity 
for public comment on such analysis once we have additional data. We 
continue to be open to conducting further impact analysis once we have 
additional data and input from interested parties.
16. Updates to the Quality Payment Program
    In this section, we estimate the overall and incremental impacts 
due to the Quality Payment Program policies finalized in this rule. We 
estimate participation, final scores, and payment adjustment for 
clinicians participating through traditional MIPS, MVPs, and the 
Advanced APMs. We also present the incremental impacts to the number of 
expected QPs and associated APM Incentive Payments that result from our 
policies relative to a baseline model that reflects the status quo in 
the absence of any modifications to the previously finalized policies.
a. Overall MIPS Modeling Approach and Data Assessment
(1) Updating the MIPS Model
    In the CY 2023 PFS proposed rule (87 FR 46407 through 46408), we 
noted that we created two MIPS RIA models: a baseline and proposed 
policies RIA model. The aim of the baseline model is to reflect 
participation, final scores, and payment adjustments for the CY 2023 
performance period/2025 MIPS payment year based on previously finalized 
policies for the CY 2023 performance period/CY 2025 MIPS payment year. 
Examples of previously finalized policies are an increase in the APM 
qualified participants threshold and the removal of the additional MIPS 
payment adjustment for exceptional performance and additional 
performance threshold. The finalized policies model builds off the 
baseline model and incorporates the MIPS policy provisions for the CY 
2023 performance period/2025 MIPS payment year included in this rule. 
The aim of the baseline and final policy models is to estimate the 
incremental impacts of the policies in this final rule. There were two 
major updates to the modeling approach used in this RIA for the 
baseline and final policy model compared to the CY 2022 PFS final rule 
(87 FR 4606 through 46407).
    First, we changed the MIPS modeling tool that we used in order to 
incorporate the same scoring engine as the one used to determine actual 
MIPS payment adjustments. We generally applied the same assumptions as 
our previous RIA analyses, but this update ensures that

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the clinician population and final scores in our model align as much as 
possible with actual MIPS scoring and minimizes differences between 
projections and policy implementation. It should be noted, data 
limitations and assumptions which may impact model results still remain 
and are described later in this section of the RIA.
    Second, we modeled participation, scoring, and payment adjustments 
for the MIPS Value Pathways (MVPs). The CY 2023 performance period/2025 
MIPS payment year is the first year where clinicians can voluntarily 
submit MVPs. Although we are modeling MVPs, we are not modeling 
subgroup reporting. A more detailed discussion of the approach used to 
model MVPs can be found in section VII.E.16.d.(2) of this RIA.
    For this final rule, we replaced the ``proposed policies model'' 
with the ``final policies model'' and as we discuss in the following 
sections, we updated the methodology to reflect data submitted in the 
2021 MIPS performance period.
(2) Assessing Which Data To Use To Estimate Future MIPS Performance
    In the 2023 PFS proposed rule (87 FR 46407), we discussed our 
decision to use 2019 MIPS performance period submissions to estimate 
eligibility and scoring. We noted that we assessed the use of 2020 
performance period submissions for the 2022 PFS final rule (86 FR 
65637) and stated in that same rule the reasons why we believed the CY 
2019 performance period submissions would be a better data source for 
estimating future performance for MIPS eligible clinicians. We found 
that the extreme and uncontrollable circumstances policy combined with 
the COVID-19 Public Health Emergency (PHE) limit the data's ability to 
simulate the future MIPS eligible population and associated performance 
using 2020 data.
    In the 2023 PFS proposed rule (87 FR 46407), we stated the CY 2021 
performance period submissions data were not available in time to 
assess whether the data can be used to predict future performance. We 
also stated that in this final rule we would evaluate whether it is 
appropriate to use the CY 2021 performance period data and what, if 
any, adjustments would need to be made in order to use that data.
    After review of the finalized CY 2021 performance period 
submissions data, we believe that it is appropriate to use CY 2021 
performance period data to estimate eligibility, final scores and 
payment adjustments for the CY 2023 performance period with some 
exceptions described below. First, in the CY 2023 PFS proposed rule (87 
FR 46411) we used cost measure testing files from prior to 2019 to 
estimate the cost performance category scores since several of the cost 
measures that we modeled were either revised or established after the 
2019 performance period. For example, the Medicare Spending Per 
Beneficiary measure was proposed with modified specifications in the CY 
2020 performance period. These measures were not part of the 2019 MIPS 
production system, which we used to model performance, and so we had to 
rely on measure testing files which often including data older than 
2019 to model these measures. These data are not as current as 2021 
data which may model the cost performance category more accurately. 
Second, the performance threshold for the CY 2019 performance period 
was 30 points, while the performance threshold was 60 points for the CY 
2021 performance period. The CY 2021 performance threshold of 60 points 
is closer to our modeled performance threshold of 75 points and, 
therefore, more accurately reflects clinician behavior. Third, using 
data from 2021 allows us to more accurately estimate the Promoting 
Interoperability performance category score. In CY 2021 PFS final rule 
(85 FR 84819), we finalized two options for meeting the Promoting 
Interoperability Health Information Exchange Objective: (1) Support 
Electronic Referral Loops by Sending Health Information measure and 
Support Electronic Referral Loops by Receiving and Reconciling Health 
Information measure; and (2) Health Information Exchange Bi-Directional 
Exchange measure. The CY 2021 performance period submission data were 
the first data which included the Bi-Directional Exchange measure. 
Finally, the 2021 data is more recent and therefore is more likely to 
be reflective of current reporting patterns among clinicians and 
groups.
    While we believe that the 2021 data is the best data source for the 
RIA model, we recognize that 2021 data has some limitations similar to 
those of the 2020 data. For instance, both 2020 and 2021 data were from 
years that occurred during the PHE and may reflect practice and billing 
patterns that differ from the usual practices of clinicians. We also 
recognize the 2021 cost measure data, which we discuss in section 
VII.E.16.d.3.(b) of this final rule, may still be impacted by the PHE 
for some MIPS eligible clinicians but we believe that it is still 
useful for modeling cost trends in the overall population of MIPS 
eligible clinicians. Another limitation of using 2021 data is that we 
are not able to estimate facility-based scores because there are no 
Hospital Value-Based Purchasing total performance scores calculated due 
the PHE.
    Due to the CY 2021 performance period PHE extreme and 
uncontrollable circumstances policy, some MIPS eligible clinicians may 
not have submitted data for MIPS for the CY 2021 performance period 
when they otherwise would have. To address this, we supplemented the CY 
2021 performance period data with CY 2019 performance period data to 
more accurately model participation for the 2021 performance period. We 
further discuss this decision in section VII.E.16.c.2.(a) of this final 
rule.
b. Estimated APM Incentive Payments to QPs in Advanced APMs and Other 
Payer Advanced APMs
    For payment years from 2019 through 2024, through the Medicare 
Option, eligible clinicians who have a sufficient percentage of their 
Medicare Part B payments for covered professional services or Medicare 
patients through Advanced APMs will be QPs in the applicable QP 
Performance Period for a year and the corresponding payment year. These 
QPs will receive a lump-sum APM Incentive Payment equal to 5 percent of 
their estimated aggregate paid amounts for Medicare covered 
professional services furnished during the calendar year immediately 
preceding the payment year. Beginning in payment year 2021, in addition 
to the Medicare Option, eligible clinicians may become QPs through the 
All-Payer Combination Option. The All-Payer Combination Option allows 
eligible clinicians to become QPs by meeting the QP payment amount or 
patient count threshold through a pair of calculations that assess a 
combination of both Medicare Part B covered professional services 
furnished or patients through Advanced APMs and services furnished or 
patients through Other Payer Advanced APMs. Eligible clinicians who 
become QPs for a year are not subject to MIPS reporting requirements 
and payment adjustments. Eligible clinicians who do not become QPs but 
meet a lower threshold to become Partial QPs for the year may elect to 
report to MIPS and, if they elect to report, will then be scored under 
MIPS and receive a MIPS payment adjustment. Partial QPs are not 
eligible to receive the APM Incentive Payment.
    If an eligible clinician does not attain either QP or Partial QP 
status, and does not meet any another exemption category, the eligible 
clinician will be subject to the MIPS reporting

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requirements and will receive the corresponding MIPS payment 
adjustment.
    Beginning in payment year 2026, the update to the PFS CF for 
services that are furnished by clinicians who achieve QP status for a 
year is 0.75 percent, while the update to the PFS CF for services that 
are furnished by clinicians who do not achieve QP status for a year is 
0.25 percent. In addition, MIPS eligible clinicians will receive 
positive, neutral, or negative MIPS payment adjustments to payment for 
their Part B covered professional services in a payment year based on 
performance during a prior performance period.
    We incorporated this change into our baseline eligibility 
determination. In addition, the thresholds to achieve QP status 
beginning in the 2023 QP Performance Period will increase to 75 percent 
for payment amount, and 50 percent for patient count. Overall, we 
estimate that for the 2023 QP Performance Period between 144,700 and 
186,000 eligible clinicians will become QPs, and therefore be excluded 
from MIPS.
    In section VII.E.17.a. of this final rule, we projected the number 
of eligible clinicians that will be QPs, and thus excluded from MIPS, 
using several sources of information. First, the projections are 
anchored in the most recently available public information on Advanced 
APMs. The projections reflect Advanced APMs that will be operating 
during the 2023 QP Performance Period, as well as some Advanced APMs 
anticipated to be operational during the 2023 QP Performance Period. 
The projections also reflect an estimated number of eligible clinicians 
that will attain QP status through the All-Payer Combination Option. 
The following APMs are expected to be Advanced APMs for the 2023 QP 
Performance Period:
     Bundled Payments for Care Improvement Advanced Model;
     Comprehensive Care for Joint Replacement Payment Model 
(CEHRT Track);
     ACO REACH Model (formerly Global and Professional Direct 
Contracting) Model;
     Kidney Care Choices Model (Kidney Care First; Professional 
Option and Global Option);
     Maryland Total Cost of Care Model (Care Redesign Program; 
Maryland Primary Care Program);
     Medicare Shared Savings Program (Level E of the BASIC 
Track and the ENHANCED Track);
     Primary Care First (PCF) Model; and,
     Vermont All-Payer ACO Model (Vermont Medicare ACO 
Initiative).
    We used the Participation Lists and Affiliated Practitioner Lists, 
as applicable, (see 81 FR 77444 and 77445 for information on the APM 
Participant Lists and QP determinations) on the 2021 third snapshot 
participation file to estimate the number of QPs, total Part B paid 
amounts for covered professional services, and the aggregate total of 
APM Incentive Payments for the 2023 QP Performance Period. We examined 
the extent to which Advanced APM participants will meet the QP 
Thresholds of having at least 75 percent of their Part B covered 
professional services or at least 50 percent of their Medicare 
beneficiaries furnished Part B covered professional services through 
the APM Entity.
c. Estimated Number of Clinicians Eligible for MIPS for the CY 2023 
Performance Period/2025 MIPS Payment Year
(1) Clinicians Included in the Model Prior To Applying the Low-Volume 
Threshold Exclusion
    For this final rule, we updated the data sources for this RIA with 
the more recent 2021 submissions and associated eligibility data and 
applied the same assumptions as the CY 2023 PFS proposed rule (87 FR 
46409 through 46410) unless otherwise noted below. As discussed in 
section VII.E16.c.2.(a) of this final rule, we made some engagement 
assumption modifications to mitigate the effect of potential non-
engagement due to the extreme and uncontrollable circumstances policies 
related to the PHE. We use the terms ``engaged'' to refer to clinicians 
who submitted data to MIPS. The following paragraphs highlight the key 
assumptions and data updates.
    We used the final reconciled eligibility determination file that 
aligned with the 2021 performance period submission data. In the CY 
2023 PFS proposed rule (87 FR 46408), we noted that using the 
reconciled eligibility determination file was a change from our 
assumptions used in the CY 2022 PFS final rule RIA model (86 FR 65642). 
In the CY 2022 PFS final rule RIA model, we used a combination of data 
from the first determination period for the 2020 MIPS performance 
period and data from the end of calendar year 2019 to be paired with 
2019 performance period submissions. We noted that we used the 
determination period from the CY MIPS performance period eligibility 
file because it was the most recent eligibility file available. 
However, we also stated that as we updated our model for CY 2023 PFS 
proposed rule (87 FR 46408), we believed that using the final 
eligibility file from the CY 2021 MIPS submission data period, which 
reconciles information from two eligibility determination periods, 
would be a better data source to pair with our performance period 
submission data and so we used the final reconciled 2019 eligibility 
determination file which aligned with the 2019 performance period 
submission data. Similarly, in this final rule we used the final 
reconciled 2021 eligibility determination file which aligns with 2021 
performance period submissions data.
    We did not propose any modifications to MIPS eligibility, therefore 
the same eligibility assumptions apply to both the baseline and final 
policies models. Our analysis found that 1.7 million clinicians who had 
PFS claims from October 1, 2020 to September 30, 2021 as well as 
additional clinicians associated with a group who had at least one PFS 
claim from October 1, 2021 through December 31, 2021.
(2) Estimation of MIPS Eligible Clinicians After Applying Assumptions 
Related To Applying the Low-Volume Threshold Exclusion and Considering 
the Extreme and Uncontrollable Circumstances Policies Related to COVID-
19 PHE.
    The low-volume threshold policy may be applied at the individual 
(TIN/NPI) or group (TIN) levels based on how data are submitted to 
MIPS. A clinician or group that exceeds at least one, but not all three 
low-volume threshold criteria may become MIPS eligible by electing to 
opt-in and subsequently submitting data to MIPS, thereby being measured 
on performance and receiving a MIPS payment adjustment.
    We describe below the estimated MIPS eligibility status and the 
associated PFS allowed charges of clinicians in the initial population 
of 1.7 million clinicians for the final policies model. We applied the 
same assumptions presented in the CY 2022 PFS final rule (86 FR 65617 
through 65660) to apply the low-volume threshold and to determine 
whether clinicians participate as a group, virtual group, APM entity, 
or as individuals, but we made an additional adjustment to recognize 
the automatic extreme and uncontrollable circumstances policy that 
applied due to the PHE.

[[Page 70202]]

(a) Adjustments to Required Eligibility Engagement Assumptions To 
Account for the PHE
    Clinicians who exceed the low-volume threshold as individuals and 
individuals in an approved virtual group are categorized as ``required 
eligibility'' because these clinicians are MIPS eligible regardless of 
whether they participate in MIPS or not. In the CY 2023 PFS proposed 
rule (87 FR 46409), we separated these MIPS eligible clinicians into 
``Engaged'' and ``Did not Engage'' based on whether they submitted data 
in the CY 2019 performance period.
    We are concerned, however, in moving to 2021 submissions data, that 
we may be overestimating the number of clinicians with ``required 
eligibility'' and who do not participate in MIPS since some MIPS 
eligible clinicians may not have submitted data due to the PHE. As 
discussed in section VII.E.16.c.2.(a) of this final rule, CMS applied 
the automatic extreme and uncontrollable circumstances (EUC) 
reweighting policy for the CY 2021 MIPS performance period due to the 
PHE. One effect of the automatic EUC policy is that individuals who are 
MIPS eligible in the CY 2021 MIPS performance period but do not submit 
data would have their performance categories reweighted and receive a 
final score equal to the performance threshold for the CY 2021 MIPS 
performance period/2023 MIPS payment year. These MIPS eligible 
clinicians would not receive a negative payment adjustment if they did 
not engage in the CY 2021 performance period, but they would receive a 
negative payment adjustment in our simulation of the CY 2023 
performance period. Therefore, to mitigate the potential effect of the 
PHE on engagement estimates for the CY 2023 performance period, for 
MIPS eligible clinicians who submitted data for the CY 2019 performance 
period and did not submit data for the CY 2021 performance period we 
assigned their participation status and final score data from the CY 
2023 PFS proposed rule baseline model (87 FR 46408). This is because 
the CY 2023 PFS proposed rule baseline model (87 FR 46408) is based on 
2019 submissions data and is hereafter called ``2019 data supplement.''
    We chose to use the 2019 data supplement instead of the CY 2023 PFS 
proposed rule policies model scores since the baseline policies are 
consistent between the proposal rule and this final rule and a baseline 
model is used in both rules. We believed these clinicians may 
participate and perform more similarly to the CY 2019 performance 
period than the CY 2021 performance period during the CY 2023 
performance period. We assumed MIPS eligible clinicians that did not 
participate in either 2021 or in 2019 would not participate in 2023.
    We do not have ability to assess the 2019 data supplement 
clinicians on performance in our model, so we used the final score from 
the CY 2023 PFS proposed rule baseline model and used that same score 
for this final rule's baseline and final policies models. Because we 
used the same score for the baseline and final policies model, we were 
not able to assess the incremental impact of policies for this group. 
However, we believe making this adjustment is valuable because it helps 
mitigate the potential effect of overestimating the required 
eligibility/non-participants which in turn would affect the MIPS 
redistribution payment.
    We have therefore separated the ``required eligibility'' into three 
buckets this year: (1) ``Engaged in MIPS''; (2) ``Did not engage in 
2021 did engage in 2019''; and (3) ``Did not engage in either 2021 or 
2019'' so that we can isolate both the effects of our final policies 
which are modeled using 2021 data, the effect of the 2019 data 
supplement, and model the population of clinicians who did not engage 
in either year. The year refers to which population of data we used (ie 
the 2021 population of clinicians or the 2019 supplement).
(b) MIPS Eligibility Estimates
    Table 154 summarizes our eligibility estimates for the proposed 
policies model after applying our assumptions.
    We estimate approximately 120,887 MIPS eligible clinicians have 
required eligibility and engage in MIPS in 2019 and 2021, 17,529 MIPS 
eligible clinicians who did not engage in MIPS based on 2021 MIPS data 
but did engage based on 2019 MIPS data, and 10,885 MIPS eligible 
clinicians who did not engage in MIPS in either year. Additionally, 
2,483 clinicians did not engage in 2021 and did not have data from 
2019. These clinicians are counted in our model as ``did not engage in 
2019 or 2021''.
    We estimate approximately 560,211 MIPS eligible clinicians as 
having ``group eligibility'' in Table 154. These clinicians belong to a 
group that meets the low-volume threshold. If they were not associated 
with the group submission, these clinicians will not be eligible for 
MIPS.
    Finally, we estimate about 7,442 clinicians will be eligible and 
participate through ``opt-in eligibility'' through the ``opt-in'' 
policy. We updated our opt-in policy to reflect that a clinician can 
elect to opt-in into MIPS and will be scored even if they do not submit 
data to MIPS. We estimate that about 79 clinicians will opt-in to the 
program but not engage.
    We estimate a total MIPS eligible clinician population of 
approximately 719,516 with $56 billion PFS allowed charges estimated to 
be included in the CY 2023 performance period/2025 MIPS payment year.
BILLING CODE 4150-28-P

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BILLING CODE 4150-28-C
    Furthermore, we estimate there will be approximately 475,882 
clinicians who are not MIPS eligible, but could be if the clinician or 
their group elects to opt-in. We describe this group as ``Potentially 
MIPS eligible'' in Table 154. These clinicians would be included as 
MIPS eligible in the unlikely scenario in which all group practices 
elect to submit data as a group, or clinicians in a group that does not 
submit are eligible to opt-into MIPS individually and choose to do so. 
This assumption is important because it quantifies the maximum number 
of MIPS eligible clinicians. When this unlikely scenario is modeled, we 
estimate the MIPS eligible clinician population could be as high as 
1,195,398-clinicians. Finally, we estimate approximately 98,909 
clinicians will not be MIPS eligible because they and their group are 
below the low-volume threshold on all three criteria and another 
approximately 403,980 will not be MIPS eligible because they are 
categorically excluded

[[Page 70204]]

regardless of volume or submission activity.
    Eligibility among many clinicians is contingent on submission to 
MIPS as a group or election to opt-in, therefore we will not know the 
number of MIPS eligible clinicians who submit until the submission 
period for the CY 2023 performance period is closed. For the remaining 
analysis, we use the estimated population of 719,516 MIPS eligible 
clinicians described above.
d. Estimated Impacts on Payments to MIPS Eligible Clinicians for the CY 
2023 Performance Period/2025 MIPS Payment Year
(1) Summary of Approach for MVPs and Traditional MPS
    In sections IV.A.3.a. through IV.A.3.F. of this final rule, we 
present several provisions which impact the measures and activities 
that impact the performance category scores, final score calculation, 
and the MIPS payment adjustment. We discuss these changes in more 
detail in section VII.E.16.d.(3) of this RIA as we describe our 
methodology to estimate MIPS payments for the CY 2023 performance 
period/2025 MIPS payment year. We then present the impact of the 
overall final policies on the CY 2023 performance period/2025 MIPS 
payment year and then compare select metrics to the baseline model, 
which only incorporates previously finalized policies for the CY 2023 
performance period/2025 MIPS payment year. By comparing the baseline 
model to the final policies model, we are able to estimate the 
incremental impact of the final policies for the CY 2023 performance 
period/2025 MIPS payment year.
    The payment impact for a MIPS eligible clinician is based on the 
clinician's final score, and MIPS eligible clinicians can participate 
as an individual, group, virtual group, APM Entity, clinicians 
participating in MIPS through the APM Performance Pathway or through an 
MVP in the four MIPS performance categories: quality, cost, improvement 
activities, and Promoting Interoperability. MIPS APM participants can 
participate in the APP as an individual, group, virtual group, APM 
Entity but are only scored on three MIPS performance categories: 
quality, improvement activities, and Promoting Interoperability. The 
average percentage change in total revenues that clinicians earn is 
less than the impact displayed here because MIPS eligible clinicians 
generally furnish services to both Medicare and non-Medicare patients; 
this program does not impact payment from non-Medicare patients. In 
addition, MIPS eligible clinicians may receive Medicare revenues for 
services under other Medicare payment systems, such as the Medicare 
Federally Qualified Health Center Prospective Payment System, that will 
not be affected by MIPS payment adjustment factors.
(2) Methodology To Assess Impact for MIPS Value Pathways
    In the 2022 PFS final rule (86 FR 65394 through 65397), we 
finalized policies at Sec.  414.1365 for implementing MVPs beginning in 
the CY 2023 performance period/2025 MIPS payment year. In updating our 
MIPS RIA model, we have made some assumptions for both the baseline and 
final policies model to simulate MVP participants and their MVP final 
score which are described in the following sections.
(a) MVP Participant Assumptions
    At Sec.  414.1365(b), we require MVP Participants (which can be a 
group, individual, subgroup or APM entity) to register prior to 
submitting an MVP. As we do not yet have information on who will 
register, we assume for purposes of this model, that MVP Participants 
are individual clinicians or groups that currently submit at least four 
quality measures that are in an MVP. For these MVP Participants, we 
calculate both an MVP and a traditional MIPS score and take the highest 
score consistent with the scoring hierarchy as finalized in the CY 2022 
PFS final rule 86 FR 65537). For the baseline model, we looked for the 
quality measures finalized for MVPs in the CY 2022 PFS final rule (86 
FR 65441 through 65443):

 Advancing Rheumatology Patient Care
 Coordinating Stroke Care to Promote Prevention and Cultivate 
Positive Outcomes
 Advancing Care for Heart Disease MVP
 Optimizing Chronic Disease Management MVP
 Adopting Best Practices and Promoting Patient Safety within 
Emergency Medicine
 Improving Care for Lower Extremity Joint Repair
 Patient Safety and Support of Positive Experiences with 
Anesthesia MVP

    For the final policies model, we incorporate the quality measure 
revisions for the above MVPs and use the quality measures to model 
scores for the new MVPs in Appendix X of this final rule:

 Advancing Cancer Care
 Optimal Care for Kidney Health
 Optimal Care for Neurological Conditions
 Supportive Care for Cognitive-Based Neurological Conditions
 Promoting Wellness

    Our MVP Participant assumptions have limitations: we are not 
incorporating subgroups due to lack of data, not all of the assumed 
participants may elect to register for an MVP, and we may have 
additional clinicians or groups register for an MVP. However, we 
believe this is a reasonable approach to simulate the impact of MVPs 
and we sought comment on this assumption, but did not receive any 
feedback.
(b) MVP Scoring Methods and Assumptions
    We simulate an MVP score using the same data sources as we did for 
traditional MIPS. We scored according to rules finalized in Sec.  
414.1365(d) and Sec.  414.1365(e) using the MVP reporting requirements 
listed in Sec.  414.1365(c) with one exception. We did not restrict the 
improvement activities to the activities listed in the MVP inventory. 
We believed this would lower our estimated MVP score as clinicians and 
groups were not required to select from a limited inventory in the CY 
2021 performance period (upon which our model is based.) Therefore, we 
scored any improvement activities the MVP Participants submitted in 
2021 as if those improvement activities are in the MVP inventory.
(3) Methodology To Assess Impact For Traditional MIPS
    To estimate the impact of MIPS policies on MIPS eligible 
clinicians, we generally used the CY 2021 MIPS performance period 
submissions data, including data submitted or calculated for the 
quality, cost, improvement activities, and Promoting Interoperability 
performance categories. As discussed in section VII.E.16.c.2.(a) of 
this final rule, we supplemented with 2019 data supplement.
    We supplemented this information with the most recent data 
available for CAHPS for MIPS and CAHPS for ACOs, administrative claims 
data for the new quality performance category measures, and other data 
sets. We calculated a hypothetical final score for the CY 2023 
performance period/2025 MIPS payment year for the baseline and final 
policies scoring models for each MIPS eligible clinician using score 
estimates for quality, cost, Promoting Interoperability, and 
improvement activities performance categories, where each are described 
in detail in the following sections.

[[Page 70205]]

(a) Methodology To Estimate the Quality Performance Category Score
    We estimated the quality performance category score using a 
methodology like the one described in the CY 2022 PFS final rule (86 FR 
65642 through 65643) for the baseline and final policies RIA models for 
the CY 2023 performance period/2025 MIPS payment year.
    To create the baseline policies RIA model, which does not reflect 
the policies finalized in this rule, we made the following 
modifications to the CY 2022 PFS final rule final policies model to 
reflect the previously finalized quality performance category policies 
for the CY 2023 performance period/2025 MIPS payment year:
     As discussed in the CY 2022 PFS final rule (86 FR 65440), 
we finalized the removal of Web Interface measures after the CY 2022 
performance period/2024 MIPS payment year for groups and virtual groups 
using the existing 10 CMS Web Interface measures. To estimate a quality 
performance category score for clinicians in groups who previously used 
the CMS Web Interface as a collection type in 2021, we assumed these 
groups will use the other two other collection types (MIPS CQMs and 
eCQMs) available in the CY 2023 performance period/2025 MIPS payment 
year. We then applied the same methodology described in the CY 2021 PFS 
proposed rule where we discussed the removal of Web Interface as a 
collection type (85 FR 50387 through 50388).
     As discussed in the CY 2022 PFS final rule (86 FR 65497 
through 65498), we finalized removing the 3-point floor for each 
measure that can be reliably scored against the benchmark and score the 
measure from 1 to 10 points starting with the CY 2023 performance 
period/2025 MIPS payment year. Due to technical limitation we were 
previously not able to simulate the removal of the special scoring 
policy of scoring 3 points for class 2 measures for clinicians not in a 
small practices beginning with the CY 2023 performance period/2025 MIPS 
payment year in the 2023 PFS Proposed Rule (87 FR 46411). In this final 
rule, we were able to incorporate the removal of this scoring policy.
     In the CY 2022 PFS final rule (86 FR 65429), we also 
finalized extending the use of the CMS Web Interface as a reporting 
option under the APM Performance Pathway into the CY 2024 performance 
period/2026 MIPS payment year. Under this policy, for the CY 2023 
performance period/2025 MIPS payment year, Web Interface reporting 
would work in the same manner as for the CY 2021 performance period/
2023 MIPS payment year, where ACOs would have the option of reporting 
either the CMS Web Interface or the APP eCQM/MIPS CQM measure set. In 
integrating the 2021 data, we assumed that ACOs that submitted Web 
Interface in 2021 would continue to submit Web Interface in 2023 and 
that ACOs that submitted the APP eCQM/MIPS measures set in 2021 would 
continue to do so in 2023 and scored the quality performance category 
based on the way they submitted their quality data.
     Similar to the CY 2022 PFS final rule model (86 FR 65642), 
we utilized the most recent benchmark file: the CY 2021 MIPS 
performance period historical benchmarks; however for this baseline 
model, we calculated a performance period benchmark if a historical 
benchmark was not available.
    For the final policies model, we made the following modifications 
to the baseline model to reflect the quality performance category 
policies for the CY 2023 performance period/2025 MIPS payment year:
     As discussed in section IV.A.10.d.(1)(b)(i) of this final 
rule, we will score administrative claims quality measures using a 
benchmark calculated from the performance period data. To simulate this 
policy in our proposed policies model, we used CY 2021 performance 
period data to score administrative claims measures.
     In Appendix 1 of this final rule, we added 9 new MIPS 
quality measures, removed 15 MIPS quality measures, partially removed 2 
MIPS quality measures that will be removed from traditional MIPS and 
retained for use in MVPs, and substantially modified 75 MIPS quality 
measures. Consistent with prior rules, (83 FR 50053), our RIA estimates 
assume that clinicians who reported Medicare Part B claims, eCQM, MIPS 
CQM and QCDR measures that are removed would find alternate measures; 
therefore, we assign points to the measures that were submitted and 
included them in our scoring model.
     In Appendix A, we included one new administrative claims 
measure, Risk-Standardized Acute Cardiovascular-Related Hospital 
Admission Rates for Patients with Heart Failure under the Merit-based 
Incentive Payment System, for MIPS eligible clinicians, groups, 
subgroups, virtual groups, and APM Entities that include at least one 
cardiologist. We included the test data for this measure into our 
model.
(b) Methodology To Estimate the Cost Performance Category Score
    We estimated the cost performance category score using a 
methodology similar to the methodology described in the CY 2022 PFS 
final rule (86 FR 65643) for the baseline and the final policies RIA 
models. However, we updated the data source to use the cost measures 
calculated for the CY 2021 MIPS performance period.
    The baseline policies RIA model used the same methodology as the 
final policies model in the CY 2022 PFS final rule (86 FR 65643) since 
there are no previously finalized cost performance category policies 
that will apply beginning with the CY 2023 MIPS performance period.
    In section IV.A.10.c.(2)(b) of this final rule, we revise the 
operational list of care episode and patient condition groups and codes 
by adding the Medicare Spending Per Beneficiary (MSPB) Clinician cost 
measure as a care episode group. This recategorization of the MSPB 
measure does not affect the scoring of the cost performance category. 
Additionally, in section IV.A.10.d.(1)(c)(i) of this final rule, we 
establish a maximum cost improvement score of 1 percentage point out of 
100 percentage points available for the cost performance category 
starting with the CY 2022 performance period/2024 MIPS payment year. 
Due to data limitations, we do not have multiple years of cost measures 
to model improvement scoring. Therefore, we did not make any 
modifications between the final policies and baseline model for the 
cost performance category scoring.
(c) Methodology To Estimate the Facility-Based Measurement Scoring
    As discussed in section VII.E.16.c.2.(a) of this final rule, a 
limitation of using 2021 data is that we are not able to estimate 
facility-based scores because there are no Hospital Value-Based 
Purchasing total performance scores calculated due the COVID-19 PHE. 
However, for clinicians who did not participate in 2021, we did use the 
2019 data supplement to identify final scores based on 2019 performance 
period submission and these scores include facility-based scores.
(d) Methodology To Estimate the Promoting Interoperability Performance 
Category Score
    For the CY 2023 PFS final rule baseline RIA model, we are using the 
CY 2021 Promoting Interoperability performance period submissions data 
to estimate CY 2023 performance for the Promoting Interoperability 
performance category. By using the 2021 performance period submissions 
data, we were able incorporate the Health Information Exchange bi-
directional exchange

[[Page 70206]]

measure option into the Health Information Exchange objective. We did 
not make additional modifications to the Promoting Interoperability 
performance category baseline RIA model beyond what we finalized in the 
CY 2022 final rule (86 FR 64996).
    For the final policies model, we considered the following policy 
provisions as potential modifications to the baseline RIA model:
     Require and modify the Query of PDMP measure for MIPS 
eligible clinicians participating in the Promoting Interoperability 
performance category and maintain the associated points at 10 points.
     Expand the Query of PDMP measure to include not only 
Schedule II opioids but also Schedule III, and IV drugs.
     Change the scoring for the e-Prescribing measure to 10 
points available and the maximum total points available for the 
Electronic Prescribing Objective will remain at 20 points for CY 2023.
     Adding Enabling Exchange Under the Trusted Exchange 
Framework and Common Agreement (TEFCA) measure as an optional 
alternative measure in the Health Information Exchange (HIE) objective.
     Modify the scoring methodology for the Promoting 
Interoperability performance category. We refer readers to section 
IV.A.6.c.(4)(g) of this final rule and Table 155: Scoring Methodology 
for the Performance Period in CY 2023 of this final rule for further 
information on the scoring.
     Consolidate the current options from three to two levels 
of active engagement for the Public Health and Clinical Data Exchange 
Objective and to require the reporting of active engagement for the 
measures under the objective
     Removing the automatic reweighting of NPs, PAs, CRNAs, or 
CNSs.
    Due to limitations in our scoring engine-based model, we are unable 
to fully incorporate all of these changes into the final policies 
model. We incorporated into the model the modification to the scoring 
methodology for the Promoting Interoperability performance category and 
the removal of the automatic reweighting of NPs, PAs, CRNAs, and CNSs. 
Due to the high submission rate for the optional Query of PDMP measure 
and the expansion of the availability of PDMPs in all 50 States and 
several localities, we anticipate that clinicians who do not currently 
submit this newly required measure will now submit the measure or 
submit one of the associated exclusions. Because we lack CY 2021 MIPS 
submissions data for the Enabling Exchange Under TEFCA measure, we only 
used past reporting on the existing Health Information Exchange 
Objective measures and the Health Information Exchange Bi-directional 
exchange measure to estimate CY 2023 Promoting Interoperability 
performance for the final policies model.
(e) Methodology To Estimate the Improvement Activities Performance 
Category Score
    For the baseline model, we modeled the improvement activities 
performance category score based on CY 2021 performance period data and 
APM participation identified in section IV.A.10.d.(1)(c)(i) of this 
final rule. For clinicians and groups not participating in a MIPS APM, 
we used their CY 2021 improvement activities score. Using the CY 2021 
performance period data, we are not able to incorporate the policy 
finalized in the CY 2020 performance period (84 FR 62980) to require a 
minimum threshold of 50 percent of clinicians in a group to complete an 
improvement activity for the group to receive credit. We continued to 
apply the methodology described in the CY 2020 PFS final rule (84 FR 
63170) to assign an improvement activities performance category score. 
For the APM participants identified in section VII.F.17.c.(1) of this 
final rule, we assigned an improvement activity performance category 
score of 100 percent.
(f) Methodology To Estimate the Complex Patient Bonus Points
    For the baseline and proposed policies RIA model, we used the 
previously established method to calculate the complex patient bonus as 
described in the CY 2022 PFS final rule (86 FR 64996). We calculated 
and applied the separate risk indicator complex patient bonus 
components methodology with a single overall cap described at section 
IV.A.10.d.(2)(a) of this final rule. In section IV.A.10.d.(2)(a)(ii) of 
this final rule, we allow facility-based clinicians to receive a 
complex patient bonus. As discussed in section VII.E.16.c.2.(a) of this 
final rule, we are not able to incorporate this provision because, 
generally, we do not have data for facility-based clinicians.
(g) Methodology To Estimate the Final Score
    We did not propose any changes for how we calculated the MIPS final 
score. Our baseline and final policies RIA models assigned a final 
score for each TIN/NPI by multiplying each estimated performance 
category score by the corresponding performance category weight, adding 
the products together, multiplying the sum by 100 points, adding the 
complex patient bonus, and capping at 100 points.
    For the baseline policies RIA model, we applied the performance 
category weights and redistribution weights finalized in the CY 2022 
PFS final rule (86 FR 65519 through 65524).
    For both models, after adding any applicable bonus for complex 
patients, we reset any final scores that exceeded 100 points to equal 
100 points. For MIPS eligible clinicians who were assigned a weight of 
zero percent for any performance category, we redistributed the weights 
according to Sec.  414.1380(c).
(h) Methodology To Estimate the MIPS Payment Adjustment
    For the baseline and final policies RIA models, we applied the 
hierarchy as finalized in the CY 2022 PFS final rule (86 FR 65536 
through 65537) to determine which final score should be used for the 
payment adjustment for each MIPS eligible clinician when more than one 
final score is available. We then calculated the parameters of an 
exchange function in accordance with the statutory requirements related 
to the linear sliding scale, budget neutrality, and minimum and maximum 
adjustment percentages.
    For the baseline model, we applied the performance threshold 
finalized in the 2022 PFS final rule (86 FR 65527) of 75 points 
finalized at Sec.  414.1405. For the final policies model, we applied 
the performance threshold of 75 points finalized in section 
IV.A.10.e.(2) of this final rule. We used these resulting parameters to 
estimate the positive or negative MIPS payment adjustment based on the 
estimated final score and the allowed charges for covered professional 
services furnished by the MIPS eligible clinician.
(4) Impact of Payments by Practice Size
    We noticed minimal changes to the mean and median final score 
between our baseline and final policies model. In our baseline model, 
the mean and median final scores are 77.78 and 79.45 points, 
respectively. In the final policies model, the mean final score is 
77.68 and the median final score is 79.98. Many clinicians are only 
slightly above or slightly below the performance threshold. For 
instance, in the final policies model, 176,512 clinicians have a final 
score between 70 and 80 points. We recognize that, because many scores 
are clustered around the performance threshold of 75, any variation in 
scoring

[[Page 70207]]

or submissions data can have a significant impact on the proportion of 
clinicians receiving a positive or a negative payment adjustment.
    Between the baseline and final policies model we observe little 
difference in the percentage and distribution of clinicians receiving a 
negative payment adjustment. Overall, we project 63.34 percent of 
engaged clinicians \576\ would receive a positive or neutral adjustment 
in our final policies model compared to 62.56 percent in the baseline 
model.
---------------------------------------------------------------------------

    \576\ We define engaged MIPS clinicians as those who have 
submitted data for at least one MIPS performance category.
---------------------------------------------------------------------------

    In this model, we no longer observe large differences in payment 
adjustments by practice size. All practices sizes saw either minimal 
change or a modest increase in the percentage of clinicians receiving 
either a positive or neutral adjustment.
    Because many clinicians scores are close to the performance 
threshold, many of these clinician's payment adjustments are fairly 
small and many negative adjustments are much lower in magnitude than 
the statutory maximum negative adjustment of 9 percent. In our final 
policies model, we project a payment adjustment of negative 9 percent 
for clinicians with a score of 18 points.
    In our baseline model, the average positive payment adjustment 
among engaged clinicians is 3.78 percent and the average negative 
payment adjustment is -1.79 percent. In our final policies model, the 
average positive payment adjustment among engaged clinicians is 3.71 
percent and the average negative payment adjustment among engaged 
clinicians is -1.84 percent. Only 8.46 percent of clinicians receive a 
score of less than 50 points and therefore a negative payment 
adjustment of more than 3 percent.
    Because there is only a slight difference in the proportion of 
clinicians receiving a negative payment adjustment between the final 
policies and baseline model, we anticipate only a modest change in the 
amount of funds redistributed due to budget neutrality (from $699 
million to $698 million) and a modest change in the maximum positive 
payment adjustment from 6.10 percent in the baseline to 6.09 percent in 
the final policies model.
    We want to highlight we are primarily using CY 2021 performance 
period submissions data to simulate a CY 2023 performance period final 
score, and it is likely that there will be changes that we cannot 
account for at this time. It should also be noted that the estimated 
number of clinicians who do not submit data to MIPS may be an 
overestimate of non-engagement in MIPS for the CY 2023 performance 
period/2025 MIPS payment year. This is because the PHE may have 
resulted in fewer clinicians submitting data to MIPS or more clinicians 
electing to apply for the extreme and uncontrollable circumstances 
policies due to the PHE for the CY 2019 and 2021 performance periods. 
Therefore, engagement levels in MIPS for the CY 2023 performance 
period/2025 MIPS payment year may differ from these reported estimates. 
We also note this participation data is generally based off 
participation for the CY 2021 performance period/2023 MIPS payment 
year, which is associated with a performance threshold of 60 points, 
and that participation may change since the finalized performance 
threshold is 75 points.
    Finally, the combined impact of negative and positive adjustments 
as a percent of allowed charges among those that do not submit data to 
MIPS was not the maximum negative payment adjustment of 9 percent 
possible because some MIPS eligible clinicians that do not submit data 
to MIPS receive a non-zero score for the cost performance category, 
which utilizes administrative claims data and does not require separate 
data submission to MIPS.
BILLING CODE 4150-28-P

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[GRAPHIC] [TIFF OMITTED] TR18NO22.201


[[Page 70209]]


[GRAPHIC] [TIFF OMITTED] TR18NO22.202

e. Additional Impacts From Outside Payment Adjustments
(1) Burden Overall
    In addition to policies affecting the payment adjustments, we 
finalized several policies that have an impact on burden in the CY 2023 
performance period/2025 MIPS payment year. In section VII.E.16.e. of 
this final rule, we outline estimates of the costs of data collection 
that includes both the effect of finalized policy updates and 
adjustments due to the use of updated data sources. For each provision 
included in this regulation which impacts our estimate of collection 
burden, the incremental burden for each is summarized in Table 157. We 
also provide proposed additional burden discussions that we are not 
able to quantify.

[[Page 70210]]

[GRAPHIC] [TIFF OMITTED] TR18NO22.203

BILLING CODE 4150-28-C
(2) Additional Impacts to Clinicians
(a) MVP Maintenance and Development Process
    In section IV.A.8.a. of this rule, we finalized the proposed 
updates to the previously finalized policies for the MVP development 
and maintenance process in the CY 2021 and 2022 PFS final rules (85 FR 
84849 through 84856 and 86 FR 65410). Specifically, we finalized the 
proposal to modify the MVP development process such that we will 
evaluate a submitted candidate MVP through the MVP development process 
and if we determine it is ``ready'' for feedback, we will post a draft 
version of the MVP on the Quality Payment Program website (https://qpp.cms.gov/) and solicit feedback for a 30-day period. Interested 
parties and the general public will have the opportunity to submit 
feedback on the candidate MVP for CMS's consideration through an email 
inbox. We will review the feedback received, and determine if any 
changes should be made to the candidate MVP prior to potentially 
including the MVP in a notice of proposed rulemaking. If we determine 
changes should be made to the candidate MVP, we will not notify the 
interested party who originally submitted the candidate MVP for CMS 
consideration in advance of the rulemaking process.
    We also finalized that beginning with the CY 2023 performance 
period/2025 MIPS payment year, to modify the MVP maintenance process 
such that interested parties and the general public will be able to 
submit their recommendations for potential revisions to established 
MVPs on a rolling basis throughout the year. We will then review the 
submitted recommendations and determine whether any are potentially 
feasible and appropriate. If we identify any submitted recommendations 
that are potentially feasible and appropriate, we will host a public 
facing webinar, open to interested parties and the general public, 
through which they may offer their feedback on the potential revisions 
we have identified. We will publish details related to the timing and 
registration process for the webinar

[[Page 70211]]

through our Quality Payment Program Listserv.
    We acknowledge that there is administrative burden associated with 
the monitoring and review of the candidate MVPs. However, we are unable 
to estimate the impact of these policies and quantify the number of 
interested parties and members of the general public that will review 
and submit their feedback for a candidate MVP. Similarly, we are 
uncertain on the number of interested parties and members of the 
general public that will submit their recommendations for potential 
revisions to established MVPs for an applicable performance period and 
if CMS will be hosting a public webinar based on the review of the 
recommendations. In summary, we are unable to quantify the impact 
associated with the finalized changes to the MVP development and 
maintenance process.
(b) Subgroup Registration
    In section IV.A.8.e.(3) of this rule, we finalized the proposed 
updates to the subgroup registration process. As part of the subgroup 
registration process, in addition to the previously established 
registration requirements, group TINs must provide a description of 
each subgroup that is registered. Under this policy, we will identify 
some key scenarios for subgroups to select from that we expect might 
reflect a typical subgroup, but also wish to offer an opportunity for 
group TINs to describe how they constructed their subgroups by 
providing a narrative in a text-only field, if the options we provide 
do not correctly describe the subgroup. We recognize that there may be 
additional burden associated with the proposed description requirement 
for subgroup registration. However, we assume that the burden 
associated with choosing a key scenario will minimize the time required 
for subgroups to provide a narrative description. Additionally, we 
anticipate the narratives to be short descriptions of the nature of a 
group practice and appropriately reflect the subgroup composition. We 
are unable to quantify the additional impact for the updates to the 
subgroup description requirement.
(c) Impact on Third Party Intermediaries
    In section IV.A.10.g.(3)(a) of this rule, we finalized the proposed 
revisions to the corrective action plan (CAP) requirement at Sec.  
414.1400(e)(1)(i)(B) to address the impact to any affected parties, as 
appropriate. We also finalized the proposed addition at Sec.  
414.1400(e)(1)(i)(E) to require the detailed communication plan for 
communicating the issues that contributed to the non-compliance and the 
impact to any affected parties, as appropriate. We anticipate 
administrative burden associated with the requirement for third party 
intermediaries to submit a detailed communication plan. Because of the 
relatively low number (fewer than 10 per year historically) of CAPs 
that we anticipate receiving from QCDRs for the CY 2023 performance 
period/2025 MIPS payment year, we are unable to quantify the burden 
associated with the development of a communication plan for third party 
intermediaries.
(d) Compare Tools: Public Reporting
    In section IV.A.10.h.(1) of this rule, we finalized the proposal to 
identify clinicians who perform telehealth services using Place of 
Service Code 02 (indicating telehealth) on paid physician & ancillary 
service (that is, carrier) claims, or modifier 95 appended on paid 
claims. Additionally, we finalized the proposal to publicly report 
Medicare procedural utilization data on the Compare tool clinician and 
group profile pages in a way that is understandable to patients and 
caregivers, based on user testing, and helps them make healthcare 
decisions. We will begin publicly reporting procedural utilization data 
no earlier than CY 2023. We will use a 12-month lookback period and bi-
monthly data refresh frequency, as technically feasible. While the 
Compare tool provisions do not increase the burden of collections, we 
note that the PRA package may require relevant modification to reflect 
the Compare tool's new uses and public display.
(e) Administrative Claims Measure
    As discussed in appendix 1, we finalized the proposed addition of 
one new administrative claims quality measure beginning in the CY 2023 
performance period/2025 MIPS payment year and for future performance 
periods: Risk-standardized Acute Cardiovascular-Related Hospital 
Admission Rates for Patients with Heart Failure under the Merit-based 
Incentive Payment System. We acknowledge there are administrative 
burdens and related financial costs associated with each administrative 
claims measure that clinicians, groups, and organizations may choose to 
monitor. However, because these costs can vary significantly due to 
organizational size, number of administrative claims measures being 
reported, volume of clinicians reporting each measure, and the specific 
methods employed to improve performance, we are unable to provide an 
estimate of the financial impact each clinician, group, or organization 
may experience. In summary, we are acknowledging that while there are 
no data submission requirements per Sec.  414.1325(a)(2)(i) for 
administrative claim measures, there may be associated costs for 
clinicians and group practices to monitor new administrative claim 
measures; however, we are unable to quantify that impact.
(f) Modifications to the Improvement Activities Inventory
    As discussed in section IV.A.10.b of this final rule, we finalized 
the proposed changes to the improvement activities Inventory for the CY 
2023 performance period/2025 MIPS payment year and future years as 
follows: adding four new improvement activities; modifying five 
existing improvement activities; and removing six previously adopted 
improvement activities. We refer readers to Appendix 2 of this final 
rule for further details. We do not believe these changes to the 
improvement activities Inventory will significantly impact time or 
financial burden on interested parties because MIPS eligible clinicians 
are still required to submit the same number of activities and the per 
response time for each activity is uniform. We do not expect these 
changes to the improvement activities Inventory to affect our currently 
approved information collection burden estimates in terms of neither 
the number of estimated respondents nor the burden per response. We 
anticipate most clinicians performing improvement activities, to comply 
with existing MIPS policies, will continue to perform the same 
activities under the policies in this final rule because previously 
finalized improvement activities continue to apply for the current and 
future years unless otherwise modified per rulemaking (82 FR 54175). 
Most of the improvement activities in the Inventory remain unchanged 
for the CY 2023 performance period/2025 MIPS payment year.
g. Assumptions & Limitations
    In section VII.E.16.x of this rule, we outline several limitations 
in using 2021 submissions data for estimating 2023 performance. In 
addition, in section VII.E.16.d.(4) of this RIA we noted the limitation 
that, because many scores are clustered near the performance threshold 
of 75 points, minor variations in clinicians final scores relative to 
our estimations could have significant impacts on the proportion of 
clinicians receiving a positive or negative payment adjustment. In 
addition to this

[[Page 70212]]

limitation, we note several other limitations to our estimates of 
clinicians' MIPS eligibility and participation, negative MIPS payment 
adjustments, and positive payment adjustments for the CY 2023 
performance period/2025 MIPS payment year.
    In our MIPS eligible clinician assumptions, we assumed that 
clinicians who elected to opt-in for the CY 2021 Quality Payment 
Program and submitted data will continue to elect to opt-in for the CY 
2023 performance period/2025 MIPS payment year. It is difficult to 
predict whether clinicians will elect to opt-in to participate in MIPS 
with the final policies.
    In addition to the limitations described throughout the methodology 
sections, to the extent that there are year-to-year changes in the data 
submission, volume and mix of services provided by MIPS eligible 
clinicians, the actual impact on total Medicare revenues will be 
different from those shown in Table 154.
17. Opioid Treatment Programs: CY 2022 Methadone Payment Exception
    As discussed in section V. of this final rule, the ``Medicare 
Program; Opioid Treatment Programs: CY 2022 Methadone Payment 
Exception'' interim final rule with comment period (Methadone IFC), 
established a limited exception to the payment methodology for 
methadone furnished by Opioid Treatment Programs (OTPs). Specifically, 
under this exception, the payment amount for the drug component of the 
methadone bundle described by HCPCS code G2067 (Medication assisted 
treatment, methadone; weekly bundle including dispensing and/or 
administration, substance use counseling, individual and group therapy, 
and toxicology testing, if performed (provision of the services by a 
Medicare-enrolled Opioid Treatment Program) and the methadone add-on 
code described by HCPCS code G2078 (Take-home supply of methadone; up 
to 7 additional day supply (provision of the services by a Medicare-
enrolled Opioid Treatment Program); List separately in addition to code 
for primary procedure) was maintained at the CY 2021 rate of $37.38 on 
an interim final basis for the duration of CY 2022 (86 FR 66032 through 
66033).
    In this final rule we are finalizing the interim revisions to the 
regulation text at Sec.  410.67(d)(2)(i)(B), which governs the 
determination of the payment amount for oral medications, to reflect 
this exception and to make a conforming change to the reference to 42 
CFR part 414, subpart J. There are no impacts to Medicare spending in 
CY 2023 as a result of finalizing the interim revisions promulgated in 
the Methadone IFC.

F. Alternatives Considered

    This final 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 we proposed to exercise 
agency discretion, presents rationale for our policies and, where 
relevant, alternatives that were considered. For purposes of the 
payment impact on PFS services of the policies contained in this final 
rule, we present above the estimated impact on total allowed charges by 
specialty.
1. Alternatives Considered for Adjusting RVUs To Match PE Share of the 
Medicare Economic Index (MEI)
    As discussed in section II.B. of this final rule, ``(5) PE RVU 
Methodology,'' Steps 3, 10, and 18, and ``3. Adjusting RVUs To Match PE 
Share of the Medicare Economic Index (MEI)'', we hold the work RVUs 
constant and adjust the PE RVUs, MP RVUs, and CF to produce the 
appropriate balance in RVUs among the PFS components and payment rates 
for individual services, that is, that the total RVUs on the PFS are 
proportioned to approximately 51 percent work RVUs, 45 percent PE RVUs, 
and 4 percent MP RVUs. As the Medicare Economic Index (MEI) cost shares 
are updated, we would typically propose to modify steps 3 and 10 
described in section II.B. of this final rule to adjust the aggregate 
pools of PE costs (direct PE in step 3 and indirect PE in step 10) in 
proportion to the change in the PE share in the rebased and revised MEI 
cost share weights, as previously described in the CY 2014 PFS final 
rule (78 FR 74236 and 74237), and to recalibrate the relativity 
adjustment that we apply in step 18 described in section II.B. of this 
final rule. The most recent recalibration was done for the CY 2014 
RVUs, when the MEI was last updated.
    As an alternative to adjusting the aggregate pools of direct and 
indirect PE costs and using a relativity adjustment based on the 
current CY 2014 MEI update, we considered using the proposed rebased 
and revised MEI cost share weights for CY 2023, as discussed in detail 
in section II.M. of the proposed rule, for purposes of adjusting the 
RVUs to match PE share of the MEI for CY 2023. Although we did not 
propose to for CY 2023, we considered using the rebased and revised 
cost share weights to adjust the aggregate pools of PE RVUs and the 
relativity adjustment to reflect more recent data, shifting over a 4-
year transition to reach the proportions of work, PE, and MP, as 
explained in in section II.M. of the final proposed rule.
    Table 158 illustrates specialty-specific impacts if we were to use 
the proposed rebased and revised MEI cost share weights to adjust the 
RVUs to match the PE share of the MEI, as proposed in section II.M. of 
the proposed rule. Column C represents specialty level impacts of our 
provisions for CY 2023 without the recalibration of RVU proportions 
based on the proposed rebased and revised MEI cost share weights, shown 
for comparison to the alternatives considered (same impacts as shown in 
Table 149). Column E represents the specialty level impacts of our 
provisions for CY 2023 with Year 1 of a 4-year phased in recalibration 
of RVU proportions based on the proposed rebased and revised MEI cost 
share weights. Column F represents the specialty level impacts of our 
provisions for CY 2023 with the recalibration of RVU proportions based 
on the proposed rebased and revised MEI cost share weights, without a 
4-year phase in, but rather, a full implementation for CY 2023. We note 
that, as discussed in detail in section II.M. of this final rule, the 
finalized rebased and revised cost share weights differ slightly from 
than the proposed rebased and revised cost share weights used to 
calculate the specialty-specific impacts in Columns E and F in Table 
158 for this alternative considered.
BILLING CODE 4150-28-P

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    The majority of specialties would experience shifts of 1 percent or 
greater if we used the proposed rebased and revised MEI cost share 
weights, as opposed to the current weights, displayed in Table 158, for 
proportioning work, PE, and MP RVUs. Several specialties shifted by 
greater than 3 percent, particularly the specialties with relatively 
higher PE costs, which are mostly realizing a positive shift, or 
relatively higher physician work costs, which are realizing a negative 
shift. As shown in Column F, the shifts are amplified, both negatively 
and positively, when use of the proposed rebased and revised MEI cost 
share weights is not phased in over

[[Page 70217]]

several years; therefore, we did not consider this a viable alternative 
for consideration. We note that there are significant shifts in 
specialty level payments if we used the proposed rebased and revised 
MEI cost share weights, some of which counter other CY 2023 provisions 
(that is, changes to Evaluation and Management (E/M) services, chronic 
pain management, and behavioral health services).
    We proposed to delay the adjustments to allow public comment and 
finalization of the proposed rebased and revised MEI, and to maintain 
use of the current MEI cost share weights while presenting the 
information in section II.M. of this final rule and the specialty level 
impacts in Table 158. We also solicited comment on the use of a 
transition to phase in use of the proposed rebased and revised MEI cost 
share weights, if finalized, for potential future rulemaking. Because 
there are significant proposed methodological and data source changes 
to the MEI for CY 2023 and significant time has elapsed since the last 
rebasing and revision of the MEI, we believe it is important to allow 
public comment and finalization of the MEI changes based on the review 
of public comment before we incorporate the updated MEI into PFS 
ratesetting, and we believe this is consistent with our efforts to 
balance payment stability and predictability with incorporating new 
data through more routine updates. Similarly, we proposed to delay the 
implementation of the rebased and revised MEI for use in the PE 
geographic practice cost index (GPCI) to allow public comment and 
finalization of the MEI changes based on the review of public comment 
before we incorporate the updated MEI into the PE GPCIs.
2. Alternatives Considered for the Practice Expense (PE) Geographic 
Practice Cost Index (GPCI)
    As discussed in section II.G. of this final rule, we use the MEI 
cost share weights to weight the four components of the PE GPCI: 
employee compensation, the office rent, purchased services, and medical 
equipment, supplies, and other miscellaneous expenses. As the MEI cost 
shares are updated, we have historically updated the GPCI cost share 
weights to make them consistent with the most recent update to the MEI. 
Instead, we proposed to maintain the use of the current 2006-based MEI 
cost share weights for the CY 2023 GPCIs, allowing interested parties 
the opportunity to review and comment on, and for us to respond to 
comments and finalize, the rebased and revised MEI cost share weights. 
Because there are significant proposed methodological and data source 
changes to the MEI for CY 2023 and significant time has elapsed since 
the last rebasing and revision of the MEI, we believe it is important 
to allow public comment and finalization of the proposed MEI changes 
based on the review of public comment before we incorporate the updated 
MEI into the PE GPCI.
    As an alternative to using the current 2006-based cost share 
weights, we considered using the proposed rebased and revised Medicare 
Economic Index (MEI) cost share weights for CY 2023, as discussed in 
detail in section II.M. of this final rule for purposes of weighting 
the four components of the CY 2023 PE GPCI. Specifically, within the 
four components of the PE GPCI, we considered proposing to update the 
employee compensation component from 16.553 percent to 24.716 percent, 
the office rent component from 10.223 percent to 5.893 percent, the 
purchased services component from 8.095 percent to 13.914 percent, and 
the medical equipment, supplies, and other miscellaneous expense 
component from 9.968 percent to 6.819 percent, as shown in Table 159. 
We note that, as discussed in detail in section II.M. of this final 
rule, the finalized rebased and revised cost share weights differ 
slightly from the proposed rebased and revised MEI cost share weights 
used for this alternative considered.
[GRAPHIC] [TIFF OMITTED] TR18NO22.208

    The use of the rebased and revised MEI cost share weights only 
impacts the PE GPCI. When the PE GPCI was calculated using the proposed 
rebased and revised MEI cost share weights, 10 of the 112 PE GPCI 
values remained the same compared to the calculated PE GPCI using the 
current 2006-based MEI cost share weights. Three of the 112 PE GPCI 
values differed by 0.001 and 68 of the 112 PE GPCI values 
differ less than or equal to 0.009. Therefore, the 
provision to maintain the use of the current 2006-based MEI cost share 
weights has little to no effect on over 70 percent of the localities' 
PE GPCIs. Of the remaining 31 localities with a difference of greater 
than 0.009 between the proposed PE GPCI and the alternative 
considered, 10 realize an increased PE GPCI when the current 2006-based 
MEI cost share weights were used, ranging from an increase of 0.010 to 
0.012, as compared to the PE GPCI if the proposed rebased and revised 
MEI cost share weights were incorporated. The remaining 21 localities 
realize a decrease in PE GPCI when the current 2006-based MEI cost 
share weights were used, ranging from a decrease of 0.010 to 0.028. We 
note that we solicited comments in section II.G. of this final rule on 
the provision to maintain the use of the current 2006-based MEI cost 
share weights and postpone the implementation of the proposed rebased 
and revised MEI cost share weights for consideration through potential 
future rulemaking. See Alternate Addenda D

[[Page 70218]]

and E to the proposed rule for the CY 2023 GPCIs and summarized GAFs if 
the proposed rebased and revised MEI cost share weights discussed in 
detail in section II.M. of the proposed rule, were incorporated to 
weight the proposed CY 2023 PE GPCIs (for comparison to Addenda D and E 
with the provision to maintain the current 2006-based MEI cost share 
weights for the PE GPCIs). Because the PE GPCIs factor into the GAF 
equation, we created an Alternate Addendum D to show the recalculated 
GAFs if the proposed rebased and revised MEI cost share weights were 
incorporated to weight the CY 2023 PE GPCIs as well. These alternative 
addenda are available on the CMS website under the supporting documents 
section of the CY 2023 PFS proposed rule at https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/index.html. 
We note that only the PE GPCI and GAF values differ between Addenda D 
and E, and Alternate Addenda D and E, as the proposed rebased and 
revised cost share weights do not impact the work or MP GPCIs.
    We received public comments on the provision to maintain the use of 
the current 2006-based MEI cost share weights and postpone the 
implementation of the rebased and revised MEI cost share weights for 
consideration through potential future rulemaking, which were discussed 
earlier in this final rule. In response to our comment solicitations, 
we received comments on the timing and implementation strategies for 
consideration in future rulemaking. We thank commenters for the 
information they provided and will continue to contemplate the 
suggestions as we consider future rulemaking.
3. Alternatives Considered Related to Payment for E/M Services
    In developing our policies for other E/M visits effective January 
1, 2023, we considered a number of alternatives. For reasons discussed 
in our E/M policy section (section II.F. of this final rule) we 
considered several refinements for the RUC-recommended work RVUs for 
several of the codes in the families based on survey time changes to 
include Hospital Inpatient or Observation Care, Nursing Facility 
visits, and Home or Residence Services. We proposed to accept the RUC 
recommendations for the work RVUs because we believe they are more 
accurate values. For some of these codes the overall times changed and 
the RUC recommended work RVUs accurately reflect changes based on 
changes in the times for the service. For some of the codes, changes 
were noted in the total time and intra-service times which was 
reflected in the intra-time and total time ratios that led to an 
increase. Given our interest in maintaining continuity in the overall 
code set, we proposed to accept the RUC recommendations for the work 
time values and work RVUs for these codes and sought public comment on 
our concerns for specific codes.
    We received public comments, which were discussed earlier in this 
final rule, related to revaluation of the Other E/M Visits. Commenters 
stated that CMS should finalize different values for some of the 
different families. For hospital inpatient and observation services, we 
received some comments that we should not accept the RUC-recommended 
values, especially for values that would decrease. These commenters 
recommended retaining the historical relative relationship between 
inpatient/observation and office/outpatient visits. We disagree that 
changes should never be made to adjust the relative valuation between 
office/outpatient visits and inpatient/observation care. Observation 
services are less intense than inpatient services, and the code set 
merger together with decreases in time, make it appropriate that we 
accept the RUC recommended values.
    For ED visits, a few commenters did not agree with our rejection of 
the RUC-recommended decrease for one visit level, on the basis that 
this code would not be properly valued in relationship to the 
comparable office/outpatient visit. We continue to believe that this 
particular ED visit should have a higher RVU than the comparable 
outpatient/office visit, to reflect higher intensity.
    For Nursing Facility visits, we received some comments indicating 
that due to anomalies in code descriptors and decreases in total time, 
we should retain current values or finalize alternative values, and ask 
the AMA to review this code family again. We believe this approach 
would be disruptive, so we are accepting the RUC values and may 
reconsider this family again in future rulemaking.
    For Home and Residence services, a few commenters requested that 
CMS not finalize RUC-recommended decreases for some of the codes, to 
help cover costs associated with travel, addressing social determinants 
of health, and other comprehensive care. Historically, travel costs 
incurred by the physician or practitioner are not included in the 
valuation of E/M codes, since travel time and/or mileage is not 
considered a resource involved in furnishing the service. We appreciate 
the need to account for social determinants of health and other 
comprehensive care for certain patients during home/residence visits. 
We are accepting the RUC-recommended values.
    Commenters were concerned about the redistributive impacts of Other 
E/M revaluation under current legislation. Most commenters urged CMS to 
work with Congress on this issue, and some urged CMS to reactivate the 
complexity add-on for O/O visits promptly in 2024. Several commenters 
recommended that CMS continue to consider whether certain Other E/M 
revaluations disrupt appropriate PFS relativity. After considering the 
public comments, we are finalizing our proposals for revaluation of 
Other E/M's as proposed. For the majority of codes, this reflects the 
consensus reached at the RUC regarding Other E/M valuation. This does 
not necessarily mean that their valuation will not need to be adjusted 
in future years, and we will continue to consider appropriate valuation 
for all E/M visits as we gain experience with them under the new 
framework. We will also follow CPT proceedings for any additional 
developments, which we would consider through notice and comment 
rulemaking.
    Regarding prolonged Other E/M services, in our proposed rule, after 
thoughtful consideration we proposed to develop Medicare-specific 
coding (three G-codes, one per setting) to avoid potentially 
substantial overpayment, provide administrative simplification, enable 
CMS to determine how much time is being spent with patients using 
claims data, and facilitate program integrity. Allowing for CMS to 
determine how much time is being spent with patients using claims data 
is important for future valuation of services on the PFS, and for 
program integrity. If we proposed to merely accept the CPT prolonged 
service coding changes, we would not be able to identify the time spent 
with patients in the claims data alone, because we might not know which 
primary service is the companion code to the prolonged service code(s) 
due to the wide service timespan (for prolonged services without direct 
patient contact) and non-specific care settings within the prolonged 
CPT code descriptors. We decided to take similar approach as we did for 
the office/outpatient E/M visits by proposing Medicare-specific coding 
(G0316 through G0318) for prolonged services for Other E/Ms. We 
considered two options in coming to our provision. First, we considered 
using the descriptor time plus 15 minutes, which would allow for 
prolonged Other E/M services to be reportable once the practitioner 
spends 15 additional minutes beyond the ceiling time of the

[[Page 70219]]

primary service. Or, our second option was to use total time plus 15 
minutes, allowing for prolonged Other E/M services to be reportable 
once the practitioner spends 15 additional minutes beyond the total 
time of the primary service. Both of these options would allow for time 
to be counted on any day within the survey period with no frequency 
limit. We proposed to value the G codes similarly to the parallel CPT 
code, and require total time to be met before prolonged time starts. 
Reporting this way, through the use of a G code for each of the 
specified code families, allows for administrative simplicity and 
payment accuracy.
    We received public comments, discussed earlier in this final rule, 
related to Medicare-specific coding for prolonged Other E/M services. 
While some commenters supported our approach, others felt it would 
result in administrative burden. Some commenters did not believe we 
should align reported times with survey times. The AMA stated that it 
would refer prolonged services back to the CPT Editorial Panel for 
potential further review, if CMS did not adopt the CPT codes for 
prolonged Other E/M services in the final rule.
    We continue to believe that adopting the CPT codes for prolonged 
services would result in duplicative time counting, and reported times 
that do not align with work times used for valuation. Having three sets 
of codes for reporting time associated with a single visit is overly 
complex, and hinders our ability to assess how much time was spent with 
patients using claims data, and trends in time under the new framework. 
However, we agree with commenters that a uniform code set for use by 
all payers for prolonged services is important to further reduce 
administrative burden. After consideration of the public comments, we 
are finalizing our proposals for prolonged Other E/M services as 
proposed, and will continue to work with the AMA to potentially further 
refine and standardize this code set, through notice and comment 
rulemaking. We refer readers to the E/M Visits section of this final 
rule for a detailed discussion of these issues.
4. Alternatives Considered Related to Provision To Allow Audiologists 
To Furnish Diagnostic Tests, as Appropriate Without a Physician Order
    As discussed in section II.K. of this final rule, interested 
parties have told us that our regulatory requirement for a physician or 
NPP order for diagnostic audiology services may be impeding access to 
audiologists. More recently they have requested that we eliminate the 
treating physician (or NPP) order requirement for the diagnostic 
hearing and balance assessment services furnished by audiologists--via 
notice and comment rulemaking--to enable greater access to these 
services.
    As we also discussed in section II.K. of the final rule, we are 
concerned that direct access of audiologists' services, that is the 
removal of the order requirement for these hearing and balance services 
furnished by audiologists, might lead to payment for services that are 
not medically necessary because the results are not being used by a 
treating physician or NPP in the management of the patient's medical 
condition. Nonetheless, after careful consideration of the interested 
parties' requests, we proposed to amend the regulation at Sec.  
410.32(a)(4) to remove the order requirement for certain audiology 
services furnished personally by an audiologist once per beneficiary 
per 12- month period for non-acute hearing conditions. We also proposed 
to create HCPCS code GAUDX (Audiology service(s) furnished personally 
by an audiologist without a physician/NPP order for non-acute hearing 
assessment unrelated to disequilibrium or hearing aids or examinations 
for the purpose of prescribing, fitting, or changing hearing aids; may 
be performed on an annual basis) to describe audiology services 
furnished without the order of a treating physician or practitioner. 
However, we did not finalize the use of HCPCS code GAUDX to identify 
and pay audiology services furnished without a physician/NPP order, due 
to many commenters' concerns about HCPCS code GAUDX and support for 
instead establishing a new modifier, which increases the specificity 
for billing for audiology services and reduces burden for audiologists. 
As discussed later in this section, we are finalizing the use of a new 
modifier (AB), along with CPT codes audiologists already use, to 
identify audiology services furnished without the order of a physician 
or NPP, and making payment for those services as appropriate using the 
current CPT codes.
    When developing our proposed policy, we considered adding 
audiologists to Sec.  410.32(a)(2), under the provision that permits 
nonphysician practitioners to order diagnostic tests. However, unlike 
audiologists, the practitioners identified in this provision are all 
required to accept payment on an assignment-related basis under section 
1842(b)(18)(C) of the Act and must accept the Medicare payment amount 
as payment in full. Medicare payment for audiology services provided by 
audiologists who do not accept assignment will result in higher out-of-
pocket expense (that is, the balance billed amount) than if they did 
accept assignment. In addition, Medicare Part B does not recognize 
audiologists to treat or manage patients, unlike PAs, NPs or CNSs who 
may bill for E/M services, and for whom Medicare Part B covers services 
and supplies incident to their own professional services as provided in 
the regulation at Sec.  410.26. Rather, because audiology services 
furnished by audiologists include only diagnostic hearing and balance 
assessment services, we concluded that adding audiologists with the 
NPPs listed in Sec.  410.32(a)(2) was inappropriate.
    We also considered alternatively removing the requirement for the 
order of a treating physician or practitioner for audiology services 
without the annual limitation. However, we had concerns about the 
possibility of overutilization of HCPCS code GAUDX (which was not 
finalized) if the results of audiology testing are not used by a 
treating clinician to manage the patient's medical condition. 
Additionally, we do not have the ability to predict the behavioral 
response of audiologists to removal of order requirements. Therefore, 
we believe that adding an annual limitation will serve to address some 
of our concerns of overutilization. To monitor for the appropriate use 
of HCPCS code GAUDX (or modifier AB, as we finalized), we will 
establish system edits through our usual change management process to 
ensure that HCPCS code GAUDX (or, as finalized, services billed on the 
same date of service with modifier AB) is only paid once every 12 
months per each beneficiary. This will also help address program 
integrity concerns about audiologists billing for directly accessed 
services without an order more frequently, furnishing services that are 
not reasonable or necessary for the treatment of the beneficiary's 
illness or injury. Finally, because we are concerned about 
beneficiaries with acute onset conditions that require immediate 
medical intervention, and the potential loss of valuable time for 
medical intervention if the patient sees an audiologist first, we are 
limiting the direct access to audiology services to non-acute hearing 
conditions and conditions for which patients' experience disequilibrium 
symptomology. To help address these safety concerns about direct access 
to audiologists, we want to stress the importance that such hearing 
conditions with a rapid onset and balance

[[Page 70220]]

conditions with disequilibrium symptoms are to be referred directly to 
the primary care physician, ENT or other physician or NPP treating the 
beneficiary.
    We received comments on our proposal to allow beneficiaries direct 
access to audiologists (without an order from the treating physician/
NPP) for non-acute hearing conditions and without disequilibrium 
symptomology once every 12-months using the GAUDX code, as we discussed 
in Section II.K of this final rule. While a few commenters supported 
the use of the GAUDX code, including the built-in safeguards, many 
commenters supported an alternative approach using a new modifier, 
instead. We agreed with commenters that it would be more transparent to 
use a modifier alongside the CPT codes that audiologists already use 
that are paid at PFS rates rather than the proposed GAUDX code and its 
proposed amount. Although several medical organizations and societies 
did not support direct access to audiologists of any kind, a couple of 
commenters, including a medical specialty, agreed with specifically 
limiting the CPT codes to the same 36 codes we proposed that code GAUDX 
would encompass, this is, not including the 14 codes we had removed for 
vestibular function that are used for balance problems; while 
audiologists favored little or no restraints on which CPT codes they 
could bill for hearing and balance assessments. In consideration of the 
comments received, specifically, acknowledging that use of a modifier 
in this instance would be administratively simpler and transparent for 
audiologist practitioners, we are finalizing an alternative policy 
using a new modifier (AB), which still retains the safeguards we 
proposed to allow beneficiaries to directly access audiologists to 
provide non-acute hearing assessments, once every 12 months, using new 
modifier AB.
5. Alternatives Considered Related to the Medicare Shared Savings 
Program
    One purpose of the prior savings adjustment we are adopting in this 
final rule is to mitigate the rebasing ratchet effect on an ACO's 
benchmark in order to improve the incentive for higher spending ACOs to 
reduce spending in advance of eventual rebasing and to encourage their 
renewal for successive agreement periods. It remains a possibility, 
however, that even with this provision, higher spending ACOs that are 
effective in reducing spending may eventually drop out of the Shared 
Savings Program absent the opportunity to participate in a one-sided 
model in the succeeding agreement period. While we project only 1 to 5 
percent of new ACOs dropping out before the end of their first 
agreement period, the dropout rate could reach as high as 30 percent 
during the second agreement period. Signaling that risk will eventually 
be mandatory could prevent the formation of new low-revenue ACOs for 
whom a sharing-only incentive has proven to be effective. We considered 
an alternative in which low revenue ACOs would be permitted to 
participate in a one-sided model for a second full agreement period and 
estimate it would further increase program savings by at least $1 
billion because it would increase retention for the type of ACO that 
has favorably responded to a moderate upside-only incentive in the 
past. This additional savings would result from (1) about a 60 percent 
reduction in the projected dropout rate by the end of the second 
agreement period for new and re-entering ACOs and (2) an assumed 
incremental increase in the share of ACOs that would form as low 
revenue (a type that is assumed to be more effective at reducing 
spending). This alternative estimate is likely conservative, as the 
savings impact could be significantly greater if such signaling 
regarding the second agreement period were to prove to be a key factor 
motivating a significant increase in the overall number of ACOs that 
enter a first agreement period under the Shared Savings Program 
(instead of just the proportion that form as low revenue versus high 
revenue).
    We also considered adding guardrails for calculating shared savings 
by limiting the difference the ACPT may be allowed to show (in either 
direction) from actual national assignable trend. As we discussed in 
the proposed rule, setting a prospective symmetric threshold for 
correcting extreme projection error would automatically correct for 
bias in either direction and prevent the need for CMS to address 
pressure to correct projection error on an ad hoc basis. Public 
pressure to correct for projection error would be strongest in 
situations where actual growth eclipses the ACPT by a significant 
margin. If CMS were assumed to only update the ACPT in years where such 
pressures were magnified because a change will favor ACOs, this impact 
estimate would show $1.3 billion in additional spending over 10 years. 
This estimate presumes that CMS would limit deviation in ACPT from 
actual national trend to no more than 2 percent in years where the ACPT 
understates national trend. The cost of such policy to asymmetrically 
correct for unfavorable projection error would grow if the threshold 
for making such adjustments were assumed to move lower than 2 percent.
6. Alternatives Considered for the Quality Payment Program
    For purposes of the payment impact on the Quality Payment Program, 
we view the performance threshold as a critical factor affecting the 
distribution of payment adjustments. We ran separate final policies RIA 
models based on the actual mean for the CY 2019 performance period/2021 
MIPS payment year and the CY 2020 performance period/2022 MIPS payment 
year with a performance threshold of 86 and 89, respectively which are 
potential values that may be used for the performance threshold for CY 
2023 performance period/2025 MIPS payment year. The models have the 
same mean and median final score as our final policies RIA model since 
the performance threshold does not change the final score. In the 
iteration with a performance threshold of 86, 60.24 percent of MIPS 
eligible clinicians will receive a negative payment adjustment among 
engaged clinicians. In the model with a performance threshold of 89 
points, 63.84 percent of MIPS eligible clinicians will receive a 
negative payment adjustment among those that submit data.
    We report the findings for the baseline RIA model which describes 
the impact for the CY 2023 MIPS performance period/2025 MIPS payment 
year if this regulation did not exist. The baseline RIA model has a 
mean final score of 77.78 and median final score of 79.45. We estimate 
that $699 million will be redistributed through budget neutrality. 
There will be a maximum payment adjustment of 6.1 percent after 
considering the MIPS payment adjustment. In addition, 38.81 percent of 
MIPS eligible clinicians will receive a negative payment adjustment 
among those that submit data.

G. Impact on Beneficiaries

1. Shared Savings Program Provisions
    As noted previously, a number of changes in this final rule 
collectively aim to increase participation in a more sustainable way 
for ACOs serving medically complex, high cost beneficiaries. The 
policies we are adopting in this final rule are designed to reverse 
recent trends where growth has plateaued in the Shared Savings Program, 
higher spending populations are increasingly underrepresented in the 
program since the change to regionally-adjusted benchmarks, and access 
to

[[Page 70221]]

ACOs appears inequitable as evidenced by data indicating that Black (or 
African American), Hispanic, Asian/Pacific Islander, and American 
Indian/Alaska Native beneficiaries are less likely to be assigned to a 
Shared Savings Program ACO than their Non-Hispanic White counterparts, 
and to encourage growth of ACOs in underserved communities.
    Additionally, ACOs have been found to perform better on certain 
patient-experience and performance measures than physician groups 
participating in the MIPS. Increased participation in the Shared 
Savings Program will extend ACO care coordination and quality 
improvement to segments of the beneficiary population that potentially 
have more to benefit from care management, and will stave off the risk 
apparent in the previous trajectory of the Shared Savings Program where 
ACO participants and ACO providers/suppliers may have felt pressure to 
avoid engaging with beneficiaries in high needs communities in order to 
avoid assignment of high cost beneficiaries to their ACO and to improve 
their performance relative to a regional expenditures. In combination 
with the new participation options that are expected attract a mix of 
new participants, targeted provisions such as using an offset factor to 
reduce the negative regional adjustment for ACOs serving high risk and 
high dual populations, aim to increase the reach of ACO care 
coordination to more beneficiaries with high needs.
2. Quality Payment Program
    There are several changes in this final rule that are expected to 
have a positive effect on beneficiaries. In general, we believe that 
many of these changes, including the MVP and subgroup provisions, if 
finalized, will lead to meaningful feedback to beneficiaries on the 
type and scope of care provided by clinicians. Additionally, 
beneficiaries could use the publicly reported information on clinician 
performance in subgroups to identify and choose clinicians in 
multispecialty groups relevant to their care needs. Consequently, we 
anticipate this will improve the quality and value of care provided to 
Medicare beneficiaries. For example, several of the proposed new 
quality measures include patient-reported outcome-based measures, which 
may be used to help patients make more informed decisions about 
treatment options. Patient-reported outcome-based measures provide 
information on a patient's health status from the patient's point of 
view and may also provide valuable insights on factors such as quality 
of life, functional status, and overall disease experience, which may 
not otherwise be available through routine clinical data collection. 
Patient-reported outcome-based measured are factors frequently of 
interest to patients when making decisions about treatment.

H. Estimating Regulatory Familiarization Costs

    If regulations impose administrative costs on private entities, 
such as the time needed to read and interpret this rule, we should 
estimate the cost associated with regulatory review. Due to the 
uncertainty involved with accurately quantifying the number of entities 
that will review the rule, we assumed that the total number of unique 
commenters on this year's final rule will be the number of reviewers of 
last year's rule. We acknowledge that this assumption may understate or 
overstate the costs of reviewing this rule. It is possible that not all 
commenters will review this year's rule in detail, and it is also 
possible that some reviewers will choose not to comment on the rule. 
For these reasons we thought that the number of commenters will be a 
fair estimate of the number of reviewers of this year's final rule.
    We also recognized that different types of entities are in many 
cases affected by mutually exclusive sections of this rule, and 
therefore for the purposes of our estimate we assume that each reviewer 
reads approximately 50 percent of the rule.
    Using the wage information from the BLS for medical and health 
service managers (Code 11-9111), we estimate that the cost of reviewing 
this rule is $115.22 per hour, including overhead and fringe benefits 
https://www.bls.gov/oes/current/oes_nat.htm. Assuming an average 
reading speed, we estimate that it will take approximately 8.0 hours 
for the staff to review half of this rule. For each facility that 
reviews the rule, the estimated cost is $921.76 (8.0 hours x $115.22). 
Therefore, we estimated that the total cost of reviewing this 
regulation is $21,514,800 ($931.35 x 23,341 reviewers on this year's 
proposed rule).

I. Accounting Statement

    As required by OMB Circular A-4 (available at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf), in Tables 160 through 
162 (Accounting Statements), we have prepared an accounting statement. 
This estimate includes growth in incurred benefits from CY 2021 to CY 
2022 based on the FY 2022 President's Budget baseline.
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[GRAPHIC] [TIFF OMITTED] TR18NO22.211

J. Conclusion

    The analysis in the previous sections, together with the remainder 
of this preamble, provided an initial Regulatory Flexibility Analysis. 
The previous analysis, together with the preceding portion of this 
preamble, provides an RIA. In accordance with the provisions of 
Executive Order 12866, this regulation was reviewed by the Office of 
Management and Budget.
    Chiquita Brooks-LaSure, Administrator of the Centers for Medicare & 
Medicaid Services, approved this document on October 26, 2022.

List of Subjects

42 CFR Part 405

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

42 CFR Part 410

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

42 CFR Part 411

    Diseases, Medicare, Reporting and recordkeeping requirements.

42 CFR Part 414

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

42 CFR Part 415

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

42 CFR Part 423

    Administrative practice and procedure, Emergency medical services, 
Health facilities, Health maintenance organizations (HMO), Health 
professionals, 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 455

    Fraud, Grant programs--health, Health facilities, Health 
professions, Investigations, Medicaid, Reporting and recordkeeping 
requirements.
    For the reasons set forth in the preamble, the Centers for Medicare 
& Medicaid Services amends 42 CFR chapter IV as set forth below:

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

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

    Authority:  42 U.S.C. 263a, 405(a), 1302, 1320b-12, 1395x, 
1395y(a), 1395ff, 1395hh, 1395kk, 1395rr, and 1395ww(k).


0
2. Section 405.2463 is amended by revising paragraph (b)(3) 
introductory text to read as follows:


Sec.  405.2463  What constitutes a visit.

* * * * *
    (b) * * *
    (3) Visit--Mental health. A mental health visit is a face-to-face 
encounter or an encounter furnished using interactive, real-time, audio 
and video telecommunications technology or audio-only interactions in 
cases where the patient is not capable of, or does not consent to, the 
use of video technology for the purposes of diagnosis, evaluation or 
treatment of a mental health disorder, including an in-person mental 
health service, beginning 152 days after the end of the COVID-19 public 
health emergency, furnished within 6 months prior to the furnishing of 
the telecommunications service and that an in-person mental health 
service (without the use of telecommunications technology) must be 
provided at least every 12 months while the beneficiary is receiving 
services furnished via telecommunications technology for diagnosis, 
evaluation, or treatment of mental health disorders, unless, for a 
particular 12-month period, the physician or practitioner and patient 
agree that the risks and burdens outweigh the benefits associated with 
furnishing the in-person item or service, and the practitioner 
documents the reasons for this decision in the patient's medical 
record, between an RHC or FQHC patient and one of the following:
* * * * *

0
3. Section 405.2469 is amended by revising paragraph (d) to read as 
follows:


Sec.  405.2469  FQHC supplemental payments.

* * * * *
    (d) Per visit supplemental payment. A supplemental payment required 
under this section is made to the FQHC when a covered face-to-face 
encounter or an encounter furnished using interactive, real-time, audio 
and video telecommunications technology or audio-only interactions in 
cases where beneficiaries do not wish to use or do not have access to 
devices that permit

[[Page 70223]]

a two-way, audio/video interaction for the purposes of diagnosis, 
evaluation or treatment of a mental health disorder occurs between a MA 
enrollee and a practitioner as set forth in Sec.  405.2463. 
Additionally, beginning 152 days after the end of the COVID-19 public 
health emergency, there must be an in-person mental health service 
furnished within 6 months prior to the furnishing of the 
telecommunications service and that an in-person mental health service 
(without the use of telecommunications technology) must be provided at 
least every 12 months while the beneficiary is receiving services 
furnished via telecommunications technology for diagnosis, evaluation, 
or treatment of mental health disorders, unless, for a particular 12-
month period, the physician or practitioner and patient agree that the 
risks and burdens outweigh the benefits associated with furnishing the 
in-person item or service, and the practitioner documents the reasons 
for this decision in the patient's medical record.

PART 410--SUPPLEMENTARY MEDICAL INSURANCE (SMI) BENEFITS

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

    Authority:  42 U.S.C. 1302, 1395m, 1395hh, 1395rr, and 1395ddd.


0
5. Amend Sec.  410.10 by revising paragraphs (l) and (p) to read as 
follows:


Sec.  410.10  Medical and other health services: Included services.

* * * * *
    (l) Pneumococcal, influenza, and COVID-19 vaccines and their 
administration.
* * * * *
    (p) Hepatitis B vaccine and its administration, as defined in Sec.  
410.63(a) of this subchapter.
* * * * *

0
6. Amend Sec.  410.26 by revising paragraph (b)(5) to read as follows:


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

* * * * *
    (b) * * *
    (5) In general, services and supplies must be furnished under the 
direct supervision of the physician (or other practitioner). Designated 
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). Behavioral health services can be furnished under 
general supervision of the physician (or other practitioner) when these 
services or supplies are provided by auxiliary personnel 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. Amend Sec.  410.32 by adding paragraph (a)(4) to read as follows:


Sec.  410.32  Diagnostic x-ray tests, diagnostic laboratory test, and 
other diagnostic tests: Conditions.

    (a) * * *
    (4) Application to audiologists. Except as otherwise provided in 
this paragraph, audiologists may personally furnish diagnostic 
audiology tests for a patient once per patient per 12-month period 
without an order from the physician or nonphysician practitioner 
treating the patient. Such diagnostic audiology tests can be for non-
acute hearing conditions, but may not include audiology services that 
are related to disequilibrium, or hearing aids, or examinations for the 
purpose of prescribing, fitting, or changing hearing aids that are 
outlined at Sec.  411.15(d). Audiology services furnished without an 
order from the treating physician or practitioner are billed using a 
modifier CMS designates for this purpose.
* * * * *

0
8. Amend Sec.  410.37--
0
a. In paragraph (c)(1), by removing the phrase ``under age 50'' and 
adding in its place the phrase ``under age 45'';
0
b. In paragraph (c)(2), by removing the phrase ``individual 50 years of 
age'' and adding in its place the phrase ``individual 45 years of 
age'';
0
c. In paragraph (e)(1), by removing the phrase ``under age 50'' and 
adding in its place the phrase ``under age 45'';
0
d. In paragraph (e)(2), by removing the phrase ``individual 50 years of 
age'' and adding in its place the phrase ``individual 45 years of 
age'';
0
e. In paragraph (i)(1), by removing the phrase ``individual age 50'' 
and adding in its place the phrase ``individual age 45''; and
0
f. By adding paragraph (k).
    The addition reads as follows:


Sec.  410.37  Colorectal cancer screening tests: Conditions for and 
limitations on coverage.

* * * * *
    (k) A complete colorectal cancer screening. Effective January 1, 
2023, colorectal cancer screening tests include a follow-on screening 
colonoscopy after a Medicare covered non-invasive stool-based 
colorectal cancer screening test returns a positive result. The 
frequency limitations described for screening colonoscopy in paragraph 
(g) of this section shall not apply in the instance of a follow-on 
screening colonoscopy test described in this paragraph.

0
9. Amend Sec.  410.40 by revising paragraph (e)(2)(ii) to read as 
follows:


Sec.  410.40  Coverage of ambulance services.

* * * * *
    (e) * * *
    (2) * * *
    (ii) In all cases, the provider or supplier must keep appropriate 
documentation on file and, upon request, present it to CMS. The 
ambulance service must meet all program coverage criteria including 
vehicle and staffing requirements. While a signed physician 
certification statement (PCS), does not alone demonstrate that 
transportation by ground ambulance was medically necessary, the PCS and 
additional documentation from the beneficiary's medical record may be 
used to support a claim that transportation by ground ambulance is 
medically necessary. The PCS and additional documentation must provide 
detailed explanations, that are consistent with the beneficiary's 
current medical condition, that explains the beneficiary's need for 
transport by an ambulance, as described at Sec.  410.41(a), that 
includes observation or other services rendered by qualified ambulance 
personnel, as described in Sec.  410.41(b).
* * * * *

0
10. Amend Sec.  410.57 by--
0
a. Revising the section heading and paragraph (a); and
0
b. Adding paragraph (d).
    The revisions and addition read as follows:


Sec.  410.57  Preventive vaccines.

    (a) Medicare Part B pays for the pneumococcal vaccine and its 
administration.
* * * * *
    (d) Medicare Part B pays for the Hepatitis B vaccine and its 
administration, as defined in Sec.  410.63(a).


Sec.  410.63  [Amended]

0
11. Amend Sec.  410.63 in the introductory text by removing the phrase 
``vaccines (see Sec.  405.310 of this chapter)'' and adding in its 
place the phrase ``vaccines (see Sec.  411.15 of this chapter)''.

[[Page 70224]]


0
12. Amend Sec.  410.67 by--
0
a. In the definition of ``Opioid use disorder treatment service'' 
redesignating paragraphs (1) through (8) as paragraphs (i) through 
(viii) and revising newly redesignated paragraphs (vi) and (vii);
0
b. Revising (d)(2)(i)(B)(2);
0
c. Adding paragraph (d)(2)(iv); and
0
d. Revising paragraph (d)(4)(ii).
    The revisions and addition read as follows:


Sec.  410.67  Medicare coverage and payment of Opioid use disorder 
treatment services furnished by Opioid treatment programs.

* * * * *
    (b) * * *
    Opioid use disorder treatment service * * *
    (vi) Intake activities, including initial medical examination 
services required under Sec.  8.12(f)(2) of this title and initial 
assessment services required under Sec.  8.12(f)(4) of this title. 
Services to initiate treatment with buprenorphine may be furnished via 
two-way interactive audio-video communication technology, as clinically 
appropriate, and in compliance with all applicable requirements. In 
cases where audio-video communications technology is not available to 
the beneficiary, services to initiate treatment with buprenorphine may 
be furnished using audio-only telephone calls if all other applicable 
requirements are met.
    (vii) Periodic assessment services required under Sec.  8.12(f)(4) 
of this title, that are furnished during a face-to-face encounter, 
including services furnished via two-way interactive audio-video 
communication technology, as clinically appropriate, and in compliance 
with all applicable requirements. During the Public Health Emergency, 
as defined in Sec.  400.200 of this chapter, and through the end of CY 
2023, in cases where a beneficiary does not have access to two-way 
audio-video communications technology, periodic assessments can be 
furnished using audio-only telephone calls if all other applicable 
requirements are met.
* * * * *
    (d) * * *
    (2) * * *
    (i) * * *
    (B) * * *
    (2) For CY 2022, the payment amount for methadone is the payment 
amount determined under paragraph (d)(2)(i)(B)(1) of this section for 
methadone in CY 2021. For CY 2023 and subsequent years, the payment 
amount for methadone will be based on the payment amount determined 
under paragraph (d)(2)(i)(B)(1) of this section for methadone in CY 
2021 and updated by the PPI for Pharmaceuticals for Human Use 
(Prescription).
* * * * *
    (iv) Increased level of psychotherapy. For CY 2023 and subsequent 
years, the payment for the non-drug component of the bundled payment 
for an episode of care under paragraph (d)(2) of this section is 
adjusted to reflect the CY 2019 Medicare physician fee schedule non-
facility rate for psychotherapy, 45 minutes with patient.
* * * * *
    (4) * * *
    (ii) The payment amounts for the non-drug component of the bundled 
payment for an episode of care, the adjustments for counseling or 
therapy, intake activities, periodic assessments, and the non-drug 
component of the adjustment for take-home supplies of opioid antagonist 
medications will be geographically adjusted using the Geographic 
Adjustment Factor described in Sec.  414.26 of this subchapter. For 
purposes of this adjustment, OUD treatment services that are furnished 
via an OTP mobile unit will be treated as if they were furnished at the 
physical location of the OTP registered with the Drug Enforcement 
Administration (DEA) and certified by SAMHSA.
* * * * *


Sec.  410.78  [Amended]

0
13. Amend Sec.  410.78 in paragraph (b)(3)(xiv) introductory text, by 
removing the phrase ``the first day'' and adding in its place the 
phrase ``the day that is the 152nd day''.

0
14. Amend Sec.  410.152--
0
a. By revising paragraph (h);
0
b. In paragraph (l)(1), by removing the phrase ``(as specified in 
paragraph (h) of this section)''.
    The revision reads as follows:


Sec.  410.152  Amounts of payment.

* * * * *
    (h) Amount of payment: Preventive vaccine administration. For the 
administration of the preventive vaccines described in paragraph (l)(1) 
of this section, as furnished by providers described in Sec. Sec.  
409.100 and 410.150 of this subchapter, Medicare Part B pays the 
following amounts, except as otherwise provided under this subchapter:
    (1) Effective January 1, 2022, for administration of an influenza, 
hepatitis B or pneumococcal vaccine, $30 per dose.
    (2) Effective January 1, 2022, for administration of a COVID-19 
vaccine, $40 per dose.
    (3) For services furnished on or after January 1 of the year 
following the year in which the Secretary ends the Emergency Use 
Authorization for drugs and biologicals issued pursuant to section 564 
of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360bbb-3), for 
administration of a COVID-19 vaccine, an amount equal to the amount 
that would be paid for the administration of a preventive vaccine 
described in paragraph (h)(1).
    (4) The payment amount for the administration of a preventive 
vaccine described in paragraphs (h)(1) through (3) of this section is 
adjusted to reflect geographic cost variations:
    (i) For services furnished before January 1, 2023, using the 
Geographic Practice Cost Indices (GPCIs) established for the year, as 
described in section 1848(e)(1) of the Act and Sec. Sec.  414.2 and 
414.26 of this subchapter.
    (ii) For services furnished on or after January 1, 2023, using the 
Geographic Adjustment Factor (GAF) established for the year as 
described in section 1848(e)(2) of the Act and Sec. Sec.  414.2 and 
414.26 of this subchapter.
    (5) The payment amount for administration of a preventive vaccine 
described in paragraphs (h)(1) through (3) of this section is updated 
annually using the percentage change in the Medicare Economic Index 
(MEI) as described in section 1842(i)(3) of the Act and Sec.  
405.504(d) of this subchapter.
* * * * *

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

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

    Authority: 42 U.S.C. 1302, 1395w-101 through 1395w-152, 1395hh, 
and 1395nn.


0
16. Amend Sec.  411.15 by revising paragraph (i) to read as follows:


Sec.  411.15  Particular services excluded from coverage.

* * * * *
    (i) Dental services--(1) Basic rule. Dental services in connection 
with the care, treatment, filling, removal, or replacement of teeth, or 
structures directly supporting the teeth.
    (2) Exception. Except for inpatient hospital services in connection 
with such dental procedures when hospitalization is required because 
of--
    (i) The individual's underlying medical condition and clinical 
status; or
    (ii) The severity of the dental procedures.\577\
---------------------------------------------------------------------------

    \577\ Before July 1981, inpatient hospital care in connection 
with dental procedures was covered only when required by the 
patient's underlying medical condition and clinical status.

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

[[Page 70225]]

    (3) Inapplicability. (i) Dental services that are inextricably 
linked to, and substantially related and integral to the clinical 
success of, a certain covered medical service are not excluded; payment 
may be made under Medicare Parts A and B for services furnished in the 
inpatient or outpatient setting. Such services include, but are not 
limited to:
    (A) Dental or oral examination performed as part of a comprehensive 
workup in either the inpatient or outpatient setting prior to Medicare-
covered organ transplant, cardiac valve replacement, or valvuloplasty 
procedures; and, medically necessary diagnostic and treatment services 
to eliminate an oral or dental infection prior to, or contemporaneously 
with, the organ transplant, cardiac valve replacement, or valvuloplasty 
procedure.
    (B) The reconstruction of a dental ridge performed as a result of 
and at the same time as the surgical removal of a tumor.
    (C) The stabilization or immobilization of teeth in connection with 
the reduction of a jaw fracture, and dental splints only when used in 
conjunction with covered treatment of a covered medical condition such 
as dislocated jaw joints.
    (D) The extraction of teeth to prepare the jaw for radiation 
treatment of neoplastic disease.
    (ii) Ancillary services and supplies furnished incident to covered 
dental services are not excluded, and Medicare payment may be made 
under Part A or Part B, as applicable, whether the service is performed 
in the inpatient or outpatient setting, including, but not limited to 
the administration of anesthesia, diagnostic x-rays, use of operating 
room, and other related procedures.
* * * * *

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

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

    Authority:  42 U.S.C. 1302, 1395hh, and 1395rr(b)(l).


0
18. Amend Sec.  414.502 by revising the definitions of ``Data 
collection period'' and ``Data reporting period'' to read as follows:


Sec.  414.502  Definitions.

* * * * *
    Data collection period is the 6 months from January 1 through June 
30 during which applicable information is collected and that precedes 
the data reporting period, except that for the data reporting period of 
January 1, 2023 through March 31, 2023, the data collection period is 
January 1, 2019 through June 30, 2019.
    Data reporting period is the 3-month period, January 1 through 
March 31, during which a reporting entity reports applicable 
information to CMS and that follows the preceding data collection 
period, except that for the data collection period of January 1, 2019 
through June 30, 2019, the data reporting period is January 1, 2023 
through March 31, 2023.
* * * * *


Sec.  414.504  [Amended]

0
19. Amend Sec.  414.504 in paragraph (a)(1) by removing the reference 
``January 1, 2022'' and adding in its place the reference ``January 1, 
2023''.

0
20. Amend Sec.  414.507 by--
0
a. Revising paragraph (d) introductory text and paragraph (d)(5);
0
b. Adding paragraph (d)(8);
0
c. Removing paragraph (f); and
0
d. Redesignating paragraphs (g) and (h) as paragraphs (f) and (g), 
respectively.
    The revisions and addition read as follows:


Sec.  414.507  Payment for clinical diagnostic laboratory tests.

* * * * *
    (d) Phase-in of payment reductions. For years 2018 through 2025, 
the payment rates established under this section for each CDLT that is 
not a new ADLT or new CDLT, may not be reduced by more than the 
following amounts for--
* * * * *
    (5) 2022--0.0 percent of the payment rate established in 2021.
* * * * *
    (8) 2025--15 percent of the payment rate established in 2024.
* * * * *

0
21. Add Sec.  414.523 to subpart G to read as follows:


Sec.  414.523  Payment for laboratory specimen collection fee and 
travel allowance.

    (a) Specimen collection fee and travel allowance. In addition to 
the payment amounts provided under this subpart for CDLTs, new CDLTs, 
and new ADLTs, CMS pays a specimen collection fee, as set forth in 
paragraph (a)(1) of this section, and a travel allowance, as set forth 
in paragraph (a)(2) of this section.
    (1) Payment for specimen collection. Except as provided in 
paragraph (a)(1)(v) of this section and subject to the annual update in 
paragraph (a)(1)(iv) of this section, beginning January 1, 2023, CMS 
pays $8.57 for all specimens collected in one patient encounter, where 
the specimen(s) is:
    (i) Used to perform a CDLT paid under this subpart G;
    (ii) Collected by a trained technician from a Medicare beneficiary 
who is----
    (A) Homebound as described in 42 CFR 424.22(a)(1)(ii).
    (B) A non-hospital inpatient, but only when no qualified personnel 
are available at the facility to collect the specimen;
    (iii) Of the following type--
    (A) Blood specimen collected through venipuncture.
    (B) A urine sample collected by catheterization.
    (iv) Beginning January 1, 2024, CMS updates the specimen collection 
fee amount under paragraph (a)(1) of this section for each calendar 
year by the percent change in the Consumer Price Index for All Urban 
Consumers (CPI-U) (U.S. city average) for the 12-month period ending 
June 30th of the year preceding the update year.
    (v) For a specimen collected from a Medicare beneficiary.
    (2) Payment for travel allowance--(i) General requirement. CMS pays 
a travel allowance, as calculated under paragraph (a)(2)(iii) of this 
section, where the specimen is one for which a specimen collection fee 
is paid under paragraph (a)(1) of this section.
    (ii) Travel allowance basis. CMS pays a travel allowance on the 
following bases:
    (A) Flat-rate travel allowance. The flat-rate travel allowance 
applies when the trained technician travels 20 eligible miles or less 
(calculated in accordance with paragraph (a)(2)(iii)(A) of this 
section) to and from one location for specimen collection from one or 
more Medicare beneficiaries; or
    (B) Per-mile travel allowance. The per-mile travel allowance 
applies when:
    (1) The trained technician travels more than 20 eligible miles 
(calculated in accordance with paragraph (a)(2)(iii)(A) of this 
section) to and from one location for specimen collection from one or 
more Medicare beneficiaries; or
    (2) The trained technician travels to more than one location for 
specimen collection from more than one Medicare beneficiary.
    (iii) Travel allowance amount--(A) Eligible miles. Eligible miles 
begin at the laboratory or the starting point of the technician's 
travel for specimen collection as specified in paragraph (a)(1) of this 
section, and end at the laboratory or the ending point of the 
technician's travel for specimen

[[Page 70226]]

collection as specified in paragraph (a)(1) of this section. Eligible 
miles do not include miles traveled for any purpose unrelated to 
specimen collection as specified in paragraph (a)(1) of this section, 
such as collecting specimens from non-Medicare beneficiaries or for 
personal reasons.
    (B) Travel allowance mileage rate. The travel allowance mileage 
rate is equal to the IRS standard mileage rate plus an amount to cover 
expenses for a trained technician equal to the most recent median 
hourly wage for phlebotomists, as published by the United States Bureau 
of Labor Statistics, divided by 40 to represent an average miles-per-
hour driving speed.
    (C) Travel allowance amount calculation. (1) For the flat-rate 
travel allowance basis specified in paragraph (a)(2)(ii)(A) of this 
section, the travel allowance amount is the travel allowance mileage 
rate specified in paragraph (a)(2)(iii)(B) of this section multiplied 
by ten, divided by the number of beneficiaries for whom a specimen 
collection fee is paid under paragraph (a)(1) of this section.
    (2) For the per-mile travel allowance basis specified in paragraph 
(a)(2)(ii)(B) of this section, the travel allowance amount is the 
number of eligible miles multiplied by the travel allowance mileage 
rate specified in paragraph (a)(2)(iii)(B) of this section, divided by 
the number of beneficiaries for whom a specimen collection fee is paid 
under paragraph (a)(1) of this section.
    (b) [Reserved]


Sec.  414.626  [Amended]

0
22. Amend Sec.  414.626--
0
a. In paragraph (d)(1) introductory text, by removing the phrase ``must 
submit a request form (accessed on the Ambulances Services Center 
website (https://www.cms.gov/Center/Provider-Type/Ambulances-Services-Center.html) to CMS'' and adding in its place the phrase ``must submit 
a request to CMS, in the form and manner specified by CMS,''; and
0
b. In paragraph (e)(2) introductory text, by removing the phrase ``by 
submitting all of the following information:'' and adding in its place 
the phrase ``by submitting a request to CMS, in the form and manner 
specified by CMS, that includes all of the following information:''.


Sec.  414.707  [Amended]

0
23. Amend Sec.  414.707 in paragraph (a)(2)(iii), by removing the 
phrase ``(as determined by the Secretary)'' and adding in its place the 
phrase ``(as defined in Sec.  410.63(a) of this subchapter).''

0
24. Amend Sec.  414.902 by adding the definition of ``Refundable 
single-dose container or single-use package drug'' in alphabetical 
order to read as follows:


Sec.  414.902  Definitions.

* * * * *
    Refundable single-dose container or single-use package drug means a 
single source drug or biological or a biosimilar biological product for 
which payment is made under this part and that is furnished from a 
single-dose container or single-use package based on FDA-approved 
labeling or product information. The term ``refundable single-dose 
container or single-use package drug'' excludes--
    (1) A drug that is a therapeutic radiopharmaceutical, a diagnostic 
radiopharmaceutical, or an imaging agent as identified in the drug's 
FDA-approved labeling.
    (2) A drug for which the FDA-approved labeling for any National 
Drug Code assigned to a billing and payment code of such drug requires 
filtration during the drug preparation process, prior to dilution and 
administration and that any unused portion of such drug after the 
filtration process be discarded after the completion of such filtration 
process.
    (3) A drug approved or licensed by the FDA on or after November 15, 
2021, until the last day of the sixth full quarter for which the drug 
has been marketed (as reported to CMS) for the first National Drug Code 
assigned to the billing and payment code of such drug.
* * * * *


Sec.  414.904  [Amended]

0
25. Amend Sec.  414.904 in paragraph (e)(1), by removing the phrase 
``(as determined by the Secretary)'' and adding in its place the phrase 
``(as defined in Sec.  410.63(a) of this subchapter).''

0
26. Section Sec.  414.940 is added to subpart K to read as follows:


Sec.  414.940  Refund for certain discarded single-dose container or 
single-use package drugs.

    (a) Provision of information to manufacturers--(1) In general. For 
each calendar quarter beginning on or after January 1, 2023, CMS 
reports to each manufacturer (as defined in Sec.  414.802) of a 
refundable single-dose container or single-use package drug the 
following for the calendar quarter:
    (i) Information on the total number of billing units of the billing 
and payment code of such drug, if any, that were discarded during such 
quarter, as determined by the JW modifier (or any successor modifier 
that includes the same data).
    (ii) The refund amount that the manufacturer is liable for pursuant 
to paragraph (a)(3) of this section.
    (iii) For purposes of this section, the term billing unit means the 
identifiable quantity associated with a billing and payment code, as 
established by CMS.
    (2) Exclusion of units of packaged drugs. The total number of 
billing units of the billing and payment code of a refundable single-
dose container or single-use package drug of a manufacturer furnished 
during a calendar quarter for purposes of paragraph (a)(1) of this 
section, and the determination of the estimated total allowed charges 
for the drug in the quarter for purposes of paragraph (c)(2) of this 
section, shall not include such units that are packaged into the 
payment amount for an item or service and are not separately payable.
    (3) Reports. Reports are sent once annually.
    (b) Manufacturer requirement. For each calendar quarter beginning 
on or after January 1, 2023, the manufacturer of a refundable single-
dose container or single-use package drug shall, for such drug, pay a 
refund that is equal to the amount determined in accordance with 
paragraph (c) of this section for such drug for such quarter.
    (1) Refund amounts that the manufacturer is liable for pursuant to 
this paragraph are paid in 12-month intervals, in a manner specified by 
CMS.
    (2) In the case that a disputed report results in a refund amount 
due, refund amounts that the manufacturer is liable for pursuant to 
this paragraph shall be paid no later than 30 days following the 
resolution of the dispute.
    (3) Amounts paid as refunds pursuant to this paragraph shall be 
deposited into the Federal Supplementary Medical Insurance Trust Fund 
established under section 1841 of the Act.
    (c) Refund amount. The amount of the refund specified in this 
paragraph is, with respect to a refundable single-dose container or 
single-use package drug of a manufacturer assigned to a billing and 
payment code for a calendar quarter beginning on or after January 1, 
2023, an amount equal to the estimated amount (if any) by which--
    (1) The product of:
    (i) The total number of units of the billing and payment code for 
such drug that were discarded during such quarter; and
    (ii) The amount of payment determined for such drug or biological 
under section 1847A(b)(1)(B) or (C) of the Act, as applicable, for such 
quarter.

[[Page 70227]]

    (2) Exceeds an amount equal to the applicable percentage of the 
estimated total allowed charges for such drug for the quarter.
    (3) For purposes of paragraph (c)(1)(ii) of this section, the term 
``applicable percentage'' means 10 percent except where an increased 
applicable percentage is applied in paragraph (d) of this section.
    (d) Treatment of drugs that have unique circumstances. For purposes 
of paragraph (c)(1)(ii) of this section, the term ``applicable 
percentage'' means
    (1) 35 percent for drugs that are reconstituted with a hydrogel and 
have variable dosing based on patient-specific characteristics
    (2) [Reserved]
    (e) Dispute resolution. Each manufacturer has an opportunity to 
dispute information in the report described in paragraph (a) of this 
section by submitting an error report as described in this paragraph.
    (1) Error report information. To assert that there have been one or 
more errors in the report, a manufacturer must submit a dispute with 
each asserted error and provide the following information--
    (i) Manufacturer name and address;
    (ii) The name, telephone number, and email address of one or more 
employees or representatives of the manufacturer.
    (iii) For a mathematical calculation error, the specific 
calculation element(s) that the manufacturer disputes and its proposed 
corrected calculation;
    (iv) For any other asserted error, an explanation of the nature of 
the error, how the error affects the refund calculation, an explanation 
of why the manufacturer believes that an error occurred, the proposed 
correction to the error, and an explanation of why CMS should use the 
proposed corrected data.
    (2) Form, manner, and timing of submission. Each manufacturer 
asserting an error must submit its error report(s), in the form and 
manner specified by CMS, within 30-days after the issuance of the 
report.
    (e) Enforcement. (1) Manufacturer audits. Each manufacturer of a 
refundable single-dose container or single-use package drug that is 
required to provide a refund under this section shall be subject to 
periodic audit with respect to such drug and such refunds.
    (2) Civil money penalty. The Secretary shall impose a civil money 
penalty on a manufacturer of a refundable single-dose container or 
single-use package drug who has failed to comply with the requirement 
under paragraph (b) of this section for such drug for a calendar 
quarter in an amount equal to the sum of--
    (i) The amount that the manufacturer would have paid under such 
paragraph with respect to such drug for such quarter; and
    (ii) 25 percent of such amount.

0
27. Section Sec.  414.1305 is amended by--
0
a. Adding the definition of ``Facility-based group'';
0
b. Revising the definitions of ``Facility-based MIPS eligible 
clinician'', ``High priority measure'', ``Multispecialty group'', 
``Single specialty group'', and ``Third party intermediary'' to read as 
follows:


Sec.  414.1305  Definitions.

* * * * *
    Facility-based group means a group that CMS determines meets the 
criteria specified in Sec.  414.1380(e)(2)(ii).
    Facility-based MIPS eligible clinician means an individual MIPS 
eligible clinician who CMS determines meets the criteria specified in 
Sec.  414.1380(e)(2)(i).
* * * * *
    High priority measure means an outcome (including intermediate-
outcome and patient-reported outcome), appropriate use, patient safety, 
efficiency, patient experience, care coordination, opioid, or health 
equity-related quality measure.
* * * * *
    Multispecialty group means a group as defined at Sec.  414.1305 
that consists of two or more specialty types as determined by CMS using 
Medicare Part B claims.
* * * * *
    Single specialty group means a group as defined at Sec.  414.1305 
that consists of one specialty type as determined by CMS using Medicare 
Part B claims.
* * * * *
    Third party intermediary means an entity that CMS has approved 
under Sec.  414.1400 to submit data on behalf of a MIPS eligible 
clinician, group, virtual group, subgroup, or APM Entity for one or 
more of the quality, improvement activities, and Promoting 
Interoperability performance categories.
* * * * *

0
28. Amend Sec.  414.1318 by--
0
a. Revising paragraph (a)(1);
0
b. Adding paragraphs (a)(3) and (4); and
0
c. Revising paragraphs (b) and (c)(2).
    The revisions and addition read as follows:


Sec.  414.1318  Subgroups.

    (a) * * *
    (1) General. Except as provided under paragraph (a)(2) of this 
section and subject to paragraph (a)(4) of this section, for a MIPS 
payment year, determinations of meeting the low-volume threshold 
criteria and special status for a subgroup is determined at the group 
level in accordance with Sec. Sec.  414.1305 and 414.1310.
* * * * *
    (3) Single subgroup per eligible clinician. An individual eligible 
clinician (as represented by a TIN-NPI combination) may register for no 
more than one subgroup within a group's TIN.
    (4) Subgroup determination period. CMS will apply the low-volume 
threshold criteria for a subgroup as described under paragraph (a)(1) 
of this section using information from the initial 12-month segment of 
the applicable MIPS determination period.
    (b) Final score. Except as provided under Sec.  414.1317(b) and 
paragraph (b)(1) of this section, each MIPS eligible clinician in the 
subgroup receives a final score based on the subgroup's combined 
performance.
    (1) CMS will not assign a final score for a subgroup that registers 
and does not submit data as a subgroup for the applicable performance 
period.
    (2) [Reserved]
    (c) * * *
    (2) Individual eligible clinicians that elect to participate in 
MIPS as a subgroup will have their performance assessed at the subgroup 
level across all the MIPS performance categories based on an MVP in 
accordance with Sec.  414.1365. Subgroups that are MVP Participants 
must adhere to an election process described in Sec.  414.1365(b).

0
29. Amend Sec.  414.1340 by adding paragraphs (a)(4) and (b)(4) to read 
as follows:


Sec.  414.1340  Data completeness criteria for the quality performance 
category.

    (a) * * *
    (4) At least 75 percent of the MIPS eligible clinician or group's 
patients that meet the measure's denominator criteria, regardless of 
payer for MIPS payment years 2026 and 2027.
* * * * *
    (b) * * *
    (4) At least 75 percent of the applicable Medicare Part B patients 
seen during the performance period to which the measure applies for 
MIPS payment years 2026 and 2027.
* * * * *

0
30. Amend Sec.  414.1365 by --
0
a. Adding paragraph (b)(2)(iii);
0
b. Revising paragraph (d)(3)(i)(A)(1);
0
c. Adding paragraphs (d)(3)(i)(B)(1) and (2);
0
d. Adding paragraphs (d)(3)(ii)(A) and (B).
    The additions and revisions read as follows:

[[Page 70228]]

Sec.  414.1365  MIPS Value Pathways.

* * * * *
    (b) * * *
    (2) * * *
    (iii) TINs must provide a description of each subgroup that is 
registered.
* * * * *
    (d) * * *
    (3) * * *
    (i) * * *
    (A) * * *
    (1) A subgroup is scored on each selected population health measure 
based on its affiliated group score, if available. If the subgroup's 
affiliated group score is not available, each such measure is excluded 
from the subgroup's total measure achievement points and total 
available measure achievement points.
    (2) [Reserved]
* * * * *
    (B) * * *
    (1) A subgroup is scored on each selected outcomes-based 
administrative claims measure based on its affiliated group score, if 
available. If the subgroup's affiliated group score is not available, 
each such measure will receive zero measure achievement points.
    (2) [Reserved]
    (ii) * * *
    (A) A subgroup is scored on each cost measure included in the MVP 
that it selects and reports based on its affiliated group score for 
each such measure, if available. If the subgroup's affiliated group 
score is not available for a measure, the measure is excluded from the 
subgroup's total measure achievement points and total available measure 
achievement points, as described under Sec.  414.1380(b)(2)(i) through 
(v).
    (B) [Reserved]
* * * * *

0
31. Amend Sec.  414.1380 by--
0
a. Adding paragraph (b)(1)(ii)(D); and
0
b. Revising paragraphs (b)(2)(iv)(E), (b)(4)(ii)(B) and (C), 
(c)(2)(i)(A)(4)(i) and (iii), (c)(3) introductory text, (e)(2) 
introductory text, (e)(2)(ii), (e)(4), (e)(5)(i) and (ii), (e)(6)(iv) 
and (v), and (e)(6)(vi)(A) and (B).
    The addition and revisions read as follow:


Sec.  414.1380  Scoring.

* * * * *
    (b) * * *
    (1) * * *
    (ii) * * *
    (D) Beginning with the CY 2023 performance period/2025 MIPS payment 
year, CMS will calculate a benchmark for an administrative claims 
quality measure using the performance on the measures during the 
current performance period.
* * * * *
    (2) * * *
    (iv) * * *
    (E) The maximum cost improvement score for the 2020, 2021, 2022, 
and 2023 MIPS payment years is zero percentage points. The maximum cost 
improvement score beginning with the 2024 MIPS payment year is 1 
percentage point.
* * * * *
    (4) * * *
    (ii) * * *
    (B) For the 2019 performance period/2021 MIPS payment year through 
the 2022 performance period/2024 MIPS payment year, each required 
measure is worth 10, 20, or 40 points, as specified by CMS. For the 
2023 performance period/2025 MIPS payment year and subsequent years, 
each required measure is worth 10, 15, 25 or 30 points, as specified by 
CMS.
    (C) For the 2019 performance period/2021 MIPS payment year through 
the 2022 performance period/2024 MIPS payment year, each optional 
measure is worth five or ten bonus points, as specified by CMS. For the 
2023 performance period/2025 MIPS payment year and subsequent years, 
each optional measure is worth five bonus points, as specified by CMS.
    (c) * * *
    (2) * * *
    (i) * * *
    (A) * * *
    (4) * * *
    (i) For the 2021 through 2025 MIPS payment years, the MIPS eligible 
clinician is a physical therapist, occupational therapist, clinical 
psychologist, qualified audiologist, qualified speech-language 
pathologist, or a registered dietitian or nutrition professional. In 
the event that a MIPS eligible clinician submits data for the Promoting 
Interoperability performance category, the scoring weight specified in 
paragraph (c)(1) of this section will be applied and its weight will 
not be redistributed.
* * * * *
    (iii) For the 2024 through 2025 MIPS payment years, the MIPS 
eligible clinician is a clinical social worker. In the event that a 
MIPS eligible clinician submits data for the Promoting Interoperability 
performance category, the scoring weight specified in paragraph (c)(1) 
of this section will be applied and its weight will not be 
redistributed.
* * * * *
    (3) Complex patient bonus. For the CY 2020, 2021, 2022, and 2023 
MIPS payment years and associated performance periods, provided that a 
MIPS eligible clinician, group, virtual group or APM Entity submits 
data for at least one MIPS performance category for the applicable 
performance period for the MIPS payment year, a complex patient bonus 
will be added to the final score for the MIPS payment year, as stated 
in paragraphs (c)(3)(i) through (iv) of this section. For the CY 2022 
MIPS performance period/CY 2024 MIPS payment year, provided that a MIPS 
eligible clinician, group, subgroup, virtual group or APM Entity 
submits data for at least one MIPS performance category for the 
applicable performance period for the MIPS payment year, a complex 
patient bonus will be added to the final score for the MIPS payment 
year, if applicable, as described in paragraphs (c)(3)(v) through 
(viii) of this section. Beginning with the CY 2023 MIPS performance 
period/CY 2025 MIPS payment year, provided that a MIPS eligible 
clinician, group, subgroup, virtual group or APM Entity submits data 
for at least one MIPS performance category for the applicable 
performance period for the MIPS payment year, or is a facility-based 
MIPS eligible clinician, a complex patient bonus will be added to the 
final score for the MIPS payment year, if applicable, as described in 
paragraphs (c)(3)(v) through (viii) of this section.
* * * * *
    (e) * * *
    (2) Eligibility for facility-based measurement. A MIPS eligible 
clinician is eligible for facility-based measurement for a MIPS payment 
year if CMS determines the MIPS eligible clinician to be facility-based 
as an individual clinician or as part of a group, or beginning with the 
2023 performance period/2025 MIPS payment year, a virtual group, as 
follows:
* * * * *
    (ii) Facility-based MIPS eligible group determination. A facility-
based MIPS eligible group is a group in which 75 percent or more of its 
eligible clinician NPIs billing under the group's TIN meet the 
requirements under paragraph (e)(2)(i) of this section.
* * * * *
    (4) Data submission for facility-based measurement. There are no 
data submission requirements for a MIPS eligible individual clinician 
to be scored under facility-based measurement. A MIPS eligible group 
must submit data in the improvement activities or Promoting 
Interoperability performance categories in order toto be scored as a 
facility-based MIPS eligible group.

[[Page 70229]]

    (5) * * *
    (i) A facility-based MIPS eligible clinician is scored with 
facility-based measurement using the score derived from the value-based 
purchasing score for the facility at which the clinician provided 
services to the most Medicare beneficiaries during the period the 
claims are drawn from in paragraph (e)(2) of this section. If there is 
an equal number of Medicare beneficiaries treated at more than one 
facility, the value-based purchasing score for the highest scoring 
facility is used.
    (ii) A facility-based MIPS eligible group is scored with facility-
based measurement using the score derived from the value-based 
purchasing score for the facility at which the plurality of clinicians 
identified as facility-based would have had their score determined 
under paragraph (e)(5)(i) of this section.
    (6) * * *
    (iv) Quality. The quality performance category score is established 
by determining the percentile performance of the facility in the value-
based purchasing program for the specified year as described in 
paragraph (e)(1) of this section and awarding a score associated with 
that same percentile performance in the MIPS quality performance 
category score for those MIPS-eligible clinicians who are not eligible 
to be scored using facility-based measurement for the MIPS payment 
year. A MIPS eligible clinician or group receiving a facility-based 
performance score will not earn improvement points based on prior 
performance in the MIPS quality performance category.
    (v) Cost. The cost performance category score is established by 
determining the percentile performance of the facility in the value-
based purchasing program for the specified year as described in 
paragraph (e)(1) of this section and awarding a score associated with 
that same percentile performance in the MIPS cost performance category 
score for those MIPS eligible clinicians who are not eligible to be 
scored using facility-based measurement for the MIPS payment year. A 
MIPS eligible clinician or MIPS eligible group receiving a facility-
based performance score will not earn improvement points based on prior 
performance in the MIPS cost performance category.
* * * * *
    (vi) * * *
    (A) For the CY 2019 MIPS performance period/2021 MIPS payment year, 
through the CY 2021 MIPS performance period/2023 MIPS payment year, a 
MIPS eligible clinician or group receives a higher combined MIPS 
quality and cost performance category score through another MIPS 
submission.
    (B) Beginning with the CY 2022 MIPS performance period/2024 MIPS 
payment year, a MIPS eligible clinician or group receives a higher MIPS 
final score through another MIPS submission.

0
32. Amend Sec.  414.1400 by--
0
a. Revising paragraphs (b)(4)(i)(B), (b)(4)(iii)(A)(3), and 
(e)(1)(i)(B);
0
b. Adding paragraphs (e)(1)(i)(E);
0
c. Revising paragraph (e)(2) introductory text and (e)(3);
0
d. Adding paragraph (e)(5); and
0
e. Revising paragraph (f)(1).
    The revisions and additions read as follows:


Sec.  414.1400  Third party intermediaries.

* * * * *
    (b) * * *
    (4) * * *
    (i) * * *
    (B) For a QCDR measure, the entity must submit for CMS approval 
measure specifications including: Name/title of measure, NQF number (if 
NQF-endorsed), descriptions of the denominator, numerator, and when 
applicable, denominator exceptions, denominator exclusions, risk 
adjustment variables, and risk adjustment algorithms. In addition, no 
later than 15 calendar days following CMS posting of all approved 
specifications for a QCDR measure, the entity must publicly post the 
CMS-approved measure specifications for the QCDR measure (including the 
CMS-assigned QCDR measure ID) and provide CMS with a link to where this 
information is posted.
* * * * *
    (iii) * * *
    (A) * * *
    (3) Beginning with the CY 2022 performance period/2024 MIPS payment 
year, CMS may approve a QCDR measure only if the QCDR measure meets 
face validity. Beginning with the CY 2024 performance period/2026 MIPS 
payment year, a QCDR measure approved for a previous performance year 
must be fully developed and tested, with complete testing results at 
the clinician level, prior to self-nomination.
* * * * *
    (e) * * *
    (1) * * *
    (i) * * *
    (B) The impact to individual clinicians, groups, virtual groups, 
subgroups, or APM Entities, regardless of whether they are 
participating in the program because they are MIPS eligible, 
voluntarily participating, or opting in to participating in the MIPS 
program, and any QCDRs that were granted licenses to the measures of a 
QCDR upon which a CAP has been imposed.
* * * * *
    (E) The communication plan for communicating the impact to the 
parties identified in paragraph (e)(1)(i)(B) of this section.
    (2) CMS may immediately or with advance notice terminate a third 
party intermediary for one or more of the following reasons:
* * * * *
    (3) A data submission that contains data inaccuracies affecting the 
third party intermediary's total clinicians may lead to remedial 
action/termination of the third party intermediary for future program 
year(s) based on CMS discretion.
* * * * *
    (5) Beginning with the CY 2024 performance period/2026 MIPS payment 
year, a QCDR or qualified registry that submits a participation plan as 
required under paragraph (b)(3)(viii) of this section, but does not 
submit MIPS data for the applicable performance period for which they 
self-nominated under paragraph (b)(3)(viii) of this section, will be 
terminated.
    (f) * * *
    (1) The entity must make available to CMS the contact information 
of each MIPS eligible clinician, group, virtual group, subgroup, or APM 
Entity on behalf of whom it submits data. The contact information must 
include, at a minimum, the MIPS eligible clinician, group, virtual 
group, subgroup, or APM Entity phone number, address, and, if 
available, email.
* * * * *

0
33. Amend Sec.  414.1405 by revising paragraph (b)(9) to read as 
follows:


Sec.  414.1405  Payment.

* * * * *
    (b) * * *
    (9) Pursuant to the methodology established at paragraph (g) of 
this section:
    (i) The performance threshold for the 2024 MIPS payment year is 75 
points. The prior period used to determine the performance threshold is 
the 2019 MIPS payment year.
    (ii) The performance threshold for the 2025 MIPS payment year is 75 
points. The prior period used to determine the performance threshold is 
the 2019 MIPS payment year.
* * * * *

0
34. Amend Sec.  414.1415 by--
0
a. Revising paragraph (b)(3);
0
b. Adding paragraph (b)(4); and

[[Page 70230]]

0
c. Revising paragraphs (c)(3)(i)(A) and (c)(7).
    The revisions and addition read as follows:


Sec.  414.1415  Advanced APM criteria.

* * * * *
    (b) * * *
    (3) The quality measures upon which an Advanced APM bases the 
payment in paragraph (b)(1) of this section must include at least one 
measure that is an outcome measure unless CMS determines that there are 
no available or applicable outcome measures included in the MIPS final 
quality measures list for the Advanced APM's first QP Performance 
Period. Beginning January 1, 2020, the included outcome measure must 
satisfy the criteria in paragraph (b)(2) of this section.
    (4) A single quality measure that meets the criteria under both 
paragraphs (b)(2) and (3) of this section may be used to satisfy the 
requirements of paragraph (b)(1) of this section.
    (c) * * *
    (3) * * *
    (i) * * *
    (A) For QP Performance Periods beginning in 2023, 8 percent of the 
average estimated total Medicare Parts A and B revenue of all providers 
and suppliers in participating APM Entities; or
* * * * *
    (7) Medical Home Model 50 eligible clinician limit. Beginning in 
the 2023 QP Performance Period, notwithstanding paragraphs (c)(2) and 
(4) of this section, if an APM Entity participating in a Medical Home 
Model is comprised of more than 50 eligible clinicians, as determined 
by that APM Entity's Participation List on any of the three QP 
determination dates (March 31, June 30, and August 31 of the QP 
Performance Period), the requirements of paragraphs (c)(1) and (3) of 
this section apply.

0
35. Amend Sec.  414.1420 by--
0
a. Revising paragraph (c)(3)(ii);
0
b. Adding paragraph (c)(4); and
0
c. Revising paragraphs (d)(3)(i) and (d)(8).
    The revisions and addition read as follows:


Sec.  414.1420  Other payer advanced APM criteria.

* * * * *
    (c) * * *
    (3) * * *
    (ii) For QP Performance Periods on or after January 1, 2020, use at 
least one measure that is an outcome measure and meets the criteria in 
paragraph (c)(2)(ii) of this section if there is such an applicable 
outcome measure on the MIPS quality measure list.
    (4) A single quality measure that meets the criteria under both 
paragraphs (c)(2) and (3) of this section may be used to satisfy the 
requirements of paragraph (c)(1) of this section.
    (d) * * *
    (3) * * *
    (i) For QP Performance Periods beginning in 2023, 8 percent of the 
total combined revenues from the payer to providers and other entities 
under the payment arrangement if financial risk is expressly defined in 
terms of revenue; or, 3 percent of the expected expenditures for which 
an APM Entity is responsible under the payment arrangement.
* * * * *
    (8) Aligned Other Payer Medical Home Model and Medicaid Medical 
Home Model 50 eligible clinician limit. Beginning with the 2023 QP 
Performance Period, notwithstanding paragraphs (d)(2) and (4) of this 
section, if an APM Entity participating in an Aligned Other Payer 
Medical Home Model or Medicaid Medical Home Model is comprised of 50 or 
more eligible clinicians is comprised of more than 50 eligible 
clinicians, as determined by the information submitted for any of the 
three QP determination dates (March 31, June 30, and August 31 of the 
QP Performance Period) as specified in Sec.  414.1440(e), the 
requirements of paragraphs (d)(1) and (3) of this section apply.

0
36. Amend Sec.  414.1430 by--
0
a. Revising paragraphs (a)(2)(iii);
0
b. Removing the second paragraph (a)(3)(ii);
0
c. Adding paragraphs (a)(3)(iii) and (iv);
0
d. Revising paragraph (a)(4)(iii);
0
e. Adding paragraph (a)(4)(iv); and
0
f. Revising paragraphs (b)(3)(i)(A) and (B), and (b)(4)(i)(A) and (B).
    The revisions and additions read as follows:


Sec.  414.1430  Qualifying APM participant determination: QP and 
partial QP thresholds.

    (a) * * *
    (2) * * *
    (iii) 2023 and 2024: 40 percent.
* * * * *
    (3) * * *
    (iii) 2023 and 2024: 35 percent.
    (iv) 2025 and later: 50 percent.
    (4) * * *
    (iii) 2023 and 2024: 25 percent.
    (iv) 2025 and later: 35 percent.
    (b) * * *
    (3) * * *
    (i) * * *
    (A) 2021 through 2024: 35 percent.
    (B) 2025 and later: 50 percent.
* * * * *
    (4) * * *
    (i) * * *
    (A) 2021 through 2024: 25 percent.
    (B) 2025 and later: 35 percent.
* * * * *

0
37. Amend Sec.  414.1440 by revising paragraph (e)(2) to read as 
follows:


Sec.  414.1440  Qualifying APM participant determination: All-payer 
combination option.

* * * * *
    (e) * * *
    (2) To request a QP determination under the All-Payer Combination 
Option, for each payment arrangement submitted as set forth in 
paragraph (e)(1) of this section, the APM Entity or eligible clinician 
must include:
    (i) The amount of revenue for services furnished through the 
payment arrangement, the total revenue received from all payers except 
those excluded as provided in paragraph (a)(2) of this section, the 
number of patients furnished any service through the arrangement, and 
the total number of patients furnished any services, except those 
excluded as provided in paragraph (a)(2) of this section; and
    (ii) In the case of an APM Entity or eligible clinician requesting 
a QP determination under either a Medicaid Medical Home Model or 
Aligned Other Payer Medical Home Model pursuant to the criteria in 
Sec.  414.1420, information specified by CMS for purposes of compliance 
with the 50 eligible clinician limit specified at Sec.  414.1420(d)(8).
* * * * *


Sec.  414.1450  [Amended]

0
38. Amend Sec.  414.1450(c)(8) by removing the reference ``November 1'' 
and adding in its place the reference ``September 1''.

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

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

    Authority: 42 U.S.C. 1302 and 1395hh.


Sec.  415.140  [Amended]

0
40. Transfer Sec.  415.140 from subpart D to subpart C.

0
41. In Sec.  415.140 in paragraph (a) amend the definition of 
``Substantive portion'' by removing the reference ``2022'' and adding 
in its place the reference ``2022 and 2023''.

[[Page 70231]]

PART 423--VOLUNTARY MEDICARE PRESCRIPTION DRUG BENEFIT

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

    Authority:  42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, 
and 1395hh.

0
43. Amend Sec.  423.160 by revising paragraphs (a)(5)(ii) and (iii) to 
read as follows:


Sec.  423.160  Standards for electronic prescribing.

    (a) * * *
    (5) * * *
    (ii) Prescriber issues 100 or fewer controlled substance 
prescriptions for Part D drugs per calendar year as determined using 
CMS claims data with dates of service as of December 31st of the 
current year.
    (iii) Prescriber has an address in PECOS in the geographic area of 
an emergency or disaster declared by a Federal, State, or local 
government entity. If a prescriber does not have an address in PECOS, 
prescriber has an address in NPPES in the geographic area of an 
emergency or disaster declared by a Federal, State, or local government 
entity.
* * * * *

PART 424--CONDITIONS FOR MEDICARE PAYMENT

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

    Authority:  42 U.S.C. 1302 and 1395hh.

0
45. Amend Sec.  424.57 by adding paragraph (b)(6) to read as follows:


Sec.  424.57  Special payment rules for items furnished by DMEPOS 
suppliers and issuance of DMEPOS supplier billing privileges.

* * * * *
    (b) * * *
    (6) The supplier is in compliance with all conditions of payment in 
paragraph (b) of this section, as well as with paragraph (c)(1)(ii)(A) 
of this section, at the time the item or service is furnished.
* * * * *

0
46. Amend Sec.  424.502 by adding the definitions of ``Director'', 
``Managing organization'' and ``Officer'' in alphabetical order to read 
as follows:


Sec.  424.502  Definitions.

* * * * *
    Director means a director of a corporation, regardless of whether 
the provider or supplier is a non-profit entity. This includes any 
member of the corporation's governing body irrespective of the precise 
title of either the board or the member.
* * * * *
    Managing organization means an entity that exercises operational or 
managerial control over, or that directly or indirectly conducts, the 
day-to-day operations of the provider or supplier, either under 
contract or through some other arrangement.
* * * * *
    Officer means an officer of a corporation, regardless of whether 
the provider or supplier is a non-profit entity.
* * * * *

0
47. Amend Sec.  424.518 by--
0
a. Revising the introductory text;
0
b. Removing paragraph (a)(1)(xviii);
0
c. Adding paragraph (b)(1)(xiv);
0
d. Revising paragraph (c)(1) introductory text; and
0
e. Adding paragraphs (c)(1)(v) and (vi), and (c)(4).
    The revision and additions read as follows:


Sec.  424.518  Screening levels for Medicare providers and suppliers.

    A Medicare contractor is required to screen all initial 
applications, revalidation applications, change of ownership 
applications pursuant to 42 CFR 489.18, applications to add a new 
practice location, and applications to report any new owner (regardless 
of ownership percentage) pursuant to a change of information or other 
enrollment transaction under title 42, based on a CMS assessment of 
risk and assignment to a level of ``limited,'' ``moderate,'' or 
``high.''
* * * * *
    (b) * * *
    (1) * * *
    (xiv) Revalidating skilled nursing facilities (SNFs)
* * * * *
    (c) * * *
    (1) High categorical risk: Provider and supplier categories. CMS 
has designated the following provider and supplier types as ``high'' 
categorical risk:
* * * * *
    (v) Prospective (newly enrolling) (SNFs).
    (vi) Enrolled OTPs that have not been fully and continuously 
certified by SAMHSA since October 23, 2018, DMEPOS suppliers, MDPP 
suppliers, HHAs, and SNFs that are submitting a change of ownership 
application pursuant to 42 CFR 489.18 or reporting any new owner 
(regardless of ownership percentage) pursuant to a change of 
information or other enrollment transaction under title 42.
* * * * *
    (4) Any screening level adjustment under paragraph (c)(3) of this 
section also applies to all other enrolled and prospective providers 
and suppliers that have the same legal business name and tax 
identification number as the provider or supplier for which the 
screening level under paragraph (c)(3) of this section was originally 
raised.
* * * * *

0
48. Amend Sec.  424.530 by--
0
a. Revising paragraphs (a)(2) and (a)(3) introductory text;
0
b. Adding paragraph (a)(3)(iii); and
0
c. Revising paragraph (c).
    The revisions and addition read as follows:


Sec.  424.530  Denial of enrollment in the Medicare program.

    (a) * * *
    (2) Provider or supplier conduct. (i) The provider or supplier, or 
any owner, managing employee, managing organization, officer, director, 
authorized or delegated official, medical director, supervising 
physician, or other health care or administrative or management 
services personnel furnishing services payable by a federal health care 
program, of the provider or supplier is--
    (A) Excluded from the Medicare, Medicaid, and any other Federal 
health care program, as defined in Sec.  1001.2 of this chapter, in 
accordance with section 1128, 1128A, 1156, 1842, 1862, 1867 or 1892 of 
the Act.
    (B) Debarred, suspended, or otherwise excluded from participating 
in any other Federal procurement or nonprocurement activity in 
accordance with section 2455 of the Federal Acquisition Streamlining 
Act (FASA).
    (ii) The individuals and organizations identified in paragraph 
(a)(2)(i) of this section include, but are not limited to, W-2 
employees and contracted individuals and organizations of the provider 
or supplier.
    (3) Felonies. The provider, supplier, or any owner, managing 
employee, managing organization, officer, or director of the provider 
or supplier was, within the preceding 10 years, convicted (as that term 
is defined in 42 CFR 1001.2) of a Federal or State felony offense that 
CMS determines is detrimental to the best interests of the Medicare 
program and its beneficiaries.
* * * * *
    (iii) The individuals and organizations identified in paragraph 
(a)(3) of this section include, but are not limited to, W-2 employees 
and contracted individuals and organizations of the provider or 
supplier.
* * * * *
    (c) Reversal of denial. If the denial was due to adverse activity 
(sanction,

[[Page 70232]]

exclusion, debt, felony) of an owner, managing employee, managing 
organization, officer, director, authorized or delegated official, 
medical director, supervising physician, or other health care personnel 
of the provider or supplier furnishing Medicare reimbursable services, 
the denial may be reversed if the provider or supplier terminates and 
submits proof that it has terminated its business relationship with 
that individual or organization within 30 days of the denial 
notification.
* * * * *

0
49. Amend Sec.  424.535 by--
0
a. Revising paragraphs (a)(2) and (a)(3)(i);
0
b. Adding paragraph (a)(3)(iv); and
0
c. Revising paragraphs (a)(12)(ii) and (e).
    The revisions and addition read as follows:


Sec.  424.535  Revocation of enrollment in the Medicare program.

    (a) * * *
    (2) Provider or supplier conduct. (i) The provider or supplier, or 
any owner, managing employee, managing organization, officer, director, 
authorized or delegated official, medical director, supervising 
physician, or other health care or administrative or management 
services personnel furnishing services payable by a Federal health care 
program, of the provider or supplier is--
    (A) Excluded from the Medicare, Medicaid, and any other Federal 
health care program, as defined in Sec.  1001.2 of this chapter, in 
accordance with section 1128, 1128A, 1156, 1842, 1862, 1867 or 1892 of 
the Act.
    (B) Debarred, suspended, or otherwise excluded from participating 
in any other Federal procurement or nonprocurement activity in 
accordance with the FASA implementing regulations and the Department of 
Health and Human Services nonprocurement common rule at 45 CFR part 76.
    (ii) The individuals and organizations identified in paragraph 
(a)(2)(i) of this section include, but are not limited to, W-2 
employees and contracted individuals and organizations of the provider 
or supplier.
    (3) * * *
    (i) The provider, supplier, or any owner, managing employee, 
managing organization, officer, or director of the provider or supplier 
was, within the preceding 10 years, convicted (as that term is defined 
in 42 CFR 1001.2) of a Federal or State felony offense that CMS 
determines is detrimental to the best interests of the Medicare program 
and its beneficiaries.
* * * * *
    (iv) The individuals and organizations identified in paragraph 
(a)(3) of this section include, but are not limited to, W-2 employees 
and contracted individuals and organizations of the provider or 
supplier.
* * * * *
    (12) * * *
    (ii) Medicare may not revoke unless and until a provider or 
supplier has exhausted all applicable appeal rights or the timeframe 
for filing an appeal has expired without the provider or supplier 
filing an appeal.
* * * * *
    (e) Reversal of revocation. If the revocation was due to adverse 
activity (sanction, exclusion, or felony) against the provider's or 
supplier's owner, managing employee, managing organization, officer, 
director, authorized or delegated official, medical director, 
supervising physician, or other health care or administrative or 
management services personnel furnishing services payable by a Federal 
health care program, the revocation may be reversed if the provider or 
supplier terminates and submits proof that it has terminated its 
business relationship with that individual within 30 days of the 
revocation notification.
* * * * *

PART 425--MEDICARE SHARED SAVINGS PROGRAM

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

    Authority:  42 U.S.C. 1302, 1306, 1395hh, and 1395jjj.

0
51. Amend Sec.  425.20 by--
0
a. In paragraph (2) of the definition of ``Experienced with 
performance-based risk Medicare ACO initiatives'' by removing the 
phrase ``prior to the agreement start date'';
0
b. In paragraph (2) of the definition of ``Inexperienced with 
performance-based risk Medicare ACO initiatives'' by removing the 
phrase ``prior to the agreement start date'';
0
c. In the definition of ``Performance-based risk Medicare ACO 
initiative'':
0
i. Revising paragraph (1)(i);
0
ii. Redesignating paragraphs (1)(ii) and (1)(iii) as paragraphs 
(1)(iii) and (1)(iv); and
0
iii. Adding a new paragraph (1)(ii).
    The revision and addition read as follows:


Sec.  425.20  Definitions.

* * * * *
    Performance-based risk Medicare ACO initiative
* * * * *
    (1) * * *
    (i) For performance years beginning prior to January 1, 2023, BASIC 
track (Levels A through E).
    (ii) For performance years beginning January 1, 2023 and in 
subsequent years, BASIC track (Levels C through E).
* * * * *

0
52. Amend Sec.  425.100 by--
0
a. Revising paragraph (b)(1); and
0
b. Adding paragraph (d).
    The revision and addition read as follows:


Sec.  425.100  General.

* * * * *
    (b) * * *
    (1) The ACO meets or exceeds the applicable minimum savings rate 
established under Sec. Sec.  425.604, 425.605 (except as provided under 
Sec.  425.605(h)), 425.606, 425.609, or 425.610.
* * * * *
    (d) An ACO is eligible to receive advance investment payments if it 
meets the criteria under Sec.  425.630(b).


Sec.  425.204  [Amended]

0
53. Amend Sec.  425.204(g) introductory text by removing the references 
``Sec.  425.601, Sec.  425.602, or Sec.  425.603'' and adding in its 
place the references ``Sec. Sec.  425.601, 425.602, 425.603, or 
425.652''.


Sec.  425.224  [Amended]

0
54. Amend Sec.  425.224(a)(4) by removing the phrase ``, or a one-sided 
model of the BASIC track's glide path (Level A or Level B),''.

0
55. Amend Sec.  425.302 by adding paragraph (a)(3)(iv) to read as 
follows:


Sec.  425.302  Program requirements for data submission and 
certifications.

    (a) * * *
    (3) * * *
    (iv) That the ACO has moved all advance investment payments 
received during that performance year into a designated advance 
investment payments account established under Sec.  425.630(e) and the 
advance investment payments have been dispersed only for allowable 
uses.
* * * * *

0
56. Amend Sec.  425.308 by adding paragraph (b)(8) to read as follows:


Sec.  425.308  Public reporting and transparency.

* * * * *
    (b) * * *
    (8) Information, updated annually about the ACO's use of advance

[[Page 70233]]

investment payments under Sec.  425.630, for each performance year, 
including the following:
    (i) The ACO's spend plan.
    (ii) The total amount of any advance investment payments received 
from CMS.
    (iii) An itemization of how advance investment payments were spent 
during the year, including expenditure categories, the dollar amounts 
spent on the various categories, any changes to the spend plan 
submitted under Sec.  425.630(d), and such other information as may be 
specified by CMS.
* * * * *

0
57. Section 425.310 is revised to read as follows:


Sec.  425.310  Marketing requirements.

    (a) Requirements. Marketing materials and activities must:
    (1) Use template language developed by CMS, if available.
    (2) Not be used in a discriminatory manner or for discriminatory 
purposes.
    (3) Comply with Sec.  425.304 regarding beneficiary incentives.
    (4) Not be materially inaccurate or misleading.
    (b) Monitoring. (1) CMS may request the submission of marketing 
materials and activities at any time. If CMS determines that the 
marketing materials and activities do not comply with the requirements 
of paragraph (a) of this section, CMS will issue written notice of 
disapproval to the ACO.
    (2) The ACO shall discontinue, and require its ACO participants, 
ACO providers/suppliers, and other individuals or entities performing 
functions or services related to ACO activities to discontinue, use of 
any marketing materials or activities disapproved by CMS.
    (c) Sanctions. Failure to comply with this section will subject the 
ACO to the penalties set forth in Sec.  425.216, termination under 
Sec.  425.218, or both.

0
58. Amend Sec.  425.312 by revising paragraph (a)(2) to read as 
follows:


Sec.  425.312  Beneficiary notifications.

    (a) * * *
    (2) Notification of the information specified in paragraph (a)(1) 
of this section must be carried out through the following methods:
    (i) By an ACO participant posting signs in all of its facilities.
    (ii) By an ACO participant making standardized written notices 
available upon request in all settings in which beneficiaries receive 
primary care services.
    (iii) In the case of an ACO that has selected preliminary 
prospective assignment with retrospective reconciliation, by the ACO or 
ACO participant providing each fee-for-service beneficiary with a 
standardized written notice at least once during an agreement period in 
the form and manner specified by CMS. The standardized written notice 
must be furnished to all fee-for-service beneficiaries prior to or at 
the first primary care service visit during the first performance year 
in which the beneficiary receives a primary care service from an ACO 
participant.
    (iv) In the case of an ACO that has selected prospective 
assignment, by the ACO or ACO participant providing each prospectively 
assigned beneficiary with a standardized written notice at least once 
during an agreement period in the form and manner specified by CMS. The 
standardized written notice must be furnished during the performance 
year for which the beneficiary is prospectively assigned to the ACO.
    (v) Following the provision of the standardized written notice to a 
beneficiary, as specified in paragraphs (a)(2)(iii) and (iv) of this 
section, the ACO or ACO participant must provide a verbal or written 
follow-up communication to the beneficiary.
    (A) The follow-up communication must occur no later than the 
earlier of the beneficiary's next primary care service visit or 180 
days from the date the standardized written notice was provided.
    (B) The ACO must retain a record of all beneficiaries receiving the 
follow-up communication, and the form and manner in which the 
communication was made available to the beneficiary. The ACO must make 
these records available to CMS upon request.
* * * * *

0
59. Amend Sec.  425.316 by adding paragraph (e) to read as follows:


Sec.  425.316  Monitoring of ACOs.

* * * * *
    (e) Monitoring ACO eligibility for advance investment payments. (1) 
CMS monitors an ACO that receives advance investment payments pursuant 
to Sec.  425.630 for changes in its ACO participants that may cause the 
ACO to no longer meet the standards specified in Sec.  425.630(b)(3) 
and (4).
    (2) If CMS determines during any performance year of the agreement 
period that an ACO receiving advance investment payments is experienced 
with performance-based risk Medicare ACO initiatives or is a high 
revenue ACO, CMS--
    (i) Will cease payment of advance investment payments, starting the 
quarter after the ACO became experienced with performance-based risk 
Medicare ACO initiatives or became a high revenue ACO.
    (ii) May take compliance action as specified in Sec. Sec.  425.216 
and 425.218.
    (3) If an ACO remains an ACO experienced with performance-based 
risk Medicare ACO initiatives or a high revenue ACO after a deadline 
specified by CMS pursuant to compliance action under this section, the 
ACO must repay all advance investment payments it received. CMS will 
provide written notification to the ACO of the amount due and the ACO 
must pay such amount no later than 90 days after the receipt of such 
notification.

0
60. Amend Sec.  425.400 by--
0
a. Revising paragraph (c)(1)(vi) introductory text; and
0
b. Adding paragraph (c)(1)(vii).
    The addition and revision read as follows:


Sec.  425.400  General.

* * * * *
    (c) * * *
    (1) * * *
    (vi) For the performance year starting on January 1, 2022 as 
follows:
* * * * *
    (vii) For the performance year starting on January 1, 2023, and 
subsequent performance years as follows:
    (A) CPT codes:
    (1) 96160 and 96161 (codes for administration of health risk 
assessment).
    (2) 99201 through 99215 (codes for office or other outpatient visit 
for the evaluation and management of a patient).
    (3) 99304 through 99318 (codes for professional services furnished 
in a nursing facility; professional services or services reported on an 
FQHC or RHC claim identified by these codes are excluded when furnished 
in a SNF).
    (4) 99319 through 99340 (codes for patient domiciliary, rest home, 
or custodial care visit).
    (5) 99341 through 99350 (codes for evaluation and management 
services furnished in a patient's home).
    (6) 99354 and 99355 (add-on codes, for prolonged evaluation and 
management or psychotherapy services beyond the typical service time of 
the primary procedure; when the base code is also a primary care 
service code under this paragraph (c)(1)(vii)).
    (7) 99421, 99422, and 99423 (codes for online digital evaluation 
and management).
    (8) 99424, 99425, 99426, and 99427 (codes for principal care 
management services).

[[Page 70234]]

    (9) 99437, 99487, 99489, 99490 and 99491 (codes for chronic care 
management).
    (10) 99439 (code for non-complex chronic care management).
    (11) 99483 (code for assessment of and care planning for patients 
with cognitive impairment).
    (12) 99484, 99492, 99493 and 99494 (codes for behavioral health 
integration services).
    (13) 99495 and 99496 (codes for transitional care management 
services).
    (14) 99497 and 99498 (codes for advance care planning; services 
identified by these codes furnished in an inpatient setting are 
excluded).
    (B) HCPCS codes:
    (1) G0402 (code for the Welcome to Medicare visit).
    (2) G0438 and G0439 (codes for the annual wellness visits).
    (3) G0442 (code for alcohol misuse screening service).
    (4) G0443 (code for alcohol misuse counseling service).
    (5) G0444 (code for annual depression screening service).
    (6) G0463 (code for services furnished in ETA hospitals).
    (7) G0506 (code for chronic care management).
    (8) G2010 (code for the remote evaluation of patient video/images).
    (9) G2012 and G2252 (codes for virtual check-in).
    (10) G2058 (code for non-complex chronic care management).
    (11) G2064 and G2065 (codes for principal care management 
services).
    (12) G0317, G0318, and G2212 (codes for prolonged office or other 
outpatient visit for the evaluation and management of a patient).
    (13) G2214 (code for psychiatric collaborative care model).
    (14) G3002 and G3003 (codes for chronic pain management).
    (C) Primary care service codes include any CPT code identified by 
CMS that directly replaces a CPT code specified in paragraph 
(c)(1)(vii)(A) of this section or a HCPCS code specified in paragraph 
(c)(1)(vii)(B) of this section, when the assignment window (as defined 
in Sec.  425.20) for a benchmark or performance year includes any day 
on or after the effective date of the replacement code for payment 
purposes under FFS Medicare.
* * * * *

0
61. Amend Sec.  425.402 by adding paragraph (f) to read as follows:


Sec.  425.402  Basic assignment methodology.

* * * * *
    (f) For performance year 2023 and subsequent performance years, CMS 
employs the following process to identify services furnished by FQHCs, 
RHCs, Method II CAHs, and ETA hospitals for purposes of the beneficiary 
assignment methodology under this section.
    (1) Prior to the start of the performance year and periodically 
during the performance year, CMS will determine the CCNs for all FQHCs, 
RHCs, Method II CAHs, and ETA hospitals enrolled under the TIN of an 
ACO participant, including all CCNs with an active enrollment in 
Medicare and all CCNs with a deactivated enrollment status.
    (2) CMS uses the CCNs identified in paragraph (f)(1) of this 
section in determining assignment for the performance year.
    (3) CMS accounts for changes in CCN enrollment status during the 
performance year as follows:
    (i) If a CCN with no prior Medicare claims experience enrolls under 
the TIN of an ACO participant after the ACO certifies its ACO 
participant list for a performance year as required under Sec.  
425.118(a)(3), CMS will consider services furnished by that CCN in 
determining beneficiary assignment to the ACO for the applicable 
performance year for ACOs under preliminary prospective assignment with 
retrospective reconciliation.
    (ii) Services furnished by a CCN with a deactivated enrollment 
status that is enrolled under an ACO participant at the start of a 
performance year will be considered in determining beneficiary 
assignment to the ACO for the applicable performance year or benchmark 
year.
    (iii) If a CCN enrolled under the TIN of an ACO participant at the 
start of the performance year enrolls under a different TIN during a 
performance year, CMS will continue to treat services billed by the CCN 
as services furnished by the ACO participant it was enrolled under at 
the start of the performance year for purposes of determining 
beneficiary assignment to the ACO for the applicable performance year.

0
62. Amend Sec.  425.512--
0
a. In paragraph (a)(4)(i)(A), by removing the phrase ``quality 
performance score'' and adding in its place the phrase ``health equity 
adjusted quality performance score'';
0
b. By revising paragraph (a)(4)(ii) and adding paragraph (a)(4)(iii);
0
c. By revising paragraphs (a)(5)(i) and (ii) and adding paragraph 
(a)(5)(iii)
0
d. By adding paragraph (a)(6);
0
e. By redesignating paragraph (b) as paragraph (c);
0
f. By adding new paragraph (b);
0
g. In newly redesignated paragraph (c)(2) introductory text, by 
removing the reference ``paragraph (b)(1) of this section'' and adding 
in its place the reference ``paragraph (c)(1) of this section''; and
0
h. By revising newly redesignated paragraph (c)(3).
    The revisions and additions read as follows:


Sec.  425.512  Determining the ACO quality performance standard for 
performance years beginning on or after January 1, 2021.

    (a) * * *
    (4) * * *
    (ii) For performance year 2023, CMS designates an alternative 
quality performance standard for an ACO that does not meet the criteria 
described in paragraphs (a)(2) or (a)(4)(i) of this section, but 
reports quality data via the APP established under Sec.  414.1367 of 
this subchapter according to the method of submission established by 
CMS and achieves a quality performance score equivalent to or higher 
than the 10th percentile of the performance benchmark on at least one 
of the four outcome measures in the APP measure set.
    (iii) If an ACO does not report any of the ten CMS Web Interface 
measures or any of the three eCQMs/MIPS CQMs and does not administer a 
CAHPS for MIPS survey under the APP, the ACO will not meet the quality 
performance standard or the alternative quality performance standard.
* * * * *
    (5) * * *
    (i) Except as specified in paragraph (a)(2) of this section, CMS 
designates the quality performance standard as the ACO reporting 
quality data via the APP established under Sec.  414.1367 of this 
subchapter, according to the method of submission established by CMS 
and the following:
    (A) For performance year 2024--
    (1) Achieving a health equity adjusted quality performance score 
that is equivalent to or higher than the 40th percentile across all 
MIPS Quality performance category scores, excluding entities/providers 
eligible for facility-based scoring, or
    (2) If the ACO reports the three eCQMs/MIPS CQMs in the APP measure 
set, meeting the data completeness requirement at Sec.  414.1340 of 
this subchapter and the case minimum requirement at Sec.  414.1380 of 
this subchapter for all three eCQMs/MIPS CQMs, achieving a quality 
performance score equivalent to or higher than the 10th percentile of 
the performance benchmark on at least one of the four outcome measures 
in the APP measure

[[Page 70235]]

set and a quality performance score equivalent to or higher than the 
40th percentile of the performance benchmark on at least one of the 
remaining five measures in the APP measure set.
    (B) For performance year 2025 and subsequent years--Achieving a 
health equity adjusted quality performance score that is equivalent to 
or higher than the 40th percentile across all MIPS Quality performance 
category scores, excluding entities/providers eligible for facility-
based scoring.
    (ii) CMS designates an alternative quality performance standard for 
an ACO that does not meet the criteria described in paragraphs (a)(2) 
or (a)(5)(i) of this section, but reports quality data via the APP 
established under Sec.  414.1367 of this subchapter according to the 
method of submission established by CMS and achieves a quality 
performance score equivalent to or higher than the 10th percentile of 
the performance benchmark on at least one of the four outcome measures 
in the APP measure set.
    (iii) An ACO will not meet the quality performance standard or the 
alternative quality performance standard if:
    (A) For performance year 2024, the ACO does not report any of the 
ten CMS Web Interface measures or any of the three eCQMs/MIPS CQMs and 
does not administer a CAHPS for MIPS survey under the APP.
    (B) For performance year 2025 and subsequent years, the ACO does 
not report any of the three eCQMs/MIPS CQMs and does not administer a 
CAHPS for MIPS survey under the APP.
    (6) For performance years 2022, 2023, and 2024, CMS designates a 
performance benchmark and minimum attainment level for each CMS Web 
Interface measure and establishes a point scale for the measure as 
described in Sec.  425.502(b).
    (b) Calculation of ACO's health equity adjusted quality performance 
score for performance year 2023 and subsequent performance years.
    (1) For an ACO that reports the three eCQMs/MIPS CQMs in the APP 
measure set, meeting the data completeness requirement at Sec.  
414.1340 of this subchapter for all three eCQMs/MIPS CQMs, and 
administers the CAHPS for MIPS survey, CMS calculates the ACO's health 
equity adjusted quality performance score as the sum of the ACO's MIPS 
Quality performance category score for all measures in the APP measure 
set and the ACO's health equity adjustment bonus points calculated in 
accordance with paragraph (b)(2) of this section. The sum of these 
values may not exceed 100 percent.
    (2) CMS calculates the ACO's health equity adjustment bonus points 
as follows:
    (i) For each measure in the APP measure set, CMS groups an ACO's 
performance into the top, middle, or bottom third of ACO measure 
performers by reporting mechanism.
    (ii) CMS assigns values to the ACO for its performance on each 
measure as follows:
    (A) Values of four, two, or zero for each measure for which the 
ACO's performance places it in the top, middle, or bottom third of ACO 
measure performers, respectively.
    (B) Values of zero for each measure that CMS does not evaluate 
because the ACO does not meet the case minimum or the minimum sample 
size for the measure.
    (iii) CMS sums the values assigned to the ACO according to 
paragraph (b)(2)(ii) of this section, to calculate the ACO's measure 
performance scaler.
    (iv) CMS calculates an underserved multiplier for the ACO.
    (A) CMS determines the proportion ranging from zero to one of the 
ACO's assigned beneficiary population for the performance year that is 
considered underserved based on the highest of --
    (1) The proportion of the ACO's assigned beneficiaries residing in 
a census block group with an Area Deprivation Index national percentile 
rank of at least 85; or
    (2) The proportion of the ACO's assigned beneficiaries that are 
enrolled in the Medicare Part D low-income subsidy (LIS); or are dually 
eligible for Medicare and Medicaid.
    (B) If the proportion determined in accordance with paragraph 
(b)(2)(iv)(A) of this section is lower than 20 percent, the ACO is 
ineligible for health equity adjustment bonus points.
    (v) Except as specified in paragraph (b)(2)(iv)(B) of this section, 
CMS calculates the ACO's health equity adjustment bonus points as the 
product of the measure performance scaler determined under paragraph 
(b)(2)(iii) of this section and the underserved multiplier determined 
under paragraph (b)(2)(iv) of this section. If the product of these 
values is greater than 10, the value of the ACO's health equity 
adjustment bonus points is set equal to 10.
    (3) The ACO's health equity adjusted quality performance score, 
determined in accordance with paragraphs (b)(1) and (b)(2) of this 
section, is used as follows:
    (i) In determining whether the ACO meets the quality performance 
standard as specified under paragraphs (a)(4)(i)(A), (a)(5)(i)(A)(1), 
and (a)(5)(i)(B) of this section.
    (ii) In determining the final sharing rate for calculating shared 
savings payments under the BASIC track in accordance with Sec.  
425.605(d), and under the ENHANCED track in accordance with Sec.  
425.610(d), for an ACO that meets the alternative quality performance 
standard by meeting the criteria specified in paragraphs (a)(4)(ii) or 
(a)(5)(ii) of this section.
    (iii) In determining the shared loss rate for calculating shared 
losses under the ENHANCED track in accordance with Sec.  425.610(f), 
for an ACO that meets the quality performance standard established in 
paragraphs (a)(2), (a)(4)(i) and (a)(5)(i) of this section or the 
alternative quality performance standard established in paragraphs 
(a)(4)(ii) or (a)(5)(ii) of this section.
    (iv) In determining the quality performance score for an ACO 
affected by extreme and uncontrollable circumstances as described in 
paragraphs (c)(3)(ii) and (iii) of this section.
    (c) * * *
    (3) If the ACO reports quality data via the APP and meets data 
completeness and case minimum requirements:
    (i) For performance years 2021 and 2022, CMS will use the higher of 
the ACO's quality performance score or the equivalent of the 30th 
percentile MIPS Quality performance category score across all MIPS 
Quality performance category scores, excluding entities/providers 
eligible for facility-based scoring, for the relevant performance year.
    (ii) For performance year 2023, CMS will use the higher of the 
ACO's health equity adjusted quality performance score or the 
equivalent of the 30th percentile MIPS Quality performance category 
score across all MIPS Quality performance category scores, excluding 
entities/providers eligible for facility-based scoring, for the 
relevant performance year.
    (iii) For performance year 2024 and subsequent performance years, 
CMS will use the higher of the ACO's health equity adjusted quality 
performance score or the equivalent of the 40th percentile MIPS Quality 
performance category score across all MIPS Quality performance category 
scores, excluding entities/providers eligible for facility-based 
scoring, for the relevant performance year.
* * * * *

0
63. Amend Sec.  425.600--
0
a. By revising the heading of paragraph (a)(4)(i)(B);
0
b. In paragraph (a)(4)(i)(B)(2)(ii), revise the last sentence.

[[Page 70236]]

0
c. In paragraph (a)(4)(i)(B)(2)(iv), by removing the phrase ``For 
performance year 2023, the ACO is automatically advanced to the level 
of the BASIC track's glide path to which the ACO would have 
automatically advanced absent the election to maintain its 
participation level for performance year 2022'' and adding in its place 
the phrase ``Except as provided in paragraph (a)(4)(i)(B)(2)(vi) of 
this section, for performance year 2023, the ACO is automatically 
advanced to the level of the BASIC track's glide path to which the ACO 
would have automatically advanced absent the election to maintain its 
participation level for performance year 2022'';
0
d. By adding paragraphs (a)(4)(i)(B)(2)(vi) and (vii), and 
(a)(4)(i)(C);
0
e. In paragraph (a)(4)(ii), by removing the reference ``paragraph (d) 
of this section'' and adding in its place the references ``paragraph 
(d) or paragraph (g)(2) of this section, as applicable'';
0
f. In paragraph (d) introductory text, by removing the phrase 
``beginning on July 1, 2019, and in subsequent years'' and adding in 
its place the phrase ``beginning on or after July 1, 2019, and before 
January 1, 2024'';
0
g. By revising paragraph (e) introductory text;
0
h. In paragraph (f)(4)(ii), by removing the reference ``Sec.  
425.601(f)'' and adding in its place the references ``Sec. Sec.  
425.601(f), and 425.656(d)'';
0
i. In paragraph (f)(4)(iii), by removing the reference ``Sec.  
425.601(e)'' and adding in its place the references ``Sec. Sec.  
425.601(e), and 425.652(c)(2)''; and
0
j. By adding paragraphs (g) and (h).
    The revisions and additions read as follows:


Sec.  425.600  Selection of risk model.

    (a) * * *
    (4) * * *
    (i) * * *
    (B) Glide path progression for agreement periods beginning on or 
after July 1, 2019 and before January 1, 2024. * * *
    (2) * * *
    (ii) * * * In the case of an ACO that elects to remain in Level B 
for an additional performance year pursuant to the second sentence of 
paragraph (a)(4)(i)(B)(2)(ii) of this section, and except as provided 
in paragraph (a)(4)(i)(B)(2)(vi) of this section, the ACO is 
automatically advanced to Level E under paragraph (a)(4)(i)(A)(5) of 
this section at the start of performance year 4 (or performance year 5 
in the case of ACOs entering an agreement period beginning on July 1, 
2019).
* * * * *
    (vi) For performance year 2023, an ACO in Level A under paragraph 
(a)(4)(i)(A)(1) of this section or in Level B under paragraph 
(a)(4)(i)(A)(2) of this section may elect to remain in the same level 
of the BASIC track's glide path in which it participated during 
performance year 2022, for the remainder of the agreement period, 
unless the ACO elects to transition to a higher level of risk and 
potential reward within the BASIC track's glide path as provided in 
Sec.  425.226(a)(2)(i). If the ACO does not elect to remain under Level 
A or Level B, for performance year 2023, the ACO is automatically 
advanced to the next level of the BASIC track's glide path to which the 
ACO would have automatically advanced absent any election to maintain 
its participation level for performance year 2022 under paragraph 
(a)(4)(i)(B)(2)(iv) of this section and, if applicable, the election to 
maintain its participation level for performance year 2021 under 
paragraph (a)(4)(i)(B)(2)(iii) of this section, unless the ACO elects 
to transition to a higher level of risk and potential reward within the 
BASIC track's glide path as provided in Sec.  425.226(a)(2)(i). A 
voluntary election by an ACO under this paragraph must be made in the 
form and manner and by a deadline established by CMS.
    (vii) For performance year 2024, an ACO with an agreement period 
beginning January 1, 2023 in Level A under paragraph (a)(4)(i)(A)(1) of 
this section or in Level B under paragraph (a)(4)(i)(A)(2) of this 
section may elect to remain in the same level of the BASIC track's 
glide path in which it participated during performance year 2023, for 
the remainder of the agreement period, unless the ACO elects to 
transition to a higher level of risk and potential reward within the 
BASIC track's glide path as provided in Sec.  425.226(a)(2)(i). If the 
ACO does not elect to remain under Level A or Level B, for performance 
year 2024, the ACO is automatically advanced to the next level of the 
BASIC track's glide path, unless the ACO elects to transition to a 
higher level of risk and potential reward within the BASIC track's 
glide path as provided in Sec.  425.226(a)(2)(i). A voluntary election 
by an ACO under this paragraph must be made in the form and manner and 
by a deadline established by CMS.
* * * * *
    (C) Glide path progression for agreement periods beginning on or 
after January 1, 2024. (1) Level of glide path entry. An ACO eligible 
to enter the BASIC track's glide path as determined under paragraph 
(g)(1) of this section may elect to enter its agreement period at any 
of the levels of risk and potential reward available under paragraphs 
(a)(4)(i)(A)(1) through (5) of this section.
    (2) Automatic advancement. An ACO is automatically advanced to the 
next level of the BASIC track's glide path at the start of each 
subsequent performance year of the agreement period, if a higher level 
of risk and potential reward is available under the BASIC track, except 
as follows:
    (i) The ACO elects to transition to a higher level of risk and 
potential reward within the BASIC track's glide path as provided in 
Sec.  425.226(a)(2)(i).
    (ii) The ACO elects to maintain its level of participation as 
provided in paragraph (a)(4)(i)(C)(3) of this section.
    (iii) The ACO is automatically advanced to Level E pursuant to 
paragraph (h)(2)(i) of this section.
    (3) Election to remain under a one-sided model. An eligible ACO 
that enters the BASIC track's glide path at Level A under paragraph 
(a)(4)(i)(A)(1) of this section and is currently at Level A may elect 
to remain in Level A under paragraph (a)(4)(i)(A)(1) of this section 
for all subsequent performance years of the agreement period.
    (i) To be eligible to participate under Level A of the BASIC track 
as described in this paragraph, the ACO must meet the following 
requirements: the ACO is participating in its first agreement period 
under the BASIC track under paragraph (a)(4) of this section, and is 
not participating in an agreement period under the BASIC track as a 
renewing ACO (as defined at Sec.  425.20) or a re-entering ACO (as 
defined in Sec.  425.20) that previously participated in the BASIC 
track's glide path under paragraph (a)(4) of this section; and the ACO 
is inexperienced with performance-based risk Medicare ACO initiatives 
(as defined in Sec.  425.20).
    (ii) A voluntary election by an ACO under this paragraph 
(a)(4)(i)(C)(3) must be made in the form and manner and by a deadline 
established by CMS.
    (iii) The ACO's election to remain in Level A applies for the 
entirety of the agreement period, unless the ACO elects to transition 
to a higher level of risk and potential reward within the BASIC track's 
glide path as provided in Sec.  425.226(a)(2)(i).
    (4) Prior to entering performance-based risk, an ACO must meet all 
requirements to participate under performance-based risk, including 
establishing an adequate repayment mechanism as specified under Sec.  
425.204(f) and selecting a MSR/MLR from the options specified under 
Sec.  425.605(b).

[[Page 70237]]

    (5) If the ACO fails to meet the requirements to participate under 
performance-based risk under paragraph (a)(4)(i)(C)(4) of this section, 
the agreement is terminated.
    (6) If, in accordance with Sec.  425.226(a)(2)(i), the ACO elects 
to transition to a higher level of risk and reward available under 
paragraphs (a)(4)(i)(A)(3) through (5) of this section, then the 
automatic transition to levels of higher risk and reward specified in 
paragraph (a)(4)(i)(C)(2) of this section applies to all subsequent 
performance years of the agreement period.
* * * * *
    (e) For performance years beginning on or after July 1, 2019 and 
before January 1, 2024, CMS monitors low revenue ACOs identified as 
experienced with performance-based risk Medicare ACO initiatives, 
during an agreement period in the BASIC track, for changes in the 
revenue of ACO participants that would cause the ACO to be considered a 
high revenue ACO and ineligible for participation in the BASIC track. 
If the ACO meets the definition of a high revenue ACO (as specified in 
Sec.  425.20)--
* * * * *
    (g) For agreement periods beginning on or after January 1, 2024, 
CMS determines an ACO's eligibility for the Shared Savings Program 
participation options specified in paragraph (a) of this section as 
follows:
    (1) If an ACO is determined to be inexperienced with performance-
based risk Medicare ACO initiatives, the ACO may enter either the BASIC 
track's glide path at any of the levels of risk and potential reward 
under paragraphs (a)(4)(i)(A)(1) through (5) of this section, or the 
ENHANCED track under paragraph (a)(3) of this section.
    (i) An ACO that is inexperienced with performance-based risk 
Medicare ACO initiatives may participate under the BASIC track's glide 
path for a maximum of two agreement periods, as specified in paragraph 
(a)(4)(i)(C) of this section.
    (ii) An ACO that enters an agreement under the BASIC track's glide 
path at either Level A under paragraph (a)(4)(i)(A)(1) of this section 
or Level B under paragraph (a)(4)(i)(A)(2) of this section is deemed to 
have completed one agreement under the BASIC track's glide path and is 
only eligible to enter a second agreement under the BASIC track's glide 
path if the ACO continues to meet the definition of inexperienced with 
performance-based risk Medicare ACO initiatives and satisfies either of 
the following:
    (A) The ACO is the same legal entity as a current or previous ACO 
that previously entered into a participation agreement for 
participation in the BASIC track's glide path only one time.
    (B) For a new ACO identified as a re-entering ACO, the ACO in which 
the majority of the new ACO's participants were participating 
previously entered into a participation agreement for participation in 
the BASIC track's glide path only one time.
    (iii) An ACO that is determined to be inexperienced with 
performance-based risk Medicare ACO initiatives but is not eligible to 
enter the BASIC track's glide path as specified in paragraph 
(a)(4)(i)(C) of this section may enter either the BASIC track Level E 
under paragraph (a)(4)(i)(A)(5) of this section for all performance 
years of the agreement period, or the ENHANCED track under paragraph 
(a)(3) of this section.
    (2) If an ACO is determined to be experienced with performance-
based risk Medicare ACO initiatives, the ACO may enter either the BASIC 
track Level E under paragraph (a)(4)(i)(A)(5) of this section for all 
performance years of the agreement period, or the ENHANCED track under 
paragraph (a)(3) of this section.
    (h)(1) For performance years beginning on or after January 1, 2024, 
CMS monitors ACOs identified as inexperienced with performance-based 
risk Medicare ACO initiatives and participating in the BASIC track 
under a one-sided model during an agreement period pursuant to an 
election under paragraph (a)(4)(i)(B)(2)(vi), paragraph 
(a)(4)(i)(B)(2)(vii), or paragraph (a)(4)(i)(C)(3) of this section for 
changes to their certified list of ACO participants that would cause 
the ACO to be considered experienced with performance-based risk 
Medicare ACO initiatives and ineligible for participation in a one-
sided model.
    (2) If the ACO meets the definition of experienced with 
performance-based risk Medicare ACO initiatives (under Sec.  425.20)--
    (i) The ACO is permitted to complete the performance year for which 
it met the definition of experienced with performance-based risk 
Medicare ACO initiatives in a one-sided model of the BASIC track, but 
is ineligible to continue participation in the one-sided model after 
the end of that performance year if it continues to meet the definition 
of experienced with performance-based risk Medicare ACO initiatives. 
The ACO will be automatically advanced to Level E within the BASIC 
track under paragraph (a)(4)(i)(A)(5) of this section at the start of 
the next performance year and will remain in Level E for all subsequent 
performance years of the agreement period; and
    (ii) Prior to entering performance-based risk, the ACO must meet 
all requirements to participate under performance-based risk, including 
establishing an adequate repayment mechanism as specified under Sec.  
425.204(f) and selecting a MSR/MLR from the options specified under 
Sec.  425.605(b), in accordance with paragraph (a)(4)(i)(B)(2)(v) of 
this section or paragraph (a)(4)(i)(C)(4) of this section, as 
applicable. If the ACO fails to meet the requirements to participate 
under performance-based risk, the agreement is terminated in accordance 
with paragraph (a)(4)(i)(B)(3) of this section or paragraph 
(a)(4)(i)(C)(5) of this section, as applicable.

0
64. Amend Sec.  425.601 by--
0
a. Revising the section heading, and paragraphs (a)(1)(i) and 
(c)(2)(i);
0
b. In paragraph (d) introductory text, by removing the dash at the end 
of the paragraph, and adding a colon in its place;
0
c. In paragraph by (d)(1)(iv), by removing the semicolon at the end of 
paragraph, and adding a period in its place;
0
d. In paragraph (d)(2), by removing ``; and'', and adding a period in 
its place;
0
e. Removing paragraph (d)(3);
0
f. In paragraph (f)(5)(ii), by removing the reference ``paragraph 
(f)(4)(i) of this section'', and adding in its place the reference 
``paragraph (f)(5)(i) of this section''; and
0
g. In paragraph (f)(5)(iv), by removing the references ``paragraphs 
(f)(1) and (2) of this section'', and adding in their place the 
references ``paragraphs (f)(1) through (3) of this section''.
    The revisions read as follows:


Sec.  425.601  Establishing, adjusting, and updating the benchmark for 
agreement periods beginning on or after July 1, 2019, and before 
January 1, 2024.

* * * * *
    (a) * * *
    (1) * * *
    (i) This calculation excludes indirect medical education (IME) and 
disproportionate share hospital (DSH) payments, and the supplemental 
payment for IHS/Tribal hospitals and Puerto Rico hospitals.
* * * * *
    (c) * * *
    (2) * * *
    (i) Excludes IME and DSH payments, and the supplemental payment for 
IHS/Tribal hospitals and Puerto Rico hospitals; and
* * * * *

0
65. Amend Sec.  425.605--

[[Page 70238]]

0
a. By revising paragraph (a) introductory text, paragraphs (a)(1)(i) 
and (ii), paragraph(a)(2) introductory text, and paragraphs (a)(5)(i) 
and (a)(6);
0
b. By adding paragraph (b)(2)(ii)(E);
0
c. By revising paragraphs (b)(3), and (c)(2);
0
d. In paragraph (d)(1) introductory text, by removing the reference 
``Sec.  425.600(d)'' and adding in its place the references ``Sec.  
425.600(d) or Sec.  425.600(g)'';
0
e. By revising the heading of (d)(1)(i)(A)(2);
0
f. By adding paragraphs (d)(1)(i)(A)(3) and (4);
0
g. By revising paragraph (d)(1)(i)(B)(1);
0
h. By revising the heading of paragraph (d)(1)(ii)(A)(2);
0
i. By adding paragraphs (d)(1)(ii)(A)(3) and (4);
0
j. By revising paragraph (d)(1)(ii)(B)(1);
0
k. By revising the heading of paragraph (d)(1)(iii)(A)(2);
0
l. By adding paragraphs (d)(1)(iii)(A)(3) and (4);
0
m. By revising paragraph (d)(1)(iii)(B)(1);
0
n. In paragraph (d)(1)(iii)(D)(2), by removing the reference ``Sec.  
425.601'' and adding in its place the references ``Sec.  425.601 or 
Sec.  425.652'';
0
o. By revising the heading of paragraph (d)(1)(iv)(A)(2);
0
p. By adding paragraphs (d)(1)(iv)(A)(3) and (4);
0
q. By revising paragraph (d)(1)(iv)(B)(1);
0
r. In paragraph (d)(1)(iv)(D)(2), by removing the reference ``Sec.  
425.601'' and adding in its place the references ``Sec.  425.601 or 
Sec.  425.652'';
0
s. By revising the heading of paragraph (d)(1)(v)(A)(2);
0
t. By adding paragraphs (d)(1)(v)(A)(3) and (4);
0
u. By revising paragraph (d)(1)(v)(B)(1);
0
v. In paragraph (d)(1)(v)(D)(2), by removing the reference ``Sec.  
425.601'' wherever it appears and adding in its place the references 
``Sec.  425.601 or Sec.  425.652'';
0
w. In paragraph (d)(2), by removing the reference ``Sec.  425.600(d)'' 
and adding in its place the references ``Sec.  425.600(d) or Sec.  
425.600(g)''; and
0
x. By adding paragraph (h).
    The revisions and additions read as follows:


Sec.  425.605  Calculation of shared savings and losses under the BASIC 
track.

    (a) General rules. For each performance year, CMS determines 
whether the estimated average per capita Medicare Parts A and B fee-
for-service expenditures for Medicare fee-for-service beneficiaries 
assigned to the ACO are above or below the updated benchmark determined 
under Sec.  425.601 or Sec.  425.652, as applicable. In order to 
qualify for a shared savings payment under the BASIC track, or to be 
responsible for sharing losses with CMS, an ACO's average per capita 
Medicare Parts A and B fee-for-service expenditures for its assigned 
beneficiary population for the performance year must be below or above 
the updated benchmark, respectively, by at least the minimum savings or 
loss rate under paragraph (b) of this section except as provided in 
paragraph (h) of this section.
    (1) * * *
    (i) For agreement periods beginning before January 1, 2024:
    (A) Positive adjustments in prospective HCC risk scores are subject 
to a cap of 3 percent.
    (B) This cap is the maximum increase in risk scores for each 
agreement period, such that any positive adjustment between BY3 and any 
performance year in the agreement period cannot be larger than 3 
percent.
    (ii) For agreement periods beginning on January 1, 2024, and in 
subsequent years:
    (A) Positive adjustments in prospective HCC risk scores are subject 
to a cap equal to the ACO's aggregate growth in demographic risk scores 
between BY3 and the performance year (positive or negative) plus 3 
percentage points.
    (B) The cap described in paragraph (a)(1)(ii)(A) of this section 
will apply to prospective HCC risk score growth for a population 
described in paragraph (a)(2) of this section only if the ACO's 
aggregate growth in prospective HCC risk scores between BY3 and the 
performance year across all of the populations described in paragraph 
(a)(2) of this section exceeds this cap. If the cap described in 
paragraph (a)(1)(ii)(A) of this section is determined to apply, the 
value of the cap is the maximum increase in risk scores for the 
applicable performance year, such that any positive adjustment between 
BY3 and the performance year cannot be larger than the value of the cap 
for any of the populations described in paragraph (a)(2) of this 
section.
    (C) The aggregate growth in demographic risk scores for purposes of 
paragraph (a)(1)(ii)(A) of this section and the aggregate growth in 
prospective HCC risk scores for purposes of paragraph (a)(1)(ii)(B) of 
this section is calculated by taking a weighted average of the growth 
in demographic risk scores or prospective HCC risk scores, as 
applicable, across the populations described in paragraph (a)(2) of 
this section. When calculating the weighted average growth in 
demographic risk scores or prospective HCC risk scores, as applicable, 
the weight applied to the growth in risk scores (expressed as a ratio 
of the ACO's performance year risk score to the ACO's BY3 risk score) 
for each Medicare enrollment type is equal to the product of the 
historical benchmark expenditures for that enrollment type and the 
performance year person years for that enrollment type.
    (2) In risk adjusting the benchmark as described in Sec. Sec.  
425.601(a)(10) and 425.652(a)(10), CMS makes separate adjustments for 
each of the following populations of beneficiaries:
* * * * *
    (5) * * *
    (i) These calculations exclude indirect medical education (IME) and 
disproportionate share hospital (DSH) payments, and the supplemental 
payment for IHS/Tribal hospitals and Puerto Rico hospitals.
* * * * *
    (6) In order to qualify for a shared savings payment, the ACO's 
average per capita Medicare Parts A and B fee-for-service expenditures 
for the performance year must be below the applicable updated benchmark 
by at least the minimum savings rate established for the ACO under 
paragraph (b) of this section except as provided in paragraph (h) of 
this section.
    (b) * * *
    (2) * * *
    (ii) * * *
    (E) Automatic transition from Level A to Level E of the BASIC 
track's glide path under Sec.  425.600(h)(2).
    (3) Except as provided in paragraph (h) of this section, in order 
to qualify for a shared savings payment, an ACO's average per capita 
Medicare Parts A and B fee-for-service expenditures for its assigned 
beneficiary population for the performance year must be below its 
updated benchmark by at least the MSR established for the ACO.
* * * * *
    (c) * * *
    (2) For performance years beginning on or after January 1, 2021. To 
qualify for shared savings, an ACO must--
    (i) Meet either the minimum savings rate requirement established 
under paragraph (b) of this section, or the criteria described in 
paragraph (h) of this section;
    (ii) Meet either the quality performance standard or alternative 
quality performance standard established under Sec.  425.512; and

[[Page 70239]]

    (iii) Otherwise maintain its eligibility to participate in the 
Shared Savings Program under this part.
    (d) * * *
    (1) * * *
    (i) * * *
    (A) * * *
    (2) For performance years beginning on January 1, 2021, or January 
1, 2022. * * *
    (3) For the performance year beginning on January 1, 2023. An ACO 
that meets all the requirements for receiving shared savings payments 
under the BASIC track, Level A, receives a shared savings payment equal 
to a percentage of all the savings under the updated benchmark (up to 
the performance payment limit described in paragraph (d)(1)(i)(B) of 
this section). The percentage is as follows:
    (i) 40 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(4)(i).
    (ii) 40 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(4)(ii).
    (4) For performance years beginning on or after January 1, 2024. An 
ACO that meets all the requirements for receiving shared savings 
payments under the BASIC track, Level A, receives a shared savings 
payment equal to a percentage of all the savings under the updated 
benchmark (up to the performance payment limit described in paragraph 
(d)(1)(i)(B) of this section). Except as provided in paragraph (h) of 
this section, the percentage is as follows:
    (i) 40 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(5)(i).
    (ii) 40 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(5)(ii).
    (B) * * *
    (1) If an ACO qualifies for savings by meeting or exceeding the 
MSR, or as provided in paragraph (h) of this section, the final sharing 
rate specified in paragraph (d)(1)(i)(A) of this section applies to an 
ACO's savings on a first dollar basis.
* * * * *
    (ii) * * *
    (A) * * *
    (2) For performance years beginning on January 1, 2021, or January 
1, 2022. * * *
    (3) For the performance year beginning on January 1, 2023. An ACO 
that meets all the requirements for receiving shared savings payments 
under the BASIC track, Level B, receives a shared savings payment equal 
to a percentage of all the savings under the updated benchmark (up to 
the performance payment limit described in paragraph (d)(1)(ii)(B) of 
this section). The percentage is as follows:
    (i) 40 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(4)(i).
    (ii) 40 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(4)(ii).
    (4) For performance years beginning on or after January 1, 2024. An 
ACO that meets all the requirements for receiving shared savings 
payments under the BASIC track, Level B, receives a shared savings 
payment equal to a percentage of all the savings under the updated 
benchmark (up to the performance payment limit described in paragraph 
(d)(1)(ii)(B) of this section). Except as provided in paragraph (h) of 
this section, the percentage is as follows:
    (i) 40 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(5)(i).
    (ii) 40 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(5)(ii).
    (B) * * *
    (1) If an ACO qualifies for savings by meeting or exceeding the 
MSR, or as provided in paragraph (h) of this section, the final sharing 
rate specified in paragraph (d)(1)(ii)(A) of this section applies to an 
ACO's savings on a first dollar basis.
* * * * *
    (iii) * *
    (A) * * *
    (2) For performance years beginning on January 1, 2021, or January 
1, 2022. * * *
    (3) For the performance year beginning on January 1, 2023. An ACO 
that meets all the requirements for receiving shared savings payments 
under the BASIC track, Level C, receives a shared savings payment equal 
to a percentage of all the savings under the updated benchmark (up to 
the performance payment limit described in paragraph (d)(1)(iii)(B) of 
this section). The percentage is as follows:
    (i) 50 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(4)(i).
    (ii) 50 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(4)(ii).
    (4) For performance years beginning on or after January 1, 2024. An 
ACO that meets all the requirements for receiving shared savings 
payments under the BASIC track, Level C, receives a shared savings 
payment equal to a percentage of all the savings under the updated 
benchmark (up to the performance payment limit described in paragraph 
(d)(1)(iii)(B) of this section). Except as provided in paragraph (h) of 
this section, the percentage is as follows:
    (i) 50 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(5)(i).
    (ii) 50 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(5)(ii).
    (B) * * *
    (1) If an ACO qualifies for savings by meeting or exceeding the 
MSR, or as provided in paragraph (h) of this section, the final sharing 
rate specified in paragraph (d)(1)(iii)(A) of this section applies to 
an ACO's savings on a first dollar basis.
* * * * *
    (iv) * * *
    (A) * * *
    (2) For performance years beginning on January 1, 2021, or January 
1, 2022. * * *
    (3) For the performance year beginning on January 1, 2023. An ACO 
that meets all the requirements for receiving shared savings payments 
under the BASIC track, Level D, receives a shared savings payment equal 
to a percentage of all the savings under the updated benchmark (up to 
the performance payment limit described in paragraph (d)(1)(iv)(B) of 
this section). The percentage is as follows:
    (i) 50 percent for an ACO that meets the quality performance 
standard by

[[Page 70240]]

meeting the criteria specified in Sec.  425.512(a)(2) or (a)(4)(i).
    (ii) 50 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(4)(ii).
    (4) For performance years beginning on or after January 1, 2024. An 
ACO that meets all the requirements for receiving shared savings 
payments under the BASIC track, Level D, receives a shared savings 
payment equal to a percentage of all the savings under the updated 
benchmark (up to the performance payment limit described in paragraph 
(d)(1)(iv)(B) of this section). Except as provided in paragraph (h) of 
this section, the percentage is as follows:
    (i) 50 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(5)(i).
    (ii) 50 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(5)(ii).
    (B) * * *
    (1) If an ACO qualifies for savings by meeting or exceeding the 
MSR, or as provided in paragraph (h) of this section, the final sharing 
rate specified in paragraph (d)(1)(iv)(A) of this section applies to an 
ACO's savings on a first dollar basis.
* * * * *
    (v) * * *
    (A) * * *
    (2) For performance years beginning on January 1, 2021, or January 
1, 2022. * * *
    (3) For the performance year beginning on January 1, 2023. An ACO 
that meets all the requirements for receiving shared savings payments 
under the BASIC track, Level E, receives a shared savings payment equal 
to a percentage of all the savings under the updated benchmark (up to 
the performance payment limit described in paragraph (d)(1)(v)(B) of 
this section). The percentage is as follows:
    (i) 50 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(4)(i).
    (ii) 50 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(4)(ii).
    (4) For performance years beginning on or after January 1, 2024. An 
ACO that meets all the requirements for receiving shared savings 
payments under the BASIC track, Level E, receives a shared savings 
payment equal to a percentage of all the savings under the updated 
benchmark (up to the performance payment limit described in paragraph 
(d)(1)(v)(B) of this section). Except as provided in paragraph (h) of 
this section, the percentage is as follows:
    (i) 50 percent for an ACO that that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(5)(i).
    (ii) 50 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(5)(ii).
    (B) * * *
    (1) If an ACO qualifies for savings by meeting or exceeding the 
MSR, or as provided in paragraph (h) of this section, the final sharing 
rate specified in paragraph (d)(1)(v)(A) of this section applies to an 
ACO's savings on a first dollar basis.
* * * * *
    (h) Calculation of shared savings for certain BASIC track ACOs not 
meeting MSR requirement. An ACO that does not meet the minimum savings 
rate requirement established under paragraph (b) of this section but 
meets the other criteria described in paragraphs (c)(2)(ii) and (iii) 
of this section may qualify for a shared savings payment as provided in 
this paragraph.
    (1) To qualify for a shared savings payment under this paragraph, 
an ACO must meet all of the following criteria:
    (i) The ACO has average per capita Medicare Parts A and B fee-for-
service expenditures for the performance year below the updated 
benchmark determined under Sec.  425.652.
    (ii) The ACO is a low revenue ACO as defined in Sec.  425.20 as 
determined at the time of financial reconciliation for the performance 
year.
    (iii) The ACO has at least 5,000 assigned beneficiaries for the 
relevant performance year as determined at the time of financial 
reconciliation for the performance year.
    (iv) The ACO is participating in an agreement period beginning on 
January 1, 2024, or in subsequent years.
    (2) The ACO's shared savings payment will be calculated as 
described in paragraph (d) of this section according to the ACO's 
applicable level of the BASIC track with the exception that the final 
sharing rate applied will equal one-half of the applicable percentage 
described in paragraph (d)(1)(i)(A)(4), (d)(1)(ii)(A)(4), 
(d)(1)(iii)(A)(4), (d)(1)(iv)(A)(4), or (d)(1)(v)(A)(4) of this 
section.

0
66. Amend Sec.  425.610--
0
a. In paragraph (a) introductory text, by removing the references 
``Sec.  425.601, Sec.  425.602 or Sec.  425.603'' and adding in its 
place the references ``Sec.  425.601, 425.602, 425.603, or 425.652'';
0
b. By revising paragraphs (a)(2)(i) and (ii), (a)(3) introductory text, 
(a)(6)(i) and (d)(2) paragraph heading;
0
c. By adding paragraphs (d)(3) and (4);
0
d. By revising the heading of paragraph (f)(2);
0
e. By adding paragraphs (f)(3) and (4); and
0
f. In paragraph (g), by removing the references ``Sec.  425.601, Sec.  
425.602 or Sec.  425.603'' and adding in its place the references 
``Sec.  425.601, 425.602, 425.603 or 425.652''.
    The revisions and additions read as follows:


Sec.  425.610  Calculation of shared savings and losses under the 
ENHANCED track.

    (a) * * *
    (2) * * *
    (i) For agreement periods beginning before January 1, 2024:
    (A) Positive adjustments in prospective HCC risk scores are subject 
to a cap of 3 percent.
    (B) This cap is the maximum increase in risk scores for each 
agreement period, such that any positive adjustment between BY3 and any 
performance year in the agreement period cannot be larger than 3 
percent.
    (ii) For agreement periods beginning on January 1, 2024, and in 
subsequent years:
    (A) Positive adjustments in prospective HCC risk scores are subject 
to a cap equal to the ACO's aggregate growth in demographic risk scores 
between BY3 and the performance year (positive or negative) plus 3 
percentage points.
    (B) The cap described in paragraph (a)(2)(ii)(A) of this section 
will apply to prospective HCC risk score growth for a population 
described in paragraph (a)(3) of this section only if the ACO's 
aggregate growth in prospective HCC risk scores between BY3 and the 
performance year across all of the populations described in paragraph 
(a)(3) of this section exceeds this cap. If the cap described in 
paragraph (a)(2)(ii)(A) of this section is determined to apply, the 
value of the cap is the maximum increase in risk scores for the 
applicable performance year, such that any positive adjustment between 
BY3

[[Page 70241]]

and the performance year cannot be larger than the value of the cap for 
any of the populations described in paragraph (a)(3) of this section.
    (C) The aggregate growth in demographic risk scores for purposes of 
paragraph (a)(2)(ii)(A) of this section and the aggregate growth in 
prospective HCC risk scores for purposes of paragraph (a)(2)(ii)(B) of 
this section is calculated by taking a weighted average of the growth 
in demographic risk scores or prospective HCC risk scores, as 
applicable, across the populations described in paragraph (a)(3) of 
this section. When calculating the weighted average growth in 
demographic risk scores or prospective HCC risk scores, as applicable, 
the weight applied to the growth in risk scores (expressed as a ratio 
of the ACO's performance year risk score to the ACO's BY3 risk score) 
for each Medicare enrollment type is equal to the product of the 
historical benchmark expenditures for that enrollment type and the 
performance year person years for that enrollment type.
    (3) In risk adjusting the benchmark as described in Sec. Sec.  
425.601(a)(10), 425.602(a)(9), 425.603(c)(10), and 425.652(a)(10) CMS 
makes separate adjustments for each of the following populations of 
beneficiaries:
* * * * *
    (6) * * *
    (i) These calculations will exclude indirect medical education 
(IME) and disproportionate share hospital (DSH) payments, and the 
supplemental payment for IHS/Tribal hospitals and Puerto Rico 
hospitals.
* * * * *
    (d) * * *
    (2) For performance years beginning on January 1, 2021, or January 
1, 2022. * * *
    (3) For the performance year beginning on January 1, 2023. An ACO 
that meets all the requirements for receiving shared savings payments 
under the ENHANCED track will receive a shared savings payment equal to 
a percentage of all the savings under the updated benchmark (up to the 
performance payment limit described in paragraph (e)(2) of this 
section). The percentage is as follows:
    (i) 75 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(4)(i).
    (ii) 75 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(4)(ii).
    (4) For performance years beginning on or after January 1, 2024. An 
ACO that meets all the requirements for receiving shared savings 
payments under the ENHANCED track will receive a shared savings payment 
equal to a percentage of all the savings under the updated benchmark 
(up to the performance payment limit described in paragraph (e)(2) of 
this section). The percentage is as follows:
    (i) 75 percent for an ACO that meets the quality performance 
standard by meeting the criteria specified in Sec.  425.512(a)(2) or 
(a)(5)(i).
    (ii) 75 percent multiplied by the ACO's health equity adjusted 
quality performance score calculated according to Sec.  425.512(b) for 
an ACO that meets the alternative quality performance standard by 
meeting the criteria specified in Sec.  425.512(a)(5)(ii).
* * * * *
    (f) * * *
    (2) For performance years beginning on January 1, 2021, or January 
1, 2022. * * *
    (3) For the performance year beginning on January 1, 2023. For an 
ACO that is required to share losses with the Medicare program for 
expenditures over the updated benchmark, the amount of shared losses is 
determined as follows:
    (i) If the ACO meets either the quality performance standard 
established in Sec.  425.512 applicable for the performance year by 
meeting the criteria specified in Sec.  425.512(a)(2) or (a)(4)(i), or 
the alternative quality performance standard established in Sec.  
425.512(a)(4)(ii), CMS determines the shared loss rate as follows:
    (A) Calculate the product of 75 percent and the ACO's health equity 
adjusted quality performance score calculated according to Sec.  
425.512(b).
    (B) Calculate the shared loss rate as 1 minus the product 
determined in paragraph (f)(3)(i)(A) of this section. The shared loss 
rate--
    (1) May not exceed 75 percent; and
    (2) May not be less than 40 percent.
    (ii) If the ACO fails to meet either the quality performance 
standard or the alternative quality performance standard established in 
Sec.  425.512 applicable for the performance year, the shared loss rate 
is 75 percent.
    (4) For performance years beginning on or after January 1, 2024. 
For an ACO that is required to share losses with the Medicare program 
for expenditures over the updated benchmark, the amount of shared 
losses is determined as follows:
    (i) If the ACO meets either the quality performance standard 
established in Sec.  425.512 applicable for the performance year by 
meeting the criteria specified in Sec.  425.512(a)(2) or (a)(5)(i), or 
the alternative quality performance standard established in Sec.  
425.512(a)(5)(ii), CMS determines the shared loss rate as follows:
    (A) Calculate the product of 75 percent and the ACO's health equity 
adjusted quality performance score calculated according to Sec.  
425.512(b).
    (B) Calculate the shared loss rate as 1 minus the product 
determined in paragraph (f)(4)(i)(A) of this section. The shared loss 
rate--
    (1) May not exceed 75 percent; and
    (2) May not be less than 40 percent.
    (ii) If the ACO fails to meet either the quality performance 
standard or the alternative quality performance standard established in 
Sec.  425.512 for the applicable performance year, the shared loss rate 
is 75 percent.
* * * * *

0
67. Amend Sec.  425.611--
0
a. In paragraph (c)(2)(i), by removing the references ``Sec. Sec.  
425.601(c) and 425.603(e)'' and adding in its place the references 
``Sec. Sec.  425.601(c), 425.603(e), and 425.654(a)'';
0
b. In paragraph (c)(2)(ii)(A), by removing the references ``Sec. Sec.  
425.601(a)(4), 425.602(a)(4), and 425.603(c)(4)'' and adding in its 
place the references ``Sec. Sec.  425.601(a)(4), 425.602(a)(4), 
425.603(c)(4), and 425.652(a)(4)'';
0
c. In paragraph (c)(2)(ii)(B), by removing the references ``Sec. Sec.  
425.601(c)(3) and 425.603(e)(3)'' and adding in its place the 
references ``Sec. Sec.  425.601(c)(3), 425.603(e)(3), and 
425.654(a)(3)'';
0
d. By revising paragraph (c)(2)(iii);
0
e. In paragraph (c)(2)(v), by removing the reference ``Sec.  
425.601(a)(5)(ii)'' and adding in its place the references ``Sec. Sec.  
425.601(a)(5)(ii) and 425.652(a)(5)(ii)'' and removing the reference 
``Sec.  425.601(b)(2)'' and adding in its place the references 
``Sec. Sec.  425.601(b)(2) and 425.652(b)(2)(i)''; and
0
f. By revising paragraph (c)(4).
    The revisions read as follows:


Sec.  425.611  Adjustments to Shared Savings Program calculations to 
address the COVID-19 pandemic.

* * * * *
    (c) * * *
    (2) * * *
    (iii) Determining national per capita expenditures for Parts A and 
B services under the original Medicare fee-for-service program for 
assignable beneficiaries for purposes of capping the regional 
adjustment to the ACO's historical benchmark according to Sec. Sec.  
425.601(a)(8)(ii)(C) and 425.656(c)(3),

[[Page 70242]]

and capping the prior savings adjustment according to Sec.  
425.652(a)(8)(iv).
* * * * *
    (4) Calculation of total Medicare Parts A and B fee-for-service 
revenue of ACO participants and total Medicare Parts A and B fee-for-
service expenditures for the ACO's assigned beneficiaries for purposes 
of identifying whether an ACO is a high revenue ACO or low revenue ACO, 
as defined under Sec.  425.20, determining an ACO's eligibility for 
participation options according to Sec.  425.600(d), and determining an 
ACO's eligibility to receive advance investment payments according to 
Sec.  425.630.
* * * * *

0
68. Amend Sec.  425.612 by--
0
a. Revising paragraph (a)(1)(i)(A) introductory text; and
0
b. In paragraph (a)(1)(i)(A)(1) by removing the phrase ``The 
communication plan'' and adding in its place the phrase ``A 
communication plan''.
    The revision reads as follows:


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

    (a) * * *
    (1) * * *
    (i) * * *
    (A) An attestation that it has established and will make available 
to CMS upon request the following narratives describing how the ACO 
plans to implement the waiver:
* * * * *


Sec. Sec.  425.614 through 425.629  [Reserved]

0
69. Add and reserve Sec. Sec.  425.614 through 425.629 to subpart G.

0
70. Section 425.630 is added to subpart G to read as follows:


Sec.  425.630  Option to receive advance investment payments.

    (a) Purpose. Advance investment payments are intended to encourage 
low-revenue ACOs that are inexperienced with risk to participate in the 
Shared Savings Program and to provide additional resources to such ACOs 
in order to support care improvement for underserved beneficiaries.
    (b) Eligibility. An ACO is eligible to receive advance investment 
payments as specified in this section if CMS determines that all of the 
following criteria are met:
    (1) The ACO is not a renewing or a re-entering ACO.
    (2) The ACO has applied to participate in the Shared Savings 
Program under any level of the BASIC track's glide path and is eligible 
to participate in the Shared Savings Program.
    (3) The ACO is inexperienced with performance-based risk Medicare 
ACO initiatives.
    (4) The ACO is a low revenue ACO.
    (c) Application procedure. To obtain a determination regarding 
whether an ACO may receive advance investment payments, the ACO must 
submit to CMS complete supplemental information as part of its 
application to participate in the Shared Savings Program (filed 
pursuant to Sec.  425.202) in the form and manner and by a deadline 
specified by CMS.
    (d) Application contents and review. (1) General. An ACO must 
submit to CMS supplemental application information sufficient for CMS 
to determine whether the ACO is eligible to receive advance investment 
payments. In addition, the ACO must submit a proposed spend plan as 
part of the supplemental application information.
    (2) Spend plan. The spend plan must:
    (i) Describe how the ACO will spend its advance investment payments 
during the agreement period to build care coordination capabilities 
(including coordination with community-based organizations, as 
appropriate), address specific health disparities, and meet other 
criteria under this section.
    (ii) Identify the categories of goods and services that will be 
purchased with advance investment payment funds (including any 
allowable uses under paragraph (e) of this section), the dollar amounts 
to be spent on the various categories, and such other information as 
may be specified by CMS.
    (iii) State that the ACO has established a separate designated 
account for the deposit and expenditure of all advance investment 
payments in accordance with paragraph (e)(4) of this section.
    (3) CMS review. CMS will review the supplemental application 
information to determine whether an ACO meets the eligibility criteria 
and other requirements for advance investment payments and will approve 
or deny the advance investment payment application accordingly. CMS may 
review an ACO's spend plan at any time and require the ACO to modify 
its spend plan to comply with the requirements of this paragraph (d) 
and paragraph (e) of this section.
    (e) Use and management of advance investment payments. (1) 
Allowable uses. An ACO must use an advance investment payment to 
improve the quality and efficiency of items and services furnished to 
beneficiaries by investing in increased staffing, health care 
infrastructure, and the provision of accountable care for underserved 
beneficiaries, which may include addressing social determinants of 
health. Expenditures of advance investment payments must comply with 
the beneficiary incentive provision at Sec.  425.304, paragraph (e)(2) 
of this section, and all other applicable laws and regulations.
    (2) Prohibited uses. Advance investment payments may not be used 
for any expense other than allowable uses under paragraph (e)(1) of 
this section. In the case of an ACO participating in Level E of the 
BASIC track, the repayment of any shared losses incurred as specified 
in a written notice in accordance with Sec.  425.605(e)(2).
    (3) Duration for spending payments. An ACO may spend an advance 
investment payment over its entire agreement period. An ACO must repay 
to CMS any unspent funds remaining at the end of the ACO's agreement 
period.
    (4) Segregation of advance investment payments. An ACO must 
segregate advance investment payments from all other revenues by 
establishing and maintaining a separate account into which all advance 
investment payments will be deposited immediately and from which all 
disbursements of such funds are made only for allowable uses in 
accordance with this paragraph.
    (f) Payment methodology. An ACO receives two types of advance 
investment payments: a one-time payment of $250,000 and quarterly 
payments calculated pursuant to the methodology defined in paragraph 
(f)(2) of this section. CMS notifies in writing each ACO of its 
determination of the amount of advance investment payment. If CMS does 
not make any advance investment payment, the notice will specify the 
reason(s) why and inform the ACO of its right to request 
reconsideration review in accordance with the procedures specified in 
subpart I of this part.
    (1) Frequency of payments. An ACO will receive the one-time payment 
at the beginning of Performance Year 1 of the ACO's agreement period. 
An ACO will receive quarterly payments each quarter for the first two 
performance years of the ACO's agreement period. An ACO may receive no 
more than eight quarterly payments.
    (2) Quarterly payment amount calculation methodology. CMS does all 
of the following in determining the quarterly payment amount prior to 
the start of the quarter.
    (i) Determines the ACO's assigned beneficiary population. The 
assigned beneficiaries used in determining the

[[Page 70243]]

quarterly payment amount are the beneficiaries most recently assigned 
to the ACO under Sec.  425.400(a)(2) (for an ACO under preliminary 
prospective assignment with retrospective reconciliation) or Sec.  
425.400(a)(3) (for an ACO under prospective assignment), based on the 
certified ACO participant list for the relevant performance year.
    (ii) Assigns each beneficiary a risk factors-based score. For each 
beneficiary in the assigned population identified in paragraph 
(f)(2)(i) of this section, CMS applies the following requirements in 
assigning a risk factors-based score:
    (A) The risk factors-based score will be set to 100 if the 
beneficiary is enrolled in the Medicare Part D LIS or is dually 
eligible for Medicare and Medicaid.
    (B) The risk factors-based score will be set to the Area 
Deprivation Index national percentile rank matched to the beneficiary's 
mailing address if the beneficiary is not enrolled in the LIS or is not 
dually eligible for Medicare and Medicaid and sufficient data is 
available to match the beneficiary to an Area Deprivation Index 
national percentile rank.
    (C) The risk factors-based score will be set to 50 if the 
beneficiary is not enrolled in the LIS or is not dually eligible for 
Medicare and Medicaid and sufficient data is not available to match the 
beneficiary to an Area Deprivation Index national percentile rank.
    (iii) Determines a beneficiary's payment amount. For each 
beneficiary in the assigned population identified in paragraph 
(f)(2)(i) of this section, CMS determines the payment amount that 
corresponds to the beneficiary's risk factors-based score determined in 
paragraph (f)(2)(ii) of this section. The beneficiary payment amount is 
as follows:

                                                            Table 1 to Paragraph (f)(2)(iii)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                Risk factors-based score                     1-24        25-34       35-44       45-54       55-64       65-74       75-84      85-100
--------------------------------------------------------------------------------------------------------------------------------------------------------
Payment amount..........................................         $0         $20         $24         $28         $32         $36         $40         $45
--------------------------------------------------------------------------------------------------------------------------------------------------------

    (iv) Calculates the ACO's quarterly payment amount. The ACO's 
quarterly payment amount is the sum of the beneficiary payment amounts 
corresponding to each assigned beneficiary's risk factors-based score, 
specified in paragraph (f)(2)(iii) of this section, capped at 10,000 
beneficiaries. If the ACO has more than 10,000 assigned beneficiaries 
according to paragraph (f)(2)(i) of this section, CMS will calculate 
the quarterly payment amount based on the 10,000 assigned beneficiaries 
with the highest risk factors-based scores determined according to 
paragraph (f)(2)(ii) of this section.
    (g) Recoupment and recovery of advance investment payments, and 
notice of bankruptcy. (1) CMS will recoup advance investment payments 
made to an ACO from any shared savings the ACO earns until CMS has 
recouped in full the amount of advance investment payments made to the 
ACO. For both renewing and re-entering ACOs, CMS will carry forward any 
remaining balance owed to subsequent performance year(s) in which the 
ACO achieves shared savings, including in any performance year(s) in a 
subsequent agreement period.
    (2) If the amount of shared savings earned by the ACO is revised 
upward by CMS for any reason, CMS will reduce the redetermined amount 
of shared savings by the amount of advance investment payments made to 
the ACO as of the date of the redetermination. If the amount of shared 
savings earned by the ACO is revised downward by CMS for any reason, 
the ACO will not receive a refund of any portion of the advance 
investment payments previously recouped or otherwise repaid.
    (3) Except as provided for in paragraphs (g)(4) of this section and 
Sec.  425.316(e)(3), for each performance year, CMS will not recover an 
amount of advance investment payments greater than the shared savings 
earned by an ACO in that performance year.
    (4) If an ACO terminates its participation agreement during the 
agreement period in which it received an advance investment payment, 
the ACO must repay all advance investment payments it received. CMS 
will provide written notification to the ACO of the amount due and the 
ACO must pay such amount no later than 90 days after the receipt of 
such notification.
    (5) In the event of bankruptcy--
    (i) If an ACO has filed a bankruptcy petition, whether voluntary or 
involuntary, the ACO must provide written notice of the bankruptcy to 
CMS and to the U.S. Attorney's Office in the district where the 
bankruptcy was filed, unless final payment for the agreement period has 
been made by either CMS or the ACO and all administrative or judicial 
review proceedings relating to any payments under the Shared Savings 
Program have been fully and finally resolved.
    (ii) The notice of bankruptcy must be sent by certified mail no 
later than 5 days after the petition has been filed and must contain a 
copy of the filed bankruptcy petition (including its docket number). 
The notice to CMS must be addressed to the CMS Office of Financial 
Management at 7500 Security Boulevard, Mailstop C3-01-24, Baltimore, MD 
21244 or such other address as may be specified on the CMS website for 
purposes of receiving such notices.
    (h) Termination of advance investment payments. (1) General. Except 
as provided in paragraph (h)(2) of this section, CMS may terminate an 
ACO's advance investment payments if the ACO--
    (i) Fails to comply with the requirements of this section; or
    (ii) Meets any of the grounds for ACO termination set forth in 
Sec.  425.218(b).
    (2) Eligibility sanction. CMS will terminate an ACO's advance 
investment payments in accordance with Sec.  425.316(e) if the ACO no 
longer meets the eligibility requirements specified in paragraphs 
(b)(3) and (b)(4) of this section.
    (3) No pre-termination actions. CMS may immediately terminate an 
ACO's advance investment payments without taking any of the pre-
termination actions set forth in Sec.  425.216.


Sec. Sec.  425.631 through 425.649  [Reserved]

0
71. Add and reserve Sec. Sec.  425.631 through 425.649 to subpart G.

0
72. Section 425.650 is added to subpart G to read as follows:


Sec.  425.650  Benchmarking methodology.

    (a) Scope and purpose. The methodology by which CMS establishes, 
adjusts, updates and resets an ACO's historical benchmark is described 
within this subpart G. The benchmarking methodology for agreement 
periods beginning before January 1, 2024, is specified in Sec. Sec.  
425.601, 425.602, and 425.603. The benchmarking methodology for 
agreement periods beginning on or after January 1, 2024, is specified 
in Sec. Sec.  425.652 through 425.660.

[[Page 70244]]

    (b) [Reserved]

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73. Section 425.652 is added to subpart G to read as follows:


Sec.  425.652  Establishing, adjusting, and updating the benchmark for 
agreement periods beginning on January 1, 2024, and in subsequent 
years.

    (a) Computing per capita Medicare Part A and Part B benchmark 
expenditures for an ACO's first agreement period. For agreement periods 
beginning on January 1, 2024, and in subsequent years, in computing an 
ACO's historical benchmark for its first agreement period under the 
Shared Savings Program, CMS determines the per capita Parts A and B 
fee-for-service expenditures for beneficiaries that would have been 
assigned to the ACO in any of the 3 most recent years prior to the 
start of the agreement period using the ACO participant TINs identified 
before the start of the agreement period as required under Sec.  
425.118(a) and the beneficiary assignment methodology selected by the 
ACO for the first performance year of the agreement period as required 
under Sec.  425.226(a)(1). CMS does all of the following:
    (1) Calculates the payment amounts included in Parts A and B fee-
for-service claims using a 3-month claims run out with a completion 
factor.
    (i) This calculation excludes indirect medical education (IME) and 
disproportionate share hospital (DSH) payments, and the supplemental 
payment for IHS/Tribal hospitals and Puerto Rico hospitals.
    (ii) This calculation includes individually beneficiary 
identifiable final payments made under a demonstration, pilot or time 
limited program.
    (2) Makes separate expenditure calculations for each of the 
following populations of beneficiaries: ESRD, disabled, aged/dual 
eligible Medicare and Medicaid beneficiaries and aged/non-dual eligible 
Medicare and Medicaid beneficiaries.
    (3) Adjusts expenditures for changes in severity and case mix using 
prospective HCC risk scores.
    (4) Truncates an assigned beneficiary's total annual Parts A and B 
fee-for-service per capita expenditures at the 99th percentile of 
national Medicare fee-for-service expenditures for assignable 
beneficiaries identified for the 12-month calendar year corresponding 
to each benchmark year in order to minimize variation from 
catastrophically large claims.
    (5) Trends forward expenditures for each benchmark year (BY1 and 
BY2) to the third benchmark year (BY3) dollars using a blend of 
national and regional growth rates.
    (i) To trend forward the benchmark, CMS makes separate calculations 
for expenditure categories for each of the following populations of 
beneficiaries:
    (A) ESRD.
    (B) Disabled.
    (C) Aged/dual eligible Medicare and Medicaid beneficiaries.
    (D) Aged/non-dual eligible Medicare and Medicaid beneficiaries.
    (ii) National growth rates are computed using CMS Office of the 
Actuary national Medicare expenditure data for each of the years making 
up the historical benchmark for assignable beneficiaries identified for 
the 12-month calendar year corresponding to each benchmark year.
    (iii) Regional growth rates are computed using expenditures for the 
ACO's regional service area for each of the years making up the 
historical benchmark as follows:
    (A) Determine the counties included in the ACO's regional service 
area based on the ACO's assigned beneficiary population for the 
relevant benchmark year.
    (B) Determine the ACO's regional expenditures as specified under 
Sec.  425.654 of this section.
    (iv) The national and regional growth rates are blended together by 
taking a weighted average of the two. The weight applied to the--
    (A) National growth rate is calculated as the share of assignable 
beneficiaries in the ACO's regional service area for BY3 that are 
assigned to the ACO in BY3, as calculated in paragraph (a)(5)(v) of 
this section; and
    (B) Regional growth rate is equal to 1 minus the weight applied to 
the national growth rate.
    (v) CMS calculates the share of assignable beneficiaries in the 
ACO's regional service area that are assigned to the ACO by doing all 
of the following:
    (A) Calculating the county-level share of assignable beneficiaries 
that are assigned to the ACO for each county in the ACO's regional 
service area. The assignable population of beneficiaries is identified 
for the assignment window corresponding to BY3 that is consistent with 
the assignment window that applies under the beneficiary assignment 
methodology selected by the ACO for the performance year according to 
Sec.  425.400(a)(4)(ii).
    (B) Weighting the county-level shares according to the ACO's 
proportion of assigned beneficiaries in the county, determined by the 
number of the ACO's assigned beneficiaries residing in the county in 
relation to the ACO's total number of assigned beneficiaries.
    (C) Aggregating the weighted county-level shares for all counties 
in the ACO's regional service area.
    (6) Restates BY1 and BY2 trended and risk adjusted expenditures 
using BY3 proportions of ESRD, disabled, aged/dual eligible Medicare 
and Medicaid beneficiaries and aged/non-dual eligible Medicare and 
Medicaid beneficiaries.
    (7) Weights each year of the benchmark for an ACO's initial 
agreement period using the following percentages:
    (i) BY3 at 60 percent.
    (ii) BY2 at 30 percent.
    (iii) BY1 at 10 percent.
    (8) Adjusts the historical benchmark based on the ACO's regional 
service area expenditures (as specified under Sec.  425.656), or for 
savings generated by the ACO, if any, in the 3 most recent years prior 
to the start of the agreement period, if applicable (as specified under 
Sec.  425.658), or a combination of these two adjustments. CMS does all 
of the following to determine the adjustment(s) applied to the 
historical benchmark:
    (i) Computes the regional adjustment in accordance with Sec.  
425.656 and the prior savings adjustment in accordance with Sec.  
425.658.
    (ii) If an ACO is not eligible to receive a prior savings 
adjustment under Sec.  425.658(b)(3)(i), the ACO will receive the 
regional adjustment to its benchmark as described in Sec.  425.656.
    (iii) If an ACO is eligible to receive a prior savings adjustment, 
CMS compares the pro-rated positive average per capita savings amount 
calculated in Sec.  425.658(b)(3)(ii) with the regional adjustment 
described in Sec.  425.656(c), expressed as a single per capita value 
by taking a person-year weighted average of the Medicare enrollment 
type-specific regional adjustment values.
    (A) If the regional adjustment, expressed as a single value, is 
negative or zero, calculate the sum of the regional adjustment value 
and the pro-rated positive average per capita savings amount.
    (1) If the sum is positive, the ACO will receive a prior savings 
adjustment in place of the negative regional adjustment equal to the 
lesser of 50 percent of the positive sum and the cap described in 
paragraph (a)(8)(iv) of this section. The adjustment will be applied as 
a flat dollar amount to the following populations of beneficiaries: 
ESRD, disabled, aged/dual eligible Medicare and Medicaid beneficiaries, 
and aged/non-dual eligible Medicare and Medicaid beneficiaries.
    (2) If the sum is negative, the ACO will receive a reduced negative 
regional adjustment amount equal to the negative

[[Page 70245]]

sum. The adjustment will be applied as a flat dollar amount to the 
following populations of beneficiaries: ESRD, disabled, aged/dual 
eligible Medicare and Medicaid beneficiaries, and aged/non-dual 
eligible Medicare and Medicaid beneficiaries.
    (B) If the regional adjustment, expressed as a single value, is 
positive, the ACO will receive an adjustment to the benchmark equal to 
the higher of the following:
    (1) The positive regional adjustment amount. The adjustment will be 
calculated as described in Sec.  425.656(c) and applied separately to 
the following populations of beneficiaries: ESRD, disabled, aged/dual 
eligible Medicare and Medicaid beneficiaries, and aged/non-dual 
eligible Medicare and Medicaid beneficiaries.
    (2) A prior savings adjustment equal to the lesser of 50 percent of 
the pro-rated positive average per capita savings amount described in 
Sec.  425.658(b)(3)(ii) and the cap described in paragraph (a)(8)(iv) 
of this section. The adjustment will be applied as a flat dollar amount 
to the following populations of beneficiaries: ESRD, disabled, aged/
dual eligible Medicare and Medicaid beneficiaries, and aged/non-dual 
eligible Medicare and Medicaid beneficiaries.
    (iv) The cap on the prior savings adjustment calculated in either 
paragraph (a)(8)(iii)(A)(1) or paragraph (a)(8)(iii)(B)(2) of this 
section is equal to 5 percent of national per capita expenditures for 
Parts A and B services under the original Medicare fee-for-service 
program in BY3 for assignable beneficiaries identified for the 12-month 
calendar year corresponding to BY3 using data from the CMS Office of 
the Actuary and expressed as a single value by taking a person-year 
weighted average of the Medicare enrollment type-specific values.
    (9) For the second and each subsequent performance year during the 
term of the agreement period, the ACO's benchmark is adjusted for the 
following, as applicable: For the addition and removal of ACO 
participants or ACO providers/suppliers in accordance with Sec.  
425.118(b), for a change to the ACO's beneficiary assignment 
methodology selection under Sec.  425.226(a)(1), and for a change to 
the beneficiary assignment methodology specified in subpart E of this 
part. To adjust the benchmark, CMS does the following:
    (i) Takes into account the expenditures of beneficiaries who would 
have been assigned to the ACO in any of the 3 most recent years prior 
to the start of the agreement period.
    (ii) Redetermines the regional adjustment amount under Sec.  
425.656 according to the ACO's assigned beneficiaries for BY3, and 
based on the assignable population of beneficiaries identified for the 
assignment window corresponding to BY3 that is consistent with the 
assignment window that applies under the beneficiary assignment 
methodology selected by the ACO for the performance year according to 
Sec.  425.226(a)(1).
    (iii) Redetermines the offset factor used in determining the 
negative regional adjustment amount under Sec.  425.656(c)(4) and (5).
    (iv) Redetermines the proration factor used in calculating the 
prior savings adjustment under Sec.  425.658(b)(3)(ii) to account for 
changes in the ACO's assigned beneficiary population in the benchmark 
years of the ACO's current agreement period due to the addition and 
removal of ACO participants or ACO providers/suppliers in accordance 
with Sec.  425.118(b), a change to the ACO's beneficiary assignment 
methodology selection under Sec.  425.400(a)(4)(ii), or changes to the 
beneficiary assignment methodology under subpart E of this part.
    (v) In accordance with paragraph (a)(8) of this section, CMS 
redetermines the adjustment to the historical benchmark based on the 
redetermined regional adjustment (as specified under Sec.  425.656), or 
the prior savings adjustment (as specified under Sec.  425.658), or a 
combination of these two adjustments.
    (10) The historical benchmark is further adjusted at the time of 
reconciliation for a performance year to account for changes in 
severity and case mix of the ACO's assigned beneficiary population as 
described under Sec. Sec.  425.605(a) and 425.610(a).
    (b) Updating the benchmark. For all agreement periods beginning on 
January 1, 2024, and in subsequent years, CMS updates the historical 
benchmark annually for each year of the agreement period using a three-
way blend calculated as a weighted average of a two-way blend of 
national and regional growth rates determined after the end of each 
performance year and a fixed projected growth rate determined at the 
beginning of the ACO's agreement period called the Accountable Care 
Prospective Trend (ACPT).
    (1) To update the benchmark, CMS makes separate calculations for 
expenditure categories for each of the following populations of 
beneficiaries:
    (i) ESRD.
    (ii) Disabled.
    (iii) Aged/dual eligible Medicare and Medicaid beneficiaries.
    (iv) Aged/non-dual eligible Medicare and Medicaid beneficiaries.
    (2) CMS computes the two-way blend of national and regional growth 
rates as follows:
    (i) Computes national growth rates using CMS Office of the Actuary 
national Medicare expenditure data for BY3 and the performance year for 
assignable beneficiaries identified for the 12-month calendar year 
corresponding to each year.
    (ii) Computes regional growth rates using expenditures for the 
ACO's regional service area for BY3 and the performance year, computed 
as follows:
    (A) Determine the counties included in the ACO's regional service 
area based on the ACO's assigned beneficiary population for the year.
    (B) Determine the ACO's regional expenditures as specified under 
Sec.  425.654.
    (iii) The national and regional growth rates are blended together 
by taking a weighted average of the two. The weight applied to the--
    (A) National growth rate is calculated as the share of assignable 
beneficiaries in the ACO's regional service area that are assigned to 
the ACO for the applicable performance year as specified in paragraph 
(b)(2)(iv) of this section; and
    (B) Regional growth rate is equal to 1 minus the weight applied to 
the national growth rate.
    (iv) CMS calculates the share of assignable beneficiaries in the 
ACO's regional service area that are assigned to the ACO by doing all 
of the following:
    (A) Calculating the county-level share of assignable beneficiaries 
that are assigned to the ACO for each county in the ACO's regional 
service area. The assignable population of beneficiaries is identified 
for the assignment window corresponding to the performance year that is 
consistent with the assignment window that applies under the 
beneficiary assignment methodology selected by the ACO for the 
performance year according to Sec.  425.400(a)(4)(ii).
    (B) Weighting the county-level shares according to the ACO's 
proportion of assigned beneficiaries in the county, determined by the 
number of the ACO's assigned beneficiaries residing in the county in 
relation to the ACO's total number of assigned beneficiaries.
    (C) Aggregating the weighted county-level shares for all counties 
in the ACO's regional service area.
    (3) CMS computes the ACPT as described in Sec.  425.660.
    (4) The two-way blend computed under paragraph (b)(2) of this 
section and the ACPT are blended together by taking a weighted average 
of the two.

[[Page 70246]]

    (i) Absent unforeseen circumstances, the weight applied to the 
components of the blend is as follows--
    (A) Two-way blend is equal to two-thirds; and
    (B) ACPT is equal to one-third.
    (ii) CMS has sole discretion to determine whether an unforeseen 
circumstance exists that warrants a reduction to the weight of the ACPT 
and the reduced weight that will apply to the ACPT.
    (5) If an ACO's average per capita Medicare expenditures for the 
performance year are above its updated benchmark for the year 
determined as described in paragraph (b)(4) of this section by at least 
the MLR or negative MSR established for the ACO, CMS will compute a 
recalculated updated benchmark using the two-way blend described in 
paragraph (b)(2) of this section.
    (i) If the ACO's average per capita Medicare expenditures for the 
performance year are above the recalculated updated benchmark by a 
smaller amount than the amount by which they are above the updated 
benchmark determined as described in paragraph (b)(4) of this section, 
CMS will use the recalculated updated benchmark to determine the 
following:
    (A) The ACO's responsibility for sharing losses with the Medicare 
program for ACOs in two-sided models as described under Sec. Sec.  
425.605 and 425.610.
    (B) The ACO's financial performance for purposes of monitoring ACO 
financial performance as described under Sec.  425.316(d).
    (ii) If the ACO's average per capita Medicare expenditures for the 
performance year are below the recalculated updated benchmark, the ACO 
will neither be responsible for sharing losses with the Medicare 
program nor eligible for sharing in savings.
    (c) Resetting the benchmark. (1) An ACO's benchmark is reset at the 
start of each subsequent agreement period.
    (2) For second or subsequent agreements periods beginning on 
January 1, 2024, and in subsequent years, CMS establishes, adjusts, and 
updates the rebased historical benchmark in accordance with paragraphs 
(a) and (b) of this section except that rather than weighting each year 
of the benchmark using the percentages provided in paragraph (a)(7) of 
this section, each benchmark year is weighted equally.

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74. Section 425.654 is added to subpart G to read as follows:


Sec.  425.654  Calculating county expenditures and regional 
expenditures.

    (a) Calculating county expenditures. For agreement periods 
beginning on January 1, 2024, and in subsequent years, CMS does all of 
the following to determine risk adjusted county fee-for-service 
expenditures for use in calculating the ACO's regional fee-for-service 
expenditures:
    (1)(i) Determines average county fee-for-service expenditures based 
on expenditures for the assignable population of beneficiaries in each 
county in the ACO's regional service area. The assignable population of 
beneficiaries is identified for the assignment window corresponding to 
the relevant benchmark or performance year that is consistent with the 
assignment window that applies under the beneficiary assignment 
methodology selected by the ACO for the performance year according to 
Sec.  425.400(a)(4)(ii).
    (ii) Makes separate expenditure calculations for each of the 
following populations of beneficiaries:
    (A) ESRD.
    (B) Disabled.
    (C) Aged/dual eligible Medicare and Medicaid beneficiaries.
    (D) Aged/non-dual eligible Medicare and Medicaid beneficiaries.
    (2) Calculates assignable beneficiary expenditures using the 
payment amounts included in Parts A and B fee-for-service claims with 
dates of service in the 12-month calendar year for the relevant 
benchmark or performance year, using a 3-month claims run out with a 
completion factor. The calculation--
    (i) Excludes IME and DSH payments, and the supplemental payment for 
IHS/Tribal hospitals and Puerto Rico hospitals; and
    (ii) Considers individually beneficiary identifiable final payments 
made under a demonstration, pilot or time limited program.
    (3) Truncates a beneficiary's total annual Parts A and B fee-for-
service per capita expenditures at the 99th percentile of national 
Medicare fee-for-service expenditures for assignable beneficiaries 
identified for the 12-month calendar year that corresponds to the 
relevant benchmark or performance year, in order to minimize variation 
from catastrophically large claims.
    (4) Adjusts fee-for-service expenditures for severity and case mix 
of assignable beneficiaries in the county using prospective HCC risk 
scores. The calculation is made according to the following populations 
of beneficiaries:
    (i) ESRD.
    (ii) Disabled.
    (iii) Aged/dual eligible Medicare and Medicaid beneficiaries.
    (iv) Aged/non-dual eligible Medicare and Medicaid beneficiaries.
    (b) Calculating regional expenditures. For all agreement periods 
beginning on January 1, 2024, and in subsequent years, CMS calculates 
an ACO's risk adjusted regional expenditures by:
    (1) Weighting the risk adjusted county-level fee-for-service 
expenditures determined under paragraph (a) of this section according 
to the ACO's proportion of assigned beneficiaries in the county, 
determined by the number of the ACO's assigned beneficiaries in the 
applicable population (according to Medicare enrollment type) residing 
in the county in relation to the ACO's total number of assigned 
beneficiaries in the applicable population (according to Medicare 
enrollment type) for the relevant benchmark or performance year for 
each of the following populations of beneficiaries:
    (i) ESRD.
    (ii) Disabled.
    (iii) Aged/dual eligible Medicare and Medicaid beneficiaries.
    (iv) Aged/non-dual eligible Medicare and Medicaid beneficiaries.
    (2) Aggregating the values determined under paragraph (b)(1) of 
this section for each population of beneficiaries (according to 
Medicare enrollment type) across all counties within the ACO's regional 
service area.

0
75. Section 425.656 is added to subpart G to read as follows:


Sec.  425.656  Calculating the regional adjustment to the historical 
benchmark.

    (a) General. This section describes the methodology for calculating 
the regional adjustment to the historical benchmark based on the ACO's 
regional service area expenditures, making separate calculations for 
the following populations of beneficiaries: ESRD, disabled, aged/dual 
eligible Medicare and Medicaid beneficiaries, and aged/non-dual 
eligible Medicare and Medicaid beneficiaries. This section applies to 
regional adjustment calculations for agreement periods beginning on 
January 1, 2024, and in subsequent years.
    (b) Calculation of an average per capita expenditure amount for the 
ACO's regional service area. To compute an average per capita 
expenditure amount for the ACO's regional service area, CMS does all of 
the following:
    (1) Determines the counties included in the ACO's regional service 
area based on the ACO's BY3 assigned beneficiary population.

[[Page 70247]]

    (2) Determines the ACO's regional expenditures as specified under 
Sec.  425.654 for BY3.
    (3) Adjusts for differences in severity and case mix between the 
ACO's assigned beneficiary population for BY3 and the assignable 
population of beneficiaries for the ACO's regional service area for 
BY3. The assignable population of beneficiaries is identified using the 
assignment window corresponding to BY3 that is consistent with the 
assignment window that applies under the beneficiary assignment 
methodology selected by the ACO for the performance year according to 
Sec.  425.400(a)(4)(ii).
    (c) Calculation of the adjustment. To calculate the adjustment, CMS 
does all of the following:
    (1) Determines the difference between the average per capita amount 
of expenditures for the ACO's regional service area as specified under 
paragraph (b)(1) of this section and the average per capita amount of 
the ACO's historical benchmark determined under Sec.  425.652(a)(1) 
through (7) and (c)(2), for each of the following populations of 
beneficiaries:
    (i) ESRD.
    (ii) Disabled.
    (iii) Aged/dual eligible Medicare and Medicaid beneficiaries.
    (iv) Aged/non-dual eligible Medicare and Medicaid beneficiaries.
    (2) Applies a percentage, as determined in paragraph (d) of this 
section.
    (3) Caps the per capita dollar amount for each Medicare enrollment 
type (ESRD, disabled, aged/dual eligible Medicare and Medicaid 
beneficiaries, aged/non-dual eligible Medicare and Medicaid 
beneficiaries) calculated under paragraph (c)(2) of this section at a 
dollar amount equal to a percentage of national per capita expenditures 
for Parts A and B services under the original Medicare fee-for-service 
program in BY3 for assignable beneficiaries in that enrollment type 
identified for the 12-month calendar year corresponding to BY3 using 
data from the CMS Office of the Actuary. The cap is applied as follows:
    (i) For positive adjustments, the per capita dollar amount for a 
Medicare enrollment type is capped at 5 percent of the national per 
capita expenditure amount for the enrollment type for BY3.
    (ii) For negative adjustments, the per capita dollar amount for a 
Medicare enrollment type is capped at negative 1.5 percent of the 
national per capita expenditure amount for the enrollment type for BY3.
    (4) For negative adjustments, CMS will multiply the regional 
adjustments calculated in paragraphs (c)(2) or (3) of this section by 1 
minus an offset factor equal to the sum of the following--
    (i) Proportion of the ACO's BY3 assigned beneficiaries that are 
dually eligible for Medicare and Medicaid; and
    (ii) The difference between the ACO's weighted average prospective 
HCC risk score for BY3 taken across the four Medicare enrollment types 
and 1. When calculating the weighted average prospective HCC risk 
score, the weight applied to the prospective HCC risk score for BY3 for 
each Medicare enrollment type is equal to the product of the BY3 per 
capita expenditures for that enrollment type and the BY3 person years 
for that enrollment type.
    (5) The offset factor described in paragraph (c)(4) of this section 
is subject to a minimum value of zero (representing no offset to the 
negative regional adjustment) and a maximum value of 1 (representing a 
full offset to the negative regional adjustment).
    (d) Phase-in of weights used in regional adjustment calculation. 
(1) The first time that an ACO's benchmark is adjusted based on the 
ACO's regional service area expenditures, CMS calculates the regional 
adjustment as follows:
    (i) Using 35 percent of the difference between the average per 
capita amount of expenditures for the ACO's regional service area and 
the average per capita amount of the ACO's initial or rebased 
historical benchmark, if the ACO is determined to have lower spending 
than the ACO's regional service area.
    (ii) Using 15 percent of the difference between the average per 
capita amount of expenditures for the ACO's regional service area and 
the average per capita amount of the ACO's initial or rebased 
historical benchmark, if the ACO is determined to have higher spending 
than the ACO's regional service area.
    (2) The second time that an ACO's benchmark is adjusted based on 
the ACO's regional service area expenditures, CMS calculates the 
regional adjustment as follows:
    (i) Using 50 percent of the difference between the average per 
capita amount of expenditures for the ACO's regional service area and 
the average per capita amount of the ACO's rebased historical benchmark 
if the ACO is determined to have lower spending than the ACO's regional 
service area.
    (ii) Using 25 percent of the difference between the average per 
capita amount of expenditures for the ACO's regional service area and 
the average per capita amount of the ACO's rebased historical benchmark 
if the ACO is determined to have higher spending than the ACO's 
regional service area.
    (3) The third time that an ACO's benchmark is adjusted based on the 
ACO's regional service area expenditures, CMS calculates the regional 
adjustment as follows:
    (i) Using 50 percent of the difference between the average per 
capita amount of expenditures for the ACO's regional service area and 
the average per capita amount of the ACO's rebased historical benchmark 
if the ACO is determined to have lower spending than the ACO's regional 
service area.
    (ii) Using 35 percent of the difference between the average per 
capita amount of expenditures for the ACO's regional service area and 
the average per capita amount of the ACO's rebased historical benchmark 
if the ACO is determined to have higher spending than the ACO's 
regional service area.
    (4) The fourth or subsequent time that an ACO's benchmark is 
adjusted based on the ACO's regional service area expenditures, CMS 
calculates the regional adjustment to the historical benchmark using 50 
percent of the difference between the average per capita amount of 
expenditures for the ACO's regional service area and the average per 
capita amount of the ACO's rebased historical benchmark.
    (5) To determine if an ACO has lower or higher spending compared to 
the ACO's regional service area, CMS does the following:
    (i) Multiplies the difference between the average per capita amount 
of expenditures for the ACO's regional service area and the average per 
capita amount of the ACO's historical benchmark for each population of 
beneficiaries (ESRD, disabled, aged/dual eligible Medicare and Medicaid 
beneficiaries, aged/non-dual eligible Medicare and Medicaid 
beneficiaries) as calculated under paragraph (c)(1) of this section by 
the applicable proportion of the ACO's assigned beneficiary population 
(ESRD, disabled, aged/dual eligible Medicare and Medicaid 
beneficiaries, aged/non-dual eligible Medicare and Medicaid 
beneficiaries) for BY3 of the historical benchmark.
    (ii) Sums the amounts determined in paragraph (d)(5)(i) of this 
section across the populations of beneficiaries (ESRD, disabled, aged/
dual eligible Medicare and Medicaid beneficiaries, aged/non-dual 
eligible Medicare and Medicaid beneficiaries).
    (iii) If the resulting sum is a net positive value, the ACO is 
considered to have lower spending compared to the ACO's regional 
service area. If the resulting sum is a net negative value, the ACO is 
considered to have higher spending compared to the ACO's regional 
service area.

[[Page 70248]]

    (iv) If during the term of the agreement period CMS adjusts the 
ACO's benchmark, as specified in Sec.  425.652(a)(9), CMS redetermines 
whether the ACO is considered to have lower spending or higher spending 
compared to the ACO's regional service area for purposes of determining 
the percentage in paragraphs (d)(1) through (3) of this section used in 
calculating the regional adjustment.
    (e) Special rules for determining the weights used in the regional 
adjustment calculation for a re-entering ACO. For a re-entering ACO 
whose prior agreement period benchmark was calculated according to 
Sec.  425.603(c), CMS determines the weight used in the regional 
adjustment calculation described in paragraphs (b) through (d) of this 
section by considering the agreement period the ACO is entering into 
according to Sec.  425.600(f) in combination with either of the 
following--
    (1) The weight previously applied to calculate the regional 
adjustment to the ACO's benchmark under Sec.  425.603(c)(9) in its most 
recent prior agreement period; or
    (2) For a new ACO identified as a re-entering ACO, CMS considers 
the weight previously applied to calculate the regional adjustment to 
the benchmark under Sec.  425.603(c)(9) in its most recent prior 
agreement period of the ACO in which the majority of the new ACO's 
participants were participating previously.

0
76. Section 425.658 is added to subpart G to read as follows:


Sec.  425.658  Calculating the prior savings adjustment to the 
historical benchmark.

    (a) General. For agreement periods beginning on January 1, 2024, 
and in subsequent years, CMS calculates an adjustment to the historical 
benchmark to account for savings generated in the 3 years prior to the 
start of the ACO's current agreement period for renewing or re-entering 
ACOs that were reconciled for one or more performance years in the 
Shared Savings Program during this period.
    (b) Calculate average per capita savings amount. (1) Calculate 
total per capita savings or losses for each performance year during the 
3 years prior to the start of the ACO's current agreement period. CMS 
applies the following requirements in determining the amount of per 
capita savings or losses for each performance year:
    (i) Per capita savings or losses will be set to zero for a 
performance year if the ACO was not reconciled for the performance 
year.
    (ii) If an ACO generated savings for a performance year but was not 
eligible to receive a shared savings payment for that year due to 
noncompliance with the requirements of this part, per capita savings 
for that year will be set to zero.
    (iii) For a new ACO identified as re-entering ACO, per capita 
savings or losses will be determined based on the per capita savings or 
losses of the ACO in which the majority of the ACO's ACO participants 
were participating.
    (2) Take the simple average of the per capita savings or losses 
calculated in paragraph (b)(1) of this section, including values of 
zero, if applicable.
    (3) Determine the ACO's eligibility for the prior savings 
adjustment as follows:
    (i) If the average per capita amount computed in paragraph (b)(2) 
of this section is less than or equal to zero, the ACO is not eligible 
to receive an adjustment for prior savings. The ACO will receive the 
regional adjustment to its benchmark as described in Sec.  425.656.
    (ii) If the average per capita amount computed in paragraph (b)(2) 
of this section is positive, apply a proration factor to account for 
any upward growth in the ACO's assigned population in the benchmark 
years of the ACO's current agreement period as compared to the size of 
the assigned population when the ACO was reconciled for the 
corresponding performance years in its prior agreement period.
    (c) Applicability of the prior savings adjustment. CMS compares the 
pro-rated average per capita savings amount determined in paragraph 
(b)(3)(ii) of this section with the regional adjustment described in 
Sec.  425.656(c), to determine the applicability of the prior savings 
adjustment, the regional adjustment or a combination of these two 
adjustments in accordance with Sec.  425.652(a)(8).

0
77. Section 425.660 is added to subpart G to read as follows:


Sec.  425.660  Accountable Care Prospective Trend (ACPT).

    (a) General. For agreement periods beginning on January 1, 2024, 
and in subsequent years, CMS incorporates a fixed projected growth rate 
determined at the beginning of the ACO's agreement period called the 
Accountable Care Prospective Trend (ACPT) into the blended update 
factor described in Sec.  425.652(b) when updating an ACO's benchmark 
for each performance year of the agreement period.
    (b) Determination of ACPT. An ACPT is a flat dollar amount 
calculated using one or more annualized growth rates based on national 
fee-for-service Medicare expenditures projected by the CMS Office of 
the Actuary. In determining the ACPT for an enrollment type for each 
performance year, CMS does all of the following:
    (1) Projects per capita growth in Parts A and B fee-for-service 
expenditures for benchmark year 3 (BY3) and each performance year of 
the ACO's agreement period. The calculation--
    (i) Excludes IME and DSH payments, and the supplemental payment for 
IHS/Tribal hospitals and Puerto Rico hospitals; and
    (ii) Makes separate expenditure calculations for each of the 
following populations of beneficiaries:
    (A) ESRD.
    (B) Aged/Disabled.
    (2) Calculates one or more annualized growth rates for the 
population of beneficiaries described in paragraph (b)(1)(ii)(A) of 
this section (the ESRD ACPT) and one or more annualized growth rates 
for the population of beneficiaries described in paragraph 
(b)(1)(ii)(B) of this section (the Aged/Disabled ACPT). These 
annualized growth rates will remain fixed over the ACO's agreement 
period. The annualized growth rate is an annual rate of growth in 
projected expenditures during the ACO's 5-year agreement period 
relative to BY3, calculated as follows--
    (i) Using a uniform annualized projected rate of growth over each 
of the 5 performance years of the 5-year agreement period; or
    (ii) If annualization as specified in paragraph (b)(2)(i) of this 
section is determined not to reasonably fit the anticipated growth 
curve, CMS will apply an alternative annualization technique using two 
or more annualized growth rates reflecting the projected rates of 
growth during the 5 performance years comprising the 5-year agreement 
period.
    (3) For each performance year, multiplies the applicable annualized 
growth rate described in paragraph (b)(2) of this section by BY3 
truncated national per capita fee-for-service Medicare expenditures for 
assignable beneficiaries for each Medicare enrollment type (ESRD, 
disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and 
aged/non-dual eligible Medicare and Medicaid beneficiaries) identified 
for the 12-month calendar year corresponding to BY3 to express the 
annualized growth rate as a flat dollar amount as follows:
    (i) The ESRD ACPT is used for the ESRD population.
    (ii) The Aged/Disabled ACPT is used for the following populations: 
disabled, aged/dual eligible Medicare and Medicaid beneficiaries, and 
aged/non-dual eligible Medicare and Medicaid beneficiaries.

[[Page 70249]]

    (4) Adjusts the flat dollar amounts described in paragraph (b)(3) 
of this section for each performance year for differences in severity 
and case mix between the ACO's BY3 assigned beneficiary population and 
the national assignable FFS population for each Medicare enrollment 
type identified for the 12-month calendar year corresponding to BY3.
    (5) Divides the risk adjusted flat dollar amounts described in 
paragraph (b)(4) of this section by the ACO's historical benchmark 
expenditures described in Sec.  425.652(a) for each Medicare enrollment 
type to calculate the percent increase to be included in the blended 
update factor described in Sec.  425.652(b)(4).


0
78. Amend Sec.  425.702 by adding paragraph (c)(2)(iii) to read as 
follows:


Sec.  425.702  Aggregate reports.

* * * * *
    (c) * * *
    (2) * * *
    (iii) As an organized health care arrangement (as defined at 45 CFR 
160.103), and the request reflects the minimum data necessary for the 
ACO to conduct health care operations work that falls within the first 
or second paragraph of the definition of health care operations at 45 
CFR 164.501 on behalf of the organized health care arrangement.
* * * * *

0
79. Amend Sec.  425.704 by revising paragraph (b) introductory text and 
adding paragraph (b)(3) to read as follows:


Sec.  425.704  Beneficiary-identifiable claims data.

* * * * *
    (b) The ACO must certify that it is requesting claims data about 
any of the following:
* * * * *
    (3) The patients of the organized health care arrangement (as 
defined at 45 CFR 160.103) in which the ACO is participating with its 
ACO participants and ACO providers/suppliers, and the request reflects 
the minimum data necessary for the ACO to conduct health care 
operations work that falls within the first or second paragraph of the 
definition of health care operations at 45 CFR 164.501 on behalf of the 
organized health care arrangement.
* * * * *


Sec.  425.800  [Amended]

0
80. Amend Sec.  425.800 in paragraph (a)(4) by removing the references 
``Sec. Sec.  425.601, 425.602, 425.603, 425.604, 425.605, 425.606, and 
425.610'' and adding in its place the references ``Sec. Sec.  425.601, 
425.602, 425.603, 425.604, 425.605, 425.606, 425.610, and 425.652''.

PART 455--PROGRAM INTEGRITY: MEDICAID

0
81. The authority citation for part 455 continues to read as follows:

    Authority: 42 U.S.C. 1302.


0
82. Amend Sec.  455.107 by revising paragraph (b)(1)(ii) to read as 
follows:


Sec.  455.107  Disclosure of affiliations.

* * * * *
    (b) * * *
    (1) * * *
    (ii) Change of selection. A State may, in consultation with CMS, 
change its selection after it has been made from the option in 
paragraph (b)(2)(ii) of this section to that in paragraph (b)(2)(i) of 
this section.
* * * * *

    Dated: October 28, 2022.
Xavier Becerra,
Secretary, Department of Health and Human Services.

    Note:  The following appendices will not appear in the Code of 
Federal Regulations.


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[FR Doc. 2022-23873 Filed 11-2-22; 4:15 pm]
BILLING CODE 4150-28-P