[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 docume