[Federal Register: November 27, 2007 (Volume 72, Number 227)]
[Rules and Regulations]
[Page 66221-66578]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27no07-15]
[[Page 66221]]
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Part II
Department of Health and Human Services
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Centers for Medicare & Medicaid Services
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42 CFR Parts 409, 410, et al.
Medicare Program; Revisions to Payment Policies Under the Physician Fee
Schedule, and Other Part B Payment Policies for CY 2008; Revisions to
the Payment Policies of Ambulance Services Under the Ambulance Fee
Schedule for CY 2008; and the Amendment of the E-Prescribing Exemption
for Computer Generated Facsimile Transmissions; Final Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 409, 410, 411, 413, 414, 415, 418, 423, 424, 482, 484,
and 485
[CMS-1385-FC]
RIN 0938-AO65
Medicare Program; Revisions to Payment Policies Under the
Physician Fee Schedule, and Other Part B Payment Policies for CY 2008;
Revisions to the Payment Policies of Ambulance Services Under the
Ambulance Fee Schedule for CY 2008; and the Amendment of the E-
Prescribing Exemption for Computer Generated Facsimile Transmissions
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule with comment period.
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SUMMARY: This final rule with comment period addresses certain
provisions of the Tax Relief and Health Care Act of 2006, as well as
making other proposed changes to Medicare Part B payment policy. We are
making these changes to ensure that our payment systems are updated to
reflect changes in medical practice and the relative value of services.
This final rule with comment period also discusses refinements to
resource-based practice expense (PE) relative value units (RVUs);
geographic practice cost indices (GPCI) changes; malpractice RVUs;
requests for additions to the list of telehealth services; several
coding issues including additional codes from the 5-Year Review;
payment for covered outpatient drugs and biologicals; the competitive
acquisition program (CAP); clinical lab fee schedule issues; payment
for renal dialysis services; performance standards for independent
diagnostic testing facilities; expiration of the physician scarcity
area (PSA) bonus payment; conforming and clarifying changes for
comprehensive outpatient rehabilitation facilities (CORFs); a process
for updating the drug compendia; physician self referral issues;
beneficiary signature for ambulance transport services; durable medical
equipment (DME) update; the chiropractic services demonstration; a
Medicare economic index (MEI) data change; technical corrections;
standards and requirements related to therapy services under Medicare
Parts A and B; revisions to the ambulance fee schedule; the ambulance
inflation factor for CY 2008; and amending the e-prescribing exemption
for computer-generated facsimile transmissions. We are also finalizing
the calendar year (CY) 2007 interim RVUs and are issuing interim RVUs
for new and revised procedure codes for CY 2008.
As required by the statute, we are announcing that the physician
fee schedule update for CY 2008 is -10.1 percent, the initial estimate
for the sustainable growth rate for CY 2008 is -0.1 percent, and the
conversion factor (CF) for CY 2008 is $34.0682.
DATES: Effective Date: The provisions of this final rule with comment
period are effective January 1, 2008, except for the amendments to
Sec. 409.17 and Sec. 409.23 which are effective July 1, 2008, and the
amendments to Sec. 423.160 which is effective January 1, 2009.
Comment Date: Comments will be considered if we receive them at one
of the addresses provided below, no later than 5 p.m. e.s.t. on
December 31, 2007.
ADDRESSES: In commenting, please refer to file code CMS-1385-FC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of three ways (no duplicates,
please):
1. Electronically. You may submit electronic comments on specific
issues in this regulation to http://www.cms.hhs.gov/eRulemaking. Click
on the link ``Submit electronic comments on CMS regulations with an
open comment period.'' (Attachments should be in Microsoft Word,
WordPerfect, or Excel; however, we prefer Microsoft Word.)
2. By mail. You may mail written comments (one original and two
copies) to the following address ONLY: Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Attention: CMS-1385-
FC, P.O. Box 8020, Baltimore, MD 21244-8020.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments (one
original and two copies) to the following address ONLY: Centers for
Medicare & Medicaid Services, Department of Health and Human Services,
Attention: CMS-1385-FC, Mail Stop C4-26-05, 7500 Security Boulevard,
Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments (one original and two copies) before the
close of the comment period to one of the following addresses. If you
intend to deliver your comments to the Baltimore address, please call
telephone number (410) 786-7197 in advance to schedule your arrival
with one of our staff members.
Room 445-G, Hubert H. Humphrey (HHH) Building, 200 Independence
Avenue, SW., Washington, DC 20201; or 7500 Security Boulevard,
Baltimore, MD 21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal Government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of filing by stamping
in and retaining an extra copy of the comments being filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Submission of comments on paperwork requirements. You may submit
comments on this document's paperwork requirements by mailing your
comments to the addresses provided at the end of the ``Collection of
Information Requirements'' section in this document.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Pam West, (410) 786-2302 for issues
related to practice expense and comprehensive outpatient rehabilitation
facilities.
Rick Ensor, (410) 786-5617 for issues related to practice expense
methodology.
Stephanie Monroe, (410) 786-6864 for issues related to the
geographic practice cost index and malpractice RVUs.
Craig Dobyski, (410) 786-4584 for issues related to list of
telehealth services.
Ken Marsalek, (410) 786-4502 for issues related to the DRA imaging
cap.
Catherine Jansto, (410) 786-7762 for issues related to payment for
covered outpatient drugs and biologicals.
Edmund Kasaitis (410) 786-0477 for issues related to the
Competitive Acquisition Program (CAP) for part B drugs.
Anita Greenberg (410) 786-4601 for issues related to the clinical
laboratory fee schedule.
Henry Richter, (410) 786-4562 for issues related to payments for
end-stage renal disease facilities.
August Nemec (410) 786-0612 for issues related to independent
diagnostic testing facilities.
Kate Tillman (410) 786-9252 or Brijit Burton (410) 786-7364 for
issues related to the drug compendia.
[[Page 66223]]
David Walczak (410) 786-4475 for issues related to reassignment and
physician self-referral rules for diagnostic tests and beneficiary
signature for ambulance transport.
Lisa Ohrin (410) 786-4565 or Joanne Sinsheimer (410) 786-4620 for
issues related to physician self-referral rules.
Bob Kuhl (410) 786-4597 for issues related to the DME update.
Rachel Nelson (410) 786-1175 for issues related to the physician
quality reporting system for CY 2008.
Maria Ciccanti (410) 786-3107 for issues related to the reporting
of anemia quality indicators.
James Menas (410) 786-4507 for issues related to payment for
physician pathology services.
Dorothy Shannon, (410) 786-3396 for issues related to the
outpatient therapy caps.
Drew Morgan, (410) 786-2543 for issues related to the E-Prescribing
Exemption for Computer Generated Facsimile Transmissions.
Roechel Kujawa (410) 786-9111 or Anne Tayloe (410) 786-4546 for
issues related to the ambulance fee schedule.
Diane Milstead, (410) 786-3355 or Gaysha Brooks (410) 786-9649 for
all other issues.
SUPPLEMENTARY INFORMATION:
Submitting Comments: We welcome comments from the public on the
following issues: Interim Relative Value Units (RVUs) for selected
codes identified in Addendum C and the physician self-referral
designated health services (DHS) procedures listed in Addendum I. You
can assist us by referencing the file code [CMS-1385-FC] and the
specific ``issue identifier'' that precedes the section on which you
choose to comment.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: http://www.cms.hhs.gov/eRulemaking.
Click on the link ``Electronic Comments on
CMS Regulations'' on that Web site to view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
This Federal Register document is also available from the Federal
Register online database through Government Printing Office Access a
service of the U.S. Government Printing Office. The Web site address
is: http://www.access.gpo.gov/nara/index.html.
Information on the physician fee schedule can also be found on the
CMS homepage. You can access this data by using the following
directions:
1. Go to the following Web site: http://www.cms.hhs.gov/PhysicianFeeSched/
.
2. Select ``PFS Federal Regulation Notices.''
To assist readers in referencing sections contained in this
preamble, we are providing the following table of contents. Some of the
issues discussed in this preamble affect the payment policies, but do
not require changes to the regulations in the Code of Federal
Regulations. Information on the regulation's impact appears throughout
the preamble and is not exclusively in section VI.
Table of Contents
I. Background
A. Development of the Relative Value System
B. Components of the Fee Schedule Payment Amounts
C. Most Recent Changes to Fee Schedule
II. Provisions of the Final Rule Related to the Physician Fee
Schedule
A. Resource Based Practice Expense (PE) Relative Value Units
(RVUs)
1. Current Methodology
2. PE Proposals for CY 2008
B. Geographic Practice Cost Indices (GPCIs)
1. GPCI Update
2. Payment Localities
C. Malpractice (MP) RVUs (TC/PC issue)
D. Medicare Telehealth Services
E. Specific Coding Issues Related to PFS
1. Reduction in the Technical Component (TC) Payment for Imaging
Services Under the PFS to the Outpatient Department (OPD) Payment
Amount
2. Application of Multiple Procedure Payment Reduction for Mohs
Micrographic Surgery (CPT Codes 17311 Through 17315)
3. Payment for Intravenous Immune Globulin (IVIG) Add On Code
for Preadmission Related Services
4. Reporting of Cardiac Rehabilitation Services
F. Part B Drug Payment
1. Average Sales Price (ASP) Issues
2. Competitive Acquisition Program (CAP) Issues
G. Issues Related to the Clinical Lab Fee Schedule
1. Date of Service for the Technical Component (TC) of Physician
Pathology Services (Sec. 414.510)
2. New Clinical Diagnostic Laboratory Test (Sec. 414.508)
H. Revisions Related to Payment for Renal Dialysis Services
Furnished by End-Stage Renal Disease (ESRD) Facilities
1. Growth Update to the Drug Add-On Adjustment to the Composite
Rates
2. Update to the Geographic Adjustment to the Composite Rates
I. Independent Diagnostic Testing Facility (IDTF) Issues
1. Revisions of Existing IDTF Performance Standards
2. New IDTF Standards
J. Expiration of MMA Section 413 Provisions for Physician
Scarcity Area (PSA)
K. Comprehensive Outpatient Rehabilitation Facility (CORF)
Issues
1. Requirements for Coverage of CORF Services Plan of Treatment
(Sec. 410.105(c))
2. Included Services (Sec. 410.100)
3. Physician Services (Sec. 410.100(a))
4. Clarifications of CORF Respiratory Therapy Services
5. Social and Psychological Services
6. Nursing Care Services
7. Drugs and Biologicals
8. Supplies and DME
9. Clarifications and Payment Updates for Other CORF Services
10. Cost Based Payment (Sec. 413.1)
11. Payment for Comprehensive Outpatient Rehabilitation Facility
(CORF) Services
12. Vaccines
L. Compendia for Determination of Medically Accepted Indications
for Off Label Uses of Drugs and Biologicals in an Anti-Cancer
Chemotherapeutic Regimen (Sec. 414.930)
1. Background
2. Process for Determining Changes to the Compendia List
M. Physician Self Referral Issues
1. General
2. Changes to Reassignment and Physician Self Referral Rules
Relating to Diagnostic Tests (Anti Markup Provision)
N. Beneficiary Signature for Ambulance Transport Services
O. Update to Fee Schedules for Class III DME for CYs 2007 and
2008
1. Background
2. Update to Fee Schedule
P. Discussion of Chiropractic Services Demonstration
Q. Technical Corrections
1. Particular Services Excluded From Coverage (Sec. 411.15(a))
2. Medical Nutrition Therapy (Sec. 410.132(a))
3. Payment Exception: Pediatric Patient Mix (Sec. 413.184)
4. Diagnostic X ray Tests, Diagnostic Laboratory Tests, and
Other Diagnostic Tests: Conditions (Sec. 410.32(a)(1))
R. Other Issues
1. Recalls and Replacement Devices
2. Therapy Standards and Requirements
3. Amendment to the Exemption for Computer Generated Facsimile
Transmission from the National Council for Prescription Drug
Programs (NCPDP) SCRIPT Standard for Transmitting Prescription and
Certain Prescription Related Information for Part D Eligible
Individuals
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S. Division B of the Tax Relief and Health Care Act of 2006--
Medicare Improvements and Extension Act of 2006 (Pub. L. 109-432)
(MIEA-TRHCA)
1. Section 101(b)--Physician Quality Reporting Initiative (PQRI)
2. Section 110--Reporting of Hemoglobin or Hematocrit for Part B
Cancer Anti-Anemia Drugs (Sec. 414.707(b))
3. Section 104--Extension of Treatment of Certain Physician
Pathology Services Under Medicare
4. Section 201--Extension of Therapy Cap Exception Process
5. Section 101(d)--Physician Assistance and Quality Initiative
(PAQI) Fund
III. Revisions to the Payment Policies of Ambulance Services Under
the Fee Schedule for Ambulance Services; Ambulatory Inflation Factor
Update for CY 2007
A. History of Medicare Ambulance Services
1. Statutory Coverage of Ambulance Services
2. Medicare Regulations for Ambulance Services
3. Transition to National Fee Schedule
B. Ambulance Inflation Factor (AIF) During the Transition Period
C. Ambulance Inflation Factor (AIF) for CY 2008
D. Revisions to the Publication of the Ambulance Fee Schedule
(Sec. 414.620)
IV. Refinement of Relative Value Units for Calendar Year 2008 and
Response to Public Comments on Interim Relative Value Units for 2007
A. Summary of Issues Discussed Related to the Adjustment of
Relative Value Units
B. Process for Establishing Work Relative Value Units for the
Physician Fee Schedule
C. 5 Year Review of Work RVUs
1. Additional Codes from the 5-Year Review of Work RVUs
2. Anesthesia Coding (Part of 5-Year Review)
3. Budget Neutrality Adjustment
D. Work Relative Value Unit Refinements of Interim Relative
Value Units (Interim 2007 Codes)
E. Establishment of Interim Work Relative Value Units for New
and Revised Physician's Current Procedural Terminology (CPT) Codes
and New Healthcare Common Procedure Coding System Codes (HCPCS) for
2008 (Includes Table Titled ``American Medical Association Specialty
Relative Value Update Committee and Health Care Professionals
Advisory Committee Recommendations and CMS's Decisions for New and
Revised 2008 CPT Codes'')
F. Discussion of Codes and RUC/HCPAC Recommendations
G. Additional Coding Issues
H. Establishment of Interim PE RVUs for New and Revised
Physician's Current Procedural Terminology (CPT) Codes and New
Healthcare Common Procedure Coding System (HCPCS) Codes for 2008
V. Physician Self-Referral Prohibition: Annual Update to the List of
CPT/HCPCS Codes
VI. Physician Fee Schedule Update for CY 2008
A. Physician Fee Schedule Update
B. The Percentage Change in the Medicare Economic Index (MEI)
C. The Update Adjustment Factor (UAF)
VII. Allowed Expenditures for Physicians' Services and the
Sustainable Growth Rate
A. Medicare Sustainable Growth Rate
B. Physicians' Services
C. Preliminary Estimate of the SGR for 2008
D. Revised Sustainable Growth Rate for 2007
E. Final Sustainable Growth Rate for 2006
F. Calculation of 2008, 2007, and 2006 Sustainable Growth Rates
VIII. Anesthesia and Physician Fee Schedule Conversion Factors for
CY 2008
A. Physician Fee Schedule Conversion Factor
B. Anesthesia Fee Schedule Conversion Factor
IX. Telehealth Originating Site Facility Fee Payment Amount Update
X. Provisions of the Final Rule
XI. Waiver of Proposed Rulemaking and Delay in Effective Date
XII. Collection of Information Requirements
XIII. Response to Comments
XIV. Regulatory Impact Analysis
Regulation Text
Addendum A--Explanation and Use of Addendum B
Addendum B--2008 Relative Value Units and Related Information Used
in Determining Medicare Payments for 2007
Addendum C--Codes With Interim RVUS
Addendum D--2008 Geographic Adjustment Factors (GAFs)
Addendum E--2008 Geographic Practice Cost Indices (GPCIs) by State
and Medicare Locality
Addendum F--CPT/HCPCS Imaging Codes Defined by Section 5102(b) of
the DRA
Addendum G--FY 2008 Wage Index for Urban Areas Based on CBSA Labor
Market Areas
Addendum H--FY 2008 Wage Index Based on CBSA Labor Market Areas for
Rural Areas
Addendum I--Updated List of CPT/HCPCS Codes Used To Describe Certain
Designated Health Services Under the Physician Self-Referral
Provision
Acronyms
In addition, because of the many organizations and terms to which
we refer by acronym in this final rule with comment period, we are
listing these acronyms and their corresponding terms in alphabetical
order below:
AAA Abdominal aortic aneurysm
AAP Average acquisition price
ACOTE Accreditation Council for Occupational Therapy Education
ACR American College of Radiology
AFROC Association of Freestanding Radiation Oncology Centers
AHFS-DI American Hospital Formulary Service--Drug Information
AHRQ Agency for Healthcare Research and Quality (HHS)
AIF Ambulance inflation factor
AMA American Medical Association
AMA-DE American Medical Association Drug Evaluations
AMP Average manufacturer price
AOTA American Occupational Therapy Association
APC Ambulatory payment classification
APTA American Physical Therapy Association
ASA American Society of Anesthesiologists
ASC Ambulatory surgical center
ASP Average sales price
ASTRO American Society for Therapeutic Radiology and Oncology
ATA American Telemedicine Association
AWP Average wholesale price
BBA Balanced Budget Act of 1997 (Pub. L. 105-33)
BBRA [Medicare, Medicaid and State Child Health Insurance Program]
Balanced Budget Refinement Act of 1999 (Pub. L. 106-113)
BIPA Medicare, Medicaid, and SCHIP Benefits Improvement Protection
Act of 2000
BLS Bureau of Labor Statistics
BMD Bone mineral density
BMI Body mass index
BMM Bone mass measurement
BN Budget neutrality
BSA Body surface area
CAD Computer aided detection
CAH Critical access hospital
CAP Competitive acquisition program
CBSA Core-Based Statistical Area
CEM Cardiac event monitoring
CF Conversion factor
CFR Code of Federal Regulations
CMA California Medical Association
CMS Centers for Medicare & Medicaid Services
CNS Clinical nurse specialist
CORF Comprehensive Outpatient Rehabilitation Facility
COTA Certified Occupational Therapy Assistant
CPEP Clinical Practice Expert Panel
CPI Consumer Price Index
CPI-U Consumer price index for urban customers
CPT (Physicians') Current Procedural Terminology (4th Edition, 2002,
copyrighted by the American Medical Association)
CRT-D Cardiac resynchronization therapy defibrillator
CT Computed tomography
CTA Computed tomographic angiography
CY Calendar year
DEXA Dual energy x-ray absorptiometry
DHS Designated health services
DME Durable medical equipment
DMEPOS Durable medical equipment, prosthetics, orthotics, and
supplies
DO Doctor of Osteopathy
DRA Deficit Reduction Act of 2005 (Pub. L. 109-432)
E/M Evaluation and management
ECI Employment cost index
EHR Electronic health record
EPC [Duke] Evidence-based Practice Centers
EPO Erythopoeitin
ESRD End stage renal disease
F&C Facts and Comparisons
FAW Furnish as written
[[Page 66225]]
FAX Facsimile
FDA Food and Drug Administration (HHS)
FMR Fair market rents
FQHC Federally qualified health center
FR Federal Register
GAF Geographic adjustment factor
GAO General Accounting Office
GII Global Insight, Inc.
GPO Group purchasing organization
GPCI Geographic practice cost index
HCPAC Health Care Professional Advisory Committee
HCPCS Healthcare Common Procedure Coding System
HCRIS Healthcare Cost Report Information System
HIPAA Health Insurance Portability and Accountability Act of 1996
(Pub. L. 104-191)
HHA Home health agency
HHS [Department of] Health and Human Services
HIT Health information technology
HMO Health maintenance organization
HPSA Health Professional Shortage Area
HRSA Health Resources Services Administration (HHS)
HUD [Department of] Housing and Urban Development
ICD Implantable cardioverter-defibrillator
ICF Intermediate care facilities
IDTF Independent diagnostic testing facility
IFC Interim final rule with comment period
IOTED International Occupational Therapy Eligibility Determination
IPPE Initial preventive physical examination
IPPS Inpatient prospective payment system
IV Intravenous
IVIG Intravenous immune globulin
IWPUT Intra-service work per unit of time
JCAAI Joint Council of Allergy, Asthma, and Immunology
LPN Licensed practical nurse
MA Medicare Advantage
MA-PD Medicare Advantage Prescription Drug Plans
MD Medical doctor
MedCAC Medicare Evidence Development and Coverage Advisory Committee
(formerly the Medicare Coverage Advisory Committee (MCAC))
MedPAC Medicare Payment Advisory Commission
MEI Medicare Economic Index
MIEA-TRHCA Medicare Improvements and Extension Act of 2006 (That is,
Division B of the Tax Relief and Health Care Act of 2006 (TRHCA)
MMA Medicare Prescription Drug, Improvement, and Modernization Act
of 2003 (Pub. L. 108-173)
MNT Medical nutrition therapy
MP Malpractice
MRA Magnetic resonance angiography
MRI Magnetic resonance imaging
MSA Metropolitan statistical area
MSP Medicare Secondary Payer
MSVP Multi-specialty visit package
NBCOT National Board for Certification in Occupational Therapy, Inc.
NCCN National Comprehensive Cancer Network
NCPDP National Council for Prescription Drug Programs
NCQDIS National Coalition of Quality Diagnostic Imaging Services
NDC National drug code
NEMC New England Medical Center
NISTA National Institute of Standards and Technology Act
NLA National limitation amount
NP Nurse practitioner
NPP Nonphysician practitioners
NQF National Quality Forum
NTTAA National Technology Transfer and Advancement Act of 1995 (Pub.
L. 104-113)
OACT [CMS'] Office of the Actuary
OBRA Omnibus Budget Reconciliation Act
OIG Office of Inspector General
OMB Office of Management and Budget
OPD Outpatient Department
OPPS Outpatient prospective payment system
OPT Outpatient physical therapy
OSCAR Online Survey and Certification and Reporting
PA Physician assistant
PC Professional component
PCF Patient compensation fund
PDP Prescription Drug Plan
PE Practice Expense
PE/HR Practice expense per hour
PEAC Practice Expense Advisory Committee
PECOS Provider Enrollment, Chain, and Ownership System
PERC Practice Expense Review Committee
PET Positron emission tomography
PFS Physician Fee Schedule
PLI Professional liability insurance
PPI Producer price index
PPS Prospective payment system
PQRI Physician Quality Reporting Initiative
PRA Paperwork Reduction Act
PSA Physician scarcity areas
PT Physical therapy
PT/INR Prothrombin time, international normalized ratio
RFA Regulatory Flexibility Act
RHC Rural health clinic
RIA Regulatory impact analysis
RN Registered nurse
RT Respiratory therapist
RUC [AMA's Specialty Society] Relative (Value) Update Committee
RVU Relative value unit
SBA Small Business Administration
SGR Sustainable growth rate
SLP Speech--language pathology
SLPs Speech--language pathologists
SMS [AMA's] Socioeconomic Monitoring System
SNF Skilled nursing facility
STS Society of Thoracic Surgeons
TA Technology Assessment
TC Technical Component
TENS Transcutaneous electric nerve stimulator
TRHCA Tax Relief and Health Care Act of 2006 (Pub. L. 109-432)
USP-DI United States Pharmacopoeia-Drug Information
WAC Wholesale acquisition cost
WAMP Widely available market price
Wet AMD Exudative age-related macular degeneration
WFOT World Federation of Occupational Therapists
I. Background
Since January 1, 1992, Medicare has paid for physicians' services
under section 1848 of the Social Security Act (the Act), ``Payment for
Physicians' Services.'' The Act requires that payments under the
physician fee schedule (PFS) be based on national uniform relative
value units (RVUs) based on the resources used in furnishing a service.
Section 1848(c) of the Act requires that national RVUs be established
for physician work, practice expense (PE), and malpractice expense.
Before the establishment of the resource-based relative value system,
Medicare payment for physicians' services was based on reasonable
charges.
A. Development of the Relative Value System
1. Work RVUs
The concepts and methodology underlying the PFS were enacted as
part of the Omnibus Budget Reconciliation Act (OBRA) of 1989, Pub. L.
101-239, and OBRA 1990, (Pub. L. 101-508). The final rule, published
November 25, 1991 (56 FR 59502), set forth the fee schedule for payment
for physicians' services beginning January 1, 1992. Initially, only the
physician work RVUs were resource-based, and the PE and malpractice
RVUs were based on average allowable charges.
The physician work RVUs established for the implementation of the
fee schedule in January 1992 were developed with extensive input from
the physician community. A research team at the Harvard School of
Public Health developed the original physician work RVUs for most codes
in a cooperative agreement with the Department of Health and Human
Services (HHS). In constructing the code-specific vignettes for the
original physician work RVUs, Harvard worked with panels of experts,
both inside and outside the Federal government, and obtained input from
numerous physician specialty groups.
Section 1848(b)(2)(B) of the Act specifies that the RVUs for
anesthesia services are based on RVUs from a uniform relative value
guide. We established a separate conversion factor (CF) for anesthesia
services, and we continue to utilize time units as a factor in
determining payment for these services. As a result, there is a
separate formula used to calculate payment for anesthesia services.
We establish physician work RVUs for new and revised codes based on
recommendations received from the American Medical Association's (AMA)
Specialty Society Relative Value Update Committee (RUC).
[[Page 66226]]
2. Practice Expense Relative Value Units (PE RVUs)
Section 121 of the Social Security Act Amendments of 1994 (Pub. L.
103-32), enacted on October 31, 1994, amended section 1848(c)(2)(C)(ii)
of the Act and required us to develop resource-based PE RVUs for each
physician's service beginning in 1998. We were to consider general
categories of expenses (such as office rent and wages of personnel, but
excluding malpractice expenses) comprising PEs.
Section 4505(a) of the Balanced Budget Act of 1997 (BBA) (Pub. L.
105 33), amended section 1848(c)(2)(C)(ii) of the Act to delay
implementation of the resource based PE RVU system until January 1,
1999. In addition, section 4505(b) of the BBA provided for a 4-year
transition period from charge based PE RVUs to resource-based RVUs.
We established the resource based PE RVUs for each physician's
service in a final rule, published November 2, 1998 (63 FR 58814),
effective for services furnished in 1999. Based on the requirement to
transition to a resource based system for PE over a 4-year period,
resource-based PE RVUs did not become fully effective until 2002.
This resource-based system was based on two significant sources of
actual PE data: The Clinical Practice Expert Panel (CPEP) data and the
AMA's Socioeconomic Monitoring System (SMS) data. The CPEP data were
collected from panels of physicians, practice administrators, and
nonphysicians (for example, registered nurses (RNs)) nominated by
physician specialty societies and other groups. The CPEP panels
identified the direct inputs required for each physician's service in
both the office setting and out-of-office setting. We have since
refined and revised these inputs based on recommendations from the RUC.
The AMA's SMS data provided aggregate specialty-specific information on
hours worked and PEs.
Separate PE RVUs are established for procedures that can be
performed in both a nonfacility setting, such as a physician's office,
and a facility setting, such as a hospital outpatient department. The
difference between the facility and nonfacility RVUs reflects the fact
that a facility typically receives separate payment from Medicare for
its costs of providing the service, apart from payment under the PFS.
The nonfacility RVUs reflect all of the direct and indirect PEs of
providing a particular service.
Section 212 of the Balanced Budget Refinement Act of 1999 (BBRA)
(Pub. L. 106-113) directed the Secretary of Health and Human Services
(the Secretary) to establish a process under which we accept and use,
to the maximum extent practicable and consistent with sound data
practices, data collected or developed by entities and organizations to
supplement the data we normally collect in determining the PE
component. On May 3, 2000, we published the interim final rule (65 FR
25664) that set forth the criteria for the submission of these
supplemental PE survey data. The criteria were modified in response to
comments received, and published in the Federal Register (65 FR 65376)
as part of a November 1, 2000 final rule. The PFS final rules published
in 2001 and 2003, respectively, (66 FR 55246 and 68 FR 63196) extended
the period during which we would accept these supplemental data through
March 1, 2005.
In the CY 2007 PFS final rule with comment period (71 FR 69624), we
revised the methodology for calculating PE RVUs beginning in CY 2007
and provided for a 4-year transition for the new PE RVUs under this new
methodology. We will continue to reexamine this policy and proposed
necessary revisions through future rulemaking.
3. Resource-Based Malpractice (MP) RVUs
Section 4505(f) of the BBA amended section 1848(c) of the Act to
require us to implement resource-based malpractice (MP) RVUs for
services furnished on or after 2000. The resource-based MP RVUs were
implemented in the PFS final rule published November 2, 1999 (64 FR
59380). The MP RVUs were based on malpractice insurance premium data
collected from commercial and physician-owned insurers from all the
States, the District of Columbia, and Puerto Rico.
4. Refinements to the RVUs
Section 1848(c)(2)(B)(i) of the Act requires that we review RVUs no
less often than every 5 years. The first 5-Year Review of the physician
work RVUs was effective in 1997, published on November 22, 1996 (61 FR
59489). The second 5-Year Review went into effect in 2002, published in
the CY 2002 PFS final rule (66 FR 55246). The third 5-Year Review of
physician work RVUs went into effect on January 1, 2007 and was
published in the CY 2007 PFS final rule with comment period (71 FR
69624) (although we note that certain additional proposals relating to
the third 5-Year Review are addressed in the CY 2008 PFS proposed rule
and in this final rule with comment period).
In 1999, the AMA's RUC established the Practice Expense Advisory
Committee (PEAC) for the purpose of refining the direct PE inputs.
Through March 2004, the PEAC provided recommendations to CMS for over
7,600 codes (all but a few hundred of the codes currently listed in the
AMA's Current Procedural Terminology (CPT) codes). As part of the CY
2007 PFS final rule with comment period (71 FR 69624), we implemented a
new methodology for determining resource-based PE RVUs and are
transitioning this over a 4-year period.
In the CY 2005 PFS final rule with comment period (69 FR 66236), we
implemented the first 5-Year Review of the malpractice RVUs (69 FR
66263).
5. Adjustments to RVUs are Budget Neutral
Section 1848(c)(2)(B)(ii)(II) of the Act provides that adjustments
in RVUs for a year may not cause total PFS payments to differ by more
than $20 million from what they would have been if the adjustments were
not made. In accordance with section 1848(c)(2)(B)(ii)(II) of the Act,
if adjustments to RVUs cause expenditures to change by more than $20
million, we make adjustments to ensure that expenditures do not
increase or decrease by more than $20 million.
As explained in the CY 2007 PFS final rule with comment period (71
FR 69624), due to the increase in work RVUs resulting from the third 5-
Year Review of physician work RVUs, we are applying a separate budget
neutrality (BN) adjustor to the work RVUs for services furnished during
2007. This approach is consistent with the method we use to make BN
adjustments to the PE RVUs to reflect the changes in these PE RVUs.
B. Components of the Fee Schedule Payment Amounts
To calculate the payment for every physician service, the
components of the fee schedule (physician work, PE, and MP RVUs) are
adjusted by a geographic practice cost index (GPCI). The GPCIs reflect
the relative costs of physician work, PE, and malpractice insurance in
an area compared to the national average costs for each component.
Payments are converted to dollar amounts through the application of
a CF, which is calculated by the Office of the Actuary (OACT) and is
updated annually for inflation.
The formula for calculating the Medicare fee schedule amount for a
given service and fee schedule area can be expressed as:
[[Page 66227]]
Payment = [(RVU work x budget neutrality adjuster x work GPCI) +
(RVU PE x PE GPCI) + (MP RVU x MP GPCI)] x CF.
C. Most Recent Changes to the Fee Schedule
The CY 2007 PFS final rule with comment period (71 FR 69624)
addressed certain provisions of the Deficit Reduction Act of 2005 (Pub.
L. 109-432) (DRA) and made other changes to Medicare Part B payment
policy to ensure that our payment systems are updated to reflect
changes in medical practice and the relative value of services. This
final rule with comment period also discussed GPCI changes; requests
for additions to the list of telehealth services; payment for covered
outpatient drugs and biologicals; payment for renal dialysis services;
policies related to private contracts and opt-out; policies related to
bone mass measurement (BMM) services, independent diagnostic testing
facilities (IDTFs), the physician self-referral prohibition; laboratory
billing for the technical component (TC) of physician pathology
services; the clinical laboratory fee schedule; certification of
advanced practice nurses; health information technology, the health
care information transparency initiative; updated the list of certain
services subject to the physician self-referral prohibitions, finalized
ASP reporting requirements, and codified Medicare's longstanding policy
that payment of bad debts associated with services paid under a fee
schedule/charge-based system is not allowable.
We also finalized the CY 2006 interim RVUs and issued interim RVUs
for new and revised procedure codes for CY 2007.
In addition, the CY 2007 PFS final rule with comment period
included revisions to payment policies under the fee schedule for
ambulance services and announced the ambulance inflation factor (AIF)
update for CY 2007.
In accordance with section 1848(d)(1)(E)(i) of the Act, we also
announced that the PFS update for CY 2007 is -5.0 percent, the initial
estimate for the sustainable growth rate (SGR) for CY 2007 is 1.8
percent and the CF for CY 2007 is $35.9848. However, subsequent to
publication of the CY 2007 PFS final rule with comment period, section
101(a) of Division B, Title I of the Tax Relief and Health Care Act of
2006 (Pub. L. 109-432) (MIEA-TRHCA), which was enacted on December 20,
2006, amended section 1848(d) of the Act. [Division B of the Tax Relief
and Health Care Act of 2006 is entitled Medicare and Other Health
Provisions and its short title is the Medicare Improvements and
Extension Act of 2006. Therefore, the law is hereinafter referred to as
``MIEA-TRHCA''.] As a result of this statutory change, the CF of
$37.8975 was maintained for CY 2007.
II. Provisions of the Final Rule Related to the Physician Fee Schedule
In response to the CY 2008 PFS proposed rule (72 FR 38122), we
received approximately 27,000 comments. We received comments from
individual physicians, health care workers, professional associations
and societies, and beneficiaries. The majority of the comments
addressed the proposals related to anesthesia coding and the 5-Year
Review, the physician self-referral provisions and the technical
correction to Sec. 410.32(a)(1) concerning an exception to the
requirement that diagnostic services (including x-rays) must be ordered
by the treating physician. To the extent that comments were outside the
scope of the proposed rule, they are not addressed in this final rule
with comment period.
RVU changes implemented through this final rule with comment are
subject to the $20 million limitation on annual adjustments contained
in section 1848(c)(2)(B)(ii)(II) of the Act. After reviewing the
comments and determining the policies we would implement, we have
estimated the costs and savings of these policies and discuss in detail
the effects of these changes in the Regulatory Impact Analysis in
section XIV. For the convenience of the reader, the headings for the
policy issues correspond to the headings used in the CY 2008 PFS
proposed rule (72 FR 38122). More detailed background information for
each issue can be found in the CY 2008 PFS proposed rule.
A. Resource Based Practice Expense (PE) Relative Value Units (RVUs)
Practice expense (PE) is the portion of the resources used in
furnishing the service that reflects the general categories of
physician and practitioner expenses, such as office rent and personnel
wages but excluding malpractice expenses, as specified in section
1848(c)(1)(B) of the Act.
Section 121 of the Social Security Amendments of 1994 (Pub. L. 103-
432), enacted on October 31, 1994, required CMS to develop a
methodology for a resource-based system for determining PE RVUs for
each physician's service. Until that time, PE RVUs were based on
historical allowed charges. This legislation required that the revised
PE methodology must consider the staff, equipment, and supplies used in
the provision of various medical and surgical services in various
settings beginning in 1998. The Secretary has interpreted this to mean
that Medicare payments for each service would be based on the relative
PE resources typically involved with furnishing the service.
The initial implementation of resource-based PE RVUs was delayed
from January 1, 1998, until January 1, 1999, by section 4505(a) of the
BBA. In addition, section 4505(b) of the BBA required that the new
payment methodology be phased in over 4 years, effective for services
furnished in CY 1999, and fully effective in CY 2002. The first step
toward implementation of the statute was to adjust the PE values for
certain services for CY 1998. Section 4505(d) of the BBA required that,
in developing the resource-based PE RVUs, the Secretary must:
Use, to the maximum extent possible, generally-accepted
cost accounting principles that recognize all staff, equipment,
supplies, and expenses, not solely those that can be linked to specific
procedures and actual data on equipment utilization.
Develop a refinement method to be used during the
transition.
Consider, in the course of notice and comment rulemaking,
impact projections that compare new proposed payment amounts to data on
actual physician PE.
In CY 1999, we began the 4-year transition to resource-based PE
RVUs utilizing a ``top-down'' methodology whereby we allocated
aggregate specialty-specific practice costs to individual procedures.
The specialty-specific PEs were derived from the American Medical
Association's (AMA's) Socioeconomic Monitoring Survey (SMS). In
addition, under section 212 of the BBRA, we established a process
extending through March 2005 to supplement the SMS data with data
submitted by a specialty. The aggregate PEs for a given specialty were
then allocated to the services furnished by that specialty on the basis
of the direct input data (that is, the staff time, equipment, and
supplies) and work RVUs assigned to each CPT code.
For CY 2007, we implemented a new methodology for calculating PE
RVUs. Under this new methodology, we use the same data sources for
calculating PE, but instead of using the ``top-down'' approach to
calculate the direct PE RVUs, under which the aggregate direct and
indirect costs for each specialty are allocated to each individual
service, we now utilize a ``bottom-up'' approach to
[[Page 66228]]
calculate the direct costs. Under the ``bottom-up'' approach, we
determine the direct PE by adding the costs of the resources (that is,
the clinical staff, equipment, and supplies) typically required to
furnish each service. The costs of the resources are calculated using
the refined direct PE inputs assigned to each CPT code in our PE
database, which are based on our review of recommendations received
from the AMA's Relative Value Update Committee (RUC). For a more
detailed explanation of the PE methodology see the Five-Year Review of
Work RVUs Under the PFS and Proposed Changes to the PE Methodology
proposed notice (71 FR 37242) and the CY 2007 PFS final rule with
comment period (71 FR 69629).
1. Current Methodology
a. Data Sources for Calculating Practice Expense
The AMA's SMS survey data and supplemental survey data from the
specialties of cardio-thoracic surgery, vascular surgery, physical and
occupational therapy, independent laboratories, allergy/immunology,
cardiology, dermatology, gastroenterology, radiology, independent
diagnostic testing facilities (IDTFs), radiation oncology, and urology
are used to develop the PE per hour (PE/HR) for each specialty. For
those specialties for which we do not have PE/HR, the appropriate PE/HR
is obtained from a crosswalk to a similar specialty.
The AMA developed the SMS survey in 1981 and discontinued it in
1999. Beginning in 2002, we incorporated the 1999 SMS survey data into
our calculation of the PE RVUs, using a 5-year average of SMS survey
data. (See the Revisions to Payment Policies and Five-Year Review of
and Adjustments to the Relative Value Units Under the Physician Fee
Schedule for CY 2002 final rule (66 FR 55246, November 1, 2002)
(hereinafter referred to as CY 2002 PFS final rule).) The SMS PE survey
data are adjusted to a common year, 2005. The SMS data provide the
following six categories of PE costs:
Clinical payroll expenses, which are payroll expenses
(including fringe benefits) for nonphysician clinical personnel.
Administrative payroll expenses, which are payroll
expenses (including fringe benefits) for nonphysician personnel
involved in administrative, secretarial or clerical activities.
Office expenses, which include expenses for rent, mortgage
interest, depreciation on medical buildings, utilities and telephones.
Medical material and supply expenses, which include
expenses for drugs, x-ray films, and disposable medical products.
Medical equipment expenses, which include expenses
depreciation, leases, and rent of medical equipment used in the
diagnosis or treatment of patients.
All other expenses, which include expenses for legal
services, accounting, office management, professional association
memberships, and any professional expenses not previously mentioned in
this section.
In accordance with section 212 of the BBRA, we established a
process to supplement the SMS data for a specialty with data collected
by entities and organizations other than the AMA (that is, the
specialty itself). (See the Criteria for Submitting Supplemental
Practice Expense Survey Data interim final rule with comment period,
(65 FR 25664, May 3, 2000).) Originally, the deadline to submit
supplementary survey data was through August 1, 2001. In the CY 2002
PFS final rule (66 FR 55246), the deadline was extended through August
1, 2003. To ensure maximum opportunity for specialties to submit
supplementary survey data, we extended the deadline to submit surveys
until March 1, 2005 in the Revisions to Payment Policies Under the
Physician Fee Schedule for CY 2004 final rule, (November 7, 2003; 68 FR
63196) (hereinafter referred to as CY 2004 PFS final rule).
The direct cost data for individual services were originally
developed by the Clinical Practice Expert Panels (CPEP). The CPEP data
include the supplies, equipment, and staff times specific to each
procedure. The CPEPs consisted of panels of physicians, practice
administrators, and nonphysicians (for example, RNs) who were nominated
by physician specialty societies and other groups. There were 15 CPEPs
consisting of 180 members from more than 61 specialties and
subspecialties. Approximately 50 percent of the panelists were
physicians.
The CPEPs identified specific inputs involved in each physician's
service provided in an office or facility setting. The inputs
identified were the quantity and type of nonphysician labor, medical
supplies, and medical equipment.
In 1999, the AMA's RUC established the Practice Expense Advisory
Committee (PEAC). From 1999 to March 2004, the PEAC, a multi-specialty
committee, reviewed the original CPEP inputs and provided us with
recommendations for refining these direct PE inputs for existing CPT
codes. Through its last meeting in March 2004, the PEAC provided
recommendations for over 7,600 codes which we have reviewed and
accepted. As a result, the current PE inputs differ markedly from those
originally recommended by the CPEPs. The PEAC has now been replaced by
the Practice Expense Review Committee (PERC), which acts to assist the
RUC in recommending PE inputs.
b. Allocation of PE to Services
The aggregate level specialty-specific PEs are derived from the
AMA's SMS survey and supplementary survey data. To establish PE RVUs
for specific services, it is necessary to establish the direct and
indirect PE associated with each service.
(i) Direct costs. The direct costs are determined by adding the
costs of the resources (that is, the clinical staff, equipment, and
supplies) typically required to provide the service. The costs of these
resources are calculated from the refined direct PE inputs in our PE
database. These direct inputs are then scaled to the current aggregate
pool of direct PE RVUs. The aggregate pool of direct PE RVUs can be
derived using the following formula: (PE RVUs * physician CF) *
(average direct percentage from SMS/(Supplemental PE/HR data)).
(ii) Indirect costs. The SMS and supplementary survey data are the
source for the specialty-specific aggregate indirect costs used in our
PE calculations. We then allocate the indirect costs to the code level
on the basis of the direct costs specifically associated with a code
and the maximum of either the clinical labor costs or the physician
work RVUs. For calculation of the 2008 PE RVUs, we are using the 2006
procedure-specific utilization data crosswalked to 2007 services. To
arrive at the indirect PE costs:
We apply a specialty-specific indirect percentage factor
to the direct expenses to recognize the varying proportion that
indirect costs represent of total costs by specialty. For a given
service, the specific indirect percentage factor to apply to the direct
costs for the purpose of the indirect allocation is calculated as the
weighted average of the ratio of the indirect to direct costs (based on
the survey data) for the specialties that furnish the service. For
example, if a service is furnished by a single specialty with indirect
PEs that were 75 percent of total PEs, the indirect percentage factor
to apply to the direct costs for the purposes of the indirect
[[Page 66229]]
allocation would be (0.75/0.25) = 3.0. The indirect percentage factor
is then applied to the service level adjusted indirect PE allocators.
We use the specialty-specific PE/HR from the SMS survey
data, as well as the supplemental surveys for cardio-thoracic surgery,
vascular surgery, physical and occupational therapy, independent
laboratories, allergy/immunology, cardiology, dermatology, radiology,
gastroenterology, IDTFs, radiation oncology and urology. (Note: For
radiation oncology, the data represent the combined survey data from
the American Society for Therapeutic Radiology and Oncology (ASTRO) and
the Association of Freestanding Radiation Oncology Centers (AFROC).) We
incorporate this PE/HR into the calculation of indirect costs using an
index which reflects the relationship between each specialty's indirect
scaling factor and the overall indirect scaling factor for the entire
PFS. For example, if a specialty had an indirect practice cost index of
2.00, this specialty would have an indirect scaling factor that was
twice the overall average indirect scaling factor. If a specialty had
an indirect practice cost index of 0.50, this specialty would have an
indirect scaling factor that was half the overall average indirect
scaling factor.
When the clinical labor portion of the direct PE RVU is
greater than the physician work RVU for a particular service, the
indirect costs are allocated based upon the direct costs and the
clinical labor costs. For example, if a service has no physician work
and 1.10 direct PE RVUs, and the clinical labor portion of the direct
PE RVUs is 0.65 RVUs, we would use the 1.10 direct PE RVUs and the 0.65
clinical labor portions of the direct PE RVUs to allocate the indirect
PE for that service.
c. Facility/Nonfacility Costs
Procedures that can be furnished in a physician's office, as well
as in a hospital or facility setting, have two PE RVUs: facility and
nonfacility. The nonfacility setting includes physicians' offices,
patients' homes, freestanding imaging centers, and independent
pathology labs. Facility settings include hospitals, ambulatory
surgical centers (ASCs), and skilled nursing facilities (SNFs). The
methodology for calculating PE RVUs is the same for both, facility and
nonfacility RVUs, but is applied independently to yield two separate PE
RVUs. Because the PEs for services provided in a facility setting are
generally included in the payment to the facility (rather than the
payment to the physician under the PFS), the PE RVUs are generally
lower for services provided in the facility setting.
d. Services With Technical Components (TCs) and Professional Components
(PCs)
Diagnostic services are generally comprised of two components; a
professional component (PC) and a technical component (TC), which may
be furnished independently or by different providers. When services
have TC, PC, and global components that can be billed separately, the
payment for the global component equals the sum of the payment for the
TC and PCs. This is a result of using a weighted average of the ratio
of indirect to direct costs across all the specialties that furnish the
global components, TCs, and PCs; that is, we apply the same weighted
average indirect percentage factor to allocate indirect expenses to the
global components, PC, and TCs for a service. (The direct PE RVUs for
the TC and PCs sum to the global under the bottom-up methodology.)
e. Transition Period
As discussed in the CY 2007 PFS final rule with comment period (71
FR 69674), we are implementing the change in the methodology for
calculating PE RVUs over a 4-year period. During this transition
period, the PE RVUs will be calculated on the basis of a blend of RVUs
calculated using our methodology described previously in this section
(weighted by 25 percent during CY 2007, 50 percent during CY 2008, 75
percent during CY 2009, and 100 percent thereinafter), and the CY 2006
PE RVUs for each existing code. PE RVUs for codes that are new during
this period will be calculated using only the current PE methodology,
and will be paid at the fully transitioned rate.
f. PE RVU Methodology
The following is a description of the PE RVU methodology.
(i) Setup File
First, we create a setup file for the PE methodology. The setup
file contains the direct cost inputs, the utilization for each
procedure code at the specialty and facility/nonfacility place of
service level, and the specialty-specific survey PE per physician hour
data.
(ii) Calculate the Direct Cost PE RVUs
Sum the Costs of Each Direct Input
Step 1: Sum the direct costs of the inputs for each service. The
direct costs consist of the costs of the direct inputs for clinical
labor, medical supplies, and medical equipment. The clinical labor cost
is the sum of the cost of all the staff types associated with the
service; it is the product of the time for each staff type and the wage
rate for that staff type. The medical supplies cost is the sum of the
supplies associated with the service; it is the product of the quantity
of each supply and the cost of the supply. The medical equipment cost
is the sum of the cost of the equipment associated with the service; it
is the product of the number of minutes each piece of equipment is used
in the service and the equipment cost per minute. The equipment cost
per minute is calculated as described at the end of this section.
Apply a BN Adjustment to the Direct Inputs
Step 2: Calculate the current aggregate pool of direct PE costs. To
do this, multiply the current aggregate pool of total direct and
indirect PE costs (that is, the current aggregate PE RVUs multiplied by
the CF) by the average direct PE percentage from the SMS and
supplementary specialty survey data.
Step 3: Calculate the aggregate pool of direct costs. To do this,
for all PFS services, sum the product of the direct costs for each
service from Step 1 and the utilization data for that service.
Step 4: Using the results of Step 2 and Step 3 calculate a direct
PE BN adjustment so that the proposed aggregate direct cost pool does
not exceed the current aggregate direct cost pool and apply it to the
direct costs from Step 1 for each service.
Step 5: Convert the results of Step 4 to an RVU scale for each
service. To do this, divide the results of Step 4 by the Medicare PFS
CF.
(iii) Create the Indirect PE RVUs
Create Indirect Allocators
Step 6: Based on the SMS and supplementary specialty survey data,
calculate direct and indirect PE percentages for each physician
specialty.
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 a TC
and PCs we are calculating the direct and indirect percentages across
the global components, PCs and TCs. That is, the direct and indirect
percentages for a given service (for example, echocardiogram) do not
vary by the PC, TC and global component.
Step 8: Calculate the service level allocators for the indirect PEs
based on the percentages calculated in Step 7. The indirect PEs are
allocated based on the three components: the direct PE
[[Page 66230]]
RVU, the clinical PE RVU and the work RVU.
For most services the indirect allocator is: indirect percentage *
(direct PE RVU/direct percentage) + work RVU.
There are two situations where this formula is modified:
If the service is a global service (that is, a service
with global, professional and technical components), then the indirect
allocator is: indirect percentage * (direct PERVU/direct percentage) +
clinical PE RVU + work RVU.
If the clinical labor PE RVU exceeds the work RVU (and the
service is not a global service), then the indirect allocator is:
indirect percentage * (direct PERVU/direct percentage) + clinical PE
RVU.
(Note that for global services the indirect allocator is based on
both the work RVU and the clinical labor PE RVU. We do this to
recognize that, for the professional service, indirect PEs will be
allocated using the work RVUs, and for the TC service, indirect PEs
will be allocated using the direct PE RVU and the clinical labor PE
RVU. This also allows the global component RVUs to equal the sum of the
PC and TC RVUs.)
For presentation purposes in the examples in Table 1, the formulas
were divided into two parts for each service. The first part does not
vary by service and is the indirect percentage * (direct PE RVU/direct
percentage). The second part is either the work RVU, clinical PE RVU,
or both depending on whether the service is a global service and
whether the clinical PE RVU exceeds the work RVU (as described earlier
in this step.)
Apply a BN Adjustment to the Indirect Allocators
Step 9: Calculate the current aggregate pool of indirect PE RVUs by
multiplying the current aggregate pool of PE RVUs by the average
indirect PE percentage from the physician specialty survey data. This
is similar to the Step 2 calculation for the direct PE RVUs.
Step 10: Calculate an aggregate pool of proposed indirect PE RVUs
for all PFS services by adding the product of the indirect PE
allocators for a service from Step 8 and the utilization data for that
service. This is similar to the Step 3 calculation for the direct PE
RVUs.
Step 11: Using the results of Step 9 and Step 10, calculate an
indirect PE adjustment so that the aggregate indirect allocation does
not exceed the available aggregate indirect PE RVUs and apply it to
indirect allocators calculated in Step 8. This is similar to the Step 4
calculation for the direct PE RVUs.
Calculate the Indirect Practice Cost Index
Step 12: Using the results of Step 11, calculate aggregate pools of
specialty-specific adjusted indirect PE allocators for all PFS services
for a specialty by adding the product of the adjusted indirect PE
allocator for each service and the utilization data for that service.
Step 13: Using the specialty-specific indirect PE/HR data,
calculate specialty-specific aggregate pools of indirect PE for all PFS
services for that specialty by adding the product of the indirect PE/HR
for the specialty, the physician time for the service, and the
specialty's utilization for the service.
Step 14: Using the results of Step 12 and Step 13, calculate the
specialty-specific indirect PE scaling factors as under the current
methodology.
Step 15: Using the results of Step 14, calculate an indirect
practice cost index at the specialty level by dividing each specialty-
specific indirect scaling factor by the average indirect scaling factor
for the entire PFS.
Step 16: Calculate the indirect practice cost index at the service
level to ensure the capture of all indirect costs. Calculate a weighted
average of the practice cost index values for the specialties that
furnish the service. Note: For services with TC and PCs, we calculate
the indirect practice cost index across the global components, PCs and
TCs. Under this method, the indirect practice cost index for a given
service (for example, echocardiogram) does not vary by the PC, TC and
global components.
Step 17: Apply the service level indirect practice cost index
calculated in Step 16 to the service level adjusted indirect allocators
calculated in Step 11 to get the indirect PE RVU.
(iv) Calculate the Final PE RVUs
Step 18: Add the direct PE RVUs from Step 6 to the indirect PE RVUs
from Step 17.
Step 19: Calculate and apply the final PE BN adjustment by
comparing the results of Step 18 to the current pool of PE RVUs. This
final BN adjustment is required primarily because certain specialties
are excluded from the PE RVU calculation for rate-setting purposes, but
all specialties are included for purposes of calculating the final BN
adjustment. (See ``Specialties excluded from rate-setting calculation''
below in this section.)
(v) Setup File Information
Specialties excluded from rate-setting calculation: For
the purposes of calculating the PE RVUs, we exclude certain specialties
such as midlevel practitioners paid at a percentage of the PFS,
audiology, and low volume specialties from the calculation. These
specialties are included for the purposes of calculating the BN
adjustment.
Crosswalk certain low volume physician specialties:
Crosswalk the utilization of certain specialties with relatively low
PFS utilization to the associated specialties.
Physical therapy utilization: Crosswalk the utilization
associated with all physical therapy services to the specialty of
physical therapy.
Identify professional and technical services not
identified under the usual TC and 26 modifier: Flag the services that
are PC and TC services, but do not use TC and 26 modifiers (for
example, electrocardiograms). This flag associates the PC and TC with
the associated global code for use in creating the indirect PE RVU. For
example, the professional service code 93010 is associated with the
global code 93000.
Payment modifiers: Payment modifiers are accounted for in
the creation of the file. For example, services billed with the
assistant at surgery modifier are paid 16 percent of the PFS amount for
that service; therefore, the utilization file is modified to only
account for 16 percent of any service that contains the assistant at
surgery modifier.
Work RVUs: The setup file contains the work RVUs from this
final rule with comment period.
(vi) Equipment Cost Per Minute =
The equipment cost per minute is calculated as:
(1/(minutes per year * usage)) * price * ((interest rate/(1-(1/((1
+ interest rate) * life of equipment)))) + maintenance)
Where:
minutes per year = maximum minutes per year if usage were continuous
(that is, usage = 1); 150,000 minutes.
usage = equipment utilization assumption; 0.5.
price = price of the particular piece of equipment.
interest rate = 0.11.
life of equipment = useful life of the particular piece of equipment.
maintenance = factor for maintenance; 0.05.
[[Page 66231]]
Table 1.--Calculation of PE RVUs Under Methodology for Selected Codes
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
99213 33533 71020 71020TC 7102026 93000 93005 93010
------------------------------------------------------------------------------------------------------
CABG,
Step Source Formula Office arterial, Chest x-ray Chest x-ray Chest x-ray ECG, ECG, ECG, report
visit, est single nonfacility nonfacility nonfacility complete tracing nonfacility
nonfacility facility nonfacility nonfacility
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Labor cost (Lab)........... Step 1............ AMA.............. ................. $13.32 $77.52 $5.74 $5.74 $ $6.12 $6.12 $
(2) Supply cost (Sup).......... Step 1............ AMA.............. ................. $2.98 $7.34 $3.39 $3.39 $ $1.19 $1.19 $
(3) Equipment cost (Eqp)....... Step 1............ AMA.............. ................. $0.19 $0.65 $8.17 $8.17 $ $0.12 $0.12 $
(4) Direct cost (Dir).......... Step 1............ ................. =(1)+(2)+(3)..... $16.50 $85.51 $17.31 $17.31 $ $7.43 $7.60 $
(5) Direct adjustment (Dir Adj) Steps 2-4......... See footnote \1\. ................. 0.592 0.592 0.592 0.592 0.592 0.592 0.592 0.592
(6) Adjusted labor............. Steps 2-4......... =Lab * Dir Adj... =(1) * (5)....... $7.89 $45.89 $3.40 $3.40 $ $3.62 $3.62 $
(7) Adjusted supplies.......... Steps 2-4......... =Sup * Dir Adj... =(2) * (5)....... $1.77 $4.35 $2.01 $2.01 $ $0.71 $0.71 $
(8) Adjusted equipment......... Steps 2-4......... =Eqp *Dir Adj.... =(3) * (5)....... $0.12 $0.39 $4.84 $4.84 $ $0.07 $0.07 $
(9) Adjusted direct............ Steps 2-4......... ................. =(6)+(7)+(8)..... $9.77 $50.62 $10.25 $10.25 $ $4.40 $4.40 $
(10) Conversion Factor (CF).... Step 5............ MFS.............. ................. $34.0682 $34.0682 $34.0682 $34.0682 $34.0682 $34.0682 $34.0682 $34.0682
(11) Adj. labor cost converted. Step 5............ =(Lab * Dir Adj)/ =(6)/(10)........ 0.23 1.35 0.10 0.10 ........... 0.11 0.11 ...........
CF.
(12) Adj. supply cost converted Step 5............ =(Sup * Dir Adj)/ =(7)/(10)........ 0.05 0.13 0.06 0.06 ........... 0.02 0.02 ...........
CF.
(13) Adj. equip cost converted. Step 5............ =(Eqp * Dir Adj)/ =(8)/(10)........ 0.00 0.01 0.14 0.14 ........... 0.00 0.00 ...........
CF.
(14) Adj. direct cost converted Step 5............ ................. =(11)+(12)+(13).. 0.29 1.49 0.30 0.30 ........... 0.13 0.13 ...........
(15) Wrk RVU * Wrk Scaler...... Setup File........ MFS.............. 0.8806........... 0.81 29.62 0.19 0.00- 0.19 0.15 0.00 0.15
(16) Dir--pct.................. Steps 6, 7........ Surveys.......... ................. 33.8% 32.6% 40.7% 40.7% 40.7% 37.7% 37.7% 37.7%
(17) Ind--pct.................. Steps 6, 7........ Surveys.......... ................. 66.2% 67.4% 59.3% 59.3% 59.3% 62.3% 62.3% 62.3%
(18) Ind. Alloc. formula (1st Step 8............ See Step 8....... ................. ((14)/(16)) ((14)/ ((14)/(16)) ((14)/(16)) ((14)/(16)) ((14)/(16)) ((14)/(16)) ((14)/(16))
part). * (17) (16)) * * (17) * (17) * (17) * (17) * (17) * (17)
(17)
(19) Ind. Alloc. (1st part).... Step 8............ ................. See (18)......... 0.56 3.07 0.44 0.44 ........... 0.21 0.21 ...........
(20) Ind. Alloc. formulas (2nd Step 8............ See Step 8....... ................. (15) (15) (15)+(11) (11) (15) (15)+(11) (11) (15)
part).
(21) Ind. Alloc. (2nd part).... Step 8............ ................. See (20)......... 0.81 29.62 0.29 0.10 0.19 0.26 0.11 0.15
(22) Indirect Allocator Step 8............ ................. =(19)+(21)....... 1.37 32.70 0.73 0.54 0.19 0.47 0.32 0.15
(1st+2nd).
(23) Indirect Adjustment (Ind Steps 9-11........ See footnote \2\. ................. 0.362 0.362 0.362 0.362 0.362 0.362 0.362 0.362
Adj).
(24) Adjusted Indirect Steps 9-11........ =Ind Alloc * Ind ................. 0.50 11.84 0.26 0.19 0.07 0.17 0.12 0.05
Allocator. Adj.
(25) Ind. Practice Cost Index Steps 12-16....... See Steps 12-16.. ................. 0.968 0.942 1.054 1.054 1.054 1.280 1.280 1.280
(PCI).
(26) Adjusted Indirect......... Step 17........... = Adj. Ind Alloc =(24) * (25)..... 0.48 11.15 0.28 0.21 0.07 0.22 0.15 0.07
* PCI.
(27) PE RVU.................... Steps 18-19....... =(Adj Dir+Adj =((14)+(26)) * 0.77 12.64 0.58 0.51 0.07 0.35 0.28 0.07
Ind) * budn. budn.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ The direct adj = [current pe rvus * CF * avg dir pct] / [sum direct inputs] = [Step 2] / [Step 3].
\2\ The indirect adj = [current pe rvus * avg ind pct] / [sum of ind allocators] = [Step 9] / [Step 10.
[[Page 66232]]
Comments Related to PE Methodology
Comment: Several commenters recommend that the unadjusted work RVUs
be used in the allocation of the indirect PE RVUs.
Response: The decision to use the budget neutralized work RVUs in
the calculation of indirect PEs appropriately maintains the current
relationships between the work, PE, and professional liability
payments. We also believe it is important to apply the revised, budget
neutralized work RVUs consistently within the PFS framework. It would
not be consistent to apply one set of work RVUs for work payments, but
a different set for purposes of calculating indirect PEs. Therefore, we
will base the calculation of both the work payments and the indirect PE
payments on the adjusted work RVUs, and maintain the current overall
relationships between work, PE, and professional liability. The PE RVUs
in Addendum B and throughout the rest of this rule reflect this policy.
Comment: Several commenters commended CMS on the bottom up approach
to calculating resource based PE RVUs. Commenters expressed gratitude
for the transparency and straight forward nature of the revised
methodology.
Response: We appreciate the support for the revised bottom up
practice methodology and agree that the bottom up methodology is a more
straight forward methodology then its predecessor.
Comment: Some commenters contend that the approach of basing PE
calculations on the weighted average of all specialties furnishing a
service is flawed and should be replaced with an approach that bases
the specialty weighted factors upon specialties that represent 95
percent of the total utilization of each respective service.
Response: This issue was fully addressed in the comment and
response section of the CY 2007 PFS final rule with comment period (71
FR 69641), and we did not make any further proposals relating to this
policy in the CY 2008 PFS proposed rule. Thus, these comments are
outside the scope of the CY 2008 PFS proposed rule.
Comment: One commenter stated that the use of direct PEs in the
allocation of indirect PEs unfairly penalizes PC only billers that do
not have any direct costs. Additionally, this commenter contends that
the use of only the work RVU in the allocation of indirect PEs for this
situation underestimates the indirect PEs for PC only billers.
Response: The resource-based PE methodology uses both the work RVU
and the direct cost PE RVU in the allocation of indirect PEs. For PC
only billers, which do not have any direct costs, indirect costs will
only be allocated based upon the work RVUs. There is no provision
within the current methodology to allocate the indirect PEs
differently, and we made no proposals in the CY 2008 PFS proposed rule
regarding this allocation. Additionally, we note that a review of
comments on past regulations confirms that the physician community
believes that the work RVUs ``over allocate'' the indirect PEs. Thus,
there appear to be differing views regarding the effect of this
allocation. We will continue to allocate the indirect PEs of PC only
services on the work RVUs.
Comment: One commenter recommended that, for procedures that have
supply costs in excess of 40 to 50 percent of total direct costs, all
supply costs be passed through and exempt from the direct adjustment
factor.
Response: The resource-based PE methodology converts the direct
costs for a service, obtained from the direct cost database, into PE
RVUs by comparing the service specific aggregate costs to the aggregate
pool of costs available for expenditure on direct costs. Because the
aggregate direct costs for all services contained in the direct cost
database exceed the aggregate pool of available direct dollars, a
direct cost adjustment must be applied to scale the database to the
pool. Irrespective of the percentage of total direct costs for a
specific service represented by supplies, this adjustment will still be
applied. If this adjustment were not applied to certain services, the
system would either not be budget neutral or RVUs for all other
services would have to be reduced to offset these exemptions. We did
not make any proposals relating to this adjustment. Moreover, we see no
methodological reason to exempt any services regardless of the
percentage of their direct costs represented by supplies from the
adjustments that apply to all direct costs.
g. Discussion of Equipment Usage Percentage
In the CY 2008 PFS proposed rule (72 FR 38132), we included a
discussion about our use of the equipment usage assumption of 50
percent, and stated that we continue to receive requests that we refine
this usage percentage. Some groups and individuals state that this
usage percentage should be in the range of 70 to 80 percent while
others contend that the current utilization rate is too high at 50
percent and should be refined downward to a lower usage percentage.
If the equipment usage percentage is set too high, the result would
be insufficient allowance at the service level for the practice costs
associated with equipment. If the equipment usage percentage is set too
low, the result would be an excessive allowance for the PE costs of
equipment at the service level. Although we acknowledged the 50 percent
across the board usage rate that we currently apply for all equipment
does not capture the actual usage rates for all equipment, we indicated
we do not believe that we have sufficient empirical evidence to justify
an alternative proposal on this issue. Therefore, we requested that
commenters submit information relating to alternative percentages and
approaches that differentially classify equipment into mutually
exclusive categories with category specific usage rate assumptions. In
addition, we requested any empirical data that would assist us in these
efforts.
h. Equipment Interest Rate
As part of our calculation of the PE equipment costs, we consider
several factors, for example, the useful life of each piece of
equipment and the typical interest that would be incurred in the
purchase of the equipment. We updated the assigned useful life for all
the equipment in our PE input database in the CY 2005 PFS final rule
with comment period. However, we have used the same interest rate of 11
percent since the inception of the resource based PE methodology in
1999. There has been much discussion regarding whether this is still
the appropriate interest rate to utilize in the calculation of the
equipment costs. The majority of comments on the CY 2007 PFS final rule
with comment period requested an interest rate of prime plus 2 percent
while a small number of commenters requested an interest rate
significantly lower than prime plus 2 percent.
In the CY 2008 PFS proposed rule (72 FR 38132), we discussed the
basis for the current interest rate of 11 percent and indicated that,
based on our analysis of the revised SBA interest rate data, we believe
11 percent continues to be an appropriate assumption; therefore, we
stated would retain the interest rate used in the calculation of
equipment costs at 11 percent.
Comments Concerning Equipment Usage and Interest Rate
Comment: Several commenters, including several specialty societies,
MedPAC, and the AMA RUC offered recommendations regarding the 11
percent interest rate and the 50 percent utilization rate used to
calculate the
[[Page 66233]]
price per minute for each piece of equipment. The recommendations
received regarding the proposed 11 percent interest rate were generally
favorable with the majority of commenters recommending that we monitor
the interest rate annually to ensure that the appropriate percentage is
utilized in the calculation of the equipment costs.
The commenters' recommendations about making adjustments to the 50
percent utilization rate varied. Certain commenters recommended we do
nothing until stronger empirical evidence is available, while other
commenters recommended a decrease in the utilization assumptions, and
some commenters recommended an increase in the utilization assumption.
The particular changes recommended in the utilization assumptions were,
in most cases, directly related to a specific code. Virtually all
comments received support an on going process of obtaining reliable
empirical data to utilize in the calculation of equipment costs in the
future.
Response: As discussed in detail in the CY 2007 PFS final rule with
comment period (71 FR 69650), we agree with commenters that both the
equipment interest rate and the equipment utilization rate should
continue to be examined for accuracy. We are committed to working with
all interested parties to define the most accurate utilization and
interest rate information for equipment used in the provision of
physicians' services. Since we did not propose a specific change, we
will maintain the assumptions of a 50-percent equipment utilization
rate and an 11-percent equipment interest rate in the calculation of
the PE RVUs published in Addendum B of this final rule with comment
period. We will continue to monitor the appropriateness of these
assumptions, and evaluate whether changes should be proposed in light
of the data available.
Comment: A few commenters recommended that the equipment
utilization rate associated with preventive services be reduced since
much of the equipment associated with preventive services is procedure
specific and thus not utilized at as high a rate as other medical
equipment.
Response: Similar to our response regarding the equipment
utilization rate associated with the entire universe of medical
equipment, we do not believe that we have any strong empirical evidence
to suggest a change in the current equipment utilization rate
associated with preventive services. We are committed to continue
working with all interested parties to identify the most accurate
utilization rate information for equipment used in the provision of
physicians' services.
2. PE Proposals for CY 2008
a. Radiology Practice Expense Per Hour
The American College of Radiology (ACR) presented CMS with
information regarding the PE/HR that was used in the PE methodology for
radiology in the CY 2007 PFS final rule with comment period. ACR
suggested that we change our methodology in a way that would weight the
survey data to provide an alternative method of representing large and
small practices. We agreed to take their approach to our contractor,
the Lewin Group, for further analysis. (We note that the Lewin Group,
in its initial analysis of the ACR survey data, had also raised
concerns about the representation of small high cost entities in the
ACR survey data.) The Lewin Group reviewed ACR's approach and concluded
that weighting the ACR survey by practice size more appropriately
accounts for the small high cost entities in the final PE/HR. After
reviewing both the ACR inquiry and the Lewin response, we also agreed
that ACR's approach more appropriately identifies the PE/HR for
radiology.
For these reasons, we proposed to revise the PE/HR associated with
radiology using the survey data weighted by practice size and included
this revised PE/HR in Table 2 of the CY 2008 PFS proposed rule which
identified the PE/HR for all specialties.
Comment: Several commenters, including the AMA's RUC, expressed
concern over the proposed increase in the PE/HR for radiology whereby
the PE/HR associated with this specialty would be developed based upon
a revised practice size weighting methodology. Commenters believed that
it is inappropriate to refine the current weighting methodology
because: (1) This weighting methodology was not done for all
specialties; and (2) some specialties requested to survey their
memberships after the deadline to submit supplemental survey data and
were denied this opportunity by CMS. Several other commenters commended
CMS on their ability to review this potential problem and offer a
timely resolution to the affected specialty.
Response: The American College of Radiology approached CMS with
questions regarding the weighting methodology that were used in the
development of their PE/HR. Specifically, ACR believed that small high
cost practices that primarily furnish professional only services were
severely underrepresented in the published PE/HR. Therefore, we
forwarded ACR's concerns to our contractor for further review. Upon
review of ACR's concerns, our contractor concluded that their initial
PE/HR recommendation to CMS was not fully representative of these
smaller high cost practices. For this reason, our contractor
recommended a revised weighting approach that would fairly represent
these small high cost practices. We agree with both the ACR and our
contractor and will finalize our proposal to use the revised PE/HR for
radiology.
Additionally, we do not believe that these revisions to the PE/HR
for radiology constitute a submission of data after the deadline. No
new data were submitted. Rather, we view this as a revision to the
weighting methodology in order to address a unique situation.
Comment: Several commenters recommended that all pain management
services be crosswalked to the interventional pain management specialty
as opposed to using the actual data which currently report the
anesthesiology specialty furnishing a significant portion of the pain
management services. According to the comments received, anesthesiology
is listed as the primary specialty on many pain management services and
since the PE/HR associated with anesthesiology is lower than
interventional pain management, pain management services are being
inappropriately valued.
Response: Physicians self-designate their respective specialty for
purposes of Medicare enrollment. If commenters believe that physicians
are incorrectly self-designating their specialty as anesthesiology when
it would be more appropriate for them to designate interventional pain
management, commenters should work with their respective specialty
organizations to ensure physicians appropriately designate the correct
specialty. If the specialty of a certain percentage of the physicians
furnishing the pain management service is actually anesthesiology, we
believe that weighting the various PE/HR for all specialties that
furnish these services, as we currently do, is the appropriate
methodology to establish the final PE/HR for pain management services.
Comment: One commenter recommends that only the PE/HR associated
with ophthalmology be used in the establishment of RVUs for CPT code
66984, Extracapsular cataract removal with insertion of intraocular
lens prosthesis (one stage procedure), manual or mechanical technique
(e.g., irrigation and aspiration or
[[Page 66234]]
phacoemulsification). The commenter contends that the 14 percent of the
utilization that is associated with optometry is in error as
optometrist would only be involved in the post-operative care of these
patients and not the surgical procedure.
Response: Although we did not make any proposals in the CY 2008 PFS
proposed rule regarding this issue, we agree that, generally,
optometrists will not be involved in the surgical procedure. As stated
by the commenter, and supported by the utilization data, there are a
significant number of services for which optometrists are involved in
the post-operative care of CPT code 66984. The resource-based PE
methodology appropriately adjusts for those services identified with
modifier 55 (post-operative care only). Since there are PEs associated
with the post-operative care of CPT code 66984, and since we adjust the
utilization for those services that are identified as the post-
operative care only of CPT code 66984, we believe the current
methodology appropriately reflects the correct weighted specialty mix
associated with this service.
Comment: One commenter recommended that the PE/HR for CPT codes
22862, Revision including replacement of total disc arthroplasty
(artificial disc) anterior approach, lumbar, single interspace, and
22865, Removal of total disc arthroplasty (artificial disc) anterior
approach, lumbar, single interspace, be crosswalked to orthopedic
surgery as opposed to the all physician PE/HR. The commenter contended
this is similar to the crosswalk change from all physicians to
orthopedic surgery that was reflected in the PE methodology in the
proposed rule for CPT code 22857, Total disc arthroplasty (artificial
disc), anterior approach, including discectomy to prepare interspace
(other than for decompression), lumbar, single interspace.
Response: CPT codes 22862 and 22865 were new for CY 2007 and absent
specific information with respect to the specialty performing the
services, we had crosswalked these codes to the all physician PE/HR. We
agree with the commenter that these codes are of a similar nature to
CPT code 22857. They are part of the same orthopedic family of codes
and should be treated consistently when applying the PE methodology.
Therefore, we will assign the orthopedic surgery PE/HR to CPT codes
22862 and 22865 as opposed to the all physician PE/HR.
Comment: Several commenters conveyed support for the Physician
Practice Information Survey which is currently being administered
throughout the nation and encouraged CMS to use this practice cost
information to update the current PE/HR data that is being utilized in
the development of resourced-based PE RVUs.
Response: The Physician Practice Information Survey is a practice
cost survey that is being conducted by the AMA with support from
various specialty societies and CMS. We look forward to analyzing the
results of the AMA data collection efforts for possible inclusion in
the resource-based PE methodology in future rulemaking cycles.
b. RUC Recommendations for Direct PE Inputs and Other PE Input Issues
In the CY 2008 PFS proposed rule (72 FR 38133), we proposed the
following concerning direct PE inputs.
(i) RUC Recommendations
In 2004, the AMA's Relative Value Update Committee (RUC)
established a new committee, the Practice Expense Review Committee
(PERC), to assist the RUC in recommending direct PE inputs (clinical
staff, supplies, and equipment) for new and existing CPT codes, a
process that was previously accomplished by the Practice Expense
Advisory Committee (PEAC).
The PERC reviewed the PE inputs for nearly 300 existing codes at
its meetings held in February 2007 and April 2007. (A list of these
reviewed codes can be found in Addendum C of the CY 2008 PFS proposed
rule.)
In the CY 2007 PFS final rule with comment period, we addressed
several issues concerning direct PE inputs and encouraged specialty
societies to pursue further review of these inputs through the RUC/PERC
process. The following discussions summarize the PERC recommendations
regarding these issues:
Cardiac Catheterization Procedures
As discussed in the CY 2008 PFS proposed rule, the PERC considered
recommendations for new or updated PE inputs for the family of CPT
codes 93501 through 93556 for cardiac catheterization. The American
College of Cardiology (ACC), in cooperation with the Society of Cardiac
Angiography and Interventions (SCA&I) and the Cardiovascular Outpatient
Center Alliance (COCA), developed PE inputs for the nonfacility setting
for 13 of the 28 CPT codes in this family.
We proposed to accept the PERC recommendations for the direct PE
inputs for the nonfacility setting for the CPT codes 93501, 93505,
93508, 93510, 93526, 93539, 93540, 93542, 93543, 93544, 93545, 93555,
and 93556.
In addition, we proposed that the PE for the following CPT codes
will not be valued or applicable to the nonfacility setting: 93503,
93511, 93514, 93524, 93527, 93528, 93529, 93530, 93531, 93532, 93533,
93561, 93562, 93571, and 93572.
Comment: We received comments from the ACC and the SCA&I thanking
us for our consideration of the PERC recommendations for 13 CPT codes
for cardiac catheterization procedures performed in the nonfacility
setting and for accepting their request not to establish nonfacility PE
RVUs for the remaining 15 procedures in the cardiac catheterization
family.
Response: We appreciate the commenters' support and have accepted
the PERC recommendations for the 13 cardiac catheterization procedures
and have changed our PE database to reflect the PE inputs. For the 15
remaining codes, we will finalize the proposal and attach the ``NA''
indicator to them.
Comment: We received comments from COCA, a national organization
representing nonfacility medical cardiology practices that conducted a
``Direct Cost Study'' purporting to demonstrate that the major problem
with the 2006 RUC estimates of direct PE costs for nonfacility
outpatient cardiac catheterization was an inadequate list of direct
patient care activities. In addition, COCA contends that the total RUC
estimates of clinical labor time were so low as to lack credibility.
The commenter contends that a significant amount of the data from its
Direct Cost Study were not incorporated into the PE recommendations
that were jointly prepared and presented at the April 2007 RUC meeting
with ACC and SCA&I for the cardiac catheterization procedures. In
addition to the inadequate clinical labor inputs, the commenter
believes that the RUC process does not allow for the inclusion of
safety devices, such as crash carts, as direct PE inputs because these
are not used in the typical case; rather, these are considered indirect
PE. COCA has requested that we review the data from the Direct Cost
Study and revise the current proposed PE RVUs for these procedures to
values that reflect more appropriately the direct and indirect costs of
providing these services. As an alternative solution, COCA asks that we
tie reimbursement for these services to a reasonable percentage of the
hospital APC.
We also heard from many cardiology practices that provide cardiac
catheterizations in the nonfacility
[[Page 66235]]
setting. They had similar comments and indicated their support for
COCA's request that we review the cost study data and revise the PE
RVUs to more appropriately value the cardiac catheterization procedures
when performed in the nonfacility setting.
Response: While we understand COCA's and the other commenters'
concerns about the decrease in the PE RVUs for the cardiac
catheterization procedures, we want to clarify that the PE inputs for
these procedures were fully considered by the RUC process. The RUC has
identified standard descriptions of clinical staff activities that the
specialty societies follow as they prepare their recommendations for
direct PE inputs believed to be typical to a service and the RUC has
established standard values for some of these clinical activities. The
RUC does not deviate from accepted standard unless the specialty
society presents compelling evidence to substantiate that the variance
is typical to the practice for each procedure. In the past, the RUC has
recommended, and we agreed, that the crash cart would be included as
equipment necessary to perform the services of cardiopulmonary
resuscitation, CPT 92950, but is not necessary to perform other
services, even though many physicians have purchased and maintain crash
carts as part of their medical practices. Since the crash cart is only
specified as required for use in CPT 92950, it is considered as
indirect PE for all other procedures. We note that COCA's request in
the alternative to make payment for these procedures based on a
percentage of the OPPS APC is not feasible. The PFS and the OPPS APC
payment amounts are determined by different payment methodologies that
are specified in the statute. We rely on the RUC process to assist us
in establishing the typical PE inputs that are necessary to provide
physician services. This is because the specialty-developed PE
recommendations that are presented to the RUC are all subject to the
same multi-specialty scrutiny. We agree with the PERC's direct PE
recommendations for the 13 cardiac catheterization codes in the
nonfacility setting and we will accept the RUC PE recommendations for
these 13 procedures. However, we are sympathetic to the concerns raised
by COCA and echoed by other commenters about the extent to which the
data from the Direct Cost Study were considered in the RUC process and
we ask that the RUC provide another opportunity for the review of the
direct PE inputs for these cardiac catheterization procedures to ensure
that the data from the COCA Direct Cost Study is afforded appropriate
and adequate consideration.
Obstetric/Gynecologic PE
As discussed in the CY 2008 PFS proposed rule, we agreed with the
PERC recommendation to add a non-sterile sheet (drape) 40 in by 60 in
(supply code SB006) priced at $0.222 to the pelvic exam pack resulting
in the new price of $1.172. This change affected 236 CPT codes for
obstetric/gynecologic services containing the pelvic exam pack. We also
proposed to accept the PERC recommendations to standardize the
equipment used in post-operative visits to include both a power table
and fiberoptic light in the PE database for 70 obstetric/gynecologic
codes.
Comment: We received a comment from the society representing
gynecologic oncologists commending us for making the above changes to
the pelvic exam pack and for standardizing the equipment used in
follow-up visits. The society believes these changes enable gynecologic
oncologists to account for the additional costs incurred in their
practice specialty.
Response: We appreciate the specialty society's comments and we
will adopt the PERC recommended inputs as proposed.
Dual Energy X-Ray Absorptiometry (DEXA)
The PERC recommended revisions to the direct PE inputs for CPT
codes 77080, 77081, and 77082 to comply with established PERC
standards, and more appropriately reflect the resources used to furnish
these services. We agreed with these PERC recommendations.
Comment: We received several comments thanking us for accepting the
RUC's PE recommendations for the DEXA codes. We also received comments
from several device manufacturers and specialty societies representing
gynecologists, endocrinologists, rheumatologists, and radiologists
informing us that the PE recommendations passed by the RUC, which we
had proposed to accept in the proposed rule, contained a mistake as to
the correct DEXA equipment that is typically used to perform the
procedure represented by CPT code 77080. The RUC's PE recommendations
listed the DEXA equipment as that using a ``pencil beam'' technology,
priced at $41,000. However, the correct DEXA equipment used for CPT
77080 uses the ``fan-beam'' technology and is priced at $85,000.
Response: We were sympathetic to the concerns expressed by the
commenters about the listing of the incorrect DEXA equipment, and we
worked with the RUC staff to arrange for this equipment error to be
reconsidered by the RUC at its September 2007 meeting. The RUC agreed
to the specialty society's recommended change in the DXA equipment for
CPT 77080. We agree with the recommendations from the specialty
societies and the RUC and we have corrected our PE database to reflect
that the fan-beam DEXA equipment is typically used for CPT 77080. In
addition, a price of $3,000, with documentation, was presented for the
spinal phantom used in this procedure. We have also accepted this price
and have changed the PE database accordingly.
Comment: We received many comments expressing concerns about the
cuts to the PE RVUs for these DEXA services. These commenters believe
the cuts are a result of the new PE methodology and may result in
access problems for patients because physicians will no longer be able
to afford to provide these services in the office setting. One
commenter asked us to identify and make available to the public the
inputs used to derive the indirect PE RVUs.
Response: We are aware that the PE RVUs for these DEXA services
were negatively impacted by the change in the PE methodology, as were
those for many other services in which the previous PE RVUs were not
based on the PE resources used to furnish the service. Because the new
PE methodology now utilizes these resources, it is important to make
certain that the PE direct inputs actually reflect the typical
resources that are used to provide each service. The methodology for
determining the indirect PE RVUs, including a description of each step
in the calculation, is detailed earlier in this section. We share the
commenters concerns about beneficiary access to DEXA services and will
continue to monitor this issue.
Computer-Aided Detection (CAD) Codes
The specialty society for radiological services reviewed the direct
inputs for CPT codes 77051 and 77052 and recommended that no changes to
the PE inputs were needed. The PERC concurred with this decision and we
are in agreement.
Comment: We received a comment from the society representing
radiologists conveying their appreciation for accepting the unchanged
direct PE inputs for CAD services.
Response: We appreciate the commenter's support and will maintain
the PE inputs as proposed.
[[Page 66236]]
Nuclear Medicine Services
The specialty society representing nuclear medicine and the PERC
recommended that the direct PE inputs for 2 CPT codes contained CPEP
inputs and needed to be updated to agree with 2004 PEAC-approved
inputs. However, in reviewing the PE database, we discovered that there
were 4 other related codes which also had CPEP inputs which should be
updated. We made the appropriate adjustments to substitute the PEAC
inputs for the CPEP for CPT codes 78600, 78607, 78206, 78647, 78803 and
78807.
The specialty society also noted that for 7 CPT codes, revision of
x-ray related supplies was required, including the number of x-ray
films, developer solution, and film jackets. The PERC forwarded these
recommendations and we made the appropriate changes to the PE database
for the following CPT codes: 78600, 78601, 78605, 78606, 78607, 78610
and 78615.
Comment: The specialty society representing nuclear medicine
expressed appreciation for acceptance of their recommended inputs and
indicated it will continue to monitor the nuclear medicine codes and
provide inputs and refinements as necessary and appropriate.
Response: We appreciate the specialty society's comments and we
will adopt the PERC recommended inputs as proposed.
Transcatheter Placement of Stent(s)
At the request of the specialty societies representing radiology
and interventional radiology, the PERC considered and approved direct
PE inputs for the nonfacility setting for 3 CPT codes, 37205, 37206,
and 75960, for transcatheter placement of stent(s). Among the supplies,
a ``vascular stent deployment system'', valued at $1,645, was noted by
the society as the typical stent used for CPT codes 37205 and 37206
requiring 2 such stents for the placement in the initial vessel and 1
stent for each subsequent vessel, respectively. We reviewed a published
clinical research study that was forwarded by the specialty society.
The study indicated that 1 stent was typical for the procedure of CPT
code 37205. As discussed in the CY 2008 PFS proposed rule (72 FR
38134), absent any further verification from the specialty, we included
only 1 stent in the PE database for this code.
Comment: Commenters, representing specialty societies for
radiology, interventional radiology and vascular surgery appreciated
the proposal assigning direct PE inputs for the nonfacility setting for
these three CPT codes. However, these commenters expressed concern that
the number of stents had been reduced. One commenter agreed that two
stents may not be typical but requested guidance on how the cost of the
additional stent could be billed; another of the commenters asked that
we reconsider this decision or at a minimum include the ``average'' of
1.5 stents. One of the commenters also noted that several studies
clearly establish that these peripheral stent services are safely
performed in the nonfacility environment, with nearly all of the
procedures in the studies resulting in short observation stays,
typically of less than 4 hours.
Response: Based on a review of the literature and other information
provided by the commenters we will revise the PE database for CPT code
37205 to reflect 1.5 stents.
Comment: Two commenters, representing manufacturers, expressly
urged us to consider the safety issues surrounding the proposal to
value these procedures in the nonfacility setting and believe that this
conflicts with the decision to exclude these procedures from the
ambulatory surgical center (ASC) list. One of these commenters
acknowledged that, while we have no specific policy to identify which
procedures can be safely performed in a physician's office, we do have
some safety standards for ASCs. The commenter requested that the ASC
standards be extended to the physician office. This commenter also
referenced studies that demonstrate complications can be associated
with these procedures, and suggested that these risks need to be
addressed by appropriate safety or quality standards.
Response: We appreciate the commenters' viewpoint. However, as the
commenters acknowledged, we have no established policy to designate
procedures that can be ``safely'' performed in the physician office
setting. The purpose of the PFS is to establish proper payment for
procedures furnished by physicians and other health professionals.
Several medical specialty societies recommended the valuation of these
services in the nonfacility setting, which suggests to us that these
procedures are being furnished in nonfacility settings on a regular
basis. These societies provided the recommended PE inputs involved in
furnishing the typical service in a nonfacility setting, and these
inputs were reviewed, accepted and recommended by the RUC. We also note
that, as indicated in the previous comment, one commenter provided
literature from studies to support that these services are safely
performed in the nonfacility environment. Because it appears these
procedures are being furnished regularly in nonfacility settings, we
believe it is appropriate to value them for payment in those settings.
Therefore, we will value these procedures in the nonfacility setting as
proposed.
Comment: One commenter noted that payment for CPT code 75960, the
supervision and interpretation service associated with the 2 CPT codes
discussed above for the transcatheter placement of stent(s), is still
shown as carrier-priced in the Addendum of the proposed rule.
Response: We regret the error. The Addendum and PFS database have
been corrected to reflect the appropriate RVUs.
(ii) Remote Cardiac Event Monitoring
In the CY 2007 PFS final rule with comment period, direct PE inputs
for remote cardiac event monitoring (CEM) services represented by CPT
codes 93012, 93225, 93226, 93231, 93232, 93270, 93271, 93733, and 93736
were revised on an interim basis to reflect the unique circumstances
surrounding the provision of these services. Unlike most physicians'
services, CEM services are furnished primarily by specialized IDTFs
that, due to the nature of CEM services, must operate on a 24/7 basis.
The specialty group representing suppliers that furnish CEM services
believes that these services require additional direct PE inputs, such
as telephone line charges associated with trans-telephonic
transmissions and fees associated with providing Web access for storage
and transmission of clinical information to the patient's physician. We
continue to work with the specialty group regarding the specific direct
PE inputs, as well as the components for the indirect PE allocation,
based on surveys conducted by the specialty group. To clarify and
further the results of our discussions with and information provided
by, the specialty group, we requested comments in the CY 2008 PFS
proposed rule on the appropriateness of the above-mentioned direct PE
inputs. In addition, we invited comments on any additional direct
inputs and components of the indirect PE allocations which would be
appropriate for these services, along with supporting documentation to
justify their inclusion for PE purposes.
Comment: We received comments from medical societies, provider
organizations and a device manufacturer thanking us for working with
these organizations to develop direct PE for
[[Page 66237]]
these services that do not fit the typical physician service model.
Several comments supported the specific PE proposals supplied by the
specialty group representing providers that furnish CEM services, and
urged us to adopt them. A medical society representing cardiologists
requested to work with us and the remote CEM provider groups to gather
and review any additional necessary data prior to adoption of
additional direct PE inputs.
The CEM provider group specifically proposed that we add telephone
transmission costs to the direct PE inputs for CPT codes for CEM, 93012
and 93271 and the CPT codes for pacemaker monitoring, 93733, and 93736.
The group also identified expenses for Web-based storage, maintenance
and access to clinical information to be allocated to the CEM and
pacemaker monitoring CPT codes, as well as the holter monitoring CPT
codes 93226 and 93232. In addition to these supply PE recommendations,
the CEM provider group proposed equipment time-in-use increases for the
holter monitors, cardiac event monitors and for INR monitors (which are
discussed later in this section).
Response: We carefully reviewed the information supplied by all of
the commenters and believe that it would be valuable for the commenters
to work together, including the cardiology specialty society, before we
establish further direct PE inputs for these cardiac monitoring
services. In addition, we would like to make the CEM providers aware
that it appears the assignment we made in CY 2007 of 43,200 time-in-use
minutes for the looping CEM monitor used in CPT code 93271 (typically
used for a 30-day period) pays back the cost of this CEM monitor, that
is valued at $995, in less than 5 months, even though the CEM monitor
has an established 4-year useful life. As we discuss later in the
Prothrombin Time, International Normalized Ratio (PT/INR) section, we
believe that the time-in-use assigned to any one device should not
exceed its useful life. We will review this time-in-use assignment for
CEM monitors during our CY 2009 rulemaking.
(iii) Prothrombin Time, International Normalized Ratio (PTI/NR)
As discussed in the CY 2008 PFS proposed rule, based on comments
received and subsequent discussions with entities that furnish these
PT/INR services, we adjusted the time in use for the home monitor
equipment for G0249 Provision of test materials and equipment for home
INR monitoring to patient with mechanical heart valve(s) who meets
Medicare coverage criteria; includes provision of materials for use in
the home and reporting pwiof [prothrombin] test results to physician;
per four tests to 1440 minutes to reflect that the monitor is dedicated
for use 24 hours a day and unavailable for others receiving this
service. We invited comments on this change, as well as comments on any
additional direct inputs which would be appropriate to this service,
along with supporting documentation to justify their inclusion for PE
purposes.
Comment: We received comments from specialty societies, provider
groups, and individuals expressing their appreciation of our attempt to
correct the problem concerning the application of PE methodology for
the PT/INR service, but noted their concern that changing the INR home
monitor time-in-use minutes from 32 to 1440 does not have a rational
basis nor does it provide for an adequate recoupment of the cost of the
device. These commenters requested that we assign a more realistic
figure to capture the 28-day period that the patient is required to use
the monitor. One commenter noted that using the current 1440 minutes,
it would take 11.7 years to recoup the $2000 price of the equipment
which has an assigned life of 4 years. The commenters suggested several
alternative methodologies to calculate the time-in-use for the INR
monitor. One method suggests multiplying the 1-day time, 1440 minutes,
by 4, which represents the number of tests conducted in the 28-day
period, to equal 5,760 minutes. This method would take 3 years to get
back the $2000 value of the INR monitor. Another proposal suggests
multiplying the 1-day 1440 minutes by 28 days which is the actual time
the patient has the equipment. This method yields 40,300 minutes and
the commenter admittedly states this method greatly overestimates the
value of the INR monitor because it would take just 5 months to recoup
the $2000 price. One commenter suggested that we simply amortize the
price of the equipment, $2,000, over the useful life of 4 years.
Another commenter's suggestion uses the annual minutes figure of
150,000 that we use in our formula for deriving per minute equipment
costs, and divides it by 28 (days) to arrive at 5,753 minutes. This
method recoups the INR monitor price in 3 years.
Other commenters voiced concerns about the valuation of the INR
home monitor and offered alternatives to capture the cost of the
device. One commenter suggested that we treat the cost of the INR home
monitor as a one-time upfront cost and include this price in HCPCS code
G0248 that is used to report the demonstration of the INR monitor to
the patient, at the initial use. Another commenter recommended that the
INR home monitor be removed from the PE for both G0248 and G0249 and be
considered under the DME benefit.
Response: We understand the concerns expressed by the commenters
and appreciate their suggested alternatives that we could use to more
appropriately cover the costs of the INR home monitor. Further, we
agree that the 1440 minutes we assigned for CY 2007 seems too low
considering that the patient uses the INR home monitor for 28 days, not
just one. After reviewing all of the suggested alternatives, we
eliminated the two proposals asking us to change the mechanism of
payment for the INR home monitor. We, therefore, considered the various
suggestions for establishing a more appropriate time-in-use value for
the INR home monitor. We believe the proposal that best reflects the
policy we use to determine the time-in-use for equipment items where
the actual minutes-in-use exceed the assigned useful life is the
commenter's suggestion to amortize the $2000 INR monitor over its 4-
year life. Using this method, 4,315 minutes is the necessary time-in-
use figure to recover the purchase price of the equipment in 4 years.
We will replace the 1440 minutes assigned for CY 2007 with 4,315
minutes as the time-in-use for the INR home monitor and will change the
PE database accordingly.
(iv) Positron Emission Tomography (PET) Codes Clinical Labor Time
We received comments from the specialty society representing
nuclear medicine regarding a discrepancy in the clinical labor time for
CPT codes 78811, 78812, and 78813 which are PET codes for tumor
imaging. The specialty noted that the clinical labor time indicated in
the PE database differs by 7 minutes from the time that was previously
recommended by the PERC in April 2004. We agreed with the specialty
society that the PE database labor inputs for these 3 PET codes are
incorrect and we made the appropriate adjustments to the PE database.
Comment: The specialty society representing nuclear medicine
expressed appreciation for acceptance of its recommended inputs and
indicated it will continue to monitor the nuclear medicine codes and
provide inputs and refinements as necessary and appropriate.
Response: We thank the specialty society for reviewing the direct
inputs for their related procedures in the PE
[[Page 66238]]
database that we post as a download with each proposed and final rule
on our Web site (http://www.cms.hhs.gov/PhysicianFeeSchedule/PFSFRN). We will
adopt the recommended inputs as proposed.
(v) Nuclear Medicine PE Supplies
The specialty society representing nuclear medicine commented that
the PE database currently contains supply items that are inappropriate
for certain procedures and provided the information to make the
corrections. For respiratory imaging procedures represented by CPT
codes 78587, 78591, 78593, 78594, 78630, 78660, 78291, and 78195, the
specialty society noted specific IV supply items to be deleted from
procedures where they are not required. For a thyroid imaging procedure
represented by CPT code 78020, x-ray supply items were recommended for
deletion. In addition, the society recommended adding supply items for
respiratory imaging procedures, including nose clips, masks, and
nebulizer kits, as appropriate, to CPT codes 78584, 78585, 78591,
78593, 78594, 78586, 78587, 78588, and 78596. For a kidney function
study represented by CPT code 78725, injection supply items were noted
as missing and the specialty society requested that these be added. We
proposed to accept these direct PE input corrections and revised our PE
database accordingly.
Comment: The specialty society voiced its gratitude for the
acceptance of their recommended inputs.
Response: We thank the specialty society for its interest in
assuring the accuracy of the PE inputs in the procedures provided by
their members. We will adopt the PERC recommended inputs as proposed.
(vi) Arthroscopic Procedure Nonfacility Inputs
In the CY 2008 PFS proposed rule (72 FR 38135), we included a
discussion about the establishment of nonfacility direct PE inputs for
the arthroscopic procedures represented by CPT codes 29805, 29830,
29840, 29870, and 29900. Absent specific recommendations from the RUC
and because some physicians are already performing these procedures in
the office setting, we specifically requested comments regarding the
appropriateness of establishing nonfacility PE inputs for these
arthroscopic procedures when they are provided in the office setting.
We also invited comments as to the specific direct PE inputs, following
the RUC approved standardized format, that are typical in the provision
of each above listed arthroscopic procedure furnished in the
physician's office. We indicated we will review these comments to
determine whether or not it is appropriate to propose on an interim
basis PE inputs for these codes in the nonfacility setting in our final
rule.
Comment: We received comments from the specialty society
representing orthopedic surgeons in opposition to the establishment of
nonfacility PE for the arthroscopic procedures because they believe
these procedures are not safely performed in the office setting. The
specialty society indicated that one of these codes, CPT 29900,
Arthroscopy, metacarpophalangeal joint, diagnostic, includes synovial
biopsy, was surveyed by the RUC in April 2001 and, at that time, the
RUC recommended this service only as a facility-based procedure. The
RUC supported the AAOS concerns and recommended that the PE RVUs for
the nonfacility setting remain designated as ``NA.'' The specialty
society believes that if the arthroscopic procedures were valued in the
nonfacility setting, untrained physicians may begin to perform them
and, as a result, patients will face significant risks. The specialty
society believes that only credentialed physicians should perform these
procedures and that this process can only be ensured in the facility-
based setting. The specialty society also asserts the facility-based
setting is the safest setting for these procedures because it affords
the physician more clinical options for dealing with any complications
that may arise. In addition, if the procedure is furnished in the
nonfacility setting, there would be no way to address any treatable
lesion that is found and a patient would need to be seen in the
facility setting to undergo a second procedure.
Because the specialty society's position was established by an
expert panel, the society states that it will reconsider its position
if evidence is presented establishing the safety and efficacy of these
procedures in the office setting and if a method is established to
ensure that only qualified physicians perform these procedures in the
office setting.
We also received comments from orthopedic practices and individual
physicians--the majority of which indicated they are members of the
orthopedic specialty society--all stating that they are currently
performing these procedures in the nonfacility setting. These comments
requested that we establish PE inputs for the arthroscopic procedures
because this would allow patients greater access to these services in
more convenient settings and, because it would establish payment that
would more fairly compensate them for the resources they use to provide
these services in the office location. A product manufacturer supported
the views of the physicians who requested the establishment of
nonfacility PE for the nonfacility setting.
These physicians note that the safety of the in-office procedures
is well documented in the literature, and provided us with citations of
articles going back to the mid-1990s. We also received suggested PE
inputs including clinical labor, supplies and equipment that are
typically used when these procedures are provided in the nonfacility
setting.
Response: We appreciate the concern expressed by the commenters
opposing the establishment of PE for the office setting and are
sympathetic to those supporting the assignment of PE for these codes.
We are also dismayed that the parties involved on each side of this
issue have not been able to resolve these issues to date. We have
decided that the most prudent course of action is to defer proposing
nonfacility inputs for these arthroscopic procedures in this final
rule. We are hopeful that the specialty society and its physician
colleagues who provide these services in the nonfacility setting will
be able to discuss the issues of mutual concern regarding the safety of
performing these procedures in the office setting. We are hopeful that
this issue can be resolved and that the physicians performing these
services in the nonfacility setting will be given the opportunity to
have a multi-specialty review by the RUC. We are aware that this
decision to refer this issue back to the specialty society and the RUC
postpones the establishment of nonfacility PE values for these
procedures until CY 2009, at the soonest, and that a review by the RUC
process is not guaranteed. However, given the apparent level of
dissension within the specialty, we believe that the specialty society,
its physician colleagues, and the RUC should first be given an
opportunity to resolve these important issues.
(vii) Nonfacility Inputs for CPT Code 52327
As discussed in the CY 2008 PFS proposed rule we indicated that the
society representing urologists requested that we remove all of the
nonfacility PE inputs for CPT code 52327, Cystourethroscopy (including
ureteral catheterization); with subureteric injection of implant
material. The specialty society reasoned that the nonfacility PE value
is inappropriate since the procedure is never performed in the
physician office;
[[Page 66239]]
it is specific to the pediatric population; and, as such, is always
performed with general anesthesia. We agreed with the specialty society
that this procedure is incorrectly valued for the nonfacility setting
and proposed to accept its recommendation to remove the nonfacility
direct PE inputs, revising the PE database accordingly.
Comment: The specialty society thanked us for accepting its
recommendation to remove the nonfacility PE for this procedure.
However, the society indicated that a review of the PE database on our
Web site indicated that these inputs were still included and suggested
that they be deleted.
Response: We appreciate the commenter's attention to detail and
have removed the PE inputs from the PE database.
(viii) Maxillofacial Prosthetics
We have been working with the society representing maxillofacial
prosthetists since 2005 to establish nonfacility direct inputs for the
prosthetic services represented by the CPT code series, 21076 through
21087. The current PE database reflects the labor, supplies, and
equipment needed to perform each procedure. However, we do not have
pricing information and documentation for many supply items. The
society provided information and documentation for equipment prices,
but because specific time-in-use information was not provided, we
developed time in use in 2006 for each equipment item in each
procedure. For CY 2007, these equipment inputs were utilized under the
new PE methodology to calculate the nonfacility PE RVUs for these
procedures. Although we have asked the specialty society to provide the
supply pricing information and time in use data for each equipment item
for each procedure, we have not received the requested information to
date. Consequently, unless such information is provided, the PE
database will continue to have no prices associated with these
supplies. Therefore, in the CY 2008 PFS proposed rule, we proposed to
cap the time in use for each equipment item at 25 minutes until
specific information is received regarding the actual time in use.
Tables listing the needed information for were included in the proposed
rule.
Comment: The specialty society representing the maxillofacial
prosthetists supplied us with some of the requested information. The
society provided us with the time-in-use data for every piece of
equipment for each of the procedures in the CPT code series 21076
through 21087. The specialty also provided prices for the supply items
used in this code series; however, it did not provide any documentation
to support these prices.
Response: We appreciate the information provided by the specialty,
especially that in relation to the equipment time-in-use. The
recommended equipment times were compared with the total clinical labor
time for each procedure and times that were greater were reduced to
equal the labor time, in accordance with our usual allocation policy.
Capping the equipment time-in-use to match the labor time affected 4
pieces of equipment in every procedure including: the dental chair,
ceiling light, air compressor, and delivery unit. For 3 of these codes,
the time-in-use for a 5th piece of equipment, the washout and curing
unit, was also capped. We will accept the specialty's equipment time-
in-use information, with the aforementioned variances, and have changed
the PE database accordingly.
We regret that documentation for the supply prices was not
forwarded. We did, however, receive a catalog documented pricing for
articulating paper/ribbon that was submitted by a different specialty
in reference to another CPT code, and have entered this price in the PE
database for 8 of the 10 codes in this family, as appropriate. The
specialty is reminded that our policy for accepting prices for supplies
or equipment in the PE database requires the submission of acceptable
documentation, the definition of which is specified below the table
that appeared in the proposed rule listing the outstanding prices for
supply items needing documentation. We will continue to work with the
specialty as it collects and forwards this important information.
(ix) Requests for Increases in Supply Prices
We received a request from the specialty society for obstetrics and
gynecology to increase the price of supply item (kit, hysteroscopic
tubal implant for sterilization) for CPT code 58565, Hysteroscopy,
surgical; with bilateral fallopian tube cannulation to induce occlusion
by placement of permanent implants for this code which was created for
CY 2005. This hysteroscopic implant kit is priced at $980 and the
specialty is now requesting a price of $1,245, providing an invoice for
documentation. The specialty reports that the higher price is
attributed to a manufacturer change in design and materials, and
submitted the manufacturer's documents supporting these changes that
were used to secure FDA approval. Therefore, we proposed to accept the
new price of $1,245 for the hysteroscopic implant kit due to the
changes made in the modified model.
Comment: We did not receive comments on this proposal.
Response: We will finalize our proposed price of $1,245 for the
hysteroscopic implant kit and will amend our PE database, as
appropriate.
(x) Supply and Equipment Items Needing Specialty Input
We have identified certain supply and equipment items for which we
were unable to verify the pricing information (see Table 2: Supply
Items Needing Specialty Input for Pricing and Table 3: Equipment Items
Needing Specialty Input for Pricing). In our CY 2008 PFS proposed rule,
we listed both supply and equipment items for which pricing
documentation was needed from the medical specialty societies and, for
many of these items, we received sufficient documentation containing
specific descriptors and pricing information in the form of catalog
listings, vendor Web pages, invoices, and manufacturer quotes. We have
accepted the documented prices for many of these items and these prices
are reflected in the PE RVUs in Addendum B of this final rule with
comment period. For the items listed in Tables 2 and 3, we are
requesting that commenters provide pricing information on items in
these tables along with acceptable documentation, as noted in the
footnote to each table, to support recommended prices. For supplies or
equipment that have previously appeared on this list, and for which we
received no or inadequate documentation, we proposed to delete these
items unless we receive adequate information to support current pricing
by the conclusion of the comment period for this proposed rule.
In Tables 4 and 5, we have listed new supplies and equipment from
the new CPT codes for CY 2008 that are discussed elsewhere in this
final rule with comment period. These items have been added to the PE
database and, where priced, are reflected in the PE RVUs in Addendum B.
[[Page 66240]]
Table 2.--Supply Items Needing Specialty Input for Pricing
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Unit Primary associated Associated *CPT Prior item Commenter response 2008 item status
Code 2006/7 Description Unit price specialties code(s) status on table and CMS action refer to note(s)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
SC088............................ Fistula needle, Item................ ......... Dermatology......... 36522.............. Yes.............. Documentation C
dialysis, 17g. received. Revised
description per
specialty's
comments. Price
accepted at $1.62.
Gas, argon, .................... ......... Urology, Radiology, 50395.............. No............... New Item........... A, E
cryoablation. Interventional
Radiology.
Gas, helium, .................... ......... Urology, Radiology, 50395.............. No............... New Item........... A, E
cryoablation. Interventional
Radiology.
SD140............................ Pressure bag........ item................ 8.925 Cardiology.......... 93501, 93508, Yes.............. Documentation C
93510, 93526. received. Price
accepted at $19.00.
SL119............................ Sealant spray....... oz.................. ......... Radiation Oncology.. 77333.............. Yes.............. No comments B
received.
SD213............................ Tubing, sterile, non- item................ 1.99 Cardiology.......... 93501, 93508, Yes.............. Documentation C
vented (fluid 93510, 93526. received. Price
administration). accepted at $0.949.
Stent, vascular, Kit................. $1,645 Radiology, 37205, 37206....... Yes.............. Documentation C
deployment system. Interventional received. Price
Radiology. retained at $1,645.
Catheter, Kumpe..... Item................ ......... Radiology, 50385, 50386....... No............... New item........... A, E
Interventional
Radiology.
Disposable .................... ......... Oral and 21073.............. No............... New item........... A, E
aspirating syringe. Maxillofacial
Surgery.
Guidewire, angle tip .................... ......... Radiology, 50385, 50386....... No............... New item........... A, E
(Terumo), 180 cm\1\. Interventional
Radiology.
Snare, Nitinol Item................ ......... Radiology, 50385, 50386....... No............... New item........... A, E
(Amplatz). Interventional
Radiology.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\*\ CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
Note: Acceptable documentation includes--Detailed description (including system components), source, and current pricing information, such as copies of catalog pages, hard copy from specific
Web pages, invoices, and quotes (letter format okay) from manufacturer, vendors or distributors. Unacceptable documentation includes--phone numbers and addresses of manufacturer, vendors or
distributors, Web site links without pricing information, etc.
Note A: Additional documentation required. Need detailed description (including kit contents), source, and current pricing information (including pricing per specified unit of measure in
database). Accept copies of catalog pages or hard copy from specific Web pages. Phone numbers or addresses of manufacturer, vendors or distributors are not acceptable documentation.
Note B: No/Insufficient received. Retained price in database on an interim basis. Forward acceptable documentation promptly.
Note C: Submitted price accepted.
Note D: Deleted per comment or CMS.
Note E: 2007/8 price retained on an interim basis. Forward acceptable documentation promptly.
Table 3.--Equipment Items Needing Specialty Input for Pricing and Proposed Deletions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Primary specialties *CPT code(s)
Code 2006/7 Description 2007/8 associated with associated with Prior status on Commenter response 2008 Item status
Price item item table and CMS action refer to note(s)
--------------------------------------------------------------------------------------------------------------------------------------------------------
EQ269.......... Ambulatory blood 3000 Cardiology......... 93784, 93786, 93788 Yes.............. Documentation C
pressure monitor. provided. Price
accepted is $1525
(Did not accept
$395 warranty
cost.).
Camera mount--floor 2300 Dermatology........ 96904.............. Yes.............. Specialty to A, E
submit, asap.
Cross slide 500 Dermatology........ 96904.............. Yes.............. Specialty to A, E
attachment. submit, asap.
Dermal imaging 4500 Dermatology........ 96904.............. Yes.............. Documentation C
software. provided. Price
accepted at $4500.
Dermoscopy 650 Dermatology........ 96904.............. Yes.............. Documentation C
attachments. provided. Price
accepted at $650 (
average of the
cost of the two
items provided).
[[Page 66241]]
EQ008.......... ECG signal 8,250 Cardiology, IM..... 93278.............. Yes.............. Documentation A, E
averaging system w- provided. Revised
P waves and late description to
potentials better describe
software. system. Price
accepted at 17,900.
Instrument, .......... Pathology.......... 88380.............. No............... New Item........... A, E
microdissection.
Lens, macro, 35- .......... Dermatology........ 96904.............. Yes.............. Deleted item as D
70mm. price is less than
$500 per
documentation
received.
Plasma pheresis 37,900 Radiology, 36481, G0341....... Yes.............. Revised description B
machine. Dermatology. based on comments
received that
light source was
not part of item.
Documentation
requested.
ED039.......... Psychology Testing .......... Psychology......... 96101, 96102....... Yes.............. Specialty to B
Equipment. submit, asap.
ER070.......... Portal imaging 377,319 Radiation oncology. 77421.............. Yes.............. Documentation C
system (w/PC work provided. Price
station and accepted at
software). $489,940 ( average
of the cost of the
two items
provided).
Strobe, 400 watts 1500 Dermatology........ 96904.............. Yes.............. Documentation B
(Studio) (2). requested.
Cryosurgery system .......... Urology, Radiology, 50593.............. No............... New item........... A, E
(for tumor Interventional
ablation)\1\. Radiology.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved. Applicable FARS/DFARS apply.
Note: Acceptable documentation includes--Detailed description (including system components), source, and current pricing information, such as copies of
catalog pages, hard copy from specific Web pages, invoices, and quotes (letter format okay) from manufacturer, vendors or distributors. Unacceptable
documentation includes--phone numbers and addresses of manufacturer, vendors or distributors, Web site links without pricing information, etc.
Note A: Additional documentation required. Need detailed description (including kit contents), source, and current pricing information (including
pricing per specified unit of measure in database). Accept copies of catalog pages or hard copy from specific Web pages. Phone numbers or addresses of
manufacturer, vendors or distributors are not acceptable documentation.
Note B: No/Insufficient received. Retained price in database on an interim basis. Forward acceptable documentation promptly.
Note C: Submitted price accepted.
Note D: Deleted per comment or CMS.
Note E: 2007/8 price, where specified, retained on an interim basis. Forward acceptable documentation promptly.
Table 4.--Practice Expense Supply Item Additions for CY 2008
----------------------------------------------------------------------------------------------------------------
*CPT code(s)
Equip code Supply description Unit Unit price associated with item Supply category
----------------------------------------------------------------------------------------------------------------
NA............. Blade, sharp pointed item........... 0.73 88381............... Cutters, closures.
surgical.
NA............. Buffer, lysis....... ml............. 0.46 88381............... Lab.
NA............. Caps, Capsure Macro ml............. 4.54 88380............... Lab.
LCM.
NA............. Catheter, balloon, item........... 306 68816............... Accessory.
lacrimal.
NA............. Catheter, Kumpe \1\. item........... ............ 50385, 50386........ Accessory.
NA............. Disposable ............... ............ 21073............... ....................
aspirating syringe
\1\.
NA............. Ethanol, 95%........ ml............. 0.0033 88380, 88381........ Lab.
NA............. Fee, image analysis. item........... 18 99174............... Office supply.
NA............. Gas, argon, ............... ............ 50593............... Accessory.
cryoablation.
Gas, helium, ............... ............ 50593............... Accessory.
cryoablation.
NA............. Gastrostomy. Low item........... 5 43760............... Accessory.
profile replacement
button (Mic-Key).
NA............. Gastrostomy. Stoma item........... 10 43760............... Accessory.
measuring device
(Mic-Key).
NA............. Glycerol, 3%........ ml............. 0.001 88380, 88381........ Lab.
NA............. Guidewire, angle tip item........... ............ 50385, 50386........ Accessory.
(Terumo), 180 cm
\1\.
NA............. IV infusion set, Sof- item........... 11.50 90769, 90771........ Hypodermic, IV.
set (Minimed).
NA............. Methylene blue stain ml............. 0.178 88380............... Lab.
NA............. Probe, cryoablation, item........... 1175 50593............... Accessory.
renal.
NA............. Rnase-free water.... ml............. 0.85 88381............... Lab.
NA............. Slide, microscope, item........... 1 88380, 88381........ Lab.
sterile.
NA............. Snare, Nitinol item........... ............ 50385, 50386........ Accessory.
(Amplatz) \1\.
NA............. Swab, patient prep, item........... 1.04 36592............... Pharmacy, NonRx.
1.5 ml (chloraprep).
[[Page 66242]]
NA............. Tube, jejunsostomy.. item........... 195 49441, 49446, 49451 Accessory.
and 49452.
----------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved.
Applicable FARS/DFARS apply.
\1\ Price verification needed. Item(s) added to table of supplies requiring specialty input.
Table 5.--Practice Expense Equipment Item Additions for CY 2008
----------------------------------------------------------------------------------------------------------------
*CPT code(s)
Equip code Equipment description Life Unit price associated with item Equipment category
----------------------------------------------------------------------------------------------------------------
NA............... Cryosurgery system 10 ........... 50593................ Other Equipment.
(for tumor ablation)
\1\.
NA............... Cardiac coil, 1.5T 8- 5 35400 7557, 7558 and 75559. Imaging Equipment.
channel (MR).
Instrument, 7 ........... 88381................ Laboratory.
Microdissection.
NA............... Pressure sensor, 5 25000 93982................ Documentation.
wireless (for
implanted AAA sac
sensor).
NA............... Camera, ocular 5 7000 99174................ Documentation.
photoscreening, w-
laptop and software.
----------------------------------------------------------------------------------------------------------------
* CPT codes and descriptions only are copyright 2008 American Medical Association. All Rights Reserved.
Applicable FARS/DFARS apply.
\1\ Price verification needed. Item(s) added to table of equipment requiring specialty input.
(xi) Additional PE Issues Raised By Commenters
Comment: One commenter recommends that the direct inputs associated
with all fee schedule services be made available to the public.
Response: Since the inception of resource based PEs, all direct
input data has been made available to the public on the CMS Web page.
The direct inputs associated with this final rule with comment period
are also available to the public at the following Web site under CMS-
1385-IFC: http://www.cms.hhs.gov/PhysicianFeeSched/PFSFRN/list.asp#TopOfPage
.
Comment: Several commenters recommend that we reprice supply items
over $200 in the PE direct input database annually. Additionally,
commenters also requested that we establish individual J codes for
these high cost supplies. Alternatively, several other commenters
expressed concerns over this recommendation stating that utilization
guidelines must be set up that would trigger repricing or an undue
burden would be placed upon those specialties using these high cost
supplies.
Response: Using an individual HCPCS code for each of these supplies
would be difficult as there are multiple manufacturers, with multiple
prices, associated with the majority of these codes. Having multiple
manufacturers, and thus multiple prices, also makes it difficult to
reprice these supplies within the PE methodology, which is why we
continue to work with the AMA RUC to establish direct cost input data.
Additionally, all direct inputs need to be budget neutralized within
the PE methodology. Removing these high cost supplies from the standard
PE methodology would unfairly advantage procedures that contain these
supplies as they would not be subject to the same budget neutrality
adjustments as would other supplies. Finally, we agree with those
commenters that state that any annual repricing of these supplies would
place undue burden on specific physician groups. For these reasons, we
will continue to price these high cost supplies within the standard PE
methodology.
Comment: A few comments were received that recommended that desktop
computers be included as a direct PE cost.
Response: The direct PE database includes desktop computers with
monitor when this computer is identified as being dedicated to a
specific procedure. The costs associated with computers that are used
for non-clinical purposes assigned to a specific procedure, for
example, used for administrative procedures, are more appropriately
captured in the indirect cost category.
Comment: One commenter representing home care physicians requested
that travel time and other inherent costs related to mobile medical
services such as vehicle operation and mobile communication should be
accounted for in the PE calculation.
Response: To the extent that travel time is necessary to furnish
physician services outside of the office setting, these expenses are
not considered direct costs under the PE methodology. Although the
mobile communication devices are not specifically included as direct PE
inputs, 12 minutes of clinical labor time is assigned for each of the
home visit E/M services, 6 minutes in the pre-time period and 6 minutes
in the post time period. Phone calls are standardized at 3 minutes each
for purposes of the direct PE inputs and would be included as part of
this clinical labor time.
Comment: One commenter stated that adjustments need to be made to
the PE database for certain dialysis codes and requested that for G0393
and G0392 an angioplasty balloon be added to the PE database and that
for CPT code 36870 the PE database should be revised to include an
angiographic room and a power table.
Response: The balloon catheters are reflected in the PE database,
as supply number SD152, and the angiographic room and an exam table are
included in the equipment for CPT code 36870.
Comment: Commenters expressed concern about the level of
reimbursement for intrathecal pump management services for chronic pain
patients and believe that the refill kit is not accounted for in the
PE. In addition, commenters expressed concern that reimbursement did
not cover the leasing costs for the equipment.
Response: We reviewed the PE database and have verified that a
refill kit, priced at $28, is included as a supply in CPT codes 95990
and 95991. In our PE database, equipment costs are assigned based on
the purchase price for each piece of equipment, regardless of whether
the equipment is owned, rented or leased.
Comment: A manufacturer expressed concern that the PE RVUs for
intranasal administration of vaccines (CPT codes 90467/8 and 90473/4)
are inappropriately low and should be equalized to the injectable
immunization administration PE RVUs.
[[Page 66243]]
The commenter stated that when the codes were reevaluated in 2004 there
was not enough experience in the office to fully understand the time
associated with providing an intranasal vaccine. The commenter stated
that specialty organizations have indicated that this issue is worth
reexamining and indicated that they had been encouraged to communicate
with the RUC in support of equalizing payment for the codes.
Response: We appreciate the commenter's concerns about the
disparity in the PE RVUs for the intranasal and injectable immunization
administration procedures. To the extent that these concerns relate to
the direct PE inputs, we would encourage the commenter to work with the
specialty organizations to determine if it is appropriate to bring
these codes forward for further RUC review.
Comment: One commenter requested that we publish the RUC approved
RVUs for all noncovered and carrier priced services, particularly for
the positron emission tomography (PET) and PET/CT procedures.
Response: We have made it our policy to publish work and PE RVUs
for services in instances where the information has been forwarded to
us, with a few exceptions. One exception to this policy is for carrier
priced codes. Our rationale for this policy is simply that any
published values for carrier-priced codes would be in direct
contradiction of our intentions with respect to this designation. As we
state in Addendum A, a ``C'' status indicator means that carriers price
this code establishing RVUs and payment amounts without direct guidance
from CMS. Because the commenter did not provide us with information
about specific noncovered services that do not have published RVUs, we
are not able to address this particular aspect of the comment.
Comment: Commenters representing radiation oncologists expressed
concern about the significant PE reductions in CPT code 77336 for
continuing medical physics consults. The commenters noted this code was
last reviewed by the PEAC in 2002 and the practice standard has changed
significantly. Commenters recommended that the direct PE inputs for
this code be reviewed and refined so that accurate PE data is reflected
for this code.
Response: While we appreciate that the commenters expressed their
concerns to us regarding a change in the practice standards for the
services of CPT code 77336 which they believe results in the need to
change the direct PE inputs, we believe that the appropriate course of
action for the commenters is to work together with the RUC affiliated
specialty society in order to determine if these concerns can be
appropriately addressed by the RUC.
Comment: We received comments from individuals and associations
with concerns about the new bottom-up PE methodology and the resulting
effect of decreases in the PE RVUs for various services including, but
not limited to the following: chemotherapy administration, endovenous
ablation procedures, brachytherapy treatments, 3-D imaging services,
and procedures for photopheresis and plasma pheresis.
Response: As we noted earlier in this section, we are aware that
the PE RVUs for some services were negatively impacted by the change in
our PE methodology. However, we will reiterate here that it is our
policy to make certain, to the maximum extent possible, that the direct
PE inputs used in the PE RVU calculation actually reflect the typical
resources used to provide each service. To the extent that the current
PE RVUs are lower than those determined under our previous methodology,
the difference is likely attributable to a previous PE RVU that was
based on charges that overvalued the service. Because the current
methodology uses the direct PE inputs that are inherent and typical to
each procedure, the resulting PE RVUs more accurately reflect the
resources that are used to provide the service.
Comment: One commenter explained that, in the CY 2004 PFS final
rule, we decided to set the values for the monthly ESRD-related
services for home dialysis patients (for example, G0323) at the same
rate as the monthly ESRD related services with 2 or 3 visits per month
(for example, HCPCS code G0318) to provide an incentive for the
increase use of home dialysis (as authorized under 1881(b)(3)(B) of the
Act). The commenter notes that the current payment rate for ESRD
related services, with 2 or 3 face-to-face visits per month is higher
than ESRD related services for home dialysis patients, (due to a
difference in PE). As such, the commenter is concerned that the
differential in payment rates mitigates the incentives that we
previously attempted to establish. The commenter suggested that
incentives for using home dialysis should be strengthened by using a
consistent PE value for MCP codes G0323 and G0318. However, the
commenter prefers that we establish a new payment rate for the monthly
management of home dialysis patients based on the weighted average of
the MCP for patients who dialyze in a dialysis center or other
outpatient facility.
Response: We appreciate the suggestions regarding our payment
policy for the monthly management of home dialysis patients. We intend
to consider the commenters suggestions as we continue to evaluate
payment rates for the monthly management of patients on home dialysis.
Note: We received comments regarding certain items and services
that are not germane to the PE RVUs or other components of the PFS.
These issues include comments regarding: revisions to the definition
of pre-service work and time for certain global services; inadequate
pricing of HCPCS code A4562 for pessaries, requests for payment
adjustments for certain services under PFS to approximate payment
amounts for these services established under OPPS and ASCs,
inadequate payment for pharmacy costs and nursing services for drug
administration codes, and concerns about the reduction of PE RVUs in
the nonfacility setting due to the changes in the PE methodology
along with requests to freeze payment amounts at the level of the CY
2006 transitional PE RVUs. Because these comments are outside the
scope of the issues raised in the CY 2008 PFS proposed rule, we will
not respond to these issues in this final rule with comment period.
B. Geographic Practice Cost Indices (GPCIs)
We are required by section 1848(e)(1)(A) and (C) of the Act to
develop separate Geographic Practice Cost Indices (GPCIs) to measure
resource cost differences among localities; and to review and, if
necessary, adjust the GPCIs at least every 3 years. In the CY 2008 PFS
proposed rule, we published the proposed GPCIs for CY 2008 in Addendum
E, noting that the proposed GPCIs do not reflect the 1.000 floor that
was in place during CY 2006 and CY 2007. This floor expires as of
January 1, 2008 in accordance with section 102 of the MIEA-TRHCA.
In developing a GPCI, section 1848(e)(1)(A)(i) and (ii) of the Act
require that the PE and malpractice (MP) GPCIs reflect the full
relative cost difference while section 1848(e)(1)(A)(iii) of the Act
requires that the physician work GPCIs reflect only one quarter of the
relative cost differences. Section 1848(e)(1)(C) of the Act also
specifies that if more than 1 year has elapsed since the last GPCI
revision, we must phase in the adjustment over 2 years, applying only
one half of any adjustment in each year. All GPCIs are developed
through a comparison to a national average for each component, and the
RVUs for different services uniformly weight each component.
[[Page 66244]]
1. GPCI Update
A detailed description of the methodology used to develop and
update the GPCIs can be found in the CY 2004 PFS proposed rule (68 FR
49039, August 15, 2003). There are three components of the GPCIs
(physician work, PE, and MP) and each relies on its own data source.
a. Physician Work
The physician work GPCI is developed using the median hourly
earnings from the 2000 Census of workers in six professional specialty
occupation categories which we use as a proxy for physician wages and
calculate to reflect one quarter of the relative cost differences.
Physician wages are not included in the occupation categories because
Medicare payments are a key determinant of physicians' earnings;
therefore, including physician wages in the physician work GPCI would,
in effect, make the index dependent upon Medicare payments. The
physician work GPCI was updated in 2001, 2003, and 2005 using data from
the 2000 Census; the proposed CY 2008 physician work GPCI is also based
on the 2000 Census data. Because all updates since 2001 have relied on
the 2000 Census data, the changes observed in the physician work GPCI
in the update years are due to minor changes in utilization and budget
neutrality factors; for CY 2008, Addendum E shows that there have been
small changes in the physician work GPCI. Section 102 of the MIEA-TRHCA
required application of a 1.000 floor on the work GPCI in payment
localities where the work GPCI was less than 1.000. This provision
expires on December 31, 2007. The CY 2008 proposed physician work GPCI
reflects the removal of this floor.
b. Practice Expense
The PE GPCI is developed from three data sources:
(i) Employee Wages: We use 2000 Census median hourly earnings of
four occupation categories. The physician work GPCI was updated in
2001, 2003, and 2005 using data from the 2000 Census.
(ii) Office Rents: We use residential apartment rental data
produced annually by the Department of Housing and Urban Development
(HUD) as a proxy for physician office rents. In 2001, 2003, and 2005,
we used rents in the HUD 40th percentile. For CY 2008, we have
calculated the GPCI using rents in the 50th percentile for the
physician office rent proxy. We proposed to use the 50th percentile
because although HUD generally allows payment for subsidized housing up
to the 40th percentile, in some areas it allows payment up to the 50th
percentile. We made this change to reflect the trend toward higher
rents across the country.
Fair Market Rents (FMRs) are gross rent estimates including rent
and utilities. HUD calculates the FMRs annually using: (1) Decennial
Census data; (2) American Housing Surveys conducted by the Census
Bureau for HUD to enable HUD to develop revisions between Census years;
and (3) random digit dial surveys to enable HUD to develop gross rent
change factors. The American Housing Surveys cover 11 areas annually,
rotating among the 44 largest metropolitan areas. The random digit dial
component surveys 60 FMR areas annually.
The FMR is set as a percentile point in the distribution of rents
for standard housing occupied by people who moved within the previous
15 months. The current FMR definition is the 40th percentile rent (the
amount below which 40 percent of units are rented). Each year, the 50th
percentile rent is also calculated by HUD and available through the
HUDUSER Web site.
In 2000, HUD changed its FMR policy to increase access to housing
for families receiving Section 8 rent subsidy vouchers (65 FR 58870).
To do so, HUD increased FMRs from the 40th percentile to the 50th
percentile in areas where subsidized families were highly concentrated
in certain census tracts, given evidence that affordable housing was
not well distributed. Only metropolitan areas with more than 100 census
tracts are considered for possible increase to the 50th percentile
rent. FMRs can be moved from 40th to 50th percentile or back from 50th
to 40th percentile.
In the case of the office rent index for the PE GPCI, FMRs have
been used to capture geographic differences in rental costs, in the
absence of a consistent commercial rent index that covers all
metropolitan and nonmetropolitan areas in the U.S. It has been used as
a measure of the ``average rent'' in a market. However, since 2000, the
FMRs have been a mixture of the 40th percentile and 50th percentile
rents. FMR areas move between the two cutoffs. For example, in
California, 9 counties had FMRs set at the 50th percentile in 2004. In
2007, only 2 of these 9 counties were still at the 50th percentile
level for the FMR, out of 4 total counties at the 50th percentile
level.
As described above in this section (and as detailed in 65 FR
58870), the criteria for setting the FMR at the 40th or 50th percentile
are based on concentrations of subsidized households. There is no
reason to assume that commercial rents would follow the same patterns.
Therefore, we believe the 50th percentile, or median, rents
calculated by HUD will be a more consistent, fair measure of geographic
differences for the purpose of proxying for commercial rents.
Rent data produce the most significant changes because they are
based on annual changes in HUD rents, and therefore, are more volatile
than the wage (Census) data. While it has been suggested that we
explore sources of commercial rental data for use in the GPCI, we do
not believe there is a national data source better than the HUD data.
(iii) Equipment and Supplies: We assume that items such as medical
equipment and supplies have a national market and that input prices do
not vary among geographic areas. As mentioned in previous updates, some
price differences may exist, but we believe these differences are more
likely to be based on volume discounts rather than on geographic market
differences. Equipment and supplies are factored into the GPCIs with a
component index of 1.000.
c. Malpractice
The MP GPCI is calculated based on insurer rate filings of premium
data for a $1 million to $3 million mature ``claims made'' policy along
with premium or surcharge data for mandatory patient compensation funds
(PCFs). The MP GPCI is the most volatile of the GPCIs. This GPCI was
updated in 2001 and 2003 as scheduled with the physician work and PE
GPCIs; but, there was an unscheduled update of the MP GPCI in 2004 (68
FR 49043) to reflect increases in MP premiums nationwide. The proposed
CY 2008 MP update reflects the most recent premium data available. The
physician work and PE GPCIs are being updated at the same time.
We received the following comments about our proposed GPCIs:
Comment: We received several comments expressing the concern that
San Benito County in California was placed in the wrong payment
locality.
Response: In 2003, the U.S. Census Bureau moved San Benito County
from the Rest of State Census category and placed it in the San Jose
MSA. Our data and methodology do not accommodate mid-decennial changes
in Census data, and therefore, our 2008 update reflects that San Benito
County remains in the Rest of California payment locality.
[[Page 66245]]
Comment: We received several comments about the PE GPCI for Santa
Clara County, California. In the proposed rule, the PE GPCI was lower
for Santa Clara than it has been in previous years and commenters were
concerned about why this happened.
Response: We recognize that there was a decrease in the proposed
Santa Clara County PE GPCI. We have studied this issue including
examining both the source data and the methodology for obtaining the PE
GPCI in case there was a mistake in the proposed values. However, a
close examination of the data showed that the GPCI is accurate and
reflects a decrease in the value of HUD rentals in Santa Clara County.
Comment: One commenter suggested that a GPCI adjustment should not
be applied to physician work, or that the physician work GPCI should be
1.000 for all localities.
Response: We are required to apply a GPCI adjustment to physician
work in accordance with section 1848(e) of the Act. Therefore, we will
continue to apply the physician work GPCI.
Comment: We received several comments suggesting that the PE GPCI
is inaccurate due to our continued use of HUD rental data as a proxy
for medical office space.
Response: Because Medicare is a national program, we believe it is
important to use the best data that is available on a nationwide basis.
We believe the HUD rental data is the most comprehensive and valid
indicator of the national real estate rental market that is available.
Additionally, as we stated most recently in the CY 2007 PFS final rule
with comment period (71 FR 69656), we believe the HUD rental data
remains the best data source to fulfill our requirements that the data
be available for all areas, be updated annually, and retain consistency
area-to-area and year-to-year. In the past, we have had both the GAO
and the Research Triangle Institute examine available data sources for
use in the PE GPCI, and both have found that available commercial data
sets either have insufficient coverage nationally or are developed by
suspect methodology. Therefore, we continue to believe the HUD rental
data is the best nationally available data source to use as a proxy for
physician office rents.
Comment: We received several comments suggesting that the GPCIs of
Hawaii/Guam and Alaska need to be adjusted to accommodate the higher
costs of transportation of supplies and equipment to these localities.
Response: The GPCIs are a proxy for costs associated with providing
services to beneficiaries, not costs associated with living in a
particular place. However, we will consider these comments as we
evaluate possible changes to our methodology.
Comment: We received comments from the Medicare Payment Advisory
Commission (MedPAC) suggesting an alternative method for calculating
the PE GPCI. This alternative PE GPCI method excludes cost measures for
equipment and supplies.
Response: We appreciate MedPAC suggesting an alternative method. We
intend to evaluate the suggested change to the PE GPCI methodology and
will propose any changes in future rulemaking.
We will finalize the GPCIs shown in Addendum E. The GPCI values
shown represent the first year of the two-year GPCI update transition
and have been budget neutralized to ensure that nationwide total RVUs
are not impacted by changes in locality GPCIs. Specifically, this is
done by applying a weight that is derived from the difference between
payments using the ``old'' GPCIs and the ``new'' GPCIs to the proposed
GPCIs that insures that total payments would not be different. As we
indicated above in this section, there is no 1.000 floor on the
physician work GPCI in 2008. The GAFs are shown in Addendum D.
2. Payment Localities
a. Background
The Medicare statute requires that PFS payments be adjusted for
certain differences in the relative costs among areas. The statute
requires an adjustment which reflects differences among areas for the
relative costs of the mix of goods and services comprising PEs (other
than Malpractice expenses) compared to the national average. The
statute also requires adjustment for the relative costs of MP expenses
among areas compared to the national average. Finally, the statute
requires adjustment for one quarter of the difference between the
relative value of physicians' work effort among areas and the national
average of such work effort.
The physician work component represents 52.466 percent of the
national average fee schedule payment amount. Thus, the statutory
requirement for geographic adjustment of only one-quarter of the
differences in the physician work component means that, on average,
only 13.117 percentage points of physician work are geographically-
adjusted, and, on average 39.349 percentage points of the physician
work component are not adjusted and represent a national fee schedule
amount.
In addition, the PE component represents 43.669 percent of the
national average fee schedule payment amount. PEs are comprised of
nonphysician employee compensation, office expenses (including rent),
medical equipment, drugs and supplies, and other expenses. As explained
above in this section, we do not make a geographic adjustment relating
to medical equipment, drugs, and supplies because there is a national
market for these items. Thus, only the categories of nonphysician
employee compensation and rents are geographically adjusted. These
categories represent, on average, 30.862 percentage points of the total
PE, and 12.807 percentage points of PEs are not geographically-
adjusted.
In total, more than half (52.156 percent) of the average PFS amount
is a national payment that is the same in all areas of the country;
that is, 52.156 percent of the average fee is not geographically-
adjusted.
There are two additional points about the geographic indices that
are important to note. First, as described above in this section, the
data used to measure cost differences among localities are proxies for
physician work, employee compensation and office rents. That is, wage
data for various categories of employees are used to proxy the actual
wages of physician employees. Second, the data used for such proxies
are based on actual Census data only for a limited number of counties.
The geographic adjustment factors (GAFs) for more than 90 percent of
counties are developed using proxies based on larger geographic areas
(for example, data for all rural areas in a State are combined and used
to proxy the values for each rural county in a State). This aggregation
is necessary for areas where country level data are not available.
Thus, the underlying data are proxies for actual costs, and the
resulting GPCIs do not measure perfectly the cost differences among
localities.
Currently, there are 89 Medicare physician payment localities to
which GPCIs are applied. The payment locality structure under the PFS
was established in 1996 and took effect January 1, 1997. The
development of this structure is described in detail in both the CY
1997 PFS proposed (61 FR 34615) and final rules (61 FR 59494).
b. Revision of Payment Localities
Over time, changing demographics and local economic conditions may
lead to increased variations in practice costs within payment locality
boundaries. We are concerned about the potential impact of these
variations and have
[[Page 66246]]
been studying this issue and potential alternatives for a number of
years. However, because changes to the GPCIs must be applied in a
budget neutral manner (and under the current locality system, budget
neutrality results in aggregate payments within each State remaining
the same), there are significant redistributive effects to any change.
Therefore, we are also concerned about the potential impact of locality
revisions.
For the past several years, we have been involved in discussions
with California physicians and their representatives about recent
shifts in relative demographics and economic conditions among a number
of counties within the current California payment locality structure.
The California Medical Association (CMA) suggested that we use our
demonstration authority to adopt an alternative locality configuration
and avoid certain redistributive effects, but such an approach was not
feasible (as discussed in the CY 2005 PFS final rule with comment
period (70 FR 70151)). In the CY 2006 PFS proposed rule (70 FR 45784),
we proposed to remove two counties from the ``Rest of California''
payment locality and create a new payment locality for each county.
These two counties were the ones with the largest difference between
the county and locality GAFs. However, there was much more opposition
than support for this proposal, in large part because of its negative
effect on payments for the counties that would have remained in the
``Rest of California'' locality. For example, the CMA commented on this
proposal stating, ``a nationwide legislative solution that would
provide additional funding * * * is the only solution we are supporting
at this time.'' We did not finalize the proposal and described our
reasons in the CY 2006 PFS final rule with comment period (70 FR
70151).
As indicated previously, we recognize that changing demographics
and local economic conditions may lead to increased variations in
practice costs within payment locality boundaries. We are concerned
about the potential impact of these variations.
In considering potential changes in payment localities, we believe
it is important to evaluate both the potential impact of intralocality
practice cost variations and the redistributive impacts that would
result from any revisions to the localities. We also indicated that we
are concerned about the considerable administrative issues in making
locality changes, particularly if such changes involve a transition,
and if they occur when new GPCI data are being phased-in. As we noted
in the response to the June 2007 General Accountability Office report
on localities (GAO-07-466), changing localities requires reprogramming
systems and extensive provider education, both of which are expensive
and burdensome administrative activities that can last for a
significant period of time. We receive claims for payment that cross
calendar years and carriers must maintain payment files for the 2
different years.
In the proposed rule we solicited comments on three possible
locality reconfigurations. We indicated that because of the importance
of striking an appropriate balance between intralocality variations and
redistributive impacts with any such locality revisions, we wanted to
be cautious and evaluate the impacts in California before considering
applying the policy more broadly in the future.
The three options from the proposed rule are described as follows:
Option 1: Using the existing locality structure, apply a rule
whereby if a county GAF is more than 5 percent greater than the GAF for
the locality in which the county resides it would be removed from the
current locality. A separate locality would be established for each
county that is removed. Based on the new fully phased-in GPCI data
(that is, for CY 2009), application of this approach in California
would remove three counties (Santa Cruz, Monterey, and Sonoma) from the
Rest of California payment locality and Marin county from the Marin/
Napa/Solano payment locality and create separate payment localities for
each of these four counties.
This approach focuses on counties for which there is the biggest
difference between the county GAF and the locality GAF.
This proposal is similar to the policy we previously proposed in
the CY 2006 PFS proposed rule (70 FR 45784) but did not adopt to
address the counties with GAFs that are most different from their
current locality designation. Implementation of this option would lead
to an increase in payment of 7.6 percent for Santa Cruz County (and
average increase of 5 percent for the other counties involved) and a
decrease in payment of 4.3 percent for Napa and Solano Counties.
Option 2: This approach is similar to option 1, but the new
localities would be structured differently. We would use the same 5
percent threshold methodology but instead of creating four new
localities in which each county becomes its own new locality, the three
counties that are removed from the Rest of California locality would
become one new locality. Marin County would still be removed from the
Marin/Napa/Solano locality to become its own locality. Application of
this approach would remove three counties (Santa Cruz, Sonoma, and
Monterey) from the Rest of California payment locality, and Marin
County from the existing Marin/Napa/Solano payment locality. This
approach groups together counties from the Rest of California locality
that have the greatest difference between the county and locality GAF.
(This option would lead to an increase of 6 percent for the new 3-
county payment locality.) These counties have similar cost structures
and grouping them together into one new locality is consistent with our
goal of homogeneous resource costs within a locality.
Option 3: Apply a methodology similar to that used in the 1997
locality revisions (61 FR 59495), but applied at the county level
rather than the ``existing locality'' level. That is, we sorted the
counties by descending GAFs and compared the highest county to the
second highest. If the difference is less than 5 percent, the counties
were included in the same locality. The third highest is then compared
to the highest county GAF. This process continues until a county has a
GAF difference that is more than 5 percent. When this occurs, that
county becomes the highest county in a new payment locality and the
process is repeated for all counties in the State. This approach would
group counties within a State into localities based on similarity of
GAFs even if the counties were not geographically contiguous.
This organizes payment localities based on costs, which would
reduce the number of payment localities in California from 9 to 6
localities. This option alleviates the greatest variations in cost
between counties in California. This proposal is unique in that the new
localities are not contiguous. Currently, all localities encompass
adjacent geographic areas.
The impacts associated with this option are significant. Depending
on the tier, changes could reflect increases of as much as 7.6 percent
or decreases of as much as 7.3 percent.
We received numerous comments on these options as discussed below:
We received similar comments from a number of individuals, State
and local medical societies, and organizations, including the
California Medical Association, on several significant issues and are
addressing these together:
Comment: Santa Cruz County should be removed from the Rest of
California payment locality due to its higher costs.
Response: We recognize that Santa Cruz County has higher costs than
other
[[Page 66247]]
counties within the Rest of California locality, and the methodologies
we presented in each of the options would result in Santa Cruz County
being removed from the Rest of California payment locality.
Comment: Many commenters were concerned about the description of
the methodology used for Options 1 and 2. Specifically, these comments
directed us to adopt a methodology suggested by the California Medical
Association. The methodology compares the highest GAF county to the
weighted average (GAF) of the remaining counties of the locality.
Response: To clarify, the methodology we used identified counties
where the county GAF was at least 5 percent higher than the GAF of the
locality and then we either left that county as a payment locality
itself or joined it with other counties into a payment locality. In
Option 1, each of these counties became a separate locality; in Option
2, we combined several of these counties into a single payment
locality. This approach is not the ``iterative methodology'' that some
commenters suggested we should follow. We recognize that there are
alternative methodologies that can be used to consider reconfigurations
to locality structures. We will consider the suggestions of the
commenters in the future.
Comment: There were concerns that combining several counties into a
single payment locality in Option 2 was arbitrary and led to lower
payments for these counties.
Response: As we stated in the proposed rule, there are trade-offs
involved in making any changes to localities, and we recognize the
importance of trying to achieve a reasonable balance among competing
priorities. One of our goals was to keep the number of payment
localities manageable. Although we recognize that there are effects on
each of the individual counties, combining counties with very similar
costs was a reasonable way to meet this goal.
Comment: Numerous commenters from California recommended that we
implement Option 3 but suggested that we erred in describing the
methodology used in the development of Table 9 of the proposed rule and
recommended that if we implement it, we should use their suggested
methodology. Commenters suggested that we really meant to insert a
hierarchical approach and discussed how these are both acceptable ways
to accomplish the restructuring of the counties. Other State societies
expressed interest in this option as long as we use the alternative
methodology suggested by the California commenters.
Response: In Option 3 in the proposed rule, we ranked the counties
by GAF from highest to lowest. We then combined into a new payment
locality the county with the highest GAF and the other counties that
have a GAF within 5 percent of the highest GAF county. Then, we found
the county with the highest GAF among the remaining counties. We
combined that county and all the counties that have a GAF within 5
percent of the new highest GAF county into a payment locality. We
continued this method until all counties were included in a locality.
As previously mentioned, there are multiple approaches to reconfiguring
the localities that result in similar outcomes. We will further study
the suggestions provided by the commenters.
Comment: We received a number of comments requesting that we
provide a wide variety of data, at the county level, from numerous
sources covering the years 1999 through 2006.
Response: We believe we provided commenters sufficient information
to fairly evaluate our proposals. We note that many of these requests
involved county level data. There is very little county level data
available nationwide. Most of our data sources are collected at the MSA
or Consolidated MSA, or Non-Metropolitan Area level, and our
methodology was designed to be used to develop GPCIs within a payment
locality analysis, not a county level analysis. We do our best to
provide requestors with sources for publicly available data and to
provide any other data that is requested of CMS. However, we often
simply do not have data available at other than the locality level.
Comment: Several commenters are concerned that the data used to
develop the latest GPCI update are out of date or inaccurate.
Response: We used the most up-to-date data available for the GPCIs
used in the calculation of the proposed options. Descriptions of the
data sources we use can be found in previous regulations (69 FR 66261)
but we will reiterate them here. For the physician work GPCI, we use
data files from the latest decennial census (currently 2000) supplied
to CMS by the Census Bureau. These data are available to any individual
or group interested in obtaining them from the Census Bureau. Data for
the rental portion of the PE GPCI update come from HUD rental files,
and these data are available online to anyone wishing to obtain them.
Wage data for the PE GPCI come from the 2000 Census files which are
available from the Census Bureau. Data for the malpractice GPCI come
from premium data that are filed by companies writing Professional
Liability Insurance in each state. These filings are provided, upon
request by our contractor, to CMS by each State Department of
Insurance. Our latest update covers premium data for 2004, 2005 and
2006.
Comment: We received comments from certain physicians in Ohio
requesting that we examine Ohio for a possible change in the current
Statewide payment locality.
Response: We are currently examining alternatives to the current
locality structure. As a part of our study we will revisit Statewide
localities to determine if revisions are appropriate.
Comment: We received a number of comments from ambulance suppliers
throughout the mid-West requesting that we make no changes that would
have a negative impact on the GPCIs in rural areas. Other commenters
expressed similar concerns about the impact of locality changes on
rural physicians and beneficiaries.
Response: The vulnerability of rural areas to decreases in relative
payments as a result of locality revisions is an issue that is of
considerable concern to us and something we take very seriously.
However, as previously noted we must find an acceptable balance between
the multiple competing concerns when making changes in localities in
order to best meet the needs of the entire program and this generally
cannot be done without having any impact on rural areas.
Comment: MedPAC provided comments outlining two possible mechanisms
for developing changes in the payment localities of the States. These
methods are similar but differ in that one method begins at the
locality level and the other starts with MSA level data. MedPAC also
suggests that we determine whether those States that are currently
single payment localities wish to remain single payment localities.
Response: As always, we value the input of MedPAC and we intend to
analyze their suggested methods carefully as we discuss possible
national policy changes.
Comment: Comments regarding changes in the payment localities in
California were universally accompanied with a belief that we should
implement these changes, without decreasing payments to any counties.
Response: We understand the desire to avoid the negative impact
implementing any of these options might have on certain areas. However,
[[Page 66248]]
the statute requires that geographic adjustments be established based
upon an index of costs that is tied to national averages. As a result,
when the average increases in one locality because of the addition of a
higher cost county, the average in the locality that previously
contained the higher cost county will necessarily decrease. Any changes
in localities will necessarily produce changes in the underlying GPCIs,
and we have no authority to assign or retain GPCIs that do not
represent the actual values for a locality.
Comment: Many commenters suggested that we consider a national
solution to payment locality structure problems, not focus on a single
state.
Response: Our proposals attempted to address locality issues in an
area of the country where the incongruity of certain GAFs within
localities is particularly evident. In addition, these issues have been
brought to our attention regularly over the past several years, and the
California Medical Association has demonstrated its desire and
willingness to work with us to develop ideas for resolving them. We
viewed these proposals relating only to California as a starting point
and, as we indicated in the proposed rule, we would consider applying
any changes to additional States in the future.
Decision: We appreciate the thoughtful comments we received in
response to the three options we included in the proposed rule. As
mentioned above, we recognize that changing the locality structure is a
complex undertaking and there are competing concerns, including budget
neutrality that results in payments in certain areas decreasing
whenever payments in other areas are increased, that must be carefully
balanced to achieve the most appropriate results. Historically, to help
us find the best balance in a particular state, we have looked to State
medical societies to work with us to provide leadership and support on
preferred approaches to locality reconfiguration in that particular
State.
The comments we received from California physicians, including the
California Medical Association's indication that it does not support
any of the options, and interested parties from other States have
convinced us that this issue requires further study and analysis.
Therefore, we will not be finalizing any of the three proposed options
in this rule. Commenters have suggested some other methodologies that
we find worthy of further exploration, including the use of
Metropolitan Statistical Areas (MSAs). We do not necessarily believe
that the county is the appropriate geographic unit on which we should
be focusing for locality revisions. Commenters also made strong
arguments for why any locality reconfiguration should be done on a
nationwide basis and not just one State at a time. Therefore, we intend
to conduct a thorough analysis of approaches to reconfiguring
localities and will address this issue again in future rulemaking.
C. Malpractice RVUs (TC/PC Issue)
In the CY 2008 PFS proposed rule (72 FR 38142), we included a
discussion about the radiology codes for which the technical component
malpractice RVUs are higher than the professional component malpractice
RVUs. In the past, several organizations have requested that we examine
these codes and make changes to this assignment of malpractice RVUs. We
asked for information about how we could address this issue and obtain
data on malpractice costs associated with these radiology codes.
We received the following comments on this issue.
Comment: The Professional Liability Insurance (PLI) workgroup of
the AMA/Specialty Society RVU update committee (RUC) supported by
several other organizations recommended that we reduce the PLI
technical component for these codes to zero. They suggest that there
are no identifiable separate costs for professional liability for
technical components. They also recommend that the PLI RVUs be
redistributed across all physicians' services. The RUC is concerned
that the Deficit Reduction Act of 2005 (Pub. L. 109-171) (DRA) cap on
the TC payment for imaging services will remove an estimated $200
million from the Part B pool (as a result of the exemption of the
reduced expenditures from the budget neutrality requirement at section
1848(c)(2)(B)(v)). The RUC believes that making the recommended changes
will keep money that would be lost due to the DRA cap in the Part B
pool. The RUC wants CMS to implement this change immediately and
consider other changes to the PLI RVU assignment later.
Response: In the CY 2008 PFS proposed rule, we explained that these
codes had not been reviewed due to a lack of suitable data on the cost
of PLI for technical staff or imaging centers. The RUC believes that no
such data are available because there are no identifiable separate
costs. At this point in time, we are not able to evaluate whether
sufficient data exists or to make a judgment on the RUC's assertion
that such data are not available because there are no identifiable
costs. We will continue to explore possible sources of information
about these costs. We made no proposal regarding malpractice RVU
assignment and we are still considering possible changes. If we
identify in the future what we believe is a more appropriate way to pay
for these services, we will propose changes through notice and comment
rulemaking.
Comment: Some commenters stated that the malpractice RVUs in the
technical component should not be zero. These commenters suggested that
we either ``flip'' the malpractice RVU assignment between the
professional and technical components or make them equal.
Response: As we stated in the CY 2008 PFS proposed rule, we do not
believe it would be appropriate to ``flip'' the PC and TC RVU values
because the professional part of the MP RVUs has undergone a resource
based review, is derived from actual data, and is consistent with the
resource based methodology for PFS payments. Further, we will not
simply equalize the PC and TC RVU values because at this time we have
no data to demonstrate that the malpractice costs for the technical
portion of these services are the same as the professional portion. We
will continue to study this issue and will propose any changes in
future rulemaking.
Comment: We received several comments recommending that we make the
PLI RVUs resource based for all codes and that we should continue to
collect and analyze appropriate malpractice premium data before making
changes to the RVU assignment.
Response: We will continue to solicit, collect, and analyze
appropriate data on this subject. Once we have sufficient information,
we will be better able to make a determination as to what, if any,
changes should be made, and we will propose any changes in future
rulemaking.
D. Medicare Telehealth Services
1. Requests for Adding Services to the List of Medicare Telehealth
Services
As discussed in the CY 2008 PFS proposed rule (72 FR 38143),
section 1834(m)(4)(F) of the Act defines telehealth services as
professional consultations, office visits, and office psychiatry
services, and any additional service specified by the Secretary. In
addition, the statute required us to establish a process for adding
services to or deleting services from the list of telehealth services
on an annual basis.
[[Page 66249]]
In the CY 2003 PFS final rule with comment period (67 FR 79988), we
established a process for adding services to or deleting services from
the list of Medicare telehealth services. This process provides the
public an ongoing opportunity to submit requests for adding services.
We assign any request to make additions to the list of Medicare
telehealth services to one of the following categories:
Category 1: Services that are similar to office
and other outpatient visits, consultation, and office psychiatry
services. In reviewing these requests, we look for similarities between
the proposed and existing telehealth services for the roles of, and
interactions among, the beneficiary, the physician (or other
practitioner) at the distant site and, if necessary, the telepresenter.
We also look for similarities in the telecommunications system used to
deliver the proposed service, for example, the use of interactive audio
and video equipment.
Category 2: Services that are not similar to the
current list of telehealth services. Our review of these requests
includes an assessment of whether the use of a telecommunications
system to deliver the service produces similar diagnostic findings or
therapeutic interventions as compared with the face-to-face ``hands
on'' delivery of the same service. Requestors should submit evidence
showing that the use of a telecommunications system does not affect the
diagnosis or treatment plan as compared to a face-to-face delivery of
the requested service.
Since establishing the process, we have added the following to the
list of Medicare telehealth services: psychiatric diagnostic interview
examination; ESRD services furnished under the monthly capitation
payment (MCP) with two to three visits per month and four or more
visits per month (although we require at least one visit a month, in
person ``hands on'', by a physician, Certified Nurse Specialist, NP, or
PA to examine the vascular access site); and individual medical
nutrition therapy.
Requests to add services to the list of Medicare telehealth
services must be submitted and received no later than December 31 of
each calendar year to be considered for the next rulemaking cycle. For
example, requests submitted before the end of CY 2006 are considered
for the CY 2008 proposed rule. For more information on submitting a
request for an addition to the list of Medicare telehealth services,
visit our Web site at http://www.cms.hhs.gov/telehealth/.
We received the following requests for additional approved services
in CY 2006: (1) Subsequent hospital care (as represented by HCPCS codes
99231 through 99233); (2) neurobehavioral status exam (HCPCS code
96116); and (3) neuropsychological testing (HCPCS codes 96118 through
96120).
After reviewing the public requests, we proposed to add
neurobehavioral status exam as described by HCPCS code 96116 to the
list of Medicare telehealth services in the CY 2008 PFS proposed rule.
We also proposed to revise Sec. 410.78 and Sec. 414.65 to include
neurobehavioral status exam as a Medicare telehealth service. We did
not propose to add subsequent hospital care or neuropsychological
testing but requested comments as to how we could determine when
subsequent hospital care is actually a follow-up inpatient consultation
and specific information on neuropsychological testing. For further
information on our proposals, see the CY 2008 PFS proposed rule (72 FR
38143).
Subsequent Hospital Care
The following is a summary of the comments we received regarding
subsequent hospital care.
Comment: We received two comments regarding the conditions (or
requirements) we could apply to subsequent hospital care so that
subsequent hospital care reflects a follow-up inpatient consultation.
One commenter suggested that follow-up inpatient consultation should be
approved as a telehealth service only if the initial inpatient
consultation was performed via telehealth. The commenter does not
believe we should approve a follow-up inpatient consultation for
telehealth if the initial inpatient consultation was furnished in-
person (because it might lead to a reduction in follow-up consultations
furnished face-to-face). The commenter also agreed with our proposal
not to approve subsequent hospital care for telehealth. Another
commenter noted that follow-up inpatient consultation was previously on
the list of Medicare telehealth services and asserts that the AMA's
deletion of follow-up inpatient consultation (as described by CPT codes
99261 through 99263) created the need to approve the addition of
subsequent hospital care to the list of Medicare telehealth services
when used for follow-up inpatient consultation care. The commenter
suggested that we create a special modifier to report follow-up
inpatient consultation via telehealth.
Response: We appreciate the comments on the conditions (or
requirements) we could apply to subsequent hospital care so that
subsequent hospital care reflects a follow-up inpatient consultation.
We intend to consider the suggestions raised by the commenters as we
continue to evaluate whether subsequent hospital care should be
approved for telehealth when it is used to furnish a follow-up
inpatient consultation. With regard to the commenter who suggested the
creation of a special modifier, we will assess whether it would be
appropriate to use a modifier(s) to identify when a subsequent hospital
care service is actually a follow-up inpatient consultation.
Comment: One commenter who supports approving subsequent hospital
care for telehealth explained that recruiting specialists to North and
South Dakota is difficult and that telehealth has helped hospital
inpatients in these States to obtain access to various types of
specialty care including pulmonology, endocrinology, pediatric
gastroenterology, pediatric cardiology, and infectious disease
specialties. The commenter also mentioned that inpatient consultations
are frequently provided by infectious disease specialists for patients
in the intensive care unit (ICU) and explained that once the patient
has made progress and is moved from the ICU, the infectious disease
specialist at the distant site continues to ``follow'' the patient
until the patient is discharged from the hospital. The commenter
recognized that access to on-going specialty care for outpatients is
important but believes that obtaining access to specialty subsequent
inpatient ``follow-up'' care is even more critical. Commenters
submitted a comparative study between subsequent hospital care
furnished as a telehealth service and furnished in-person.
Response: As discussed in the CY 2008 PFS proposed rule, given the
potential acuity level of the patient in the hospital setting, we
believe that many services furnished within the scope of the subsequent
hospital service codes are not similar to the current telehealth
services. As such, we indicated that subsequent hospital care is a
category 2 service (which requires sufficient comparative analyses
before approving it for telehealth). The commenters did submit one
comparative analysis between subsequent hospital care furnished as a
telehealth service and subsequent hospital care furnished in-person.
However, the study submitted involved only continuing specialist care
(for one specialty), not continuing inpatient care by the primary
attending physician. In
[[Page 66250]]
addition, the sample size was extremely small. Thus, the study findings
are not generalizable.
As such, we continue to have concerns about using a
telecommunications system as a substitute for the on-going, day-to-day
(in-person) evaluation and management of a hospital inpatient and
believe further study is necessary. In the absence of sufficient, well-
designed comparison studies showing that the use of a
telecommunications system is an adequate substitute for the in-person
delivery of subsequent hospital care, we are not adding subsequent
hospital care to the list of Medicare telehealth services. As discussed
above in this response, we will work with the industry organizations
and groups to learn more about hospital care as a telehealth service
when it is used for follow-up inpatient consultations.
Comment: One commenter (who submitted the request to approve
subsequent hospital care for telehealth) stated that the original
request to add subsequent hospital care to the list of Medicare
telehealth services was a request to ``re-establish'' subsequent
inpatient visits (as a Medicare telehealth service). The commenter
described two scenarios in which subsequent hospital care could be
furnished as a telehealth service. The first scenario would involve a
specialty physician who furnishes an inpatient consultation as a
telehealth service (as requested by the attending physician). The
second scenario involves an attending or admitting physician who
furnishes initial hospital care in-person (not as telehealth) and
provides subsequent hospital care as a telehealth service. The
commenter believes that access to telehealth care is better than not
having access to any care and that studies have shown that telehealth
care provides better clinical outcomes than no care at all.
Additionally, the commenter asserts that tertiary care trauma surgeons,
neurologists (for initial and follow-up stroke evaluation),
psychiatrists (for initial assessment and prescriptive safety orders),
infectious disease physicians, and cardiologists can be made available
through telehealth when these specialties are not available on-site.
The commenter believes that not approving subsequent hospital care for
telehealth will severely hinder access to specialty care in the
inpatient hospital setting and will lead to grave consequences for
patients when no specialists are available on-site (at the hospital).
Response: We agree that telehealth services may help provide
greater access to specialty care, and therefore, better clinical
outcomes where a shortage of medical professionals exist (or in
situations when no care is available). As discussed in the CY 2008 PFS
proposed rule, we are considering approving subsequent hospital care
for telehealth when it is used for follow-up inpatient consultation. We
believe that permitting follow-up inpatient consultations via
telehealth will help provide greater access to specialty care in the
inpatient hospital setting.
Additionally, we note that, contrary to the commenter's assertion,
subsequent inpatient hospital visits were not previously on the list of
Medicare telehealth services. As mentioned by a previous commenter, the
AMA deleted the codes for follow-up inpatient consultation (as
described by CPT codes 99261 through 99263). Effective January 1, 2006,
these CPT codes no longer exist and were removed from the PFS, and a
conforming change was made to the list of Medicare telehealth services.
Prior to January 1, 2006, the physician (or practitioner) at the
distant site could have used these CPT codes to bill for follow-up
inpatient consultations as a telehealth service. However, subsequent
inpatient hospital visits were not on the list of Medicare telehealth
services.
Comment: One commenter cited the concerns we raised in the proposed
rule regarding the acuity level of a hospital inpatient and the use of
a telecommunications system to furnish on going evaluation and
management services in the inpatient hospital setting. The commenter
believes that patients in the emergency department typically have a
higher acuity level, are in a more precarious physical state (as
compared to a hospital inpatient) and may not have a diagnosis. The
commenter explains that hospitalized patients have already been seen
and admitted by a physician on site and have at least a preliminary
diagnosis. Despite the higher acuity level of a patient in the
emergency department, the commenter asserts that we reimburse for
telehealth care in the emergency department (but not for inpatients).
Additionally, the commenter discussed various scenarios involving
the examination of acute stroke patients via telehealth in the
emergency room and ICU. For example, the commenter provided a summary
of a study that tested whether the use of an audio and video multimedia
telecommunications system is a feasible and reliable means for
delivering emergency stroke care (using the National Institute of
Health Stroke Scale). This study concluded that ``remote examination of
acute stroke patients with a computer based telesupport system is
feasible and reliable when applied in the emergency room''. The
commenter also explained how telehealth is being used to provide 24
hour access to acute stroke care expertise for a number of hospitals in
Massachusetts and that similar programs are being established
throughout the United States, Canada, the United Kingdom, Scandinavia,
and other parts of the world. The commenter also provided a discussion
of a study that examined the fiscal impact of providing telehealth
consultation (for acutely ill and injured children in the ICU) on rural
hospitals. The study found that as a result of greater access to
pediatric consultations, savings are realized from a reduction in
patient transfers (to larger hospitals) and increased revenue for rural
hospitals.
Response: We appreciate the information the commenter has submitted
on the remote evaluation of stroke patients and pediatric telehealth
consultations in the emergency department or ICU. We intend to consider
this information as we evaluate whether to approve subsequent hospital
care for telehealth when it is used for follow up inpatient
consultation. We would also mention that the nature of the comment
indicates a misconception that we pay for emergency department services
as a telehealth service. We note that only outpatient consultations
(not visits) are approved as a Medicare telehealth service for a
patient in the emergency department. If guidance or advice is needed in
the emergency department (for example, for acute stroke care), an
outpatient consultation may be requested from an appropriate source and
may be furnished as a telehealth service. However, emergency department
services (as described by CPT codes 99281 through 99285) are not on the
list of Medicare telehealth services.
Comment: One commenter mentioned that we previously approved the
psychiatric diagnostic interview examination and subsequent ESRD
related visits furnished under the monthly capitation payment (MCP) for
telehealth without comparative analyses and data showing patient
satisfaction (which implies that subsequent hospital care could be
approved for telehealth on the same basis). The commenter also cited
the proposed regulatory impact analysis for telehealth stating that
previous additions to the list of Medicare telehealth services have not
resulted in a significant increase in Medicare program expenditures.
Response: In approving the psychiatric diagnostic interview
examination for telehealth, we considered this service to be comparable
[[Page 66251]]
to an initial office visit, or consultation service, which are
currently Medicare telehealth services. Likewise, we considered the
outpatient dialysis visits furnished under the MCP (except for one
visit to examine the vascular access site) to be comparable to office
and other outpatient visits currently on the list of Medicare
telehealth services. Therefore, we considered these services to be
category 1, and therefore, we were able to review and approve them for
telehealth without reviewing additional research studies to support
their approval. However, as discussed above in this section, because of
the potential acuity of a hospital inpatient, we were not able to
conclude that the entire scope of services described by the subsequent
hospital care codes is similar to the existing list of telehealth
services (for example, an office visit, office psychology service, or
consultation). Therefore, we considered subsequent hospital care to be
a category 2 service (which requires sufficient comparative analyses
before approving for telehealth).
For more information on the addition of the psychiatric diagnostic
interview examination see the CY 2003 PFS proposed rule (67 FR 43863).
For more information on the addition of ESRD-related visits furnished
under the MCP, see the CY 2005 PFS proposed rule (69 FR 47511).
Neurobehavioral Status Exam
Comment: Several commenters expressed support for our proposal to
add the neurobehavioral status exam to the list of Medicare telehealth
services. Commenters agreed that because the neurobehavioral status
exam is primarily a clinical interview (similar to the psychiatric
diagnostic interview which is currently a Medicare telehealth service),
it is logical and consistent to approve this service for telehealth.
Response: We agree with the commenters. As discussed in the
proposed rule, the neurobehavioral status exam is furnished by a
physician or psychologist and includes an initial assessment and
evaluation of mental status for a psychiatric patient. In this regard,
we believe the neurobehavioral status exam is similar to psychiatric
diagnostic interview examination (which is currently approved as a
Medicare telehealth service).
Comment: One commenter who supported our proposal to approve the
neurobehavioral status exam for telehealth, stated that HCPCS code
96116 is a new code that replaced HCPCS code 96115 (the predecessor to
HCPCS code 96116) in the 2006 CPT compendia. The commenter believes
that neurobehavioral status exam (as described by HCPCS code 96115) was
previously on the list of Medicare telehealth services and considers
our proposal to add neurobehavioral status exam (as described by CPT
code 96116) to be a restoration of the neurobehavioral status exam as a
telehealth service.
Response: The commenter's assertion that our proposal to add the
neurobehavioral status exam to the list of Medicare telehealth services
is a restoration of the neurobehavioral status exam as a telehealth
service is not correct. The neurobehavioral status exam (as previously
described by CPT code 96115) was not on the list of Medicare telehealth
services. The proposed addition of neurobehavioral status exam is a new
proposal.
Comment: One commenter stated that the neurobehavioral status exam
appears to require that the service be provided face to face (in
person). Therefore, the commenter requested us to clarify that face to
face services may qualify as telehealth services.
Response: As discussed in the CY 2005 PFS final rule with comment
period, only services that traditionally require a face-to-face (in-
person) physician or practitioner encounter are candidates for the list
of Medicare telehealth services. Services not requiring a face-to-face
encounter with the patient that may be furnished through the use of a
telecommunications system are already covered under Medicare. For more
information see the CY 2005 PFS final rule (69 FR 66278).
Neuropsychological Testing
Comment: We received conflicting comments regarding
neuropsychological testing. For example, one commenter agreed with the
requestor that neuropsychological testing furnished via telehealth is
not significantly different from being furnished in-person (especially
when administered by a computer). Additionally, the commenter stated
that existing telehealth services for psychiatric patients include
office visits, consultation, and office psychiatry. The commenter
believes that the patient-provider dynamics of these services would not
appear to be so significantly different from those for
neuropsychological testing as to justify not approving the services for
telehealth. The commenter also believes that testing dynamics, such as
the patient being blindfolded or having numbers assigned to his or her
fingers, could be easily reproduced with the help of someone at the
originating site.
The same commenter also provided a discussion of the importance of
early detection of dementia through neuropsychological testing. The
commenter included a letter from the Armed Forces Epidemiological Board
about brain injury in military service members with recommendations on
handling these injuries. The commenter stated that although the
Epidemiological Board addressed military patients, the principles of
its findings apply to civilian assessment and treatment of brain
injuries; that is, appropriate testing at earlier stages of brain
injury or disease is likely to elicit a more accurate patient profile,
leading to more targeted interventions and better patient outcomes.
In addition, the commenter stated that the administration of
neuropsycho- logical testing may be more difficult for some patients
than others; however, this is true in both the in-person and telehealth
setting. The commenter believes that if the patient requires immediate
in-person assistance, a telepresenter could be used to facilitate the
testing and that the determination of patient suitability for testing
should be up to the physician or practitioner at the distant site. Two
commenters agreed that a telepresenter could assist the physician or
psychologist at the distant site with the testing and that the
physician or psychologist should determine which patients (and tests)
are appropriate for telehealth.
Another commenter who provides neuropsychological testing via
telehealth explained that many standardized neuropsychological tests
are available (literally hundreds) to the physician or psychologist (or
technician) and that tests vary widely in terms of administrative
procedure and the level of interaction between the patient and
practitioner responsible for administering the test. The commenter
believes that many tests could be effectively administered via
telehealth and that it is not appropriate for us to issue a ``global
denial'' of neuropsychological testing. For example, the commenter
believes that neuropsychological testing administered via a computer
should be approved for telehealth and that testing administered by a
physician, psychologist, or qualified technician should be re-
evaluated. The commenter also explained that an RN is often used as a
telepresenter to assist the neuropsychologist or technician with
testing. When testing cannot be administered in a ``standardized
fashion'' via telehealth, a qualified technician could be present on-
site with the patient to assist a psychologist who
[[Page 66252]]
furnishes the test at the distant site. However, the commenter believes
that some testing measures may not be appropriate for telehealth. The
commenter estimated that ``fewer than 35 percent of the hundreds of
available measures do not lend themselves to standardized
administration via telehealth''. The commenter also cited the American
Psychological Association's Ethical Principles of Psychologists and
Code of Conduct and stated these guidelines would prohibit
administration of certain individual tests via telehealth.
Other commenters believe that further study is necessary. The
commenters urged us to seek additional information concerning the
provision of neuropsychological testing before making a determination
about these services for telehealth. One commenter believes that
neuropsychological testing should be considered for telehealth approval
stating, ``however it is unclear whether the technology has advanced
far enough to allow all neuropsychological testing to be provided via
telehealth without compromising the quality of care''. Additionally,
the commenter stated that more time is needed to assess how
neuropsychological testing could be provided via telehealth and listed
the following issues that need further consideration:
The variety of disorders and diagnoses appropriate via
telehealth;
The physical assistance that patients may need to complete
tests; and
The impact of face-to-face interactions with a
psychologist or trained psychological technician during testing on the
interpretation of test results.
Response: We appreciate the comments regarding the use of an
interactive audio and video telecommunications system in furnishing
neuropsychological testing services. Based on the comments received, we
believe that further study is necessary before making a determination
about neuropsychological testing for telehealth. As discussed above in
this section, we received conflicting comments as to whether the
administration of a neuropsychological test could be furnished
adequately when the practitioner who is responsible for administering
the test is not physically present with the patient.
For example, some commenters believe that neuropsychological
testing furnished via telehealth is not significantly different than
when furnished in-person and that a telepresenter could be used to
assist the physician or psychologist at the distant site if necessary.
Other commenters believed that further study is necessary before
approving neuropsychological testing for telehealth. One commenter
believed that it is unclear whether the use of a telecommunications
system for administering neuropsychological testing would compromise
quality of care and listed specific issues that need greater
exploration. Even a commenter who supports approving neuropsychological
testing for telehealth indicated that many neuropsychological testing
measures would not be appropriate for telehealth. As such, we continue
to have concerns about using an interactive audio and video
telecommunications system as a substitute for the face-to-face (in-
person) requirements of neuropsychological testing.
Comment: Two commenters believe that sufficient empirical evidence
exists to support the approval of neuropsychological testing for
telehealth. The commenters submitted summaries of two comparative
analyses between neuropsychological testing furnished via an
interactive audio and video telecommunications system and
neuropsychological testing furnished in-person.
Response: As discussed above in this section, we believe that
further study is necessary before approving neuropsychological testing
for telehealth. Although the commenters did submit comparative
analyses, in one of the studies cited, the same psychologist furnished
neuropsychological testing in both conditions (face-to-face and via
telehealth). In another study cited, study participants without
neuropsychological or psychiatric disturbance were tested.
Additionally, the studies cited had extremely small samples. As such,
we believe it would be difficult to generalize any findings to a
broader population.
Comment: One commenter questioned whether the regulatory impact
analysis for telehealth was intended to provide a rationale to make
reductions in Medicare payment for telehealth services in the future.
The commenter urged us to continue to fund a wide variety of telehealth
services.
Response: The regulatory impact analysis was not intended to be
used as a rationale for making reductions in Medicare payment for
telehealth services. The intent of the regulatory impact analysis on
telehealth was to illustrate that the proposed addition of
neurobehavioral status exam to the list of Medicare telehealth services
should not have a significant budgetary impact on the Medicare program.
For more information on our regulatory impact analysis for the proposed
addition of neurobehavioral status exam to the list of Medicare
telehealth services, see the CY 2008 PFS proposed rule (72 FR 38216).
Comment: One commenter stated that neuropsychological testing is
ancillary to a neurobehavioral status exam and that neuropsychological
testing would have little additional budgetary impact (beyond the
impact of adding neurobehavioral status exam). To support this
assertion, the commenter cited our proposed regulatory impact analysis
on the addition of neurobehavioral status exam (as described by CPT
code 96116).
Response: As discussed above in this section, we believe that
further study is necessary before approving neuropsychological testing
for telehealth.
Comment: A few commenters requested that we approve additional
services for telehealth (for example, standardized performance testing
as described by CPT code 96125).
Response: Requests for additions (including any supporting data
analyses) should be submitted through our process for adding services
and must be received by December 31 of each calendar year to be
considered for the next proposed rule. For more information on how to
submit a request for addition, please visit our Web site at http://www.cms.hhs.gov/telehealth
.
Results of Evaluation of Comments
We are adding the neurobehavioral status exam as represented by
HCPCS code 96116 to the list of Medicare telehealth services.
Additionally, we are revising Sec. 410.78 and Sec. 414.65 to include
neurobehavioral status exam as a Medicare telehealth service.
As discussed above, only services that traditionally require a
face-to-face (in person) physician or practitioner encounter are
candidates for the list of Medicare telehealth services. Services not
requiring a face-to-face encounter with the patient that may be
furnished through the use of a telecommunications system are already
covered under Medicare. As discussed in chapter 15, section 30 of the
Medicare Benefit Policy Manual, payment may be made for physicians'
services delivered via a telecommunications system for services that do
not require a face-to-face patient encounter. The interpretation of an
x-ray, electrocardiogram, electroencephalogram and tissue samples are
listed as examples of these services.
[[Page 66253]]
After further review of the requested services for addition,
neuropsychological testing administered by a computer (as described by
HCPCS code 96120) is not a candidate for the list of Medicare
telehealth services. Neuropsychological testing administered by a
computer (HCPCS code 96120) does not require a face-to-face (in person)
encounter between the patient and the physician or psychologist (or
qualified technician) responsible for the administration and
interpretation of the test results (for example, the patient is
interfacing with the computer, not a physician or psychologist). As
such, a telecommunications system may be used to facilitate
neuropsychological testing administered by a computer (as described by
HCPCS code 96120); for example, Web-based computer neuropsychological
testing, and/or transmission of neuropsychological test results to an
interpreting physician or psychologist via telecommunications system.
E. Specific Coding Issues Related to the PFS
1. Reduction in the Technical Component (TC) for Imaging Services Under
the PFS to the Outpatient Department (OPD)
Effective January 1, 2007, section 5102(b)(1) of the Deficit
Reduction Act of 2005 (Pub. L. 109-171) (DRA) amended section 1848 of
the Act to require that, for imaging services, if-- ``(i) The technical
component (including the technical component 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 for hospital outpatient department services*
* * for such service for such year, determined without regard to
geographic adjustment * * *, 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 technical
component for such year.''
As required by the statute, for imaging services (described in this
section) 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 5102(b)(1) of the DRA 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.''
To apply section 5102(b) of the DRA, we needed to determine the CPT
and alpha-numeric HCPCS codes that fall within the scope of ``imaging
services'' defined by the DRA provision. In the CY 2008 PFS proposed
rule, we explain in detail the process we used for establishing the
list of codes that fall within the scope of this DRA provision. We also
stated that upon further review, we have determined that certain
ophthalmologic procedures meet the DRA definition of imaging
procedures, but were not included in the original list of imaging
services subject to the OPPS cap. Therefore, we proposed to add the
following procedures to the list of procedures subject to the OPPS cap,
effective January 1, 2008:
92135, Scanning computerized ophthalmic diagnostic imaging
(e.g., scanning laser) with interpretation and report.
92235, Fluorscein angioscopy (includes multiframe imaging)
with interpretation and report.
92240, Indocyanine-green angiography (includes multiframe
imaging) with interpretation and report.
92250, Fundus photography with interpretation and report.
92285, External ocular photography with interpretation and
report for documentation of medical progress (e.g., close-up
photography, slit lamp photography, goniophotography, stereo-
photography).
92286, Special anterior segment photography with
interpretation and report; with specular endothelial microscopy and
cell count.
A complete list of CPT codes that identify imaging services as
defined by the DRA OPPS cap provision, amended to include these
ophthalmologic procedures, was also published in Addendum F of the CY
2008 PFS proposed rule (72 FR 38369 through 38372). Payment for an
individual service on this list will only be capped if the PFS TC
payment amount exceeds the OPPS payment amount.
Comment: Several commenters indicated that none of the six
ophthalmologic CPT codes proposed for addition to the list of
procedures subject to the OPPS cap meet the statutory definition of
imaging under the DRA, that is, none of the procedures codes fall under
the categories of x-rays, ultrasound, MRI, PET, CT or fluoroscopy.
Specifically, they noted that CPT code 92250 utilizes a wide angle
camera used primarily for detecting retinopathy in diabetics. Likewise,
CPT codes 92235, 92240, and 92285 are all photos, using photographic
equipment, or an angioscope. The commenters concluded that the Congress
did not intend for any service that uses a camera or microscope, takes
photographs, and produces negatives to be included in the DRA
definition of imaging services.
Another commenter indicated that CPT codes 92250 and 92285 do not
meet our criterion for including a procedure under the DRA provision,
that is, services that provide visual information regarding areas of
the body that are not normally visible, thereby assisting in the
diagnosis or treatment of injury. The commenter noted that the subject
procedures take traditional pictures of parts of the eye that are
normally visualized with the naked eye. One commenter noted that the
six CPT codes have not experienced dramatic increases in utilization,
but rather, utilization has remained stable or decreased.
Response: The DRA provision describes imaging services broadly as
``imaging and computer-assisted imaging services,'' and does not
provide for the type of distinctions the commenters suggested. While it
specifically includes certain imaging modalities (x-ray, ultrasound,
MRI, PET, CT, and fluoroscopy), it does not exclude other imaging
modalities. In fact, the DRA provision excludes only one imaging
service, that is, diagnostic and screening mammography. Concerning CPT
codes 92250 and 92285, we believe the images generated by these
services may include information that requires the use of photographic
or imaging equipment and is not normally visible by the unaided human
eye. Finally, the description of imaging services to which the DRA
provision applies is not limited to procedures that have experienced
dramatic increases in utilization. We believe the six procedures meet
the DRA definition of imagining services and are similar to other
procedures already subject to the DRA provision. Therefore, we will
include these CPT codes on the list of procedures subject to the OPPS
cap. (Note: This list of procedures is published in Addendum F of this
final rule with comment period.)
Comment: Many comments requested clarification of the application
of the OPPS cap when there is no OPPS payment for comparison; where the
code is bundled under OPPS; or where
[[Page 66254]]
the OPPS payment includes items (for example, contrast agents or
radiopharmaceuticals) that are paid separately under the PFS.
Response: Where there is no OPPS payment for a procedure or where
the OPPS for a procedure is bundled, there is no OPPS amount for the
comparison with the PFS payment. Therefore, it is infeasible to apply
an OPPS cap. The codes will remain on the list of codes subject to the
OPPS cap, but will not be affected by the cap. Where the OPPS payment
includes packaged services or items that are paid separately under the
PFS, we can and do apply an OPPS cap. The physician can continue to
bill separately for such services or items when furnished in a place of
service, for example, a physician's office, where the item is paid
separately.
2. Application of Multiple Procedure Reduction for Mohs Micrographic
Surgery (CPT Codes 17311 Through 17315)
Under the multiple procedure payment reduction policy,
reimbursement for subsequent surgical procedures performed during the
same operative session by the same physician is reduced by 50 percent.
The Mohs surgery codes have been exempt from the multiple procedure
payment reduction rules since the inception of the PFS (56 FR 59602,
November 25, 1991).
The CPT Editorial Panel reviewed all of the codes on the list of
codes exempt from the multiple procedure payment reduction (the ``-51
modifier exempt list'') to identify which codes should be exempt from
the multiple procedure payment reduction rules. Based on the revisions
to the code descriptors and a clearer understanding regarding the
technical elements of the procedure, in CY 2007, the CPT Editorial
Panel removed the Mohs procedure from the -51 modifier exempt list. The
codes for Mohs surgery were revised to take into account the different
level of physician work intensity involved based on anatomic site. The
RVUs associated with the codes for each anatomic location were
recommended by the RUC, as they are for other procedures, after a
thorough discussion by the RUC of all aspects of the service. Work RVUs
were developed for each Mohs surgery base code based on an assumption
that each code is performed separately. Because the work RVUs for these
services do not take into account the efficiencies that occur when
multiple procedures are performed in one session, we do not believe
that these codes should continue to be exempt from the multiple
procedure payment reduction. Therefore, we proposed to eliminate the
modifier 51 exemption and apply the multiple procedure payment
reduction rules to these codes.
Comment: We received comments supporting our proposal and
expressing the belief that our proposal is fair and consistent with our
multiple procedure payment policies already affecting a wide range of
procedures with codes in the Surgery/Integumentary System of CPT. Many
commenters opposed our proposal to eliminate the modifier -51 exemption
and apply the multiple procedure payment reduction to these codes.
These commenters believed that eliminating these codes from the
modifier -51 exempt list would negatively impact Medicare
beneficiaries'' access to timely and quality care, and could lead to
increases in pathology charges and increase the amount spent on
multiple facility fees, thereby raising the overall cost of treating an
individual with skin cancer. In addition to these concerns, many of the
commenters do not believe we have sufficient justification to make the
change, and suggest that this is an arbitrary decision. Further, the
commenters asserted that the AMA-RUC and CPT decisions were in error
and should not be followed.
Response: We verified with the CPT Editorial Panel that the
application of the modifier -51 exempt status indicator, and
subsequently, the inclusion of this series of codes (CPT codes 17311
through 17315) in Appendix E, Summary of CPT Codes Exempt from Modifier
-51, of the 2008 CPT codebook would not be carried forward with the new
series of codes created in 2007. The CPT panel confirmed with us that
the exclusion of these codes from Appendix E was not an error. The AMA
RUC reviewed and valued the new and existing codes for Mohs surgery.
Upon completion of a thorough review and discussion of the Mohs codes,
the RUC valued these codes with the full understanding these codes were
removed from the modifier -51 exempt list and would be subject to the
multiple procedure payment reduction as well.
We believe the CPT Editorial Panel and the Mohs workgroup on the
CPT Editorial Panel gave considerable time, effort and discussion in
the creation of the new and existing codes for Mohs surgery. We also
believe the AMA-RUC carefully reviewed the rationale and deliberations
which lead to the creation of new Mohs surgery codes. In addition, we
believe the specialty society had ample time and opportunity to express
its point of view to both the CPT Panel and the AMA-RUC. As a result of
the revisions to these codes and their respective valuation, we do not
believe they should continue to be treated differently from other codes
in the Surgery/Integumentary System section of the CPT book and see no
reason not to accept the recommendations provided by the CPT Panel and
AMA-RUC. Therefore, we are finalizing our proposal to eliminate the
modifier -51 exemption and apply the multiple surgery procedure payment
reduction rules to these codes.
3. Payment for Intravenous Immune Globulin (IVIG) Add-On Code for
Preadmission Related Services
Intravenous immune globulin (IVIG) is a unique product derived from
blood plasma. This drug is paid for under the ASP methodology and the
administration of this drug is reported using the first hour and second
hour infusion codes for therapeutic, prophylactic and diagnostic
services under CPT.
We recognize the importance of IVIG to patients who require it and
are concerned about reports of problems with IVIG access and
availability. We have initiated several actions in response to concerns
about the supply of IVIG.
In July 2007, we implemented new codes for reporting IVIG for
liquid non-lyophilized IVIG.
In CY 2006 and 2007, we established payment, through the creation
of a special G-code, G0332, for preadministration services furnished in
connection with the procurement of IVIG in the physician's office. This
code is designed to compensate physicians for the extra resources
required to be expended due to market conditions to locate and obtain
the appropriate IVIG products and to schedule patient infusions.
Comment: We received several comments regarding our proposal to
continue in CY 2008 the preadministration payment under the PFS for
patients treated with IVIG in a physician's office.
The majority commenters supported our proposal and recommended that
it be finalized, and recommended that this policy be made permanent.
Commenters stated that if this code and payment are not made permanent,
we would need to present a convincing evidence to terminate this
payment. Commenters indicated that without continuation of the add on
payment, access problems for Medicare beneficiaries in need of IVIG
would be more severe.
Many commenters indicated problems with the ASP payment methodology
for IVIG stating that IVIG is a unique
[[Page 66255]]
product for which market conditions are unlike all other drugs paid
under ASP. Other commenters remarked that the addition of the four new
billing codes for liquid IVIG adopted in July 2007 should improve
market conditions and beneficiary access to IVIG. Some commenters asked
that we consider making the liquid IVIG codes permanent J-codes. A few
commenters asked that CMS consider establishing an add on payment for
IVIG similar to the add on payment for clotting factor.
Two commenters indicated that Addendum B did not include the G-code
for preadministration services and recommended that the code be
included in Addendum B for the final rule.
Response: Comments regarding the ASP pricing methodology for IVIG,
the adoption of new drug codes for liquid IVIG in CY 2007, and the
consideration of an add-on payment for IVIG similar to the add-on
payment for blood clotting factor are beyond the scope of our proposal
which focuses on payment for a service under the PFS. We will consider
these comments in context of any proposed policies for drug payments
made as part of the CY 2009 PFS proposed rule.
In terms of the preadministration service for IVIG, we will
continue the CY 2007 payment policy for code G0332 through CY 2008. We
will carefully consider all relevant information including the
conditions of the IVIG drug market during CY 2008 when we address
whether it would be appropriate to continue the payment policy as part
of the CY 2009 PFS.
We appreciate the commenters alerting us that G0332 was omitted
from Addendum B in the proposed rule and we will ensure that this code
is listed in Addendum B of this final rule with comment period.
Therefore, we are finalizing the proposal to continue to recognize
payment for preadministration services for IVIG furnished to patients
in a physician's office in CY 2008. Payment for this service will be
made based on the PE RVUs previously established for this service in CY
2007. Payment for preadminstration services for IVIG furnished to
hospital outpatients is paid under the outpatient PPS (OPPS) and is
addressed as part of that final rule.
4. Reporting of Cardiac Rehabilitation Services
For CY 2008, we proposed to assign a status indicator of ``I''
(invalid for Medicare purposes, Medicare recognizes another code for
the billing of this service) to the current CPT codes for cardiac
rehabilitation services, CPT codes 93797, Physician services for
outpatient cardiac rehabilitation; without continuous ECG monitoring
(per session), and 93798, Physician services for outpatient cardiac
rehabilitation; with continuous ECG monitoring (per session) and
proposed to establish two new Level II HCPCS codes that we believe are
more appropriate for specifically reporting cardiac rehabilitation
services under the PFS. The proposed HCPCS codes are: GXXX1, Physician
services for outpatient cardiac rehabilitation; without continuous ECG
monitoring (per hour), and GXXX2, Physician services for outpatient
cardiac rehabilitation; with continuous ECG monitoring (per hour). We
also proposed to crosswalk the current RVUs associated with CPT codes
93797 and 93798 to HCPCS Codes Gxxx1 and Gxxx1.
Comment: Many commenters, including physicians and providers of
cardiac rehabilitation services, were generally supportive of the
proposal for the specific G-codes. Commenters believed that this
proposed coding change would allow for more appropriate coding and
payment for cardiac rehabilitation services in those cases where
intensive programs provide multiple sessions each day. In addition,
commenters requested that we explicitly state that multiple sessions of
cardiac rehabilitation can be paid for the same date of service when
modifier 59 is reported. They also requested that we crosswalk the
payments for both of the proposed G-codes to the higher cost CPT code
93798 to ensure that the full range of modalities provided in certain
intensive cardiac rehabilitation programs are available.
Several of these commenters also requested that we provide
additional guidance related to reporting of the cardiac rehabilitation
G-codes, such as: (1) Explaining that it is likely to be reasonable and
necessary to cover 72 cardiac rehab sessions when multiple sessions are
provided in one day; (2) encouraging contractors to factor the ``proven
results'' of a program into coverage decisions and that 72 sessions
should be ``presumptively covered'' when they are furnished by a
certain intensive cardiac rehabilitation program; and (3) providing
further clarification and expansion of nutritional counseling by
registered dieticians, indicating that they could independently bill
for nutritional counseling within cardiac rehabilitation programs using
the medical nutrition therapy codes because the NCD does not
specifically mention these services.
Alternatively, a few commenters, including physician specialty
groups, questioned the need for the proposed G-codes, indicating that
no new data would be gained by a coding shift that changes a unit from
a session to an hour. Commenters also suggested that we work with the
AMA to address the issue of whether it would be appropriate to modify
the CPT definition for this code from a per session to per hour basis.
Many commenters also expressed concern that the use of the term
``physician services'' and ``MD services'' in the G-code descriptors
could be misinterpreted by Medicare contractors as requiring a
physician to directly deliver the care or be in attendance during each
service episode and requested that the code descriptor be revised.
Response: We are aware of several intensive cardiac rehabilitation
programs that provide multiple sessions in a day, lasting several hours
total. The NCD for cardiac rehabilitation currently states that cardiac
rehabilitation programs are covered for certain categories of patients
and that the programs must be comprehensive. To be comprehensive the
programs must include a medical evaluation, a program to modify cardiac
risk factors (for example, nutritional counseling), prescribed
exercise, education, and counseling. The NCD does not distinguish
between different approaches to the delivery of cardiac rehabilitation
services, whether the more common practice of two sessions per week or
the more intensive programs of several sessions per day. In order to
allow for flexibility and tailoring of cardiac rehabilitation programs
based on patient needs, we have not been prescriptive regarding the
precise amount of time that must be spent on each component of the
program. Regarding intensity, we expect the intensity of cardiac
rehabilitation programs to vary by patient and by program.
We believe it is important that our payment policy provides
appropriate payment for cardiac rehabilitation services. In order to
minimize the administrative burden to physicians and providers, but
permit accurate reporting and payment for cardiac rehabilitation
programs that provide more than one session per day, we believe that
continuing the use of CPT codes 93797 and 93798 and allowing physicians
and providers to bill more than one session per day under some
circumstances would be the most appropriate course. Therefore, based
upon the comments received and upon further review of this issue, for
CY 2008, we will allow physicians and providers to report more than one
unit for a date of service if
[[Page 66256]]
more than one cardiac rehabilitation session lasting at least 1 hour
each is provided on the same day.
With respect to commenters' concerns about the use of the term
``physician services'' in the proposed G-code descriptors, we note that
the descriptors for these codes were proposed to be parallel to the
descriptors of the CPT codes for cardiac rehabilitation sessions which
contain the term ``physician services'' in their descriptors. We are
not aware that physicians and providers have problems with Medicare
contractors'' interpretation of the CPT code descriptors.
After consideration of all public comments received, we are not
finalizing our proposal to establish two new G-codes for reporting
cardiac rehabilitation services. Instead, we will continue to use the
CPT codes 93797 and 93798 to report cardiac rehabilitation services
under the CY 2008 PFS.
We will provide further guidance on coding and payment instructions
for the cardiac rehabilitation services codes through program
instructions.
We will not provide the additional coverage-related guidance
requested by some commenters, such as the presumptive coverage and
independent billing for registered dieticians. These recommendations
effectively request changes to the NCD, and therefore, are outside of
the scope of this final rule with comment period.
F. Part B Drug Payment
1. Average Sales Price (ASP) Issues
Medicare Part B covers a limited number of prescription drugs and
biologicals. For the purposes of this proposed rule, the term ``drugs''
will hereafter refer to both drugs and biologicals, unless otherwise
specified. Medicare Part B covered drugs not paid on a cost or
prospective payment basis generally fall into the following three
categories:
Drugs furnished incident to a physician's service.
DME drugs.
Drugs specifically covered by statute (certain
immunosuppressive drugs, for example).
Beginning in CY 2005, the vast majority of Medicare Part B drugs
not paid on a cost or prospective payment basis are paid under the ASP
methodology. The ASP methodology is based on data submitted to us
quarterly by manufacturers. In addition to the payment for the drug,
Medicare currently pays a furnishing fee for blood clotting factors, a
dispensing fee for inhalation drugs, and a supplying fee to pharmacies
for certain Part B drugs.
In January 2006, the drug coverage available to Medicare
beneficiaries expanded with the implementation of Medicare Part D. The
Medicare Part D program does not change Medicare Part B drug coverage.
In this section, we discuss changes and issues related to the
determination of the payment amounts for covered Part B drugs and
furnishing blood clotting factor. This section also discusses changes
to how manufacturers calculate and report ASP data to us.
a. ASP Payment
Section 303(c) of the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (Pub. L. 108-173) (MMA) amended Title XVIII
of the Act by adding section 1847A. This section revised the payment
methodology for the vast majority of drugs and biologicals not paid on
a cost or prospective payment basis furnished on or after January 1,
2005. The ASP reporting requirements are set forth in section 1927(b)
of the Act. Manufacturers must submit ASP data by 11-digit National
Drug Code (NDC) to us quarterly. The manufacturers' submissions are due
to us not later than 30 days after the last day of each calendar
quarter. The methodology for developing Medicare drug payment
allowances based on the manufacturers' submitted ASP data is specified
in 42 CFR, part 414, subpart K. We update the Part B drug payment
amounts quarterly based on the data we receive. In this section of the
preamble, we discuss certain aspects of the calculation of
manufacturers' ASP data, issues related to bundled price concessions,
and other Part B drug payment issues.
Further information on manufacturers' submission of ASP data for
Medicare Part B drugs and biologicals is contained in prior rulemaking
documents and other guidance accessible on the CMS Web page at (http://www.cms.hhs.gov/McrPartBDrugAvgSalesPrice/
). Specifically refer to the
April 6, 2004 ASP interim final rule with comment period (IFC) (69 FR
17935) and the CY 2007 PFS final rule with comment period (71 FR
69624), which finalized the ASP calculation and reporting requirements
of the April 6, 2004 IFC, and the Frequently Asked Questions available
on the CMS Web page.
b. Bundled Price Concessions
In the CY 2007 PFS proposed rule and final rule with comment
period, we solicited and responded to comments regarding the issue of
how to allocate price concessions across drugs that are sold under
bundling arrangements for purposes of calculating the ASP. We did not
establish a specific methodology that manufacturers must use for the
treatment of bundled price concessions for purposes of the ASP
calculation in the CY 2007 PFS final rule with comment period. In the
absence of specific guidance, we maintained existing guidance that
manufacturers may make reasonable assumptions in their calculation of
ASP, consistent with the general requirements and the intent of the
Act, Federal regulations, and their customary business practices. We
also indicated that we would be closely monitoring this issue and may
provide more specific guidance in the future if we determine it is
warranted.
As stated in the CY 2008 PFS proposed rule (72 FR 38150), in its
January 2007 Report to Congress, ``Impact of Changes in Medicare
Payments for Part B Drugs,'' the MedPAC discussed the issue of
allocation of bundled price concessions for purposes of calculating the
ASP, noting that ``some manufacturers offer provider discounts for one
of their products contingent on purchases of one or more other
products.'' This report discusses two approaches for allocating bundled
price concessions.
According to MedPAC, one option would be to require manufacturers
to allocate bundled discounts in proportion to the sales of each drug
sold under the bundled arrangement. For example, Drug A and Drug B are
sold under a bundled arrangement and have a combined bundled discount
equal to $200,000 on total sales of $1 million. If Drug A has sales of
$600,000, the manufacturer would allocate 60 percent of the bundled
discount to that drug when calculating ASP. Forty percent of the
bundled discount would be allocated to Drug B. MedPAC states that this
approach would parallel bundling requirements under Medicaid and would
be simpler to administer. However, MedPAC notes that this method might
not capture contingent discounts.
The other approach discussed by MedPAC would be to require
manufacturers to allocate bundled discounts to reflect the
contingencies in the contract. That is, manufacturers would allocate
any additional (or increased) discount to the sales of the drug (or
drugs) that the discount is meant to increase. This approach would
result in an ASP that more accurately reflects the transaction price of
drugs when a discount for one drug or drugs is contingent in whole or
in part on the purchase of another drug. For example, if a greater
discount on the purchase price of Drug A is contingent on the
[[Page 66257]]
purchase (or purchases) of Drug B, this additional discount would be
allocated to sales of Drug B in the calculation of ASP.
In its discussion of bundling, MedPAC states that the goal should
be to ensure that ASP reflects the average transaction price for drugs.
To that end, MedPAC recommends that the Secretary clarify the ASP
reporting requirements for bundled products to ensure that ASP
calculations allocate discounts to reflect the transaction price for
each drug. Further, MedPAC states that we should ensure that the
reporting requirements for allocating discounts are clear and that they
can be implemented by manufacturers in a timely fashion.
In the CY 2008 PFS proposed rule (71 FR 77176), we also discussed
the Medicaid Program: Prescription Drugs proposed rule published in the
December 22, 2006 Federal Register (hereinafter referred to as the
December 22, 2006 proposed rule) concerning the calculation of
manufacturers' average manufacturer price (AMP). In the December 22,
2006 proposed rule, we proposed that discounts associated with a
bundled sale would be allocated proportionately according to the dollar
value of the units of each drug sold under the bundled arrangement. For
bundled sales where multiple drugs are discounted, the aggregate value
of all the discounts would be proportionately allocated across all of
the drugs in the bundle. For AMP purposes, a bundled sale would mean an
arrangement regardless of physical packaging under which the rebate,
discount, or other price concession is conditioned upon the purchase of
the same drug or drugs of different types (that is, at the nine-digit
NDC level) or some other performance requirement (for example, the
achievement of market share, inclusion or tier placement on a
formulary), or where the resulting discounts or other price concessions
are greater than those which would have been available had the bundled
drugs been purchased separately or outside of the bundled arrangement.
In the December 22, 2006 proposed rule, we further proposed that the
AMP should be adjusted for bundled sales by determining the total value
of all the discounts on all drugs in the bundle and allocating those
discounts proportionately to the respective AMP calculations. The
aggregate discount is allocated proportionately to the dollar value of
the units of each drug sold under the bundled arrangement. Where
discounts are offered on multiple products in a bundle, the aggregated
value of all of the discounts should be proportionately allocated
across all of the drugs in the bundle. We received many comments on the
many aspects of the December 22, 2006 proposed rule. However, the
review of those comments and development of the final AMP calculation
policies and rule were not complete at the time the CY 2008 PFS
proposed rule was developed.
In light of MedPAC's recommendation that we clarify the ASP
reporting requirements for bundled products and our discussion of
bundled price concessions in the CY 2007 PFS rulemaking, we stated in
the CY 2008 PFS proposed rule that we believe specific guidance in the
ASP context is warranted to provide for greater consistency in ASP
reporting across manufacturers and to enhance the accuracy of the ASP
payment system. We stated that we found MedPAC's suggestion not to
defer further guidance in this area compelling with respect to the
potential that manufacturers may make differing assumptions in the
absence of specific guidance on how to allocate bundled price
concessions in the context of ASP. In addition, we stated that we
believe it is appropriate at this time to establish a specified method
for treating bundled price concessions in the calculation of ASP that
is consistent with the treatment of such discounts for purposes of the
AMP calculation, and that appropriate consistencies across the
calculations of ASP and AMP will result in a lower potential for error
and more accurate calculations of both prices.
As we noted in the CY 2008 PFS proposed rule, although ASP and AMP
serve similar, but not identical, purposes, differences between these
calculations provide a rationale for, and in some instances may
require, minor differences between the final policies adopted in
Medicaid and Medicare regulations. We believe any differences would be
necessary to clarify certain aspects of a consistent approach for
treatment of bundling, and would not result in significant policy
differences on how bundling is addressed in the context of AMP and in
the context of ASP.
Therefore, for purposes of calculating the ASP (beginning with the
reporting period for the first calendar quarter of 2008 and
thereafter), we proposed that the manufacturer must allocate the total
value of all price concessions proportionately according to the dollar
value of the units of each drug sold under a bundled arrangement to
ensure that the ASP is adjusted for bundled arrangements as defined at
proposed Sec. 414.802. For a bundled arrangement, where multiple drugs
are discounted, the aggregate value of all the discounts would be
proportionately allocated across all of the drugs sold under the
bundled arrangement. We proposed that a bundled arrangement, for ASP
purposes, would mean an arrangement, regardless of physical packaging
under which the rebate, discount, or other price concession is
conditioned upon the purchase of the same drug or biological or other
drugs or biologicals or some other performance requirement (for
example, the achievement of market share, inclusion or tier placement
on a formulary, purchasing patterns, prior purchases), or where the
resulting discounts or other price concessions are greater than those
that would have been available had the drugs or biologicals sold under
the bundled arrangement been purchased separately or outside of the
bundled arrangement. We proposed to specify at proposed Sec.
414.804(a)(2)(iii) that all price concessions on drugs sold under a
bundled arrangement must be allocated proportionately to the dollar
value of the units of each drug sold under the bundled arrangement.
In the CY 2008 PFS proposed rule, we also stated our intention to
remain consistent, as appropriate, with the final policy adopted in the
Medicaid Program: Prescription Drugs final rule with comment period
published in the July 17, 2007 Federal Register (72 FR 39142)
(hereinafter referred to as the July 17, 2007 final rule with comment
period), which was still under development at that time. We stated that
the Medicaid policies on bundled sales may ultimately differ from our
discussion of the topic in the CY 2008 PFS proposed rule as a result of
the final policy adopted in the July 17, 2007 final rule with comment
period and that our policies for ASP in this final rule with comment
period may reflect the final Medicaid policy on bundled sales, but only
to the extent that it is appropriate for ASP and the public has had the
opportunity to comment on how the final Medicaid policy for bundled
sales, if appropriately adopted for ASP purposes, would effect the
calculation of ASP. The final Medicaid policy on bundled sales adopted
in the July 17, 2007 final rule with comment period was consistent with
the discussion of this issue in the December 22, 2006 proposed rule
with certain clarifications.
Comment: We received many comments on this issue. Most of these
commenters noted that our proposal for the treatment of bundled price
concessions in the ASP context was similar to the language finalized in
the July 17, 2007 final rule with comment period. In general, most of
the
[[Page 66258]]
commenters supported an appropriately consistent approach for the
treatment of bundled price concessions within both the AMP and ASP
calculations. However, several commenters indicated that they were
still reviewing the July 17, 2007 final rule with comment period and
believe additional time may be needed to better understand how the
proposed Medicare bundled arrangement definition is to be applied.
Several commenters had questions about how the proposed bundling
policies may apply to certain contracting arrangements, and because of
these questions, recommended that we cease or delay implementation of
our proposed method for treatment of bundled price concessions for
purposes of ASP.
Response: Based on comments recommending a delay and to better
understand the concerns stated by the commenters, we are not finalizing
the regulatory language changes we proposed in the CY 2008 PFS proposed
rule at this time. Although we are not establishing a specific
methodology that manufacturers must use for the treatment of bundled
price concessions for purposes of calculating ASP at this time, we are
clarifying that, in the absence of specific guidance, manufacturers may
make reasonable assumptions in their calculation of ASP, consistent
with the general requirements and the intent of the Act, Federal
regulations, and their customary business practices. In making
reasonable assumptions for purposes of calculating ASP, one method
manufacturers could use is to reallocate price concessions that are
conditioned upon other purchases or a performance requirement (for
example, the achievement of market share, inclusion or tier placement
on a formulary) so that the total value of all such price concessions
are allocated proportionately according to the dollar value of the
units of each drug sold. However, manufacturers may have other methods
they could use to report bundled price concessions, so long as
manufacturers apply reasonable assumptions consistent with the general
requirements and the intent of the Act, Federal regulations, and their
customary business practices. Manufacturers' reasonable assumptions
consistent with our requirements, guidance and manufacturer's customary
business practices remain an important aspect of ASP reporting. These
assumptions should be submitted along with the ASP data and the signed
certification form.
Recognizing that the treatment of bundled price concessions in the
ASP calculation has implications for the integrity of the ASP payment
methodology, we will continue to monitor this issue, will consider the
comments on this issue, and may provide more specific guidance in the
future through rulemaking or through program instruction or other
guidance (consistent with our authority under section 1847A(c)(5)(C) of
the Act) if we determine it is warranted. As we continue to review
these issues, we want to be sure we are aware of concerns from all
stakeholders, and thus we encourage the public to provide additional
information or concerns to us on this issue as they may arise.
c. Clotting Factor Furnishing Fee
Section 303(e)(1) of the MMA added section 1842(o)(5) of the Act
which requires the Secretary, beginning in CY 2005, to pay a furnishing
fee in an amount the Secretary determines to be appropriate to
hemophilia treatment centers and homecare companies for the items and
services associated with the furnishing of blood clotting factor.
Section 1842(o)(5)(C) of the Act specifies that the furnishing fee for
clotting factor for CY 2006 and subsequent years will be equal to the
fee for the previous year increased by the percentage increase in the
consumer price index (CPI) for medical care for the 12 month period
ending with June of the previous year.
The furnishing fee for CY 2007 is $0.152 per unit clotting factor.
The percent increase in the CPI for medical care for the 12-month
period ending in June 2007 is 4.0 percent. Consequently, the furnishing
fee will be $0.158 per unit of clotting factor for CY 2008. While the
furnishing fee payment rate is calculated at 3 digits, the actual
amount paid to providers and suppliers is rounded to 2 digits.
In the CY 2008 PFS proposed rule, we proposed to announce the
annual update of the blood clotting factor furnishing fee, as specified
in section 1842(o)(5)(C) of the Act, by issuing program instructions
and postings on the CMS Web site in lieu of including a discussion of
this issue in PFS rulemaking for CY 2009, and thereafter, until such
time as the update methodology may be modified. We made our proposal
because the update is statutorily determined, is based on an index not
affected by administrative discretion or public comment, is based on
the percentage increase in the CPI for medical care for the 12-month
period ending with June of the previous year, and is not released by
the Bureau of Labor Statistics until after our proposed rule is
published.
As stated in the CY 2008 proposed rule, we believe that including a
discussion of the furnishing fee update in annual rulemaking does not
provide an advantage over other means of announcing this information,
so long as the current statutory update methodology continues in
effect. We believe that the public's need for information and adequate
notice regarding the updated furnishing fee can be better met by
issuing program instructions which will eliminate the discussion of the
furnishing fee update annually in rulemaking. In addition, by
communicating the updated furnishing fee in program instruction, the
actual figure for the percent change in the applicable CPI and the
updated furnishing fee calculated based on that figure can be announced
more timely than when included as part of the PFS final rulemaking
process.
Comment: We received comments in support of our proposal to
announce the update furnishing fee via program instructions beginning
in CY 2009, and to continue updating the furnishing fee according to
the consumer price index for medical care. Comments supported the
continued use of our proposed approach until such time as the
methodology is changed.
Response: After consideration of the public comments, beginning for
CY 2009, we will announce the updated blood clotting factor furnishing
fee via program instructions and via a Web posting. In addition, we may
include the updated blood clotting factor furnishing fee in the annual
PFS final rules to promote broader dissemination of the announcement.
d. Widely Available Market Prices (WAMP) and AMP Threshold
Section 1847A(d)(1) of the Act states that ``the Inspector General
of HHS shall conduct studies, which may include surveys to determine
the widely available market prices (WAMP) of drugs and biologicals to
which this section applies, as the Inspector General, in consultation
with the Secretary, determines to be appropriate.'' Section 1847A(d)(2)
of the Act states that, ``Based upon such studies and other data for
drugs and biologicals, the Inspector General shall compare the ASP
under this section for drugs and biologicals with--
The widely available market price (WAMP) for these drugs
and biologicals (if any); and
The AMP (as determined under section 1927(k)(1) of the Act
for such drugs and biologicals.''
Section 1847A(d)(3)(A) of the Act states that, ``The Secretary may
disregard the ASP for a drug or biological that exceeds the WAMP or
[[Page 66259]]
the AMP for such drug or biological by the applicable threshold
percentage (as defined in subparagraph (B)).'' The applicable threshold
is specified in the statute as 5 percent for CY 2005. For CY 2006 and
subsequent years, section 1847A(d)(3)(B) of the Act establishes that
the applicable threshold is ``the percentage applied under this
subparagraph subject to such adjustment as the Secretary may specify
for the WAMP or the AMP, or both.'' In CY 2006 and CY 2007, we
specified an applicable threshold percentage of 5 percent for both the
WAMP and AMP. We based this decision on the limited data available to
support a change in the current threshold percentage.
For CY 2008, we proposed to specify an applicable threshold
percentage of 5 percent for the WAMP and the AMP. At present, the OIG
is continuing its comparison of both the WAMP and the AMP. Furthermore,
information on how recent changes to the calculation of the AMP may
affect the comparison of AMP to ASP is not available at this time.
Since we do not have data that suggest another level is more
appropriate at this time, we believe that continuing the 5 percent
applicable threshold percentage for both the WAMP and AMP is
appropriate for CY 2008.
As we noted in the CY 2007 PFS final rule with comment period (71
FR 69680), we understand that there are complicated operational issues
associated with potential payment substitutions and will continue to
proceed cautiously in this area and provide stakeholders, particularly
manufacturers of drugs impacted by potential price substitutions, with
adequate notice of our intentions regarding such, including the
opportunity to provide input with regard to the processes for
substituting the WAMP or the AMP for the ASP. As part of our approach,
we intend to develop a better understanding of the issues that may be
related to certain drugs for which the WAMP and AMP may be lower than
the ASP over time.
Comment: We received several comments regarding our proposal to
maintain the threshold at 5 percent. Most commenters supported
maintaining this threshold. One commenter suggested increasing the
threshold but did not specify a percentage to which it should be
increased. Another commenter suggested increasing the threshold for AMP
to 10 percent while maintaining the 5 percent threshold for WAMP.
Response: We recognize the public's concern regarding the
establishment of an appropriate threshold for making price
substitutions. We disagree with the commenter who recommended different
thresholds for WAMP comparisons and for AMP comparisons because of
current operational difficulties associated with maintaining and
communicating different thresholds. At the current time, we also
believe that maintaining two thresholds lessens stakeholders' ability
to accurately predict the potential risk for price adjustments. After
considering public comments on this issue, and as required by statute,
we are finalizing our proposal to establish the WAMP/AMP threshold at 5
percent for CY 2008.
Comment: We received many comments suggesting that caution be
exercised in the determination of price substitutions and that we
develop a formal process and criteria to be used to determine when
substitutions are necessary. Commenters also recommended that we assure
adequate notice is provided prior to making a price substitution.
Several commenters indicated recent policy changes made to the Medicaid
AMP calculation could impact the accuracy of the comparisons between
AMP and ASP and stated that these changes should be carefully studied
and considered before implementing any pricing changes.
Additionally, several commenters opposed any price substitutions
for certain classes of providers or for certain specific drugs. The
commenters noted that certain classes of providers may be subject to
different cost structures making wholesale substitution of prices
impractical. Some commenters asserted that certain drugs experience
unique market forces that may be adversely affected by pricing
substitutions.
Response: We understand that complex operational issues, both
within CMS and externally could impact potential payment rate
substitutions. We acknowledge the recent changes to the AMP regulations
and are studying such changes carefully. Furthermore, we recognize the
variety of providers and the marketplace forces that impact drug
pricing decisions under ASP. Therefore, we will proceed cautiously and
provide stakeholders, particularly manufacturers of drugs impacted by
potential price substitutions, with adequate notice of our intentions
regarding such, including the opportunity to provide input with regard
to the processes for substitution.
e. Other Issues
Comment: A few commenters noted that we did not discuss the payment
for separately billable ESRD drugs in the CY 2008 PFS proposed rule.
These commenters supported continuation of the current policy of basing
the payment on the ASP+6 percent.
Response: We did not propose any policy changes to the approach
that we currently use to pay for separately billed ESRD drugs.
Therefore, for CY 2008 payment for separately billable drugs furnished
by ESRD facilities will continue at ASP+6 percent in accordance with
section 1847A of the Act.
Comment: Several commenters noted that the billing and payment
codes recently established for liquid IVIG to implement separate
payment under section 1847A(b)(4) of the Act should improve beneficiary
access to these products.
Response: We thank the commenters for communicating their support.
Comment: We received a few comments expressing concern that,
because ASP based payment limit updates lag time by at least 2 calendar
quarters, increases in market prices may not be reflected in a drug's
payment limit for at least 6 months after a pricing adjustment. One
commenter suggested that current technology should enable CMS to
decrease the lag time from 6 months to 2 to 3 months.
Response: By statute, the ASP based payment allowances are
determined on a quarterly basis and are based on ASPs reported by
manufacturers quarterly. Manufacturers must report to us no later than
30 days after the close of the calendar quarter. There is a necessary
time frame after the close of a calendar quarter for manufacturers to
calculate and submit the ASP data to CMS, for CMS to prepare and issue
the payment rates, and for the claims processing contractors to
implement the updated payment files. We implement these new payment
limits through program instructions or otherwise at the first
opportunity after we received the data, which is the calendar quarter
after receipt.
Comment: One commenter suggested that we modify the formula we use
to calculate the payment amounts based on manufacturers' ASP data so
that the formula is volume weighted as suggested by the OIG.
Response: We discussed our formula for determining the payment
amounts based on manufacturers' ASP data in the CY 2006 PFS final rule
(70 FR 70217). As we stated in the CY 2006 PFS final rule, in
establishing the formula used to calculate the payment amounts based on
manufacturers' ASP data, we considered various approaches, including
the alternative suggested by this commenter. If appropriate, we may
consider revising the methodology in the future. We did not propose to
change our current formula, and are not
[[Page 66260]]
implementing changes to our formula at this time.
Comment: We received a few requests to increase the pharmacy
supplying fee for immunosuppressive, oral anticancer, and oral anti-
emetic drugs for CY 2008 to reflect actual supplying costs. We also
received comments expressing concerns that primarily because of the
labor intensive Medicare Part B claims processing services provided by
specialty transplant pharmacies, the current supplying fee payment for
immunosuppressive drugs is substantially lower than reported actual
supplying costs. One commenter requested that we eliminate the two-
tiered pharmacy supplying fee for prescriptions filled within a 30-day
period.
Response: We are committed to assuring that our claims systems
process claims as timely and accurately as possible and that their
payment methodologies result in the determination of accurate payment
amounts. We recognize the operational complexities under which certain
providers operate and strive to develop systems and processes to
minimize such complexities. We appreciate the comments that were
provided and may consider the issue in future rulemaking if
appropriate. Since we did not propose a change to these rates for CY
2008, they will continue to be in effect in CY 2008. We received
several other comments on the use and potential impacts of the ASP
payment methodology and other issues related to Part B drugs that are
also outside the scope of this rulemaking and will not be addressed in
this final rule with comment. These topics include the following:
Requests for billing codes for specific products;
Whether alternative payment methodologies or exceptions to
the ASP based payment should be considered;
Variation in local coverage and payment policies,
including use of least costly alternative policies and invoice pricing
for compounded drugs;
Excluding prompt pay discounts from the calculation of
ASP; and
Whether coverage under Part B should be expanded to
include certain vaccines.
2. Competitive Acquisition Program (CAP) Issues
Section 303(d) of the MMA required the implementation of a CAP for
certain Medicare Part B drugs and biologicals not paid on a cost or PPS
basis. The provisions for acquiring and billing drugs under the CAP
were described in the Competitive Acquisition of Outpatient Drugs and
Biologicals Under Part B proposed rule (published in the March 4, 2005
Federal Register; hereinafter referred to as the March 4, 2005 proposed
rule) and interim final rule with comment period (published in the July
6, 2005 Federal Register; hereinafter referred to as the July 6, 2005
IFC) (70 FR 10746 and 70 FR 39022, respectively). Certain provisions
were finalized in the CY 2006 PFS final rule with comment period (70 FR
70116). We specified a single CAP drug category to include a defined
list of drugs furnished incident to a physician's service.
In this final rule with comment period, we discuss the impact of
provisions in section 108 of the MIEA-TRHCA on administrative and
operational aspects of the CAP. Topics include the implementation of a
post-payment review process and the corresponding changes to claims
processing procedures, and changes to other operational aspects of the
CAP. This final rule with comment period implements conforming changes
to the CAP regulations to reflect these provisions that made changes to
the payment process of the CAP for Part B Drugs.
When the CAP program began on July 1, 2006, physicians were given a
choice between obtaining these drugs from vendors selected through a
competitive bidding process and approved by CMS, or directly purchasing
these drugs and being paid under the ASP system. In this final rule
with comment period, we discuss areas related to transporting CAP drugs
and the administrative burden of the CAP submitted in response to the
July 6, 2005 IFC. In addition, we are finalizing portions of the July
6, 2005 IFC that were not finalized in the CY 2006 PFS final rule with
comment period and responding to the other timely comments we received
on the July 6, 2005 IFC that we have not responded to previously.
a. MMA Operational Provisions
Prior to the enactment of the MIEA-TRHCA, section 1847B(a)(3)(A) of
the Act set forth specific requirements that have a direct impact on
the administrative and operational parameters for instituting a CAP.
This section of the statute required the following:
(1) Approved CAP vendors bill the Medicare program for the drug or
biological supplied, and collect any applicable deductibles and
coinsurance from the Medicare beneficiary. (For purposes of the
preamble, the term ``approved CAP vendor'' means the term
``contractor'' as referred to in the statute.)
(2) Any applicable deductible and coinsurance may not be collected
unless the drug was administered to the beneficiary. (For purposes of
the preamble, the term ``drug'' refers to drugs and biologicals
furnished under the CAP, unless the context specifies otherwise.)
(3) Medicare can make payments only to the approved CAP vendor, and
these payments are conditioned upon the administration of the drug.
Section 108 of the MIEA-TRHCA amended this third element.
b. MIEA-TRHCA
Section 108 of the MIEA-TRHCA made changes to the CAP payment
methodology. Section 108(a)(1) of the MIEA-TRHCA amended section
1847B(a)(3)(A)(iii) of the Act by adding new language that requires
that payment for drugs and biologicals be made upon receipt of a claim
for a drug or biological supplied for administration to a beneficiary.
This statutory change took effect on April 1, 2007.
Section 108(a)(2) of the MIEA-TRHCA requires the Secretary to
establish (by program instruction or otherwise) a post-payment review
process (which may include the use of statistical sampling) to assure
that payment is made for a drug or biological only if the drug or
biological has been administered to a beneficiary. The Secretary shall
recoup, offset, or collect any overpayments determined by the Secretary
under this process.
Section 108(b) of the MIEA-TRHCA states that nothing in this
section shall be construed as requiring the conduct of any additional
competition under section 1847B(b)(1) of the Act; or requiring an
additional physician election process.
Section 108(c) of the MIEA-TRHCA states that the amendments of this
section apply to payments for drugs and biologicals supplied: (1) On or
after April 1, 2007; and (2) on or after July 1, 2006 and before April
1, 2007, for claims that are unpaid as of April 1, 2007.
Comment: Some commenters suggested that any changes to the CAP be
made only after the expiration of the current vendor contract. The
commenters stated that implementation of changes before the next vendor
contract would be unfair to bidders who chose not to participate in the
CAP because of previously issued guidance. The commenters cited the CAP
statutory reference about waiving the FAR in order to promote
competition. The commenters believe that such changes would
inappropriately favor the single
[[Page 66261]]
existing vendor, and therefore, hurt competition.
Response: We do not have the authority to delay implementing the
claims processing changes required by the MIEA-TRHCA, which were
effective April 1, 2007. Although some of our changes were not
expressly required by the statute, we believe these conforming changes
are necessary to allow the program to function in a manner that is
consistent with, and required by, the statutory changes. Further,
because the CAP is a new payment program, change that is consistent
with operational experience and improves efficiency for participants is
to be expected. Finally, we disagree that the FAR affects our ability
to make changes in the program while the current contract is in force.
Because these changes do not modify an approved CAP vendor's
responsibilities under its contract with us, we do not believe the FAR
is implicated.
Further, as we have discussed in prior rulemaking, the CAP statute
authorizes the waiver of provisions of the FAR (other than provisions
relating to confidentiality of information and such other provisions as
the Secretary determines appropriate) as necessary for the efficient
implementation of Section 1847B of the Act, in order to promote
competition.
We have discussed our approach to conforming to the confidentiality
provisions in the July 6, 2005 IFC (70 FR 39077), and we intend to
comply with this approach during future vendor bidding periods. In
implementing the CAP, we have waived all of the FAR except for the
confidentiality and the conflict of interest provisions to promote
competition and the efficient implementation of the program. We made
the decision to waive the FAR (other than the provisions on
confidentiality and conflict of interest) in order to increase the pool
of qualified vendors available to participate in the program. It is our
understanding that compliance with the FAR is not normally required of
the companies that make up the pool of potential CAP vendors. It is
also not required of other Medicare suppliers. We waived these
provisions in order to structure CAP bidding in a manner consistent
with established vendor bidding practices.
The FAR's confidentiality provisions, as well as the conflict of
interest standards and requirements found in FAR subsection 9.5, apply
to approved CAP vendors and applicants. All other provisions of the FAR
have been waived for purposes of the CAP. However, we have used certain
provisions of the FAR for guidance in implementing the CAP, and we may
from time to time used other FAR provisions as a guide, even though
they have been waived. For example, as we discussed in the July 6, 2005
IFC (70 FR 39063), we look to the provisions of the FAR to guide our
assessment of bidder's financial solvency.
However, even if the FAR were implicated, we believe these changes
promote competition because they make the program a more attractive
option for physicians, which will provide physicians who compete among
one another a more meaningful choice between the CAP and the ASP
methodology. We further believe the changes we are implementing here
are designed to improve the flexibility and administrative ease of the
CAP. Therefore, we will proceed with implementing the provisions we are
finalizing as indicated in this final rule with comment period.
c. CAP Claims Processing
In the July 6, 2005 IFC (70 FR 39042), we initially implemented a
claims processing system that enables selected approved CAP vendors to
bill the Medicare program directly, and to bill the Medicare
beneficiary and his or her third party payer after verification that
the physician has administered the drug. When a participating CAP
physician elects to join the program, he or she must agree to obtain
all drugs on the CAP drug list from the approved CAP vendor, with only
a few exceptions. For example in furnish as written (FAW) situations
(that is, where a beneficiary needs a particular formulation of a drug
not available from the approved CAP vendor) the participating CAP
physician would be allowed to obtain that drug outside of the CAP. In
the case of Medicare Secondary Payer (MSP) (that is, where a Medicare
beneficiary may have another payer primary to Medicare), the
participating CAP physicians must obtain physician administered drugs
from entities approved by the primary plan and bill the primary payer.
Detailed MSP instructions have been issued by CMS that allow the
physician to bill under the ASP methodology for the portion of the drug
not covered by the primary payer in this situation.
Prior to the MIEA-TRHCA, the claims processing procedures for the
approved CAP vendor and the participating CAP physician were as
follows:
Once a shipment is received from the approved CAP vendor,
the participating CAP physician stores the drug until the date of drug
administration.
When the drug is administered to the beneficiary, the
participating CAP physician places the prescription order number for
each drug administered on the claim form submitted to his or her
regular Part B carrier.
Similarly, when the approved CAP vendor bills Medicare for the drug
it shipped to the participating CAP physician, it places the relevant
prescription order number on the claim form submitted to the designated
carrier. The use of the prescription order number on both the
participating CAP physician's claim and the approved CAP vendor's claim
is intended to indicate drug administration to the beneficiary. The
participating CAP physician's claim and the approved CAP vendor's claim
are matched in the Medicare claims processing system so that drug
administration can be verified and payment to the approved CAP vendor
can be made.
d. Required Changes to CAP Claims Processing
As originally implemented, the claims matching process described
above in this section was completed before payment was made. However,
as of April 1, 2007, section 108 of the MIEA-TRHCA requires payment to
be made to the CAP vendor for claims upon receipt. The statute also
requires us to establish a post-payment review process to assure that
payment is made for a drug only if the drug has been administered to a
beneficiary. We are authorized under the statute to recoup, offset, or
collect any overpayments by the Secretary. We are also authorized to
conduct post-payment review using statistical sampling and to implement
the post-payment review process by program instruction or otherwise. We
implemented the necessary changes to our claims processing system and
initiated the post-payment review process on April 1, 2007 via
instructions to the CAP-designated claims processing contractor and
Questions and Answers posted on the CMS competitive bidding Web site at
http://www.cms.hhs.gov/CompetitiveAcquisforBios/15_Approved_Vendor.asp#TopOfPage
.
Under the post-payment review process, the CAP-designated carrier
will use the CMS claims processing system to look for a match between
the CAP prescription order number on the participating CAP physician's
claim and the same prescription order number on the approved CAP
vendor's claim to track drug administration on a dose by dose basis. If
the CAP-designated carrier is able to find a match between the two
claims, the carrier makes a determination that the beneficiary did
receive the drug being billed for by the CAP physician. The
participating CAP
[[Page 66262]]
physician claim may also contain information on any determination of
medical necessity and coverage made by the local carrier.
We will also use statistical sampling under the post-payment review
process to determine whether drugs were medically necessary. All
Medicare claims are subject to medical necessity determinations;
however, under the changes required by the MIEA-TRHCA, CAP claims may
not all have a chance to be reviewed for medical necessity before they
are paid. Therefore, the post-payment review includes both verification
of drug administration and a medical necessity review of a
statistically valid sample of CAP claims. In conducting the post-
payment review, we will continue to monitor for fraud, waste, and
abuse. All CAP claims will remain eligible for review for medical
necessity and verification of drug administration. We anticipate that
the post-payment review process will provide us with additional
opportunities to monitor for the appropriate payment of drugs furnished
under this program.
To conduct post-payment review of claims, we may also ask for
documentation of administration from the approved CAP vendor and for
medical records from the participating CAP physician for any claim that
is identified for review. While it is standard practice for CMS to
require Medicare providers to submit medical records as part of claims
review, we reserve the right to also specifically request any other
records that verify the administration of a CAP drug. Furthermore, we
want to make it very clear to the participating CAP physician that when
electing to join the program that the physician may be asked to supply
medical records for post-payment review. Therefore, in the CY 2008 PFS
proposed rule (72 FR 38153), we proposed to revise Sec.
414.908(a)(3)(xi) and the physician election agreement form to clarify
that medical records and certain other information may be requested
from the CAP physician during the post-payment review process.
The procedures used to verify valid claims and ensure proper
payment for drugs supplied under the CAP are based on established post-
payment review processes used in other parts of the Medicare program.
The request for medical records as part of the claims payment process
during CAP post-payment review is intended to work in conjunction with
Item 12 on the Health Insurance Claim Form CMS-1500 which, when signed
by a beneficiary, authorizes the release of ``any medical information
necessary to process a claim.''
When a claim is selected for review we notify the approved CAP
vendor and request its records to verify administration. We also notify
the approved CAP vendor that we will be requesting medical records from
the participating CAP physician. If the medical record is not received
within 30 days, the claim is denied because we will not have sufficient
information to verify drug administration and medical necessity.
This review process is similar to those used elsewhere in the
Medicare program such as clinical laboratory payment review or payment
of radiology services.
As we specified in the July 6, 2005 IFC (70 FR 39038), the local
carrier's medical review policies and coverage determinations will
continue to apply in the CAP. Under our previous claims processing
methodology, the local carrier made the coverage determination on the
drug ordered by the participating CAP physician and furnished by the
approved CAP vendor as part of the claim matching process prior to
payment of the approved CAP vendor's claim. Under the new methodology,
the drug claim will be paid upon receipt unless the local carrier has
already made a coverage or medical necessity determination on the drug,
and the match has already occurred showing that the drug claim should
be denied.
As part of the post-payment review process, the CAP-designated
carrier checks the CMS central claims processing system to determine
whether the local carrier has made a coverage or medical necessity
determination on the CAP drug indicated on the participating CAP
physician's drug administration claim. If a coverage determination has
been made, the CAP-designated carrier reflects the local carrier's
decision in its post-payment review of the claim. If the local carrier
has not reviewed the drug administration portion of the participating
CAP physician's claim as of the date that the designated carrier
processes the approved CAP vendor's drug claim, the CAP-designated
carrier uses the local carrier's coverage determination policies when
conducting medical review of the claim.
Comment: One commenter stated that we had exceeded the scope of the
statute because we were planning to conduct a medical necessity review
on CAP drug claims that were selected for review as part of the
statistical sample.
Another commenter recommended that we make detailed description of
the claims sampling process available for public comment and asked that
we design the process consistent with the Medicare Program Integrity
Manual. The commenter also asked for more detail on the information
necessary to include in the medical record to ensure that the
participating CAP physician has appropriately documented the medical
necessity of the drug administered.
One commenter questioned whether we needed to obtain additional
information from the CAP participating physician on claims selected for
post pay review based on the statistical sample and stated that the
information contained on the claim form should be sufficient to verify
administration.
Another commenter questioned why we were changing the CAP claims
processing methodology to pay most claims upon receipt and to verify
administration on a post pay basis. The commenter asked whether we
would allow for extenuating circumstances if the medical record was not
supplied by the participating CAP physician within the 30-day time
period for situations such as bankruptcy, litigation, or closure of the
practice.
Response: As stated in the CY 2008 PFS proposed rule (72 FR 38153),
we were required to make changes to the CAP claims processing
methodology because section 108 of the MIEA-TRHCA amended section
1847B(a)(3)(A)(iii) of the Act by adding new language that requires the
payment for drugs and biologicals upon receipt of a claim for a drug or
biological supplied for administration to a beneficiary. This change in
the law was effective on April 1, 2007. Section 108(a)(2) of the MIEA-
TRHCA requires the Secretary to establish (by program instruction or
otherwise) a post-payment review process (which may include the use of
statistical sampling) to assure that payment is made for a drug or
biological only if the drug or biological has been administered to a
beneficiary. The Secretary is required to recoup, offset, or collect
any overpayment determined by the Secretary under this process. We
implemented the necessary changes to our claims processing system and
initiated the post-payment review process on April 1, 2007, via
instructions to the CAP-designated claims processing contractor and
Questions and Answers posted the CMS competitive bidding Web site at
http://www.cmsm.hhs.gov/CompetitiveAcquisforBios/15_Approved_Vendor.asp#TopOfPage.
In the CY 2008 PFS proposed rule, we described
the changes we had made to our claims processing system and proposed
conforming changes to our regulations for additional items not covered
by the MIEA-TRHCA. Because the MIEA-TRHCA gave us authority to
[[Page 66263]]
implement its provisions by program instructions or otherwise by April
1, 2007, the necessary changes have already been made to our claims
processing system and the post-pay review process had been implemented.
The post-payment review process includes verification of drug
administration and a medical necessity review of a statistically-valid
sample of CAP claims. This process was designed in conformance with the
Medicare Program Integrity Manual and in consultation with CMS
statistical sampling experts, consistent with our authority to
establish these procedures by program instruction or otherwise. For
additional information on the requirements of the Program Integrity
Manual see http://www.cms.hhs.gov/manuals/downloads/pim83co2pdf.
All Medicare claims are subject to medical necessity
determinations; however, under the changes required by the MIEA-TRHCA,
there may not be sufficient time for all CAP claims to be reviewed for
medical necessity before they are paid. Prior to paying the approved
CAP vendor's claim, the designated carrier will check the claims
processing system to determine whether the participating CAP physician
has submitted the claim for the administration of the drug. If the
physician has submitted the claim and the local carrier has made a
determination that the drug is not payable because of a coverage or
medical necessity denial, the drug claim will be denied by the
designated carrier. However, if no determination has been made on the
physician's claim, the designated carrier will pay the approved CAP
vendor's claims for the drug under the MIEA-TRHCA, and the claim will
be subject to statistical sampling on a post-pay basis. If the claim is
selected for review, verification of drug administration and a medical
necessity review will be conducted. As part of this process, the
designated carrier will check the system to see whether the local
carrier had denied the claim as not medically necessary. If a denial
has been made, the designated carrier will deny the approved CAP
vendor's claim on medical necessity grounds. The designated carrier
will use the local carrier's policies when conducting the review.
Medical necessity review is always conducted based on medical
records obtained from the physician and will be conducted in an effort
to look behind the information on the claim form. As specified in
chapter 3 of the Medicare Program Integrity Manual, standard data
elements for post-pay medical review include signature requirements,
diagnosis requirements, and documentation of orders for testing. The
carrier may also specify additional information it will review to
document that coverage and medical necessity requirements have been
met. Under the current CAP post-pay review process, the designated
carrier requests that all records be supplied by the physician within
30 days but allows for a limited amount of time beyond that period
before the service will be considered not to have been administered.
Participating CAP physicians are encouraged to send any information
they can provide to the designated carrier within the timeframes
provided. If the physician is unable to provide all of the requested
information in a timely manner to the carrier, he or she may contact
the carrier to determine if the contractor will grant an extension.
There is also a provision in the Medicare Program Integrity Manual that
allows contractors to grant additional time in the event of a natural
disaster. As we indicated in the CY 2008 PFS proposed rule, it is
standard practice for Medicare providers to be required to submit
medical records to assist in claims review. Therefore, we are
finalizing our proposal to revise Sec. 414.908(a)(3)(xi) and the
physician election agreement to make it very clear to the CAP
participating physician that they may be asked to provide medical
records for post-payment review in the CAP.
e. Provisions for Collection of Beneficiary Coinsurance
In the CY 2006 PFS final rule with comment period, we specified at
Sec. 414.914(h)(1) that subsequent to receipt of final payment by
Medicare, or the verification of drug administration by the
participating CAP physician, the approved CAP vendor must bill any
applicable supplemental insurance policies. If a balance remains after
the supplemental insurer pays its share of the bill, or if there is no
supplemental insurance, the approved CAP vendor may bill the
beneficiary for the balance. In prior practice, a match in the claims
system between the participating CAP physician's drug administration
claim and the approved CAP vendor's drug claim and the subsequent
payment by Medicare was used to indicate that the beneficiary received
the drug. We also allowed voluntary information exchanges between the
approved CAP vendor and the participating CAP physician's office to
verify CAP drug administration. Additionally, we note that under the
CAP regulations, the participating CAP physician has a responsibility
to notify the approved CAP vendor when a drug is not administered or a
smaller amount was administered than was originally ordered.
Because section 108 of the MIEA-TRHCA requires the payment of CAP
claims upon receipt, payment of a claim by Medicare may occur before
administration of the drug has been verified. However, section
1847B(a)(3)(A)(ii) of the Act, which states that deductible and
coinsurance shall not be collected unless the drug or biological is
administered, remains unchanged. Thus, because we have interpreted this
provision as requiring verification of administration prior to the
collection of applicable cost sharing amounts, the requirement for
verification of administration similarly remains unchanged. However,
because of the statutory change of section 108(a)(1) of the MIEA-TRHCA
and its resulting impact on our claims processing methodology, the
claims processing system no longer provides a way for CMS to verify
administration on the approved CAP vendor's behalf before the approved
CAP vendor collects coinsurance from the beneficiary or the
supplemental insurer. Verification of CAP drug administration is also
conducted in the post-payment review process. The approved CAP vendor
is expected to make information available to verify administration for
post-payment review as necessary.
We believe that an approved CAP vendor can verify whether a CAP
drug was administered in a variety of ways. For example, an approved
CAP vendor may enter into a voluntary agreement with a participating
CAP physician to exchange such information as described in the CY 2006
PFS final rule with comment period (70 FR 70251). However, if a
participating CAP physician is unwilling to enter into a voluntary
agreement to verify administration, the approved CAP vendor may verify
that the drug was administered by contacting the participating CAP
physician's office to request verbal confirmation. In such an instance,
the approved CAP vendor is expected to document the verbal confirmation
of CAP drug administration, the identities of individuals who exchanged
the information, and the date and time that the information was
obtained. In addition to verifying administration through contact with
the physician's office, we also suggest that the approved CAP vendor
place a statement on beneficiaries' bills informing the individual of
the statutory requirement and suggesting that the beneficiary contact
the participating CAP physician to verify that he or she received the
dose
[[Page 66264]]
of the drug for which he or she are being billed prior to paying any
cost sharing amount.
For the reasons described above in this section, we believe that
the verification of CAP drug administration remains a required element
of the CAP; therefore, in the CY 2008 PFS proposed rule (72 FR 38155),
we proposed to add Sec. 414.906(a)(6) by specifying that all of the
following elements are required to document the verification of CAP
drug administration:
Beneficiary's name.
Health insurance number.
Expected date of administration.
Actual date of administration.
Identity of the participating CAP physician.
Prescription order number.
Identity of the individuals who supply and receive the
information.
Dosage supplied.
Dosage administered.
In the CY 2008 PFS proposed rule, these data elements were actually
proposed in Sec. 414.914 (72 FR 38226). We believe that the drug
administration verification requirements best fit in Sec. 414.914
since CAP vendors must collect this information as part of their terms
of contract. Therefore, we are finalizing Sec. 414.914 to include
these provisions.
Also, as a result of changes mandated by section 108(a)(1) of the
MIEA-TRHCA, we proposed to revise new Sec. 414.914(i)(1) to remove the
reference to ``final payment by Medicare'' and revise this language to
state, ``payment by Medicare.'' The original language was written to
indicate that an approved CAP vendor could not bill a beneficiary's
supplemental insurer for applicable amounts of cost sharing until the
CAP drug claim had matched the corresponding physician's drug
administration claim. Under the post-payment review process, the final
payment would not occur until a statistical review of the claims was
complete, a process that may take several months. Removing the word
final from this section of the regulation will clarify that the
approved CAP vendor may bill the supplemental insurer immediately after
the designated CAP carrier makes the initial payment on a CAP drug
claim. Under our current regulations, the approved CAP vendor may also
bill the beneficiary if drug administration is verified by the
participating CAP physician. This provision remains unchanged.
Under the revised CAP claims payment process, the approved CAP
vendor will bill Medicare for the CAP drug that has been provided. In
most cases Medicare will pay the claim upon receipt. If the beneficiary
has a supplemental insurance policy, and the supplemental insurer has a
crossover agreement with Medicare, the claim automatically will cross
over to the supplemental insurer for payment. The supplemental insurer
will pay its share. Upon receipt of payment from the supplemental
insurer, the approved CAP vendor may bill the beneficiary for any
residual amount. For beneficiaries who do not have a supplemental
insurance policy, the approved CAP vendor may bill the beneficiary
after payment by Medicare.
However, in either case, the approved CAP vendor may not collect
any coinsurance owed from the beneficiary or his or her supplemental
insurer unless it has verified that the drug was administered. If the
approved CAP vendor believes that the drug was administered but later
learns that it was not, the approved CAP vendor must refund any
coinsurance collected to the beneficiary and his or her supplemental
insurer, as applicable. In addition, in Sec. 414.914(i)(2), we
proposed that the approved CAP vendor must promptly refund any payment
made by CMS if the vendor has been paid for drugs that were not
administered. We also proposed to interpret the word ``promptly'' to
mean 2 weeks. Thus, the approved CAP vendor would have 2 weeks from the
date it was notified that it had been paid for a drug that had not been
administered to refund to the designated carrier any payment for the
claim and refund any cost sharing collected to the beneficiary or his
or her supplemental insurer.
Comment: We received few comments on our proposal for provisions
for collection of beneficiary coinsurance. One commenter was concerned
about the administrative burden placed on the participating CAP
physician if the approved CAP vendor calls the physician's office to
verify that a drug was administered. Another commenter agreed with our
proposal to require that the approved CAP vendor refund any cost
sharing collected in error promptly to the beneficiary and or his or
her supplemental insurance provider. The commenter also suggested that
we require the approved CAP vendor to pay a penalty above the amount
owed if it does not refund the cost sharing amount within the 2 week
time frame.
Response: Physicians and their staff are the best source of
information for drug verification since they have direct contact with
the beneficiary. We have structured the process for verification of CAP
drug administration in the least burdensome way possible for the
participating CAP physician that would still provide us with
information to comply with the statutory mandate to assure that payment
is made for a CAP drug only if it has been administered to a
beneficiary.
Physicians have flexibility in how verification for drug
administration occurs. The physician is free to enter into a voluntary
agreement with the approved CAP vendor to verify drug administration
and to specify the manner in which he or she would like the
verification to occur. Alternatively, if the physician chooses not to
enter into such an agreement and does not notify the vendor that a dose
of a CAP drug has been administered, the approved CAP vendor will
contact the physician to verify administration before collecting
coinsurance from the beneficiary.
We believe that the degree of flexibility built into this procedure
for drug administration verification minimizes the burden for
participating CAP physicians within the confines of our statutory
obligation to assure that payment is made for a CAP drug only if it has
been administered to a beneficiary. Therefore, we are finalizing our
proposal to add new Sec. 414.914(h)(1) as described above in this
section.
We are also finalizing our proposal to revise new Sec.
414.914(i)(1) to remove the reference to ``final payment by Medicare''
and revise this language to state, ``payment by Medicare.'' Under the
post-payment review process, the final payment will not occur until a
statistical review of the claims was complete, a process that may take
several months. Removing the word final from this section of the
regulation will clarify that the approved CAP vendor may bill the
supplemental insurer immediately after the designated CAP carrier makes
the initial payment on a CAP drug claim. Under our current regulations,
the approved CAP vendor may also bill the beneficiary if drug
administration is verified by the participating CAP physician. This
provision remains unchanged.
Under the revised CAP claims payment process, the approved CAP
vendor will bill Medicare for the CAP drug that has been provided. In
most cases Medicare will pay the claim upon receipt. If the beneficiary
has a supplemental insurance policy, and the supplemental insurer has a
crossover agreement with Medicare, the claim automatically will cross
over to the supplemental insurer for payment. The supplemental insurer
will pay its share. Upon receipt of payment from the supplemental
insurer the approved CAP vendor may bill the beneficiary for any
residual amount. For beneficiaries who
[[Page 66265]]
do not have a supplemental insurance policy, the approved CAP vendor
may bill the beneficiary after payment by Medicare.
However, in either case, the approved CAP vendor may not collect
any coinsurance owed from the beneficiary or his or her supplemental
insurer unless it has verified that the drug was administered. If the
approved CAP vendor believes that the drug was administered but later
learns that it was not, the approved CAP vendor must refund any
coinsurance collected to the beneficiary and his or her supplemental
insurer, as applicable.
In addition, we are finalizing Sec. 414.914(i)(2), so that the
approved CAP vendor must promptly refund any payment made my CMS if the
vendor has been paid for drugs that were not administered. We are
implementing our proposal to interpret the term ``promptly'' to mean 2
weeks so that the approved CAP vendor would have 2 weeks from the date
that they were notified that they had been paid for a drug that had not
been administered to the beneficiary to refund any payment for the
claim made to the designated carrier and refund any cost sharing
collected to the beneficiary and his or her supplemental insurer. We
are not implementing a penalty if the refund of any cost sharing
collected in error exceeds the two week time frame because section
1847B of the Act does not provide for such a remedy.
f. Approved CAP Vendor Appeals for Denied Drug Claims
In the March 4, 2005 proposed rule (70 FR 10757 through 10758) and
the July 6, 2005 IFC (70 FR 39054 through 39057), we discussed the
development of the CAP dispute resolution process and the limited
applicability of the traditional Medicare fee for service appeals
process to an approved CAP vendor's dispute of CAP drugs claims that
are denied by the CAP-designated carrier. We stated that the approved
CAP vendor could file appeals as a Medicare supplier consistent with
the rules at 42 CFR part 405, subpart I. For the purposes of the
appeals regulations at Part 405, Subpart I, we indicated that a local
carrier's initial determination of the participating CAP physician's
drug administration claim was an initial determination regarding
payment of the approved CAP vendor's drug claim. Thus, the approved CAP
vendor was to be considered a party to any redetermination of the drug
administration claim by the local carrier. In addition, the approved
CAP vendor would be considered a party to an initial determination on
the claim for payment for the drug product that the approved CAP vendor
filed with the CAP-designated carrier.
We also specified that appeals of either initial determination
would be filed with the local carrier. We stated that the local
carrier, rather than the designated carrier, possessed all information
necessary to adjudicate an appeal in this situation. Such information
included local coverage decisions, medical necessity determinations,
and information regarding payment of drug administration claims. A
dispute resolution process was set forth in Sec. 414.916.
Under our initial implementation of the provision that authorized
CAP, this alternative approach provided party status to the approved
CAP vendor on the participating CAP physician's drug administration
claim. This was necessary because an approved CAP vendor was not
permitted to receive payment for a CAP drug until the corresponding
drug administration claim was submitted by a participating CAP
physician. Payment for the approved CAP vendor's claim was authorized
when the participating CAP physician's claim and the approved CAP
vendor's claim were matched in the system.
However, changes to the claims processing requirements and the
addition of a post-payment review process required by section 108(a)(2)
of the MIEA-TRHCA (discussed above in this section) eliminate the
approved CAP vendor's dependency on a participating CAP physician's
filing of a drug administration claim in order to receive payment for a
CAP drug. Accordingly, the approved CAP vendor no longer needs party
status on the drug administration claim submitted by the participating
CAP physician. Instead, under the MIEA-TRHCA, the approved CAP vendor's
drug claim may be paid by the CAP-designated carrier once it is
received. This determination made on the claim constitutes an initial
determination as defined in Sec. 405.924. The approved CAP vendor is
considered a party to this initial determination and may request a
redetermination and subsequent appeals consistent with the process
established under 42 CFR part 405, subpart I.
The changes to CAP claims processing in this final rule with
comment period that conform to the MIEA-TRHCA result in two scenarios
that create appeals rights for the approved CAP vendor with respect to
their drug product claim: (1) Prepayment denials of the approved CAP
vendor's claim made by the CAP-designated carrier (based on information
from the local carrier that the payment for the drug should be denied
as excluded or non-covered); and (2) post-payment denials by the CAP-
designated carrier based on the post-payment review process established
under the MIEA-TRHCA.
Therefore, as proposed in the CY 2008 PFS proposed rule (72 FR
38156), we are making the following clarifications regarding the CAP
appeals process for an approved CAP vendor's denied drug claims:
For prepayment denials, the approved CAP vendor, as a
supplier, has a direct right to appeal the initial determination made
by the designated carrier on its drug product claim. The local carrier
will conduct the redetermination on prepayment denials. It is the most
appropriate entity to review prepayment denials since it is most
familiar with the relevant coverage policies for that jurisdiction. We
acknowledge that this process differs from a traditional fee-for-
service appeal since the redetermination will not be conducted by the
contractor that issued the initial determination.
For the post-payment review process, an initial
determination will be considered re-opened if the CAP-designated
carrier selects the drug claim for review. If the CAP-designated
carrier cannot verify administration or cannot determine that the drug
is covered or medically reasonable and necessary, the CAP-designated
carrier will issue a revised determination to deny coverage of the drug
product claim. The CAP-designated carrier will then determine whether
an overpayment exists, and if so, will recover the overpayment. As a
supplier, the approved CAP vendor would then have the right to request
a redetermination of the revised coverage determination, and the
overpayment assessment. The CAP-designated carrier will process the
redetermination.
We received no comments on this topic; therefore, we are finalizing
the proposed conforming changes to the CAP appeals process as described
herein.
g. Definition of Exigent Circumstances
Sections 1847B(a)(1)(A)(ii) and 1847B(a)(5)(A)(ii) of the Act
require that each physician be given the opportunity annually to elect
to obtain drugs and biologicals through the CAP and to select an
approved CAP vendor. Section 1847B(a)(5)(A)(i) of the Act allows for
selection of another approved CAP vendor more frequently than annually
in exigent circumstances as defined by CMS.
In the CY 2005 PFS final rule with comment period (70 FR 70258), we
[[Page 66266]]
stated that participating CAP physicians would have the option of
changing approved CAP vendors or opting out of the CAP program on an
annual basis. We also provided the circumstances, as specified in Sec.
414.908(a)(2), under which a participating CAP physician may choose a
different approved CAP vendor mid-year or opt-out of the CAP. These
circumstances are: (1) If the selected approved CAP vendor ceases to
participate in the CAP; (2) if the participating CAP physician leaves
the group practice that had selected the approved CAP vendor; (3) if
the participating CAP physician relocates to another competitive
acquisition area (if multiple CAP competitive areas are developed) or,
(4) for other exigent circumstances defined by CMS.
We also identified a separate exigent circumstance relating to
instances in which an approved CAP vendor declines to ship CAP drugs
(when the conditions of new Sec. 414.914(i) are met) in Sec.
414.908(a)(5). We noted that in these cases, a physician may opt-out of
his or her drug category, and because there is currently only one drug
category for the CAP, then the participating CAP physician would be
allowed to opt-out of the CAP altogether (70 FR 39081).
The CAP became operational on July 1, 2006. At that time, we
believed that most issues raised by participating CAP physicians would
relate to quality and service, which could be resolved through the
approved CAP vendor's grievance process and the dispute resolution
process conducted by the designated carrier. However, since then, we
have been contacted by a few participating CAP physicians who have
requested termination of their election agreement because they
misunderstood the CAP program or determined that it was not a viable
option for their practice.
These instances demonstrate that a practice might wish to leave the
program for other business reasons that are unrelated to the approved
CAP vendor's performance. However, we continue to believe that
opportunities for leaving the CAP outside the annual election process
should be limited because the CAP was designed as a program in which
physicians would make an annual decision to participate, as consistent
with sections 1847B(a)(1)(A)(ii) and 1847B(a)(5)(A) of the Act.
Therefore, in the CY 2008 PFS proposed rule (72 FR 38156), we
proposed to define an additional exigent circumstance for opting out of
the CAP. We proposed that within 30 days of the effective date of the
election agreement, the participating CAP physician may submit a
written request to terminate his or her participation in the CAP. The
request would be sent to the designated carrier under the dispute
resolution process, and the designated carrier would determine within 1
business day whether the request was related to the service provided by
the approved CAP vendor. If so, the designated carrier would refer the
participating CAP physician to his or her approved CAP vendor's
grievance process to further determine whether any appropriate and
reasonable steps could be taken to resolve the identified issue.
We proposed that the approved CAP vendor would have 2 business days
to respond to the participating CAP physician's concern, consistent
with Sec. 414.914(f)(5). If the approved CAP vendor is unable to
identify a solution for resolving the issue that is consistent with the
CAP statute, regulations, contracts and guidance, and that is
acceptable to the physician, then the participating CAP physician would
be referred back to the designated carrier for assistance under the
dispute resolution process. We also proposed that the participating CAP
physician's request would be handled under the dispute resolution
process because protocols and defined time frames have already been
developed for handling participating CAP physician and approved CAP
vendor complaints in this set of procedures.
We proposed that if the designated carrier does not believe that
the participating CAP physician's request is related to an issue that
could be resolved by the approved CAP vendor, then the designated
carrier would conduct an investigation and attempt to resolve any
issues identified in the physician's request to terminate his or her
CAP election agreement. If the designated carrier is unable to resolve
the situation to the physician's satisfaction within 2 business days,
then it can either make a recommendation to CMS that the physician be
permitted to terminate his or her CAP election agreement, or request a
2-day extension to continue examining the issue. We stated that we
believed that 4 business days would be sufficient to conclude this
process because it would give the designated carrier time to gather
information from other affected parties, such as the participating CAP
physician's local carrier, but still prepare a speedy summary of the
issues involved in the physician's request.
Under our proposal, after the 2-day or 4-day period, as applicable,
the designated carrier would forward its recommendation and the
physician's request to CMS. We would then review the recommendation and
make a final decision within 2 business days from the date that we
received the request.
We proposed that if the participating CAP physician demonstrated
that remaining in the CAP was a significant burden, then we would allow
that physician to terminate his or her participation in the program. We
would inform the designated carrier of our decision, which the
designated carrier would then communicate to the participating CAP
physician in writing. As part of this process, the physician's
termination date for his or her CAP election agreement would be
determined and communicated to all parties involved, including the
physician's local carrier.
Conversely, if we did not believe that the physician demonstrated
that CAP participation constituted a significant burden, then we would
not allow the physician to terminate his or her CAP contract.
Subsequently, we would inform the physician of our decision in writing
via the designated carrier. We would also include a recommendation for
corrective action.
In the CY 2008 PFS proposed rule, we also proposed that, even if we
agreed to terminate the participating CAP physician's CAP election
agreement, the physician would still be required to continue to
cooperate in any post-payment review and appeal of claims for drugs
that the approved CAP vendor had already provided and been paid for.
The physician would also have to make arrangements with the approved
CAP vendor for the return of any unused drugs that had not been
administered to the beneficiary prior to the effective date of the
physician's termination from the CAP. If the approved CAP vendor had
billed CMS for drugs that had not yet been administered to a
beneficiary, then the vendor would be required to correct the claim and
return any overpayment.
Comment: We received several comments that supported defining an
additional exigent circumstance for leaving the CAP because of a burden
on the practice. Several commenters addressed the timeframe for leaving
the CAP. Of these comments, all supported a 30-day timeframe, though
several encouraged a longer window. Commenters who encouraged a longer
time period believe that 30 days was insufficient time to determine the
suitability of the CAP for their practice.
While most commenters agreed that a demonstration of burden should
be required, one commenter stated that allowing physicians to opt-out
for any reason would be desirable. One commenter suggested that
physicians should be allowed to opt-out of the CAP
[[Page 66267]]
at any time for any reason. Several commenters asked that the opt-out
process be simplified. Another commenter requested that the process for
determining whether to grant a physician's request to leave the CAP be
outlined.
Response: Based on the comments, we are revising our proposal to
make it more flexible. While we recognize the concerns raised by
commenters who recommended that we allow physicians to leave the CAP
for any reason at any time, we continue to believe that there should be
limits on a participating CAP physician's ability to leave the CAP. The
CAP statute contemplates an annual election process. Our proposal to
allow a 30-day period for opting out because of a burden is based on
our authority to specify ``exigent circumstances,'' and we do not
believe it would be appropriate to allow physicians to opt-out under
this process without some exigency that makes termination of CAP
participation necessary. However, in recognition of these comments, and
because we agree that participating CAP physicians should have a
sufficient opportunity to assess the suitability of the CAP for their
practice, we are making the following changes to the opt-out process.
First, we note that we intend to take a broad view of what would
constitute a burden to the practice resulting in an ``exigent
circumstance.'' We believe that a broad view is appropriate because
there may be many reasons why a participating CAP physician may find
CAP participation more burdensome than he or she expected, and we do
not wish at this time to place a limit on what those reasons may be. As
we gain experience with this process, we may in a future rulemaking
specify a list of ``exigent circumstances'' or prescribe more specific
standards for what constitutes an ``exigent circumstance'' for purposes
of the opt-out process; however, for now we will assess requests on a
case-by-case basis under the process described in this preamble and set
forth in the regulations at Sec. 414.908.
In response to comments seeking greater flexibility in the process
and a longer window in which to assess the CAP's suitability for the
physician's practice, we are implementing a two-tiered process that
would both expand the initial time frame for requesting to opt-out of
the CAP and would allow for requests to opt-out at any time based on a
change in circumstances that was not previously known to the
participating CAP physician. We believe that such a process, which we
outline below, strikes a balance between providing participating CAP
physicians with flexibility to opt-out of the CAP when participation is
burdensome, while still placing appropriate limits on a physician's
ability to leave the CAP outside the annual election process.
Thus, under the two-tiered process we are finalizing in this rule,
we are changing to 60 days the initial period during which a physician
can request termination of his or her CAP participation agreement as a
result of exigent circumstances. We agree with commenters that allowing
physicians more time to determine whether the CAP is suitable for their
practices is advisable. We believe that an initial 60-day period will
allow the participating CAP physician time to make a more complete
assessment of the CAP's suitability. Although certain burdens will be
likely to be apparent immediately, the first 30 days may be a period
with a steep learning curve for the practice as it adapts to the CAP
drug ordering process, and the first 30 days may involve working out
any ``start up'' issues within the practice or with the approved CAP
vendor. For this reason, the first 30 days may not be a fully
representative time period during which to assess ongoing CAP
participation. We believe an additional 30 days of CAP participation
would be sufficient to identify, in the vast majority of cases, whether
participation will constitute a burden to the practice.
Under this process, therefore, if a participating CAP physician's
election agreement was effective on January 1, 2008, then he or she
would have until March 1, 2008, to request to terminate participation
in the program if CAP participation results in a burden to the
practice. In addition, based on the concerns raised by commenters, we
will allow physicians to leave the CAP at any time after the first 60
days if they can show that a change in circumstances that was not known
to the practice previously results in a burden to the practice. As
noted above, we believe that in the vast majority of cases
participating CAP physicians will be able to identify a burden, if any,
within the first 60 days. However, we also recognize that issues may
arise during the course of the year that would result in an ``exigent
circumstance,'' but that were not known to the participating CAP
physician during the first 60 days of CAP participation. In such
instances, we agree with commenters that physicians should have a
longer window to request an opt-out.
For purposes of the two-tiered process, then, examples of burdens
that we would expect a practice could identify within the first 60 days
may include difficulties with CAP billing or drug ordering
requirements, or documentation that the practice's initial
understanding of these requirements was based on inaccurate information
provided by a third party. Examples of burdens that might arise after
the initial 60 days could include a change in practice personnel,
patient population, computer systems, or vendor behavior that makes it
harder to participate in the program. Where an opt-out request is
submitted after the initial 60 days, we will require the participating
CAP physician to demonstrate the request is based on information that
he or she did not have within the first 60 days.
All requests to terminate participation, whether within the first
60 days or thereafter, would be submitted to the CAP-designated carrier
and processed under the dispute resolution process. The request would
need to document the physician's burden. Upon completion of the process
outlined in proposed Sec. 414.917, we would make the decision about
whether the participating CAP physician's participation in the CAP will
be terminated.
If the physician has not demonstrated that CAP participation
represents a burden for his or her practice--either during the first 60
days or, if thereafter, as a result of a change in circumstances that
was not known to the practice previously, then we would not allow the
physician to terminate his or her participation in CAP because, as
noted above, we continue to believe that a participating CAP
physician's ability to opt-out of the CAP under this process should be
limited to ``exigent circumstances,'' as contemplated by the statute
and our regulations.
We would inform the physician of our decision in writing via the
designated carrier. We would also include a recommendation for
corrective action, if appropriate. For example, if the reason that the
CAP participating physician wanted to leave the program was that the
approved CAP vendor was not delivering drugs timely, the designated
carrier would investigate the situation. If it found that the approved
CAP vendor was complying with our regulations on drug delivery at Sec.
414.914(f) and Sec. 414.902 but that the participating CAP physician
was not ordering drugs consistent with the vendor's procedures, then
the CAP-designated carrier could educate the physician about the proper
drug ordering procedures and facilitate a discussion between the
approved CAP vendor and the participating CAP physician about how the
physician could order drugs in a way that met the
[[Page 66268]]
needs of his or her practice and the drug ordering requirements of the
CAP vendor. The CAP-designated carrier would document the result of
that discussion in writing. The participating CAP physician would have
the right to request a reconsideration of our decision as specified in
Sec. 414.916(c). We are revising Sec. 414.916(c) to clarify that the
physician reconsideration process would apply to reconsiderations of
our decision on whether the participating CAP physician may opt-out of
the CAP.
Based on our experience with the program, we continue to believe
that handling all requests to terminate CAP election under the dispute
resolution process is reasonable and straightforward. We further
believe the use of our pre-existing process will not create unnecessary
delays in processing opt-out requests, particularly in light of the
short time frames we have specified for responding to opt-out requests.
Moreover, we believe the dispute resolution process is sufficiently
detailed that it provides an ample description of how a physician's
request to terminate CAP participation will be assessed.
Physicians will still be required to return unused CAP drugs and to
complete any required CAP claims processing activities as described in
proposed Sec. 414.917. The notification to a physician will also
include the end date of CAP participation in order to facilitate an
orderly and efficient changeover between the CAP and ASP payment
systems.
Therefore, we are finalizing Sec. 414.908 and Sec. 414.917 as
proposed, subject to the changes described in this section. (We are
making an additional technical change to Sec. 414.908 to consolidate
the ``additional opt-out'' provision, currently set forth at Sec.
414.908(a)(5), with the other opt-out provisions at Sec.
414.908(a)(2). We believe this nonsubstantive change will improve the
clarity of the regulations.) Finally, we also are finalizing Sec.
414.916(c) as amended as described in this section.
h. Transporting CAP Drugs
Although section 1847B((b)(4)(E) of the Act provides for the
shipment of CAP drugs to settings other than a participating CAP
physician's office under certain conditions, we did not propose to
implement the CAP in alternative settings. In the July 6, 2005 IFC (70
FR 39047), we described both comments that supported the idea of
allowing participating CAP physicians to transport drugs to multiple
office locations, and comments that raised concerns about the risk of
damaging a drug that has not been kept under appropriate conditions
while being transported.
As stated in Sec. 414.906(a)(4), we implemented the CAP with a
restriction that CAP drugs be shipped directly to the location where
they will be administered. However, we were aware that physicians may
desire to administer drugs in alternative settings, especially in a
home. We sought comment on how this could be accommodated under the CAP
in a way that addresses the concerns about product integrity and damage
to the approved CAP vendors' property expressed by the potential
vendors.
Several comments submitted in response to the July 6, 2005 IFC
suggested either narrowing or removing the restriction on transporting
drugs to other locations. Commenters believed that physicians,
particularly those who specialize in oncology, and their staff are
knowledgeable about drug stability and handling, and therefore, were
capable of assuming this responsibility. Other commenters indicated
that transporting the drug to another office location may allow for
flexibility in scheduling patient visits. It would allow practices with
satellite operations that are not open every business day to receive
shipments of CAP drugs at another practice location and then to
administer the drugs in the satellite office.
We also received several comments discussing the impact of CAP-
delivery times on rural clinics and offices with satellite locations.
Many of these responses discussed how easing the restriction on
transporting CAP drugs between locations would be welcome in rural
areas and for satellite offices with limited hours.
These comments and our experience with the CAP thus far have caused
us to consider revising our policy. Therefore, in the CY 2008 PFS
proposed rule (72 FR 38157), we requested comments on the potential
feasibility of narrowing the restriction on transporting CAP drugs
where this is permitted by State law and other applicable laws and
regulations. We asked commenters to consider how such a policy could be
constructed so that the approved CAP vendor could retain control over
how the drugs that it owns are handled. We also requested comments on
other issues that we should take into account concerning transportation
of CAP drugs between practice locations listed on a physician's CAP
election agreement form. Additionally, we also solicited comments on
the following areas that we could use in the development of future
proposals:
How to structure requirements so that drugs are not
subjected to conditions that will jeopardize their integrity, stability
or sterility while being transported and steps to keep transportation
activities consistent with all applicable laws and regulations;
Whether any agreement allowing participating CAP
physicians to transport CAP drugs to alternate practice locations
should be voluntary. This means that approved CAP vendors would not be
required to offer such an agreement and physicians who participate in
the CAP would not be required to accept such an offer; and
Whether the agreement should be documented in writing, and
whether it is necessary to create any restrictions on which CAP drugs
could be transported.
We stated that we were not making a specific proposal at this time
but that we would use any information received to structure a future
proposal in the event we made one.
Comment: Several commenters supported the concept of easing the
restriction on transporting CAP drugs if this could be done safely, and
if changes were consistent with applicable rules, regulations, and
within the limitations of product stability and integrity. The
restriction on transporting CAP drugs was perceived as a barrier to
physician participation in the program. One commenter stated that
elimination of the restriction would result in the same flexibility as
the ASP (buy and bill) method of acquiring drugs. Another commenter
expressed a strong desire to implement these changes promptly.
A few commenters also cautioned us to be certain that appropriate
safeguards would be in place if we chose to ease the transportation
restriction. One commenter asked that the safeguards be available for
public scrutiny before they are implemented. Conversely, other
commenters stated that a physician's certification or discretion were
satisfactory.
Response: We are sympathetic to the concerns expressed by the
commenters and expect to issue a proposal in the CY 2009 PFS proposed
rule that would allow the transportation of CAP drugs from one
physician practice location in certain circumstances. We further expect
that our proposal would propose to permit transport of CAP subject to
voluntary agreements between the approved CAP vendor and the
participating CAP physician that complied with all applicable State and
Federal laws and regulations and product liability requirements. We
welcome comments on how to structure such a proposal.
[[Page 66269]]
i. Alternatives to the CAP Prescription Order Number
In the July 6, 2005 IFC (70 FR 39043 and 39049), we responded to
several comments regarding the administrative burden that the CAP
ordering and claims payment process imposes upon participating CAP
physicians; specifically, activities associated with using and tracking
the prescription order number were mentioned. We received additional
comments on this issue in response to the IFC as well.
After the close of the comment period, we also received an inquiry
from the current approved CAP vendor about the potential length of the
CAP prescription order number and whether it could present a burden to
participating CAP physicians. A 30-byte field is currently available on
the electronic claim form for prescription numbers; however, it is not
necessary for the prescription order number to be 30 bytes long.
Typically, 15 or fewer total characters have been used by the approved
CAP vendor.
The requirements for developing the CAP prescription order number
are as follows: The first 9 characters are the approved CAP vendor's ID
and the HCPCS code of the drug that is being billed; the approved CAP
vendor sets the remaining characters. The assigned CAP prescription
order number is captured in Loop 2410, REF02 (REF01=XZ) of the ANSI
4010A1 electronic claims transaction. This segment of the electronic
claims transaction is part of a specific data format that Medicare
claims must adhere to in order to meet national electronic standards
for the automated transfer of certain health care data as mandated by
the Health Insurance Portability and Accountability Act of 1996 (Pub.
L. 104-191) (HIPAA).
Each prescription order number is unique to a dose of a CAP drug
that is being shipped for administration to a particular beneficiary.
The prescription order number is generated by the approved CAP vendor
and, as stated in the July 6, 2005 IFC (70 FR 39042), each dose of a
CAP drug is required to have a separate prescription order number.
After the drug is administered, the participating CAP physician's drug
administration claim is submitted with a no-pay line containing the
prescription order number. The approved CAP vendor's claim for the CAP
drug also contains the prescription order number.
When the CAP was implemented, the prescription order number was
used in the claims matching process to facilitate accurate payment of
the approved CAP vendor. Prior to payment, this system paired an
approved CAP vendor's drug claim to a participating CAP physician's
drug administration claim using the prescription order number. A
matching prescription order number between these two claims indicated
that the drug had been administered.
Since the CAP began, the claims process has changed because of
statutory changes. Section 108(a)(2) of the MIEA-TRHCA requires us to
make payment upon receipt of an approved CAP vendor's drug claim and
then to conduct a post-payment review of claims. As stated in the MIEA-
TRHCA, the post-payment review process is intended to ``assure that
payment is made only for a drug or biological * * * if the drug or
biological has been administered to a beneficiary.''
Under this new process, the prescription order number still plays a
pivotal role. Prior to the payment of the approved CAP vendor's drug
claim, the CAP-designated carrier uses the prescription order number to
check the claims processing system to ascertain whether the local
carrier has adjudicated the drug administration claim. If the local
carrier has done so, then the CAP-designated carrier will look to see
whether the local carrier has determined that the CAP drug administered
by the participating CAP physician is covered and is medically
necessary. The local carrier's decision determines whether the CAP-
designated carrier will pay the approved CAP vendor's drug claim. If
the participating CAP physician's local carrier has not made a
determination on the physician's claim and the CAP drug claim, then the
designated carrier will pay the approved CAP vendor's claim upon
receipt and use the CAP prescription order number to help verify drug
administration on a post-payment basis.
The prescription order number is also still used in other CAP
processes. Each dose of a CAP drug that is shipped by the approved CAP
vendor is tracked using the prescription order number. Moreover, the
prescription order number is particularly useful in certain situations
such as those that involve recurring cyclic drug treatment regimens. In
these cases, the prescription order number minimizes the possibility of
confusion by serving as a unique differentiating factor between highly
similar drug claims. Also, the prescription order number is valuable
during instances in which the anticipated day of service submitted by
the participating CAP physician differs from the actual date of drug
administration. In these situations, the prescription order number
would clarify confusion stemming from discrepancies in dates. Overall,
we believe that the prescription order number remains an appropriate
and necessary tool to track the administration of a specific dose of a
drug and for the accurate execution of the post-payment review process.
Although we believe that the use of the prescription order number
is necessary to facilitate accurate review of CAP claims, we are aware
that it may be considered an inconvenience by some potential
participating CAP physicians and approved CAP vendors. Therefore, in
the CY 2008 PFS proposed rule (72 FR 38158), we requested comments on
alternative methods to accurately track the administration of specific
doses of drugs in order to meet the requirements stated in section
108(a)(2) of the MIEA-TRHCA. These comments could then be used in the
development of a proposal for future rulemaking.
Comment: We received a few comments on this issue. One commenter
suggested that the CAP-designated carrier should simply match vendor
and physician claims but did not provide any details about how that
could be accomplished without the prescription order number. Another
commenter stated that the CAP prescription order number was no longer
needed to verify drug administration and should be eliminated. Instead
they recommended that we should rely on the approved e-CAP vendor's
verification of drug administration and the physician's records of drug
administrations.
Response: While the records of participating CAP physicians and the
CAP vendor are currently used in the post pay review process, the CAP
prescription order number plays an important role in that it enables
the designated carrier to identify the exact doses of a drug that was
administered and provides a link between the approved CAP vendor's
claim and the participating CAP physician's claim that is not available
otherwise.
We do not believe the suggestions that we have received thus far
would allow us to discontinue the use of the prescription order number.
The prescription order number allows us to better ``assure that payment
is made only for a drug or biological * * * if the drug or biological
has been administered to a beneficiary'' since it tracks the
administration of a specific dose of a drug, which allows CMS to match
the vendor and the physician claim in the post pay review process.
However, we would appreciate receiving other suggestions that would
allow drug administration verification on a dose specific basis. Since
we did not make a specific proposal about this
[[Page 66270]]
issue, we will not make any changes at this time to the requirement
that the CAP prescription order number be supplied by the approved CAP
vendor and included on claims from both the participating CAP physician
and the approved CAP vendor.
j. Prefilled Syringes
In the July 6, 2005 IFC (70 FR 39061), we described public comments
which stated that participating CAP physicians could not vouch for the
quality of products that were opened by an approved CAP vendor for
repackaging, for mixing the drug with other drugs or injectable fluids
(admixture), or for removing a part of the contents to supply the exact
dose for a beneficiary. Several commenters recommended that approved
CAP vendors deliver their products in the same form in which they are
received from the manufacturer, without opening packaging or
containers, mixing or reconstituting vials, or repackaging.
Specifically, the commenters were concerned about the capabilities of
individuals who mix the drug, as well as shipping conditions, storage,
and stability.
We responded by stating that the CAP is not intended to require
approved CAP vendors to perform pharmacy admixture services (for
example, to furnish reconstituted or otherwise mixed drugs repackaged
in IV bags, syringes, or other containers that are ready to be
administered to a patient) when furnishing CAP drugs. Admixture
services for injectable drugs require specialized staff, training, and
equipment, and these services are subject to standards such as United
States Pharmacopoeia Chapter 797, Pharmaceutical Compounding--Sterile
Preparations. These requirements have significant impact on drug
shipping, storage, and stability requirements, as well as system cost
and complexity. As stated in Sec. 414.906(a)(4), the approved CAP
vendor must deliver ``CAP drugs directly to the participating CAP
physician in unopened vials or other original containers as supplied by
the manufacturer or from a distributor that has acquired the products
directly from the manufacturer.''
Since issuing the July 6, 2005 IFC, we have become aware that
bevacizumab (Avastin[supreg]) is being used for the treatment of
exudative age-related macular degeneration (wet AMD) in very small
doses. Although this is an off label use, it is gaining acceptance
among ophthalmologists who treat wet AMD, and this use has been the
subject of several carriers' local coverage determinations. Bevacizumab
is considerably less expensive than certain other drugs used in the
treatment of wet AMD.
The smallest commercially-available package of bevacizumab is a
100mg single use vial, while a dose used to treat wet AMD is
approximately 1mg. Some local carriers who have issued coverage
instructions for the use of bevacizumab in the treatment of wet AMD
allow physicians to obtain these small doses of drug from a pharmacy
that is capable of preparing sterile products. We expect to issue
instructions that will allow participating CAP physicians to use the
furnish as written option, as appropriate, and to obtain small doses of
bevacizumab outside of the CAP in prefilled syringes if their local
carrier's coverage determinations allow such a practice and if it is
consistent with applicable laws and regulations. We believe that this
approach will minimize the waste associated with using a 100mg single
use vial for the treatment of wet AMD and will increase the flexibility
for participating CAP physicians by making an alternative quantity of
this drug available to participating CAP physicians whose carriers have
applicable policies.
However, this option is not available in all areas. Therefore, we
stated that we are considering reassessing our policy on the use of
prefilled syringes to determine whether it would be feasible to make
the option of using prefilled syringes supplied by an approved CAP
vendor available to all physicians who participate in the CAP, rather
than requiring physicians to go outside the CAP in order to obtain CAP
drugs in prefilled syringes. In the CY 2008 PFS proposed rule (72 FR
38159), we requested comments on whether allowing approved CAP vendors
to repackage CAP drugs in certain situations may be beneficial to
beneficiaries, the program, and to the physicians who participate in
it.
In considering whether to propose a change to our regulations in
the future, we also solicited comments on:
Whether approved CAP vendors are likely to be pharmacies
or have access to pharmacy services with trained personnel and
facilities for the small scale preparation of sterile drug products in
response to a specific prescription order for a specific patient;
Whether an approved CAP vendor should be given an
opportunity to supply bevacizumab under the CAP if it is repackaged in
a patient-specific dose consistent with applicable state laws and
regulations upon request from a participating CAP physician;
Whether this sort of activity should be restricted to
bevacizumab, or possibly phased-in for other CAP drugs. If we were to
apply this sort of policy to other CAP drugs, we would also have to
determine how phasing-in might occur, which drugs it should apply to
and whether the preparation of admixtures (including the preparation of
sterile syringes, minibags, and mixing of drugs and solutions intended
for intravenous administration) should be allowed as well;
How this sort of service could be limited to participating
CAP physicians who voluntarily agree to use it, and whether such an
agreement should be made in writing between the approved CAP vendor and
the participating CAP physician;
How such a program could be structured so that the service
and staff engaged in providing the service would be required to meet
all applicable laws (including Stark, Anti-kickback, and State pharmacy
laws), as well as regulations for the preparation of sterile products,
(including standards for product integrity and sterility);
Whether the cost of preparing such product would be
included in the CAP vendor's bid price; and
Whether any other important elements should be evaluated
if we consider changing CAP policy on prefilled syringes in the future.
Comment: We received several comments on these issues. Overall,
responses were generally equally divided among those who supported
prefilled syringes, those who advocated a cautious approach, and those
who opposed the practice.
Those who opposed making prefilled syringes available through the
CAP cited stability and sterility concerns. Those commenters also
raised concerns about whether the CAP vendor's preparation of a
particular drug product for an off-label use by participating CAP
physicians would violate existing drug law because of the potential
scale of an approved CAP vendor's activities and because the drug was
being prepared for use in a manner other than as described in its FDA-
approved labeling. Several commenters urged that caution be used in
developing changes to the aspects of the CAP that are discussed above
in this section, but many of these commenters were not completely
opposed to the preparation of prefilled syringes by approved CAP
vendors.
Several commenters were quite supportive of using prefilled
syringes. One commenter stated that pharmacy preparation of prefilled
syringes was regarded as a ``convenient and safe practice'' and would
avoid both waste
[[Continued on page 66271]]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
]
[[pp. 66271-66320]] Medicare Program; Revisions to Payment Policies Under the
Physician Fee Schedule, and Other Part B Payment Policies for CY 2008;
Revisions to the Payment Policies of Ambulance Services Under the
Ambulance Fee Schedule for CY 2008; and the Amendment of the E-
Pr[[Page 66271]]
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and some of the risk associated with transferring sterile products.
Another commenter also recommended that a mechanism to pay for the
preparation and waste associated with the process be established.
There was a general point of agreement between commenters who urged
a cautious approach and those who agreed with the concept of prefilled
syringes. These commenters agreed that that additional flexibility or
enhancements to the CAP would be welcome provided that they did not
affect beneficiary safety and were consistent with applicable laws,
regulations, product stability, and product integrity requirements.
Response: We appreciate the comments on prefilled syringes and we
will consider whether to develop a proposal that is consistent with
applicable laws, regulations, product stability, and product integrity
concerns in future rulemaking. Because we did not propose a change to
our current regulations on the use of prefilled syringes in the CAP,
they remain unchanged for the present time. We may make a proposal in
the future.
k. Contractual Provisions
Section 1847B of the Act is generally silent on the subject of
disputes surrounding the delivery of drugs and the denial of drug
claims. However, section 1847B(b)(2)(A)(ii)(II) of the Act states that
a grievance process is a quality and service requirement expected of
approved CAP vendors. In the July 6, 2005 IFC (70 FR 39055 through
39058), we described the process for the resolution of approved CAP
vendors' claims denials and the resolution of participating CAP
physicians' drug quality and service complaints. We encouraged
participating CAP physicians, beneficiaries, approved CAP vendors, and
the designated carrier to use informal communication as a first step to
resolve service-related administration issues. However, we recognized
that certain disputes would require a more structured approach, and
therefore, we established processes under Sec. 414.916 and Sec.
414.917.
Suspension and termination from the CAP were the only remedies
described under the CAP dispute resolution processes. Having gained
some experience with the CAP, we believe that having an intermediate
level of remedy for less serious but persistent problems is desirable
in order to bridge the gap between taking no action and suspension or
termination of an approved CAP vendor.
We believe that additional contractual obligations, such as
additional reporting requirements, could be useful, particularly if
they provide an opportunity for the approved CAP vendor to come into
compliance using objective goals and a set timeline. Therefore, in the
CY 2008 PFS proposed rule (72 FR 38160), we requested comments on what
types of potential contractual provisions could be used to encourage
approved CAP vendors to comply with CAP requirements for less serious
violations, such as missing reporting deadlines, or participation in
inappropriate promotional strategies. We also requested comments on the
following:
The type of contractual provisions that would be suitable.
For example, requests for specific or targeted reporting and monitoring
activities in response to specific violations.
Whether an approved CAP vendor's code of conduct could be
used to address these types of less serious situations and how that
could be accomplished; and
Whether the CAP physician election agreement should be
revised to include provisions to address participating CAP physicians'
noncompliance with CAP rules or the CAP election agreement.
Comment: One commenter agreed with the use of contractual
provisions, including additional reporting requirements, as an
intermediate form of remedy in response to a CAP vendor's noncompliance
with CAP requirements. The commenter also noted that a vendor code of
conduct would be useful.
Response: We plan to develop a proposal for additional provisions
that could be added to the CAP contract. These provisions would be used
to encourage approved CAP vendors to comply with CAP requirements. We
will propose such provisions in a future rulemaking period.
l. Finalizing Remaining Provisions of the July 6, 2005 Interim Final
Rule with Comment Period
In this PFS final rule with comment, we are finalizing the portions
of the July 6, 2005 IFC that were not finalized in previous rulemaking.
We are also responding to other timely comments we received on the July
6, 2005 IFC that we have not responded to previously.
Comments that we will be addressing in this rule include the
following:
The use of e-prescribing in CAP.
Updating CAP prices and data reporting.
The application of Comprehensive Error Rate Testing (CERT)
to CAP claims.
The 14-day participating CAP physician billing
requirement.
The impact of CAP participation on clinical research.
Licensure requirements for CAP pharmacies and
distributors.
Community mental health centers and participation in the
CAP.
Administrative and financial burden of CAP participation
for physicians.
We have addressed drug transportation previously in this section of
this final rule with comment period.
Basis and Scope (Sec. 414.900)
These provisions provide that the regulations in this subpart
implement sections 1847A and 1847B of the Act. We received no comments
on these provisions and we are finalizing the corresponding regulatory
text at Sec. 414.900 in its entirety.
Definitions (Sec. 414.902)
Section 414.902 lists the definitions used in 42 CFR Subpart K. We
did not receive any comments about the revisions to this section that
we made in the July 6, 2005 IFC (70 FR 39093). At this time, we are
finalizing the regulatory text at Sec. 414.902 as it currently reads.
Competitive Acquisition Program as the Basis for Payment (Sec.
414.906)
Section 414.906 specifies how payment for CAP drugs is determined,
including vendor responsibilities for billing, shipment and delivery;
computation of the payment amount; substitution of CAP drugs and
resupply of a participating CAP physician's drug inventory.
i. 2005 Comments
In the July 6, 2005 IFC (70 FR 39074), we discussed the methodology
used to update CAP drug prices during the bidding process. We responded
to comments that suggested that single price updates for CAP drugs
should be tied to changes in ASP prices. We stated that we did not
believe that there had been enough experience with the ASP payment
methodology to update the bids based on growth in the ASP. We also
solicited comments on this method of updating single drug prices to the
payment year in order to develop and refine the CAP in the future.
(a) Updating CAP Prices and Data Submission
Comment: We received comments about updating CAP drug prices more
frequently than annually. One commenter suggested that we should
consider quarterly data submissions and
[[Page 66272]]
pricing updates even during the phase in period in order to produce
greater savings in instances where vendors' overall costs for CAP drugs
were declining, while providing greater protection for vendors in
instances where vendors were experiencing cost increases. Another
commenter encouraged us to compare CAP prices to ASP prices using the
most recent data available and to account for manufacturer price
adjustments in a timely manner.
Response: In the July 6, 2005 IFC (70 FR 39076), we stated, ``when
the administrative mechanisms of the CAP are operational and vendors
have more experience under the program, we will consider whether more
frequent reporting (of reasonable net acquisition costs) would be
appropriate.'' Section 414.914 requires that the CAP contract must
provide for the disclosure of the approved CAP vendor's reasonable, net
acquisition costs for a specified period of time, not to exceed
quarterly and provide for appropriate adjustments as described in Sec.
414.906(c)(1). This section describes the computation of an annual
update to the payment amount and allows updates more often than
annually but no more often than quarterly in any of the following
cases: introduction of new drugs; expiration of a drug patent or
availability of a generic drug; material shortages that result in a
significant price increase for the drug; and withdrawal of a drug from
the market. Also, the CAP payment amount is limited by the weighted
payment amount established under section 1847A of the Act across all
drugs for which a composite bid is required in the category, and
limited by the payment amount established under section 1847A of the
Act for each other drug for which the approved CAP vendor submits a
bid. It is not clear how the commenter is proposing that we account for
changes in manufacturer's price adjustments in a more timely manner.
Because the CAP has been operational for 15 months, we are still
gaining experience with the reporting and update mechanisms already in
place. At present, we believe these processes are sufficient to address
the needs of the CAP; however, as the program grows, we may consider
other options, including more frequent price updates.
(b) Impact of CAP on Clinical Research
Comment: Some commenters stated that they were concerned that CAP
participation would conflict with the Medicare National Coverage
Decision (NCD) on Clinical Trials. Since the NCD enables Medicare to
reimburse physicians for the current standard of care drugs that are
administered to beneficiaries in the control group of clinical trial
protocols, commenters were concerned that physicians would not be able
to enroll Medicare beneficiaries in clinical trials if drugs required
in the protocol were not on the CAP drug list. In addition, some
commenters expressed their concern that there was a lack of built in
oversight in CAP to ensure that vendors would buy drugs directly from a
manufacturer or wholesaler. The commenters were concerned that this
could result in the acquisition of counterfeit product, and that as a
result, such products could infiltrate clinical trials and compromise
the results of cancer clinical research that a CAP physician might be
participating in.
Response: As a result of an executive memorandum issued by the
President of the United States in June 2000, we instituted the NCD in
September 2000 as explained in our ``September 2000 Program
Memorandum'' on clinical trials available at http://www.cms.hhs.gov/ClinicalTrialPolicies/.
The NCD stipulates that Medicare will provide
payment for routine costs associated with qualifying clinical trials
and for items or services needed to treat complications arising from
participation in such trials. The NCD was revised in July 2007 as
outlined in CAG-00071R, the ``Decision Memorandum for the Clinical
Trial Policy,'' which may be found at https://www.cms.hhs.gov/mcd. More
information about the National Coverage Decision on Clinical Trials can
be found on the CMS Web site at http://www.cms.hhs.gov/ClinicalTrialPolicies/
and through a Medicare Learning Network article
at http://www.cms.hhs.gov/MLNMattersArticles/.
We are very aware of the importance of clinical trial research in
the treatment of cancer, and we do not believe that CAP participation
has imposed any undue hardships on participating CAP physicians or
their Medicare patients who engage in such activities. Participating
CAP physicians do not have to buy and bill for the medications they
receive from the approved CAP vendor. The vendor is responsible for
billing the designated carrier and the beneficiary. Thus, if the
standard of care drug needed for the control group of a research
protocol is on the CAP drug list, the participating CAP physician may
order the medication from the approved CAP vendor. This should not
affect the participating CAP physician's ability to enroll Medicare
patients in clinical trials. Moreover, participating CAP physicians may
still purchase and bill for medications that are not on the CAP drug
list through the ASP system, which would allow them to obtain the non-
CAP drugs required in a research protocol. If a particular NDC for a
drug is not on the CAP drug list but is part of the research protocol,
a participating CAP physician may buy the medication on their own and
bill for it via the ``furnish as written'' provision, which allows the
physician to bill for the drug under the ASP methodology in that
instance, even though it is on the CAP drug list.
Though we have had no reports that CAP physicians have been
prevented from engaging in clinical trial research because of their CAP
participation, we are mindful that this could be an issue because of
the way some studies are structured. In the event that we receive
comments that demonstrate that this has become a problem in the future,
we will address the issues accordingly and possibly propose mechanisms
to facilitate participation in clinical trial research and the CAP.
We would also like to reemphasize that CAP is a voluntary program.
If physicians do not believe that the ``furnish as written'' option and
the CAP drug list are sufficient to meet their clinical research needs,
then they may decline to join the CAP and continue to purchase and bill
for medication under the ASP system.
We also are cognizant of the importance of preserving drug quality
and integrity in the CAP and have structured the program accordingly.
The importance of drug quality and oversight are recognized in both the
vendor bidding process and in the CAP dispute resolution process
administered by the designated carrier. We have discussed our concern
for maintaining CAP drug quality in the program as a whole on several
occasions, most recently in the CY 2006 PFS final rule with comment
period (70 FR 70244). Section 1847B of the Act and Sec. 414.908(b)
delineate several requirements that vendors must meet in order to be
selected to participate in the CAP, including an ability to ensure
product integrity, at least 3 years experience in furnishing Part B
Injectable drugs, and acquisition of all CAP drugs directly from the
manufacturer or from the distributor that has acquired the products
directly from the manufacturers. After an entity has been awarded a
contract, we work closely with the CAP-designated carrier and the
approved CAP vendor to monitor and respond to any concerns that are
raised by participating CAP physicians under the dispute resolution
process.
[[Page 66273]]
We have not received any complaints regarding CAP drug quality and
integrity. If such an event were to occur, it would be investigated and
resolved promptly so that patient health and safety would not be
jeopardized. In light of all of these requirements and protections, we
do not believe that research and CAP participation are incompatible.
At this time, we are finalizing the remaining provisions of this
section.
Competitive Acquisition Program (Sec. 414.908)
This section specifies the process for a physician to select an
approved CAP vendor. It also details the responsibilities of a
participating CAP physician, such as including the specific information
required on the prescription order, notifying the CAP vendor about
changes in drug administration, and adhering to the timeframe for
submission of claims.
Moreover, Sec. 414.908 delineates the process for selecting
approved CAP vendors. It also outlines additional factors that are
considered both during and after the vendor selection process such as
exclusion of entities from participation in Medicare or other Federal
health care programs under section 1128 of the Act.
i. 2005 Comments
(a) Physician Administrative and Financial Burden
Comment: We received several comments from individual physicians
and physician groups expressing their concern that CAP could place a
significant burden on physicians. Some commenters stated that the
requirement to maintain a separate inventory of CAP drugs will increase
physicians' administrative burden and costs. Others indicated that
physicians would have no incentive to participate in the CAP unless
these extra administrative costs could be reimbursed. One commenter
indicated that the program was impractical and economically unfeasible.
Response: In the July 6, 2005 IFC (70 FR 39049), we discussed the
issue of administrative burden. Although we agree that a physician may
have to make some adjustments in his or her practice in order to comply
with the requirements of the CAP, we believe that the relief from the
financial burden of purchasing drugs and billing Medicare for them will
be a substantial benefit for many physicians. We do not believe that
the clerical and inventory resources associated with participation in
the CAP exceed the clerical and inventory resources associated with
buying and billing drugs under the ASP system. A physician is free to
design his or her practice in a way that minimizes the extent of
changes necessary to comply with the CAP requirements. For example, an
electronic inventory of CAP drugs is required, but separate drug
storage is not; it is a suggested option if such a procedure makes it
easier on the physician's practice to track the CAP drugs. We recognize
that although a physician's staff or their software vendor may need to
make system changes to bill using the CAP format and to accommodate the
CAP modifiers and prescription numbers, these initial changes would be
a one-time occurrence.
In the ASP system, the payment for clerical and inventory resources
associated with buying and billing for drugs is bundled into the drug
administration payment under the physician fee schedule. We have
adopted this same logic in the CAP and believe that the drug
administration payment is sufficient to cover any associated expenses
of participating in the CAP.
If a physician perceives that CAP participation would be more
burdensome than the ASP system, then he or she is under no obligation
to join the CAP because it is a voluntary program. Additionally, as
described in other parts of this rule, participating CAP physicians may
also petition to terminate their CAP election due to exigent
circumstances through the dispute resolution process in the event that
they find the participation in the program becomes a burden.
Comment: One commenter expressed disappointment that community
mental health centers (CMHCs) cannot elect to participate in the CAP.
Response: As noted in the July 6, 2005 IFC (70 FR 39030), CMHCs can
not elect to participate in the CAP for provision of Part B drugs. The
CAP statute is clear that only physicians may elect to have section
1847B of the Act apply in lieu of the ASP payment methodology.
(b) E-Prescribing
Comment: One commenter recommended that CAP vendors should be
capable of accepting and submitting e-prescribing transactions in
accordance with the final e-prescribing standards issued for Medicare
Part D. The commenter reasoned that vendor compliance would not be an
undue hardship because vendors already will have a fairly rigorous
technical infrastructure in place.
Response: Section 101 of the MMA amended title XVIII of the Act to
establish a voluntary prescription drug benefit program. The MMA
electronic prescription program provisions found in section 1860D-4(e)
of the Act apply to the electronic transmission of prescription and
certain prescription-related information for Medicare Part D drugs for
Part D eligible individuals. The Part D e-prescribing requirements do
not apply to the electronic transmission of prescriptions and
prescription related information for Part B drugs unless those
prescriptions are written for Part D eligible persons and the
prescribed drug is a Part D drug. Prescription Drug Plan (PDP) sponsors
Medicare Advantage (MA) organizations offering Medicare Advantage-
Prescription Drug Plans (MA-PD) are required to establish electronic
prescription drug programs to provide for electronic transmittal of
certain information to the prescribing provider and dispensing pharmacy
and pharmacist. Prescribers and dispensers of Part D drugs are not
required to write prescriptions electronically, but those that do so
would be required to comply with any applicable final e-prescribing
standards that are in effect when they conduct electronic prescription
transactions, or seek or transmit prescription information or certain
other related information electronically.
We responded to a comment on whether participating physicians would
be required to incorporate e-prescribing technologies into the CAP in
the July 6, 2005 IFC (70 FR 39039). At that time, we stated that we
would monitor the development of the program to see if some aspects of
it could be adapted to the CAP. Since publication of the IFC, we have
adopted three foundation standards (70 FR 67568), recognized six
initial standards in a Request for Applications (RFA) (Available
through http://www.grants.nih.gov/grants/guide/rfa-files/FRA-HS-06-001.htm
), and conducted a pilot program in 2006 to test the six initial
standards and their ability to interoperate with the foundation
standards. More information about the MMA e-prescribing program and the
outcome of the pilots can be found on the CMS Web site at http://www.cms.hhs.gov/EPrescribing/.
The MMA requires the adoption of
additional standards by the Secretary by April 1, 2008. We will
continue to track the development of the e-prescribing program to see
whether it would be appropriate to incorporate some of the program's
elements into the CAP at a later date.
[[Page 66274]]
(c) The Comprehensive Error Rate Testing (CERT) Program and CAP Claims
The purpose of the CERT program is to monitor and report the
accuracy of Medicare fee for service payments. In the July 6, 2005 IFC
(70 FR 39038), we discussed CERT and how it would apply to CAP claims.
While we anticipated that CERT would apply to CAP, the process had not
been determined at that point. We received no additional comments on
this issue and have implemented CERT review of CAP claims since
publication of the July 6, 2005 IFC. CAP claims paid by the designated
carrier may be selected for review in a manner consistent with other
claims the carrier processes.
(d) 14-Day Billing Requirement
In the July 6, 2006 IFC (70 FR 39050), we summarized and responded
to comments about the 14-day requirement for physicians to file claims
for CAP drug administration. Although a number of commenters considered
the time period to be too brief and were opposed to it, we decided to
implement the 14-day requirement at Sec. 414.908(a)(3)(x) because the
approved CAP vendor's payment for drugs furnished under the CAP
depended on a match between the vendor's drug claim and the physician's
drug administration claim. Implementation of the post-payment review as
mandated by section 108 of the MIEA-TRHCA has superseded our original
implementation of CAP claims processing procedures, which had required
a pre-payment claims matching process for CAP drug claims, and the 14-
day billing requirement was not finalized in previous rules (70 FR
70260).
Comment: In 2006 several commenters asked us to allow at least 30
days or more for physicians to submit CAP drug administration claims.
During this comment period, we also received several comments stating
that the 14-day requirement be withdrawn because changes to the claims
processing system made it unnecessary and such an action would
encourage physician participation in the CAP.
Response: Our 14-day standard was based on a review of Medicare
claims that showed approximately 75 percent of part B drug and drug
administration claims were submitted within 14 days of the date of
service. It was initially implemented as a means of facilitating the
CAP claims matching process that was in effect prior to the
implementation of the post-payment review process as mandated by
section 108 of the MIEA TRHCA. As the commenters indicated, a 14-day
requirement is less than is allowed under claim submission requirements
used in other parts of the program.
We agree that the claims processing changes required by Section 108
of MIEA-TRHCA have altered the role of the claims submission standard.
However, we do not believe that it has eliminated the need for a
claims-matching process under the CAP. Under the new payment process
that resulted from the MIEA-TRHCA, the CAP-designated carrier also
conducts a pre-payment review in which it checks for any local carrier
decisions about medical necessity prior to paying for drug claims
submitted by the approved CAP vendor. Retaining a claims submission
requirement for participating CAP physician drug administration claims
may prevent the agency from paying for drugs that have been denied on a
medical necessity basis by the local carrier because when the local
carrier reviews the physician's claim it makes a determination on
whether the CAP drug that was administered was medically necessary. We
are not eliminating the requirement for prompt billing altogether, as
requested by commenters, because it will continue to facilitate a
quicker determination that the drug can be administered.
However, we acknowledge that a somewhat longer claims submission
standard would not adversely affect the post-payment review process
because it still would allow for a relatively quick match between the
claim for a particular dose of a CAP drug and the claim for its
administration. Also, separate analyses of previous claims submission
data and CAP drug claims lead us to conclude that the overwhelming
majority of participating CAP drug administration claims are submitted
within 30 days of the date of service. We further believe that, in
light of the comments, increasing the 14-day claims submission
requirement would make the CAP more appealing to physicians and provide
them with greater claims submission flexibility.
Therefore, we are increasing the requirement for timely CAP drug
administration claim submission from 14 days to 30 days. We are
finalizing the requirements at Sec. 414.908 to include this revision.
ii. Regulatory Text
At this time, we are finalizing Sec. 414.908 as amended to reflect
the changes discussed in this final rule with comment period.
The Bidding Process (Sec. 414.910)
This section outlines the specific criteria for the submission of a
bidding price for a CAP drug, and specifies what costs should be
included in the bid price. We received no comments on this provision
and are now finalizing the regulatory text for Sec. 414.910.
Conflicts of Interest (Sec. 414.912)
Section 414.912 states conflict of interest requirements and
standards that vendor applicants and approved CAP vendors must meet in
order to participate in CAP. We received no comments on this provision,
and therefore, are finalizing Sec. 414.912.
Terms of Contract (Sec. 414.914)
Section 414.914 outlines the contract provisions between CMS and
the approved CAP vendor such as contract length and termination, and
specific requirements that the approved CAP vendor must comply with.
i. 2005 Comments
(a) Licensure Requirements for Cap Pharmacies and Distributors
Comment: Some commenters requested clarification on the types of
licenses that are required of CAP vendors. A few commenters also asked
us to specify whether a CAP vendor will be operating as a pharmacy or
as a wholesale distributor since licensing requirements and regulatory
laws for these two types of entities can vary by state, and since
pharmacies and distributors are two different models.
Response: As specified in Sec. 414.914, approved CAP vendors and
their subcontractors must meet applicable licensure requirements in
each State in which it supplies drugs under the CAP. This includes
appropriate licensure in States that the CAP vendor ships drug to even
though the vendor does not maintain a physical establishment in these
States. In the July 6, 2005 IFC (70 FR 39066), we stated that a vendor,
its subcontractor, or both must be licensed appropriately by each State
to conduct its operations under the CAP. Therefore, a vendor under the
CAP would be required to be licensed as a pharmacy, as well as a
distributor if a State requires it. It is the CAP vendor's
responsibility to determine which State and national requirements it
must adhere to. Based on our experience with the CAP, we are not
persuaded by the comments that any changes to this policy are necessary
at this time.
ii. Regulatory Text
We finalized portions of Sec. 414.914 in the CY 2006 PFS final
rule with
[[Page 66275]]
comment period (70 FR 70333) and are now finalizing the remainder of
the regulatory text.
Dispute Resolution for Vendors and Beneficiaries (Sec. 414.916)
This section discusses the steps, timeframes, and requirements of
the dispute resolution process that are available to an approved CAP
vendor and beneficiaries to address the issue of denied CAP drug
claims. It also describes the protocol that physicians would utilize to
appeal the suspension of their CAP contract.
We did not receive any comment on this comments on this provision
in response to the CY 2006 PFS proposed rule. However, a revision to
this section will be made in light of the exigent circumstance
discussion in section (g) of this section of the preamble. We are
revising Sec. 414.916(c) to clarify that the physician reconsideration
process would apply to reconsiderations of our decision on whether the
participating CAP physician may opt out of the CAP. We are finalizing
Sec. 414.916 at this time.
Dispute Resolution and Process for Suspension or Termination of
Approved CAP Contract (Sec. 414.917)
This section discusses the steps and timeframes of the process
available to participating CAP physicians for the resolution of quality
or service issues concerning an approved CAP vendor.
We did not receive any comments on this section during the comment
period for the July 6, 2005 IFC. Comments that we received on this
section during the comment period for the CY 2008 PFS proposed rule are
discussed above in this section. We are now finalizing the regulatory
text for this section as described in this final rule with comment
period.
Assignment (Sec. 414.918)
Section 414.918 specifies that payment for a competitively biddable
drug may be made only on an assignment related basis. We received no
comments on this provision and are now finalizing Sec. 414.918.
Judicial Review (Sec. 414.920)
Section 414.920 outlines the areas under the CAP that are not
subject to administrative or judicial review. We received no comments
on this provision and are now finalizing this section.
m. Brief Summary of Comments We Are Not Addressing
In response to the FY 2007 IPPS final rule with comment period (71
FR 47870), we received a comment related to the payment rate for
intravenous immunoglobulin (IVIG) therapy in Medicare. We will not be
addressing this comment since it is outside the scope of both the CY
2008 PFS proposed rule and the FY 2007 IPPS final rule with comment
period. In addition, in response to the CY 2007 PFS proposed rule, one
commenter recommended that we implement continuous open enrollment in
the CAP and eliminate the requirement for annual physician election,
and specify who are the appropriate people to sign the CAP election
form. We are not addressing these comments because it is outside the
scope of the proposed rule.
G. Issues Related to the Clinical Laboratory Fee Schedule
1. Date of Service for the Technical Component of Physician Pathology
Services (Sec. 414.510)
In the CY 2007 PFS final rule with comment period (72 FR 69787), we
added Sec. 414.510 for the date of service of a clinical diagnostic
laboratory test that uses a stored specimen.
When we added Sec. 414.510, we indicated the provision applies to
clinical diagnostic laboratory tests. For outpatients, clinical
diagnostic laboratory tests are paid under the Medicare Part B clinical
laboratory fee schedule. Upon further review, we believe the provision
should also apply to the technical component (TC) of physician
pathology services. In practice, the collection date for both clinical
laboratory services and the TC of physician pathology services is
similar. Therefore, we believe Sec. 414.510 should apply to both types
of services. This will improve claims processing and adjudication in
relation to the clarity of dates of service, accuracy of payment, and
detection of duplicate services. For outpatients, the TC of physician
pathology services can be paid under the Physician Fee Schedule (PFS)
or the hospital Outpatient prospective payment system (OPPS). As a
result, for Sec. 414.510, in the CY 2008 PFS proposed rule (72 FR
38160), we proposed to revise the section heading and introductory
sentence to specify that the provision applies to both clinical
laboratory and pathology specimens. We also proposed revising Sec.
415.130(d) to include a reference to Sec. 414.510.
Comment: Some commenters supported our proposal to revise the
section heading and introductory sentence for Sec. 414.510 to specify
that the provision applies to both clinical laboratory and pathology
specimens. (We also proposed revising Sec. 415.130(d) to include a
reference to Sec. 414.510.) One commenter asked that we clarify
whether the provision applies to pathology tests where the technical
component and the professional component (PC) are performed by the same
lab and billed globally.
Response: Concerning one line global billing, we would like to
point out that the TC and the PC of a laboratory test should be on
separate line items on the same claim when two different dates of
service are involved, even when both services are performed by the same
independent laboratory. One line global billing is not appropriate in
this instance. Program instructions on this issue will be forthcoming.
Comment: One commenter requested revisions to our regulations to
specify that if the clinical laboratory test specimen is collected
outside the hospital by nonhospital personnel, the beneficiary
qualifies as a nonhospital patient.
Response: We do recognize that the determination of whether the
beneficiary qualifies as an inpatient, outpatient, or nonpatient is
important for payment purposes. However, we do not agree that the
laboratory date of service regulation should be amended to address the
employment arrangements of the personnel performing the specimen
collection. Furthermore, this comment is outside the scope of our
proposal to broaden the clinical laboratory date of service rules we
adopted last year.
We continue to believe the date of service should relate to clear
calendar dates for the specimen collection and day of discharge from
the hospital if the specimen was collected while the patient was
undergoing a hospital procedure.
We are implementing our proposed regulation at Sec. 414.510 on the
date of service of the TC of the physician pathology service.
2. New Clinical Diagnostic Laboratory Test (Sec. 414.508)
a. Background
In the CY 2007 PFS final rule with comment period (71 FR 69701), we
adopted a new subpart G under part 414 that implemented section 942(b)
of the MMA requiring that we establish procedures for determining the
basis for, and amount of payment for any clinical diagnostic laboratory
test for which a new or substantially revised HCPCS code is assigned on
or after January 1, 2005 (``new tests'').
Under Sec. 414.508, we use one of two bases for payment to
establish a payment amount for a new test. Under Sec. 414.508(a), the
first basis, called
[[Page 66276]]
``crosswalking,'' is used if a new test is determined to be comparable
to an existing test, multiple existing test codes, or a portion of an
existing test code. If we use crosswalking, we assign to the new test
code the local fee schedule amount and national limitation amount (NLA)
of the existing test code or codes. If we crosswalk to multiple
existing test codes, we determine the local fee schedule amount and NLA
based on a blend of payment amounts for the existing test codes. The
second basis for payment is ``gapfilling.'' Under Sec. 414.508(b), we
use gapfilling when no comparable existing test is available. We
instruct each Medicare carrier or MAC to determine a carrier-specific
amount for use in the 1st year that the new code is effective. The
sources of information that these carriers or MACs examine in
determining carrier-specific amounts include:
Charges for the test and routine discounts to charges;
Resources required to perform the test;
Payment amounts determined by other payers; and
Charges, payment amounts, and resources required for other
tests that may be comparable (although not similar enough to justify
crosswalking) or otherwise relevant.
After the first year, the carrier-specific amounts are used to
calculate the NLA for subsequent years. Under Sec. 414.508(b)(2), the
test code is paid at the NLA, rather than the lesser of the NLA and the
carrier-specific amounts.
We instruct our carriers or MACs to use the gapfill method through
program instruction, which lists the specific new test code and the
timeframes to establish carrier-specific amounts. During the first year
a new test code is paid using the gapfill method, contractors are
required to establish carrier-specific amounts on or before March 31.
Contractors may revise their payment amounts, if necessary, on or
before September 1. In this manner, a carrier or MAC may revise its
carrier-specific amount based on additional information during the 1st
year.
In the CY 2007 PFS final rule with comment period (71 FR 69702), we
also described the timeframes for determining the amount of and basis
for payment for new tests. The codes to be included in the upcoming
year's fee schedule (effective January 1) are available as early as
May. We then list the new clinical laboratory test codes on our Web
site, usually in June, along with registration information for the
public meeting.
The public meeting is held no sooner than 30 days after we announce
the meeting in the Federal Register. The public meeting is typically
held in July. In September, we post our proposed determination of the
basis for payment for each new code and seek public comment on these
proposed determinations of the basis for payment. The updated clinical
laboratory fee schedule is prepared in October for release to our
contractors during the first week in November so that the updated
clinical laboratory fee schedule is ready to pay claims effective
January 1 of the following calendar year.
We received comments in response to the CY 2007 PFS proposed rule
concerning information to be presented during the public meeting
process. In responding to these comments in the CY 2007 PFS final rule,
we stated that we did not believe that opportunities for information
gathering on new tests have been fully utilized within the public
meeting process. Payment recommendations from the public have sometimes
lacked charge, cost, and clinically-detailed information for the new
clinical laboratory tests. We also stated that when soliciting public
input for the meeting we would recommend that all participants in the
public meeting consultation process strive for transparency and try to
provide as much supporting information as possible to assist us in
evaluating their recommendations.
In addition, in the CY 2007 PFS final rule with comment period, in
response to comments suggesting that the method used by contractors to
determine their price for gapfilled tests should be more specific, we
indicated that we would engage in discussions with our carrier
contractors and laboratory industry representatives to explore their
experiences with the gapfill process. We also agreed to host a forum to
listen to suggestions from the public and said that we expected to
solicit comments on a potential reconsideration process in a future
rulemaking.
As explained in the CY 2008 PFS proposed rule, we discussed these
issues with our contractors. We also solicited comments on the gapfill
process in the July 16, 2007 clinical laboratory public meeting.
Discussions with our contractors and other interested parties
revealed that the length of time we allow for a contractor to establish
a carrier-specific amount may sometimes be insufficient for obtaining
additional sources and data on a new test. However, our contractors and
other interested parties were also concerned that if procedures and
determinations were permitted to extend over too long a time frame, the
uncertainty of the final payment amount would be detrimental for
laboratories, practitioners, and patients for incorporating new
technology tests and improving patient care. In the CY 2008 PFS
proposed rule, we also encouraged the public to submit written comments
on gapfilling and said that we would respond to them to the extent they
related to a proposal in the rule.
In the CY 2008 PFS proposed rule, we proposed a reconsideration
process for determining the basis for and amount of payment for any new
test for which a new or substantially revised HCPCS code is assigned on
or after January 1, 2008. This proposed change attempted to balance
additional opportunities for public input against the necessity for
establishing final fees for new clinical laboratory test codes.
Section 1833(h)(8)(A) of the Act provides broad authority to
develop through regulation procedures for the method for determining
the basis for and amount of payment for new tests. We believe that we
have authority under section 1833(h)(8)(A) of the Act to establish
procedures under which we may reconsider the basis for and amount of
payment for a new test. Furthermore, under section 1833(h)(8)(D) of the
Act, the Secretary may convene such other public meetings to receive
public comments on payment amounts for new tests as the Secretary deems
appropriate.
We note that, under both section 1833(h)(8)(B)(v) of the Act and
Sec. 414.506(d)(2), the Secretary must make available to the public a
list of ``final determinations.'' We do not believe that these
provisions preclude us from reconsidering our final determinations. It
is not unusual for us to provide for discretionary reopening or
reconsideration of final agency action. It is not unusual for us to
provide for discretionary reopening or reconsideration of final agency
action. For example, under Sec. 405.1885, we may reopen a final agency
determination regarding payment to a provider of services.
Comment: Commenters were supportive of our proposal to add Sec.
414.509 concerning a reconsideration process for new lab test payment
determinations. Generally, commenters believed that in contrast to
several other payment systems, which have been significantly revised in
the last several years, the procedures for operating the clinical
laboratory fee schedule have remained relatively static. They further
commented that the implementation of a reconsideration process would be
a significant step in helping assure reasonable pricing decisions for
new
[[Page 66277]]
tests, and they commended us for our actions in this regard.
Response: We appreciate the support for our proposal for a
reconsideration process for new lab test payment determinations. We
believe this additional opportunity to revisit payment determinations
for clinical laboratory test codes will foster accurate payment levels
for new tests. We will discuss specific suggestions for revisions to
Sec. 414.509 below in this section.
b. Basis for Payment
Under our existing procedures for determining the basis for payment
of a new test, either to crosswalk or gapfill, we receive comments on
the appropriate basis for payment for a new test both at the public
meeting in July and after we announce our proposed determinations in
September. In November, we post our determination on the basis for
payment for the new test on the CMS Web site. This determination of the
basis for payment is final, except in the case of a gapfilled test for
which we later determine that gapfilling is not appropriate under Sec.
414.508(b)(3).
In the CY 2008 PFS proposed rule, we proposed to create a
reconsideration process for determinations of the basis, either
crosswalking or gapfilling, for payment of a new clinical diagnostic
laboratory test. Consistent with our existing process, we would make a
determination using the information gathered from the public meeting
process and post a determination of the basis for payment, either to
crosswalk or gapfill, on the CMS Web site, likely in September. We
would accept written comments asking for a reconsideration on this
basis determination for 30 days after we posted the determination on
the CMS Web site. If a commenter recommended that we switch from
gapfilling to crosswalking for a new code, the commenter would also
have the opportunity to recommend the code or codes to which to
crosswalk the new test code. Under Sec. 414.508, claims would be paid
using this basis to calculate fees beginning January 1.
After considering the comments received and the information from
the public meeting, we would post our decision on our Web site as to
whether we elect to reconsider our determination of the basis for
payment. If we elect to reconsider the basis for payment (that is,
whether to crosswalk or gapfill a test), we would post our
determination as to whether we would change the basis for payment on
the CMS Web site. Our decision regarding the basis for payment would be
final and not subject to further reconsideration.
If we change our prior determination of the basis for payment, the
new determination would be effective on January 1. We would not reopen
or otherwise reprocess claims with dates of service prior to the
effective date of the revised determination.
We note that, under our proposed reconsideration processes (for
both the basis for payment and amount of payment) we would make two
separate decisions. First, we would decide whether to reconsider our
prior determination. If we elect to reconsider our prior determination,
we would then determine whether we should change our prior
determination.
Comment: One commenter suggested that the agenda for the public
meeting should announce a list of requests received by CMS to
reconsider the basis for and amount of payment for a new clinical
laboratory test, and the agenda should invite comment, either written
or orally, on the requests. The commenter stated that in this way, we
will receive views on the validity of the requests for reconsideration.
Another commenter indicated that more than one public meeting per year
should be hosted by CMS to discuss comments under the reconsideration
process, as well as the payment determination process.
Response: We are receptive to suggestions on providing information
about the public meeting agenda. We do not believe a revision to the
regulatory text at subpart of Sec. 414.509(a) is required in order to
disseminate information on our meetings. We publish a public meeting
notice in the Federal Register to announce the meeting. The notice
includes many details about the purpose and registration process for
the meeting and also refers to additional Web site information for the
meeting. If we receive a request to reconsider the basis of payment for
a new test within the 60-day window after we post our basis of payment
on the CMS Web site, the requestor could also request to present his or
her comment orally at the next clinical laboratory public meeting. We
can include this information in the meeting agenda that will be posted
on the CMS Web site. Members of the public who are interested in
addressing a particular reconsideration request at the laboratory
public meeting can let us know of their interest in doing so after they
review the reconsideration requests that will be addressed at the
laboratory public meeting. In addition, we will accept written comments
on the reconsideration request after the public meeting. We will accept
written comments during the same time period we set for accepting other
comments after the clinical laboratory public meeting--usually 2 weeks.
We note that, if the party that submitted the reconsideration request
does not choose to present at the public meeting, members of the public
may not comment on the reconsideration request and we will not accept
written comments.
However, hosting more than one public meeting per year is a timing
issue which is limited by the constraints of the process. Currently,
there is a limited amount of time between the receipt of the new test
codes for the upcoming year and the deadline to issue them via CMS
instruction; therefore, we cannot accommodate two public meetings in a
year. As a result, we are finalizing Sec. 414.509(a) with revisions to
specify that other commenters may speak about reconsideration requests
on the laboratory public meeting agenda and that we will accept written
comments on reconsideration requests addressed at the public meeting.
c. Amount of Payment
i. Crosswalking
Under our existing procedures, commenters recommend the code or
codes to which to crosswalk a new clinical laboratory test both at the
public meeting in July and during the comment period after we issue our
proposed determination in September. We consider the appropriate basis
for payment and the amount of payment at the same time. Therefore,
commenters that recommend crosswalking as the basis for payment for a
new test also make recommendations concerning the code or codes to
which to crosswalk the new test. In November, we post the code or codes
to which we will crosswalk the test and the payment amount for the test
on the CMS Web site. This determination is final.
In the CY 2008 PFS proposed rule (72 FR 38162), we proposed to
create a reconsideration process under which we may reevaluate the code
or codes and their corresponding fees to which we crosswalk a new
test's fees. We would accept reconsideration requests and written
comments on the crosswalked code or codes and the resulting amount of
payment for the new code for 60 days after we posted the determination
on the CMS Web site, sometime in November. In addition, we proposed
that a commenter who had submitted a written comment within the 60-day
comment period would also be given the opportunity to present its
comment at the public meeting. After considering the comments received
and the
[[Page 66278]]
information of the public meeting, we would post our decision as to
whether we had elected to reconsider our determination of the
crosswalked code or codes and the resulting amount of payment on the
CMS Web site. If we elect to reconsider the amount of payment and had
determined that we should revise the amount of payment, we would post a
new determination of the code or codes to which we would crosswalk the
test on the CMS Web site. We proposed that, after we posted our
determination of the code or codes to which the test would be
crosswalked on the CMS Web site, we would pay claims on the basis of
this determination beginning January 1. Our decision regarding the
amount of payment would be final and not subject to further
reconsideration.
If we change our prior determination of the amount of payment, the
new determination would be effective January 1. We would not reopen or
otherwise reprocess claims with dates of service prior to the effective
date of the revised determination.
As discussed in section II.G.2.b., we may also change the basis for
payment for a new test as the result of reconsideration. If we change
the basis for payment from gapfilling to crosswalking, we would also
determine the code or codes to which we would crosswalk the test.
Because we believe it is important to establish final payment amounts
within a reasonable amount of time, we also proposed that these
determinations of crosswalked payment amounts would not be subject to
reconsideration.
Comment: Some commenters indicated that Sec. 414.509(b)(1) should
establish payment amounts at the national limitation amount (NLA) of
the tests to which the new tests are crosswalked. The NLA should
replace carrier-specific amounts below the NLA for new tests. The
commenters believe that if the amount of payment is lower than the NLA
in a carrier's geographic area, patient access to a new test will be
limited in the geographic area.
Response: In the CY 2008 PFS proposed rule, we did not make policy
proposals regarding the level of payment for crosswalked tests. Rather,
our policy proposals were limited to the reconsideration process.
Accordingly, we believe that this comment is outside of the scope of
this rulemaking
Comment: One commenter suggested that a similar reconsideration
process should also be available for existing laboratory tests. The
commenter pointed out that the payment amounts determined for certain
laboratory tests by one or another Medicare carrier or MAC now differ
from the payment amounts determined for these same tests by other
Medicare contractors and from the corresponding NLA.
Response: Section 1833(h)(1) of the Act sets forth the calculation
of the payment amounts for test codes included on the clinical
laboratory fee schedule to be the lower of the charge submitted, the
carrier-specific amount, or the NLA. We believe changes to payment
amounts for tests that are not ``new tests'' under section
1833(h)(8)(A) of the Act would require a statutory change.
Comment: One commenter recommended that CMS clarify how fee
schedule amounts below the NLA will be adjusted as carriers are phased
out and their functions are moved to MACs.
Response: This comment is outside the scope of our proposal. If
necessary we may address this comment in a future program memorandum.
We are finalizing Sec. 414.509(b)(1). Consistent with the
revisions we made to Sec. 414.509(a), we are revising Sec.
414.509(b)(1) to provide that other commenters may speak about
reconsideration requests on the lab public meeting agenda and that we
will accept written comments on reconsideration requests addressed at
the public meeting.
ii. Gapfilling
As discussed in this preamble and in accordance with Sec.
414.508(b), after we determine that gapfilling will be the basis for
payment for a new clinical diagnostic laboratory test, we instruct our
carriers or MACs to determine carrier-specific gapfill amounts by April
1 and finalize carrier-specific amounts by September 30. We include the
determinations of carrier-specific amounts and the NLA for the new test
code in the clinical laboratory fee schedule the following November
when we post our payment determinations on the CMS Web site. Except in
the case of a gapfilled test for which we determine that gapfilling was
not appropriate under Sec. 414.508(b)(3), these determinations are
final.
We proposed to provide for a reconsideration process for gapfilled
payment amounts. Under this process, by April 30, we would post the
carrier-specific amounts on the CMS Web site at http://www.cms.hhs.gov/ClinicalLabFeeSched/02_clinlab.asp
.
Interested parties would submit written comments to CMS (which we
would provide to the carriers for their consideration) on the carrier-
specific amounts within 60 days from the date of posting the carrier-
specific amounts.
In the CY 2008 PFS proposed rule, we stated that carriers or MACs
would finalize carrier-specific amounts by September 30 and that we
would set the NLA at the median of the carrier-specific amounts, and we
would post the carrier-specific amounts and the NLA on our Web site. In
addition, we stated that the public would have 60 days to submit a
reconsideration request.
We also proposed that if we elect to act on the reconsideration
request to reconsider the carrier-specific amounts and decide to revise
our prior determination, we would adjust the NLA based on comments
received. We would post the revised NLA on the CMS Web site and payment
for the test would be made at the NLA beginning January 1. This
determination would be final and not subject to further
reconsideration.
In addition we proposed that, if we change the basis of payment
from crosswalking to gapfilling as the result of a reconsideration, the
new gapfilled payment amount would be subject to reconsideration under
proposed Sec. 414.509(b)(2). Unlike a crosswalked test, the payment
amount for a gapfilled test is not established when we determine the
basis for payment because it takes approximately 9 months for our
contractors to establish carrier-specific amounts. Thus providing for
reconsideration of gapfilled payment amounts would not lengthen the
period of time it would take to determine a final payment amount.
We proposed to amend Sec. 414.508(b)(3) to provide that Sec.
414.508(b)(3) applies to new tests for which a new or substantially
revised HCPCS code assigned on or before December 31, 2007. We proposed
that the more comprehensive reconsideration procedures would apply to
new or substantially revised HCPCS codes assigned after December 31,
2007.
Comment: One commenter suggested that we should accept comments
after the carrier-specific amounts become final, which is currently on
September 30.
Response: We appreciate this commenter's input. We have decided to
revise the reconsideration process that we proposed. Under the final
policy we are adopting in this final rule with comment period, we will
post interim determinations of carrier-specific amounts on the CMS Web
site in April and, for 60 days, we will accept written comments that we
will share with our carriers and MACs. However, we will not accept
reconsideration requests on the interim carrier-specific amounts. In
September, we will post final carrier-
[[Page 66279]]
specific amounts on the CMS Web site. Interested parties may request
reconsideration of the final carrier-specific amounts within 30 days of
when we post the final carrier-specific amounts on the CMS Web site.
Based on the written reconsideration requests received, we would
evaluate whether we should reconsider the carrier-specific amounts and
NLA.
If we elect to reconsider the carrier-specific amounts and the NLA,
we will process the request for reconsideration between the end of the
30-day comment period and the deadline for dissemination of the
information to the Medicare carriers or MACs via CMS instruction so
that we can finalize our determinations prior to January 1. A request
for reconsideration can be denied or reconsidered for a different
payment amount.
If we elect not to reconsider the carrier-specific amounts and the
NLA, we will post the carrier-specific amounts and NLA on the CMS Web
site on or before January 1. These amounts would be based on the
carrier-specific amounts and NLA we had posted in September. Payment
for the test would be made at the NLA on January 1. This determination
would be final and not subject to further reconsideration.
In addition, after the final test codes and payment amounts are
effective on January 1, there is no reconsideration process that occurs
after that date.
Comment: One commenter suggested that CMS provide a rationale for
either accepting or declining a reconsideration after it is received
and for deciding whether to change a prior determination.
Response: We do not plan to post a rationale for our decision to
accept or decline a reconsideration request. This is consistent with
our policy in other areas of the Medicare program when we make a
decision about whether to reopen a previous decision.
Comment: One commenter suggested that we should convene an expert
advisory committee, broadly representative of the laboratory industry,
to advise CMS on pricing along with standardizing the sources and
quality of charge and cost data.
Response: The purpose of the Clinical Laboratory public meeting is
to convene industry experts and entertain comments, both orally and in
writing, as well as any charge and cost data that is available from the
industry. In fact, we specifically asked, via public notice, those in
the clinical laboratory industry to provide charge and cost data
related to the agenda items at the annual public meeting. We welcome
any related information that industry representatives would like to
provide via the public meeting forum and during the associated comment
period.
Comment: There were specific concerns raised by commenters
regarding varying payment amounts set by carriers when the gapfilling
basis is utilized to determine payment amounts for a new test code.
These commenters recommended that we establish formal procedures for
carriers or MACs to apply when establishing payment amounts, including
a formal appeals process. The commenters stated the payment amounts
should be calculated using information on the following factors,
resources needed to perform the test, staff expertise, time needed to
perform the test and the test's potential value. In addition, the
commenters suggested we should publish the gapfill payment amounts
determined by carriers or MACs and an explanation of the payment
amounts.
Response: Although we appreciate the comments on the establishment
of payment amounts for new clinical laboratory test codes using the
gapfill basis and the suggested improvements to the way we set rates,
these comments are outside the scope of this rulemaking. In the CY 2008
PFS proposed rule, we proposed policies and requested comment regarding
our proposed reconsideration process. We made no policy proposals with
respect to the methodology our contractors use to establish gapfilled
payment amounts. However, in the interest of transparency we will
instruct carriers or MACs to provide a rationale for their final
carrier-specific amounts, which we will post on our Web site.
Comment: One commenter suggested that we should establish a
temporary NLA based on the carrier-specific amounts posted on April 30
within the first year of the gapfill process.
Response: We appreciate the commenter's suggestion; however, we are
concerned that establishing a temporary NLA within a 3 month time
period is not possible due to our substantial program requirements each
year. Currently, clinical laboratory fee schedule payment rates are
established on a calendar year basis. During the year preceding each
January 1, an extensive multi-step process is in place in order to
bring those payment rates to fruition. Currently, that process does not
allow for additional ratesetting procedures.
d. Jurisdiction for Reconsideration Decisions
In the CY 2008 PFS proposed rule (72 FR 38163), we proposed that
jurisdiction for reconsideration would rest exclusively with the
Secretary. A decision whether to reconsider a determination would be
committed to the discretion of the Secretary. Accordingly, a refusal to
reconsider an initial determination would not be subject to
administrative or judicial review. We recognize that parties
dissatisfied with an initial determination as to the amount of payment
for a particular claim for laboratory services may appeal the initial
determination under part 405, subpart I of our regulations. Under our
proposal, a party could challenge under part 405, subpart I a
determination regarding the amount of payment for a new test--
regardless of whether the amount of payment was established as the
result of a reconsideration--but a party could not challenge a decision
not to reconsider.
Comment: One commenter stated that comments should be allowed on
the final payment determination amounts.
Response: This comment appears to request an extension of the
reconsideration process or a change in the jurisdiction as proposed in
Sec. 414.509. The commenter did not provide additional information on
the circumstances that would warrant an extension of the
reconsideration process. Also, the comment did not specify the length
of time for an extension or procedures for an extension or change of
jurisdiction. We believe Sec. 414.506 through Sec. 414.509 permit
adequate opportunities for public participation in the process of
establishing a payment amount and requesting a reconsideration. More
than 2 years can elapse if all steps of these reconsideration
procedures are necessary for the establishment of the basis and payment
for a new test code. We do not agree that revisions to Sec. 414.509(d)
are warranted.
3. Technical Revisions
We also proposed technical revisions to Sec. 414.502, Sec.
414.506, and Sec. 414.508. Under section 1833(h)(8)(A) of the Act, the
term ``new tests'' is defined as any clinical diagnostic laboratory
test for which a new or substantially revised HCPCS code is assigned on
or after January 1, 2005. However, our regulations do not define the
term ``new test.'' Therefore, we proposed to define the term ``new
test'' under Sec. 414.502 using the statutory definition. In addition,
under Sec. 414.506 and Sec. 414.508, we proposed to replace
references to ``new clinical diagnostic laboratory test that is
assigned a new or substantially revised code on or after January 1,
2005'' with references to ``new test.''
Response: We received one supportive comment on this subpart,
[[Page 66280]]
and we appreciate the positive input received on our technical
revisions. Therefore, we are finalizing the technical revisions as
proposed.
H. Revisions Related to Payment for Renal Dialysis Services Furnished
by End-Stage Renal Disease (ESRD) Facilities
In the CY 2008 PFS proposed rule (72 FR 38163), we outlined the
proposed updates to the case mix adjusted composite rate payment system
established under section 1881(b)(12) of the Act, added by section 623
of the MMA. These included updates to the drug add-on component of the
composite rate system, as well as the wage index values used to adjust
the labor component of the composite rate.
Specifically, we proposed the following provisions which are
described in more detail below in this section.
A growth update to the drug add-on adjustment to the
composite rates for 2008 required by section 1881(b)(12)(F) of the Act.
An update to the wage index adjustments to reflect the
latest hospital wage data, including a reduction to the wage index
floor and a revised budget neutrality adjustment to the wage index for
2008.
We received approximately 7 comments on these proposed changes
which are discussed in detail below in this section.
1. Growth Update to the Drug Add-On Adjustment to the Composite Rates
Section 623(d) of the MMA added section 1881(b)(12)(B)(ii) of the
Act which required the establishment of an add-on to the composite rate
to account for changes in the drug payment methodology stemming from
enactment of the MMA. Section 1881(b)(12)(C) of the Act provides that
the drug add-on must reflect the difference in aggregate payments
between the revised drug payment methodology for separately billable
ESRD drugs and the AWP payment methodology. In 2005, we generally paid
for ESRD drugs based on average acquisition costs. Thus the difference
from AWP pricing was calculated using acquisition costs. However, in
2006 when we moved to ASP pricing for ESRD drugs, we recalculated the
difference from AWP pricing using ASP prices.
Comment: Two commenters supported our continued use of ASP+6
percent to pay for separately billable ESRD drugs.
Response: Although these comments are outside the scope of the
proposed rule, we appreciate the support of our previous decision to
pay for separately billable ESRD drugs at ASP+6 percent.
In addition, section 1881(b)(12)(F) of the Act requires that
beginning in CY 2006, we establish an annual update to the drug add-on
to reflect the estimated growth in expenditures for separately billable
drugs and biologicals furnished by ESRD facilities. This growth update
applies only to the drug add-on portion of the case-mix adjusted
payment system.
The CY 2007 drug add-on adjustment to the composite rate is 14.9
percent. The drug add-on adjustment for 2007 incorporates an inflation
adjustment of 0.5 percent. This computation is explained in detail in
the CY 2007 PFS final rule with comment period (71 FR 69682 through
69684). We note that the drug add-on adjustment of 15.1 percent that
was published in the CY 2007 PFS final rule with comment period did not
account for the 1.6 percent update to the composite rate portion of the
basic case-mix adjustment payment system that was subsequently enacted
by the MIEA-TRHCA, effective April 1, 2007. Since we compute the drug
add-on adjustment as a percentage of the weighted average base
composite rate, the drug add-on percentage was decreased to account for
the higher composite payment rate resulting in a 14.9 percent add-on
adjustment beginning April 1, 2007. This adjustment was necessary to
ensure that the total drug add-on dollars remain constant.
(a) Estimating Growth in Expenditures for Drugs and Biologicals for CY
2008
In the CY 2007 PFS final rule with comment period (71 FR 69682), we
established a methodology for annually estimating the growth in ESRD
drugs and biological expenditures that uses the Producer Price Index
(PPI) for pharmaceuticals as a proxy for pricing growth in conjunction
with 2 years of ESRD drug data to estimate per patient utilization
growth.
For CY 2008, we proposed to continue using this methodology to
update the drug add-on adjustment, using expenditure data from CY 2005
and CY 2006 to estimate the growth in per patient utilization of drugs.
However, we also proposed using only drug expenditure data from
independent ESRD facilities because we were unable to determine
utilization change in hospital-based dialysis facilities due to the
changes in payment methodology for these types of dialysis facilities
from CY 2005 to CY 2006. In 2005, payments to hospital-based facilities
were based on cost (or a percentage of charges), whereas payments to
those facilities in 2006 were based on ASP pricing. Because of the cost
payment methodology, the ``drug unit'' fields on the 2005 hospital-
based ESRD facility bills were not used for payment purposes, and
therefore, the data may not have been accurately reported on those
bills. As such, we were unable to accurately isolate the per unit
payment differential for hospital-based ESRD facility drug expenditures
between 2005 (cost payments) and 2006 (ASP payments) for purposes of
estimating the residual utilization change between years. We proposed
imputing the same utilization growth for hospital-based ESRD facilities
as estimated for independent ESRD facilities.
Comment: One comment urged us to reevaluate the data and
methodology used to estimate utilization changes. The comment was
specifically concerned about the timeliness of the data and that the
exclusion of hospital-based drug data may significantly skew the
accuracy of the utilization growth calculation. However, the comment
did not suggest an alternative methodology.
Response: The data from CY 2005 and CY 2006 represent the most up
to date and latest full years of data available. Contrary to the
commenter's suggestion, as we indicated in the CY 2008 PFS proposed
rule, including hospital-based data in the computation would have
resulted in a negative utilization growth. Therefore, we opted to
exclude those data to avoid penalizing ESRD facilities because of the
problems with the hospital-based ESRD facility drug data. We believe
our approach provides the most reasonable result given the available
data.
Comment: One comment suggested that we adopt an index that would
account for both price and utilization such as the National Health
Expenditures (NHE) index. This would avoid the data issues associated
with estimating utilization growth.
Response: We do not believe that the NHE projections would be the
best proxy for growth in ESRD drug expenditures. The NHE projections
are based on the economic, demographic and Medicare spending
projections contained in the Medicare Trustees Report as opposed to an
independent forecast of economic assumptions, such as the Global
Insights projections of the PPI for prescription drugs that are used in
our Medicare market basket forecasts to update many of our payment
systems. The NHE projection modeling approach is at an aggregate level
and does not capture the nuances of both labor and economic markets as
accurately as does the specific PPI forecast. We believe that, despite
some of the limitations in the data, estimating utilization growth
[[Page 66281]]
from reported ESRD claims data provides the most accurate measure of
actual ESRD facility drug utilization.
Comment: One comment suggested that the PPI may not result in an
accurate assessment of prices for ESRD drugs and that there are other
available indices that would provide more accurate data on ESRD drugs.
In addition, they stated that should we choose to move forward with the
PPI, the most up to date PPI forecast should be used.
Response: We do not know of any better price index than the PPI for
measuring price growth for ESRD drugs. However, we welcome any
suggestion the industry may have on an alternative price index suitable
for measuring price growth of ESRD drugs. Global Insight, Inc. is a
nationally recognized economic and financial forecasting firm that
contracts with CMS to forecast the components of our market baskets.
The current projection of the PPI for prescription drugs is based on
the 2007 second quarter forecast using historical data through the
first quarter of 2007, the most current data available at this time.
Comment: One comment recommended that a mechanism be established to
provide for a forecasting error adjustment of prior estimates.
Response: While we appreciate the concern related to the accuracy
of an update based on proxy measures for price and the proposed
utilization computations, the very nature of estimating future
expenditures under a prospective payment system requires that those
estimates are based on the best historical data available. As such, we
believe we have met our obligation under the statute in estimating
growth in ESRD drug expenditures for CY 2008. Moreover, forecast error
adjustments are rarely made in our prospective payment systems.
(b) Estimating Growth in Per Patient Drug Utilization
To isolate and project the growth in per patient utilization of
ESRD drugs for CY 2008, we removed the enrollment and price growth
components from the historical data and considered the residual to be
utilization growth. As discussed previously, we proposed to use
independent ESRD facility drug expenditure data from CY 2005 and CY
2006 to estimate per patient utilization growth for CY 2008.
We first estimated total drug expenditures. For the CY 2008 PFS
proposed rule (72 FR 38165), we used the final CY 2005 ESRD facility
claims data and the latest available CY 2006 ESRD facility claims data,
updated through December 31, 2006. That is, for CY 2006 we used claims
that were received, processed, paid, and passed to the National Claims
History File as of December 31, 2006. For this final rule with comment
period, we are using more updated CY 2006 claims with dates of service
for the same time period. This updated CY 2006 data file includes all
claims that were received, processed, paid, and passed to the National
Claims History File as of June 30, 2007 for CY 2006.
For the CY 2008 PFS proposed rule, we adjusted the December 2006
file to reflect our estimate of what total drug expenditures would be
using the final June 30, 2007 bill file for CY 2006. The net adjustment
we applied to the CY 2006 claims data was an increase of 12 percent to
the December 2006 claims file. For this final rule with comment period,
we are using the CY 2006 claims file as of June 30, 2007, which
represents the final claims file for that year. To calculate the
proposed per patient utilization growth, we removed the enrollment
component by using the growth in enrollment data between 2005 and 2006.
This was approximately 3 percent. To remove the price effect, we
calculated the weighted difference between 2005 average acquisition
price (AAP) and 2006 ASP pricing for the original top ten drugs for
which we had average acquisition prices. We weighted the differences by
the 2006 independent ESRD facility drug expenditure data. This process
led to an overall 3 percent reduction in price between 2005 and 2006
(72 FR 38165 through 38166).
After removing the enrollment and price effects from the
expenditure data, the residual growth would reflect the per patient
utilization growth. To do this, we divided the product of the
enrollment growth of 3 percent (1.03) and the price reduction of 3
percent (1.00 - 0.03 = 0.97) into the total drug expenditure change
between 2005 and 2006 of -0.2 percent (1.00 -0.00 = 1.00). The result
is a proposed utilization growth factor equal to 1.00 (1.00/1.03 *
0.97) = 1.00.
Since we observed no growth in per patient utilization of drugs
between 2005 and 2006, we proposed no projected growth in per patient
utilization for all ESRD facilities for CY 2008.
c. Applying the Proposed Growth Update to the Drug Add-On Adjustment
In the CY 2007 PFS final rule with comment period (71 FR 69684), we
revised our update methodology by applying the growth update to the per
treatment drug add-on amount. That is, for CY 2007, we applied the
growth update factor of 4.03 percent to the $18.88 per treatment drug
add-on amount for an updated amount of $19.64 per treatment.
For CY 2008, we proposed to update the per treatment drug add-on
amount of $19.64 established in CY 2007 by converting the update into
an adjustment factor as specified in section 1881(b)(12)(F) of the Act.
(i) Update to the Drug Add-On Adjustment
In the CY 2008 PFS proposed rule (72 FR 38166), we estimated no
growth in per patient utilization of ESRD drugs for CY 2008. Using the
projected growth of the CY 2008 PPI for prescription drugs of 3.66
percent, we projected that the combined growth in per patient
utilization and pricing for CY 2008 would result in an update equal to
the PPI growth, or 3.66 percent (1.0 * 1.0366 = 1.0366). This proposed
update factor was applied to the CY 2007 per treatment drug add-on
amount of $19.64 (reflecting a 14.9 percent adjustment in CY 2007),
resulting in a proposed weighted average increase to the composite rate
of $0.72 for CY 2008 or a 0.5 percent increase in the drug add-on
percentage. Thus, the total proposed drug add-on adjustment to the
composite rate for CY 2008, including the growth update was 15.5
percent (1.149 * 1.005 = 1.155).
In addition, we proposed to continue to use this method to estimate
the growth update to the drug add-on component of the case mix adjusted
payment system until we have at least 3 years worth of ASP-based
historical drug expenditure data that could be used to conduct a trend
analysis to estimate the growth in drug expenditures. Given the time
lag in the availability of ASP drug expenditure data, we expect that
the earliest we could consider using trend analysis to update the drug
add-on adjustment would be 2010. We intend to reevaluate our
methodology for estimating the growth update at that time.
Comment: One comment suggested that we should work with the kidney
care community as we consider a CY 2010 transition to trend analysis
using ASP-based historical data. The comment expressed concern that
using actual historical ESRD drug expenditure data reflecting ASP
pricing could adversely affect ESRD facilities due to changes in ASP
pricing for EPO and Procrit.
Response: Once we begin using trend analysis to update the drug
add-on adjustment, we will provide details of that methodology in
future rulemaking.
[[Page 66282]]
(ii) Final Growth Update to the Drug Add-On Adjustment for 2008
Similar to the proposed rule, we estimated no growth in per patient
utilization of ESRD drugs for CY 2008. To remove the price effect, we
used 2006 weights for each of the top ten ESRD drugs billed by
independent ESRD facilities. These weights are shown in Table 6.
Table 6.--CY 2006 Drug Weights for Independent Facilities
------------------------------------------------------------------------
2006
Independent drugs weights
(percent)
------------------------------------------------------------------------
EPO........................................................ 75.2
Paricalcitol............................................... 11.6
Sodium--ferric--glut....................................... 2.9
Iron--sucrose.............................................. 5.7
Levocarnitine.............................................. 0.3
Doxercalciferol............................................ 3.1
Calcitriol................................................. 0.1
Iron--dextran.............................................. 0.0
Vancomycin................................................. 0.1
Alteplase.................................................. 0.9
------------------------------------------------------------------------
We removed the enrollment and price effects from the independent
ESRD facility expenditure data to determine the per patient utilization
growth. To do this we divided the product of the enrollment growth of 3
percent (1.03) and the price reduction of 3 percent (1.00-0.03 = 0.97)
into the total drug expenditure change between 2005 and 2006 of -0.1
percent (1.00-0.00 = 1.00). The result is a utilization growth factor
equal to 1.00 (1.00/1.03 * 0.97) = 1.00.
Using the latest projected growth of the CY 2008 PPI for
prescription drugs of 3.5 percent, we project that the combined growth
in per patient utilization and pricing of ESRD drugs for CY 2008 would
result in an update equal to the PPI growth or 3.5 percent (1.00 *
1.035 = 1.035). This update factor was applied to the CY 2007 average
per treatment drug add-on amount of $19.64 (reflecting a 14.9 percent
adjustment for CY 2007), resulting in a weighted average increase to
the composite rate of $0.69 for CY 2008 or a 0.5 percent increase in
the drug add-on percentage for CY 2008. Thus, the total drug add-on
adjustment to the composite rate for CY 2008, including the growth
update is 15.5 percent (1.149 * 1.005 = 1.155).
2. Update to the Geographic Adjustment to the Composite Rates
Section 1881(b)(12)(D) of the Act, as added by section 623(d) of
the MMA, gives the Secretary the authority to revise the wage indexes
previously applied to the ESRD composite rates. The wage index values
are calculated for each urban and rural area. The purpose of the wage
index is to adjust the composite rates for differing wage levels
covering the areas in which ESRD facilities are located.
(a) Updates to Core-Based Statistical Area (CBSA) Definitions
In the CY 2008 PFS proposed rule (72 FR 38166), we clarified that
this and all subsequent ESRD rules and notices are considered to
incorporate the CBSA changes published in the most recent OMB bulletin
that applies to the hospital wage data used to determine the current
ESRD wage index. The OMB bulletins may be accessed online at http://www.whitehouse.gov/omb/bulletins/index.html
.
(b) Updated Wage Index Values
In the CY 2006 PFS final rule with comment period (70 FR 70167), we
described that methodology for calculating the CY 2006 wage index
values and stated that we intend to update the ESRD wage index values
annually. Current wage index values for CY 2007 were developed from FY
2003 wage and employment data obtained from the Medicare hospital cost
reports. The ESRD wage index values are calculated without regard to
geographic reclassifications authorized under sections 1886(d)(8) and
(d)(10) of the Act and utilize pre-floor hospital data that is
unadjusted for occupational mix.
We proposed to use the same methodology for CY 2008 (72 FR 38167),
with the exception that FY 2004 hospital data will be used to develop
the CY 2008 ESRD wage index values. For a detailed description of the
development of the CY 2008 wage index values based on FY 2004 hospital
data, see the FY 2008 IPPS final rule entitled ``Changes to the
Hospital Inpatient Prospective Payment Systems and Fiscal Year 2008
Rates'' (72 FR 47320). Section G of the preamble to that final rule
describes the cost report schedules, line items, data elements,
adjustments, and wage index computations. The wage index data affecting
ESRD composite rates for each urban and rural locale may also be
accessed on the CMS Web site at http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp.
The wage data are located in the
section entitled ``FY 2008 Final Rule Occupational Mix Adjusted and
Unadjusted Average Hourly Wage and Pre-Reclassified Wage Index by
CBSA.''
Comment: One commenter expressed concern in regard to our use of
acute care hospital wage data in the calculation of the wage index
stating that the cost for hospital based facilities and ambulatory
centers varies greatly. The commenter urged us to locate an alternative
data source that reflects information directly tied to ESRD facilities.
Response: At the present time, data that is specific to independent
dialysis facilities is not available upon which to base the wage index.
As described in the CY 2007 PFS final rule with comment period (71 FR
69685), given the similarity of the labor market for professional,
technical, and nursing staff between hospitals and ESRD facilities, we
believe our use of hospital wage and employment data obtained from the
Medicare cost reports to develop the ESRD wage index is appropriate. In
addition, several of our major prospective payment systems (PPS)
utilize the same wage index (for example, Skilled Nursing Home PPS,
Inpatient Psychiatric Facility PPS, Inpatient Rehabilitation Facility
PPS, Home Health PPS, and Hospice PPS.)
(i) Third Year of the Transition
In the CY 2006 PFS final rule with comment period (70 FR 70169), we
indicated that we would apply a 4-year transition period to mitigate
the impact on composite rates resulting from our adoption of CBSA-based
geographic designations. Beginning January 1, 2006, during each year of
the transition, an ESRD facility's wage-adjusted composite rate (that
is, without regard to any case-mix adjustments) will be a blend of its
old MSA-based wage-adjusted payment rate and its new CBSA-based wage-
adjusted payment rate for the transition year involved. In addition,
beginning in CY 2006 we provided a gradual reduction in the wage index
floor. We indicated that we would reassess the need for a wage index
floor for CY 2008. In the CY 2008 PFS proposed rule (72 FR 38167), we
proposed a further reduction in the wage index floor. For each
transition year, the share of the blended wage-adjusted base payment
rate that is derived from the MSA-based and CBSA-based wage index
values and the applicable wage index floor is as follows:
In CY 2006, the first year of the transition, we
implemented a 75/25 blend. The wage index floor was reduced from 0.9000
to 0.8500.
In CY 2007, the second year of the transition, we
implemented a 50/50 blend. The wage index floor was reduced from 0.8500
to 0.8000.
For CY 2008, consistent with the transition blends
announced in the CY 2006 PFS final rule with comment period (70 FR
70170), we are implementing a 25/75 blend between an ESRD facility's
MSA based composite
[[Page 66283]]
rate, and its CY 2008 CBSA-based rate reflecting its revised wage index
values. In addition, we proposed to continue the wage index floor, but
to further reduce it from 0.8000 to 0.7500.
An example of how the wage-adjusted composite rates would be
blended during CY 2008 and the additional subsequent transition year
follows.
Example: An ESRD facility has a wage-adjusted composite rate
(without regard to any case-mix adjustments) of $135.00 per treatment
in CY 2007. Using CBSA-based geographic area designations, the
facility's CY 2008 wage-adjusted composite rate, reflecting its wage
index value would be $145.00. During the remaining 2 years of the 4-
year transition period to the new CBSA-based wage index values, this
facility's blended rate through 2009 would be calculated as follows:
CY 2008 = 0.25 x $135.00 + 0.75 x $145.00 = $142.50
CY 2009 = 0 x $135.00 + 1.0 x $145.00 = $145.00
We note that this hypothetical example assumes that the calculated
wage-adjusted composite rate of $145.00 for CY 2008 does not change in
CY 2009. In actuality, the wage-adjusted composite rate for CY 2009
would change because of annual revisions to the wage index. However,
the example serves only to demonstrate the effect on the composite rate
of the CBSA-based wage index values which will be phased in during the
remaining 2 years of the transition period. As noted above in this
section, the 4-year transition period will expire and in CY 2009 and
forward, we will be using CBSA-based wage index values.
Comment: Several commenters expressed concern in regard to our
proposal to decrease the wage index floor from 0.80 to 0.75. In
addition, one commenter indicated that a defunct licensing board in
Puerto Rico has inhibited licensing of dialysis technicians for a long
period of time. As a result, registered nurses are the only group of
licensed professional qualified to furnish dialysis within this area.
In addition, a commenter believes that decreasing the floor will
make it difficult to recruit and retain qualified personnel in areas
affected by the removal of the floor. The commenter also identified the
recent transition to the ASP drug pricing methodology and increases in
operating expense as factors that have compounded the impact of any
further drop in the wage index floor.
Response: As described in the CY 2007 PFS final rule with comment
period (71 FR 69686 through 69687), the proposed wage index floor was
substantially higher than the actual wage index values for urban
locales in Puerto Rico, without application of any floor and prior to
the application of the BN adjustment. Specifically, the proposed wage
index floor was 0.80 whereas the actual wage index values ranged from
0.3241 to 0.4893. Similarly, the proposed wage index floor for CY 2008
is 0.75 whereas the actual wage index values for urban locales in
Puerto Rico range from 0.3064 to 0.4729. Therefore, we believe that the
CY 2008 wage index floor of 0.75 compared to actual wage levels is an
appropriate level and the new floor would not impede the ability of
ESRD facilities to recruit and retain staff.
(ii) Wage Index Values for Areas With No Hospital Data
In CY 2006, while adopting the CBSA designations, we identified a
small number of ESRD facilities in both urban and rural geographic
areas where there is no hospital wage data from which to calculate ESRD
wage index values. The affected areas were rural Massachusetts, rural
Puerto Rico and the urban area of Hinesville, GA (CBSA 25980). For both
CY 2006 and CY 2007, we calculated the ESRD wage index values for those
areas as follows:
For rural Massachusetts, because we had not determined a
reasonable proxy for rural data in Massachusetts, we used the FY 2005
wage index value for rural Massachusetts.
For rural Puerto Rico, the situation is similar to rural
Massachusetts. However, since all geographic areas in Puerto Rico were
subject to the wage index floor in CY 2006 and CY 2007, we applied the
ESRD wage index floor to rural Puerto Rico as well.
For the urban area of Hinesville, GA, we calculated the CY
2006 and CY 2007 wage index value for Hinesville, GA (CBSA 25980) based
on the average wage index value for all urban areas within the State of
Georgia.
In the CY 2008 PFS proposed rule (72 FR 38168), we proposed an
alternative methodology for establishing a wage index value for rural
Massachusetts. Since we have used the same wage index value for two
years with no updates, we believed it was appropriate to establish a
methodology that uses reasonable proxy data for rural areas (including
rural Massachusetts) and also permits annual updates to the wage index
value based on that proxy data. Therefore, in cases where there is a
rural area without hospital wage data, we proposed to use the average
wage index values from all contiguous CBSAs to represent a reasonable
proxy for that rural area.
In determining the imputed rural wage index, we interpret the term
``contiguous'' to mean sharing a border. In the case of Massachusetts,
the entire rural area consists of Dukes and Nantucket Counties. We
determined that the borders of Dukes and Nantucket counties are
``contiguous'' with Barnstable and Bristol counties. Under the proposed
methodology, the wage index values for the counties of Barnstable (CBSA
12700, Barnstable Town, MA--(1.2539)) and Bristol (CBSA 39300,
Providence-New Bedford-Fall River, RI-MA--(1.0783)) are averaged,
resulting in a proposed imputed wage index value of 1.1665 for rural
Massachusetts for CY 2008.
For rural Puerto Rico, we proposed to continue to apply the wage
index floor in CY 2008. Since all areas in Puerto Rico that have a wage
index are eligible for the proposed CY 2008 ESRD wage index floor of
0.7500, we proposed to also apply the floor to ESRD facilities located
in rural Puerto Rico.
For Hinesville, GA (CBSA 25980) which is an urban area without
specific hospital wage data, we proposed to continue using the same
methodology used to impute a wage index value for that area as we used
in CY 2006 and CY 2007. Specifically, we used the average wage index
value for all urban areas within the State of Georgia for purposes of
calculating the wage index value for Hinesville. Therefore, for CY 2008
we proposed that the wage index value for urban CBSA (25980)
Hinesville-Fort Stewart, GA is calculated as the average of the wage
index values of all urban areas in Georgia.
We solicited comments on these proposed approaches to calculate the
wage index values for areas without hospital wage data for CY 2008 and
subsequent years. We indicated that we would continue to evaluate
existing hospital wage data and, possibly, wage data from other
sources, such as the Bureau of Labor Statistics, to determine if other
methodologies of imputing a wage index value for these areas may be
feasible. We received one comment on this issue.
Comment: One commenter was supportive of our methodology used in
calculating wage index values for areas with no hospital wage data
including rural Massachusetts, Puerto Rico, and an urban area in
Georgia. However, the commenter requested that we carefully evaluate
the extent to which these methodologies would be appropriate in other
situations nationwide.
Response: We agree with the commenter. As additional areas are
[[Page 66284]]
identified for which hospital wage data does not exist, we will
reevaluate the extent to which the methodologies used for
Massachusetts, Puerto Rico, and Georgia would be appropriate and
consider alternative methodologies on an as needed basis.
We are finalizing the ESRD wage index and associated policies as
proposed for CY 2008. In addition, we note that we plan to evaluate any
policies adopted in the FY 2008 IPPS final rule (72 FR 47130, 47337
through 47338) that affect the wage index, including how we treat
certain New England hospitals under section 601(g) of the Social
Security Amendments of 1983 (Pub. L. 98-21).
(iii) Budget Neutrality (BN) Adjustment
Section 1881(b)(12)(E)(i) of the Act, as added by section 623(d) of
the MMA, requires that any revisions to the ESRD composite rate payment
system as a result of the MMA provision (including the geographic
adjustment) be made in a budget neutral manner. This means that
aggregate payments to ESRD facilities in CY 2007 should be the same as
aggregate payments that would have been made if we had not made any
changes to the geographic adjusters. We note that this BN adjustment
only addresses the impact of changes in the geographic adjustments. A
separate BN adjustment was developed for the case-mix adjustments,
currently in effect. Since we are not proposing any changes to the
case-mix measures for CY 2008, the current case-mix budget neutrality
will remain in effect for CY 2008. For CY 2008, we again proposed to
apply the BN adjustment directly to the ESRD wage index values, as we
did in CY 2007. As we explained in the CY 2007 PFS final rule with
comment period (71 FR 69687 through 69688), we believe this is the
simplest approach because it allows us to maintain our base composite
rates during the transition from the current wage adjustments to the
revised wage adjustments described previously in this section. Because
the ESRD wage index is only applied to the labor related portion of the
composite rate, we computed the BN adjustment based on that proportion
(53.711 percent).
To compute the proposed CY 2008 wage index BN adjustment, we used
the proposed wage index values, 2006 outpatient claims (paid and
processed as of December 31, 2006), and geographic location information
for each facility.
Using the treatment counts from the 2006 claims and facility-
specific CY 2007 composite rates, we computed the estimated total
dollar amount each ESRD provider would have received in CY 2007 (the
2nd year of the 4-year transition). The total of these payments became
the target amount of expenditures for all ESRD facilities for CY 2008.
Next, we computed the estimated dollar amount that would have been paid
to the same ESRD facilities using the proposed ESRD wage index for CY
2008 (the 3rd year of the 4-year transition). The total of these
payments became the third year amount of wage-adjusted composite rate
expenditures for all ESRD facilities.
After comparing these two dollar amounts (target amount divided by
3rd year new amount), we calculated an adjustment factor that, when
multiplied by the applicable CY 2008 ESRD proposed wage index value
would result in payments to each facility that remain within the target
amount of composite rate expenditures when totaled for all ESRD
facilities. The proposed BN adjustment for the CY 2008 wage index was
1.054955.
We also must apply the BN adjustment to the proposed wage index
floor of 0.7500 which resulted in a proposed adjusted wage index floor
of 0.7912 (0.7500 x 1.054955) for CY 2008.
Comment: One commenter expressed concern in regard to the
calculation of the BN adjustment for the geographic wage index stating
that the methodology included in the proposed rule lacked transparency.
The commenter urged us to provide the data and methodology used in
calculating the BN adjustment.
Response: The commenter did not identify where transparency was
lacking or any missing elements that would enable the community to
assess the impact of the proposed changes. However, we received a
similar request for clarification during last year's rulemaking process
and provided an extensive description of the manner in which budget
neutrality is applied to the wage index in the CY 2007 PFS final rule
with comment period (71 FR 69687 through 69688). While claims data have
been updated since publication of that final rule with comment period,
the methodology has not changed.
During the CY 2008 PFS proposed rule comment period, we made
available an ESRD Composite Rate Payment System File. This file
contained select claims level data from the 2006 ESRD facility
outpatient claims, updated through December 31, 2006. For more
information on this file, see the following page on the CMS Web site at
http://www.cms.hhs.gov/LimitedDataSets/06.asp#TopOfPage.
After publication of this final rule with comment period, we intend
to provide the updated version of the CY 2006 outpatient claims (paid
and processed as of June 30, 2007) that were used to compute the BN
adjustment.
To compute the final CY 2008 ESRD wage index BN adjustment, we used
FY 2004 pre-floor, pre-reclassified, non-occupational mix-adjusted
hospital wage data to compute the wage index values, 2006 outpatient
claims (paid and processed as of June 30, 2007), and geographic
location information for each ESRD facility which may be found through
Dialysis Facility Compare. The FY 2004 hospital wage index data for
each urban and rural locale by CBSA may also be accessed on the CMS Web
site at: http://www.cms.hhs.gov/AcuteInpatientPPS/WIFN/list.asp. The
wage index data are located in the section entitled ``FY 2008 Final
Rule Occupational Mix Adjusted and Unadjusted Average Hourly Wage and
Pre-Reclassified Wage Index by CBSA.''
Dialysis Facility Compare Information can be found on the CMS Web
site at http://www.cms.hhs.gov/DialysisFacilityCompare/.
Using treatment data from the latest 2006 claims file and facility-
specific CY 2007 composite rates, we computed the estimated total
dollar amount each ESRD provider would have received in CY 2007 (the
2nd year of the 4-year transition). The total of these payments became
the target amount of expenditures for all ESRD facilities for CY 2008.
Next, we computed the estimated dollar amount that would have been paid
to the same ESRD facilities using the ESRD wage index for CY 2008 (the
3rd year of the 4-year transition). The total of these payments became
the 3rd year new amount of wage adjusted composite rate expenditures
for all ESRD facilities.
After comparing these dollar amounts (target amount divided by 3rd
year new amount), we calculated an adjustment factor that when
multiplied by the applicable CY 2008 wage index value, will result in
aggregate payments to ESRD facilities that will remain within the
target amount of composite rate expenditures. When making this
calculation, the ESRD wage index floor value of 0.7500 is used whenever
appropriate.
The final BN adjustment for the CY 2008 wage index is 1.055473.
To ensure budget neutrality, we also must apply the BN adjustment
to all index values, including the wage index floor of 0.7500, which
results in an adjusted wage index floor of 0.7916 for CY 2008.
(iv) ESRD Wage Index Tables
The final CY 2008 wage index tables applicable to ESRD facilities
are located
[[Page 66285]]
in Addenda G and H of this final rule with comment period.
I. Independent Diagnostic Testing Facility (IDTF) Issues
In the CY 2008 PFS proposed rule (72 FR 38169 through 38171), we
clarified our interpretation of several of the existing performance
standards at Sec. 410.33(b), and Sec. 410.33(g), proposed a new IDTF
performance standard at Sec. 410.33(g)(15), and a new proposed IDTF
provision at Sec. 410.33(i).
We received numerous comments concerning the revisions to existing
performance standards and new provisions affecting IDTFs and have
revised our proposed changes, where applicable, to reflect the issues
brought forth by the commenters. We are adopting the provisions
contained in the proposed rule as final with the following changes.
1. Revisions of Existing IDTF Performance Standards
a. Sec. 410.33(g)(6)
In Sec. 410.33(g)(6), we had proposed to revise this existing
performance standard to include the requirement that an IDTF must list
our designated contractor as a Certificate Holder on the comprehensive
liability insurance policy by revising Sec. 410.33(g)(6) to state,
``Has a comprehensive liability insurance policy in the amount of at
least $300,000 per location that covers both the supplier's place of
business and all customers and employees of the supplier and ensures
that this insurance policy must remain in force at all times. The
policy must be carried by a nonrelative owned company. Failure to
maintain required insurance at all times will result in revocation of
the IDTF's billing privileges retroactive to the date the insurance
lapsed. IDTF suppliers are responsible for providing the contact
information for the issuing insurance agent and the underwriter. In
addition, we proposed that the IDTF must: ensure that the insurance
policy must remain in force at all times and provide coverage of at
least $300,000 per incident; notify the CMS-designated contractor in
writing of any policy changes or cancellations; and list the CMS-
designated contractor as a Certificate Holder on the policy.''
Comment: One commenter suggested that we amend the Sec.
410.33(g)(6) provision on the comprehensive liability insurance policy
to state that IDTFs should have a comprehensive liability insurance
policy of at least $100,000 per incident, $300,000 aggregate and that
CMS should require the IDTF to list Medicare contractors as certificate
holders for notification purposes only.
Response: After receiving numerous comments supporting the proposed
figures, we are adopting the proposed figure of $300,000 per incident.
Comment: Several commenters recommended that we revise the proposed
performance standard found at Sec. 410.33(g)(6) to remove the
requirement that our designated contractor be listed as a Certificate
Holder on the liability insurance policy. One commenter supported the
proposed changes to the performance standard at Sec. 410.33(g)(6), but
expressed concerned about whether underwriters were willing to list the
government as a certificate holder on an insurance policy.
Another commenter questioned whether insurance underwriters will be
open to the idea of adding the government as a certificate holder on an
insurance policy and suggested that CMS survey several insurance
carriers which provide this type of coverage to determine if this
performance standard is achievable. One commenter stated that the
comprehensive liability insurance policy provision (Sec. 410.33(g)(6))
which requires the IDTF to list the Medicare contractor as the
certificate holder on the policy is too burdensome and obtrusive on
small business entities. They recommended using a comparable approach
to the one required by DMEPOS supplier, and have the IDTF provide a
copy of the annual renewal of the insurance coverage for the IDTF to
the Medicare contractor (the renewal package would include information
on the coverage levels, as well as the premiums paid).
One commenter suggested removing the contractor as the certificate
holder for the comprehensive liability insurance policy, but if they
are named as a certificate holder for the comprehensive liability
insurance policy that it be only for notification purposes.
Response: Given the concerns raised about the increased
administrative burden, we agree that our designated contractor should
not be included as a Certificate Holder on the IDTF's comprehensive
liability insurance policy. We have revised the performance standard
found at Sec. 410.33(g)(6) to remove the requirement that our
designated contractor be listed as a Certificate Holder on the IDTF's
comprehensive liability insurance policy. However, we believe that it
is essential that a Medicare fee for service (FFS) contractor be
allowed to verify information contained in the comprehensive liability
insurance policy. We believe that a Medicare contractor (that is,
carrier or Part A/Part B Medicare Administrator Contractor) should be
able to verify the issuance of a comprehensive liability insurance
policy with an insurance agent or, as necessary, an underwriter. This
approach will allow a Medicare FFS contractor to review and verify that
a comprehensive liability insurance policy has been issued and is in
effect at the time of enrollment and throughout the enrollment period.
We have revised Sec. 410.33(g)(6) to read, ``Has a comprehensive
liability insurance policy in the amount of at least $300,000 per
location that covers both the supplier's place of business and all
customers and employees of the IDTF. The policy must be carried by a
nonrelative-owned company. Failure to maintain required insurance at
all times will result in revocation of the IDTF's billing privileges
retroactive to the date the insurance lapsed. IDTF suppliers are
responsible for providing the contact information for the issuing
insurance agent and the underwriter. In addition, the IDTF must--
Ensure that the insurance policy must remain in force at
all times and provide coverage of at least $300,000 per incident; and
Notify the CMS designated contractor in writing of any
policy changes or cancellations.''
b. Sec. 410.33(g)(2)
In Sec. 410.33(g)(2), we proposed to establish a 30-day reporting
period for certain reportable events and a 90-day reporting period for
all other reportable events.
Comment: One commenter asked that we define the term ``nonrelative
owned'' while another commenter asked that we remove this term
altogether because we are not precluding self insurance.
Response: While we do not believe that it is necessary to define
the term ``nonrelative owned'' in this rulemaking effort, a non-
relative owned company applies to insurance policies obtained through a
familial relationship, not a related organization or business partner.
Therefore, we are not removing this term from the performance standard.
Comment: Several commenters supported our proposal to revise the
reporting requirements found in the performance standard found at Sec.
410.33(g)(2). One commenter supported the CMS proposal to revise the
reporting requirements found in performance standard at Sec.
410.33(g)(2) to establish separate reporting periods for different
reportable events. The proposed changes will provide the information
desired by CMS in a timely
[[Page 66286]]
manner while minimizing the administrative burdens on both IDTFs and
the Medicare contractors caused by the current notification standard.
Response: We appreciate these comments and agree that revising this
standard will reduce the administrative burden on both IDTFs and our
contractors.
Comment: One commenter recommended that we revise the CMS-855B to
list the specific changes that must be reported within 30 calendar days
of the change. However, one commenter stated that requiring the
reporting of changes depending on the type change in 30 or 90 days puts
an unfair burden on IDTFs.
Response: We agree that the CMS-855B should be revised and should
list the specific changes that must be reported within 30 calendar days
of the change. Currently, IDTFs are required to report all changes in
30 days. Our proposal would limit the number of reportable events that
would need to be reported within 30 days of the change. We intend to
revise the CMS-855B to clarify which reportable events must be reported
within 30 and 90 days. We will use the Paperwork Reduction Act process
to seek specific comments in seeking revisions to the CMS-855B.
Comment: One commenter recommended that we allow IDTFs to make
changes online.
Response: We are developing the Provider Enrollment, Chain, and
Ownership System (PECOS) Web, which will allow all providers and
suppliers, including IDTFs, to enroll or report enrollment changes via
the Internet. We are hoping to implement PECOS Web in most parts of the
country by March 2008.
Comment: One commenter suggested that all changes should be
reported to CMS within 90 days or in the alternative. This commenter
also recommended that IDTFs report any changes that have occurred in
the preceding quarter on a quarterly basis.
Another commenter suggested that we should allow at least 90 days
for reporting changes in contact information with the contractor. This
commenter also suggested that we further define what the policy and
coverage requirements for self insurance and the term ``independent
underwriter.''
Response: Section 410.33(g)(2) requires IDTFs to report all changes
in 30 days. By adopting our proposal, we limit the number of reportable
events that would need to be reported within 30 days of the change. As
stated above, we intend to revise the CMS-855B to clarify what items
must be reported within 30 and 90 days. Since many IDTFs operate on
different schedules, it would not be practical to implement a quarterly
reporting requirement.
As a result of the issues raised by the commenters, we are revising
Sec. 410.33(g)(2) to read, ``Provides complete and accurate
information on its enrollment application. Changes in ownership,
changes of location, changes in general supervision, and adverse legal
actions must be reported to the Medicare FFS contractor on the Medicare
enrollment application within 30 calendar days of the change. All other
changes to the enrollment application must be reported within 90
days.''
c. Sec. 410.33(g)(8)
We received the following comments in response to our proposal at
Sec. 410.33(g)(8).
Comment: Several commenters recommended that we consider limiting
the types of beneficiary complaints that are subject to the performance
standard found in Sec. 410.33(g)(8). Another commenter recommended
that the standard found in Sec. 410.33(g)(8) apply only when a
beneficiary formalizes their complaint in writing. Other commenters
stated that the proposed change in Sec. 410.33(g)(8) is unnecessary,
not to mention ambiguous and labor intensive to implement.
One commenter recommended that we model the IDTF documentation
requirement after standards established by the Food and Drug
Administration. Specifically, this commenter recommends that IDTFs
maintain a record for each serious complaint received by the facility
for at least 3 years from the date the complaint was received.
Another commenter recommended that we clarify that IDTFs are
required to monitor only those beneficiary complaints that relate to
the quality of care the patient receives.
One commenter stated that the standard at Sec. 410.33(g)(8) be
clarified to eliminate the documentation of routine billing questions
so there is no unnecessary burden on small business entities.
One commenter suggested that instead of adopting Sec. 410.33(g)(8)
as written for documenting a beneficiary's questions or complaints,
IDTFs should be required to develop and adhere to a complaint policy
that includes documentation of material medical or billing complaints,
and that if CMS adopts the current provision, the word questions should
be changed to complaints. The commenter also maintains that IDTFs
should be allowed to keep documents that are older than 30 days at a
site other than the IDTF's physical location and CMS should clarify how
long the IDTFs are required to keep each complaint and whether an IDTF
will be required to record the insurance claim number for each
complaint.
Other commenters recommended that we clarify Sec. 410.33(g)(8) to
specifically state that this standard relates to complaints regarding
the provision of service, because as written, it will impose a sweeping
new recordkeeping requirement that drastically affects small business
entities.
Response: Based upon the comments received, we have revised this
provision to clarify and limit the amount of documentation that is
necessary when a clinical complaint is received in writing. We also are
clarifying and limiting the amount of documentation that is necessary
when a clinical complaint is received in writing. We believe that
complaints should be readily available for examination and we will
establish a time frame for maintaining this documentation. Therefore,
we have revised Sec. 410.33(g)(8) accordingly.
Comment: One commenter recommended that we develop a standardized
complaint form and an electronic Web-based platform for submitting
complaints regarding an IDTF.
Response: We believe that an IDTF can document any formal
complaints it receives in the most convenient way possible for that
IDTF.
After reviewing public comments regarding our proposed change to
Sec. 410.33(g)(8), we are adopting this proposed change with
modifications. By revising this language, we believe that we are
reducing the paperwork burden on IDTFs to maintain and respond to
written clinical complaints, rather than all questions and complaints
it receives from beneficiaries. Section 410.33(g)(8) is revised to
read, ``Answer, document, and maintain documentation of a beneficiary's
written clinical complaint at the physical site of the IDTF (for mobile
IDTFs, this documentation would be stored at their home office.) This
includes, but is not limited to, the following:
The name, address, telephone number, and health insurance
claim number of the beneficiary.
The date the complaint was received; the name of the
person receiving the complaint; and a summary of actions taken to
resolve the complaint.
If an investigation was not conducted, the name of the
person
[[Page 66287]]
making the decision and the reason for the decision.''
By making this change, we believe that we are reducing the
paperwork burden on IDTFs by asking them to maintain and respond to
written clinical complaints, rather than address all questions and
complaints it receives from beneficiaries.
d. Sec. 410.33(b)(1)
We received the following comments in response to our proposal at
Sec. 410.33(b)(1).
Comment: Several commenters agreed with our proposal to delete the
requirement that the supervising physician is responsible for the
overall operation and administration of an IDTF.
Response: We appreciate these comments and are adopting this change
in the final regulation.
Comment: One commenter recommended that we delay the implementation
of our clarification that a physician providing general supervision can
oversee a maximum of three IDTF sites by noting that term, ``sites''
includes fixed, as well as mobile sites.
Response: We believe that a physician providing general supervision
can oversee a maximum of three IDTF sites which includes fixed as well
as mobile sites.
Comment: One commenter recommended that we clarify that the three
site limitation only relates to the provision of general supervision.
In addition, one commenter recommended that we clarify that while a
physician may only provide general supervision to three IDTF sites,
this provision does not apply to the number of interpreting physicians
at an IDTF site.
Response: We agree with this comment and will clarify that the
supervision limitation only applies to general supervision.
Comment: One commenter stated that our proposal to consider each
mobile IDTF unit as one IDTF site was unreasonable.
Response: We disagree and we believe that a physician providing
general supervision can oversee a maximum of three IDTF sites. We
maintain that fixed and mobile IDTFs essentially are furnishing the
same services. We note that the term, ``sites'' includes fixed as well
as mobile sites because there are three concurrent locations where
testing may occur at a given time.
Comment: One commenter stated individual locations should be
counted only if they have separate Medicare PINs.
Response: With Medicare's implementation of the National Provider
Identifier (NPI) on or before May 23, 2008, Medicare contractors will
no longer issue billing numbers to the public. Providers and suppliers
will use their assigned NPI to submit claims to Medicare. As such,
organizations may obtain one or many NPIs. Accordingly, we are not able
to adopt this suggestion.
Comment: One commenter suggested that it would be inappropriate to
require that a mobile IDTF have a different supervising physician for
every three office locations that it visits, therefore this provision
should apply only to those IDTFs in a fixed location.
Response: We believe that a physician providing general supervision
can oversee a maximum of three IDTF sites and note that the term,
``sites'' includes fixed, as well as mobile sites, because there are
three concurrent locations where testing may occur at a given time. A
mobile IDTF may visit multiple locations and it would still be
considered one mobile unit. The number of places a mobile IDTF visits
does not change the fact that this is a single unit and up to three
fixed base or mobile units may be under the general supervision of one
physician.
Comment: One commenter stated that the mobile unit described at
Sec. 410.33(b)(1) should be consistent with the language used on the
CMS-855B enrollment application.
Response: We will consider revising the CMS-855B to incorporate
this recommendation.
Comment: One commenter recommended treating fixed base sites and
portable units on a comparable basis in that a supervising physician
not be limited to supervising three portable units, but also could
supervise three sites from which portable units are dispatched.
Response: A mobile IDTF may visit multiple locations, and it would
still be considered one mobile unit. The number of places a mobile IDTF
visits does not change the fact that this is a single unit and up to
three fixed base or mobile units may be under the general supervision
of one physician. Under the commenter's scenario, any number of mobile
units could be in use and a physician would not be able to provide
general supervision to an infinite number of mobile units.
Comment: One commenter recommended that we revise Sec. 410.33(b)
to move to a diagnostic equipment threshold limit instead of an IDTF
site limit since, as proposed, the provision allowing fixed based IDTFs
to run limitless testing procedures at the IDTF is equated with a
mobile unit running one test at a time. Therefore the number of
supervising physicians should be determined through testing volume and
not location.
Another commenter recommended that a maximum threshold of 15 units
per supervising physician would be advisable and that is should be made
clear that this section applies to general supervision and not direct
or personal supervision.
Response: Due to the varied and ever changing equipment used by
IDTFs, it would be impractical to establish such limits.
Comment: One commenter recommended that we conduct additional
audits, monitoring, and enforcement actions, where warranted, to
address existing compliance problems.
Response: We agree with the commenters that audits, monitoring, and
enforcement efforts are effective ways to identify individual
compliance issues. We already require that Medicare contractors conduct
an onsite visit to verify the performance standards found in this
section prior to initial enrollment. We will consider adding and/or
redirecting existing resources to ensure that an IDTF remains in
compliance with these standards.
Comment: One commenter requested clarification to differentiate
between fixed and mobile IDTFs business models and the differences by
which IDTFs using these models provide services.
Response: A fixed base IDTF performs all of its diagnostic testing
at the practice location found on the Medicare enrollment application
(CMS-855), whereas a mobile IDTF travels and performs its diagnostic
tests at locations other than a single practice location.
Comment: One commenter requested that we clarify the definition of
``site'' versus ``testing locations'' distinction.
Response: We consider sites and testing locations to be a practice
location for both fixed base and mobile IDTFs.
Comment: One commenter suggested that the language at Sec.
410.33(i)(3) is in error and was meant to be a definition, because it
explains the first two parts of the effective date provision. The
commenter stated that they believe that the date which a signed
enrollment application is submitted should be considered the date of
filing and that any time lag in contractor decisions should be excluded
when determining the date of filing.
Response: We agree with the commenter and are revising Sec.
410.33(b)(1) accordingly.
After reviewing the public comments, we are amending the provision
to
[[Page 66288]]
remove the following sentence from Sec. 410.33(b)(1), ``The IDTF
supervising physician is responsible for the overall operation and
administration of the IDTFs, including the employment of personnel who
are competent to perform test procedures, record and report test
results promptly, accurately and proficiently, and for assuring
compliance with the applicable regulations''.
We are adopting the provision at Sec. 410.33(b)(1) which clarifies
the meaning of what constitutes three IDTF sites to include both fixed
sites and mobile units. This includes moving portable diagnostic
equipment to another location and used it to provide IDTF services.
Accordingly, we believe that a physician providing general supervision
as defined in Sec. 410.32(b)(3)(i) can oversee a maximum of three
sites (that is, fixed or mobile) where concurrent operations can be
performed. In addition, we are clarifying that that this provision
applies only to general supervision within an IDTF setting. Section
410.33(b)(1) is revised to read, ``Each supervising physician must be
limited to providing general supervision to no more than three IDTF
sites. This provision applies to both fixed sites and mobile units
where three concurrent operations are capable of performing tests.''
2. New IDTF Standards
a. Sec. 410.33(i)
In Sec. 410.33(i), we proposed to establish an initial enrollment
date for IDTFs and to limit the retrospective period for which an IDTF
can obtain payment for services after enrolling into the Medicare
program.
Comment: One commenter recommended that we adopt an accelerated
rollout plan of the PECOS Web to facilitate the enrollment process for
IDTFs.
Response: We expect to implement PECOS Web in most parts of the
country by March 2008.
Comment: One commenter recommended that we ensure that Medicare
contractors process enrollment applications in a timely manner so that
beneficiaries will have access to quality and convenient healthcare
delivery at an IDTF.
Response: We will continue to work with all Medicare contractors to
ensure that applications are processed in a timely and accurate manner.
With the implementation of PECOS Web, we believe that many of the
processing delays that have occurred within the last year will be
corrected. Specifically, PECOS Web will facilitate the submission of a
complete application and allow applicants to make any necessary changes
to their enrollment application in a timely manner.
Comment: Several commenters recommended that we revise our
proposals to allow an IDTF to begin billing Medicare for claims with
dates of service on or after the day on which the IDTF submits a
``substantially correct'' or ``substantially complete'' enrollment
application or the date the IDTF first furnishes services at its
location, whichever is later.
Response: We disagree with the recommendation to permit an IDTF to
submit claims with dates of service on or after the day which the IDTF
submits a ``substantially correct'' enrollment application or the date
the IDTF first furnishes services at its location, whichever is later.
We believe that it is essential that all providers and suppliers,
including IDTFs, submit a complete application at the time of filing or
perfect the submission of their enrollment application in response to a
contractor's request for information. Accordingly, an applicant who
submits a complete application or responds in a timely manner to a
request for additional information is not disadvantaged by this
proposal. However, it is important to note that if an application is
rejected in accordance with the provisions found at Sec. 424.525, the
applicant will need to submit a new application to enroll in the
Medicare program. In this case, the applicant only will be able to seek
payments for those services furnished on or after the date of filing or
when the Medicare contractor has approved the second application
request.
Comment: One commenter recommended that retroactive billing (once
approval has been determined) be allowed back to the time of the
initial application (even if the first submission is rejected).
Response: As stated above in this section, we disagree with this
recommendation. We believe that an IDTF should be allowed to bill for
services furnished on or after the date of filing or the date the
practice location became operational. However, we do not believe that
it is appropriate to allow an IDTF to bill for services back to the
filing date of the initial application if the initial application was
rejected due to the nonsubmission of information or denied because the
applicant did not meet the program requirements to enroll as an IDTF.
Comment: One commenter recommended that a 60-day period be allowed
for retroactive billing before an IDTF is enrolled.
Response: While we believe that an IDTF should be allowed to bill
for services furnished on or after the date of filing or the date the
practice location became operational, we do not believe that it is
appropriate to allow an IDTF to bill for services prior to the filing
date associated with when the application was submitted.
Comment: One commenter recommended that Medicare contractors follow
a protocol that outlines the items that will require a contractor to
reject or deny an enrollment application.
Response: Medicare contractors are bound by applicable enrollment
regulations and CMS manual instructions. Specifically, all Medicare
contractors are required to follow regulations found at Sec. 424.525
and manual instructions found in publication 100-8, Chapter 10 of the
Program Integrity Manual (PIM) when rejecting an enrollment application
for insufficient information. In addition, Medicare contractors are
required to follow regulations found at Sec. 424.530 and manual
instructions found in publication 100-8, Chapter 10 of the PIM when
denying an enrollment application.
Comment: One commenter recommended that we not implement our
proposal to preclude an IDTF from being allowed to bill Medicare
retroactively for services that are rendered prior to the provider
being formally approved by the applicable Medicare contractor to
participate in the Medicare program.
Response: Since our proposal specifically allows an IDTF to receive
reimbursement for services furnished on or after the filing or the date
the IDTF opened a new practice location, whichever was later, we
believe that we are allowing IDTFs a limited amount for retroactive
billing. As stated in the preamble to the proposed rule, the purpose of
this rulemaking effort is to establish a date of enrollment for IDTFs
where we believe that the enrolling IDTF meets all of the program
requirements to participate in the Medicare program.
Comment: One commenter recommended that we clarify that our
proposed change in billing be applied only to new or initial enrollment
applications and would not affect existing operations when changes or
additions are made to an enrollment application, such as the addition
of a new physician or piece of equipment.
Response: In general, we agree with this commenter in that the
proposed change only will apply to new or initial enrollment
applications. Since the provision is designed to limit
[[Page 66289]]
retrospective billing prior to enrollment in the Medicare program, we
do not believe this change will impact existing IDTFs who are making a
change to an existing enrollment record for a fixed or mobile practice
location. However, it is important to note that the limitations on
retroactive billing will apply to existing IDTFs who are adding a new
fixed or mobile practice location to their existing enrollment record.
Moreover, a limitation on retroactive billing may apply when there is
change of ownership.
Comment: One commenter stated that they had no issues with the
effective date of the billing privileges provision. However, this
commenter suggested that this provision be tied to a requirement that
the CMS designated contractor process the application in a timely
fashion.
Response: We are also concerned about delays associated with the
enrollment process. However, we recognize that many of the delays are
the result of IDTF suppliers not submitting a complete application at
the time of filing or failing to submit complete and timely responses
to a contractor's request for information.
In addition, we believe that it is appropriate to expect meaningful
Medicare contractor processing timeliness standards. As necessary, the
agency can update or revise processing standards through the manual
instructions and through contracts with Medicare Administrative
Contractors. We fully expect that most enrollment applications will be
processed in accordance with CMS processing requirements found in
Publication 100-8, Chapter 10 of the PIM. The PIM establishes
processing standards for initial applications, changes of information,
and reassignments that all Medicare contractors must adhere to.
Specifically, we currently require Medicare contractors to process 80
percent of initial applications within 60 days, 90 percent of initial
applications within 120 days, and 99 percent of initial applications
within 180 days. We also require Medicare contractors to process 80
percent of changes of information and reassignments within 45 days, 90
percent of changes of information and reassignments within 60 days, and
99 percent within 90 days.
With the implementation of PECOS Web, an internet version of the
Medicare enrollment process, in FY 2008, we expect to establish more
stringent contractor processing timeliness standards for applications
submitted via PECOS Web.
Comment: One commenter stated that the effective date of the
billing privileges provision may economically affect small and medium
sized business in that the IDTF must list the credentialed employees on
the application itself in order for the application to be processed,
and that these businesses cannot use or bill for their services during
the time periods that they are not enrolled. Further, the commenter
states that it would be impractical to hire these technicians if they
cannot use them to perform the tests for the time it takes to get
approved.
Response: We disagree with the commenter because all IDTFs should
have proper staffing, including credentialed technicians, at the time
the IDTF practice location is applying to participate in the Medicare
program or when the IDTF is operational.
Comment: One commenter suggested that an IDTF that is enrolled and
in good standing in the Medicare program at one location be able to
enroll new sites retroactively to the first date of service at the new
location.
Response: We disagree with this recommendation because the approval
of one practice location does not necessarily mean that a second
practice location meets the requirements for approval.
Comment: One commenter recommended that we require that applicants
be notified of their enrollment status within 60 days of submitting
their applications.
Response: We believe that this comment is outside the scope of this
final rule. However, given certain resource limitations, contractors
are unable to respond to such status inquiries. With the implementation
of PECOS Web, providers and suppliers, except DMEPOS suppliers, will be
able to check the status of their applications via the Internet.
After reviewing the public comments we are finalizing the provision
at Sec. 410.33(i) to state that we will establish an initial
enrollment date for an IDTF that would be the later of: (1) the date of
filing of a Medicare enrollment application that was subsequently
approved by Medicare FFS contractor; or (2) the date an IDTF first
started furnishing services at its new practice location. We also
adopted the ``date of filing'' as the date that the Medicare FFS
contractor receives a signed provider enrollment application that the
Medicare FFS contractor is able to process for approval. If the
Medicare FFS contractor rejects or denies an enrollment application
that is not later overturned during the appeals process, the new date
of filing would be established when an IDTF submits a new enrollment
application that the contractor is able to process to approval.
With the implementation of an Internet enrollment process referred
to as the PECOS Web in 2008, the date of filing for applications
submitted through PECOS Web will be the date the Medicare contractor
receives all of the following: (1) A signed Certification Statement;
(2) an electronic version of the enrollment application; and (3) a
signature page that the Medicare contractor processes to approval.
While this change limits the retrospective payments that an IDTF
may obtain from the Medicare program, we believe that this approach
will ensure that a Medicare contractor is able to verify that an IDTF
meets all program requirements at the time of filing, including the
performance standards outlined in Sec. 410.33(g) before payment for
service occurs.
b. Sec. 410.33(g)(3)
We received the following comments regarding our proposal at Sec.
410.33(g)(3) to expressly preclude hotels and motels from being
considered an appropriate site for an IDTF setting.
Comment: One commenter stated that many IDTFs have contracts
directly with a hotel or motel where they rent space for studies and
that they disagreed with the rules' provision to ban such a situation.
Response: We disagree with this comment because we believe that
space located within a hotel or motel can easily be transferred to
other uses other than providing sleep studies.
Comment: Several commenters stated that a hotel or motel room is
not appropriate places for diagnostic testing to take place.
Response: We agree with these comments and have revised Sec.
410.33(g)(3) accordingly.
Comment: One commenter suggested that the provision at Sec.
410.33(g)(3) be changed to state that the requirements for hand washing
and patient privacy only apply to IDTFs that see patients and to
clarify that being able to access records electronically fulfills the
requirement of storing business and medical records.
Response: We have amended Sec. 410.33(g)(3) to state that the
requirements for hand washing and patient privacy only apply to IDTFs
that see patients and to clarify that being able to access records
electronically fulfills the requirement of storing business and medical
records.
We are adopting a revision to Sec. 410.33(g)(3) to expressly
preclude hotels and motels from being considered an appropriate site
for an IDTF setting.
[[Page 66290]]
Based on public comments, we believe that a hotel or motel is not an
appropriate place for diagnostic testing to take occur. Accordingly, we
have revised Sec. 410.33(g)(3) to read, ``Maintain a physical facility
on an appropriate site. For the purposes of this standard, a post
office box, commercial mailbox, motel, or hotel are not considered an
appropriate site. The physical facility, including mobile units, must
contain space for equipment appropriate to the services designated on
the enrollment application, facilities for hand washing, adequate
patient privacy accommodations, and the storage of both business
records and current medical records within the office setting of the
IDTF, or IDTF home office, not within the actual mobile unit.''
Additionally, we have added an exception at Sec. 410.33(g)(3)(ii),
where IDTFs that do not see beneficiaries at their locations are exempt
from providing hand washing and patient privacy accommodations.
c. Sec. 410.33(g)(15)
At Sec. 410.33(g)(15), we proposed a new performance standard
which stated, ``Does not share space, equipment, or staff or sublease
its operations to another individual or organization.''
Comment: One commenter stated that they were concerned about the
emergence of arrangements in which a physician practice leases a block
of time from an imaging provider (such as an IDTF) or agrees to pay the
provider a per service fee to use its facility. The group practice then
refers its patients to the imaging provider for imaging